DeFi exploit hits THORChain - hackers capture around US$5,000,000

Iron Finance reports back from the dead and Uniswap scales with optimism. At the same time, there was an exploit at THORChain – what happened in the Wild West of Decentralized Finance (DeFi) this week?

Once again, there was a lot going on in the Wild West of Decentralized Finance this week. The “DeFi ETF token” DeFi Pulse Index (DPI) lost 22.98 percent of its value on a weekly basis.

Among the index’s worst performers were tokens from decentralized exchanges. Uniswap (UNI), Blancer (BAL) and SushiSwap (SUSHI) lost between 28.37 and 32.21 percent of their market cap. Moreover, Total Value Locked (TVL) also suffered a setback. Between July 9 and July 16, the capital held in smart contracts by DeFi protocols fell from $58.6 billion to $55.21 billion at press time.

Risen from the dead: Iron Finance reports back

Less than a month after the spectacular bank run at Iron Finance, the DeFi project is venturing a new start. With IronSwap, a new token called ICE and a Yield Farm, Iron Finance aims to win back users by offering attractive returns.

While the new Yield Farms do not currently include an algorithmic stablecoin, it is still questionable how sustainable the extremely high returns of up to 613 percent per year are. The IS3USD liquidity pool shown in the chart above is Iron Finance’s new flagship in this regard. The pool is a fork of Curve’s 3pool design (CRV) and accepts stablecoin deposits in USDT, DAI, and USDC. Additionally, Iron Finance is rewarding all users who offer capital in the new liquidity pools with ICE tokens.

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At the time of writing, Iron Finance’s new liquidity pools have already been able to accumulate over $900 million in capital.

Hackers capture nearly five million US dollars from THORChain

On July 15, THORChain, a cross-chain swaps platform that is extremely popular in the DeFi space, fell victim to a hacking attack.

According to official information from THORChain, Ethereum worth almost five million US dollars was captured.

Furthermore, THORChain stated that only liquidity providers that made Ethereum available on the decentralized exchange were victims of the exploit.

Now, THORChain first wants to update its protocol, fix errors and then restart the network. Once this process is complete, the next step will then be to compensate all affected liquidity providers. How long this process will take is as yet unclear.

Shortly after the exploit, RUNE’s share price fell by over 14 percent. At press time, RUNE is trading just below the five US dollar mark.

Uniswap launches DeFi scaling solution Optimism

After more than two years in development, Uniswap announced the launch of Optimism on July 13. Optimism is a Layer 2 scaling solution that uses so-called Optimistic Rollups to scale Uniswap. This is expected to make transactions up to 10 to 50 times cheaper than on the Ethereum mainchain.

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According to a blog post from the Uniswap team, it is now possible for DeFi users to transfer their digital assets to the Optimism Ethereum network. To do so, all they need to do is use the Optimism Gateway. You can read about exactly how that works here.

In addition, Optimism is already compatible with popular wallets (Metamask, WalletConnect) and popular analytics sites like Etherscan and The Graph. So far, however, Optimism is off to a slow start. Only $4.36 million is in Optimism’s smart contracts to date, and trading volume is also well below that of the Uniswap version on the Ethereum mainchain, at $1.15 million within the last 24 hours.

Uniswap OptimismUniswap OptimismSource:

For comparison, in the Uniswap V3 smart contracts. Ethereum mainchain version currently holds $1.58 billion and within the last 24 hours the trading volume there was over $844 million.

Safety first

However, when making this comparison, one must keep in mind that Optimism is only in its alpha phase and therefore cannot fully develop yet. As the new technology is to be tested for a few more weeks, transactions are currently limited to a maximum of 50,000 per day. As soon as this threshold is exceeded, the transaction fees increase until the number of transactions falls below the threshold again.