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CFTC Commissioner is not a big fan of DeFi; calls it ‘illegal’ since it defies archaic laws

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DeFi has gained significant traction this bull season. It has not only attracted a myriad of previously skeptic market players to rake in profits but has now come under the scrutiny of law enforcement agencies. In the latest development, the Commissioner of Commodity Futures Trading Commission [CFTC], Dan M. Berkovitz has called for a crackdown on unregulated derivatives platforms in the decentralized finance world.

CFTC exec just termed DeFi “illegal”

Berkovitz believes DeFi derivatives platforms may violate the existing Commodity Exchange Act [CEA]. In a keynote address, the commissioner was quoted saying,

“There is no intermediary to monitor markets for fraud and manipulation, prevent money laundering, safeguard deposited funds, ensure counterparty performance, or make customers whole when processes fail. A system without intermediaries is a Hobbesian marketplace with each person looking out for themselves. Caveat emptor—“let the buyer beware.”

He also opined that “unlicensed” DeFi markets for derivative instruments are a bad idea and that he does not see how it is legal under the act which requires futures contracts to be traded on a designated contract market [DCM] that are licensed and regulated by the CFTC.

Berkovitz went on to speculate that it is “untenable” to permit “an unregulated, unlicensed derivatives market” to function adjacent to, what he considers, “a fully regulated and licensed derivatives” market.

Acknowledging the lack of “safeguards’ in the market as well as customer protections, the commissioner said that it would not be fair to enforce the obligations, restrictions, and costs of regulation upon some DeFi while allowing their unregulated rivals to exist wholly free of such obligations, restrictions, and costs.

He said that DeFi should not be allowed to transform into “an unregulated shadow financial” market in a direct match with its regulated counterparts. He also urged that the CFTC along with other regulators of the country, need to concentrate more on the growing concern and address regulatory transgressions appropriately.

DeFi Options Platform FinNexus Exploited; FNX Token Crashes By 90%

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DeFi hacks and rug pulls have become common by the day.

FinNexus, a decentralised finance [DeFi] options platform, was the most recent victim of a malicious entity’s exploit. While FinNexus has yet to publish a post-mortem report, the firm has cautioned users to withdraw their funds from the pools.. Its tweet regarding the same read,

“We regret to inform our traders and investors that the FinNexus erc20 contract appears to have been hacked. For safety reasons please withdraw your funds from the pools. The team is working on this issue and we will provide updates as they become available.”

The platform’s claims of the event being a smart contract hack was rebuffed by popular DeFi analyst and researcher, Chris Blec who speculated that either this is a case of a stolen admin key or was used maliciously by a team member.

What exactly happened with the DeFi Platform?

After digging deeper, another DeFi research analyst Igor Igamberdiev observed that FinNexus [FNX] contract deployer changed the token owner to some address on both Ethereum [ETH] as well as Binance Smart Chain [BSC] network. This address reportedly minted 323 million FNX [which was worth around $6M] on Ethereum and 60 million FNX [approximately $1.6 million] on Binance Smart Chain.

Following the minting, the attacker started dumping coins. In total, the decentralized options platform incurred a loss of $7.6 million.

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So now the community was left wondering if this was a case of rug pull or stolen private key and FinNexus is yet to provide a conclusive report on the same.

FNX Crashes

FNX

Following the development of the exploit, the DeFi platform’s native token, FNX, crashed by more than 90% in the last 24-hours. Before the exploit, it was trading above $0.3 however, its price went on a downward spiral to a new low of $0.062, at press time. The crash could be attributed to the fact that a major portion of FinNexus’ token collateral was liquidated during the attack.

Binance Smart Chain’s DeFi Project Losses Over $30M In Flash Loan Exploit

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A DeFi project Spartan Protocol’s contract suffered an exploit that led to loss of more than $30 million in funds. The incident reportedly originated due to a flawed liquidity share calculation in the protocol, that resulted in the drainage of assets from the pool.

In the post-mortem blog post, the security firm PeckShield detailed,

“In particular, the specific hack inflates the asset balance of the pool before burning the same amount of pool tokens to claim an unnecessarily large amount of underlying assets. The consequence of this attack results in more than $30M loss from the affected pool.”

The decentralized protocol [DeFi] was built on Binance Smart Chain for incentivized liquidity and synthetic assets. While first reporting the incident Spartan had revealed that the malicious entity used $61 million in Binance’s native token BNB to control the pools via an unknown economic exploit path to remove almost $3 million in funds from the pools.

According to the post-mortem report, the flash loan was taken on BSC’s popular DEX PancakeSwap for 100,000 wrapped BNB [wBNB]. This amount was to be paid back at the last step with 260 wBNB as the flash loan fee. However, the hacker allegedly swapped the wrapped BNB to Spartan’s native token – SPARTA five times via this exploited pool of the protocol. It swapped wBNB to SPARTAN an additional ten times through the same pool.

After inflating the asset balance in the pool, tokens were burnt to withdraw the liquidity. This process was repeated until the flash loan of 100,260 wBNB was returned and the hacker drained more than $30 million from the DeFi protocol.

DeFi Flash Loan Attacks One After Another

Rekt, which posted another assessment of the incident, also stated that Spartan’s latest exploit with $30 million funds drained is the sixth biggest incursion on its leaderboard.

This news comes jist days after the attackers of yet another Binance Smart Chain’s DeFi exchange Uranium Finance siphoned off with more than $57 million in exploit from a similar attack. In April 20th, layer two protocol EASYFI lost around $59 million.

Uniswap Calls Massive Trade Volumes ‘Not Real’; Delta Hits Back

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Uniswap’s phenomenal growth over the short span of time has been lauded by market players and DeFi experts alike. It has emerged as one of the world’s largest decentralized exchange [DEX] sweeping significant volume in the market. However, the trading volume recorded on the 30th March on Uniswap was much higher than normal.

So what exactly happened on Uniswap?

It was DeFi protocol, Delta Financial’s native token, DELTA that was responsible for the brief and fake volumes on Uniswap. The token recorded a trading volume of more than $6.13 billion, meaning, it contributed to roughly 85% of the total volume on the DEX even as the liquidity stood at a little more than $16 million.

Delta is a newbie in the world of DeFi and identifies itself as on-chain options layer which uses a combination of liquidity standards to minimize premiums and provide competitive options price. In short, it essentially aims to solve the problem of expensive and volatile options trading especially due to lack of liquidity.

The large trading volume figures were due to Delta’s liquidity rebasing system. This is essentially an algorithmic mechanism of increasing the price to mint tokens over time. While this seemed similar to that of wash trading, since it requires swapping tokens back and forth in order to trigger high volume and price of a token, the inventor of Uniswap Protocol, Hayden Adams, clarified that while it is not wash trading, it also does not represent “real” volume either.

He also went on to say that the figures will soon be considered untracked volume on Uniswap.

Adams also stated that the current Delta stats will not influence Uniswap’s global trading volume and added that Delta’s strange protocols are the reasons behind the exploding figures.

Delta Financial has hit back with the following tweet:

“All DELTA data is completely frozen, as if trading is not happening at all. To top it off an engineer wrote ‘Scammy Token’ in the PR. Meanwhile, the volume is still misreported on all other tokens.”

CMS, Alameda Leads $4.9M Funding Round For DeFi Protocol

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Bitcoin’s surge has caused a ripple effect which was felt across the decentralized finance [DeFi] realm as well. In the latest development, a DeFi lending protocol called Alchemix has announced securing $4.9 million in a funding round on the 14th of March.

Interestingly, this round included some names of major industry venture capital groups who poured in capital into the DeFi protocol. Some of them include digital-asset-focussed principle investment firm CMS holdings, FTX’s parent company Alameda Research, crypto hedge fund Immutable Capital, investment firm Nascent, among others.

The team behind the DeFi platform revealed that it had agreed to sell its native ALCX tokens at the price of $700 per token for the total value of $4.9 million. Furthermore, the trading price at the time of the deal, meaning on the 11th of March was between $680-$800. Alchemix also disclosed that the proceeds of this funding round have been transferred to the founders to function as personal funding.

Up until the latest round, Alchemix had not received any funding. As per the official Discord post further stated,

“This is incredibly positive for the outlook of the project offering substantial benefits: Frees up the founding team to commit to full-time development – accelerating towards Alchemix V2. Facilitated our ability to generate funding via OTC, avoiding any sell pressure on the market”

DeFi: The Hot Place For Investments

DeFi has managed to cement itself center stage as the global financial establishment disrupter, flanked by the likes of Bitcoin and Dogecoin. There is a major influx of users, developers, experienced as well as novice investors in DeFi protocols lately.

According to a new study, the accredited investors in the United States were exhibiting a trend of growing inclination towards the world of decentralized finance. This was reported by Xanglo, in its latest survey which revealed that a vast majority of 67% of respondents out of 379 accredited investors in the country have knowledge about the burgeoning space.

Out of this cohort, 90% of respondents are likely to invest in the space in the next 12 months.

DeFi has generated real, working applications that have already managed to attract billions of money and would continue to do so with proper regulations at place.

DeFi Token Aave Continues To Tear Through Highs, Hits $436

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Aave, the open-source decentralized finance [DeFi] protocol has witnessed a massive rise over the last few weeks. In terms of the total value locked [TVL in USD] surged by nearly 24% over the past day alone pushing the figures to a new all-time high of $4.96 billion.

Aave TVL

The above chart by DeFi Pulse evidenced that money has been flowing through the second-largest DeFi protocol. The latest stats have positioned it as the best performing protocol of recent time.

AAVE’s Soars To New ATH

Interestingly, the protocol only had a few million dollars worth of crypto in it this time last year; since then it has risen to become the second-largest DeFi project on Ethereum. Its native token, Aave also followed the bullish trend, logging historic high prices and recorded a surge of more than 93% over the past week.

In fact, the DeFi token has risen by over 41% in 24-hour alone which drove its price to $436.01, at the time of writing.

Aave2

Aave has been on an absolute tear even as the rest of the DeFi tokens cooled down. What has helped the token sustain the latest rally?

Aave’s 24-hour trading volume scored a record $1.86 billion according to CoinMarketCap which is partially driven by investors acquiring more tokens for staking. Hence, the rising volume, as well as the growing demand for flash loans among the market participants are the main forces behind the price action.

In addition, the renewed uptrend in the cryptocurrency space has further bolstered the already building momentum.

According to the crypto-analytic platform, Santiment, Aave whales were also fueling the recent rally. Its tweet read,

“Aave whales, which we deem addresses holding 1,000 tokens or more (~$397k+ USD), have ballooned from 266 to 327 addresses this past month, fueling this rally.”

Santiment

In general, the DeFi tokens have garnered widespread adoption in the latest bull run. So much so that Mike Novogratz, the CEO and founder of crypto-focused merchant bank Galaxy Digital, said that while Bitcoin is probably a” safer option on a risk-adjusted basis”, another class of digital assets such as Aave, Chainlink, Compound, YFI, and Uniswap has the potential to take over in the coming years.

DeFi Token wANATHA Surges By 470% After Uniswap Listing

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Riding on the DeFi wave is yet another project dubbed Anatha, a vertically integrated DeFi ecosystem that feeds rewards directly back to the participants in the form of native tokens. In the latest developments, the price of Wrapped Anatha [wANATHA] has surged more than 470% since it was listed as the world’s largest DEX Uniswap on 1 October.

The project recently unveiled its community liquidity access event with a $4.5M value of Ether in Uniswap Liquidity, paired with 300 million wANATHA using a multi-sig solution for secured Liquidity injection into DEX on the 4th of October.

wAnatha

Shortly thereafter, Anatha went on to become the most successful initial liquidity offering fair launch event on Uniswap witnessing over 13,000 ETH raised in just 24-hours. Notably, during this time, there were 2,000 wallet holders with a $30 million transaction volume which drove the price of wANATHA to rally over 470%.

According to its official blog post, Anatha aims to build systems that are an alternative to fiat insider greed and systems that are inclusive. On the first day of its Wrapped Anatha [wANATHA] Uniswap listing, the project also launched Cosmos Tendermint powered network and the DeFi wallet solution.

Explaining how Anatha is different from other players in the market, CEO Edward Deleon Hickman stated,

“Unlike most projects we’ve actually built most of what we are describing before going to market. I think that’s a key indicator of the seriousness of our approach. That said, the key driver for both myself and my team is our ETHOS. We believe that the advent of non-national digital money opens up an entire universe of possibility, as value is multiplied in the newly emerging information age economy we must ask ourselves where that value should go.”

The total supply of ANATHA on Mainnet is fixed and is set to 7.7 billion. while the total amount of wANATHA for liquidity event as ERC-20 is set at 300 million.  The inflation rate is 1% per annum and the new tokens will be minted daily at a rate of 0.0028% of the total supply. These tokens will be not be sold. Instead, it will be distributed such as

  • 50% is allocated to the Network Validator Reward Pool [NVRP]
  • 25% will be handed out to DeHRA Holders [$ANATHA Token holders who have registered their “screenname” on the network, such as “@human” “@samatha”]
  • 12.5% will be allocated to the Developer Fund
  • 12.5% will be distributed to the Security Token Holders

In related news, the platform’s Wrapped Anatha [wANATHA] ERC 20 contract for their Community Liquidity Event was audited by cybersecurity firm Halborn.

Binance Dives Into DeFi With Launch Of Automated Market Maker Pool

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Touted as the world’s largest cryptocurrency exchange, Binance made its way to the top with consecutive developments for the exchange as well as the ecosystem. The last two years have been eventful for the exchange following an array of partnerships across the globe. While global expansion has been one of Binance’s major missions, it hasn’t lost focus on the upgrades pertaining to the platform. Recently, the Malta-based exchange announced the launch of a new trading platform, Binance Liquid Swap.

Binance Steers Towards DeFi

Off late, Decentralized Finance [DeFi] has been the talk of the crypto town. While several platforms have been exploring the prospects of the DeFi space, Binance seems to have jumped on to the bandwagon. In a recent blog post, the exchange revealed that it had launched an automated market maker [AMM] pool, Binance Liquid Swap. This would permit users who provide liquidity to earn both income as well as interest via trading fees. However, unlike DeFi, Binance’s latest venture, is reportedly centralized.

The Malta-based crypto exchange claims to be the first to roll out a centralized exchange with AMM. The post further read,

“When you place your crypto funds into the liquidity pools on Binance Liquid Swap, you get to harness the power of an AMM pricing module. This can give you stable prices and lower fees for transactions both small and large, which are done via instant swaps.”

Currently, the platform supports just three coins, stablecoin Tether [USDT], Binance USD [BUSD] as well as Dai [DAI].  The liquid trading pairs available were USDT/BUSD. BUSD/DAI and USDT/DAI.

Furthermore, Binance affirmed that the prices and the transaction fees pertaining to the Binance Liquid Swap was entirely dependent on the assets in the liquidity pool. When a user adds, removes, or swaps funds present in the pool, the fees as well as the price changes. The exchange added,

“You’re entitled to your interest plus a cut of the transaction fees when you pool your tokens.”

Since the latest platform is still in its promotional period till 4 October 2020, the trading fee will be as low as 0.04 % However, it would soon return to 0.1% after the aforementioned date.

Binance Futures Launches YFI/USDT Perpetual Contract as DeFi Demand Surges

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DeFi (Decentralized finance) is currently one of the hottest corners of the crypto industry this year and, as a result of the boom, many project tokens have shown incredible price surges. One of the prominent tokens is Yearn. Finance ‘s native YFI, which has gained significant traction over the last few weeks.

DeFi, the big hype

In a bid to cash in on the mania, several centralized platforms have now jumped on the DeFi bandwagon.

In the latest development, one of the world’s largest centralized cryptocurrency exchange, Binance announced the launch of the YFI/USDT perpetual contract on its Futures platform wherein the users will be able to choose between 1-50x leverage.

The YFI/USDT perpetual contract is a USDT-margined futures contract that uses USDT as collateral. According to the official blog post, the contract will be made available to users from 31st August 7:00 AM [UTC].

This news follows Binance‘s announcement of offering ‘DeFi Index Perpetual Contracts’ to cater to the huge customer demand to get exposure to a broad base of DeFi products.

yearnfinance charts

YFI’s meteoric rise

Meanwhile, in a little over a month, YFI has soared by a staggering 4008% since it was created $764.42 in July to the press time price at $31,682. Following the path of Bitcoin, the creators of the project have limited the supply of the governance token to 30,000 YFI coins. This could be an important contributing factor to the rapid surge in its price.

This new rally was also speculated to be triggered after, one of the largest DeFi protocol, Aave announced the listing the token. This was a significant development for the YFI ecosystem primarily because Aave has successfully outpaced the likes of Maker, Curve Protocol in the race for the first place in terms of TVL.

As previously reported, yet another catalyst for the token’s upward momentum was directed towards a  potential collaboration between the crypto derivative platform FTX and Yearn.Finance.

Besides, the protocol also recently announced the launch of ‘yinsure.finance’ which is essentially a prototype for a new tokenized insurance, the first of its kind in the DeFi ecosystem.

DeFi Project ‘Curve’ Eyes for $1B TVL Days After ‘Unexpected Deployment’

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The DeFi boom of 2020 is real and is showing no signs of slowing down. Over the past couple of years, the DeFi ecosystem has evolved significantly with the foray of new market participants which are continuously building new infrastructure.

The new kid in the block is a decentralized Ethereum liquidity exchange pool called Curve Finance. According to DeFi Pulse, the protocol is getting closer to a $1 billion mark in total locked value [USD]. As the upward movement continued, a TVL of $922.7 million was recorded.

defi pulse

The figures first shot up on 14th August from a mere $254.5 million, surging by an astonishing 262.5% in a period of two days. With this, Bitcoin locked in Curve Finance’s exploded to 11.637.

This comes after popular cryptocurrency exchanges such as OKEx, Huobi, and Binance announced support for its native token, CRV.

This token is used for the purpose of voting in platform governance. In addition, CRV is also used as a reward for liquidity providers. In addition, a portion of the trading fees collected is used to conduct constant token burns.

Unexpected deployment fuels Curve adoption

Initially developed as a viable alternative to trading stablecoins on general-purpose DEXes, Curve is a well-known name in the space and hence, the anticipation surrounding the launch was also quite high.

It was the unfolding of an interesting turn of events that multiplied the hype. This involved an anonymous DeFi user who deployed the Curve token and contracts on the Ethereum mainnet well before the team’s official announcement. The user, with a relatively new Twitter account, revealed,

“Yo, @CurveFinance! Saw your DAO is ready to rock and I gots to MAXIMIZE MY ALPHA ! So I went ahead and deployed it for you. Get at me in DM to verify and lets get this party started!!”

While the Curve team had no prior knowledge about the contract deployment, hours after the above Twitter post, however, the officials of the DeFi platform verified the deployment process and confirmed the legitimacy. This subsequently forced Curve Finance to launch its decentralized autonomous organization or DAO and governance token CRV.

In an official statement, the Curve team announced,

“Someone deployed $CRV based on smart contracts we had published on github, front-running our efforts. While we initially were skeptical, it appeared to be an acceptable deployment with correct code, data, and admin keys. Due to the token/DAO getting traction, we had to adopt it.”

The Curve team further added that the deployment had correct code, data, and admin keys and also went on to add that the community member who deployed it relinquished any admin power.

Pre-mining accusations

Curve Finance is touted as one of the most prominent platforms in the space. But speculations regarding users’ pre-mining CRV token surfaced in the DeFi community. This was due to the fact that contracts were already deployed by the anonymous user unexpectedly. Soon after which some DeFi users started staking yCRV, tokens that represent shares of Curve’s liquidity pools, in a bid to earn CRV tokens even before the team could verify that the contracts had been properly deployed.