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Solana (SOL) DeFi Ecosystem Drops 96%, TVL Reaches $330 Million

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DeFiLlama, one of the most reliable TVL aggregators for DeFi assets, reports that The total value locked (TVL) in Solana (SOL) network’s DeFi ecosystem has fallen drastically from its peak of $10.17 billion in December of last year to only about $329 million as of November 14th- approximately a decrease of about 96%.

Screenshot 2022 11 15 220034
Source: DeFiLlama

When concerns arose at the beginning of November over FTX’s liquidity, TVL on the Solana network decreased rapidly, and the impact was so severe that in just one week, it had plunged to 63%. 

The data show that among the top Decentralized Finance projects on Solana, lending platform Solend lost 28.80% of its TVL on the last day and 88.47% of its TVL over the previous seven last days. 

In addition, Solend’s TVL monthly change is around 89.09%, and there are currently about $26.04 million locked in the protocol compared to $284.33 million on November 2nd.

Solana
Source: DeFiLlama

Tulip Protocol, the first yield aggregation platform based on Solana with auto-compounding vault techniques, lost around 67.01% of TVL during the course of the previous seven days. Similar losses were suffered by Raydium (50%), Marinade Finance (53.61%), and Friktion (60%).

Solana Ecosystem & FTX Bankruptcy: Facts

According to the Solana Foundation, as of November 6th, when FTX.com stopped processing withdrawals, it had $1 million in cash or cash equivalents. 

It has a limited effect on the network’s operations because it represents less than 1% of its cash or cash equivalents. Furthermore, it had no SOL custody on FTX.com.

The network said:

In light of the voluntary Chapter 11 bankruptcy proceedings that FTX/Alameda announced on November 11th, we do not know how these and other FTX/Alameda’s assets will be settled in the aftermath of the Chapter 11 proceedings.

Moreover, a recent evaluation by the Solana Foundation shows that the majority of the top blockchain-based ventures on this network (DeFi) have had minimal to no exposure to FTX. 

Even though many projects will inevitably face difficulties due to FTX, they also appear optimistic about how they can move forward.

In addition, the network asserts that:

During the events of the past week, the Solana network has not experienced any notable performance or uptime issues.

Related Reading | Hong Kong To Become Virtual Asset Hub Despite FTX Collapse

Solana’s DeFi Ecosystem Bearing Brunt Of The FTX Contagion

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Solana’s Total Value Locked has shrunk in the backdrop of FTX contagion. TVL is a metric that highlights the total coins deposited across DeFi protocols, including staking, lending, and liquidity pools. 

Data from DeFiLlama showed that SOL’s TVL tanked over 33% at the time of writing, to $417 million, a significant decline from the previous peak of $10 billion reached on November 9, 2021.

Of all the SOL’s protocols, DeFi platform Solend has lost nearly its entire worth. Its current TVL stands at $44.83 million, down by over 60% in the last 24 hours. Similarly, Radium and Lido’s TVL have too fallen by 35% and 47% over the day and are currently hovering at $62 million and $49 million respectively.

The largest among them, Liquid staking protocol Marinade Finance, too witnessed its TVL on the chain, fall to 37% to rest at $107 million in the past 24 hours.

The other day Solana’s native SOL coin lose its value in the early hours of 9 Nov, leaving lending firm Solend to close out a sizable account that went underwater. SOL’s price depreciated by 65% in less than a week and is trading at $14 at press time.

At first, Solend attributed the failure to liquidate to network slack. Later investigation revealed that the problem was a lack of on-chain SOL liquidity, which the protocol has attempted to address by raising the interest rate on SOL to over 2,500% in an effort to attract deposits and motivate borrowers to repay their loans.

Panic Among Solana Investors Amidst FTX FUD

As investors hurried to sell their stakes, more than $800 million worth of SOL is expected to be unstaked early on Wednesday, data from solanacompass.com revealed.

SOL started to decline shortly after Binance CEO Changpeng Zhao declared that the largest cryptocurrency exchange in the world would sell $500 million in FTT, a token created by a rival FTX, as a result of recent “revelations,”

FTT holders rushed to exit their positions by selling the token aggressively out of concern that the Binance sale would cause its price to soar, leading to the exact freefall they had anticipated.

As Solana began its descent, leading on-chain experts speculated that FTX and Alameda were liquidating their SOL holdings to raise cash to support FTT.

The CoinDesk article stated that as of June 30, Alameda held around $1 billion in SOL. 10% of Solana’s market capitalization at the time was represented by it.

Solana DeFi Perpetrator Unmasked; Justifies His Actions

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The anonymous attacker of the Solana-based Defi protocol Mango Markets has reportedly revealed himself on Twitter, calling the exploit a “highly profitable trading strategy”.

The user who goes by the name of Avraham Eisenberg works as a digital art dealer in New York, shared a thread in which he acknowledged his role in the exploit.

In the series of tweets, Eisenberg claimed that his team’s actions were legal open-market moves even if the development team did not foresee all the after-effects.

To counter the resultant insolvency and allow users to access their funds, he and his team came to a settlement agreement with the insurance fund intending to make all users “whole as soon as possible” as well as “recapitalize” the Solana exchange.

He believes that this process, known as “auto deleveraging,” operates similarly on exchanges like Binance and Bitmex, removing a portion of the profits from profitable traders in order to ensure the security of all user assets.

Community Reacts To Solana DeFi Exploiter

As previously covered by TronWeekly, Eisenberg under anonymity posted a governance proposal asking the team of Mango Markets to utilize $70 million in treasury funds to settle some bad debt.

Eisenberg promised to refund $67 million if his conditions were met, according to the proposal. The remaining money, however, would be given to the hacker as a bug bounty by the community. This came to $47 million.

As the hacker, used millions of the stolen tokens to cast votes in favor, 98% of the electorate approved of the agreement. Eisenberg’s request that the Solana DEX, not file charges were also part of the plan.

By using an oracle to manipulate the price, Eisenberg managed to raise Mango’s collateral value. He then borrowed money from the Treasury and engaged in self-directed counter-trading with a different account.

Following the revelation, the crypto community appeared to be divided over the issue. Some users commented that this was an exploit rather than a hack and claimed that no law was broken.

Another said that the price was inflated beyond the fair market value and that “using the protocol as designed” is a red herring. “Price manipulation of token MNGO is illegal.”

Solana DeFi Exploiter Will Return “Bad Debt”… On One Condition

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Solana-powered decentralized finance [DeFi] lending protocol Mango Markets recently suffered a massive exploit to the tune of $100 million, where the attacker reportedly manipulated the oracle’s smart contract.

After the team offered a bounty in exchange for the return of the stolen assets, the hacker/s made a proposal on Mango Governance that they would send back those assets but under one condition and that was utilizing $70 million USDC from Mango’s treasury to repay the “bad debt” within the protocol.

The negotiation agreement also specified that once the tokens are returned, no criminal investigations would be opened.

By voting for this proposal, mango token holders agree to pay this bounty and pay off the bad debt with the treasury, and waive any potential claims against accounts with bad debt, and will not pursue any criminal investigations or freezing of funds once the tokens are sent back as described above.

For the uninitiated, this bad debt is the result of a rescue plan developed by Mango Markets and the competing Solana lending platform Solend for a major Solana whale with $207 million in debt dispersed across several lending platforms.

The whale had once borrowed 88% of the USDC that was available on Solend.

The rescue was put together because of concern that the whale’s bets would be liquidated if the SOL token fell another 20%, which would spread and have a negative influence on the Solana ecosystem.

Solana Exploiter May Have Rigged The Voting Proposal

At the time of writing this post, 32 million “yes” was garnered from the attacker’s proposal. Meanwhile, crypto Twitter is abuzz with the proposal’s absurdity amidst speculations that the voting process has been rigged by the exploiters to favor them.

That being said, online sleuths continue to dig deeper into the exploit. According to the blockchain auditing website OtterSec, the attacker addresses were funded 5.5 million via FTX. Not just Solana oracles, the attacker also appeared to exploit prices across all exchanges.

Mango Markets is a Solana-based platform for trading digital assets on the Sol blockchain for spot margin and trading perpetual futures. The protocol is governed by Mango DAO.

Following the latest incident, its native token MNGO token has shed its value by more than 40% in the last 24 hours.

The team behind the DeFi trading platform later updated that withdrawals are temporarily halted to prevent any further unnecessary losses. “To make sure depositors of the Mango protocol are made whole and to try and salvage some value in Mango DAO and protocol to rebuild from here”, it added.

Blockwater Technologies Fails To Make $3.4 Million DeFi Loan

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Blockwater Technologies, a South Korean blockchain investment company, missed payments on a loan from TrueFi, a decentralized lending platform, according to a statement released by TrueFi on Sunday.

The declaration claims that TrueFi gave Blockwater a “notice of default” on October 6 after it defaulted on a $3.4 million loan in stablecoin (BUSD).

Given the complexity surrounding the sudden insolvency, the TrueFi credit group conducted a thorough out-of-court workout with the Blockwater principals, along with a loan amendment to raise the borrowing rate and extend maturity. However, it was ultimately decided that a prospective court-supervised administrative court action would result in a better outcome for stakeholders.

Blockwater’s default highlights the effect of the bear market

The bankruptcy of the firm appears to be the most recent illustration of the insolvency issue in the crypto sector.

Numerous well-known cryptocurrency companies, including the hedge fund Three Arrows Capital (3AC), the cryptocurrency lender Celsius Network, the digital asset broker Voyager Digital, and the operator of crypto-mining data centers Compute North, have filed for bankruptcy. This is due to the sharp decline in the market this year, which was made worse by the collapse of the Terra blockchain.

After TrueFi and Blockwater modified the loan and prolonged the payment period in August, Blockwater went into default on its obligations. After the restructuring attempts, Blockwater was able to pay off $654,000 of its outstanding debt; nonetheless, payments were eventually late. There is still approximately $3 million in debt.

TrueFi has so far made unsecured loans totaling more than $1.7 billion, successfully recovered repayments totaling around $1.5 billion across 136 loans, and generated interest payments to lenders in the amount of $34.34 million.

As of this writing, TrueFi is enabling 10 loans totaling almost $140 million in active lending. Given the continued demand from borrowers and backing from significant lenders, the TrueFi credit group feels that the loan book is still in good condition and has been aggressively seeking loan renewals.

“With a traditional and rigorous approach to underwriting, TrueFi’s loan book remains healthy and active across both crypto-native and real-world lending.”

According to the statement, TrueFi and Blockwater are still in “active communication” and Blockwater’s bankruptcy has no impact on the protocol’s other loan pools.

DeFi Protocol Rolls Out “The Savings Vault”; Details

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DeFi platform Phuture released its new yield-farming product called “USV” [USDC Savings Vault] promising “guaranteed” premium returns, thanks to its tie-up with another leading decentralized protocol Notional.

According to information from Defi Llama, Notional has a total value locked [TVL] of $86.5 million.

Investors can earn interest on their holdings by using USV, an ERC-4626 compliant vault, which uses Circle’s USDC stablecoin as its underlying collateral, the blog stated.

In decentralized finance, a vault is a smart contract that automatically generates yield. The smart contract handles the searching for users instead of manually moving money between several projects in search of the highest yield.

“Think of the Savings Vault like a savings account at a traditional bank. Fiat currency is deposited on a savings bank account to earn interest. Similarly, the Savings Vault allows for crypto assets to be deposited into the vault, so users can passively earn returns. As with any on-chain, decentralised product from Phuture, users can withdraw their assets at any time.”

Using the Phuture app, investors can transfer USDC to USV and acquire vault shares in exchange for their investment. The yield that the vault forges determines how much the auto-compounding vault shares increase in value over time.

Thanks to the influx of significant cash in 2021, the cryptocurrency market saw a sharp rise in the total value locked across all DeFi systems. However, things appear to be changing in 2022.

DeFi TVL Fall Over 68% In 2022

According to data released on September 26 by cryptocurrency market data aggregation and analytics company CryptoRank, the TVL recorded in December 2021 stood at a staggering $303.8 billion but fell to $96.3 billion in September 2022, a loss of 68.3%.

The stats suggest that the TVL in DeFi has dropped from $106 billion, where it was a month ago, to the present $96.3 billion, a loss of 10% over the past 30 days. Notably, Ethereum [ETH] continues to dominate the DeFi market, accounting for $56.3 billion, or 58.46%, of the total DeFi TVL.

With $11.9 billion in TVL, Tron [TRX], BNB Chain [BNB], Avalanche [AVAX], $3.5 billion, and Solana [SOL] are all ahead of Ethereum in that order. In May 2022, Tron’s TVL in DeFi increased by 47% while Ethereum’s fell 35% during a bear market.

Cream Finance Hackers Swaps $1.75M ETH To BTC

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Hackers of the infamous Cream Finance heist reportedly exchanged roughly 1000 ETH which is worth $1.75 million for 80 RenBTC, blockchain security expert PechShield noted. RenBTC is an ERC-20 token that allows a decentralized representation of Bitcoin within Ethereum.

Twitter users reacted angrily with many questioning the platform’s competencies and its inability to prevent such attacks.

How many times Cream Finance be exploited until we admit people working on the project are imcompetent at least shouldn’t be working on financial products?

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Cream Finance Hackers Swaps $1.75M ETH To BTC 4

Flash loans have been known to be the most widely used by hackers to conduct exploits on decentralized finance [DeFi] systems. Such loans allow investors to borrow unsecured funds from lenders using smart contracts instead of third parties.

This year, another most outrageous flash loan attack was the Beanstalk heist. The stablecoin protocol was drained of $182 million. Next, in June, two more crypto platforms suffered similarly – Inverse Finance and Nirvana. But for Cream Finance, this wasn’t its first attack.

The Ethereum-based lending protocol was a target of multiple exploits but the most damaging of them was the $130 million attack in late 2021.

The incident caused a massive trust deficit for Cream Finance in the crypto circles which eventually made an impact on the token’s price leading to its near annihilation [ CREAM tokens plummeted by over 90%].

Cream Finance’s Third Hack

Prior to that, in Feb 2021, the DeFi protocol was attacked in a similar manner where bad actors stole $35 million. Cream Finance’s native token tanked by 30% in just one hour. 

Then in August, the platform suffered the second hack that resulted in the attacker looting more than 418 million in AMP, the Flexa Network’s native token, and approximately 1,300 Ethereum. 

Just recently, an Avalanche-based lending protocol Nereus Finance fell victim to a well-planned hack that saw hackers secure $371,000 worth of USD Coin [USDC] using a smart contract exploit.

After the incident, Nereus Finance released a detailed post-mortem of the incident explaining that the hacker was able to deploy a custom smart contract that utilized a $51 million flash loan from Aave to artificially inflate the Avalanche pool price for a single block.

The bad debt was reportedly paid off from the team’s treasury, as told by the Nereus in the report.

Avalanche flash loan attack leads to loss of $371k in USDC

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In the wee hours of Tuesday, a flash loan attack was carried out using the Avalanche network. A specific smart contract as well as a number of liquidity providers were the targets of the attack. According to blockchain cybersecurity company CertiK, the attacker made $370,000 in gains.

A flash loan attack is a misuse of a platform’s smart contract security in which an attacker typically borrows large sums of money without putting up any security. Then, they engage in arbitrage trading to profit.

In order to do this, they manipulate the price of a cryptocurrency asset on one market before selling it again almost immediately on another. Attackers normally follow the method precisely and promptly, repeating it several times before finishing.

According to CertiK, three possible protocols may have been harmed in the most recent Avalanche breach. The same applied to the DEX platform Trader Joe, the staking platform Nereus Finance, and the AMM Curve Finance.

Notably, CertiK’s on-chain security programme Skynet detected the attack, which took place on Tuesday at 7:26 p.m. UTC.

In recent years, a number of crypto heists have involved flash loans. For instance, the Ethereum-based system Beanstalk was compromised in April and approximately $180 million was stolen. The attacker(s) apparently obtained a flash loan using the lending marketplace Aave, allowing them to stockpile a sizable quantity of Stalk, Beanstalk’s native governance token. The attacker(s) were able to swiftly pass a fraudulent governance proposal that syphoned off all protocol funds into a personal Ethereum wallet thanks to the voting power provided by these Stalk tokens.

However, as shown below, the amount of money taken without using flash loans (in purple) increased in August, demonstrating that DeFi criminals do not always take the same path used by the Avalanche/Beanstalk hackers.

Screenshot 162
Source: The Block

Avalanche’s DeFi efficiency

Avalanche has not been doing well on the DeFi front. For instance, the total value of assets locked on its platform has been declining over the past six months and was only $1.7 billion at the time of publication, reflecting a 4.1% daily loss.

Furthermore, competing protocols like Solana have been able to post superior figures even on the revenue front. The Web3 analyst for Aurum Crypto recently used Twitter to highlight the aforementioned pattern. Solana had earned about $50,000 every day in fees over the previous three months. The figure for Avalanche, on the other hand, was in the $25–$30k range.

With being stated, it should be mentioned that Solana spends more on security. In other words, there is a large disparity between the cost and profitability of the two procedures. The expert tweeted, “Calling out the same,”

Here’s Why Cardano’s DeFi Ecosytem Has the Upper hand Among Its Rivals

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Cardano-focused community member has doubled down on the key advantages that the network’s decentralized finance [DeFi] protocols owns over its rivals.

In the tweet, the pseudonymous influencer known as “ADA whale” shared that after Ethereum, Cardano is the first such protocol to built an entire DeFi ecosystem without any influence from the venture capitalists or the VC’s.

“It has security, decentralisation, community and soon throughput to succeed & equivalents to Compound (Liqwid), AAVE (AADA) and Curve/Maker (Ardana) lined up + much more.” it tweeted to its nearly 113k followers.

In the second quarter of 2022, ADA’s total value locked [TVL] metrics has shoot up by thousands of percent. By mid-June, 2022, one of the largest proof-of-stake network had already on-boarded over 1,000 actively developed decentralized applications [dApps].

According to a number of reports, the projects associated with non-fungible tokens [dashboards, marketplaces, DeFis with NFTs] are in focus for the [ADA]ecosystem.

As for project building on it, Cardano has seen significant developments in the past few months. At present, 1,075 projects are active, while 93 projects have recently been launched on the network.

Cardano: One Project Per day In August

According to the latest monthly report for the month of August, new projects on the PoS blockchain has increased by 31, implying that one new project per day of the month.

With respect to NFT, or CNFT, the ecosystem has remained the most preferred choice. This is due to its cost effectiveness, speed of minting NFT on Cardano, coupled with the same perks that its larger competitors have.

Most importantly, one of its strongest component is the “Community & Social,” which is already doing its part to seek out as many people as possible.

Although, the DeFi component in the Cardano-built family of projects is only 2.3% of 1,076, but if one takes the broader concept of decentralized finance, with wallets, lending, oracles and stablecoins, the number is clearly higher.

On top of that, the much awaited release of Vasil hard fork in September, might take Cardano to a new level and directly affect the attractiveness of the blockchain for developers.



Developers Of A Polygon-Based DeFi Project Blur Finance Flee With $600K

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A Polygon-based Yield Aggregator Blur Finance’s developers allegedly disappeared with $600,000 worth of funds from its Polygon and BNB Chain contracts.

Shedding more light, Security firm PeckShield tweeted on August 10 that the rug-pulled protocol’s stolen amount was withdrawn within minutes and its social media channel had been deleted. Moreover, its native token BLR has lost nearly its entire value.

The link to the protocol’s Discord channel displayed an “invite invalid” message, and its website returned an invalid certificate.

According to online sleuths, Blur Finance launched on BNB Chain and had over 754 holders. On July 7, a contract was created for integration between Blur and Polygon, projecting annualized yields of some 4,000%. 

Last week, the price of the BLR token reached its all-time high at 6 cents. Following the rug pull, it plummeted 99% and at press time is exchanging hands at $.00064.

The move is a classic example of a scam executed by developers who first launch decentralized finance [DeFi] applications and utilize social media marketing tools to attract people before issuing a token and listing it on a decentralized exchange [DEX].

After investors have bought the tokens in the hopes of a positive return, the developers shut up shop and vanish.

Another Polygon-Based Web3 Gaming App Rug Pulled

A few days back, a newly launched decentralized gaming project on Polygon, Dragoma was too abandoned. PeckShield flagged an alleged rug pull of over $1 million by Dragoma developers. $420,000 USDT and 880,000 MATIC tokens were reportedly found missing from the polygon contract.

As reported by TronWeekly, on July 25, Teddy Doge developers made off with $4.5 million in a soft rug pull. In accordance with the report, 30 billion TEDDY tokens were swapped for BNB and BUSD and then cashed out through the Binance exchange.

In soft rug pull scams, the developers conduct legitimate work on a blockchain and then drain the liquidity pools from the project, essentially “pulling the rug” from the investors and causing a sharp fall in related tokens.

In both cases, the project developers would aggressively market their product and offer high return promises. Investors who fall for it suffer unexpected losses.