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What’s the reason behind Ethereum Layer 2 Arbitrum’s astonishing growth?

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Ethereum second-layer scaling solution, Arbitrum’s has managed to capture the decentralized finance [DeFi] market. The platform has witnessed rapid growth as market participants continue to deploy their capital in emerging yield farms. Developed by Offchain Labs, Arbitrum uses Optimistic Rollups to process transactions at an enhanced speed and is significantly cost-effective than Ethereum mainnet while simultaneously profiting from the security of the base chain.

If the latest stats are to be believed, the total value locked [USD] in the project skyrocketed to $2.23 billion. According to an analysis platform called L2beat, the TVL figures soared by an astonishing 2,411% over the past week alone. Ethereum locked in the protocol also has been climbing higher and stood at 669.7k ETH as of September 13.

Arbitrum

Ethereum layer 2’s Growth Trajectory

During the weekend, the yield farms for speculative tokens launched causing bridge volume to spike. The FOMO kicked in and the bridge volume spiked. The main reason behind the abrupt upswing was the launch of a yield farm called ArbiNYAN. Arbitrum’s growth coincided with the shrinking TVK values of “Ethereum Killers” such as Solana, Fantom, and Harmony.

According to Nick Chong, an investment analyst at ParaFi Capital, Ethereum’s transaction costs has been one of the biggest narratives this year. At the beginning of 2021, users observed other networks that run the Ethereum Virtual Machine [EVM] that provided low transaction fees and low latency but often ended up compromising on security with smaller node sets and centralized bridging infrastructure.

Then entered Rollups. These are scaling solution that acquires the security of the underlying network while at the same time enhancing transaction throughput and fees. Rollups aimed to address the never-ending debate of trade-offs between fees, security, and usability. Chong expressed his optimism surrounding the Arbitrum project and tweeted,

“Really excited to see the Arbitrum ecosystem develop. Also keeping a close eye on projects launching on Arbitrum first, then branching out to other networks. This may increasingly become a commonly seen playbook for applications w/ users that have sensitivity around tx fees.”

Cardano [ADA] starts on a negative despite gaining smart contract capabilities

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Cardano [ADA] had a sporadic rise in the 2021 summer. After decoupling from Bitcoin [BTC], ADA went on to post an astonishing rally that only a few alts could mimic. But the token’s price action is a classic example of “buy the rumor, sell the news.”

ADA’s strength over the past couple of weeks displayed immense potential, but as the highly-anticipated development of the Alonzo upgrade arrived, the crypto-asset flashed red. As a matter of fact, ADA was down by 6.38% over the past 24-hours which drove its price to $2.42.

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What is Cardano’s Alonzo upgrade?

Infrastructure-wise Cardano’s wait for smart contract capabilities is over. The arrival of Alonzo essentially means that the network is now ready to host smart contracts, thereby facilitating different teams and projects to begin creating and deploying their protocols directly on the public blockchain for the very first time.

The official blog post by IOHK announcing the upgrade stated,

“It’s only just the beginning. But this is still a moment for celebration. As a community, we have been on an incredible journey together. Rightly, we should allow ourselves to acknowledge the tremendous efforts made by so many to get here. This will also be a time for reflection on the challenges we’ve collectively overcome.”

According to IOHK, the Byron reboot in March 2020 set the stage for the Cardano network by implementing a robust and scalable code base on which to build. The following Shelley upgrade transformed the network from a federated model towards a decentralized one. This year’s Mary upgrade helped create a multi-asset network and introduced native tokens.

Cardano’s latest Alonzo upgrade was deployed with the help of hard fork combinator [HFC] technology, which combines two protocols into a single protocol. This isn’t the first time, that Cardano has leveraged this tool. In fact, HFC was used in previous upgrades as well.

The development arm of Cardano also revealed having the “backbone for a new decentralized application platform” by enabling Plutus scripts to be written and executed on-chain that would pave the way for numerous decentralized applications [DApp] and decentralized finance [DeFi] use cases.

It’s still early

Cardano has never been able to escape FUD and has drawn severe criticism from Ethereum developers. TWJ had earlier reported the backlash Cardano received over the Minswap drama. Pointing towards the inevitability of poor development teams behind decentralized platforms, poor coding practice, and the presence of bad actors, IOHK stated,

“Let us be clear. There will be bumps in the road. Early user experiences might not be perfect. Some early DApps will have issues. We’ll see some great development teams and some poor ones. This is a permissionless, decentralized blockchain, so this is inevitable.”

Here’s how Algorand Foundation plans to boost DeFi innovation with a $300M fund

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Algorand Foundation has announced the launch of a DeFi fund called ‘Viridis’ on September 10. The fund in question aims to support 150 million Algo to boost the decentralized finance ecosystem on Algorand, according to the official blog post.

To propel the growth of the fund, the foundation introduced the $5 Million Price Oracle SupaGrant and the $5 Million Bridge SupaGrant. The main objective behind the funds is to accommodate the growing demand for the Defi space and support the development of decentralized infrastructure.

Algorand’s SupaGrants program aims at skilled teams of developers and organizations in order to create security and superior solutions for the ecosystem. The program mainly focuses on teams with relevant experience in building advanced solutions such as automated market makers [AMMs], decentralized exchanges [DEX], or bridges. It also intends to utilize its expertise to design an oracle system. Primarily, the teams must have the capacity to be able to maintain the oracle long-term and efficiently respond to security and non-security concerns that may come up.

What is Algorand’s “Virdis” all about

“Viridis” reflects Algorand’s ambitious roadmap to create a green and carbon-free ecosystem and implement the same in its rapidly evolving DeFi domain. Along the same line, the blog post stated,

“And everybody that builds their DeFi applications on Algorand can do so in the knowledge that they are building on the most sustainable, carbon negative, high performance blockchain. Viridis will enable sustainable, green, wealth creation.”

The first $5 million SupaGrant will be used to create two-way bridges from Ethereum and other chains. Once ported to the Algorand blockchain, decentralized applications will require access to market data to handle a wide range of smart contract functions. The second $5 million SupaGrant is involved in seeking proposals for the purpose of integrating the oracle networks with associated price feeds. The remaining funds will be deployed on the further development of the application across this DeFi ecosystem.

Algorand isn’t the only blockchain to have come up with a DeFi fund. Harmony, another blockchain platform, announced a $300 million fund recently.

Besides, ALGO, Algorand’s native cryptocurrency, performed well in September. The token has risen by more than 77 percent in two days, from a low of $1.19 to a press time price of $2.11.

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Uniswap team discovers a minor issue that would’ve made the next 8 votes ineffective

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Uniswap is one of the most popular decentralized exchanges [DEX] for listing projects, trading, and investing in digital assets.

Just a month after the decentralized finance [DeFi] education-focused fund drama that fueled concerns over flaws in Uniswap’s governance model, the team behind the platform fixed a “minor issue.” Uniswap Founder Hayden Adams took Twitter to reveal discovering the issue that would have made the next 8 votes ineffective. His tweet read,

“Uniswap community members recently proposed upgrading Uniswap governance contracts to Bravo [also used by Compound gov]. Today, a Labs team member discovered a minor issue that would have made the next 8 votes ineffective. The issue: proposalCount initialized to 0, initialProposalCount to 8. Executing checks proposalId greater than initialProposalCount so next 8 proposals were unable to execute. I fixed it by submitting 8 “dummy” proposals that can never execute, bringing proposalCount to 8.”

Following the episode, Adams admitted that governance contract upgrades require particular caution and also went on to add that the 7 days voting period is likely not sufficient time for meticulous security reviews.

Uniswap Governance Drama 

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Uniswap continues to keep growing and attracting projects at a much faster rate than its rivals. But the platform faced a severe backlash from the traders and crypto enthusiasts after the DeFi education-focused fund abruptly sold off half of the assets allocated to it by Uniswap governance – opening a can of worms that questioned the DEX’s governance, transparency, and project accountability.

It all started when the DeFi Education Fund backed by the DEX revealed selling off 500,000UNI for some $10.2 million USDC on July 12. The move by the newly formed organization clearly did not sit well with the industry players as many questioned why would the DEF require such a massive amount of capital. The controversy induced concerns not just over the decentralized exchange’s governance model; but also transparent, accountability and the nature of decentralization. Additionally, many also speculated the intention behind presenting the proposal by Harvard Law’s student group.

Another DeFi project hit by major exploit of $4.5M

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The growth of decentralized finance, or DeFi, has set the stage for a fully decentralized financial ecosystem. But, given the innovative nature of space, DeFi continues to be a work in progress and is hence prone to a number of vulnerabilities.

In the recent development, decentralized finance project xToken came under yet another exploit after the malicious entities behind it identified a vulnerability in the smart contracts for its xSNX product. In the latest post-mortem report, the xToken team revealed the vulnerability in its xSNX contract which was exploited by the hackers that led to a loss of $4.5 million.

xToken decided to withdraw the xSNX product offering and noted that the current xSNX implementation is by far their “most complicated product,” and added that it has “complex dependencies” and “significant surface area for vulnerabilities.”

The DeFi X-ploiter Returns

This isn’t the first time that xToken suffered an exploit of this magnitude. As a matter of fact, nearly three months ago the DeFi platform was drained off of $24 million in the same token, to the identical attack technique. While unfortunate, some in the crypto industry speculated if effective security controls were put in place. Along with the same line Analyst, Rekt Capital noted,

“X-token rekt again, and it seems flash loans are still in fashion. ~$4.5 million stolen from their xSNX contract. Three months ago this team lost $24 million – in the same token, to the same attack technique. At the time, we wrote; XToken is a quality protocol. Now we’re not so sure.”

The analyst also admitted that the withdrawal of the offering was wise but questioned the DeFi project’s public admission that the xSNX was too complicated as the team revealed the vulnerabilities about the product implementation.

“The decision to withdraw their xSNX offering may be wise, however, by publicly admitting that it was too complicated for them, aren’t they just worsening the damage to their reputation?”

Previously, crypto intelligence firm CipherTrace had disclosed that DeFi hacks totaled $361 million by July 2021, which accounted for three-quarters of the total hack volume of the entire cryptocurrency space for this year. Despite technological advancements, many industry experts believe that DeFi-related crime and security breaches will continue to advance decentralized finance moving forward.

Several notable individuals in the industry have previously opined the lack of KYC as a driver behind the increase in hacks that unintentionally ends up providing bad actors access to financial services for illicit activity.”

Biggest DeFi heist turns out be to be white hat hack

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The community just witnessed the largest ever theft from a DeFi protocol. The unidentified attacker siphoned off with a whopping $612 million worth of cryptocurrency from cross-chain DeFi protocol Poly Network. However, it didn’t take long enough for them to return the stolen funds.

After pulling off the biggest heist in the history of DeFi, the hackers returned more than a third of $613 million in digital coins they stole, said Poly Network. The hacker has claimed they are keeping the rest of the funds safe while they negotiate with the team behind the protocol.

It this a white hat hack to teach DeFi protocol about its security flaws?

The blockchain forensics company Chainalysis revealed that a vulnerability in the digital contracts Poly Network, which uses to move assets between different blockchains, was exploited. In an email, a person claiming to be behind the entire act said that they did it “for fun” and wanted to “expose the vulnerability” before others could exploit it.

If that is true, then the lesson is quite an expensive one. The purported hacker revealed that they were never really “interested in money” and returning the tokens was always part of the plan. The entities behind it has not yet been identified nor the message has been authenticated.

Chainalysis explained,

“The attacker communicated with Poly Network via Ether transaction note during this process, voicing their intention to start by returning altcoins and asking if their stolen USDT could be unlocked in return for returning stolen USDC. It’s possible this is a ruse to make off with the unstolen USDT, but so far nothing suggests the attacker won’t continue to return the stolen funds.”

Interestingly, one such cryptocurrency security firm called Slowmist has claimed to have identified hacker information such as mailbox, IP address, and device fingerprints, meaning they are close to unmasking them. However, Chainalysis also revealed that there is no information to confirm this.

Nothing in this DeFi space is bizarre anymore. The exploiter even went ahead to conduct an AMA session.

Uniswap’s users can still bypass censorship of the main UI, trade restricted assets

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The largest decentralized exchange [DEX] Uniswap’s software development studio had earlier revealed restricting access to some tokens, including synthetic stocks and derivatives from the platform interface.

Over the past couple of weeks, several cryptocurrency firms such as Binance have removed their tokenized stock products. But Uniswap’s move is different than most centralized exchanges since it is only restricting access through its own interface.

Dodging Uniswap’s censorship

Uniswap Labs did not clearly mention the actual reason behind the restriction but in the official blog post, the studio had said that the tokens in question represented a very small portion of the overall volume on the Uniswap Protocol. However, it is important to note that there are several ways in which censorship can be bypassed. In fact, the users can still access these tokens through other portals on the DeFi platform that supports them. Parafi Capital’s Nick Chong also revealed that there are “a ton of alternative interfaces.”

Chong observed that the restricted assets accounted for a total of $5.9 million worth of volume over the past seven days which is around 0.076% of the decentralized exchange’s 7-day volume. He called it a “rounding error.” Chong also emphasized the need for bookmarking decentralized interfaces and mirror applications and asserted,

“The world needs decentralized interfaces. Wouldn’t it have been bad if all non-power user DeFi traders woke up one day and the Uniswap Labs interface was gone w/ no alternatives? This is a wake-up call! Bookmark the decentralized interfaces.”

A bad precedent

The latest move has opened a can of worms about the never-ending decentralization and the impact of regulatory oversight on decentralized finance [DeFi]. Interestingly, the development comes days after the United States regulatory watchdog announced that that they would increasingly monitor these types of products. Needless to say, the platform has been at the receiving end of severe backlash from the community.

Joey Krug, the co-CIO of Pantera Capital and co-founder of Augur said that even though he loves Uniswap, he said that the decision sets a bad example. Krug reiterated General Douglas MacArthur’s famous quote and claimed that this would not be the first case of defi censorship.

“History teaches with unmistakable emphasis that appeasement begets new and bloodier wars. It points to no single instance where this end has justified that means, where appeasement has led to more than a sham peace.”

Tron-based JustSwap attracts more users than Polygon’s DEX QuickSwap

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Tron-based automated liquidity protocol, JustSwap has clocked in more unique active users in its platform than the Polygon-based decentralized exchange, QuickSwap. For the longest time, QuickSwap has held the second position in DappRadar exchange rankings in terms of users.

However, according to the latest chart by the digital analytics firm, JustSwap has managed to “swoop in and replace it.” Over the past 30 days, DappRadar revealed that the Tron-based decentralized trading protocol has drawn almost 200,000 unique users. QuickSwap, on the other hand, saw a little more than a 1% increase in the number of users interacting with its smart contracts.

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Meanwhile, the number of transactions on the Tron-powered platform surged considerably to more than 550,000. This trend was indicative that on average, users conducted approximately 2.8 transactions. It was quite a feat for JustSwap since Polygon has rapidly amassed a lot of users under its hood as it shot to fame this year.

In the past month, JustSwap facilitated more than $300 million through its smart contracts. However, even as the users and the number of transactions rose, the two indicators had little effect on the volume which saw a drop of more than 50%. Besides, Tron-based platforms are becoming rapidly popular. As a matter of fact, three out of the top seven DEXs for the period are Tron-based when ranked by unique active wallets.

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Tron, Ethereum, Polygon, Solana, the list goes on

As Proof-of-Stake [PoS] consensus gained traction, blockchains have also been increasing along with it.

The market for competing blockchains has never been more crowded and complex before. Numerous platforms are now offering variations on the same products, while others have come up with unique offerings. The shift from the dominant Ethereum has been transparent because of its perennial congestion issues and high gas fees. Apart from Tron, there are several other blockchains that have quickly emerged as viable alternatives for the Ethereum network. Some of which are Cardano, Tezos, EOS, Solana, Algorand, NEO, and Avalanche, among others.

DeFi lender MakerDAO Finally Transitions To Complete Decentralization

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Prominent Ethereum-based DeFi lending pioneer and stablecoin protocol MakerDAO’s plan to achieve full decentralization is in its last leg. The platform has announced that it is at the last stage of dissolving its foundation on the path to complete decentralized governance.

While declaring that the MakerDAO is now completely decentralized, Rune Christensen, the CEO of Maker Foundation, stated in a blog post that the Foundation will formally dissolve within the next few months and that the DAO is now fully self-sufficient.

“With several Core Units approved by governance to efficiently organize all areas of work within the DAO and the global community now responsible for every aspect of the Maker Protocol, the DAO is now fully self-sufficient and the Maker Foundation has fulfilled its bootstrapping responsibilities.”

The complete decentralization of Maker implies that the future development and operation of the Protocol and the DAO will be in the hands of the community engaged.

Quick take on MakerDAO’s rise to prominence in DeFi realm

Christensen had introduced the first iteration of Dai, then called the eDollar, on Reddit back in March 2015. Two years later, the MakerDAO developers launched and started to use the first version of Dai, dubbed ‘ProtoSai,’ which marked the first limited release of the Dai Stablecoin System and was a forerunner to the public launch of Single-Collateral Dai [SAI] several months later. In December 2017, the Sai white paper was published followed by the launch of Single-Collateral Dai.

In 2018, the DeFi foundation published its proposal that described the core principles for sustainable decentralized governance. The very next year, Multi-Collateral Dai was launched. In 2020, the MKR token contract was transferred to Maker governance, after which the token holders were presented with full control of the MKR contract. Maker Improvement Proposals [MIPs] framework was approved two months later which included MIP0 and two MIP sets.

Since then, the DeFi protocol has indeed come a long way. Recounting the milestones, the MakerDAO’s exec said,

“The global Maker community is now responsible for every aspect of the Maker Protocol and the DAO. I’m so proud of what we’ve done and what it signifies.”

Bitrue announces support Cardano’s native tokens via OCCADA listing

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Cryptocurrency exchange, Bitrue is all set to become the first exchange to support native assets on the Cardano blockchain. Following the latest move, both individuals and companies will be able to mint their own tokens on the network directly with the help of native assets.

The resulting tokens can be sent on the Cardano blockchain just like ADA and can also be used as a regular coin. According to the official press release, the first asset to be supported on Bitrue will be Occam.fi’s OCC utility token starting before July end. Occam.fi is basically a decentralized finance [DeFi] launchpad for other ventures that aim to utilize ADA liquidity that is currently untapped.

In addition to that, the users will also be able to deposit and withdraw both the ERC20 and Cardano forms of OCC to the cryptocurrency exchange as per their choice and trade them in a unified market for OCC. That way, Bitrue will serve as the location for users across the world to trade for and hold a Cardano native asset.

Cardano-Bitrue’s Combined Efforts

Adam O’Neill, who happens to be Bitrue’s chief marketing officer, called native assets, a “fantastic leap forward” for the Cardano blockchain and went on add,

“It provides teams who wish to leverage blockchain technology with a powerful and easy route to bring their token into existence. The intrinsic capabilities of the Cardano chain will lend a lot of power to any project building on it, such as massively increased scalability compared to other leading chains.”

The native tokens in question are said to share many of the same base functionalities of ADA including the same security guarantees, the joint process to asset creation and management, and the reduction of manual, custom code required to produce different assets such as utility tokens, non-fungible [NFTs], security tokens, etc. It is important to note that, despite the introduction of this new breed of native tokens, ADA will remain as the “principal currency” and which will be used as the only asset for the purpose of fees, rewards, as well as deposits.

The latest development comes just a month after Bitrue announced delegating one million ADA tokens to a public stakepool called ‘1LOVE’ in a bid to contribute to the blockchain project’s development and further strengthen decentralization.