Tag: Decentralized Finance

Synthetix Secures $20M Investment from DWF Labs

by Blockchain News

Synthetix is a tokenized asset issuance platform that allows users to create Synths by locking tokens into a smart contract and minting derivatives that provide exposure to a range of different assets. The platform’s V2 has surpassed $400 million in perpetual swap daily trade volume, and the collaboration with liquidity provider Curve Finance saw a surge in daily fees, increasing the SNX token value by over 100%.

Synthetix has announced a $20 million investment through a new partnership with Web3 investment and quantitative trading firm DWF Labs. DWF Labs has acquired $15 million worth of Synthetix’ native token SNX paid for with USD Coin (USDC) in March 2023, and has committed to purchasing another $5 million worth of SNX tokens once the integration of Synthetix’ services has been completed.

As part of the deal, DWF Labs will be responsible for increasing SNX token liquidity and market making across centralized and decentralized exchanges. Synthetix’ perpetual futures will also be integrated into DWF Labs’ trading business. Holding SNX tokens allows users to create Synths by locking tokens into a smart contract and minting derivatives that provide exposure to a range of different assets. Users can trade Synths using Synthetix’ pooled collateral model, with trades between Synths generating fees for SNX collateral providers.

The creation of on-chain synthetic assets tracks the value of real-world assets, which includes synthetic fiat currencies or commodities like Gold and financial instruments like equity indices. DWF Labs managing partner Andrei Grachev believes the partnership will provide streamlined trading mechanisms in the Decentralized Finance (DeFi) space, allowing for innovative hedging strategies and unique use cases.

Synthetix’ V2 platform has surpassed $400 million in perpetual swap daily trade volume according to data from Dune Analytics. The partnership with liquidity provider Curve Finance saw a surge in daily fees in June 2022, increasing the SNX token value by over 100% during the depths of the prolonged cryptocurrency bear market.

Overall, the investment from DWF Labs is expected to increase Synthetix’ market reach and liquidity, while also providing streamlined trading mechanisms for users in the DeFi space.

Source

Tagged : / / / / /

Aave Freezes Stablecoin Trading Amid Price Volatility

by Blockchain News

Aave, a popular lending protocol in the decentralized finance (DeFi) space, has taken action to mitigate the impact of recent price volatility in the stablecoin market. On March 11, the price of USD Coin (USDC), a commonly used stablecoin, depegged, leading to concerns over the stability of other stablecoins. In response, Aave has temporarily frozen trading of stablecoins and set the loan-to-value (LTV) ratio to zero.

The decision to freeze trading was based on an analysis by Gauntlet Network, a DeFi risk management firm, which recommended a temporary pause of all v2 and v3 markets. Aave’s governance forum noted that setting the LTV ratio to zero would “discount the borrowing power of the asset” without affecting the health factor (HF) of any user position. The HF is a measure of the risk associated with a user’s position on the Aave platform.

The LTV ratio is an important metric for determining the amount of credit that can be secured using crypto as collateral. When a user borrows funds on the Aave platform, they must put up collateral in the form of crypto assets. The LTV ratio is calculated by dividing the amount of credit borrowed by the value of the collateral. A higher LTV ratio means that a user can borrow more funds with less collateral, but it also increases the risk of liquidation if the value of the collateral decreases.

By setting the LTV ratio to zero, Aave has effectively suspended all borrowing against stablecoins. This move is designed to protect users from the risk of liquidation during a period of heightened volatility. However, it also means that users who have already borrowed funds using stablecoins as collateral will need to find alternative sources of collateral or risk having their positions liquidated.

The decision to freeze trading of stablecoins on Aave also highlights the growing importance of stablecoins in the DeFi ecosystem. Stablecoins are designed to maintain a stable value relative to a particular currency or asset, such as the US dollar or gold. They are commonly used as a form of collateral on DeFi platforms, allowing users to borrow and lend funds without being exposed to the volatility of other cryptocurrencies.

However, as the recent depegging of USDC demonstrates, stablecoins are not immune to price volatility. This can create risks for users who rely on stablecoins as collateral, as a sudden drop in value can trigger liquidations and result in the loss of funds. Aave’s decision to freeze trading of stablecoins and set the LTV ratio to zero highlights the need for greater risk management measures in the DeFi ecosystem.

In conclusion, Aave’s decision to freeze stablecoin trading and set the LTV ratio to zero is a response to the recent price volatility in the stablecoin market. The move is designed to protect users from the risk of liquidation during a period of heightened volatility but also means that users who have already borrowed funds using stablecoins as collateral will need to find alternative sources of collateral. This decision underscores the importance of stablecoins in the DeFi ecosystem and the need for effective risk management measures to protect users. Stablecoins play a crucial role in DeFi by providing a stable asset that can be used as collateral for loans and other financial activities. However, as Aave’s decision demonstrates, stablecoins are not immune to price volatility and can create risks for users if their value suddenly drops.

To address these risks, DeFi platforms like Aave need to implement effective risk management measures that can help protect users from the impact of market volatility. This includes setting appropriate LTV ratios that balance the need for collateral with the risk of liquidation, as well as monitoring the market for signs of instability.

In addition to risk management measures, there is also a need for greater transparency and accountability in the DeFi ecosystem. Users need to be able to trust that the platforms they are using are safe and secure, and that their funds are protected from theft or other forms of loss. This requires clear and transparent reporting of platform performance, as well as robust security measures to prevent hacks and other forms of cyber-attacks.

Overall, the recent decision by Aave to freeze stablecoin trading and set the LTV ratio to zero is a reminder of the risks associated with stablecoins in the DeFi ecosystem. While stablecoins can provide a stable asset for collateral, they are not immune to market volatility and can create risks for users. To address these risks, DeFi platforms must implement effective risk management measures and ensure transparency and accountability in their operations. By doing so, they can help build trust and confidence in the DeFi ecosystem and promote its continued growth and development.

Source

Tagged : / / / / /

Crypto Industry Continues to Experience Hacks and Exploits: Can Increased Security Measures Help?

by Blockchain News

The crypto industry has been plagued with hacks, fraud, scams, and rug pulls in the past year, with losses totaling approximately $4 billion in 2022 alone. The largest crypto hack of 2022 was the Axie Infinity’s Ronin blockchain hack, which saw hackers make off with about $625 million worth of Ethereum and USDC. Despite the prevalence of hacks and exploits, some projects have been able to track down attackers and even recover some stolen funds with the help of on-chain sleuths.

Recent news of the successful retrieval of $140 million worth of tokens involved in the Wormhole cross-chain bridge hack is a positive development for the crypto industry. The coordinated effort between Jump Crypto and Oasis, which developed multi-signature wallet software, is a testament to the importance of collaboration and increased security measures. However, it is clear that more needs to be done to prevent such attacks in the future.

One way to increase security measures in the crypto industry is through the implementation of decentralized finance (DeFi) protocols. DeFi protocols offer an alternative to traditional financial systems by using blockchain technology to enable peer-to-peer transactions, without the need for intermediaries such as banks. This creates a more secure and transparent system that is less susceptible to hacks and exploits.

Another potential solution is to increase the use of multi-signature wallets, which require multiple parties to sign off on transactions before they are approved. This would add an additional layer of security and make it more difficult for attackers to gain access to funds.

In conclusion, while the successful retrieval of funds from the Wormhole cross-chain bridge hack is a positive development for the crypto industry, it is clear that increased security measures are needed to prevent future attacks. The implementation of DeFi protocols and multi-signature wallets are just two of the ways in which the industry can become more secure and protect the investments of its users.

Source

Tagged : / / /

Solana price ‘bear flag’ paints $50 target as Wormhole hack exposes security hole

by Cointelegraph

Solana (SOL) became one of the worst performers among the top cryptocurrencies on Feb. 3 as traders assessed its links with the second-biggest hack to date.

$325M worth of wETH gone

SOL price dropped by 5.50% to below $96.50 as Wormhole, a bridge between Solana and Ethereum blockchains, reportedly lost $325 million worth of Wrapped Ethereum (wETH) due to a technical vulnerability.

Prior to the hack on Wednesday, SOL was trading as high as $112.

In detail, hackers tricked a series of Solana’s smart contracts into signing illicit transactions digitally posing as “guardians,” reported blockchain researcher Kelvin Fichter Wednesday night after the hack. He wrote:

“The attacker made it look like the guardians had signed off on a 120k deposit into Wormhole on Solana, even though they hadn’t. All the attacker needed to do now was to make their “play” money real by withdrawing it back to Ethereum.”

Wormhole said that it would add Ethereum’s native token Ether (ETH) “over the next hours” to back wETH on the Solana network on a 1:1 basis. However, the project did not clarify the source of the funds that would be used to buy ETH tokens.

Bear flag triggered

The selloff in the Solana market across the last 24 hours came closer to triggering a bearish continuation setup that may send the SOL price down by another 50%.

Dubbed “bear flag,” the pattern emerges when the price consolidates sideways/higher after a strong downside move, called “flagpole.” In a perfect world, the price eventually breaks below the consolidation range and falls by as much as the flagpole’s length.

So far, SOL/USD has been forming the same bear flag pattern, as shown in the chart below.

SOL/USD daily price chart featuring bear flag setup. Source: TradingView

The downside target put forth by Solana’s bear flag sits near $50, almost halfway down where the SOL price has been trading on Thursday.

Related: Report crowns Solana for using least energy per transaction, but there’s a catch

Last year, Solana sprinted into the top-ten cryptocurrencies by market cap with SOL rising by more than 11,000% as investors bet on the growth of decentralized finance (DeFi) and nonfungible token (NFT) sectors.

However, entering 2022, the SOL price has fallen sharply, wiping almost half Solana’s market capitalization amid a broader crypto market decline — that also battered Bitcoin (BTC), Ether, and other top-ranking digital assets.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.