BitKeep Compensates Users After $8M Hack

On December 26, 2022, BitKeep, a multichain wallet, suffered an attack that resulted in an estimated $8 million loss of funds from users who downloaded the 7.2.9. APK update for the wallet. The update had been maliciously swapped by hackers, resulting in the theft of users’ cryptocurrency holdings.

In response to the hack, BitKeep announced on March 29 that it had fully compensated all 11,090 users affected by the incident. The compensation was made possible through the company’s own funds and was an important step in restoring trust with its user base.

Additionally, BitKeep announced that it will rebrand to Bitget Wallet following a $30 million investment from the cryptocurrency derivatives exchange Bitget. The investment valued BitKeep at $300 million and will provide the wallet with access to Bitget’s $300 million User Protection Fund, which will help mitigate the risk of future security threats.

The compensation of affected users is a significant move by BitKeep to show its commitment to security and to demonstrate that it takes the safety of its users’ assets seriously. With the rebrand to Bitget Wallet and access to the User Protection Fund, the company is signaling that it is taking additional steps to enhance the security of its platform and to protect its users’ assets.

The decision to rebrand to Bitget Wallet also represents a strategic move by the company to align itself more closely with Bitget, a well-established player in the cryptocurrency derivatives exchange market. By partnering with Bitget, BitKeep will be able to tap into the expertise and resources of a company with a proven track record of success in the industry.

Overall, the compensation of affected users and the rebrand to Bitget Wallet represent important steps for BitKeep as it seeks to enhance its security and position itself for future growth. With access to the Bitget User Protection Fund, the company is well-positioned to protect its users’ assets from future security threats and to continue building a reputation as a trusted and reliable provider of cryptocurrency wallet services.


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Algorithmic asset experiments continue to entice traders & developers

As the team behind Morph.Finance can attest, developing an algorithmic stablecoin project can be every bit as frustrating and thrilling as investing in one. 

While algorithmic assets have retreated from mid-December marketcap highs, the space has nonetheless continued to attract intrepid investors and developers aiming to position themselves at the forefront of a new financial vertical — though it remains an open question if such projects will ever achieve stability.

Largely formed in the mold of defunct 2018 project Basis, algorithmic assets are designed to automatically adjust the total circulating supply of a token based on preset conditions, such as time or price. While they’re ostensibly intended to hew to a peg, such as the US dollar, containing and mitigating volatility has proven to be a notoriously difficult problem to solve.

So far these assets have remained somewhat on the fringe of decentralized finance (DeFi), with the top three projects — Empty Set Dollar, Frax, and Dynamic Set Dollar — accounting for just half a billion in marketcap between them, per Coingecko. Yet traders keep lining up to take spins at the rebase casino, and there’s ongoing development into new products like BadgerDAO’s forthcoming DIGG — a synthetic asset meant to track the price of Bitcoin. It remains new, exciting, and largely unexplored territory.

A more stable stablecoin

In an interview with Cointelegraph, the anonymous developers of Morph.Finance — formerly Dynamic.Supply — recounted their story trying to build a sustainable project in the space, a story with just as many ups and downs as an algo stablecoin chart.

“Dynamic.Supply was a simple Basis fork with modified variables, which launched in early January,” said the team. “We tried to limit whale/bot accumulation by capping the maximum number of tokens per TX during the first hour of launch, but this was unsuccessful.”

The team explained that deep-pocketed ‘whale’ traders hoovered the tokens shortly after launch, and proceeded game the rebase parameters in their favor.

“There was no lockup on the boardroom initially, which opened us up to yield sniping, where users would buy and deposit large amounts of DSTR right before the end of an epoch, collect the rewards, then market dump everything before repeating a few hours later.”

The manipulation discouraged early community members and even some of the developers. Others, however, remained undaunted.

New features, new problems

As is often the case in startup stories, the obstacles led to ingenuity. In the case of Morph, the ingenuity came in the form of a Zapper contract allowing algorithmic stablecoin liquidity providers to quickly switch between other project pools to theirs. 

In the short term it bolstered liquidity, but in the long term it might also allow Morph to “introduce a market-wide LP zapper system that benefits all farms” — an innovation that could buoy the whole space.

But even the new on-ramps to the weren’t enough to stabilize the peg.

“Liquidity significantly improved, however our tokenomics were working against us,” the team said. “Emission of DST and DSTR were both far too fast, leaving us with insufficient time to get new arbitrage mechanics rolled out.”

In order to combat their overaggressive token emissions, the team deployed new contracts, rebranded, and asked the community to transfer their tokens — a process that led to significant griping about gas fees in social channels, as well as no small amount of anxiety that the team might be planning an elaborate rugpull.

Twitter trader @CryptoSpider1 was among those who held his stake through the migration to the new contracts, and said in a statement to Cointelegraph that “rugpull” risks are a part of being on the emerging frontier of the space.

“High risk = high reward, and the dev has shown he/she has no interest in rugpulling but creating something interesting that challenges the current model,” he said.

Next steps

As of 8 pm EST today, just a few weeks after launching as “Dynamic.Supply,” the project has reopened liquidity pools, completing Morph’s “metamorphosis” — converting DST and DSTR tokens to Morph Coin (MORC) and Morph Tracker (MORT), along with the new name, website, and emission rate. 

The Zapper feature — the first of what Morph hopes will be a series of contributions to the space — has also been carried over from the old brand.

A series of shuffles, tweaks, and innovations, all from a handful of devs and intended to push the algorithmic asset space forward.

It’s an open question as to if Morph’s changes will bring their asset stability, just as a similar concerns swirl around most, if not all algorithmic asset projects. But when asked about the future of Morph and projects like it, the Morph team already had further innovations on the mind.

“Utility! Without it, Morph, and all similar projects will eventually fizzle out. That’s not what we want, we’re aiming to build a sustainable ecosystem that we hope will bring real value to our users.”