Hot DeFi becomes a thrilling “game”
Since AMM-type DEX applications such as Uniswap have triggered the market, many DeFi concept projects such as Oracle, liquidity mining, Yield Farming, etc. have alternately taken over the bullish market, gradually pushing the market sentiment to a new high.
As of 30 August 2020, the total value lock (TVL) of the entire DeFi world (the total value of ETH and various ERC-20 tokens) has reached $9.38 billion, within a short distance to $10 billion, which may also be the first time in human history that nearly $10 billion of assets are directly hosted on a stack of nested protocol codes.
Among the expanding DeFi market volume, the current top three locked-up assets are:
The TVL of Aave worth $1.6 billion;
The TVL of Maker worth $1.4 billion;
The TVL of Curve worth $1.3 billion;
The fragmentation of the market has also been accelerated by DeFi’s explosive growth. In addition to Maker, Aave, Curve and Yearn are almost all upstarts, and the variety of new design and rules for these projects is dizzying.
DEX(Decentralized exchange) also began to gradually exceed the second tier exchanges and even challenge the first-tier trading platforms. On August 30, Uniswap reached a new milestone, outpacing Coinbase for the first time, with 24-hour trading volume exceeding $426 million, compared with $348 million for Coinbase Pro.
But also concern has come under the prosperity. There are a lot of landmines waiting for explosion, especially for multilayer nested DeFi agreement — combined DeFi financial instruments are to become the norm and are driven by automated algorithms. Although value can flow more rapidly throughout the blockchain network, it also means that any single point of risk can trigger the “butterfly effect”.
Endless chaos is the paradise of hackers
Especially when the volume has reached the level of ten billion, any small bugs under the giants will cause incalculable consequences, and even become a universal ATM for hackers.
In the first half of this year, hackers made hundreds of thousands of dollars via “DeFi Lego” in 15 seconds (“ The bZx incident “). Hacker using the bugs of bZx’s smart contract, make full use of “DeFi lego” in the time of an Ethererum block (less than 15 seconds) — call contracts by each other between five DeFi products (dydx, Compound, bZx Uniswap kyber) on the premise of not using hacker’s own funds, finally successfully make arbitrage of hundreds of thousands of dollars.
More recently, on August 13th, the YAM bug incident cause a rare rollercoaster of prices and community sentiment within 24 hours, resulting in the permanent locking of 750,000 YCRVs in its governance contract.
At the same time, among all the contract risk types, if the inadvertent contract bugs are the inevitable “probabilistic natural disaster”, then the malicious design fraud is the completely inevitable “man-made disaster”.In particular, if there is no audit of bylaws, users will send funds to “hackers” if they transfer assets without investigation.
A recent example of a typical liquidity mining scam was uncovered. Users are granted to the staking contract on the first authorization by the project, but it further required the user to grant them transferFrom authorization on the second authorization.
“If user doesn’t check the contract, they will probably authorize it without thinking. In this case, it’s useless that you withdraw asset from the contract, you need to manually cancel the authorization. And the funds of many users will just disappear. “including liquidity mining project chick the articles mentioned in the beginning. Next it’s found that the team transfer the first fund by the Tornado cash anonymous token.
In the current “mining” climate, there will be endless schemes. DeFi, seemingly on a tear, is more like a game of putting tens of billions of dollars in the open air.
As a bundle of nested protocol codes hosting nearly $10 billion in assets, DeFi is well positioned to take on the potential for change step by step and, in the eyes of most “blockchains”, it’s becoming a “place of hope” with infinite possibilities.
But it needs to be developed more steadily, and the “land of hope” may just be an inch near to the “root of all evil”.
About ZB Group
ZB Group was founded in 2012 with the goal of providing leadership to the blockchain development space and today manages a network that includes digital assets exchanges, wallets, capital ventures, research institutes, and media. The Group’s flagship platform is ZB.com, the industry leading digital asset exchange. The platform launched in early 2013 and boasts one of the world’s largest trading communities.
ZB Group also includes ZBG the innovative crypto trading platform, and BW.com, the world’s first mining-pool based exchange. Other holdings include wallet leader BitBank, as well as exchange brands ZBM, ZBX and Korea’s Bithi.
Industry intelligence and standards are headed by the recently launched ZB Nexus who embody the core values of ZB Group and open-source their reports and analysis for the public.
Learn more about ZB Exchange by visiting www.zb.com.
