Welcome to Finance Redefined, a weekly newsletter with essential information on decentralized finance (DeFi), put together to bring you the most significant developments from the last week.
Decentralized applications, or DApps, finally showed a glimpse of recovery in August, as the daily average number of active unique wallets increased by 3.7% compared to May.
With just under a week to go until the Fusion or Merge, the big Ethereum update, SEBA Bank has opened Ethereum staking services for institutions. Layer 2 scalability solutions, on the other hand, are expected to see a significant reduction in their carbon emissions post-Fusion.
This past week, two DeFi protocols fell victim to coordinated flash lending attacks. On Wednesday, Avalanche-based lending protocol Nereus Finance fell victim to a cunning hack that saw a user obtain $371,000 worth of USD Coin (USDC) via a smart contract. The next day, Thursday, New Free DAO, a project focused on non-fungible tokens (NFTs), lost almost $1.25 million in another similar flash loan attack.
The top 100 DeFi tokens by market cap finally saw a week of gains after nearly two weeks of dominant bearish price action. Most of the tokens posted double-digit gains, with Luna Classic (LUNC) breaking into the top-30 with gains of more than 100% in the last seven days.
Report: DApp Activity Jumps 3.7% in August for the First Time Since May
DApps showed a slight recovery for the first time since May, with daily average active unique wallets (UAW) rising 3.7% on a month-over-month basis.according to a report from DappRadar.
The increase was partially driven by the Flow protocol, which saw a 577% increase in UAWs due to Instagram’s support of its NFTs and the Solitaire Blitz game. On the other hand, Solana’s UAW was down 53% in August from the previous month, while transactions fell 68%, according to the results.
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SEBA Bank will provide Ethereum staking services to institutions
As the Ethereum network moves from proof-of-work (PoW) consensus to proof-of-stake (PoS), a digital asset platform has started a service for institutions to get started in Ether (ETH) staking.
In an announcement sent to Cointelegraph, Swiss digital asset banking platform SEBA Bank said it has launched an Ethereum staking service for institutions that want to earn returns from staking on the Ethereum network. According to the company, the move is a response to growing institutional demand for DeFi services.
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ETH Loans by “degens” for Hard Fork Tokens Cause Headaches for DeFi Platforms
The growing number of speculators borrowing Ether to maximize their potential to earn forked Ether proof-of-work (ETHPoW) tokens has been causing headaches for DeFi protocols.
The issue has been gaining steam over the past month as a significant number of Ether miners are expected to continue working on a forked PoW chain or possibly even multiple chains after the long-awaited merge.
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Avalanche flash loan exploit causes $371,000 worth of USDC to be stolen
The loan protocol based on Avalanche, Nereus Finance, has been the victim of a clever hack in which a user has made with USD 371,000 of USD Coin through a smart contract.
Blockchain cybersecurity firm CertiK was one of the first to detect the exploit on Tuesday, stating that the attack affected liquidity pools on Nereus related to decentralized exchange (DEX) Trader Joe and automated market maker Curve Finance.
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DeFi Protocol Token NFD Crashes 99% After Flash Loan Attack
New Free DAO, a DeFi protocol, faced a series of flash lending attacks on Thursday, resulting in a reported loss of $1.25 million. The price of the native token has fallen by 99% after the attack.
Unlike regular loans, several DeFi protocols offer flash loans that allow users to borrow large amounts of assets without up-front collateral deposits. The only condition is that the loan must be repaid in a single transaction within a certain period. However, this feature is often exploited by malicious adversaries to gather large amounts of assets and launch expensive exploits targeting DeFi protocols.
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DeFi Market Landscape
Analytical data reveals that DeFi Total Value Locked saw little change from last week. The value of the TVL was about $61.02 billion at the time of writing. Data from Cointelegraph Markets Pro and TradingView shows that the top 100 DeFi tokens by market cap had a bullish week with most tokens seeing double-digit gains while some others continue to trade in the red.
LUNC was the biggest gainer on the week, posting a 101% gain over the last seven days, followed by Chainlink (LINK), with a 14.8% gain. Compound (COMP) was up 7.71% and PancakeSwap (CAKE) posted a 6.24% gain on weekly charts.
Thanks for reading our roundup of this week’s most impactful DeFi happenings. Join us next Friday for more stories, insights, and insights about this dynamically moving space.
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