Welcome to Finance Redefined, your weekly dose of the biggest decentralized finance (DeFi) news, a newsletter crafted to feature the most relevant events of the past week.
DeFi has become a prominent option for investors following multiple centralized finance (CeFi) crashes throughout 2022. Some key areas of interest for investors include “NFTfi”, on-chain derivatives platforms, decentralized stablecoins and Ethereum layer 2 solutions.
Seven DeFi exploits occurred in February, resulting in a net loss of about $21 million. March is no different, with multiple exploits already reported, such as on the Hedera mainnet. DeFi lender Tender.fi was exploited, but the funds were returned by the white hat hacker who drained $1.59 million.
Tornado Cash’s developers said a new version of the shuffling tool would aim to be more regulator-friendly, where law enforcement can differentiate between the legal and illegal transfer of funds.
The DeFi market had a bearish week, with most of the top 100 tokens trading in the red thanks to the new federal budget and the Fed rate hike.
CoinGecko: Funding Shifts from CeFi to DeFi After Big Crashes of 2022
Digital asset investment firms invested $2.7bn in decentralized finance projects in 2022, up 190% from 2021, while investments in centralized finance projects went the other way, falling 73% to $4.3bn in the same period. The staggering rise in DeFi funding came despite global cryptocurrency funding figures falling from $31.92 billion in 2021 to $18.25 billion in 2022.
According to a March 1 report from CoinGecko, citing data from DefiLlama, the numbers “potentially point to DeFi as the new high-growth area for the crypto industry.” The report says that the decline in funding to CeFi could indicate that the sector “is reaching a degree of saturation.”
DefiLlama: 7 hacks of DeFi protocols in February, with USD 21 million in stolen funds
Re-entry, price oracle, and exploit attacks across seven protocols caused the DeFi space to bleed at least $21 million worth of cryptocurrency in February.
According to DeFi data DefiLlamaone of the largest of the month was the flash loan reentry attack on Platypus Finance, which caused a loss of funds of USD 8.5 million.
Tender.fi suffers an exploit: an ethical hacker returns the funds
An ethical hacker stole $1.59 million from DeFi lending platform Tender.fi, prompting the service to suspend lending while it tries to recover its assets.
CertiK, an auditor of Web3-focused smart contracts, and Lookonchain, a blockchain analyst, discovered a vulnerability on March 7 that led to the theft of funds from the DeFi lending protocol. Tender.fi confirmed the incident on Twitter, citing “an unusual number of loans” through the protocol.
Hedera confirms that a mainnet exploit led to the theft of service tokens
Hedera, the company behind the distributed ledger technology Hedera Hashgraph, has confirmed a smart contract attack on its mainnet, resulting in the theft of several tokens from liquidity pools.
Hedera said the attacker targeted liquidity tokens on decentralized exchanges (DEXs) that derived their code from Uniswap v2 on Ethereum, ported for use in Hedera’s token service.
Tornado Cash Developer Says New Version of Cryptocurrency Mixer Aims to Comply with Regulations
A former Tornado Cash developer claims to be building a new cryptocurrency mixing service to fix a “critical flaw” of the sanctioned cryptocurrency mixer, hoping to convince US regulators to reconsider their stance on privacy mixers. .
The code for a new Ethereum-based mixer, “Privacy Pools,” was posted to GitHub on March 5 by its creator, Ameen Soleimani.
In a thread of 22 messages on Twitter, Soleimani explained that the Tornado Cash “critical failure” is that users cannot prove that they are not associated with North Korea’s Lazarus Group or any criminal enterprise.
DeFi Market Review
Analytical data reveals that the total market value of DeFi fell below $45 billion last week. Data from Cointelegraph Markets Pro and TradingView shows that the top 100 DeFi tokens by market capitalization had a bearish week, with all but a few trading in the red.
Thanks for reading our roundup of this week’s biggest DeFi events. See you next Friday for more stories, perspectives, and insights into this ever-evolving space.
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