DeFi & L1L2 (Week 32, 10/08/2022 – 16/08/2022)

Acala Network suffered security breach, aUSD depegged. Curve Finance’s website hacked. Crypto users were hit with “dust attack” after being sent a small amount of ETH from Tornado Cash.

Weekly DeFi Index

This week’s price index dropped by -7.26%, while volume and volatility indices were positive at +11.26% and +3.16%, respectively.

DeFi Index Tokens

News Highlight

• Acala, the “DeFi hub” of the Polkadot network, suffered a major security breach. The exploit allowed the attackers to mint an additional 1.2 billion aUSD, the native stablecoin of the network, in its iBTC/aUSD liquidity pool. Following the exploit, aUSD depegged and plunged to a low of US$0.009 on 14 August. In response to the incident, Acala passed a proposal to burn US$1.28 billion aUSD to regain the peg. At the time of writing, aUSD is trading around US$0.88. 
• Decentralised exchange Curve Finance experienced a frontend attack on 10 August. Hackers compromised the Curve website to redirect unwitting users or their transactions to a malicious destination. The thieves made off with US$570,000 of ETH and part of the stolen funds were frozen.
• DeFi protocols banned users following OFAC sanctions on Tornado Cash. However, this derives a so-called ‘dust attack’. Crypto users reported being blocked by major DeFi protocols after attackers sent a small amount of Ether (usually 0.01 ETH) via Tornado Cash. More than 600 addresses were hit with the same 0.01 ETH ($19.25) ‘dust attack’, including crypto exchanges and public figures.
• Ethereum’s third and final testnet merge was completed on Goerli. This is one step closer to Ethereum’s mainnet upgrade, which is expected to happen this year.

DEX Protocols Metrics

Lending Protocols Metrics

Charts on Layer 2 Projects

• Overall, the L2 market saw +6.99% growth over the past week. Optimistic rollup projects rose +4.15% and zero-knowledge rollup projects dropped -4.61%. Sidechain projects gained traction with +18.02% growth, mainly driven by Polygon (+20.50%). Ethereum’s TVL rose +1.17%.

• The TVL for almost all of optimistic rollup’s projects were negative last week except Arbitrum (+7.75%) and Optimism (+0.04%).

• Although the overall TVL of ZK rollups fell, StarkNet was under the spotlight as its TVL grew +14.07%.

Further Reading

• Arbitrum launches gaming and social App-focused layer 2 chain Arbitrum Nova
• DeFi protocols Aave, Uniswap, Balancer, ban users following OFAC sanctions on Tornado Cash
• Tornado Cash DAO shuts down as it “can’t fight the US” and keep contributors safe
• BlueBenx fires employees, halts funds withdrawal citing $32M hack
• Interlay launches Bitcoin-backed stablecoin iBTC on Polkadot network
• DeFi firms Iron Bank, Yearn Finance join layer 2 protocol Optimism
• Cross-chain bridge RenBridge laundered $540M in hacking proceeds: Elliptic

Authors

Research and Insights Team

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