Decentralized Horror: Roundup of DeFi’s Nightmares of the Year

Decentralized Horror: Roundup of DeFi’s Nightmares of the Year
DeFi has been the driving force behind all things crypto in 2020.

BeInCrypto dug into DeFi nightmares, flash loan scares, smart contract code chills happened this year.

Some have made some sort of profit, but a few have been completely „destroyed“, and that’s where the bad things come in.

Decentralized Finance (DeFi) has undoubtedly been the driving force behind all things crypto this year, but it hasn’t been without its share of horror stories.

Since the season lends itself to it, we’ll dig into DeFi nightmares, flash loan scares, smart contract code thrills, hideous hacks, spooky scams, and terrifying “rugpulls” this year.

Let’s start with the DeFi voucher …

Before we dive into the dark depths of DeFi depravity, let’s start on a positive note. If 2017 and 2018 were the year of ICOs, 2019 was the year of stablecoins, 2020 was definitely the year of decentralized finance.

Billions of dollars in crypto collateral have poured into a rapidly expanding array of decentralized exchanges, automated market makers and liquidity pools, as traders and investors seek better returns on their digital assets.

Since the start of 2020, that figure, known as the Locked-In Total Value (TVL), has jumped nearly 2,000% to $ 12 billion in October . This surge in crypto collateral has made other milestones possible, such as the highest amount of Wrapped Wrapped (or Tokenized) Bitcoin (BTC) at over 147,000 BTC, and nearly 8% of the entire offer of Ether (ETH), or 9 million ETH, locked in DeFi protocols.

DeFi tokens were the best performers of the year, although many corrected heavily over the past month. A few people with big bags already made bigger fortunes, a lot of people made some sort of profit, but a few were completely „destroyed“, and that’s where the bad things come in.

And the bad starts with bZx

The first quarter of 2020 has been a bit quiet for DeFi, but TVL crossed the billion dollar mark for the first time in early February, which was also the same month as the industry’s first high-profile exploits.

The bZx margin lending and trading protocol was the first serious casualty of 2020 with two flash lending exploits that resulted in the loss of nearly $ 1 million in user funds. The malicious actor successfully exploited a low-liquidity Uniswap marketplace to complete a single trade, known as a flash loan, to make a profit of around $ 350,000. A second attack in the week resulted in the loss of an additional $ 600,000 in ETH from bZx, which suspended operations following the exploit.

The exploits created a wave of criticism from DeFi detractors and Bitcoin maximalists at the time, who said that the fact that bZx was able to freeze the platform in both attacks showed that it was ultimately acted as a centralized platform.

Creator of “Black Thursday”

DeFi markets were bubbling well until mid-March, when the global financial and crypto markets collapsed in the wake of the escalating Covid-19 pandemic. Ethereum, which serves as the backbone of the DeFi industry, fell 55% in less than a week, leading to a day dubbed „Black Thursday“ for MakerDAO, the world’s leading DeFi protocol, at the time. .

The Black Swan event resulted in the massive liquidation of the vast majority of Maker Chests, resulting in an under-guarantee of around $ 4 million in Dai. No code was exploited, but many safe deposit box owners lost all warranties, leading to both a class action lawsuit against the Maker Foundation and a management poll to compensate victims. The stability fee has been adjusted and the Dai savings rate has been set at zero, it still has not moved from that level.

Bitcoin er verdt $ 350 millioner forlater Huobi etter COO arrestert

Huobi-ledergruppen har også avklart at børsen vil fortsette å operere til tross for politiets etterforskning.

Viktige takeaways

Kinesiske medier rapporterte om arrestasjonene av Huobis Chief Operating Officer (COO) Robin Zhu Jiawei.
Huobi-tjenestemenn fortsetter imidlertid å nekte disse påstandene ettersom Huobi fortsetter normal drift.
Uttak økte drastisk etter nyhetene, ettersom kundene trakk mer enn $ 350 millioner i Bitcoin 2. november.

Nyheter fra Kina om arrestasjonene av en høytstående Huobi-tjenestemann har slått frykt blant kryptobrukere som fremdeles hevder seg fra tilbaketrekkssuspensjonene hos OKEx.

Regulatory Crackdown eller Chinese FUD?

Selv om Huobi ble grunnlagt i Kina, flyttet han til Singapore etter forbudet mot kryptovalutautveksling i Kina. Til tross for flyttingen forbød regjeringen høytstående tjenestemenn i OKEx og Huobi å forlate landet tilbake i 2017 for å undersøke begge utvekslingene.

Lokale rapporter avslører nå at Huobi er tilbake i det regulatoriske setet.

I følge to uavhengige rapporter fra kinesiske mediekilder Colin Wu og Deep Chain Financial, har det kinesiske politiet tatt COO for Huobi, Robin Zhu Jiawei, under varetekt.

Nyheten om pågripelsen kommer bare en måned etter pågripelsen av OKEx-eier, XuMingXing. Mens OKEx har nektet alle påstander knyttet til politiets etterforskning, har uttak på sentralen blitt suspendert i 20 dager.

Den samlede Bitcoin-saldoen på Huobi og OKEx er over 460 000 BTC, verdt 3,5 milliarder dollar. En regulatorisk nedbryting av de to øverste kinesiske børsene vil sikkert skape frykt, og i dag opplevde markedet et lite glimt av det.

Så snart rapporten om arrestasjoner i Huobi lekket, begynte kundene å flykte fra børsen.

Analytics-nettstedet Whale Alert rapporterte 110 millioner dollar utstrømninger fra Huobi til Bitfinex. Videre rapporterte Crypto Quant netto Bitcoin-utstrømning på over $ 55 millioner i Telegram-gruppen.

Huobi sa senere at „ryktene er falske“, og alle ledelsens tjenestemenn er blitt redegjort for.

Nye rapporter bekrefter arrestasjonen av Huobi

En ny rapport fra Colin Wu ser imidlertid ut til å bekrefte arrestasjonsnyhetene. Videre antyder kontoen også at Zhu-saken ligner OKEx-konsernsjefen.

Etter arrestasjonen av Xu i midten av oktober hadde Huobi tatt raske skritt for å sikre børsens midler. Et slikt trinn hadde vært å stoppe uttak midlertidig.

Nettoutstrømningen av Bitcoin fra børsen 2. november var over 26.000 BTC verdt mer enn $ 350 millioner.

Kryptomarkeder har lenge vært offer for kontrovers i Kina, ettersom landet er vert for et blomstrende kryptosamfunn og mangel på klare regler.

Mens utvekslingen fortsetter å nekte rapportene, er det vanskelig å ignorere gjentatte tilfeldigheter i disse rapportene.