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Industry Execs Confident in DeFi Adoption Despite Security Flaws: Finance Redefined

The top 100 DeFi tokens had a mixed week, with the majority losing bullish momentum from the previous week.

Welcome to Finance Redefined, your weekly dose of essential decentralized finance (DeFi) insights — a newsletter designed to bring you noteworthy developments from the previous week.

Industry experts are optimistic about DeFi and believe the sector will continue to grow despite its security flaws, which stem primarily from the massive failure of centralized exchanges. Despite this, the decentralized exchanges have lost $30 million in liquidity provider incentives.

Ledger, a popular hardware crypto wallet, has released a new DeFi tracking feature that works in tandem with its hardware wallets to monitor performance analytics for over 1,000 protocols.

The Lodestar Finance protocol, which was exploited for more than $5 million on December 10, had a Mango Markets connection, and the exploiter replicated the methods used by the Mango Markets hacker to drain funds.

In terms of price action, the DeFi market had a mixed week, with the majority of tokens remaining in the same price range as last week but losing bullish momentum.

Because DeFi is a hotspot for various hacks and exploits, some people may be discouraged or wary of entering the space. Professionals in the crypto space, on the other hand, are optimistic about DeFi’s future adoption.

Web3 executives shared their thoughts on how to achieve broader DeFi adoption, from educating institutional investors to removing user experience barriers for retail investors.

After a year of volatility and uncertainty, users and developers are looking for ways to stay safe and informed. During this transition, Ledger, a hardware wallet developer, announced a new integration that allows users to track the value of their assets.

On December 13, Ledger and Merlin, a DeFi portfolio tracker, announced a new partnership to bring live DeFi performance analytics to Ledger Live users. The app integrates with Ledger’s cold storage wallets and has over 5 million users.

According to a new tweet from SushiSwap CEO Jared Grey, the decentralized exchange (DEX) has lost $30 million in the last year on liquidity provider incentives (LPs). SushiSwap currently employs a token-based emission strategy to incentivize LPs, as Grey explained, but the current rate is “unsustainable.”

Grey intends to rework SushiSwap’s tokenomics so that LPs are no longer subsidized with emissions, as well as redesign the exchange’s entire model of bootstrapping liquidity. “In the first quarter of 2023, we will bring innovation to scale swap volume and prioritize TVL. Others should migrate to Sushi as LPs experience a more profitable swap experience,” wrote the DEX executive.

CertiK, a blockchain security firm, has released a post-mortem analysis of the $5.8 million Lodestar Finance exploit that occurred on December 10. Lodestar Finance hackers “artificially inflated the price of an illiquid collateral asset, which they then borrowed against, leaving the protocol in insolvency.”

The attack took advantage of a flaw in the PlutusDAO’s plvGLP token on Lodestar. Lodestar “uses verified, secure Chainlink price feeds for every asset it offers with the exception of plvGLP,” according to its documentation. Instead, the exchange rate of plvGLP to GLP on Lodestar was based on total assets divided by total supply.

According to analytical data, DeFi’s total value locked has remained above $40 billion despite a minor drop over the last week. According to data from Cointelegraph Markets Pro and TradingView, the top 100 tokens by market capitalization in DeFi had a volatile week, with the majority of tokens trading in the red.

Lido DAO (LDO) was the biggest gainer among the top 100 DeFi tokens, gaining 8.5% in the last week, followed by Thorchain (RUNE), which gained 3%.

Thank you for taking the time to read our summary of this week’s most significant DeFi developments. Join us next Friday for more stories, insights, and education in this ever-changing field.

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