The last week of 2022 was not a good one for the industry, as it saw multiple exploits and an exit scam scare.
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.
The final week of 2022 saw another slew of exploits, insider job accusations, and exit scam drama for DeFi. It all started on Christmas Eve, when Defrost Finance, a decentralized leveraged trading platform built on the Avalanche blockchain, was targeted by a DeFi flash loan attack, resulting in a $12 million loss.
However, the hacker responsible for the attacks reportedly returned a portion of the funds the following day. Certik, a security analytics firm, investigated the sequence of events and concluded that the $12 million in funds drained were part of an exit scam.
On December 26, during the Defrost exploit saga, hackers stole $8 million from Bitkeep, a multichain wallet. It was later revealed in an analysis report that exploiters lured users through phishing websites.
Another bearish week for the top 100 DeFi tokens, with little to no price movement. On the weekly charts, nearly all tokens were trading in the red.
Defrost Finance announced this week that both of its versions, Defrost v1 and Defrost v2, are being investigated for a hack. Investors reported losing their staked Defrost Finance (MELT) and Avalanche tokens from MetaMask wallets, prompting the announcement.
Doran, a core team member at Defrost Finance, confirmed that Defrost v2 was hit with a flash loan attack after a few users complained about the unusual loss of funds. At the time, the platform believed Defrost v1 had been unaffected by the hack and decided to suspend v2 for further investigation.
Defrost Finance, the decentralized trading platform that was the victim of a $12 million hack in the days leading up to Christmas, has denied allegations that it “rugged” its users as part of an elaborate “exit scam.”
On December 23, the platform announced that it had been subjected to a flash loan attack, which resulted in the draining of user funds from its v2 protocol. A day later, another incident occurred in which a hacker stole the admin key for a second “much larger” attack on the v1 protocol.
While many people are still enjoying the holiday season, hackers are hard at work, draining around $8 million in an ongoing BitKeep wallet exploit.
On December 26, some users of the multichain crypto wallet BitKeep reported that their funds were being drained and transferred while they were not using their wallets. The BitKeep team confirmed in their official Telegram group that some APK package downloads had been hijacked, with hackers installing code.
Midas Custodial Investment Platform will cease operations due to a $63.3 million deficit in its DeFi portfolio. Midas founder and CEO Iakov Levin, also known as Trevor, wrote that the decision was made in part because the fund’s DeFi portfolio lost $50 million, or 20% of its $250 million assets under management.
Furthermore, Levin stated that the failures of Terra, FTX, and Celsius contributed to Midas’ problems, with users withdrawing 60% of their funds following those failures.
According to data, DeFi’s total market value remained below $40 billion this week, trading at around $38.2 billion at the time of writing. According to Cointelegraph Markets Pro and TradingView data, DeFi’s top 100 tokens by market capitalization had a volatile and bearish week, with nearly all of the tokens trading in the red.
Thank you for taking the time to read our summary of the most significant DeFi developments this week. Join us next Friday for more stories, insights, and education in this rapidly evolving space.
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