Weekly DeFi Report: Proof of Merge

Summary

Digital assets had another week of stable performance, with BTC fluctuating around the 30k mark. Ether continues to show weakness despite successful PoS merge for the Ropsten testnet. Two more testnets are slated to merge before the mainnet merge later this year.

In the last 7 days:

Out-performers in the Top 100 :

LEO (+12%), MATIC (+5%), LINK (+27%), XTZ (+12%), THETA (15%), HNT (+40%)

Under-performers in the Top 100:

NEAR (-10%), ICP (-32%), APE (-11%), EGLD (-20%), AAVE (-14%), WAVES (-20%), LUNC (-25%)

In the DeFi space, TVL numbers are generally lower, with BNB Chain (-7%), Cronos (-12%), Waves (-9%) leading the decline, whilst Tron (+1%) and Avalanche (+1%) bucked the trend by seeing a small increase in TVL. In terms of activities, headlines and actual activities are very muted as market activities/developments subside during bear market.

Deep Dive

Ropsten Testnet Merge Goes Live

What’s the deal: Ethereum testnet, Ropsten, successfully merged its PoW execution layer with its PoS Beacon Chain. Ethereum mainnet is expected to undergo the same merge later this year — the merge is a long-awaited milestone in Ethereum’s transition from PoW to PoS consensus algorithm

Osmosis $5M Exploit

More about the exploit: There was a bug on Osmosis which resulted in incorrect calculation of LP shares when adding and removing liquidity from pools. The bug resulted in $5M of losses, and a decision by validators to halt the chain. Osmosis team ensured that all losses would be covered and that they have identified the causes of the bugs and are working on remediation. The chain would be restarted on a new codebase with the bug fixed.

What’s also worth noting is that one of the validators, FireStake, went to exploit the vulnerability, turning a profit of ~$2M. However, they have quickly confessed, and released public statement that they are working with the Osmosis team to return the funds as soon as possible.

Optimism Exploit

More about the exploit: The Optimism Foundation engaged Wintermute, a market- maker, for market-making services, allocating temporary grant of 20mio $OP tokens. However, Wintermute mistakenly provided a multi-sig address on Gnosis Safe that was not yet deployed. The attacker then was able to deploy the said multi-sig to L2 with different parameters, and took control of the 20mio OP tokens. Wintermute stated that it is completely at fault, and will be purchasing whatever tokens the attacker would be selling.

Mastercard enters Web3 and NFTs

What’s the deal: The well-known payment system, Mastercard, was working with several Web3 companies including Immutable X, Candy Digital, The Sandbox, Moonpay, Spring, Mintable and Nifty Gateway to allow Mastercard payments for NFT purchases. They hope to bring the Mastercard payment network onto Coinbase’s new NFT marketplace and facilitate the process of buying NFTs.

Following

Big Money Raises

• Laevitas raises $2.5mio Seed Round, the round was co-led by 3AC and
• DeFiance Euler, a lending/borrowing protocol, raises $32mio