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This Week In DeFi – December 1

Author

Alex Miguel
December 01, 2023

Happy Friday, DeFi readers!

This week…

  • Wormhole raises $225M at $2.5B valuation

  • Cosmos community reduces inflation rate to 10%

  • Aerodrome & Velodrome front-ends exploited

  • KyberSwap attacker makes grand demands

Wormhole raises $225M at $2.5B valuation

Cross-chain protocol Wormhole has secured $225 million in funding, valuing the project at a total of $2.5 billion.

The funding round, which has been the largest crypto venture capital investment the year, included participation from Coinbase Ventures, Multicoin Capital and Breven Howard, who will receive “token warrants” – rights to tokens at a future date.

Jump Trading Group spun-off the Wormhole project earlier this month, which will now exist as an independent entity.

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Cosmos community reduces inflation rate to 10%

The Cosmos community has voted to set the maximum annual inflation rate of its native currency, ATOM, from 14% to 10%. As a result, ATOM’s annualized staking yield would be reduced from around 19% to 13.4%.

The proposal was only narrowly passed, with 41.1% of votes in favor of the change, while 38.5% voted against it. The proposal argued that the high inflation rate represented over-payment for network security.

Cosmos co-founder Jae Kwon attempted to incentivize voters against passing the proposal, by forking the network and planning to airdrop the new token “ATOM1” to those voting against the inflation reduction.

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Aerodrome & Velodrome front-ends exploited

DeFi exchanges Aerodrome and Velodrome had their front-ends compromised this week, with users being instructed not to use the protocols until the issue was resolved.

The exploit was the result of a social engineering attack on the domain provider. Both protocols, which are closely connected, have managed to regain control of their domains, and are currently working to restore the primary front-end.

$40,000 worth of stolen funds are on the move and have been traced back to two addresses. The two protocols have a combined figure of more than $200M in total value locked (TVL).

KyberSwap attacker makes grand demands

Last week’s KyberSwap attacker has made some extreme demands while holding around $46 million in stolen funds for ransom – going as far as demanding “complete executive control” of the protocol and its operations.

The hacker has been communicating via on-chain messages, the latest of which was an in-depth ultimatum which contained and offer for executives and employees of the project.

They have explained that it is their best and only offer, and would void the potential agreement if they were contacted by any agents regarding their “trades”.

Is Tether up next for US scrutiny?

Tether’s USDT may be next to be placed under the United States’ microscope, as Wally Adeyemo, deputy secretary of the US Treasury honed in on “non-US stablecoin issuers” that are backed by the US dollar.

Being the largest stablecoin for several years by a significant margin, USDT is the obvious major target for regulators that fits the description.

USDT has a total circulating market cap of a whopping $89.26 billion – well over three-times as large as its next closest competitor, USDC, at $24.52 billion. And with a dubious history like Tether, the stablecoin leader could end up being the US authorities’ next high-profile target in the cryptosphere.

Despite some laughably small prosecutions in the past, the US has finally shown it is not shy of going after industry giants, most recently making a deal with the sector’s largest exchange, Binance.

Operating in a very grey area for some time, it is not unlikely that Tether has a spotted past that US authorities will happily prey on.

Currently representing almost one-third of total crypto trading volume, any damage to USDT may leave a massive hole in the ecosystem if anything happens to it.

Whether or not it was Tether, Adeyemo had some stern words for whoever he had in mind: "My message is simple: We will find you and hold you accountable."

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Stat Box

Total Value Locked: $46.80B (down 0.9% since last week)

DeFi Market Cap: $67.83B (up 4.2%)

DEX Weekly Volume: $13.3B (down 22%)

DAI Supply: 5.35B (up 0.8%)

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