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This Week In DeFi – October 14

This Week In DeFi – October 14

This week, Uniswap raises $165M in Series B funding, Solana's Mango Markets is exploited for $100M and ETH becomes deflationary.

October 14, 2022

To the DeFi community,

This week, decentralized exchange Uniswap raised $165 million in Series B funding, led by Polychain Capital.

Uniswap intends to use the capital for a range of uses, including improving its web app and developer tools, supporting its NFT platform launch and improving user experience on mobile.

The platform’s governance also completed a vote last night to launch Uniswap on privacy-focused Layer-2 scaling solution, zkSync, with almost 100% in favor.

1/ We’re proud to announce that we’ve raised $165 million in Series B funding to bring the powerful simplicity of Uniswap to even more people across the world 🦄🍾
uniswap.org/blog/bringing-…
— Uniswap Labs 🦄 (@Uniswap)
12:13 PM • Oct 13, 2022

Solana decentralized derivatives exchange, Mango Markets, was exploited for well over $100 million – the second 9-figure hack in less than a week (following Binance Smart Chain).

The attacker opened a large trade on perpetual swaps of Mango’s native $MNGO token, then proceeded to manipulate the price to drastically inflate their position. They then borrowed and withdrew almost all of the protocol’s available liquidity against the inflated figure.

Following the exploit, the attacker made a proposal via Mango’s governance to return around $51 million worth of tokens – in exchange for immunity.

1/ this is how I think the mango attack played out, please let me know if I got anything wrong:
at 6:19 PM ET, attacker funded acct A (CQvKS...) with 5mm USDC collateral
trade.mango.markets/account?pubkey…
— Joshua Lim (@joshua_j_lim)
12:09 AM • Oct 12, 2022

Ether has become deflationary over the past week, for the first time following the proof-of-stake Merge. The supply has reduced around 0.13% during the last seven days – around 4,000 ETH.

The shift has come as gas prices increase on the network, mostly driven by a minting-frenzy for experimental project “XEN Crypto”. XEN currently accounts for over 40% of the total gas fees used on Ethereum over the last 24 hours.

A single (pointless) token mint has burned ~6% of all net ETH issued post-merge in the past few hours.
Showcasing that any sustained activity coming back would immediately lead to ETH supply quickly becoming deflationary.
— mhonkasalo.lens (@mhonkasalo)
8:19 PM • Oct 8, 2022

Stablecoin giant Tether claims that it has eliminated ALL commercial paper holdings from its USDT reserves, along with an increase in exposure to US Treasurys.

The move got rid of over $30 billion of commercial paper without any losses in the process, according to Tether. It follows the promises of Tether to improve the quality of its USDT backing, which had been heavily criticized.

BREAKING: Tether is proud to announce that we have completely eliminated commercial paper from our reserves. This is evidence of our commitment to back our tokens with the most secure, liquid reserves in the market. (1/3)
— Tether (@Tether_to)
4:46 PM • Oct 13, 2022

The time appears to be ripe for smart contract hacks and exploits, while the ecosystem has its guard down and liquidity is low.

Four hacks happened in a single day on October 11, adding to the Binance Smart Chain hack of last week. October 2022 is already the “biggest month ever for hacking activity,” despite us not even being halfway through the month.

The most notable exploit of the week was the Mango Markets hacker, who managed to easily manipulate the price of the $MNGO token and make away with over 9 figures of protocol funds.

Aside from exploits, news has been mixed regulation and institution-wise, as we see greater levels of both adoption and regulation.

On the adoption side we have the US’ largest bank, BNY Mellon, announcing custody services for cryptocurrencies – an enormous nod to crypto from the legacy banking system.

On the regulation side, the EU Commission is seeking full-blown blockchain monitoring, with a very dystopian “embedded supervision” pilot program on the way.

Coin Center is fighting back against the US Treasury over Tornado Cash sanctions, trying to nip the department’s overreach and precedent in the bud – before its too late.