Welcome to Finance Redefined, your weekly dose of essential decentralized finance (DeFi) insights — a newsletter crafted to bring you significant developments over the last week.
Industry experts are confident in DeFi and believe the sector would continue to see adoption despite its security flaws, primarily due to the mammoth failure of centralized exchanges. Despite the continued growth, however, the decentralized exchanges have lost $30 million on liquidity provider incentives.
Popular hardware crypto wallet Ledger introduced a new DeFi tracking feature that pairs with its hardware wallets to monitor performance analytics of over 1,000 protocols.
The Lodestar Finance protocol that was exploited for over $5 million on Dec. 10 had a Mango Markets connection, wherein the exploiter copied the methods used by the Mango Markets’ hacker to drain funds.
The DeFi market had a mixed week in terms of price action, where the majority of the tokens remained in the same price range as last week but lost bullish momentum.
Industry execs voice confidence in DeFi adoption despite security flaws
With DeFi being a hub for various hacks and exploits, some may feel discouraged or wary of entering the space. However, professionals within the crypto space are confident that DeFi will have broader adoption in the future.
From educating institutional investors to eliminating user experience barriers for retail investors, Web3 executives shared their thoughts on how broader DeFi adoption can be achieved.
Ledger hardware wallet adds DeFi tracking feature
Users and developers are seeking out ways to stay both safe and informed after a year of volatility and uncertainty. During this shift, the hardware wallet developer Ledger announced a new integration for users to track the value of their assets.
Ledger and Merlin, a DeFi portfolio tracker, announced their new partnership on Dec. 13 to bring live DeFi performance analytics to Ledger Live users. The app connects to Ledger’s cold storage wallets and services over 5 million users.
SushiSwap CEO reveals DEX lost $30M on LP incentives this year
According to a new tweet by SushiSwap CEO Jared Grey, the decentralized exchange (DEX) experienced a $30 million loss over the past 12 months on incentives for liquidity providers (LPs). As explained by Grey, SushiSwap currently employs a token-based emission strategy to incentivize LPs, but the current rate is “unsustainable.”
Moving forward, Grey plans to rework SushiSwap’s tokenomics so that LPs are no longer subsidized with emissions and redesign the entire model of bootstrapping liquidity on the exchange. “In Q1 2023, we will bring innovation to scale swap volume & prioritize TVL. As LPs experience a more profitable swap experience, others should migrate to Sushi,” wrote the DEX executive.
Hackers copied Mango Markets attacker’s methods to exploit Lodestar — CertiK
Blockchain security company CertiK has shared a post-mortem analysis of the $5.8 million Lodestar Finance exploit that occurred on Dec. 10. Lodestar Finance hackers “artificially pumped the price of an illiquid collateral asset which they then borrow against, leaving the protocol with irretrievable debt.”
The attack occurred through a vulnerability in the PlutusDAO’s plvGLP token on Lodestar. According to its documentation, Lodestar “uses verified, secure Chainlink price feeds for every asset it offers with the exception of plvGLP.” Instead, the exchange rate of plvGLP to GLP relied on total assets divided by total supply on Lodestar.
DeFi market overview
Analytical data reveals that DeFi’s total value locked remained above $40 billion but saw a minor dip from the past week. Data from Cointelegraph Markets Pro and TradingView show that DeFi’s top 100 tokens by market capitalization had a volatile week, with the majority of the tokens trading in the red.
Lido DAO (LDO) was the biggest gainer among the top 100 DeFi tokens, registering a surge of 8.5% over the past week, followed by Thorchain(RUNE) with a 3% surge on the weekly chart.
Thanks for reading our summary of this week’s most impactful DeFi developments. Join us next Friday for more stories, insights and education in this dynamically advancing space.