🦹🏻♂️ Rug-Pullers and Black-Hats Ran Wild in 2021 With $2.2B Lost to Theft: Report
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NEWS Hackers, exploiters, rug-pullers, and other DeFi miscreants had a prolific 2021. That’s the upshot from a finding by Chainalysis, the blockchain forensic analysis firm. It said rogues stole $2.2B in digital assets from DeFi protocols last year, a 13-fold increase from 2020. That accounted for more than two-thirds of the $3.2B lost in all crypto.
SCAMMING Chainalysis also found surging instances of rug-pulls and money laundering in the DeFi sector last year, warning that DeFi may be “unlikely to realize its full potential if the same decentralization that makes it so dynamic also allows for widespread scamming and theft.” The firm published the findings in a preview of its 2022 crypto crime report.
UNSAFE PROJECTS While Chainalysis suggests that better communication from industry leaders and regulators may help retail investors learn how to avoid dubious projects, the report forecasts that “more drastic steps” may be needed to “prevent tokens associated with potentially fraudulent or unsafe projects from being listed on major exchanges” in the future.
TOKEN STANDARD A new proposed token standard for Ethereum sent optimistic ripples through the DeFi community this week. Joey Santoro, co-founder of the Fei protocol, introduced a new token standard, called ERC-4626 on Twitter on Jan. 4 to general support.
YIELD At a high level, ERC-4626 tokens standardize yield-bearing tokens, making it easier to integrate them into DeFi protocols. Examples of yield-bearing tokens include lending protocol Aave’s aTokens, which accrue interest, and Yearn Finance’s yTokens, which increase in value as the deposits they represent generate yield.
MONEY LEGOS ERC-4626 streamlines the integration of tokens like aTokens and yTokens into other DeFi protocols, Santoro told The Defiant. Integrations with other protocols, essentially stacking “money legos” on top of each other, is a key value proposition of DeFi. So, a standard for these value-accruing legos would be likely to reduce friction in the DeFi development process.
GAS COSTS Not sure which of the up-and-coming decentralized finance tokens are the right bet? Why not just buy all of them? Obviously, the gas costs alone of buying all of them would be prohibitive, never mind the time it would take to just catch each one as they launch.
NEW TOKEN But now, the Index Coop and the Bankless DAO have collaborated to come up with a new token that does all the work. It’s called the Bankless DeFi Innovation Index, and its GMI token launches today.
RISK CURVE For those who don’t dedicate their days to crypto Twitter, “GMI” is shorthand for “gonna make it.” “Our thesis is, DeFi moves fast,” Peter Lemonade from Index’s growth team told The Defiant in a phone call. “A lot of our customers were looking for something a bit further out on the risk curve.”
ECOSYSTEM It may not be a surprise, but now we have the proof: Devs love Ethereum more than ever. The lion’s share of developers — 700 — are joining the Ethereum ecosystem every month, according to a report published by Electric Capital, a crypto research firm. Ethereum’s developer ecosystem is the largest in crypto by a significant margin, with 4,000 active devs clocking in every month.
NEW DEVS And 500 new devs are also contributing code to a DeFi protocol for the first time each month. However, the report emphasizes that just 1,000 full-time devs are maintaining the entire DeFi sector, which currently represents a combined total value locked of more than $200B.
WEB3 PROTOCOLS Researchers analyzed almost 500,000 open-source code repositories and 160M individual code commits from across Web3. With the study looking at unique open-source repositories only, Electric Capital notes its estimates are undercounted. The report estimates there are currently more than 18,400 developers contributing to web3 protocols every month.
Future of Ethereum
FASCINATING Vitalik Buterin is just like everyone else — he digs NFTs, too. That was just one of the observations made by the co-creator of Ethereum in an appearance on Bankless’ podcast on Jan. 4. In a freewheeling discussion, Buterin also weighed in on Ethereum 2.0 and Layer 2 scaling solutions. Buterin described the rise of NFTs as “really fascinating,” asserting that the sector has inspired many new entrants into the crypto sector from the mainstream and artistic communities.
SOCIETY “To me, blockchains are about creating these innovative new ways to organize society,” Buterin said. “In some ways, what’s happening with artists being able to sell NFTs really is a realization of that spirit, because we actually are giving people who are creating art new business models — giving the creators of this thing is very valuable but often has a hard time getting business models, a new way to get funding.”
SCALING Ethereum’s chief scientist highlighted the “amazing” growth of Layer 2 scaling, describing the technology as having evolved “from theory to practice” over the course of 2021.
In which Brady Dale delves into Axie Infinity’s next act.
GAME MODE Axie Infinity is entering another dimension. It’s not going to just be a sort of Pokémon game any longer. A new wrinkle is coming. “Land is another game mode built in the Axie universe,” Jeffrey Zirlin of Sky Mavis, the company that’s building the Axie Infinity game, told The Defiant in an interview.
OWNABLE PLOTS On New Year’s Eve, the team published a blog post teasing gaming on Axie land — ownable plots in the Axie creatures’ world, Lunacia. The move introduces a whole new kind of gameplay for the Axie NFTs that have driven so much activity over the last year. The blog post included a short teaser trailer that allows players to have a look at the quality of art powering the game.
VANGUARD Axie Infinity had a giant year in 2021. It was in the vanguard of the play-to-earn revolution spawned by blockchains. Its AXS governance tokens are selling for $88, up 149X from where it was in early 2021.
QUESTS It also brought in $1.3B in revenue in the last year, according to Token Terminal. But obviously the pressure is on to keep up that dominance. Axie is now a game with basically two modes: quests and battles. Both allow users to earn cryptocurrency, but some have criticized the level of gameplay for such a buzzy enterprise.
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Decentralized stablecoin issuer Terra issued an ambitious proposal to expand the interchain deployment of its TerraUSD (UST) stablecoin across five projects on Ethereum, Polygon and Solana.
Bitcoin continues to lose ground as minutes from the Federal Reserve’s December meeting released earlier this week flagged the chance of a faster policy tightening.
🔗 GameStop Entering NFT and Cryptocurrency Markets as Part of Turnaround Plan: The Wall Street Journal
GameStop Corp. is launching a division to develop a marketplace for nonfungible tokens and establish cryptocurrency partnerships, according to people familiar with its plans, pushing the company into much-hyped areas as it tries to turn around its core videogame business.
Today we are thrilled to announce an additional $25M in funding, led by Andreessen Horowitz (a16z crypto).
Trending in The Defiant
Sunflower Game Throws Wrench in Polygon’s Gears Fees on Ethereum scaling solution Polygon are surging to record highs. The cause? A game.
Axie Infinity to Release Land Gaming Mode in Bid to Maintain Dominance Axie Infinity is entering another dimension. It’s not going to just be a sort of Pokémon game any longer.
Osmosis Lights Up the Market with 80% Run in Last 14 Days Osmosis, a decentralized exchange, has made its way to the front page of CoinGecko as its token has repeatedly rallied in the new year.
🧑💻 ✍️ Stories in The Defiant are written by Brady Dale, Owen Fernau, Samuel Haig, DeFiDad, and yyctrader, and edited by Edward Robinson, yyctrader, and Camila Russo. Videos are produced by Robin Schmidt, Alp Gasimov and Daniel Flynn. Podcast is led by Camila, edited by Alp.
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