Recap: DeFi Week of March 9 🦄
Hello Defiers! Hope you’re having a good, safe weekend, recovering from the intense market turmoil of this past week and taking all the precautions to stay healthy.
Summing up: The past week was the worst in history for crypto, with bitcoin down 40% and ether plunging almost 48%. DeFi was put to the test, and it wasn’t exactly pretty. Friday’s post focuses on how a design flaw in MakerDAO, the biggest platform in the ecosystem, allowed loan liquidators to take $4.5 million of ether collateral for free. The lending platform and issuer of the Dai stablecoin avoided shutdown and should come out stronger by implementing learning from what went wrong. MKR holders and those borrowers whose entire collateral got liquidated will feel the pain in the meantime. Thursday’s Defiant was on how my DeFi10 portfolio faired amid this market sell-off, and it turns out, open finance was a good place to weather the storm, but still no safe haven. On more cheerful news, the market for digi-physical tokens is heating up, changing ownership as we know it. This week’s interview was with white hat hacker legend Samczsun, who talked about open source’s double-edged sword and the need for dapps to have “pause buttons.”
This week’s interview was with the white hat hacker who goes by Samczsun and has quickly become a DeFi legend for uncovering bug after bug, even on projects that have been audited. He does this in his free time and discloses his findings to companies in exchange for “bounties” or rewards for the service —what’s known as a “white hat” hacker. He recently made headlines for finding vulnerabilities in decentralized insurance project Nexus Mutual, authentication service Authereum, and for helping bZx fix the bugs that got exploited in the biggest financial attacks to DeFi —which he had also warned about last year. He has also uncovered bugs in 0x, Curve Finance, Ethereum Name Service, Kyber Network and DDEX.
Ether Plunge Tests DeFi Giant While Ripple Effects Have Just Begun: DeFi giant MakerDAO was almost brought to its knees. The space has come up ahead each time. Will it now? It probably will, but traders are paying the price. And not just MakerDAO holders and borrowers; all of DeFi will feel the ripples.
DeFi10 Fund Beats Stocks and Bitcoin in Market Storm: Decentralized finance is turning out to be a decent place to weather the storm. A portfolio of 10 investments in decentralized finance platforms plus a benchmark I set up at the start of the year, which I call DeFi10, is outperforming risky assets including crypto, U.S. equities, high-yield bonds and emerging markets stocks.
Digi-Physical Tokens to Change Ownership as We Know It: Digital money and the physical world are becoming more intertwined than ever, radically amplifying product ownership by users and creators. Creators are selling real-life items via cryptocurrency tokens trading in decentralized exchanges. The first to do this was Uniswap Exchange with Unisocks. The space is gaining steam, with MetaFactory and Zora recently launching digital marketplaces for scarce physical items, which they also help create.
DeFi Galaxy Having a Big Bang Moment: Ethereum analytics firm Alethio just updated its amazing visualization of the decentralized finance ecosystem, showing how the DeFi galaxy is quickly expanding, with the number of users and platforms growing in an interconnected web.
Thanking all the amazing Defiers for the support and love this week (and always)!
The Defiant is a daily newsletter focusing on decentralized finance, a new financial system that’s being built on top of open blockchains. The space is evolving at breakneck speed and revolutionizing tech and money. Sign up to learn more and keep up on the latest, most interesting developments. Subscribers get full access at $10/month or $100/year, while free signups get only part of the content.
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About the author: I’m Camila Russo, a financial journalist writing a book on Ethereum with Harper Collins. (Pre-order The Infinite Machine here). I was previously at Bloomberg News in New York, Madrid and Buenos Aires covering markets. I’ve extensively covered crypto and finance, and now I’m diving into DeFi, the intersection of the two.