HundredFinance hack, Aave updates, ETH Shapella upgrade, New stablecoin launches,...
Issue #36 of The State of DeFi Lending newsletter
Welcome to issue #36 of The State of DeFi Lending, a newsletter covering the highlights of lending markets in DeFi.
In this issue we cover:
Lending protocol HundredFinance’s Optimism market gets hacked for $7m. The protocol contributors are trying to negotiate a return of the assets for a 10% bounty.
Aave’s money market deployments are in full swing with live community proposals to expand Aave v3 onto Starknet and BNB Chain. The protocol is also launching GHO on Goerli testnet.
The ETH Shapella upgrade was performed successfully, turning into a “bullish unlock” with ETH rising by 13.1% surge to $2,117 in the 48hrs thereafter. However, there’s very little borrow demand for ETH staking derivatives.
The stablecoin space is not standing still. New “experiments” have been announced in the last days, eg M^Zero Labs, Ondo’s OMMF and Redacted’s DINERO.
Read below for more…
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News
Lending protocol HundredFinance has been hacked on Optimism for about $7m in various tokens.
https://twitter.com/peckshield/status/1647307128267476992?s=20
HundredFinance is a Compound fork and had two pools for wBTC cTokens, one of which was empty. The attacker exploited that mistake, inflated the token and emptied the pool.
https://twitter.com/danielvf/status/1647329491788677121?s=20
It appears the empty token pool was a main cause for the exploit.
https://twitter.com/danielvf/status/1647332221131411463?s=20
The team is publicly negotiating a 10% bounty if the hacker returns the funds.
https://twitter.com/HundredFinance/status/1648320706243964930?s=20
The Aave community is proposing to bring v3 to StarkNet and BNB Chain.
On 4 April, Aave initiated a proposal to launch Aave V3 on StarkNet which got overwhelming support. The integration plan between Aave and StarkNet will be conducted in two phases. The first phase involves establishing a cross-chain bridge for aTokens between Ethereum and StarkNet, while the second phase involves full deployment of the Aave protocol.
The Aave community is also proposing to deploy Aave V3 on the BNB Chain and start with a range of blue-chip collateral assets such as BNB, WBTC, BETH, WETH, USDC, and USDT.
The dominant lending protocol on BNB chain is Venus Protocol which has had numerous exploits and security issues. The RiskDAO bad debt dashboard shows $88m in bad debt for Venus Protocol.
On 6 April, Aave founder Stani announced the Goerli testnet deployment of Aave’s GHO stablecoin.
https://twitter.com/StaniKulechov/status/1643953547522744321?s=20
Aave also has a new risk dashboard, developed by Gauntlet Network.
https://risk.gauntlet.network/protocols/aave
Ethereum’s Shapella upgrade was executed succesfully!
https://twitter.com/etherscan/status/1646281789735047168?s=20
The Shapella upgrade went live on the Ethereum mainnet on April 12th, primarily enabling the withdrawal of staked ether. Liquid staking services had previously allowed users to access funds while staking their ETH through liquid staking derivative tokens (LSDs), which can now be burned and redeemed for the underlying ether.
The Shapella upgrade allows users and validators to unstake through partial or full withdrawals, although a withdrawal queue prevents instant liquidation. To date, the majority of ETH has been withdrawn using the partial method, with many users choosing to re-deposit their funds.
There was speculation that unlocking staked ether might put sell pressure on ETH, but limits were in place to prevent a mass exodus. Since Shapella, there has been a net decline in ETH staked; however, deposits continue, with overall deposit levels higher than pre-Shapella. ETH's price exceeded $2,000 on April 13th, suggesting that the mass sell-off fear has been alleviated.
Nansen published a good explainer thread on the staking data. https://twitter.com/themlpx/status/1647588196535140352?s=20
For more data, OurNetwork published great statistics in their weekly newsletter.
For those who want to follow in real-time, there is an unlock dashboard available here.
Borrow demand for LSDs are virtually non-existent: Aave’s stETH market has a utilization rate of 13%. Lenders are currently earning under 10 bps and borrowers are paying 28 bps on the protocol’s Ethereum V3 market.
Stablecoin development is in full swing and remains one of the main innovation drivers of DeFi. In the last weeks, a number of new “experiments” have been announced. Let’s have a look…
M^Zero Labs
M^Zero launched with a $22.5m fundraising announcement. The project considers itself financial middleware, that can cover all sorts of financial use cases such as new forms of money to sophisticated financial aggregates and derivatives. The funds will be used to build a decentralized value transmission mechanism on Ethereum mainnet, allowing institutional-like agents to exchange and compose value on-chain.
https://twitter.com/LucaProsperi/status/1644324432448454656?s=20
Ondo MMF
Two months ago, Ondo launched OUSG to tokenize US Treasury yields which amassed over $70m in AUM. In response to high demand , a new product called OMMF has been introduced, which tokenizes US government money market funds (MMFs). OMMF allows stablecoin and fiat subscriptions and redemptions, and maintains a constant value of $1. It can be used as a dollar or stablecoin replacement for settlement and collateral in OTC trading and lending.
https://twitter.com/OndoFinance/status/1646515414321754115
DINERO
"DINERO" is a permissionless stablecoin backed by user-owned block space on Ethereum. Users can stake their ETH to access a premium decentralized RPC that revolves around a stablecoin as a medium of exchange.
The Dinero protocol introduces a public and permissionless RPC, a decentralized stablecoin (DINERO), and an ETH liquid staking token (LST). The protocol utilizes an ETH liquid staking token called Pirex ETH (pxETH). The underlying ETH is staked to validate transactions, with Dinero protocol validators powering the Redacted Relayer premium RPC.
DINERO is a collateralized debt position (CDP) stablecoin primarily backed by ETH. It aims to use the underlying ETH collateral to enable a decentralized RPC (Redacted Relayer) and a block builder, protecting Dinero users from MEV attacks. DINERO will function as the currency of the Dinero protocol, allowing users to interact with it, and Redacted DAO's governance power will help bootstrap DINERO liquidity on decentralized exchanges.
https://twitter.com/redactedcartel/status/1643994653325156353?s=20
Short news & announcements
FTX rumoured to be relaunched as the FTX Japan auction gets cancelled and Tribe Capital is putting together a $250m capital injection
Tether blacklisted $3 million of USDT belonging to the address of a MEV bot, due to pressure from law enforcement agencies