Update on Alpha Homora, Summary overview of exploits in DeFi, TUSD depeg & borrowing craze, NFT lending heats up as Blur launches "Blend",...
Issue #38 of The State of DeFi Lending newsletter
Welcome to issue #38 of The State of DeFi Lending, a newsletter covering the highlights of lending markets in DeFi.
In this issue we cover:
Alpha Homora has closed the curtain on the Iron Bank stand-off. The community had voted to initiate legal actions if there’s no reponse by Iron Bank as of last Friday. The deadline has passed and conversations continue to be heated.
April was ExploitSzn with $104m in lost funds due to exploits, scams and hacks according to a report by CertiK. This number however large amounts to 24% of YTD losses from hacks (~$430m).
Tron’s TUSD experiences significant adoption on Binance to the point that it depegs to $1.2. DeFi traders piled on the opportunity to borrow TUSD and short it. There’s also been a little bit of drama between CZ & Justin Sun.
Blur launches NFT lending protocol Blend which attracts >$17m in loan volume in the day after launch. Blend launches with two products: NFT Peer-2-Peer lending products and Buy-Now-Pay-Later. Blur employs the same yield farming playbook for Blend that helped the NFT marketplace to claim the top spot.
Read below for more…
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News
Alpha Homora’s (AH) stand-off with Iron Bank (IB) is entering the next phase: AH’s community voted to start legal proceedings against IB if no agreement is achieved by 28 April 8am UTC.
https://twitter.com/Alpha_HomoraV2/status/1651873953760280576?s=20
As the deadline has elapsed, the dispute will now become a matter of lawyers and courts.
IB’s Twitter has been notoriously absent from the public debate, ever since they declined AH’s offer in mid-April, over concern of time-staggered repayments.
https://twitter.com/ibdotxyz/status/1646900619431620610?s=20
The Iron Bank price chart has taken a significant hit over the last 90 days, especially in comparison to ETH: down 43%. In comparison, the Alpha Homora token is down 9% vs ETH in the same period.
April saw $104m in losses from DeFi exploits and attacks, according to CertiK.
https://twitter.com/CertiKAlert/status/1652625412948729861
April 2023 saw significant activity in crypto scams, exploits, and hacks, with losses amounting to more than $104 million, according to a report by crypto security and auditing firm CertiK. Several notable exploits included $25.4 million lost from MEV trading bots, $22 million from a hot wallet exploit at Bitrue exchange, and a $13 million loss from a hack at South Korea's GDAC exchange.
Flash loan attacks, primarily led by Yearn Finance, resulted in approximately $20 million lost. Exit scams were also prevalent, with the top one being Merlin DEX, which accounted for $2.7 million of the total $9.4 million lost in the month. The Rekt Database by DeFi reported over 50 instances of crypto exploits, scams, and hacks in April, many of which were memecoin rug pulls.
In a separate publication to CertiK, crypto security researcher DevDacian wrote up a deep dive into Lending/Borrowing attacks in DeFi. The article aims to categorize the types of vulnerabilities that auditors & developers should be aware of in lending & borrowing platforms.
https://twitter.com/DevDacian/status/1650812666519392257?s=20
To appreciate this piece of work, the author “…read through every public c4 & sherlock contest, categorized & systematized the major vulnerability classes found in these DeFi systems, and made it all freely available to help YOU!”
TUSD liquidity on Binance swells to $1.2bn and depegs to $1.2.
Market depth for the TUSD-USDT pair on Binance has significantly increased, and TUSD is increasingly becoming part of the stablecoin conversation. However, the stablecoin TUSD experienced a depegging on several exchanges, reaching a high of $1.20 relative to USDT on Binance, where it has recently been promoted.
It’s most notably being used for SUI yield farming when SUI mainnet launches on 3 May.
As TUSD liquidity has not kept up with its increased volumes, this depegging was more likely to occur. Users on Aave and Compound began borrowing large amounts of TUSD and swapping for USDC, shorting TUSD from its elevated price.
Binance CEO CZ tweeted that the exchange would take action against any farming by Justin Sun, who sent over $50 million worth of TUSD to Binance. https://twitter.com/cz_binance/status/1652949031524376579?s=20
Justin Sun quickly responded clarifying that the funds are being used for deeper TUSD liquidity on Binance and not for SUI LaunchPool farming. However, Justin also conceded that some team-member erroneously tried to participate in the LaunchPool.
https://twitter.com/justinsuntron/status/1652954970000617474?s=20
NFT marketplace BLUR has announced the launch of a peer-to-peer NFT Finance protocol called Blend.
https://twitter.com/blur_io/status/1653051809240604674?s=20
Blur has announced a new NFT lending protocol called Blend, developed in collaboration with Paradigm's Dan Robinson and Transmissions11.
https://twitter.com/danrobinson/status/1653052209431724034?s=20
The protocol enables perpetual lending, with loans having no set expiration date and market-determined interest rates. Blend loans have fixed rates and never expire, allowing borrowers to repay at any time, while lenders can exit positions via a Dutch auction to a replacement lender. If the auction fails, the borrower is liquidated, and the lender takes the collateral. The full whitepaper can be accessed here.
Blend is launching with two products: NFT Lending and Buy-Now-Pay-Later. These two products are available for three collections at different price points to enable a larger participation (Punks, Azuki, Milady).
https://twitter.com/blur_io/status/1653101755809562624?s=20
Since going live on 1 May, Blend has originated a total of >1,000 loans worth more than ETH 12,000 (~$22.5m) which makes it the fastest growing NFTfi protocol. APRs range from 30% (Punks) to 100% (Milady).
A detailed Dune Dashboard is available here.
One of the factors contributing to this stellar growth is Blur’s incentive scheme that give credits to earn $BLUR also for Blend users.