Welcome to Finance Redefined, your weekly dose of basics decentralized finance (DeFi) insights — a newsletter designed to bring you the highlights of the past week.
On June 15, an imbalance in Curve Finance’s 3pool led to Tether (USDT) depeg fear as the stablecoin’s weight in the pool rose above 70%, leading to a large selloff. Tether’s CTO stated that these market conditions are stress tests for the stablecoin and reduced the “FUD” depeg.
In other news, a cryptocurrency trading bot programmed to make arbitrage trades borrowed $200 million to make just over $3.
Uniswap, a decentralized exchange protocol, released its version 4 code on June 13, making way for new liquidity pools.
DeFi lending platform Sturdy Finance has been tapped for $800,000. The protocol team offered a $100,000 reward for refunds and reopened its stablecoin market on June 16. In further use, the Hashflow protocol was depleted for $600,000; However, Hashflow has assured users that they will be “whole”.
The top 100 DeFi tokens had another bearish week, with most cryptocurrencies trading at three-month lows.
Curve pool imbalance worries USDT depeg, Tether CTO calls it FUD
USDT deviated slightly from its peg to the US dollar on June 15 due to imbalances in the 3pool Curve. USDT price fell 0.3% to around 0.997 as its weight in the 3pool curve increased to over 70% from the usual 33.1%.
Curve’s 3pool is a stablecoin pool for decentralized finance that holds huge amounts of liquidity in the top three stablecoins: USDT, USD Coin (USDC) and Dai (DAI). A significant increase in the weight of a particular stablecoin in the pool indicates a large sale of that asset.
Cryptocurrency trading bot borrows $200 million for $3 profit
A cryptocurrency trading bot programmed to make arbitrage trades performed various complex steps within the Ethereum blockchain — including taking a $200 million flash loan — to secure a profit of just $3.24.
On June 14, blockchain analytics company Arkham Intelligence shared a breakdown of the bot’s movement. According to the company, the transaction was carried out by an arbitrage bot that uses flash loans.
Uniswap releases version 4 code that enables new types of liquidity pools
Uniswap Labs has released draft code for Uniswap v4, announcing the move in a June 13 blog post from Uniswap founder Hayden Adams. The new code includes “hooks,” or plugins, that allow developers to create their own liquidity pools.
Uniswap is the largest decentralized crypto exchange by volume. Its latest version, v3, was deployed on May 4, 2021.
Attacker drains $800,000 from DeFi protocol Sturdy Finance
DeFi protocol Sturdy Finance lost 442 Ether (ETH), worth nearly $800,000 at the time of writing on the security exploit. The attacker exploited a vulnerability that ultimately manipulated the faulty pricing oracle, allowing them to siphon funds from the protocol.
On June 12, blockchain security firm PeckShield alerted Sturdy Finance and reported a transaction that appeared to be related to price manipulation. Almost an hour later, the DeFi protocol said it was aware of the abuse and responded by suspending all markets and assuring its users that no other funds were at risk.
Robust finances reopened its stablecoin market June 16, almost three days after the exploitation. The DeFi protocol also offered a $100,000 reward to anyone who could help make an arrest or recover funds.
Hashflow ensures that users will be taken care of after a $600,000 exploit
Cryptocurrency trading platform Hashflow has assured that affected users will be “made whole” following a breach that saw at least $600,000 worth of digital assets removed from the platform. On June 14, blockchain security company PeckShield announced an ongoing issue with trading platform Hashflow.
A few hours later, Hashflow notified users that it was addressing a current situation related to contract approvals, as flagged by PeckShield.
DeFi Market Overview
The overall market value of DeFi saw a bearish decline last week. Data from Cointelegraph Markets Pro and TradingView shows that the top 100 DeFi tokens by market cap had a bearish week, with most tokens trading in the red. The total value locked in DeFi protocols remained below the $50 billion mark.
Thanks for reading our roundup of this week’s most impactful DeFi changes. Join us next Friday for more stories, insights and education on this dynamic space.