Welcome to Finance Redefined, your weekly dose of essentials decentralized finance (DeFi) insights – a newsletter designed to bring you the most important developments from the past week.
Last week in DeFi was dominated by exploits and hacks, with three DeFi platforms losing almost $39 million. Alphapo hot wallets were mined for over $32 million, Era Lend was mined for $3.4 million, and decentralized finance protocol Conic Finance was mined for almost $3.5 million.
Better yet, the DeFi ecosystem was abuzz with the development of zero-knowledge-proof (ZK-proof) scaling solutions as the layer 2 sector heats up despite the market bearish.
The exploits and bearish market situation have taken a toll on DeFi protocols, with the total value locked in DeFi protocols seeing a significant decline over the past week.
Alphapo hot wallets hacked for more than $31 million
Crypto payment platform Alphapo saw around $31 million withdrawn from its Ether (ETH), TRON (TRX) and Bitcoin (BTC) hot wallets, security experts reported on July 22. As the amount of Bitcoin stolen is uncertain, the numbers could be even higher.
According to on-chain detective ZachXBT, the funds were stolen from the Ethereum network, then exchanged for ETH before being linked to the Avalanche and Bitcoin blockchains. DeDotFi’s security team said a leak of private keys could be behind the hack. Investigations are still ongoing.
Era Lend on zkSync Exploited for $3.4 Million in Reentry Attack
zkSync lending app Era Lend was mined for $3.4 million in crypto, according to a July 25 report from blockchain security firm CertiK. The attacker used a “read-only reentry attack” to drain funds, which is an attack that interrupts a multi-step process and then causes it to continue after a malicious action has been performed. Specifically, a “read-only” reentry does not update the state of a contract.
According to the report, the attacker drained funds in two transactions using the external account 0xf1D076c9Be4533086f967e14EE6aFf204D5ECE7a. The attacker relied on a vulnerability in “the callback function and _updateReserves” to manipulate a contract to report old values that had not yet been updated.
Knowledgeless technology development intensifies in a bear market
ZK proofs are cryptographic methods that allow one party to prove to another party that something is true without revealing any underlying sensitive private information. The technology has been a hot topic of discussion among crypto veterans of late. On July 19, during the zkDay event – part of the Ethereum Community Conference in Paris – more than 2,000 attendees arrived at a small venue on Rue l’Aubrac to get a glimpse of the latest ZK projects on display . P0x Labs, the developer behind the ZK Manta Network protocol, even announced a $25 million increase during the event.
Currently, technology plays a critical role in scaling Layer 2 solutions. By computing a simple cryptographic proof on Layer 2, transactions can be finalized almost instantly and the record is sent back to the underlying blockchain. underlying as succinct proof. At the same time, ZK proofs can enable private transactions that do not transmit sensitive information to observers.
Optimism trading volumes exceed those of Abitrum for the first time in six months
The Optimism network has exceeds Arbitrage of transaction volume for the first time in six months, according to July 27 data from blockchain analytics platform Artemis. Both networks are Ethereum Layer 2 that use optimistic rollup technology, which compresses and aggregates transactions before submitting them to Ethereum, potentially reducing transaction fees.
The Optimism volume fell behind Arbitrum in January, as the first season of its “quest” feature ended. However, it reclaimed the top spot on July 25 when Worldcoin launched.
DeFi Market Overview
The total DeFi market value saw a bullish surge after three bearish weeks. Data from Cointelegraph Markets Pro and TradingView shows that the top 100 DeFi tokens by market cap had a bullish week, with most tokens trading in the green. The total value locked in DeFi protocols has remained below $50 billion.
Thank you for reading our summary of this week’s most notable DeFi developments. Join us next Friday for more stories, ideas and information about this dynamically evolving space.