Welcome to the latest edition of the Cointelegraph decentralized financial newsletter.
It has been a tumultuous week with defamation, hacking, bailouts, and new developments in decentralized finance. Read on for a summary of the most impactful stories from the past seven days.
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Wonders get lost in the epic Sifu
After former QuadrigaCX co-founder Michael Patrin was revealed as founder of Wonderland’s DeFi protocol, known on social media as @0xSifu, a subsequent community vote decided to permanently close Wonderland due to unresolved security issues.
The saga began when DeFi investigator Zachxbt stripped Sifu, a popular figure in the digital asset space, for allegedly fraudulent and illegal activities, most notably the $145 million loss on Canadian crypto exchange QuadrigaCX in December 2018.
After learning about Sifu’s true identity a month before this week’s announcement, Daniel Sistagali, co-founder of Wonderland and Abracadabra’s stablecoin protocol, asked community members an important question: “Should we liquidate or continue to fight for DAO-investments? Is it regulated? A new revolutionary?” Sestagalli expressed his personal preference for being the last to fight.
Technically, on January 15, Wonderland hit an all-time high of $776.64 million in closed total value, or TVL. However, as a result of this revelation, TVL fell significantly to $78.57 million on January 25, down 89.9%. At the time of writing, that number has recovered slightly to $408.59 million.
In true Web3 fashion, the decision to “end Wonderland and return the treasury to its owners” was up for a vote. The two-day management intervention resulted in a split decision, an inconclusive majority: 116,000 TIME Tokens were rated as No and 95,000 as Yes.
In response, co-founder Sestagalli felt that “the team’s duty is to accept the will of the token holders. Since the vote is so close to 50/50, there is only one way to go forward – pay off/relax.” He confirms in a follow-up tweet.
Community discussions are underway in an effort to find a solution acceptable to the Wonderland saga for all involved. The proposals currently in the lead are a merger with Abracadabra or a transition to a DAO structure with more transparency.
$321 million from wormhole exploitation, saved by father
This week, the Wifihole DeFi Bridge protocol suffered a massive breach of network security involving 120,000 encapsulated Ether (wETH), which equates to $321 million at the time of impact — the second largest breach in the history of decentralized finance after the $610 million Poly Network hack. In August 2021
Wormhole is known in the industry for its cross-chain token bridge service, where users can move cryptocurrencies between chains like Ethereum, Solana, and Polygon, among others, without interacting with central exchanges.
After analyzing the blockchain data, it turned out that the attacker had withdrawn 120,000 WETH to Solana and then exchanged 93,750 for ether (ETH) worth $254 million. The remainder of WETH was exchanged for Solana (SOL) and USD Coin (USDC) at Solana.
Subsequently, the hacker spent part of the funds on an asset purchase round that included SportX (SX), Meta Capital (MCAP) and finally Crypto Karma (FUCK), as well as the much-awaited asset that will be released soon. , Bored Ape Yacht Club (APE) icon.
In response, the Wormhole team promised the community that the supply of tokens, as well as the one-for-one backed assets, would be fully recovered, and would offer the attacker a generous white-fault prize for a full refund.
The hack could have severe consequences for the protocols and platforms in the Solana ecosystem that relies on WETH security. If their assets are not backed by WETH, investors will not be able to use the service and may lose confidence and thus reduce assets. Solana’s stock fell about 13 percent due to the impact of the news.
Shuffled, Wormhole’s parent company, Jump Crypto, stepped in to rescue the platform and recover all lost funds, an action Wormhole confirmed in a tweet.
Despite the solution for affected platform users, there are still concerns about where the $321 million was lost, as well as the intentions of the hacker.
