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DeFi’s ‘Flash Loan’ Crisis Worsens, Algorithms to the Rescue

Pancake Bunny, BurgerSwap, Belt Finance — What do these three protocols have in common? Apart from them being DeFi-based, they all have been victims of flash loan attacks in the past month. Based on data estimates, nearly $167 million has been siphoned in May 2021 by perpetrators who have leveraged zero-collateral loans to the T. […]

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Pancake Bunny, BurgerSwap, Belt Finance — What do these three protocols have in common?

Apart from them being DeFi-based, they all have been victims of flash loan attacks in the past month. Based on data estimates, nearly $167 million has been siphoned in May 2021 by perpetrators who have leveraged zero-collateral loans to the T.

Latest Attacks; the Flash Loan Crisis is Here to Stay

Pancake Bunny, a Binance Smart Chain-based yield-farming aggregator, was attacked on 20 May. The valuation of the flash loan attack is estimated to be around $200 million. Termed as an “economic exploit” by the team, the incident took a massive toll on the project’s health, and its token BUNNY saw a 95% dump in price.

Similarly, BurgerSwap, a decentralized automated market maker on BSC, lost $7 million through 14 transactions on 28 May. The hackers, as claimed by the BurgerSwap team, created a fake coin to initiate the attack. They then adjusted the routing to manipulate the prices and steal the funds.

Furthermore, Belt Finance, a DeFi platform providing market-making solutions, lost a whopping $50 million to a flash loan attack. By creating a smart contract that uses Pancake Swap for loans, the hackers exploited the beltBUSD pool. And in 8 transactions, damage of $50 million, including a profit of $6.2 million, was inflicted.

These attacks feature here due to recency bias. But, these stats reflect the voluminous nature and the frequency of these attacks. Unfortunately, with no concrete measures in place, the flash loan crisis shall continue to deter users from investing in DeFi-based projects.

Vulnerabilities in the DeFi Space

The increased frequency of flash loan attacks is sending ripples across the DeFi community. Apart from the monetary loss, we also see a major dip in confidence amongst the dApp developers. Likewise, these headlines further fuel skepticism against the blockchain and DeFi community impeding the efforts being put in for their mass adoption.

All these factors culminate in questioning the amount of undue risk in the DeFi space with special emphasis on its security and integrity. With over $66 billion locked in DeFi, it is time the vulnerabilities in the DeFi space are solved in absolute terms.

The CMO of Chainlink Labs, Adelyn Zhou stated that “flash loan attacks do not create vulnerabilities within DeFi – they simply reveal vulnerabilities that already exist.” This statement calls out the DeFi protocols that are still relying on centralized oracles.

Looking at the modus operandi of the flash loan attacks, hackers place their bets on vulnerable centralized oracles to become temporary whales. This provides them the capital and the leverage to influence, manipulate, and siphon funds of gargantuan proportions.

This leaves us with the conclusion that any DeFi protocol dependent on a sole price oracle is vulnerable to flash attacks. But, what if the trading infrastructure promoted the interconnectivity of the centralized exchanges? Then, oracles dependent on multiple exchanges, with volume and liquidity differences, can shield themselves against flash attacks.

This is specifically what Flowdesk aims to achieve with their market-making infrastructure. By combining more than 40+ platforms, Flowdesk advances the interconnectivity of centralized exchanges.

The Dire Need for Market-Making Between CEX and DEX

The cryptocurrency market is fractured, and exchange platforms are scattered across the globe. Although we can see this as an advantage to crypto projects, more often than not, this dissociated liquidity comes at a crucial cost.

Maintaining a project token’s liquidity is a must, and although DeFi helps projects manage their own tokens, the tools to apply these principles are missing on centralized exchanges (CEXs) like Binance and Coinbase.

To surmount these challenges, Flowdesk, a technological market-making company is aiming to bring liquidity to crypto projects across all platforms — CEXs and DEXs — 24/7. Their financial expertise coupled with their specialized market-making algorithms enables constant liquidity and healthy market conditions for the digital asset ecosystem that, in some cases, is extremely volatile.

As the trend of Bridges, Swaps, and L2 protocols gets widely popular, it is important to maintain credible market conditions across every trading pair, on all protocols at all times. This helps prevent arbitrage opportunities that defer early investors from investing in projects. Liquidity and trust take time to build organically, and it’s mandatory for any project to survey their market. With Flowdesk’s constant market data aggregation and normalization, every project can have a global view of their market and an understanding of their market flow.

This trust is also built with the help of the virtual assets service providers. As cryptocurrency becomes broadly accepted and known, its reputation still needs to be proven. Flowdesk aims to bring back trust into the digital asset ecosystem. As such, they are operating in France, the nation with one of the strictest regulatory frameworks, and are awaiting the deliverance of the Digital Asset Service Provider (DASP) authorization from the French regulating authorities. While these frameworks can be seen as strict, they aim at protecting the end-users, who very often suffer due to the risks posed by the inferior quality of certain DeFi protocols.

Conclusion

Being an algorithm-bound market maker, Flowdesk is championing the upkeep of regulatory compliance. Not only are they infusing trust into the industry but their open-source culture is also promoting collective growth. Both these factors together contribute to making DeFi and the crypto market more healthy and trustworthy. With these attributes in place, their widespread adoption turns into a mere formality.

Image by Gerd Altmann from Pixabay

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Source: https://bitcoinist.com/defis-flash-loan-crisis-worsens-algorithms-to-the-rescue/?utm_source=rss&utm_medium=rss&utm_campaign=defis-flash-loan-crisis-worsens-algorithms-to-the-rescue

Blockchain

The GBA Annual Achievement Awards

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In April 2019, during the Guatemalan election, the people of Guatemala suspected that voting fraud had occurred. Since additional elections were scheduled for August 2019, citizens wanted assurance that there would be no fraud in the next election. That was the impetus for Fiscal Digital, a Guatemalan citizen volunteer organization, to utilize a public immutable blockchain for their elections. Against overwhelming opposition, the Organizer of Fiscal Digital, Carlos Toriello Herrerias, was successful in implementing a blockchain-based voting solution in Guatemala. Carlos was the winner of last year’s GBA Annual Achievement Award for Courage.

The Government Blockchain Association (GBA) is pleased to announce that the 2021 Annual Achievement Awards will be happening live in Washington DC, (9/30/2021) as part of Government Blockchain Week. Four awards will be presented in the areas of Leadership, Innovation, Social Impact and Courage. Nominations of individuals deploying exceptional blockchain use will come from around the globe. From securing land titling records, to self-sovereign medical records, to immutable and verifiable voting, blockchain is affecting every industry that transfers value. The winners of these awards are truly making a mark in history, and there is still time to nominate your colleague.

Winners will be awarded by MC Robert Levin of Emergingstar Capital, from a stage in Washington DC in front of a distinguished audience. Receiving a GBA Annual Achievement Award is a credential that can be listed on Linked In, resume’, and any other social media as a recognized global achievement. Do not miss this opportunity to promote the exceptional achievers in your circle. Nominate them for the GBA Annual Achievement Awards today.

Annual Achievement Awards nominations are open until August 15. Winners will be announced from stage in Washington DC on September 30th. All uses of blockchain technology are eligible.

Source: Plato Data Intelligence

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Blockchain

Happy birthday Ethereum!

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Today marks the sixth birthday of the Ethereum network and Ether – the world’s second-largest digital asset.

Ethereum was created by the crypto innovator Vitalik Buterin when the project was officially proposed in a white paper in late 2013.

The following January, a 20-year-old Buterin, headed down to the annual North American Bitcoin conference in Miami, Florida, clutching that white paper.

It’s there he met his Ethereum co-founders – a group of Canadian crypto evangelists who immediately saw the huge potential of Buterin’s idea.

Crammed into a little beach house, they invited Buterin to stay and turn his vision into reality.

Within six months, Vitalik had dropped out of the computer science program at the University of Waterloo, and moved out to Zug, Switzerland (now known as crypto valley) along with the rest of the group-turned-team.

The founding members of the Ethereum network included Gavin Wood (Solidity smart contract language creator), Anthony di Lorio (DeCentral founder), Joseph Lubin (ConsenSys founder), and Charles Hoskinson (Cardano founder).

After the completion of an $18m funding round in 2014, development begun and Ethereum slowly materialised as a viable decentralised network.

However, tensions between members set in and the team begun to unravel.

Charles Hoskinson was the first to go, many others would follow.

Today, only Buterin still works on the project.

After a period of successful testing on July 30, 2015 – the first block of Ethereum was mined and the Ethereum mainnet was launched.

The network has rapidly grown to become one of the most prominent components of DeFi and the crypto industry at large. However, a victim of its own success, gas and transaction fees have begun to slow.

This is why Ethereum is now preparing for an imminent scalability update to Ethereum 2.0.

Watch this space.

More crypto news and information

If you want to find out more information about Bitcoin or cryptocurrencies in general, then use the search box at the top of this page. Here’s an article to get you started.

As with any investment, it pays to do some homework before you part with your money. The prices of cryptocurrencies are volatile and go up and down quickly. This page is not recommending a particular currency or whether you should invest or not.

Disclaimer: The views and opinions expressed by the author should not be considered as financial advice

 

 

PlatoAi. Web3 Reimagined. Data Intelligence Amplified.
Click here to access.

Source: https://coinrivet.com/happy-birthday-ethereum/

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Blockchain

Binance to halt derivatives and futures trading in Europe

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Binance has officially halted futures and derivatives products offerings across the European region, commencing with Germany, Italy, and the Netherlands. 

The leading cryptocurrency exchange continues to limit products to users amid the ongoing challenges it faces from global regulators.

The move means users from these countries will not be able to open new futures or derivatives products accounts “with immediate effect”. 

Binance confirmed that if existing users have any open positions in these markets, they are advised to close them, noting that a further announcement would be made at a later date to confirm a 90-day period in which to close open positions.

Binance clarified the importance of European markets to their offerings and invited regulators to open a dialogue to discuss the requirements necessary at local levels. The discussion marks Binance’s continued efforts to collaborate with local and national regulators on the necessary requirements to operate in these areas.

“The European region is a very important market for Binance, and it is taking proactive steps towards harmonising crypto regulations, which is a positive sign for the industry,” wrote Binance in a tweet.

Binance also said it does “not actively market Futures and Derivatives Products locally” and that they plan to start “further scaling down” access to these products within Europe. 

The announcement follows Binance’s recent removal of high leverage trading products from its product offerings and a seemingly relentless wave of scrutiny and oversight from global regulators. 

Despite recent efforts to appease regulators by CEO Changpeng Zhao (CZ), Binance has been forced to delist certain margin trading pairs and cease trading and support for stock tokens like Tesla and Coinbase. Binance is also preparing to cut daily withdrawal limits from two Bitcoin (BTC) to 0.06 BTC in August.

Additionally, leading banking institutions and payment processors in the UK have started to limit transfers to and from Binance, citing “excessively high fraud rates” as a key reason for the decision. 

Binance has also been banned in Malaysia and given 14 days notice to shut down its operations. According to an announcement released today, the Securities Commission of Malaysia has issued public enforcement actions against Binance for “Illegally Operating in Malaysia.”

Binance has been given 14 business days from July 26 to comply. The order demands that Binance disables its website and mobile apps in Malaysia alongside ceasing “all media and marketing activities”.

The announcement also mandated Binance CEO Changpeng Zhao to ensure full compliance with the order. Malaysia’s securities regulator also urged citizens to desist from trading with crypto exchanges operating in the country illegally.

Binance-owned exchange WazirX is also being investigated by authorities in India to determine whether it was complicit in alleged money-laundering conducted by betting apps, which collected more than $134 million in the past 10 months. The Enforcement Directorate is investigating allegations that Chinese-operated betting apps laundered a portion of funds through WazirX.

CEO Changpeng Zhao remains optimistic about the future of Binance despite the recent regulatory issues faced by the exchange. He recently disclosed that Binance US, which operates separately from Binance, was looking to go public.

“Binance US is looking at the IPO route,” he said.

“Most regulators are familiar with a certain pattern or having headquarters, having corporate structure. But we are setting up those structures to make it easier for an IPO to happen.”

 

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Source: https://coinrivet.com/binance-to-halt-derivatives-and-futures-trading-in-europe/

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Blockchain

PayPal to launch crypto trading in UK

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PayPal has announced an extension of its cryptocurrency trading platform to UK customers.

This is a significant change of tune by the company, whose former CEO Bill Harris described Bitcoin in 2018 as “a useless payment system, and a ridiculous store of value”.

Now, however, the electronic payment service has slowly begun integrating cryptocurrencies on a large scale, with the moves described as part of an incremental new strategy by new CEO Dan Schulman as he revealed details in his recent Q2 reporting call.

“We continue to be really pleased with the momentum we’re seeing on crypto,” he said.

“We’re going to launch, hopefully, maybe even next month in the UK, open up trading there.”

Trading of crypto assets such as Bitcoin (BTC), Ethereum (ETH), and LiteCoin (LTC) is planned to arrive for UK users by the end of August. Currently, PayPal allows cryptocurrency transactions up to $100,000.

However, PayPal retains control of user’s cryptocurrency in a move reminiscent of traditional centralised financial practices, with no mechanism for transfers to private wallets.

This leads to the ‘not your keys, not your coins’ argument.

Jose Fernandez da Ponte, Vice-President for Blockchains, Crypto, and Digital Currencies suggested this will be a future feature incorporated into the Venmo platform.

Venmo – an easy payment app owned by PayPal – has become a primary facilitator of cryptocurrency trading for the company. The app is popular in the United States, but has made little impact on the British market.

Schulman indicated that Venmo is preferential as it can be used easily in day-to-day commerce, also noting the app’s rapid growth to 70 million users and revenues in excess of 180%.

“We’re also seeing strong adoption and trading of crypto on Venmo,” he added.

“In this quarter, we expanded the Venmo value proposition to allow merchants and consumers to pay for goods and services.”

Crypto in commerce seems to be the predominate focus of PayPal, although its ‘super app’ will operate a centralised trading exchange, this is a competitive space with the likes of DashDirect launching earlier this week.

Automated Clearing House (ACH) sits at the core of PayPal’s market-dominating strategy, allowing vendors and merchants to set-up direct debits to user’s crypto wallets.

“We’re working right now on transfers to third-party wallets, and we really want to make sure that we create a very seamless process for taxes and tax reporting,” Schulman explained.

“And so we’re really looking at how do we integrate that into both the trading and the buy with crypto on our platform.”

Implementation of DeFi products into PayPal’s ecosystem is fundamental to the firm’s potential success in integrating commerce with mass adoption, a fact that doesn’t escape their CEO.

“How can we use smart contracts more efficiently?” he asked in the Q2 call.

“How can we digitise assets and open those up to consumers that may not have had access to that before?”

“There are some interesting DeFi applications as well. And so we are working really hard.”

Needless to say, PayPal’s moves on cryptocurrency are of huge significance for crypto adoption – with the platform representing an easy and widespread point of entry for new crypto users.

More crypto news and information

If you want to find out more information about Bitcoin or cryptocurrencies in general, then use the search box at the top of this page. Here’s an article to get you started.

As with any investment, it pays to do some homework before you part with your money. The prices of cryptocurrencies are volatile and go up and down quickly. This page is not recommending a particular currency or whether you should invest or not.

Disclaimer: The views and opinions expressed by the author should not be considered as financial advice

Disclaimer: We do not give advice on financial products.

PlatoAi. Web3 Reimagined. Data Intelligence Amplified.
Click here to access.

Source: https://coinrivet.com/paypal-to-launch-crypto-trading-in-uk/

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