Weekly DeFi Index

This week's price index dropped by -7.26%, while volume and volatility indices were positive at +11.26% and +3.16%, respectively.

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DeFi Index Tokens

*DeFI index tokens: AAVE, BAL, CAKE, COMP, CRV, CVX, FXS, JOE, LDO, LINK, MKR, OSMO, REN, SNX, SPELL, SUSHI, UNI, VVS, YFI.

News Highlight 

• Acala, the “DeFi hub” of the Polkadot network, suffered a major security breach. The exploit allowed the attackers to mint an additional 1.2 billion aUSD, the native stablecoin of the network, in its iBTC/aUSD liquidity pool. Following the exploit, aUSD depegged and plunged to a low of US$0.009 on 14 August. In response to the incident, Acala passed a proposal to burn US$1.28 billion aUSD to regain the peg. At the time of writing, aUSD is trading around US$0.88. 

• Decentralised exchange Curve Finance experienced a frontend attack on 10 August. Hackers compromised the Curve website to redirect unwitting users or their transactions to a malicious destination. The thieves made off with US$570,000 of ETH and part of the stolen funds were frozen.

• DeFi protocols banned users following OFAC sanctions on Tornado Cash. However, this derives a so-called ‘dust attack’. Crypto users reported being blocked by major DeFi protocols after attackers sent a small amount of Ether (usually 0.01 ETH) via Tornado Cash. More than 600 addresses were hit with the same 0.01 ETH ($19.25) ‘dust attack’, including crypto exchanges and public figures.

• Ethereum’s third and final testnet merge was completed on Goerli. This is one step closer to Ethereum's mainnet upgrade, which is expected to happen this year.

DEX Protocols Metrics

Sources: CoinGecko, DeFi Llama, Nomics, Crypto.com Research

Lending Protocols Metrics

*LDR (Loan to Deposit Ratio) = Total Borrowed / TVL

Sources: CoinGecko, DeFi Llama, Crypto.com Research

Charts on Layer 2 Projects

• Overall, the L2 market saw +6.99% growth over the past week. Optimistic rollup projects rose +4.15% and zero-knowledge rollup projects dropped -4.61%. Sidechain projects gained traction with +18.02% growth, mainly driven by Polygon (+20.50%). Ethereum’s TVL rose +1.17%.

• The TVL for almost all of optimistic rollup’s projects were negative last week except Arbitrum (+7.75%) and Optimism (+0.04%).

• Although the overall TVL of ZK rollups fell, StarkNet was under the spotlight as its TVL grew +14.07%.

Further Reading 

• Arbitrum launches gaming and social App-focused layer 2 chain Arbitrum Nova

• DeFi protocols Aave, Uniswap, Balancer, ban users following OFAC sanctions on Tornado Cash

• Tornado Cash DAO shuts down as it “can’t fight the US” and keep contributors safe

• BlueBenx fires employees, halts funds withdrawal citing $32M hack

• Interlay launches Bitcoin-backed stablecoin iBTC on Polkadot network

• DeFi firms Iron Bank, Yearn Finance join layer 2 protocol Optimism

• Cross-chain bridge RenBridge laundered $540M in hacking proceeds: Elliptic

Thank you for reading! We hope you find our Weekly Defi and Layer 1 & Layer 2 News Update enlightening!

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