Welcome to Finance Redefined, your weekly dose of key decentralized finance (DeFi) insights — a newsletter built to bring you the most significant developments from the past week.
This week, Redefining Finance looks at the growing popularity of zero-knowledge, evidence-based scalable solutions. Zero-knowledge rollups (ZK-rollups) technology have gained a lot of traction over the last year thanks to their increased use in the Ethereum ecosystem.
Bug bounties are seen as a great bounty system for white hat hackers to get rid of bugs in the DeFi ecosystem, which often fall victim to exploits. However, recent analysis has shown that these programs have had mixed results.
After a series of exploits on the Multichain protocol over the past few weeks, the founders of Connext proposed a “Sovereign Bridged Token” standard to prevent future problems and exploits.
Algorand’s decentralized lending protocol will expire at the end of the year as developers claim building a lending protocol and lending is “no longer a viable path” for the protocol.
The top 100 DeFi tokens have had a mixed week in terms of price action, followed by a final spike on July 13, helped by a partial ruling for Ripple in its fight against the United States Securities and Exchange Commission (SEC), leading to an 84% surge in XRP (XRP) prices. ).
The Ethereum scaling protocol encourages zero-knowledge usage in 2023
The Ethereum scaling protocol dominates ZK-rollup usage, with major launches, new research, and healthy competition among the highlights in the sector report published by ZKValidator.
The node infrastructure operator’s “State of ZK Q2” report reflects key events across the ZK ecosystem, with the notable launch of ZK-powered layer 2 highlighting the use of the technology for scaling compared to other market segments.
The decentralized lending protocol Algorand Algofi will close at the end of 2023
Algofi, a lending and lending protocol built on top of the Algorand decentralized finance blockchain, is about to be shut down.
According to the July 11 announcement, “developers’ faith in the power of Algorand technology and the new consensus algorithm has not wavered,” however, the Algofi platform will be shutting down soon.
Bug bounties can help secure blockchain networks, but have had mixed results
Bug bounties are programs that organizations offer to incentivize security researchers or ethical or white hat hackers to find and report vulnerabilities in their software, websites or systems. Bug bounties aim to improve overall security by identifying and fixing potential vulnerabilities before bad actors can exploit them.
Organizations implementing bug bounty programs usually establish guidelines and rules outlining the scope of the program, the targets they are eligible for, and the types of vulnerabilities they are interested in. Depending on the severity and impact of the vulnerabilities found, they may also determine the reward offered for validating a bug submission, ranging from a small amount of money to a significant cash prize.
Arbitrum-based Rodeo Finance exploited the exploit for the second time, $1.5 million was stolen
Decentralized finance (DeFi) protocol based on Arbitrum Rodeo Finance exploited $1.53 million on July 11. The DeFi protocol was exploited using a code vulnerability in its Oracle, causing the loss of over 810 Ether (ETH). Rodeo Finance was previously exploited on July 5 for around $89,000 due to a vulnerability in the mintProtocolReserves function.
According to data shared by blockchain analytics firm PeckShield, the exploit then bridged the stolen funds from Arbitrum to Ethereum and exchanged 285 ETH for unshETH. The exploit then deposits the ETH on the Eth2 stake. Finally, the exploits routed the stolen ETH using the popular mixer service Tornado Cash, which exploits often use as an exit route to obfuscate transaction trails.
The founders of Connext proposed a ‘Sovereign Bridged Token’ standard after the Multichain incident
The July 7 Ethereum upgrade proposal (EIP) seeks to standardize how tokens are bridged between networks. The “Sovereign Bridged Token” standard, or EIP-7281, allows token issuers to create canonical bridges across multiple networks.
The proposal was co-authored by Arjun Bhuptani, founder of the Connext liaison protocol. In a July 7 social media post, Buptani claimed the protocol would help prevent issues like the July 6 Multichain incident, which some experts described as a hack.
DeFi market overview
The total DeFi market value saw a bullish spike after three bearish weeks. Data from Cointelegraph Markets Pro and TradingView shows that the top 100 DeFi tokens by market cap have had a bullish week, with most tokens trading in the green. The total value locked in DeFi protocols remains under $50 billion.
Thanks for reading our roundup of the week’s most impactful DeFi developments. Join us next Friday for more stories, insights and education regarding this dynamically evolving space.
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