Ethereum projects go offchain
While the crypto market is cooling off and DeFi users are enjoying relatively low onchain transaction fees for interacting with Ethereum-based protocols, the community is actively working on scaling solutions in anticipation of the next network congestion.
Ethereum’s offchain scaling solution Polygon (MATIC) saw a wave of adoption reaching more than $7.5 billion in total value locked, according to DeFi Pulse, with major DeFi projects such as Sushi, Curve, 0x, and 1inch joining the network. Polygon is based on the Plasma technology with Proof-of-Stake side chains, allowing high transaction throughput with low fees, which are paid in network’s native token MATIC.
Following the surge in Polygon adoption, DeFi researchers like Chris Blec raised concerns over the network’s centralization, because its security relies solely on 5 of the 8 multisig keyholders, who have a power to upgrade project’s contracts. This could be a major security threat, especially taking into account a rather hostile jurisdiction of the India-based startup. The Polygon team admits the current centralized state of its network, adding that in the future the project should be moved from multisigs to governance-controlled proxies with an end goal of completely removing upgradability.
In another vein, the team behind Arbitrum — another layer-2 scaling solution that has full EVM (Ethereum Virtual Machine) compatibility and uses optimistic rollups to increase transaction throughput — has launched its mainnet beta called Arbitrum One. According to an official announcement, more than 250 teams requested an early access to the network, which will assure that all major DeFi projects have enough time to deploy and test their protocols before Arbitrum One will be open to end users.
In fact, DeFi project SushiSwap has already deployed its DEX to Arbitrum One without any governance vote as part of team’s multi-chain mission to integrate the AMM protocol into various blockchains and offchain scaling solutions.
Meanwhile, the Uniswap community took more democratic approach and voted in favor of deploying the popular DeFi protocol to Arbitrum One, since Uniswap’s recently released version 3 lacks gas saving improvements.
Critics, however, argue that apart from running polls with obvious outcomes, the Uniswap team should have also asked UNI holders before making controversial decisions. For example, Uniswap devs made a unilateral decision to release the latest version of the DEX under a restrictive Business Source License 1.1 without any governance voting, which raised questions about the true value of protocol’s governance token UNI.
Binance Smart Chain-based protocols are shattered by exploits
BurgerSwap, a BSC-based Uniswap copycat, has suffered from a security breach resulting in a loss of $7.2 million. According to Uniswap founder Hayden Adams, the flash loan attack was possible because BurgerSwap’s team removed an important line from the original source code.
A few days later, Belt Finance — another BSC-based AMM protocol — has been attacked, resulting in a loss of $50 million. An adversary was able to exploit the project’s beltBUSD pool before the team spotted the attack and paused withdrawals from the said pool. According to a post-mortem report, developers patched the attack vector and announced a compensation plan, committing to re-distribute 67% of unlocked team’s tokens to the victims of the attack through an incentivized liquidity mining program.
In a response to more than 8 similar flash loan exploits that have recently shattered the BSC network, Binance blamed an organized group of hackers for the series of attacks. Although, skeptics speculate that some of the exploited projects were scams to begin with, disguising the so-called ‘rug pulls’ as hacks.
In other news
Following another China’s crackdown on Bitcoin, Hong Kong authorities confirmed intentions to bar retail investors from trading cryptocurrencies. At the same time, HK activists are using IPFS and the LikeCoin blockchain to preserve coverage of city’s pro-democracy movement amid a recent wave of censorship.
Both r/Bitcoin and r/Cryptocurrency subreddits have recently surpassed 3 million subscribers each. r/Bitcoin has been the largest crypto-focused sub since its creation in 2010. r/Cryptocurrency sub was created 3 years later with a goal of providing a space for a more broader discussion about various altcoins and in 2020 it introduced MOON tokens to reward users for participation.
The president of El Salvador, Nayib Bukele, announced the introduction of a legislation that will make Bitcoin a legal tender in the country. This comes as a key part in a major plan to build a new financial ecosystem, with the cryptocurrency created by Satoshi Nakamoto as the base layer. Bukele has been a Bitcoin supporter since 2017.