The past week in DeFi saw the developers behind Base and Optimism protocols collaborate on a revenue and governance sharing framework, while evidence emerged regarding the $1.5 billion Multichain hack and victims search for answers, and blockchain security provider Quantstamp introduced a new DeFi tool to detect flash loan attack vulnerabilities. Additionally, Shiba Inu's Ethereum layer 2, Shibarium, is preparing for a relaunch, and the DeFi market experienced a minor dip in total value locked.
Hackers have targeted decentralized finance (DeFi) protocols almost 500 times since 2019, stealing a total of $6 billion, highlighting the vulnerabilities of the smart contracts that underpin DeFi platforms. The recent surge in hacks, along with declining market share and increasing interest rates, has led to the closure of several platforms and calls for regulations to prevent money laundering and enhance security measures.
Binance CEO Changpeng "CZ" Zhao predicts that decentralized finance (DeFi) has the potential to surpass centralized finance (CeFi) in the next bull run, emphasizing the positive impact of regulatory clarity and the need for broader cryptocurrency adoption worldwide.
The International Monetary Fund (IMF) and the Financial Stability Board (FSB) have published a joint policy paper with recommendations for regulating stablecoins and decentralized finance (DeFi) activities, in response to the risks associated with crypto assets.
Global securities regulators have outlined a blueprint to hold participants in decentralized finance (DeFi) accountable for their actions and protect market stability, as the sector has experienced significant shrinkage and is being used for money laundering; regulators are proposing a framework to ensure investor protection, risk management, and cross-border cooperation.
Binance CEO predicts that DeFi will surpass centralized finance in the next bull run, while the US CFTC takes regulatory action against three DeFi protocols for alleged registration failures; a report from the Bank for International Settlements argues that pure DeFi has little use case in the real world due to the need for oracles; Binance is refunding $1 million to users over a token incident, and the Shiba Inu ecosystem's layer-2 network, Shibarium, has reached over one million wallets but has yet to impact the price of SHIB token.
Finoa, a Berlin-based cryptocurrency custody firm, is expanding its services to include decentralized finance (DeFi) through its custodial wallet infrastructure, offering regulated institutions access to a curated list of web3 platforms and permissioned DeFi applications.
The Bank for International Settlements (BIS) has successfully used novel intermediaries to reduce liquidity risk and enhance security for central bank digital currencies (CBDCs) in its Project Sela, which feeds into CBDC projects for the Israeli shekel and Hong Kong dollar. The project has demonstrated the feasibility of implementing secure and private CBDC systems on a central bank's ledger, protecting against hacks and ensuring privacy for users.
Decentralized finance (DeFi) projects in the US face significant regulatory risk, according to Synthetix founder Kain Warwick, who believes that US regulators are neglecting the advantages of transparent and open infrastructure in financial markets and that it will be left to the courts to resolve these issues.
DeFi has become centralized, with stablecoins and real-world assets dominating the market, but crypto staking yields can bring decentralization back to the space by offering a viable alternative.
Decentralized finance (DeFi) derivatives ecosystem Avantis Labs has raised $4 million in a seed funding round led by Pantera Capital to grow its flagship product Avantis, a perpetual-trading and market-making protocol that aims to enable forex and commodities to be hedged and traded on-chain without the need for tokenization, with plans to expand its capabilities beyond perpetual trading to include options trading in the future.
The Bank for International Settlements (BIS), along with the central banks of France, Singapore, and Switzerland, successfully tested the cross-border trading and settlement of wholesale CBDCs using decentralized finance (DeFi) technology concepts on a public blockchain under a project called Mariana.
Stablecoin issuer Circle Internet Financial has released Perimeter Protocol, an open-source smart contract codebase that allows for the development of tokenized credit markets, enabling various credit use cases such as invoice factoring, payroll advances, instant settlement, and credit trading for institutional investors. This move comes as the tokenization of real-world assets gains momentum, with tokenized assets predicted to grow to a $5 trillion market in the next five years. Circle aims to leverage the protocol to enhance the utility of its stablecoin USDC and Euro-pegged token EURC in decentralized finance (DeFi) credit platforms.
Interest-bearing stablecoins are becoming increasingly popular in the DeFi sector as they offer attractive yields generated from real-world assets, such as T-Bills and government bonds, providing a transparent and auditable alternative to traditional banking systems.
Exploits related to oracle networks have led to nearly a billion dollars in losses over the past three years, as decentralized finance (DeFi) protocols relying on oracles are vulnerable to manipulation due to unreliable real-world data.
The co-founder of Aptos believes that a universal identity application, stablecoins, and decentralized finance (DeFi) innovation are the key factors that could attract a billion new users to the digital assets space.
Decentralized finance (DeFi) has the potential to revolutionize wealth building globally, and the use of Artificial Intelligence (AI) can address challenges such as liquidity, language barriers, regulatory compliance, and security to further enhance its adoption and growth.
