GM uniformly to the whole Blockworks fam! Alright, the Curve Finance situation has finally calmed down, at least for now. Let's take a look at some effects it's had. Most notably, the project's TVL has decreased by ~$1.7B from ~$3.8B to ~$2.1B, a ~45% reduction since the attack. Hopefully, user confidence isn't lost, and Curve can attract LPs back to the platform. There might otherwise be a decrease in onchain stablecoin liquidity as the project was the most important exchange for this category of swaps. It seems that the whitehat hackers that tried to step in were really unlucky, as they were ~10 minutes away from getting their hands on the exploitable funds in the CRV/ETH pool. If the whitehats had 30 or so more minutes, ~$18M could have been saved. Interestingly, the reentrancy bug has been live since July 2021 and was patched in November of the same year through a version update for Vyper, the programming language used by Curve. The oversight here was not realizing the potential impact the bug could have at the time, and projects were thus not alerted to update to a newer version of Vyper. As discussed in yesterday's newsletter, Curve Finance founder Michael Egorov was forced to sell a large amount of his CRV holdings OTC in order to keep his loans afloat. All in all, it seems that ~55M CRV was sold at a price of $0.4 per token. The deals reportedly have a six-month lockup period, with buyers including prominent crypto personalities such as Justin Sun, DCFGod, and Machi Big Brother. Consequently, Egorov was able to pay down almost ~$25M of his loans, but the open positions against CRV collateral are still worth ~$90M in aggregate. CRV dropped to ~$0.5 at its lowest yesterday, but following the OTC deals, the price stabilized at around $0.6 for a while. Currently, CRV is trading at ~$0.56, down ~23% since the first exploit took place. A further ~35% decrease would be needed from the current price for Egorov's largest loan of ~$60M obtained through Aave v2 to reach insolvency. In the TradFi world, MicroStrategy has filed a prospectus supplement with the SEC to issue up to $750M worth of class A common stock. History doesn't necessarily predict the future, but it's likely that funds raised through this program will be used to acquire more BTC, something that the Executive Chairman of MicroStrategy, Michael Saylor, is notorious for doing. In July, the company acquired ~467 BTC for ~$14.4M. Some investors see MicroStrategy's stock as a way to get exposure to BTC, and many have speculated that if/when spot Bitcoin ETFs are approved, the share price will take a massive hit. If you ask me, the move is a way to squeeze cash out of a dying company at the expense of shareholders. Imagine thinking only tokenholders can get diluted through emissions, could never be me. – Brick |
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Okay ladies and gents—Permissionless II is coming up in mid-September. We would love to see you all join the Blockworks family in Austin, TX, for the world's largest DeFi event of the year! Don't FOMO in before it's too late. FOMO in now.
More information and tickets can be found here.
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The Blockworks boys have been hard at work creating a new data product, and we just had to shill this one. With increased activity, thanks to meme tokens, Coinbase's L2, Base, has been printing money. In the past three days, the rollup has accrued ~$720K profit, translating to a ~$88M run-rate. In comparison, Arbitrum and Optimism have made ~$11M and ~$6M in transaction profit in the past year, respectively. This comparison isn't fair, though, because Base has experienced a vast amount of congestion as degens flock to the rollup. To get their transactions quickly included, they've been paying high priority fees. The daily average priority fees as a share of total transaction fees is ~79%. In contrast, the priority fee on Optimism typically fluctuates between 10%–20%. In addition to priority fees, total transaction fees comprise a base fee and a fee for posting transaction data to Ethereum. Base is built with the OP Stack, and it's worth mentioning that a % of the rollup's profits will be sent to Optimism. The increased activity has led to several protocols announcing their deployments on Base. Most notably, SushiSwap went live today, and CAP, a perps DEX, will open its trading UI to everyone later this month. Proven protocols are definitely needed on the rollup as LeetSwap, a DEX that accounted for most of the swap volume on Base over the weekend, seems to have been exploited yesterday. The initial hype has calmed for now, with TVL having decreased from its peak of ~$41M on Monday to ~$10M, and the day-on-day decrease in Base's profit was ~81%. If you're interested in getting your hands on world-class data from Blockworks Research, be sure to join our waitlist here. |
zkSync is creating a framework for fractal scaling Ethereum where any developer can easily deploy a Zero Knowledge proof based L2 or L3, dubbed a Hyperchain. |
Vertex is a vertically integrated DEX on Arbitrum that supports cross-margined accounts across money, spot, and perps markets. The goal is to compete with CEXs by offering low latency and low fee trading for makers and takers by leveraging a hybrid-orderbook AMM architecture. |
To shore up his positions and prevent a possible liquidation cascade, Curve founder Michael Egorov has turned to unlikely sources of liquidity |
The price pump that historically comes as a result of Litecoin halvings already happened this time around, analyst says |
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The insights, views and outlooks presented in the report are not to be taken as financial advice. Blockworks Research analysts are not registered broker/dealers or financial advisors. Blockworks Research analysts may hold assets mentioned in this report, further outlined in the Firm's Financial Disclosures. |
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