In today's edition of YIYL (You Invest, You Lose) we take a break from the drama in the CEFI space and head to the trusted use your own keys DEFI space which is meant to be peggged as the solution to all this counter party risk.
Allas DEFI isn't all its pegged to be, and is even more of a shitshow, it's just that these can be slightly contained since you have more oversight on the holdings.
But that doesn't mean it makes it any better, it just means the risk is moved to another part of the system. But this is what shitcoiners don't want you to know, they want you to watch their hands not where the money is going and like a crafty street magician while you're still guessing which card is the 3 of spades, the shitcoin magician has clubbed you over the head for your wallet and watch.
I've seen this play out so many times, my blog is literally a testiment to the faillure, lies and stupidity in this space, yet it doesn't make a single lick of difference to the addict shitcoiners who fill these projects with liquidity. Some have bothered to read what I have to say and it's starting or started to sync in while others still need to see their shit go to zero before they learn their lessons.
DFX more like Dafuq?
DFX is an Ethereum and Polygon based "de"-centralized exchange protocol with a dynamically tuned bonding curve optimized for fiat-backed stablecoins. So instead of trading thinly traded shitcoins you can trade deriviates based on fiat, like USDC, CADC, EURS, XSGD, etc) using real-world FX price feeds pulled in from oracles that could be compromised.
Now if you wanted to trade FX you could just use a regulated broker with ample liquidity and insurance, oh you can roll the dice on these unregulated casinos.
Ofcourse like most shitcoin protocols, very few people know how to trade on them so there isn't that much fees and most people are looking to be LP providers and earn a return on this apparent fees being generated by swaps. Its meant to be a way that you can help others trade while not using your funds and when you need your money you can pull it out with the fees it's earned routing those payments.
Now that's all well and good but theory and practice are two differnet things and in reality, you can get cleaned out long before you realise you should be closing out these risky ass positions.
Gone in a flash
This was evidently the case for those using DFX finance who had their positions rekt this week after a user was able to use a flash loan to exploit a vulnerability in the smart contract for DFX Finance.
The platform suffered a loss amounting to around $5 million. Reports are pretty limited on this hack, not sure if the platform wants to keep it on the DL or they've had a self-inflicted wound they want to keep people from sniffing around, either way, a sizable chunk of funds has moved off DFX.
https://twitter.com/DFXFinance/status/1590858722728972289
- DFXFinance
The user subsequently laundered the funds through the Tornado Cash cryptocurrency tumbler. Pulling funds from the treasury on the mainnet the attacker didn't make off with the entire amount, thankfully another parasite was able to skim off their profits. When the flash loan attack was executed on the platform, a bot was watching it all play out and this MEV bot snagged a significant amount of the funds.
However, the funds he did manage to secure, have been mixed and this user probably gets to walk away with a handsome little profit.
https://twitter.com/CertiKAlert/status/1590859073813188608
- CertiKAlert
Sources:
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