The Cross-Chain Roundup #16
Week Roundup (March 06 - 12 , 2023)
Okay, let’s skip the preamble and get to the point: Silicon Valley Bank. WTH just happened and why did our stablecoins spend the weekend underwater? We’ll assume you’re abreast of the basics so will skip to the chapters you’ve yet to catch from the absorbing drama that’s gripped TradFi and DeFi alike.
This was the week when cross-chain gained another two C’s that followed it everywhere like a shadow: Circle contagion. Due to these events, most of the news being pushed out by cross-chain protocols was statements confirming they did/didn’t have exposure to the USDC fallout. Thankfully, other stuff also happened during the last seven days, and some of it was actually positive. We’ve got it all: the good, the bad, and the wait-and-see-how-ugly in this edition of the Swing newsletter. Take a deep breath, hold onto your bags and we’ll dive in.
It’s been a good week for KAVA, the EVM network that’s seen a massive inflow of liquidity. The TVL in DeFi protocols on KAVA has grown by $266M in a week, seeing it overtake Solana. A massive ecosystem development fund and a wave of new protocols has made it a good week for KAVA amidst a very bad week for crypto.
Lido Finance has made Polygon its third ecosystem after Ethereum and Solana. Its arrival on Polygon will make stETH available for DeFi purposes throughout the DeFi ecosystem. Lido’s decision was made based on parameters such as Polygon’s network TVL, DeFi activity, security and the presence of many long-term Lido partners.
You wait ages for a decent iOS wallet and then two come at once. Last week it was Uniswap Labs’ effort. This week it’s Core, which has launched on iOS and Android. Core allows users to easily self-custody tokens and NFTs while keeping track of their portfolio across Avalanche, Bitcoin, Ethereum, and all EVM chains. It also supports native bridging from Bitcoin to Ethereum.
Convex is bringing its Curva-based system for efficient stable swaps to Polygon. Just like on Arbitrum, operating on Polygon will look and feel very similar to Convex on Ethereum. The process for providing liquidity and staking will be the same as before. Users simply need to provide liquidity on Curve, stake LP tokens to get the socialized boost, and claim rewards.
As USDC lost its dollar peg over the weekend, US funds holding the asset were faced with a quandary: should they trade into other stables or sit tight and wait for the ship to right itself? Looksonchain has monitored the actions of leading US investment funds. It turns out that many elected to seek sanctuary in USDT until the coast was clear. Jump Trading, Wintermute Trading, Genesis Trading, and BlockTower Capital redeemed USDC for USD cash via Circle and Coinbase ahead of the weekend bank break.
One of the DeFi users worst affected by the USDC de-pegging was a DeFi trader who didn’t check before they executed an onchain swap. They took $2,080,468.85 of stables including USDC and received just $0.05 of USDT. They used KyberSwap’s aggregation router to dump a large amount of 3CRV (DAI/USDC/USDT) LP token into USDT. Unfortunately the pool was illiquid and an arb bot profited from the discrepancy.
Polaris is the first OS project to be built from the ground up by the Berachain team. It’s a general purpose blockchain framework that enables the integration of the EVM into any underlying consensus layer. Its current iteration has been optimized for the Cosmos SDK but Berachain hopes it will become the gold standard for EVM on Cosmos and more broadly on Proof of Stake chains in general.
DeFi lending platform Euler has been cleared out of $197M in user funds, taken in a flash loan attack. It appears that two attackers launched a total of six attack transactions. Attacker 0x5f25 launched the first attack, making a profit of around 8.8M DAI. Other assets stolen include $18.5 million in Wrapped Bitcoin (WBTC), $135.8 million in Staked Ethereum (stETH), and another $33.8 million in USDC.
Dust on Crust by Arthur Hayes
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