Crypto finance shifts from CeFi to DeFi after major collapses: Finance Redefined

Welcome to Finance Redefined, your weekly dose of essential decentralized finance (DeFi) insights – a newsletter designed to bring you significant developments over the past week.

DeFi has become a prominent choice for investors after several centralized finance (CeFi) collapses through 2022. Some key areas of interest for investors include “NFTfi”, on-chain derivatives platforms, decentralized stablecoins and Ethereum layer 2s.

February saw seven DeFi exploits that resulted in a net loss of around $21 million. Mars is no different, with several companies already registered, for example on Hedera’s main network. DeFi lender Tender.fi was exploited, but the white hat hacker who drained $1.59 million returned the money.

Tornado Cash developers said a new version of the mixing tool would aim to be more regulator-friendly, where law enforcement can distinguish between legal and illegal transfers of funds.

The DeFi market had a bearish last week, with most of the tokens in the top 100 trading in the red thanks to the new federal budget and the Fed rate hike.

Crypto finance shifts from CeFi to DeFi after major collapses: CoinGecko

Digital asset investment companies poured $2.7 billion into decentralized finance projects in 2022 – up 190% from 2021 – while investments in centralized finance projects went the other way – falling 73% to $4.3 billion in the same time frame. The staggering increase in DeFi funding came despite overall crypto funding figures falling from $31.92 billion in 2021 to $18.25 billion in 2022.

According to a March 1 report from CoinGecko, citing data from DefiLlama, the numbers “potentially point to DeFi as the new high-growth area of ​​the crypto industry.” The report says the decline in funding for CeFi may point to the sector “reaching a degree of saturation.”

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7 DeFi protocol hacks in February, with $21 million stolen: DefiLlama

Reentrancy, price oracle attacks and exploits across seven protocols saw the DeFi space bleed at least $21 million in crypto in February.

According to DeFi’s data analytics platform DefiLlama, one of the biggest of the month was the attack on flash loan reintroduction on Platypus Finance, which resulted in $8.5 million in lost funds.

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DeFi Lender Tender.fi Suffers From Exploitation — White Hat Hacker Returns Funds

An ethical hacker siphoned $1.59 million from DeFi lending platform Tender.fi, prompting the service to halt lending while it tries to recoup its assets.

Web3-focused smart contract auditor CertiK and blockchain analyst Lookonchain flagged an exploit that saw funds drained from the DeFi lending protocol on March 7. Tender.fi confirmed the incident on Twitter, citing “an unusual amount of loans” through the protocol.

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Hedera confirms that exploitation on the mainnet led to the theft of service tokens

Hedera, the company behind distributed ledger technology, Hedera Hashgraph, has confirmed a smart contract exploit on the Hedera mainnet, which led to the theft of several liquidity pool tokens.

Hedera said the attacker targeted liquidity pool tokens on decentralized exchanges (DEXs) that derived their code from Uniswap v2 on Ethereum, transferred for use on the Hedera token service.

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The Tornado Cash developer says the “sequel” to the crypto mixer aims to be regulator-friendly

A former Tornado Cash developer claims to be building a new crypto mixing service to address a “critical flaw” at the sanctioned crypto mixer, hoping to convince US regulators to rethink their stance on privacy mixers.

The code for a new Ethereum-based mixer, “Privacy Pools,” was released on GitHub on March 5 by its creator, Ameen Soleimani.

In a 22-part Twitter thread, Soleimani explained that the “critical flaw” with Tornado Cash is that users cannot prove they are not associated with North Korea’s Lazarus Group or any criminal enterprise.

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DeFi Market Overview

Analytical data shows that DeFi’s total market capitalization fell below $45 billion in the past week. Data from Cointelegraph Markets Pro and TradingView show that DeFi’s top 100 tokens by market capitalization had a bearish week, with most tokens trading in the red, barring a few.

Thanks for reading our roundup of this week’s most impactful DeFi developments. Join us next Friday for more stories, insights and education in this dynamic area of ​​progress.