Multimillion hack and new rules for Decentralized Finance (DeFi)

A hacker loots over $ 100 million on Cream Finance and a new report by the Financial Action Task Force (FATF) proposes new rules for Decentralized Finance (DeFi).

After the broad DeFi sector has performed comparatively poorly in recent weeks, some tokens have turned around this week. The token of the decentralized exchange (DEX) aggregator 1inch (1INCH) increased by over 20 percent on a weekly basis. 1INCH’s sudden price explosion was due to the announcement that the project would be integrated into Exodus’ crypto wallet by default. Exodus users now have the opportunity to trade their tokens directly in their wallet via 1inch’s DEX aggregator.

Another DeFi project that has performed strongly this week is Curve (CRV). Just like PancakeSwap or Uniswap (UNI), Curve is a DEX. In contrast to the two DEX heavyweights, Curve is primarily specialized in offering token swaps for cryptocurrencies that are stable in value. With a Total Value Locked (TVL) of almost 19 billion US dollars, Curve is the largest DeFi protocol in the entire crypto space, according to the Defi Llama analysis platform.


On a weekly basis, CRV is up 61.23 percent and is trading just under $ 5 at press time.

Key factors behind the ongoing CRV rally are the incentives investors are currently receiving for long-term staking of CRV. Almost 90 percent of all CRV tokens are currently in staking smart contracts, with an average blocking period of 3.68 years. This development has led to a severe supply shortage of CRV – if the demand for CRV remains the same or increases, this means price growth.

The Financial Task Force (FATF) proposes new rules for DeFi

The international organization FATF proposed new guidelines for the regulation of digital assets (VASP) in a report published on October 28th. In addition to non-fungible tokens (NFTs), this report also looked at decentralized finance.

All companies that offer services in connection with stablecoins and blockchain-based DeFi protocols should therefore be obliged to closely monitor the data of their customers in order to prevent money laundering and terrorist financing. In plain language, this means that every founder, owner and operator of a DeFi protocol should carry out a know-your-customer procedure (KYC).

Unsurprisingly, the reactions in the DeFi community were quite negative. Miller Whitehouse-Levine, the policy director of the recently formed DeFi Education Fund, criticized the FATF guidelines in several tweets. He doesn’t think that decentralized finance can be easily integrated into the existing guidelines of the traditional financial world. He is also the opinionthat it will be a long time before the requirements of the FATF can be implemented in practice.

Notwithstanding these concerns, the practical impact of these guidelines is likely to be relatively limited. We are still a long way from doing this in practice.

Cream Finance: DeFi hack clears $ 130 million

One reason why regulation in the DeFi space can make sense was recently demonstrated by a hacker attack on Cream Finance (CREAM). The DeFi protocol fell victim to a hacker attack for the third time in its short history this week. The attacker stole around 130 million US dollars. As is so often the case, a security hole in the smart contracts made the hack possible.

PeckShield exposed the vulnerability. The blockchain security service provider announced that the attacker used a flash loan to get the funds in the smart contracts. According to blockchain records, around 130 million US dollars were stolen in this way.

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