A week of exploits and uncertainty for DeFi: Finance Redefined

Welcome to Finance Redefined, your weekly dose of essential decentralized finance (DeFi) insights – a newsletter curated to bring you the most important developments from the past week.

After a bullish April, May was another month of exploits, back pulls and hacks, making DeFi uncertain again. The most prominent headline marker in the past week was the Multichain protocol. The delayed node upgrade of the cross-chain DeFi protocol created a spiraling impact and lowered the token price by 30%.

The Multichain protocol saga impacted multiple DeFi protocols, forcing Binance to suspend deposits for ten bridged tokens on May 25 after days of deadlocked transactions.

Aside from Multichain, the week was dominated by hacks, exploits and carpet pulls. A crypto project reportedly expired with $32 million in client funds, the DeFi protocol WDZD Swap was abused for $1.1 million, and a bug in Aave v2 on Polygon led to the freezing of some assets in the contract.

The top 100 DeFi tokens had another bearish week, with a slight change from the previous week and most DeFi tokens trading in the red on the weekly charts.

Multichain token collapses 30% on backend upgrade delay

On May 24, the price of the cross-chain router protocol Multichain’s native MULTI token dropped 30% in 24 hours to trade at $4.97, as reported by Cointelegraph. It has since dropped below $4. The selloff came after users reported that their multichain funds had not arrived due to a backend node upgrade that was “taking longer than expected”.

At the same time, a wallet address linked to layer-1 blockchain developer Fantom Foundation reportedly removed 449,740 MULTI ($2.4 million) from liquidity on decentralized exchange SushiSwap. Rumors also seem to have fueled the sell-off. In a tweet more than 300,000 views since publication, one user wrote: “The multichain team is rumored to have been arrested by Chinese police, with $1.5 billion in contract funds under control.” On the same day, blockchain analytics firm Lookonchain reported at least $3 million in MULTI outflows tied to smart money accounts.

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Binance suspends deposits for bridged tokens, seeks clarity from Multichain team

On May 25, crypto exchange Binance suspended deposits for 10 bridged tokens after days of deadlocked transactions that created uncertainty around the Multichain protocol.

Affected token pairs are Polkastarter (POLS), Alpaca Finance (ALPACA), Travala.com (AVA), Spell (SPELL), Fantom (FTM), Alchemy (ACH), Beefy (BIFI), SuperVerse (SUPER), Harvest Finance (FARM ) and DeXe (DEXE). The move will affect users of bridged tokens on the BNB Smart Chain, Fantom, Ethereum, and Avalanche blockchain networks.

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Project kicks off with $31.6 million in alleged exit scam

A crypto project called Fintoch — which is claimed to be backed by investment bank Morgan Stanley — appears to have gotten off the ground with nearly $32 million in user funds, according to on-chain detective ZachXBT.

In a thread, the crypto sleuth showed a chart detailing the movement of funds. The on-chain detective claimed that the project likely ran an exit scam. The fund promised a daily interest rate of 1% for user investments. However, users of the platform are starting to report that they are now unable to withdraw their funds from Fintoch.

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