The target of the accident was Spartan Protocol, a DeFi protocol for synthetic assets running on BSC. When diving into the detailed source code, we can see it is a tweaked version of the UniswapV2 protocol. Specifically, the fee mechanism is modified to incentivize liquidity providers when liquidity is scarce. As a result, users trading larger volumes are charged more fees. Almost all main assets on BSC (e.g. BNB) have corresponding UniswapV2-like pairs (e.g. WBNB-SPARTA). Similar to UniswapV2, those pairs are open for users to add/remove liquidity. …
On Feb 24th, the post-mortem describing three white-hacks on Primitive Finance was released. More than one month after the post-mortem release, we identified a vulnerable user with ~$1M (500 WETH) at risk on April 14. By reproducing the white-hacks, we demonstrated our findings to Primitive Finance via ImmuneFi and helped the victim at risk reset the allowance. Below, we outline how we exploited the loophole on a simulated platform and identified the victim using blockchain data analytics.
Gas reflexivity and feedback loops
Ethereum block space is probably the most scarce resource right now. The rise of liquidity mining and yield farming over the past couple of months have led to a sharp increase in gas fees, with averages currently in the 400–600 Gwei range(!).
The GBTC and ETHE premium arbitrage trade has recently become very topical. Both products, issued by Grayscale, have traded at a consistent premium over NAV (TradeBlock XBX and ETX Index) since inception. Currently, GBTC trades at a 30% premium to NAV, and ETHE trades at a 850% premium to NAV.
There are multiple ways to monetize on the growth in decentralized finance networks via trading strategies. Underlying strategies tend to fall into two wider risk categories; 1) guaranteeing on-chain liquidity on applications that rely on external liquidity provision, and 2) extracting fees from applications with guaranteed on-chain liquidity.
Market participants have a few ways to earn a higher rate of return than the rate of ‘risk free’ interest (e.g. lending rates on Compound Protocol, or eventually, the DAI savings rate, or ‘DSR’). Outside of speculative trading, this includes acting as keepers. Keepers are independent operators that exploit opportunities for profit…
Auctions are a particularly popular topic in game theory, with dutch auctions in particular being widely studied. Generally, dutch auctions facilitate price discovery, but may not necessarily reach an equilibrium state where all participants reveal their true valuation of the item for sale.
In Algorand, the dutch auctions are ran with an embedded 1-year put option, with a strike price tied to the auction clearing price. …
Ampleforth’s (AMPL) IEO recently sold out on Bitfinex in 2 seconds.
“AMPL supply expands and contracts in response to it’s price deviating from a 1 USD target. Deviations result in a supply change of AMPLs once every 24 hours, increasing or decreasing the number of tokens in each holder’s wallet pro-rata.”
The full whitepaper can be found here.
Whilst some market participants (perhaps initially a majority) may think of AMPL as a stablecoin, this is not the case. The price will mean revert towards $1, but the number of AMPLs held in wallets will deviate over time due to rebasing…
There are increasingly more Ethereum projects building Decentralized Finance (DeFi) applications. Whilst liquidity across platforms remains scarce compared to centralized counterparts, we foresee interesting trading opportunities arising in the space from both existing and new platforms.
The Maker (MKR)credit system acts similar to a decentralized lender, allowing users to lock up collateral in smart contracts and borrow DAI. A user that wishes to transact in DAI would send a specific amount of ETH to a contract which creates a Collateralized Debt Position (CDP). To hedge against a decline in the price of collateral users must over-collateralize these contracts.
Over the past week we have seen behavior indicative of market manipulation by OKEx, and estimate $400mm+ of futures contracts have been forced into liquidation as a result.
The Bitcoin Cash ($BCH) network goes through regular protocol upgrades twice per year. As there has been conflicting consensus changes between different development teams, a hard fork was scheduled occur on the 15th of November around 4:40 PM GMT. As the battle between Bitmain (ABC) and CoinGeek (BSV) intensified, exchange operators have had to pick a side regarding which chain they will continue to reference their indices against.
The Bitcoin Cash ($BCH) network goes through regular protocol upgrades twice per year. Currently, there is conflicting consensus changes between different development teams. As no consensus has been reached, a hard fork will occur on the 15th of November around 4:40 PM GMT which may cause a permanent chain-split into $BCH-ABC and $BCH-SV. We see trading opportunities in $BCH and its associated derivatives ahead of the fork.
$BCH Bi-weekly ($BCH1116) and quarterly contracts ($BCH1228) are trading at 200bp-300bp discounts to spot. However, the spot index against which OKEx contracts settle after the fork will reference $BCH-ABC, and will not include…
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