This weekly news summary from China, Taiwan and Hong Kong attempts to plan the most important news in the industry, including influential projects, changes in the regulatory environment, and enterprise blockchain integration.
Rear Cable chain and Chain swap Being exploited, it can be said with certainty that the hacker cross-chain bridge seems to be the style of this season. This week, the local project Poly Network was stolen $615 million Before leading the crypto community in a dramatic witch hunt to track down the attacker. Although most news media have widely reported this story, there are still a few points worth analyzing.
Who are these projects?
The first point is that most Western DeFi users have never heard of Poly Network, even though their total lock-in value is more than $600 million. Dovey Wan of Primitive Capital talked about this on Twitter. She pointed out, “The Chinese crypto community always has its own version to use the same blockchain infrastructure. For better or worse, most of them are invisible. Westerners Inaccessible.”
After Poly was hacked, most CTs knew about this “cross-chain” project with TVL over 500 million US dollars, just like the case of PlusToken in 2018
Despite the ban, despite the many carpets and hackers, there is still a very active but completely different “Defi” community in mainland China
— Dovey “Rug The Fiat” Wan🪐🦖 (@DoveyWan) August 11, 2021
So why do Chinese projects fly so far under the radar? The first reason may be cultural and language barriers, as the Chinese marketing team strives to integrate into the fast-growing and esoteric world of encrypted Twitter.
They are not trying to win the global community, but instead focus on integrations that can directly attract users.
According to data from SimilarWeb, more than 58% of the network traffic of Poly Network comes from third-party website recommendations, among which Chinese DApp OpenOcean, O3 Swap and Wing Finance top the list. In contrast, more than half of Compound Finance’s visits came from direct clicks, and only 16% came from third-party websites.
The two main recommended sites for Compound are CoinMarketCap and CoinGecko. This shows that the differences in behavior between Chinese and international users are very obvious, and two completely different strategies are needed to attract two audiences.
Unravel the network
Another more taboo topic is that many large-scale DeFi projects in China are connected to other projects. The Poly Network is connected to the O3 network, and the O3 network itself is incubated by Neo. The extent of Neo’s involvement is unclear, but it explains why Poly Network founders are rarely seen marketing in public. These “founders” are usually just puppets of the parent company. The parent company gets all the benefits of launching the second token without having to bear the reputation or legal risks associated with it. If the side project is successful, the main network can be supported. If it fails, everyone will continue their lives and pretend that it never happened.
Many of O3Swap’s user assets have been compromised in the attack, which is a big public relations issue for O3Swap. This is not the first time the team has had to deal with negative impacts, as they have been accused of writing a backdoor feature in the code that will enable them to carry out a carpet pull. Although this has never been exploited, it does raise questions about the developer’s intentions.
After the hacker attack, A lot of negative Flooded with local social media, comments questioned the integrity of the Chinese-made project. One Weibo user said that you could kill him before he came into contact with the Chinese project, while another user called it internal work.
The bigger problem here is that before DeFi, unqualified projects will never start, causing the value of token holders to slowly and painfully soften. Under this model, investors still have the opportunity to recover some of their funds by selling on the secondary market.
In the new model of the DeFi fork, the code can be deployed very quickly and accumulate hundreds of millions of dollars in TVL without the need for adequate risk control. Auditing may be superficial, and the surprisingly high returns will induce retail investors to provide liquidity. If the code is leaked, all assets will be lost, which will cause investors to lose more quickly and comprehensively.
Looking for a silver lining
The main positive factor in all of this is the rapid unified response of the Chinese blockchain community. Smart contract auditor Slow Wu quickly cooperated with exchanges to limit attackers’ options for liquidating funds.company Blog notes:
“Special thanks to Hoo, Poly Networks, Huobi ZLabs, ChainNews, WePiggy, TokenPocket, Bibox, OkLink, etc., as well as many individual partners. Under the premise of compliance, they have synchronized relevant attacker information with the SlowMist security team in a timely manner. It’s worthwhile to track down the attacker.”
Huobi co-founder Du June also chose this on social media, stating that they will do everything they can to protect the crypto community. This will be a welcome sign for Chinese DeFi users who want to see trust rebuild among local participants.
Huobi has noticed that from #PolyNetwork tonight. Our risk control and security teams are already tracking and identifying the addresses involved. We will do our best to assist and protect the crypto community. #Joined forces
— Du Jun (@DujunX) August 10, 2021