Welcome to the latest issue of Cointelegraph’s decentralized finance newsletter.
Despite the market’s second week of bearish data, there is no shortage of bullish fundamental news for the sector. Read on for the most influential DeFi stories from the past 7 days.
What you’re about to read is a shorter, more concise version of the newsletter. For a comprehensive summary of last week’s DeFi developments, subscribe below.
Vitalik sees multi-chain, not cross-chain, Web3 world
Ethereum co-founder Vitalik Buterin candidly commented Implementing the security constraints of a full-featured cross-chain bridge in the blockchain industry.
Buterin believes that storing assets on their native chain provides a higher level of security against 51% attacks than cross-chain activity, noting: “Storing Ethereum-native assets on Solana-native assets are always safer on Solana. Ethereum-native assets on Solana or Solana-native assets on Ethereum.”
My thesis on why the future will be *multichain*, but not *crosschain*: there are fundamental limitations to the security of bridges spanning multiple “sovereign regions”.from https://t.co/3g1GUvuA3A: pic.twitter.com/tEYz8vb59b
-vitalik.eth (@VitalikButerin) January 7, 2022
Sharing a series of examples to demonstrate his thesis, Buterin noted that if a malicious entity attempted to launch a 51% attack on Ethereum, transactions made by innocent parties could be censored and/or recovered, but not blocked and would not lost.
In the most extreme case, even if 99% of the protocol is compromised, users’ funds are still safe, as nodes will overwhelmingly support the remaining 1% of blocks that follow the rules, so decisions can be governed.
By contrast, such an event running on a cross-chain bridge between Ethereum and Solana, for example, would result in irreversible losses, Buterin believes. The problem is related to the addition of the chain.
Assume that 51% of attacks occur on one of the 50 chains. In that case, all of them would be vulnerable to what he called a “systemic contagion that threatens the economy of the entire ecosystem.”
dYdX aims to be fully decentralized by the end of 2022
dYdX, a Layer 2 derivative protocol, This week released the fourth iteration of its roadmap, has laid out plans to develop the platform into an open source, community-focused and fully decentralized operation later this year.
The architecture operates on a dual model, where parts of the protocol (such as staking and governance) are decentralized, while core functions such as off-chain order books and matching engines are controlled by in-house subsidiary dYdX Trading Inc and by Amazon Web Services, etc. Centralized server support.
“There will no longer be a central point of control or failure of the protocol,” a representative of the company said after the v4 upgrade, ensuring that “all controllable aspects of the protocol will be fully controlled by the community.”
Amazon Web Services (AWS) last month Tech outages highlight real vulnerabilities in many crypto businesses, including dYdX, Binance.US, and Coinbase, and their inherent reliance on centralized servers to maintain the network.
At the time, dYdX shared a sincere update on its official Twitter account and pledged to seek a clear solution, stating:
“Unfortunately, some parts of the exchange still rely on a centralized service (AWS in this case). We are firmly committed to full decentralization, which remains our number one priority as we continue to iterate on the protocol one of the tasks.”
In addition to its desire to decentralize, dYdX is also looking to improve its interface trading platform, introduce spot, margin and synthetic trading opportunities, and appoint an external auditor to evaluate business operations.
Near Protocol raises $150M to accelerate Web3 adoption
Proof of Stake Blockchain Near Protocol raises $150M in seed investment this week to boost Web3 visibility and adoption Apps within its network, with an inherent focus on expanding its audience and community base into Latin America, Turkey and India.
This round of financing was led by well-known hedge fund Three Arrows Capital, with further participation from Mechanism Capital, Dragonfly Capital and Andreessen Horowitz’s Silicon Valley-based fund a16z. Individual angel investors include British billionaire hedge fund manager Alan Howard and Aave founder Stani Kulcov.
In a Medium blog post, Near Foundation CEO Marieke Flament shared her optimism about the latest funding, which surpasses the company’s previous $65.9 million raise:
“We are delighted to have such a fantastic list of backers to support NEAR’s mission. We look forward to using this funding to improve access to blockchain technology in a growing number of countries around the world.”
In October 2021, the smart contract platform allocated $800 million for new initiatives within the decentralized finance (DeFi) space, such as developer apps, startup grants, and geofunding.
Token performance
The total value locked in DeFi edged down 2.77% over the week to $128.15 billion, continuing to be accompanied by a broader market decline, according to the analysis.
data from Cointelegraph Market Pro Top 100 DeFi Tokens by Market Cap Mainly Bullish, TradingView Shows Last 7 days.
Secret (SCRT) leads for the second week in a row with 15%. Earth (Luna) rose 6.32%, while 1inch Network (1INCH) rose 2.9%.
Interviews, features and other cool stuff
Thank you for reading our roundup of the week’s most influential DeFi developments. Join us again next Friday for more stories, insights and education in this dynamically growing space.
