Fear and Greed: DeFi drama as Mango Markets hit with $100m+ exploit; good week for crypto adoption, though
A look at some of the latest crypto happenings over a couple of drinks – one half empty, one half full. Mango Markets and other recent DeFi exploits aren’t fun, but Google, BNY Mellon and other adoption news lighten the mood.
First, a check-in on the leading crypto market sentiment tracker, the Fear & Greed Index, put together by altenative.me, which gathers its data from volatility readings, market volume, social media and other factors.
And yep, just as we’d suspected, it’s pretty much the same story as the last time we looked at this dial. With no small amount of trepidation surrounding the latest set of monthly US CPI data, due this week, it’s unsurprising to see the same crypto-market sentiment that’s been kicking about for months still confirmed in numbers and graphs.
Although there’s been no shortage of decent crypto-industry news of late, including some notable funding raises (and see further below for another one of those making news), you’ve got to take the good with the bad. Case in point…
Mango Markets, a Solana-blockchain-based decentralised finance protocol has today reportedly lost more than US$100 million in funds in a hack.
It’s the second DeFi exploit of that size in less than a week (BNB Chain suffered a biggie), and also comes after a smaller exploit in the past 24 hours or so – on TempleDAO.
The Mango protocol confirmed the hack in a tweet detailing that the attacker was able to drain the funds via an “oracle price manipulation”.
We will be disabling deposits on the front end as a precaution, and will keep you updated as the situation evolves.
If you have any information, please contact [email protected] to discuss a bounty for the return of funds. 2/
— Mango (@mangomarkets) October 11, 2022
Blockchain auditing website has been covering the exploit and making clarifying updates for the past several hours. “It appears the attacker was able to manipulate their Mango collateral,” it tweeted. “They temporarily spiked up their collateral value, and then took out massive loans from the Mango treasury.”
At a high level,
1. This was not a flashloan attack
2. The attacker addresses were funded 5.5M via FTX
3. It appears the attacker manipulated prices across all exchanges, not just Solana oracles pic.twitter.com/mQnjCTvPZi
— OtterSec (@osec_io) October 12, 2022
As OtterSec explains it, the attacker “created a ~480M MNGO-PERP position and countertraded” his or herself on another account. “They then manipulated the price of MNGO up across a number of exchanges, borrowing against their unrealized MNGO gains to drain the protocol.
“As an aside, these hacks often have large consequences for the community. The surge in price caused over 4000 short liquidations across Mango Markets.
“As expected, when MNGO returned to its normal value, the attacker account becomes massively undercollateralized, with a 470M contract short open.”
The hacker has apparently made a proposal to try to negotiate for a bounty-payment deal.
In the past hour at time of writing, Mango Markets tweeted the following: “We believe the most constructive way to approach this is to continue communicating with those responsible for the incident and in control of the funds removed from the protocol to attempt to resolve the issues amicably.”
We believe the most constructive way to approach this is to continue communicating with those responsible for the incident and in control of the funds removed from the protocol to attempt to resolve the issues amicably.
— Mango (@mangomarkets) October 12, 2022
Sounds like that bounty might well be an option, then. Either way, it’s another ordinary look for DeFi in a pretty crazy week so far. More fuel for the fire for regulatory hawks.
In fact, as The Defiant points out below, there have actually been a few other, smaller exploits over the past 24 hours or so, including RabbySwap (US$200k loss); ParaSwap (unconfirmed); and, as mentioned, TempleDAO’s stax.fi (US$2.3m).
Four hacks in one day might be a new record 🤯
More than $115M was stolen from DeFi protocols TODAY.
— The Defiant (@DefiantNews) October 12, 2022
Although DeFi is definitely a buyer-beware sector of the market with more than its fair share of teething problems, it’s also an area of crypto that has so much promise and use case. Just ask David Angliss from Apollo Capital. Actually, let us do that – the analyst regularly shares his take with us on the best, most robust, up-and-coming DeFi projects.
Moving on to the half-full beverage…
• As mentioned in our morning roundup, tech titan Google and crypto-exchange beast Coinbase have signed a deal that will see Google accept crypto as a payment method for its cloud-computing clients.
Google will be using Coinbase to facilitate the transactions, and it’s something that’s expected to go live in early 2023.
— CTO Larsson (@ctoLarsson) October 11, 2022
• We also mentioned the big BNY Mellon (America’s oldest bank and one of its largest by assets managed) news this morning.
The institution, which has been leaning crypto’s way for a little while now, can now custody Bitcoin and Ethereum for its clients, storing private keys and providing bookkeeping services – similar to offerings provided to fund managers in traditional finance.
Here’s what banker turned crypto-focused CEO of Custodia Bank Caitlin Long thought about the news, though…
“Look what the Fed actually said last week, versus what it did today.” Further context on that in relation to BNY Mellon’s news below:
— Magoo PhD (@HodlMagoo) October 11, 2022
• Also turning crypto frowns if not completely upside down, then perhaps kind of momentarily sideways, is news from Brazil regarding an absolutely humungous amount of institutional adoption bubbling beneath the surface.
August figures released by Brazil’s tax authority have reportedly revealed that more than 12,000 companies have crypto holdings of some kind. It’s by far the largest amount ever recorded in the Latin American powerhouse.
NEWS: Brazilian Tax Authority Records 12,000 Institutional Crypto Holdings#Brazil is becoming the primary crypto market of Latin America as records show over 12,000 Brazilian companies have #crypto holdings.
— Cryptoforce (@cryptoforcex) October 11, 2022
• Meanwhile, the youth-focused fintech firm Step has raised about US$300 million in debt funding, led by Triplepoint Capital and Evolve Bank & Trust.
According to a press release the fresh capital will go toward building Step’s infrastructure and the launch of new products.
One of said products incorporates crypto with an investing feature that will allow its nearly 4 million users to buy and sell Bitcoin and other cryptocurrencies, as well as receive Visa rewards in crypto denominations. Very cool.
The last time this happened, #SP500 put in a solid rally.
The fear and greed index has just formed a bullish divergence. pic.twitter.com/VPv7jinXmo
— Game of Trades (@GameofTrades_) October 11, 2022
Okay, and yet, if the following is the case, then this doesn’t bode particularly well any time soon for the Federal Reserve pivot markets are hoping for. We’ll see.
JUST IN – FED BANK OF CLEVELAND PRESIDENT: THE FED HAS YET TO MAKE ANY PROGRESS LOWERING INFLATION
and here we go
— Bitcoin Magazine (@BitcoinMagazine) October 11, 2022
Not crypto related, this next item, but it’s interesting. Elon Musk has denied American political scientist Ian Bremmer’s reporting that the Tesla CEO talked to Vladimir Putin before tweeting out thoughts on Ukraine and how to end the conflict.
Bremmer has been standing by his article.
Who’s being flexible with the truth here, then? One of them.
elon musk told me he had spoken with putin and the kremlin directly about ukraine. he also told me what the kremlin’s red lines were.
— ian bremmer (@ianbremmer) October 11, 2022
i’ve long admired musk as a unique and world-changing entrepreneur, which i've said publicly. he's not a geopolitics expert.
— ian bremmer (@ianbremmer) October 11, 2022
No, it is not. I have spoken to Putin only once and that was about 18 months ago. The subject matter was space.
— Elon Musk (@elonmusk) October 11, 2022