As a seasoned crypto investor with a few battle scars and lessons learned from past experiences, I must admit that the recent turn of events with DeFi Edge has left me with a mix of frustration and caution. Having navigated through several market cycles and witnessed numerous projects either thrive or crumble, I can’t help but feel a sense of déjà vu when faced with such situations.
On October 14th, the decentralized finance liquidity management protocol known as DeFi Edge halted all deposit transactions to its strategy contracts through their user interface. As a result, users have been compelled to search for alternate solutions.
On September 30th, the team associated with the protocol announced on X that certain strategies would no longer be available (or “delisted”). Yet, it seems that the recent update to the deposit system affects all strategies, not just those specifically mentioned in the announcement.
Withdrawals from DeFi Edge are still functioning as of the time of publication.
DeFi Edge serves as a decentralized financial tool for investors seeking to offer liquidity to decentralized cryptocurrency trading platforms. This platform simplifies certain tasks typically handled by liquidity providers, including adjusting inventory and collecting fees, through automation.
The app connects to various platforms such as PancakeSwap, Thena, Camelot, Lynex, QuickSwap and more. As of September 29, just prior to when the DeFi Edge team revealed they were removing certain strategies, the protocol had approximately $4.8 million in cryptocurrency stored within its contracts.
By September 30th, the team notified on X platform that they were ceasing support for certain strategies employed in the Camelot exchange within the Arbitrum network. They advised users to withdraw their funds by October 10th, as these strategies would no longer be maintained after this date.
October 4th saw PancakeSwap on the BNB Chain make an announcement about removing all their DeFi Edge contracts from circulation.
“Attention all users: @DeFiEdge will stop maintaining all its Position Manager vaults on PancakeSwap from 10 Oct 2024. Please remove your funds from their vaults before that to avoid any issues.”
2 days after the event, DeFi Edge posted on its X account, emphasizing that they advise users to withdraw their liquidity via the PCS interface before the 10th of October.
Contrary to the warning given, a significant number of users failed to remove their funds from DeFi Edge’s contracts before the set deadline. As per DefiLlama’s blockchain data, approximately $3.6 million in cryptocurrency remained trapped within these contracts as late as October 10th. It is possible that some users were uninformed about the announcement since the app’s user interface did not provide any relevant details during the specified timeframe.
Starting from October 14th, any strategy shown on the app’s user interface will carry a notification saying, “You are not whitelisted. Please connect with our community in the DeFi Edge Discord channel.” This change impacts strategies that were mentioned in the X posts dated September 30th and October 8th, as well as others that weren’t related to those platforms like QuickSwap, Thena, and Uniswap.
The error message contains a link to the protocol’s official Discord channel. CryptoMoon contacted the team through this Discord channel but did not receive a response by the time of publication. The channel does not contain any announcements of how a user can become whitelisted, if at all.
Currently, around $3.64 million in cryptocurrency is being held within the DeFi Edge contracts as of October 14th.
Previously, problems caused by exploits have been common in applications designed for managing liquidity. For instance, on January 22nd, a competitor of DeFi Edge named Concentric experienced an attack where an intruder stole their private key, leading to a loss of $1.8 million. After this incident, the protocol was closed down and did not reopen. Similarly, on January 4th, Gamma Protocol, another liquidity manager, suffered a $400,000 exploit. However, the team managed to fix the vulnerability and restarted the protocol.
On October 14th, a representative from Gamma clarified to CryptoMoon that they have no intention of making it mandatory for users to be added to a list (whitelist) in the future.
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2024-10-14 15:00