This Week In DeFi – December 9

This week, Maple Finance borrowers owe tens of millions, ConsenSys responds to privacy backlash, SushiSwap looks to boost its treasury and Chainlink launches staking.

Dec 09, 2022

To the DeFi community,

This week, uncollateralized lending protocol Maple Finance has seen Orthogonal Trading default on $36 million of loans – representing almost one-third of active loans across the platform.

$31 million were in the M11 USDC pool, resulting in about an 80% loss for users lending to that particular pool. The other $5 million was in the Maven M11 WETH pool, which took a 17% loss. No other pools were directly affected.

Orthogonal Trading defaulted due to having funds tied up in FTX before the exchange’s collapse, despite only claiming to have minor exposure to the exchange in November. Maple Finance has since severed its relationship with the company.

Another borrower, Auros, has also missed a loan payment of 2,400 WETH worth $3.1 million.

M11 Credit @M11Credit

On December 3rd, Orthogonal Trading informed us that due to funds held on FTX, they incurred a much larger loss than previously disclosed to us, and will not be able to repay loans or uphold their obligations as a borrower. link.medium.com/6p58SPmQvvb 1/3

link.medium.comM11 Credit Update on loans to Orthogonal TradingM11 Credit issues default notice to Orthogonal Trading after misrepresenting financials

ConsenSys, the company behind MetaMask and Infura, has made a series of clarifications and plans addressing the backlash received by users over recent privacy concerns.

The firm explained that it would only collect wallet and IP address data when transactions were made, but not when “read” requests are performed (e.g. to check account balances). It also stated that the infrastructure cannot stop logging IP addresses entirely, but would stop linking it directly to transaction data.

ConsenSys also claims that it will be rolling out a new “advanced settings” page on MetaMask that will enable users to choose their own RPC provider at onboarding – rather than using the default Infura provider currently used.

MetaMask 🦊💙 @MetaMask

We are committed to protecting the privacy of MetaMask users. Last month, the ConsenSys privacy policy update raised questions and misconceptions. We heard you, went to work, and would like to share some important clarifications and updates 🧵👇 consensys.net/blog/news/cons…

consensys.netConsenSys Data Retention Update | ConsenSysWe’ve dug into the issues raised as a result of our recent privacy policy update and have important clarifications and updates: 1) we do not correlate IP and wallet address data on read requests; 2) we are narrowing our data retention to 7 days; 3) we never sell user data; and 4) we are improving Me…

Decentralized exchange SushiSwap and its Sushi suite of DeFi products may have its future in danger, as the project faces “a significant deficit” in funding via its Treasury.

CEO Jared Grey stated in a governance proposal that the current Treasury provides only for around 1.5 years of runway for operations, proposing “immediate action” to ensure sufficient resources for uninterrupted operation.

The proposal involves increasing the “Kanpai” Treasury allocation to 100% of fees, effectively diverting fees from xSUSHI stakers to the treasury for operations. The reallocation of fees is proposed “for one year or until new tokenomics are implemented.”

Jared Grey @jaredgrey

As promised, here's my thread on the Sushi Kanpai proposal, why it's essential to the fiscal security of Sushi, and how Sushi's upcoming tokenomics helps bring realignment of value to its core customers, LPs, securing the DEX for the future. 1/

Leading oracle service Chainlink has introduced support for the beta version of its staking service. The service allows LINK holders to earn a native yield for the very first time.

To participate in staking, token holders must lock up their LINK tokens in Chainlink's smart contracts to back performance guarantees for the protocol's oracle services. The initial staking pool will be capped at 25 million LINK, or around 5% of the token's circulating supply. The cap will be increased to 75 million over time.

Chainlink @chainlink

General Access to Chainlink Staking v0.1 is now open! Stake your #LINK and earn rewards for helping secure the Chainlink Network and the broader Web3 Ecosystem. Start staking today to secure your spot 👇 staking.chain.link

Centralized points of failure once again weigh down Defi this week, this time as Maple Finance sees defaults on tens of millions in loans from its users. Orthogonal Trading has been accused of misrepresenting its risk exposure, leading to large losses for lenders – highlighting the human faults that true DeFi attempts to avert.

On a more positive note, billions in funding has still poured into DeFi over Q3 – a 24% drop, but still a pleasant surprise in terms of investor confidence in the sector among the collapses of several major [centralized] entities.

User-friendliness and privacy is seeing some positive progression, as Ledger releases its new “Stax” device, designed by no other than iPod inventor, Tony Fadell. MetaMask provider ConsenSys has also facilitated some better privacy-preserving options following backlash over storing user data.

Although a lot of dust still needs to be settled from this year’s failures, it appears that DeFi is developing into its best form yet. Some dubious centralized entities still must collapse, however we’re well on our way to a more resilient, independent ecosystem.