This Week In DeFi – November 18

This week, more details are revealed about the FTX collapse, Genesis and Gemini suspend redemptions for some users, users flock to safety in DeFi and StarkWare deploys $STRK.

Nov 18, 2022

To the DeFi community,

This week, FTX stays plastered across the news as details continue to emerge from bankruptcy filings, on-chain data and other sources connected to the situation.

Most interestingly, it was alleged that Bahamian regulators directed ex-CEO Sam Bankman-Fried to hack into the exchange and transfer remaining assets to the Bahamian government.

The allegations were made by FTX in a motion in the US Bankruptcy Court in Delaware – and explains the so-called “FTX accounts drainer” who made off with customer funds, completing the exchange’s fateful collapse.

Mario Nawfal @MarioNawfal

🚨Bombshell court filing by FTX, claims that after the bankruptcy was filed, evidence suggests SBF was directed by regulators in the Bahamas to gain “unauthorized access” to FTX’s digital assets and then transferred them to the Bahamian govt. - CNBC

The contagion from FTX’s downfall has also spread to Genesis and Gemini, who both suspended redemptions for customers.

For Genesis, this applied to their lending arm Genesis Global Capital, citing “extreme market dislocation and loss of industry confidence caused by the FTX implosion.”

In the case of Gemini, the exchange suspended withdrawals from their interest-earning platform Gemini Earn – explaining that they could no longer fulfill redemptions within their service-level agreement promise of five business days.

Genesis has since sought an emergency loan of $1 billion, which it says it needs by Monday.

Yano 🟪 @JasonYanowitz

If this is really the end for Genesis, this could be more impactful than FTX. FTX hurt liquid funds and consumers. Genesis impacts nearly every company in crypto. Let's dig in.

On the decentralized side of things, DeFi protocols have seen a significant uptick in users and user activity, as the community flocks to safety away from troubled centralized entities.

Data from Nansen shows double-digit percentage growth in users and transactions over the last week for a huge range of platforms, with Aave seeing a 70% increase in users and a doubling of transactions.

Additional data from Token Terminal says that decentralized exchanges dealing in perpetual swap contracts reached $5 billion in daily trading volume – the largest trading volume since the Terra implosion in May of this year.

Andrew T @Blockanalia

Most DeFi protocols are up double digits in users and transactions this week; centralized exchanges have huge outflows "Crypto" as measured by onchain activity is doing great despite FTX fraud From a PR angle I know nobody cares abt nuance right now, but it's not complicated

Joe Weisenthal @TheStalwart

Well put from @ByrneHobart here. Lots of "real Communism has never been tried" energy from crypto people these days https://t.co/xdI5EQTLwN https://t.co/Ni2alPVfJq

StarkWare has deployed a token for Ethereum Layer-2 StarkNet, known as StarkNet Token or “STRK”. The token is not yet tradable, however details have been revealed including its distribution and vesting schedules.

The maximum supply of STRK will be 10 billion tokens, with 5.01 billion being allocated to the StarkNet foundation. Tokens held by shareholders, employees and independent partners will be unlocked over the course of four years, beginning after one year.

SECRETIVE @LordSecretive

The $STRK token has just deployed on Ethereum 5 key things to know:

“CeFi” continues to dominate the headlines this week as the crypto community pieces together the complete story, while second-order effects on the ecosystem begin to surface.

DeFi is not completely unaffected, with the news continuing to dampen the public’s wider perspective of crypto, and therefore prices. On the plus side, there has been an apparent exodus of users from centralized platforms – now looking rather risky – to DeFi, which is now looking like the much safer bet.

Although it was important that the bad actors were eventually flushed out of the ecosystem, it has proven more disastrous than expected, especially with such a major (and trusted) platform biting the dust.

It may take time to rebuild and build confidence back up in the industry as a whole, but DeFi is standing strong and showing its strengths – eliminating centralized risk associated with human error.

Plenty of further bad actors and risks still remain to be removed from DeFi and crypto, however we are on the right path, however painful that may be.