The Weekly Wrap: Hacks and exploits, BlackRock teams up with Coinbase, Optimistic Optimism

Aug 5, 2022

1. Nomad bridge drained for $190m, 8’000 Solana wallets hacked for ~$8m

The Facts:

  • In the most recent nine-figure crypto attack on cross-chain messaging protocol Nomad, hackers exploited a security flaw to steal roughly $200m in digital assets.
  • Almost all assets in Nomad’s smart contract running on Ethereum were drained.
  • Moonbeam went into maintenance mode limiting the chain’s functionality in order to investigate the issues but resumed operations closely after.
  • Nomad was able to return about $20m from white hat hackers and others.
  • In a separate hack happening Tuesday, nearly 8’000 Solana wallets were drained costing users about $8m so far.
  • The Solana exploit most likely was closely linked to Slope wallet as neither hardware wallets were affected nor was Solana compromised on the protocol level.

Why it’s important:

  • With Nomad being the 4th highest DeFi exploit in history, yet another cross-chain bridge is being drained after the recent $100m exploit of Harmony’s Horizon bridge.
  • With the top 3 DeFi exploits Ronin Network ($624m), Poly Network ($611m), and Wormhole (326m) being related to cross-chain bridges, Vitalik Buterin is yet to be disproved on his take that cross-chain bridges lack security due to fundamental limitations.
  • As trusted bridges remain less secure than trust minimized bridges that move security from key management to code such as leveraged by rollups, the likelihood of a multi-chain future appears to be higher than a cross-chain.

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SOURCE: (DATA) ARCANE, (CHART) BITCOIN SUISSE RESEARCH

$11b

Current 2022 estimate on Ethereum mining revenue. The mining revenue will drop to zero post-merge as Ethereum transitions to PoS.


2. Coinbase and BlackRock to enhance access points for institutional crypto adoption via Coinbase Prime and Aladdin

The Facts:

  • Coinbase and BlackRock announced a partnership in order to offer institutional clients cryptocurrency brokerage and custody services, limited to Bitcoin for now.
  • CEO Larry Fink previously stated that the company would look at ways to provide clients with access to digital assets, confirming institutional investors' interest in the cryptocurrency market.
  • At the same time, asset manager Brevan Howard hits the biggest cryptocurrency hedge fund launch to date with more than $1b in AUM.

Why it’s important:

  • With BlackRock’s recent move, the trend of TradFi’s continuous push towards crypto consolidates.
  • By linking Coinbase Prime, which is utilized by +13k institutional clients, and Aladdin, which is trusted by 55k financial professionals, the alliance establishes new access points for institutional crypto adoption.
  • Coinbase shares (COIN) recovered 35% on the news after ARK invest sold their main share of COIN at $53 last week.

Also, small grammar nuance: in English when talking about things like proof of stake, we don't say ‘it's a security’, we say ‘it's secure’. I know these suffixes are hard though, so I forgive the error.

Vitalik Buterin, Co-Founder of Ethereum on Michael Saylor’s opinion about ETH being a security (via Twitter)


3. Optimistic TVL booms and Arbitrum reveals Nitro migration date

The Facts:

  • TVL in Optimism more than doubled within 3 weeks from $0.72b on July 15 to $1.51b (27.1% accounts to Optimism’s native OP token) today along with significant price appreciation of OP, creating a positive feedback loop for participants.
  • The increase and momentum most likely are linked to their incentive program to grow the ecosystem as well as to airdrop farmers that anticipate the next OP airdrop.
  • Compared to Arbitrum that currently leads market share among Layer2s with 47.9% and a TVL of $2.48b, Optimism was able to gain a market share of 29.25% on the back of the recent uptrend.
  • On Thursday, optimistic rollup Arbitrum also announced the final migration date (August 31) for its highly anticipated Nitro upgrade, calling developers to prepare and test their contracts.
  • The Nitro upgrade will bring advanced call data compression driving down transaction costs, compatibility to Ethereum L1 gas aligning price for EVM operations, Geth tracing, and additional interoperability.

Why it’s important:

  • Catalyst events such as the 2nd OP airdrop and Arbitrum Nitro might push more awareness and therefore boost the rollups ecosystems.
  • As the Merge approaches with Ethereum’s rollup-centric roadmap getting more traction, Arbitrum, and Optimism, both being optimistic rollups, push for more users and DeFi activity.
  • Their efforts hit amidst various announcements of competing general purpose zk-rollups nearing launch windows.
  • With Nitro migrating end of August, Arbitrum’s Odyssey program, which is likely linked to an airdrop, is expected to resume soon.
  • Interestingly, Optimism managed to pass Arbitrum’s daily security cost paid to Ethereum on a more frequent basis as activity soared.
In other news
  • Tiffany announces NFT drop for 30 ETH per piece (via The Verge)
  • Aave joins the stablecoin game with yield generating GHO (via CoinDesk)
  • CEO of MicroStrategy Michael Saylor is stepping down as CEO (via CNBC)
  • Solana’s NFT marketplace Magic Eden expands towards Ethereum (via Decrypt)
  • Meta rolls out NFT integration across 100 countries (via CoinDesk)
  • New U.S. Senate bill to make CFTC primary crypto regulator (via The Crypto Times)
  • Fake DeFi ecosystems exposed on Solana and Saber protocol (via CoinDesk)
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Dominic Weibel

Crypto Researcher