The Cat That Kinda Got the C.R.E.A.M.
EDITION N°2 | 2 September 2021
Ah, what a week! Top stories: The SEC showed they’re not messing about, hiring a private firm to step up their DeFi monitoring efforts, C.R.E.A.M. got exploited for $18.8m and Metamask hit 10 million monthly active users.
1. The SEC goes Sherlock Holmes on DeFi
The SEC hired California-based AnChain.AI to monitor DeFi transactions according to a Forbes article last weekend. It’s a great contract to win [congrats AnChain!] but perhaps a daunting task; tracking the entire DeFi ecosystem, which is now fairly LARGE and growing by the week, is no small feat.
Analyzing suitably detailed transaction and wallet data on ALL DeFi protocol interactions is absolutely imperative here. However, glancing at Chainalysis’ 2021 Global DeFi Adoption Index Report highlights how extensive North America’s usage already is, with ~23m+ monthly visits. Following our previous comments on G. Gensler and co, it would appear a highly coordinated analytics approach will eventually be necessary to generate the sufficient coverage required to track the entire burgeoning DeFi ecosystem.
The key takeaway here: KYC/AML layer integrations for on-chain protocols is looking increasingly like a ‘must-have’ going forward.
2. Temporarily skimming the C.R.E.A.M.
Sometimes “whitehat” hackers exploit protocols to draw attention to smart contract weaknesses and then return the funds, giving them a free pass for a ‘do-over’ [see Poly Network]. Sadly for decentralized lending protocol Cream Finance and select protocol participants, this was not the case, with $18.8m of liquidity drained from the protocol’s AMP token contract at the time of the hack.
This is not necessarily in the community spirit of DeFi but it is interesting to see account notes almost instantly populate on Etherscan for the offending wallet address. For an ecosystem promising to be built on transparency, instant settlement and accountability, this level of detail - typically reserved for ‘classified’ internal records - is interesting to access publicly. Even more interesting is the now $21.7m in funds still appear to be sitting in 0x…EDe.
3. Metamask and the 10m MAUs
Driven by soaring DeFi and NFT activity on the Ethereum blockchain, Metamask monthly active user (MAU) numbers have increased 1800%+ in just over a year, to 10 million. Often, active users will have more than one ETH address for their transactions, so this number may be overstated, but nevertheless, it’s significant and a testament to the adoption we are seeing in non-custodial, decentralized digital assets. This coincides, interestingly, with OpenSea seeing a surge in NFT monthly trading volumes in excess of $3.3bn according to Dune Analytics. Metamask wallets use is highest in the Philippines, US, Vietnam, the UK and China with Asia leading user growth; which also echoes some of the data coming from the Chainalysis report.
Note: The Chainalysis Report also highlights how institutional transactions accounted for over 60% of DeFi transactions in Q2 2021; eyes on Square, JPM & Blackrock.
And now for something macro & micro…
Why is Raoul Pal such a don? Because he is a great storyteller, has access to all the data and generates impressive feedback loops to spin a coherent narrative. As fans of Bankless and Real Vision, we had to include this cast in our second edition.
… brought to you by Alkemi Network
Alkemi Network is building an on-chain liquidity network with a suite of tools and products that serve as onramps for everyone to participate in decentralized finance. See our latest Ecosystem Update.