- Curve releases its stablecoin whitepaper.
- Aave suffers bad debt.
- A judge orders a Tornado Cash developer to remain in custody
- Coinbase Wallet adds an Optimistic Görli faucet.
Optimism Highlights 🔴✨
Coinbase Wallet Supports OP Faucet
Coinbase Wallet added support for an Optimistic Görli faucet to its browser extension. Coinbase Wallet now supports faucets for Optimism Görli, Polygon Mumbai, Ethereum Görli and Ethereum Sopolia. Görli and Sopolia are the only testnets that will continue to be maintained by the Ethereum Foundation.
Curve Releases Stablecoin Whitepaper
Curve Finance released a whitepaper for $crvUSD, an overcollateralized stablecoin pegged to USD. The stablecoin will feature a novel liquidation mechanism called the Lending-Liquidating AMM Algorithm (LLAMMA), which converts positions between collateral and stablecoins. In an effort to protect borrowers against liquidations and reduce the risk of bad debt on the protocol, the LLAMMA automatically converts collateral to stablecoins along a curve when the price of the collateral decreases. Conversely, the LLAMMA converts the stablecoins back to collateral when the price increases beyond a threshold.
The stablecoin also features an automatic stabilizer called PegKeeper. The PegKeeper mints and burns $crvUSD if the price is above or below peg. The protocol-minted $crvUSD is added to and withdrawn from Curve pools as part of the stablecoin’s monetary policy. Curve Finance the leading DEX for stablecoin swaps.
Judge Orders Pertsev To Remain In Custody
Dutch public prosecutor Martine Boerlage ordered Alexey Pertsev, a developer who helped write open-source code for Tornado Cash, to remain in custody until February 20, 2023. The order was made on the basis of Pertsev being a flight risk. Pertsev has been detained by Dutch authorities since OFAC-sanctioned Tornado Cash in August. The prosecutor claims Pertsev and two other developers operated Tornado Cash akin to a company because they owned most DAO tokens, could change how it operated and made money off of it. Pertsev is accused of benefiting from the tool’s use in money laundering. Tornado Cash is a privacy tool that can be used to hide the origin of funds.
Aave Suffers $1.5 Million In Bad Debt
Avraham Eisenberg (aka “Avi”), a trader known for extracting $112 million in a price manipulation attack on Mango Markets, executed a similar attack on Aave. The attack exploits an asymmetry in LTV for low liquidity assets. It works by manipulating the price of an asset to borrow more value than the posted collateral. Avi deposited over 35 million $USDC into Aave to borrow $CRV tokens. He swapped the borrowed $CRV for $USDC and added the $USDC as collateral. The fresh collateral and $CRV’s price fall allowed Avi to borrow even more tokens. Some Aave users who posted $CRV as collateral were also liquidated, adding to the sell pressure.
As soon as the selling pressure stopped, the price of $CRV jumped back up with a V-shaped recovery. Avi’s USDC position was then liquidated. However, the position did not liquidate fast enough, leaving Aave short of 2.6 million $CRV tokens. The amount equates to roughly $1.5 million in bad debt for the protocol.
StarkWare Approaches To Data Availability (DA)
StarkWare released an article recapping approaches to Data Availability (DA). Currently, there are three DA solutions supported by STARK proofs, which are Rollup, Validium, and Volition. A Rollup stores the state of the chain on L1 Ethereum along with STARK proofs. Rollup removes any dependency on L2 to withdraw assets. Since storing data on Ethereum is gas-intensive, Validium reduces costs by storing data off-chain with a Data Availability Committee (DAC). Volition is the combination of Validium and Rollup, providing users with the option to select their DA model for each transaction. StarkNet uses Rollup whereas StarkEx supports Validium or Volition.