Bessie Liu


<p>The first week of 2024 already has DeFi users on edge after three security incidents in five days.</p>



<p>Over the new year, South Korean cross-chain bridging project Orbit Chain lost <a href="https://blockworks.co/news/80-million-lost-orbit-bridge">$80 million</a> in assets to hackers who’d raided the protocol’s multi-signature wallet.</p>



<p>The team says it’s now working with domestic and international law enforcement to determine the next steps and ways to execute a viable recovery plan.</p>



<p>On Monday — two days after the Orbit attack — cross-chain money market Radiant Capital lost an estimated $4.5 million in a flash loan attack.&nbsp;</p>



<p>A bad actor had manipulated the liquidity index of a freshly created native USDC market on Arbitrum to rapidly siphon crypto from the protocol, leading to pauses in lending and borrowing activities through Radiant.</p>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">Today&#39;s hack on <a href="https://twitter.com/RDNTCapital?ref_src=twsrc%5Etfw">@RDNTCapital</a>  results in the loss of 1.9k eth (~$4.5m). <br><br>The root cause is not new:  It basically exploits a time window when a new market is activated in a lending market (forked from the popular Compound/Aave). The exploitation also relies on a known rounding… <a href="https://t.co/XogWUVO3po">https://t.co/XogWUVO3po</a> <a href="https://t.co/x5X9ql8AGA">pic.twitter.com/x5X9ql8AGA</a></p>&mdash; PeckShield Inc. (@peckshield) <a href="https://twitter.com/peckshield/status/1742334242120466580?ref_src=twsrc%5Etfw">January 2, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<p>The attack left Radiant Capital with bad debt and the team says it has since taken steps to re-capitalize. The hope is that users could regain access to their deposits. </p>



<p>Next up was liquidity management platform Gamma Strategies, where an estimated $3.4 million was lost on Thursday. The attacker manipulated Gamma’s accounting mechanisms to mint an excess of liquidity provider tokens, which allowed them to illegitimately withdraw more than 1,300 ETH.&nbsp;</p>



<p>Gamma has since shut off deposits on public-facing vaults to prevent further attacks.&nbsp;</p>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">The main issue is with the settings we placed on (2) the price change threshold. <br><br>It was placed too high allowing for up 50-200% price change on certain LST and stablecoin vaults. This allowed the attacker to manipulate the price up to the price change threshold and mint a…</p>&mdash; Gamma (@GammaStrategies) <a href="https://twitter.com/GammaStrategies/status/1742882843607416860?ref_src=twsrc%5Etfw">January 4, 2024</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<p>Continued exploits across DeFi have left some concerned about the future of the space. </p>



<p>“DeFi really needs to wake up,” Paul Frambot, CEO of software research and development company Morpho Labs <a href="https://twitter.com/PaulFrambot/status/1742822921507049645?s=20">posted</a> on X. “It has been seven years, yet every week, new large-scale hacks, incidents freezing platforms, economic attacks.&#8221;</p>



<p>&#8220;We are missing orders of magnitude. We need to change the current paradigm.&#8221;</p>



<p>This sentiment is shared by Phillip Shoemaker, executive director of Identity.com, a non-profit organization providing decentralized identity verification.&nbsp;</p>



<p>“Security audits are critical for this industry, including for smart contracts and data storage. But I don’t think there’s nearly enough security audits happening in the digital asset space as a whole,” Shoemaker told Blockworks.</p>



<p>He noted that the blockchain space needs to be doing “much, much more in this regard.”</p>



<p>“I think these hacks and various breaches are pushing a lot of people away from engaging with the industry – people just don’t know what’s secure and what’s not. This is something that we as an industry really need to address more thoroughly,” Shoemaker said.</p>



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Decentralized Finance

DeFi hackers ring in New Year with 3 attacks in 5 days

Jack Kubinec

<div id="highlights-block_635fc152e273c" class="highlights">
        <ul>
                <li>Arbor, formerly Porter, will let DAOs issue bonds for interest rates as high as 20%</li>
                <li>Porter Finance’s original founder closed the platform in July, shortly after its launch</li>
            </ul>
    
</div>



<p>In July, Porter Finance shut down its <a href="https://cms.blockworks.co/porter-finance-has-a-new-idea-to-help-daos-grow-defi-bonds/" target="_blank" rel="noreferrer noopener">DeFi bond issuance protocol</a> after just four weeks, citing a lack of demand. Four months later, three of Porter’s initial four developers are giving things another go under &#8220;Arbor.&#8221;</p>



<p>Porter Finance is rebranding to Arbor Finance today, forking its code while keeping the same core function — allowing DAOs to raise debt in stablecoins while using their native tokens as collateral. </p>



<p>Arbor’s pitch is that DAOs seeking to hold their native tokens through the bear market will issue debt with the hope that the tokens will appreciate in value during the next bull run.</p>



<p>Deployed to the Ethereum blockchain, Arbor works by creating ERC-20 bond tokens that lenders can bid on. Lending yield will be higher than in the traditional finance world to account for the additional risk of often-volatile governance tokens — interest rates could be set as high as 20%, Arbor told Blockworks.</p>



<p>Arbor believes purchasing DAO bonds is better for investors than participating in a token sale or initial coin offering.</p>



<p>“The question isn&#8217;t, ‘is the token going to go up or down?’ The question is, ‘is the DAO going to be able to repay the principal plus interest at maturity?,’” Arbor co-founder Russell Bookland said.</p>



<p>Arbor also offers convertible bonds, meaning lenders can convert their bonds into DAO tokens before their bond matures.</p>



<h3 class="wp-block-heading">DeFi devs bet Porter shutdown was premature</h3>



<p>Shortly after launching in June, Porter Finance partnered with the DeFi lending platform Ribbon Finance and received $4.2 million in bids for its bonds. Given its initial success, Porter’s shutdown just a few weeks later was head-scratching. </p>



<p>Arbor told Blockworks the decision came from Porter founder Jordan Meyer over objections from the rest of the team, who are now launching Arbor. The group declined to elaborate further, and Meyer did not return a request for comment.</p>



<p>In Meyer’s <a href="https://blog.porter.finance/porter-finance-is-shutting-down-bond-issuance-platform-bc8cb053f35d" target="_blank" rel="noreferrer noopener">blog post</a> announcing Porter’s shutdown, the founder said he was “not confident there will be large inflows of lending demand.” The Arbor team said it does not expect institutional investors to be a large initial source of capital.</p>



<p>Still, Arbor is betting on its protocol, even in a slumping crypto market.</p>



<p>“We saw quite a significant uptick in inbound demand as the market crashed because now DAOs were really feeling the pain point of not having very diversified treasuries,” Bookland said. “They didn&#8217;t have a robust stablecoin supply.”</p>



<p>And DAOs have been looking to make use of their treasuries in crypto winter. Last week, <a href="https://cms.blockworks.co/makerdao-votes-in-favor-of-rune-christensens-endgame-plan/" target="_blank" rel="noreferrer noopener">MakerDAO approved a proposal</a> to move $1.6 million of its USDC into Coinbase Prime. This summer, <a href="https://cms.blockworks.co/uniswap-to-create-foundation/" target="_blank" rel="noreferrer noopener">Uniswap launched a foundation</a> to <a href="https://www.axios.com/2022/08/05/uniswap-looks-to-spend-some-of-its-giant-treasury" target="_blank" rel="noreferrer noopener">grow</a> its ecosystem using treasury funds.</p>



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arbor finance

DeFi Bond Issuer Porter Attempts Rebrand — Without its Founder

Shalini Nagarajan

<div id="highlights-block_631600497a278" class="highlights">
        <ul>
                <li>KyberSwap has offered a 15% bounty to its hackers if the stolen funds are returned</li>
                <li>Binance previously helped recover funds stolen from Curve Finance and Axie Infinity</li>
            </ul>
    
</div>



<p>Binance may have helped crack last week’s $265,000 hack on decentralized exchange (DEX) platform KyberSwap.</p>



<p>Binance CEO Changpeng Zhao <a href="https://twitter.com/cz_binance/status/1565976776710430721" target="_blank" rel="noreferrer noopener">said</a> on Saturday that his exchange’s security team identified two suspects behind the attack, and that their identities have been forwarded to the KyberSwap team.&nbsp;</p>



<p>On Sept. 1, KyberSwap issued an <a href="https://blog.kyber.network/notice-of-exploit-of-kyberswap-frontend-963aa8febd6a" target="_blank" rel="noreferrer noopener">alert</a> to notify users that a hacker exploited a frontend vulnerability which led to the draining of two whale wallets on Ethereum and Polygon.&nbsp;</p>



<p>The team discovered malicious code in its Google Tag Manager (GTM) which led to fraudulent transaction approvals, which allowed a hacker to transfer user funds to their account. The GTM was then disabled, according to a blog.</p>



<p>“The script had been discreetly injected and specifically targeting whale wallets with large amounts,” KyberSwap said.</p>



<p>The DeFi platform, which doubles as both a DEX and a liquidity protocol, offered a 15% bounty (around $40,000) to the hacker if they returned the funds and spoke with the team. Compromised addresses would be fully compensated, the network said.</p>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr"><a href="https://twitter.com/hashtag/Binance?src=hash&amp;ref_src=twsrc%5Etfw">#Binance</a> security team has identified two suspects for yesterday&#39;s KyberSwap hack. We have provided the intel to the Kyber team, and are coordinating with LE (law enforcement).<br><br>Stay <a href="https://twitter.com/hashtag/SAFU?src=hash&amp;ref_src=twsrc%5Etfw">#SAFU</a>. <a href="https://t.co/tbQBGaGTNG">https://t.co/tbQBGaGTNG</a></p>&mdash; CZ 🔶 Binance (@cz_binance) <a href="https://twitter.com/cz_binance/status/1565976776710430721?ref_src=twsrc%5Etfw">September 3, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<p>Around the same time as the KyberSwap incident, privacy-focused startup ShadowFi also <a href="https://medium.com/@ShadowFi/shadowfi-the-exploit-44733d1f8cb0" target="_blank" rel="noreferrer noopener">suffered</a> a cyberattack leading to around $301,000 in losses. PeckShield <a href="https://twitter.com/ShadowFi_/status/1565919551186935808" target="_blank" rel="noreferrer noopener">identified</a> the hacker as NeorderDAO, a little-known crypto collective whose website is now offline.</p>



<p>Binance has often shown commitment to helping out crypto projects. Last month, the exchange managed to <a href="https://cms.blockworks.co/binance-recovers-majority-funds-stolen-in-curve-finance-hack/" target="_blank" rel="noreferrer noopener">recover</a> a majority of the funds hackers stole from DeFi protocol Curve Finance. It also <a href="https://twitter.com/cz_binance/status/1517385438469791749" target="_blank" rel="noreferrer noopener">helped</a> Axie Infinity recover nearly $6 million allegedly stolen by North Korean hacking unit Lazarus Group in April.&nbsp;</p>



<p>DeFi hacks have been exploding in the past two years, hitting over <a href="https://cms.blockworks.co/defi-exploits-top-1-8b-ytd-though-security-getting-better-immunefi-says/" target="_blank" rel="noreferrer noopener">$1.2 billion</a> in the first quarter of this year alone, according to Immunefi. The Federal Bureau of Investigation recently <a href="https://cms.blockworks.co/fbi-issues-warning-over-defi-exploits-open-source-development/" target="_blank" rel="noreferrer noopener">warned</a> against such exploits, saying cyber criminals are on the lookout to abuse the complexity of cross-chain functionality.&nbsp;</p>



<p>Kyber’s KNC token has fallen 5% since the hack to $1.65, data from <a href="https://www.tradingview.com/chart/?symbol=FTX%3AKNCUSD" target="_blank" rel="noreferrer noopener">TradingView</a> shows.</p>



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Binance

Binance Identifies Suspects Who Stole From KyberSwap Whales

<div id="highlights-block_63111f3816cd6" class="highlights">
        <ul>
                <li>A free floating DAI would see MakerDAO&#8217;s stablecoin de-peg from the US dollar entirely</li>
                <li>The plan is part of the protocol&#8217;s ambitions to protect itself from regulatory threats</li>
            </ul>
    
</div>



<p>Weeks after <a href="https://cms.blockworks.co/makerdao-plans-to-yolo-usdc-into-eth/" target="_blank" rel="noreferrer noopener">threatening</a> to “YOLO” DAI collateral from Circle’s USD coin to ether, MakerDAO’s co-founder Rune has proposed a path to “free floating” DAI — letting the stablecoin de-peg from the US dollar altogether.</p>



<p>Rune’s <a href="https://forum.makerdao.com/t/endgame-plan-timeline-to-free-floating-dai/17529" target="_blank" rel="noreferrer noopener">proposal</a> on MakerDAO’s forum, submitted on Wednesday, calls for the decentralized autonomous organization (DAO) treasury to accumulate ether through its current investments for three years before cutting back on real world plays (RWAs) and reducing its exposure to “seizable” assets.&nbsp;</p>



<p>Rune’s plan represents a struggle to overcome a growing schism emerging in MakerDAO, as members plan to avoid <a href="https://cms.blockworks.co/tornado-cash-sanctions-expose-potential-defi-achilles-heel/" target="_blank" rel="noreferrer noopener">potential — and still hypothetical — fallout</a> from the United States’ Tornado Cash sanctions.</p>



<p>The proposal outlines three different “stances” for MakerDAO as the organization moves away from real world assets and DAI loses its dollar peg: Pigeon (maximum growth), Eagle (balance between growth and resilience) and Phoenix (maximum resilience at the cost of less growth).</p>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">3/ He highlights three different &quot;stances&quot; of collateral backing, each at a different point in this timeline and contingent upon the threat of an authoritarian attack. <a href="https://t.co/UP25i1O3PX">pic.twitter.com/UP25i1O3PX</a></p>&mdash; Westie 🟪 (@WestieCapital) <a href="https://twitter.com/WestieCapital/status/1564946096555802625?ref_src=twsrc%5Etfw">August 31, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<p>In the blog post, Rune emphasized his support for real world asset projects which can onboard users into decentralized finance (DeFi), but warns a free floating DAI backed solely by crypto and not pegged to the dollar may become necessary.</p>



<p>Rune wrote DAI will detach from the US dollar — doing away with what’s known as the Price Stability Peg — only in the case of an “authoritarian threat.” Since the US Treasury sanctioned Tornado Cash in August and Circle <a href="https://cms.blockworks.co/netherlands-arrests-suspected-tornado-cash-dev-days-after-us-sanctions/" target="_blank" rel="noreferrer noopener">blacklisted</a> a host of USDC Ethereum addresses, Maker members have been sounding alarm bells that <a href="https://cms.blockworks.co/tornado-cash-sanctions-expose-potential-defi-achilles-heel/" target="_blank" rel="noreferrer noopener">government interference could quickly torpedo</a> DAI’s value.&nbsp;</p>



<p>Maker is still pursuing partnerships with non-crypto financial institutions&nbsp;— such as its <a href="https://cms.blockworks.co/makerdao-opens-100m-dai-loan-to-huntingdon-valley-bank/" target="_blank" rel="noreferrer noopener">recent</a> $100 million debt facility with Huntingdon Valley Bank — but the US’ Tornado Cash sanctions reduced the DAO’s appetite for regulatory risk.</p>



<h3 class="wp-block-heading">&#8216;Futurists&#8217; and &#8216;centralists&#8217; torn over free floating DAI</h3>



<p>In a group built to avoid centralized authority, MakerDAO is struggling to find a unified path forward.</p>



<p>“It seems everyone in MakerDAO understands there [needs] to be changes, but the action plan is not decided yet,” Maker contributor Ignas told Blockworks in a Twitter DM. “[Maker]DAO is just unsure and disoriented where to even start.&#8221;</p>



<p>MakerDAO’s current split centers on what the protocol should do with its assets. The worldview shared by Rune and fellow <a href="https://twitter.com/g_dip/status/1564716210054479874?s=20&amp;t=k2LUcJyikISZXinDJTwDfA" target="_blank" rel="noreferrer noopener">“futurists”</a> holds that a truly decentralized DAI can eventually replace fiat at a large scale, and government sanctions are a major threat to this mission. </p>



<p>On the other hand, <a href="https://twitter.com/g_dip/status/1564716214030671872?s=20&amp;t=k2LUcJyikISZXinDJTwDfA" target="_blank" rel="noreferrer noopener">“centralists”</a> include venture capital investors who hope to expand the protocol’s real world credit facilities to make the DAO profitable.&nbsp;</p>



<p>It remains unclear which worldview is ascendant, but futurists received a boost in June when MakerDAO <a href="https://cms.blockworks.co/makerdao-votes-against-a-more-streamlined-leadership/" target="_blank" rel="noreferrer noopener">voted down</a> the creation of a lending oversight committee that would have expanded the DAOs reach into RWAs. The vote was controversial, drawing accusations that a minority of Maker whales, including Rune, used large tranches of votes to shift the outcome.</p>



<p>As specifics on the US Treasury’s sanctions loom, though, MakerDAO may be facing a test for its continued existence. As its former head of business development Greg di Prisco <a href="https://twitter.com/g_dip/status/1564717904544890888?s=20&amp;t=k2LUcJyikISZXinDJTwDfA" target="_blank" rel="noreferrer noopener">wrote</a> on Twitter this week, Maker seems to be entering a “battle for the soul” of the protocol.</p>



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MakerDAO Co-Founder Lays Timeline for Free Floating DAI

Sebastian Sinclair

<div id="highlights-block_630ddd07f71d7" class="highlights">
        <ul>
                <li>The FBI has detailed various DeFi hacks and exploits faced by the cryptocurrency industry over the past year</li>
                <li>Due diligence has been urged to ensure investors understand protocols and verify code audits have taken place</li>
            </ul>
    
</div>



<p>Criminals are ramping up efforts to exploit DeFi (decentralized finance) vulnerabilities to steal crypto, the US Federal Bureau of Investigation (FBI) has warned.</p>



<p>The agency said it has noticed a rise in smart contract hacks and is urging investors who’ve fallen victim to related theft to reach out.</p>



<p>“Cyber criminals seek to take advantage of investors’ increased interest in cryptocurrencies, as well as the complexity of cross-chain functionality and open source nature of DeFi platforms,” the agency said in a <a href="https://www.ic3.gov/Media/Y2022/PSA220829" target="_blank" rel="noreferrer noopener">statement</a>.</p>



<p>More than $1.8 billion in digital assets were <a href="https://cms.blockworks.co/defi-exploits-top-1-8b-ytd-though-security-getting-better-immunefi-says/" target="_blank" rel="noreferrer noopener">stolen</a> from DeFi protocols in this year’s first quarter alone — an almost eightfold increase from 2021’s equivalent period.</p>



<p>The FBI made note of several attack vectors specific to DeFi protocols in the last 12 months, including flash loans, token bridges and oracle price pairs.</p>



<p>Indeed, token bridges in particular have been major targets this year. Harmony’s cross-chain <a href="https://cms.blockworks.co/defi-cross-chain-horizon-bridge-hacked-for-100m/" target="_blank" rel="noreferrer noopener">Horizon Bridge</a> was hacked for $100 million in June while <a href="https://cms.blockworks.co/sky-mavis-ronin-network-bridge-exploited-for-over-600m/" target="_blank" rel="noreferrer noopener">Ronin Network</a>, the Ethereum-linked sidechain for blockchain game Axie Infinity, lost a whopping $625 million three months earlier — the crypto industry’s largest exploit to date.</p>



<figure class="wp-block-embed is-type-rich is-provider-twitter wp-block-embed-twitter"><div class="wp-block-embed__wrapper">
<blockquote class="twitter-tweet" data-width="550" data-dnt="true"><p lang="en" dir="ltr">The <a href="https://twitter.com/hashtag/FBI?src=hash&amp;ref_src=twsrc%5Etfw">#FBI</a> warns that cyber criminals are increasingly exploiting vulnerabilities in decentralized finance (DeFi) platforms to steal investors cryptocurrency. If you think you are the victim of this, contact your local FBI field office or IC3. Learn more: <a href="https://t.co/fboL1N17JN">https://t.co/fboL1N17JN</a> <a href="https://t.co/VKdbpbmEU1">pic.twitter.com/VKdbpbmEU1</a></p>&mdash; FBI (@FBI) <a href="https://twitter.com/FBI/status/1564337233217273857?ref_src=twsrc%5Etfw">August 29, 2022</a></blockquote><script async src="https://platform.twitter.com/widgets.js" charset="utf-8"></script>
</div></figure>



<p>Authorities <a href="https://cms.blockworks.co/treasury-sanctions-north-korean-hacker-group-confirms-ties-to-625m-hack/" target="_blank" rel="noreferrer noopener">believe</a> North Korean hacking unit Lazarus Group was behind both the Horizon and Ronin bridge incidents. </p>



<p>Some of the stolen funds were traced to Ethereum-powered crypto mixer <a href="https://cms.blockworks.co/funds-from-100m-horizon-bridge-exploit-sent-to-tornado-cash-mixing-service/" target="_blank" rel="noreferrer noopener">Tornado Cash</a>. Tornado Cash was blacklisted by the US earlier this month, barring citizens from engaging with the protocol — and, technically, even interacting with digital assets that have passed through it.</p>



<h3 class="wp-block-heading">FBI says open source code allows &#8216;unfettered access&#8217; to bad actors</h3>



<p>The FBI laid out four recommendations for crypto investors; precautionary measures to reduce their susceptibility to theft on the blockchain.</p>



<p>Those include the usual caveats of enlisting professional financial advice and undertaking proper research while ensuring their investments have verifiable code audits.</p>



<p>Investors should also be aware of DeFi liquidity pools with “extremely limited timeframes” to join. The FBI also warned of potential risks associated with open source development, on which much of the crypto ecosystem relies.</p>



<p>“Open source code repositories allow unfettered access to all individuals, to include those with nefarious intentions,” the agency said.</p>



<p>It should be noted that several protocols who’ve undergone code audits have fallen victim to exploits outside their control, though security appears to be “getting better,” Immunefi’s CEO Mitchell Amador told Blockworks in an interview in July.</p>



<p>As for the platforms themselves, the FBI advised they should institute real-time analytics and monitoring while continuously testing their code.</p>



<p>Development of an incident response plan to make investors aware of when an exploit has occurred should also be front and center, it said.</p>



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blockchain

FBI Issues Warning Over DeFi Exploits, Open Source Development

Luke Conway


<p>Yield farming is the process of using decentralized finance (DeFi) to maximize returns. Users lend or borrow crypto on a DeFi platform and earn cryptocurrency in return for their services.</p>



<p>Yield farmers who want to increase their yield output can employ more complex tactics. For example, yield farmers can constantly shift their cryptos between multiple loan platforms to optimize their gains.</p>



<h3 class="wp-block-heading">Quick facts:</h3>



<ul class="wp-block-list"><li>Yield farming is the process of token holders maximizing rewards across various DeFi platforms.</li><li>Yield farmers provide liquidity to various token pairs and earn rewards in cryptocurrencies.</li><li>Top yield farming protocols include Aave, Curve Finance, Uniswap and many others.</li><li>Yield farming can be a risky practice due to price volatility, rug pulls, smart contract hacks and more.</li></ul>



<h2 class="wp-block-heading">How does yield farming work?</h2>



<p>Yield farming allows investors to earn yield by putting coins or tokens in a decentralized application, or dApp. Examples of dApps include crypto wallets, DEXs, decentralized social media and more.</p>



<p>Yield farmers generally use decentralized exchanges (DEXs) to lend, borrow or stake coins to earn interest and speculate on price swings. Yield farming across DeFi is facilitated by smart contracts — pieces of code that automate financial agreements between two or more parties.</p>



<h3 class="wp-block-heading">Types of yield farming:</h3>



<ul class="wp-block-list"><li><strong>Liquidity provider</strong>: Users deposit two coins to a DEX to provide trading liquidity. Exchanges charge a small fee to swap the two tokens which is paid to liquidity providers. This fee can sometimes be paid in new liquidity pool (LP) tokens.</li><li><strong>Lending</strong>: Coin or token holders can lend crypto to borrowers through a smart contract and earn yield from interest paid on the loan.</li><li><strong>Borrowing</strong>: Farmers can use one token as collateral and receive a loan of another. Users can then farm yield with the borrowed coins. This way, the farmer keeps their initial holding, which may increase in value over time, while also earning yield on their borrowed coins.</li><li><strong>Staking</strong>: There are two forms of staking in the world of DeFi. The main form is on <a href="https://cms.blockworks.co/proof-of-work-vs-proof-of-stake-whats-the-difference/">proof-of-stake</a> blockchains, where a user is paid interest to pledge their tokens to the network to provide security. The second is to stake LP tokens earned from supplying a DEX with liquidity. This allows users to earn yield twice, as they are paid for supplying liquidity in LP tokens which they can then stake to earn more yield.</li></ul>



<h2 class="wp-block-heading">Calculating yield farming returns</h2>



<p>Expected yield returns are usually annualized. The prospective returns are calculated over the course of a year.</p>



<p>Two often-used measurements are annual percentage rate (APR) and annual percentage yield (APY). APR does not account for compounding — reinvesting gains to generate larger returns — but APY does.</p>



<p>Keep in mind that the two measurements are merely projections and estimations. Even short-term advantages are difficult to forecast with accuracy. Why? Yield farming is a highly competitive, fast-paced industry with rapidly changing incentives.</p>



<p>If a yield farming strategy succeeds for a while, other farmers will flock to take advantage of it, and it will ultimately stop yielding significant returns.</p>



<p>Because APR and APY are outmoded market metrics, DeFi will have to construct its own profit calculations. Weekly or even daily expected returns may make more sense due to DeFi&#8217;s rapid pace.</p>



<h2 class="wp-block-heading">Popular yield farming protocols&nbsp;</h2>



<h3 class="wp-block-heading">Curve Finance</h3>



<p>Curve is the largest DeFi platform in terms of total value locked, with nearly $19 billion on the platform. With its own market-making algorithm, the Curve Finance platform makes greater use of locked funds than any other DeFi platform — a beneficial strategy for both swappers and liquidity suppliers.</p>



<p>Curve provides a large list of stablecoin pools with good APRs that are tied to fiat cash. Curve keeps its APRs high, ranging from 1.9% (for liquid tokens) to 32%. As long as the tokens don&#8217;t lose their peg, stablecoin pools are quite safe. Impermanent loss may be entirely avoided because their costs will not alter drastically in comparison to each other. Curve, like all DEXs, carries the danger of temporary loss and smart contract failure.</p>



<p>Curve also has its own token, CRV, that is used for governance for the Curve DAO. </p>


<p>[stock_market_widget type=&#8221;accordion&#8221; template=&#8221;chart&#8221; color=&#8221;#5B35D5&#8243; assets=&#8221;CRV-USD&#8221; start_expanded=&#8221;true&#8221; display_currency_symbol=&#8221;true&#8221; api=&#8221;yf&#8221; chart_range=&#8221;1mo&#8221; chart_interval=&#8221;1d&#8221;]</p>



<h3 class="wp-block-heading">Aave</h3>



<p>Aave is one of the most widely used stablecoin yield farming platforms, with over $14 billion in value locked up and a market worth of over $3.4 billion.</p>



<p>Aave also has its own native token, AAVE. This token incentivizes users to use the network by providing benefits such as fee savings and governance voting power.</p>


<p>[stock_market_widget type=&#8221;accordion&#8221; template=&#8221;chart&#8221; color=&#8221;#5B35D5&#8243; assets=&#8221;AAVE-USD&#8221; start_expanded=&#8221;true&#8221; display_currency_symbol=&#8221;true&#8221; api=&#8221;yf&#8221; chart_range=&#8221;1mo&#8221; chart_interval=&#8221;1d&#8221;]</p>



<p>It is common to find liquidity pools working together when it comes to yield farming. The Gemini dollar, which has a deposit APY of 6.98% and a borrow APY of 9.69%, is the highest-earning stablecoin accessible on Aave.&nbsp;</p>



<h3 class="wp-block-heading">Uniswap</h3>



<p>Uniswap is a DEX system that enables token exchanges with no trust. Liquidity providers invest the equivalent of two tokens to create a market. Traders can then trade against the liquidity pool. In return for providing liquidity, liquidity providers get fees from trades that take place in their pool.</p>



<p>Due to its frictionless nature, Uniswap has become one of the most popular platforms for trustless token swaps. This is useful for high-yield agricultural systems. Uniswap also has its own DAO governance token, UNI.</p>


<p>[stock_market_widget type=&#8221;accordion&#8221; template=&#8221;chart&#8221; color=&#8221;#5B35D5&#8243; assets=&#8221;UNI1-USD&#8221; start_expanded=&#8221;true&#8221; display_currency_symbol=&#8221;true&#8221; api=&#8221;yf&#8221; chart_range=&#8221;1mo&#8221; chart_interval=&#8221;1d&#8221;]</p>



<h3 class="wp-block-heading">PancakeSwap</h3>



<p>PancakeSwap works similarly to Uniswap, however, PancakeSwap runs on the Binance Smart Chain (BSC) network rather than on Ethereum. It also includes a few extra gamification-focused features. BSC token exchanges, interest-earning staking pools, non-fungible tokens (NFTs) and even a gambling game in which players guess the future price of Binance Coin (BNB) are all available on PancakeSwap.</p>



<p>PancakeSwap is subject to the same risks as Uniswap, such as temporary loss due to big price fluctuations and smart contract failure. Many of the tokens in PancakeSwap pools have minor market capitalizations, putting them in danger of temporary loss. </p>



<p>PancakeSwap has its own token called CAKE that can be used on the platform and also used to vote on proposals for the platform. </p>


<p>[stock_market_widget type=&#8221;accordion&#8221; template=&#8221;chart&#8221; color=&#8221;#5B35D5&#8243; assets=&#8221;CAKE-USD&#8221; start_expanded=&#8221;true&#8221; display_currency_symbol=&#8221;true&#8221; api=&#8221;yf&#8221; chart_range=&#8221;1mo&#8221; chart_interval=&#8221;1d&#8221;]</p>



<h2 class="wp-block-heading">Risks of yield farming</h2>



<p>Yield farming is a complicated process that exposes both borrowers and lenders to financial risk. When markets are turbulent, users face an increased risk of temporary loss and price slippage. Some risks associated with yield farming are as follows:</p>



<h3 class="wp-block-heading">Rug pulls&nbsp;</h3>



<p>Rug Pulls are a form of an exit scam in which a cryptocurrency developer collects investor cash for a project and then abandons it without repaying the funds to the investors. Rug pulls and other exit scams, which yield farmers are particularly vulnerable to, accounted for about 99% of big fraud during the second half of 2020, according to a CipherTrace research <a href="https://ciphertrace.com/2020-year-end-cryptocurrency-crime-and-anti-money-laundering-report/#summary">report</a>.</p>



<h3 class="wp-block-heading">Regulatory risk&nbsp;</h3>



<p>Cryptocurrency regulation is still shrouded in uncertainty. The Securities and Exchange Commission has declared that some digital assets are securities, putting them within its jurisdiction and allowing it to regulate them. State regulators have already <a href="https://cms.blockworks.co/new-york-attorney-general-orders-crypto-lending-platforms-to-halt-operations-in-state/">issued</a> cease and desist orders against centralized crypto lending sites like BlockFi, Celsius and others. DeFi lending and borrowing ecosystems could take a hit if the SEC declares them to be securities.</p>



<p>While this is true, DeFi is designed to be immune to any central authority, including government regulations.</p>



<h3 class="wp-block-heading">Volatility</h3>



<p>Volatility is the degree to which the price of an investment moves in either direction. A volatile investment is one that has a large price swing over a short period of time. While tokens are locked up, their value may drop or rise, and this is a huge risk to yield farmers especially when the crypto markets experience a bear run.</p>



<h4 class="wp-block-heading">What is impermanent loss?</h4>



<p>During periods of high volatility, liquidity providers can experience impermanent loss. This occurs when the price of a token in a liquidity pool changes, subsequently changing the ratio of tokens in the pool to stabilize its total value.</p>



<p><strong>Example</strong>:&nbsp;</p>



<p>Alice deposits 1 ETH and 2,620 DAI (US dollar stablecoins: 1 DAI = $1) into a liquidity pool because the value of one ether is $2,620 (at the time of writing). Say the pool only has three other liquidity providers who have each deposited the same amount to the pool, bringing the total value of the pool to 4 ETH and 10,480 DAI, or $20,960.</p>



<p>Each of these liquidity providers is entitled to 25% of the pool&#8217;s funds. If they wanted to withdraw at current prices, they would each receive 1 ETH and 2,620 DAI. But what happens when the price of ETH falls?</p>



<p>If the price of ETH starts to drop, that means traders are selling ETH for DAI. This causes the ratio of the pool to shift so that it is more ETH heavy. Alice’s share of the pool would still be 25%, but she would now have a higher ratio of ETH to DAI. The value of her 25% share of the pool would now be worth less than when she initially deposited her funds because traders were selling their ETH at a lower value than when Alice added liquidity to the pool. </p>



<p>This is called an impermanent loss because the loss is only realized if the liquidity is withdrawn from the pool. If a liquidity provider decides to keep their funds in the pool, the liquidity value may or may not break even over time. In some cases, the fees earned from providing liquidity can offset impermanent losses. </p>



<p><strong>Read more: </strong><a href="https://cms.blockworks.co/the-investors-guide-to-navigating-impermanent-loss/">The Investor’s Guide to Navigating Impermanent Loss</a></p>



<h3 class="wp-block-heading">Smart contract hacks</h3>



<p>Most of the hazards associated with yield farming are related to the smart contracts that underpin them. The security of these contracts is being improved via better code vetting and third-party audits, however, hacks in DeFi are still common.</p>



<p>DeFi users should conduct research and use due diligence prior to using any platform.</p>



<h2 class="wp-block-heading">Frequently asked questions</h2>



<h3 class="wp-block-heading">Is yield farming profitable?</h3>



<p>Yes. However, it depends on how much money and effort you&#8217;re willing to put into yield farming. Although certain high-risk strategies promise substantial returns, they generally require a thorough grasp of DeFi platforms, protocols and complicated investment chains to be most effective.</p>



<p>If you&#8217;re searching for a way to make some passive income without investing a lot of money, try placing some of your cryptocurrencies into a time-tested and trustworthy platform or liquidity pool and seeing how much it earns. After you&#8217;ve formed this foundation and developed confidence, you may move on to other investments or even buy tokens directly.</p>



<h3 class="wp-block-heading">Is yield farming risky?</h3>



<p>Risk farming carries a number of risks that investors should understand before starting. Scams, hacks and losses due to volatility are not uncommon in the DeFi yield farming space. The first step for anyone wishing to use DeFi is to research the most trusted and tested platforms.&nbsp;</p>



<h2 class="wp-block-heading">Further reading</h2>



<p><a href="https://cms.blockworks.co/interest-rate-swaps-will-be-catalyst-for-new-era-of-defi-says-voltz-ceo/">Interest Rate Swaps Will Be ‘Catalyst for New Era of DeFi,’ Says Voltz CEO</a></p>



<p><a href="https://blog.chain.link/defi-2-0-and-liquidity-incentivization/" target="_blank" rel="noreferrer noopener">DeFi 2.0 and Liquidity Incentivization</a></p>



<p><a href="https://cms.blockworks.co/celsius-ceo-mashinsky-the-8-8-yield-we-pay-on-stablecoins-is-true-value-of-usd/">Celsius CEO Mashinsky: The 8.8% Yield We Pay on Stablecoins is True Value of USD</a></p>



<p><em>Get educated. Check out </em><a href="https://cms.blockworks.co/proof-of-work-vs-proof-of-stake-whats-the-difference/"><em>Proof-of-Work vs. Proof-of-Stake</em></a><em>, </em><a href="https://cms.blockworks.co/the-investors-guide-to-nfts/"><em>The Investor’s Guide to NFTs</em></a><em>, </em><a href="https://cms.blockworks.co/the-investors-guide-to-defi/"><em>The Investor’s Guide to DeFi</em></a><em>, </em><a href="https://cms.blockworks.co/the-investors-guide-to-the-metaverse/"><em>The Investor’s Guide to the Metaverse</em></a><em> or the guide to </em><a href="https://cms.blockworks.co/what-is-solana-everything-you-need-to-know-about-the-ethereum-rival/"><em>Solana</em></a><em>.</em></p>



<p><em>This is not an endorsement of any project, and should not be interpreted as investment advice. This Guide is for educational purposes only.</em></p>


Borrowing

What Is Yield Farming? What You Need To Know

Aaron Ahmadi


<h2 class="wp-block-heading">What is Yearn Finance (YFI), and how can you invest in it? </h2>



<p>Yearn Finance is a suite of yield-optimizing DeFi protocols anchored on the Ethereum blockchain.</p>



<p>Want to read more like the Guide to Yearn Finance? Scroll to the bottom for additional reading and a list of other <a href="https://cms.blockworks.co/category/education/" target="_blank" rel="noreferrer noopener">Blockworks Investor&#8217;s Guides</a>.</p>





<h2 class="wp-block-heading">A quick primer on DeFi</h2>



<p>All you need to get started in DeFi is an internet connection. Its core thesis is personal financial autonomy — removing unnecessary middlemen in banking, investing and transacting.</p>



<p>Yearn takes this thesis to logical extremes, providing a fast, decentralized method to use digital assets in ways that mirror traditional finance, including lending and borrowing, as well as in ways specific to DeFi (decentralized finance), like staking or yield farming.</p>



<p>Chief among today’s most-utilized DeFi-oriented blockchains is the Ethereum chain, which Yearn Finance was built on.&nbsp;</p>





<h2 class="wp-block-heading">​What is Yearn Finance?</h2>



<p>The central goal behind Yearn Finance is to maximize returns on your cryptocurrency by arbitraging different lending platforms in search of the best available yield — shifting between dYdX, Aave and Compound, as interest rates vary between these platforms.</p>



<p>Within the Yearn Finance ecosystem, investors have a choice of three core products:</p>



<ul class="wp-block-list"><li><a href="https://yearn.finance/#/ironbank" target="_blank" rel="noreferrer noopener">Iron Bank</a></li><li><a href="https://yearn.finance/#/labs" target="_blank" rel="noreferrer noopener">Labs</a></li><li><a href="https://yearn.finance/#/vaults" target="_blank" rel="noreferrer noopener">Vaults</a></li></ul>



<p>Below, we&#8217;ll take a closer look at each option and how they fit within Yearn&#8217;s larger ecosystem.</p>





<h2 class="wp-block-heading">The case for Yearn</h2>



<p>With $3.51 billion in current total value locked (TVL), Yearn Finance is one of the fastest-growing DeFi projects to date with promising potential for its future. Major mergers with other protocols like SushiSwap and Pickle have deepened Yearn’s market reach in the DeFi world. </p>



<p>For those thinking about Yearn for the long haul, it’s worth noting the limited supply of YFI tokens. Technically speaking, users can vote to change the rules on token economics. However, if Yearn’s limited supply stays the same, then Yearn Finance will follow a similar limited-supply model to bitcoin. At the time of this writing, 1 YFI token is $20,610.55. The predetermined total of 36,666 YFI are in circulating supply.</p>



<p>Yearn Finance remains decentralized and community-governed, allowing the Yearn community to shape the future of the project. With a robust offering of products that sets the bar for other DeFi projects, some look to Yearn Finance as the standard in the ever-evolving space. Remember, DeFi is in its infancy.</p>



<p>More conceptually, Yearn Finance remains true to its core, decentralized values in that it continues to uphold transparency and is governed by the users. That means everyone starts on equal footing. Token holders get to vote on the rules. All proposals require over 50% approval before passing. There’s also a <a href="https://yearnweb.substack.com/" target="_blank" rel="noreferrer noopener">newsletter</a> which users can subscribe to stay up-to-date on planned releases, bug fixes, etc.</p>



<p>What began as the first <a href="https://docs.yearn.finance/resources/defi-glossary#fair-launch" target="_blank" rel="noreferrer noopener">fair token launch</a> has evolved into one of DeFi’s most powerful investment opportunities. Of course, nothing in the crypto world comes without risk, so proceed with care.</p>





<h2 class="wp-block-heading">How to invest with Yearn Finance</h2>



<h3 class="wp-block-heading">Option 1: Buy YFI</h3>



<p>As an investor, you have options with Yearn Finance. If your plan is to simply own the YFI token, you can buy it on exchanges like Uniswap or Curve. Then, simply store your assets in a crypto wallet. You can also directly cash out your YFI when you decide to take profits. YFI is also available on centralized exchanges like Binance or Kraken.</p>



<h3 class="wp-block-heading">Option 2: Yield-farm with YFI</h3>



<p>Within Yearn Finance’s platform, the suite of products ranges from low to high risk. One of the simpler, lower-risk services is <a href="https://yearn.finance/#/ironbank" target="_blank" rel="noreferrer noopener">Iron Bank</a>, which allows users to borrow using crypto as collateral without having to sell.</p>



<p>For those with a somewhat higher risk-appetite, there’s <a href="https://yearn.finance/#/vaults" target="_blank" rel="noreferrer noopener">Vaults</a>. Simply choose a strategy from Vault&#8217;s options, deposit the proper tokens and let Yearn tech help maximize yield through shifting capital, auto-compounding and rebalancing. Keep in mind there are no regulations to protect customers or a customer support number to call if there’s a bug in the code or in the event of a hack. While Yearn Finance is known to be secure, it remains experimental; it’s best to know your own risk tolerance.<br><br>Unlike traditional banking products, you can withdraw your investments with Vault at any time.</p>



<p>Finally, Yearn <a href="https://yearn.finance/#/labs" target="_blank" rel="noreferrer noopener">Labs</a> offers an unconventional high-risk, high-reward approach. According to their documentation:</p>



<p>&#8220;The emerging strategies you&#8217;ll find here are the newest and most unconventional around. Be sure to review the About sections carefully and make sure you understand token locking, impermanent loss, and other risks before proceeding.&#8221;</p>



<h3 class="has-black-color has-text-color wp-block-heading">Final considerations</h3>



<p>As DeFi products go, Yearn Finance boasts a relatively simple and effective collection. However, emerging markets change quickly, so it&#8217;s vital to stay informed and keep up with the latest news and insights.<br><br>You can do so here, at <a href="https://cms.blockworks.co" target="_blank" rel="noreferrer noopener">Blockworks.co</a>.</p>





<h2 class="has-black-color has-text-color wp-block-heading">Additional resources</h2>



<p><a href="https://cms.blockworks.co/yearn-finance-launches-yfi-buyback-program-markets-wrap/" target="_blank" rel="noreferrer noopener">Yearn Finance Launches YFI Buyback Program: Markets Wrap</a></p>



<p><a href="https://cms.blockworks.co/the-investors-guide-to-defi/" target="_blank" rel="noreferrer noopener">The Investor&#8217;s Guide to DeFi</a></p>



<p><a href="https://docs.yearn.finance/getting-started/using-yearn" target="_blank" rel="noreferrer noopener">Getting Started Using Yearn</a></p>



<p><a href="https://docs.yearn.finance/resources/faq" target="_blank" rel="noreferrer noopener">Yearn Product FAQs</a></p>



<p><a href="Yea" target="_blank" rel="noreferrer noopener">Podcast: The Rebirth of Tokenomics: Yea</a><a href="https://cms.blockworks.co/podcast-the-rebirth-of-tokenomics-yearn-finance-and-ve33/" target="_blank" rel="noreferrer noopener">rn Finance and Ve(3,3)</a></p>



<p><a href="https://cms.blockworks.co/the-investors-guide-to-defi-2-0/" target="_blank" rel="noreferrer noopener">The Investor’s Guide to DeFi 2.0</a></p>





<h3 class="wp-block-heading">Get educated. Check out <a href="https://cms.blockworks.co/the-investors-guide-to-bitcoin/" target="_blank" rel="noreferrer noopener">The Investor&#8217;s Guide to Bitcoin</a>, <a href="https://cms.blockworks.co/the-investors-guide-to-nfts/" target="_blank" rel="noreferrer noopener">The Investor&#8217;s Guide to NFTs</a>, <a href="https://cms.blockworks.co/the-investors-guide-to-defi/" target="_blank" rel="noreferrer noopener">The Investor&#8217;s Guide to DeFi</a>, <a href="https://cms.blockworks.co/the-investors-guide-to-the-metaverse/" target="_blank" rel="noreferrer noopener">The Investor&#8217;s Guide to the Metaverse</a> and <a href="https://cms.blockworks.co/the-investors-guide-to-music-nfts/" target="_blank" rel="noreferrer noopener">The Investor&#8217;s Guide to Music NFTs.</a></h3>





<p><em>The content of this webpage is not investment advice and does not constitute any offer or solicitation to offer or recommendation of any company, product or idea. It is for general educational purposes only and does not take into account your individual needs, investment objectives or specific financial circumstances.</em></p>


The Investor’s Guide to Yearn Finance

Ben Strack

<div id="highlights-block_6215583a9ca28" class="highlights">
        <ul>
                <li>Uniswap (UNI) makes up a third of the index, while Aave (AAVE), SushiSwap (SUSHI) and Loopring (LRC) each exceed 10%</li>
                <li>Compass Financial Technologies plans to launch thematic, volatility, options-based and multi-asset indices in 2022</li>
            </ul>
    
</div>



<p>A Swiss index provider has launched an index offering exposure to 10 DeFi tokens as crypto investment vehicles continue to proliferate.</p>



<p><a href="https://www.compassft.com" target="_blank" rel="noreferrer noopener">Compass Financial Technologies</a>’ indices have about $5 billion of assets and are tracked by ETPs across Europe.</p>



<p>Appetite for digital asset exposure through institutional-quality solutions is growing significantly, CEO Guillaume Le Fur told Blockworks.</p>



<p>“We have clearly identified the DeFi [theme] as one of the fastest growing sectors in the crypto industry, and the index is designed to offer broad and dynamic exposure to this sector,” Le Fur said.</p>



<p>The index is the first such institutional product that determines weightings by tracking token liquidity and revenue produced by DeFi (decentralized finance) protocols via on-chain data, according to the firm.&nbsp;</p>



<p>The largest allocation is to Uniswap (UNI), with a weighting of roughly 33%. Aave (AAVE), SushiSwap (SUSHI) and Loopring (LRC) each exceed 10%.</p>



<div class="wp-block-image"><figure class="aligncenter size-large"><img loading="lazy" decoding="async" width="1024" height="605" src="https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Compass-DeFi-Index-allocation-1024x605.jpg" alt="" class="wp-image-17770" srcset="https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Compass-DeFi-Index-allocation-1024x605.jpg?w=1024 1024w, https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Compass-DeFi-Index-allocation-1024x605.jpg?w=300 300w, https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Compass-DeFi-Index-allocation-1024x605.jpg?w=768 768w, https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Compass-DeFi-Index-allocation-1024x605.jpg?w=1536 1536w, https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Compass-DeFi-Index-allocation-1024x605.jpg?w=428 428w, https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Compass-DeFi-Index-allocation-1024x605.jpg?w=442 442w, https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Compass-DeFi-Index-allocation-1024x605.jpg?w=370 370w, https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Compass-DeFi-Index-allocation-1024x605.jpg?w=80 80w, https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Compass-DeFi-Index-allocation-1024x605.jpg?w=50 50w, https://blockworks-co.imgix.net/wp-content/uploads/2022/02/Compass-DeFi-Index-allocation-1024x605.jpg?w=1854 1854w" sizes="auto, (max-width: 1024px) 100vw, 1024px" /><figcaption>Compass Financial Technologies&#8217; DeFi index allocation</figcaption></figure></div>



<p>The index can be used under a license agreement by issuers in any country, subject to local regulations. It is compliant with EU Benchmarks Regulation and is live on Bloomberg, as well as Refinitiv.</p>



<p>The launch comes as crypto offerings continue to <a href="https://cms.blockworks.co/with-us-bitcoin-etf-in-limbo-crypto-exchange-traded-products-all-the-rage-in-europe/" target="_blank" rel="noreferrer noopener">multiply in Europe</a>.</p>



<p>Compass partnered with CoinShares in June 2020 to create the CoinShares Gold and Cryptoassets Index (CGCI) — the first EU Benchmarks Regulation-compliant index that combines crypto and gold.</p>



<p>CoinShares more recently <a href="https://cms.blockworks.co/coinshare-launches-new-etps/" target="_blank" rel="noreferrer noopener">launched two crypto ETPs</a> (exchange-traded products) designed to share staking rewards with investors. <a href="https://cms.blockworks.co/wisdomtree-launches-spot-etps-in-europe/" target="_blank" rel="noreferrer noopener">WisdomTree</a> and 21Shares have continued bringing crypto ETPs to the European market, <a href="https://cms.blockworks.co/21-shares-expands-crypto-etps/" target="_blank" rel="noreferrer noopener">with the latter</a> planning to support what it considers the top 50 cryptocurrencies by the end of the year.</p>



<p>“2022 should be an important year for us in terms of index offerings, with new thematic basket indices, volatility, options-based indices and multi-asset indices,” Le Fur said.</p>



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