Weekly Crypto Recap

Biggest Hack of the Week - Mango Swap Loses $100M

As seen in the Tweet above, Mango Markets was recently the victim of a massive 9-figure hack, so what happened? The case of Mango was not even a cross-chain hack, which is now quite common in the DeFi environment, however, a very well-planned operation executed by manipulating the futures capabilities of the platform. Through a series of different limit orders on DEX’s, the attacker first acquired the majority of tokens at $0.0382 per token, after which he began to manipulate the price of MNGO on centralized exchanges, bringing the price to $0.91 per token due to the low liquidity on CEX exchanges. At $0.91 value per token, one of his MNGO accounts was on the plus side by $423 million. This allowed it to borrow $116 million in tokens from all markets, causing debt for the protocol. The most interesting thing in this saga is that the hacker voted within the Mango DAO using the stolen 32.9 million MNGO tokens for his proposal, writing the following:

I suggest that the MNGO team pay off all the debts of the project. The project has about $70 million to pay off such debts. I propose the following. If this proposal is accepted, I will send MSOL, SOL and MNGO to the address announced by the Mango team. Mango's Tregery will be used to cover any remaining bad debt in the protocol, and all users without bad debt will be reinstated. Any bad debt will be treated as a reward/bounty payable from the project's insurance fund. By voting for this proposal, Mango token holders agree to pay this reward and repay the bad debt by treasury, and to waive any potential claims for bad debt accounts and will not conduct any criminal investigations or freeze funds after the tokens are sent back as described above.

Eth 2.0 Can Be Deflationary After All!

Ethereum token circulation dropped by about 5,000 ETH between October 8 and October 15. How is this possible?

As you might know, the EIP-1559 Ethereum update added a mechanism to burn part of the gas fees from ETH transactions, see more statistics here. Furthermore, the ETH Proof of Stake (merge) update has reduced the ETH print to a bare minimum compared to what miners were getting, as the graph below shows.

+3.66%/year - ETH POW ( Proof of Work)

+1.72%/year - Bitcoin POW (Proof of Work)

+0.07%/year - ETH POS (Proof of Stake)

Thanks to the gold rush and jump in gas from minting the Xen Crypto token, the gas levels on the ERC-20 network went up a lot, causing more burning than minting and as a result, deflation!

What Does This Mean For the Future of Ethereum?

If over the long term, Ethereum can continue to remain deflationary, supply will be continuously reduced and therefore increase the tokens’ scarcity.

While the Etherium team still has a lot of work to do, we are indeed seeing the first clear benefits of ETH's transition from Proof Of Work to Proof Of Stake with the reduction in Ethereum emissions.

About the Author

Crypto Enthusiast for over 6 years now. Working full time in DeFi since 2021.

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