Despite the recent US$73 million hack on Curve Finance, a stablecoin-focused decentralised exchange (DEX) and lending protocol, decentralised finance (DeFi) services income is increasing.
According to Forkast Labs data, DeFi services revenue, or the total of fees collected from decentralised applications, dipped to US$6.26 million during the last week from US$7.16 million the week before, although it is still more than the US$5.94 million collected the week before the Curve Finance attack.
On July 31, Curve Finance was hacked for cryptocurrency worth US$73.5 million, making it the ninth-largest DeFi attack in history. Total value locked (TVL), the value of all assets deposited in DeFi protocols, was at least US$3.21 billion when the attack occurred. According to data from DeFiLlama, DeFi’s TVL was calculated at US$43.81 billion on July 30. Despite the vulnerability, Forkast Labs data indicates that DeFi systems are making more money.
The fact that DeFi revenues are still increasing demonstrates that long-term investors are not deterred by such losses. Despite being aware of the hazards, they nevertheless participate in the industry, according to Jonas Betz, a market analyst for cryptocurrencies and the founder of the consulting business Betz Crypto.
Every DeFi investor should be aware of the basic risk that [hacks] pose because they are just a part of the game.
Due to the over US$100 million in DeFi loans made by Curve Finance founder Michael Egorov, which were secured by more than 47% of the Curve (CRV) cryptocurrency’s circulation supply, the attack on Curve Finance caused significant concerns for the industry. Investors are concerned that the probable liquidation of Egorov could put the entire DeFi market in peril.
The exploit increases worries about the security of user payments that are locked into DeFi protocols, which have been the main targets of malicious actors. According to Chainalysis, DeFi hacks accounted for 82.1% of all cryptocurrency hacks in 2021, totaling approximately US$3.1 billion in stolen money.
During the Terra-Luna crisis in May 2022, DeFi’s TVL, a widely used metric frequently used to gauge the size of the DeFi market, plummeted from its heyday of over US$136 billion on May 6—just before Terra’s UST lost its dollar parity.
“With [TVL] dropping 7% to 8% post-hack, amounting to billions, DeFi’s TVL most certainly did see an immediate impact, with AAVE’s TVL dropping 15%,” stated Eitan Katz, the co-founder and CEO of decentralised money transfer protocol Kima, in a statement shared with Forkast.
DeFi’s TVL did not, however, collapse to the degree that may have been predicted, it is true. This is due to a number of factors, including the fact that DeFi investors have developed greater fortitude and acumen when calculating risk before acting.
In the previous week, TVL for Ethereum dropped by 7.98% to US$21.8 billion, while TVL for all chains dropped by 5.477% to US$38.13 billion from US$40.34 on August 17.
The TVL of Curve Finance decreased by 28.8% in the two days after the hack, reaching a two-year low of US$1.68 billion on August 1, before rising to US$2.41 on August 14. Prior to the exploit, on June 30, the protocol’s TVL was $3.26 billion USD, according to DefiLlama.
After the exploit, TVL across all blockchains dropped by 6.71% in the two days that followed, reaching US$40.87 billion on August 1 before rising to US$41.92 billion on August 14. On the day before the Curve exploit, the total TVL across all blockchains was worth at US$43.81 billion.
Despite the decline in TVL, Aharon Miller, co-founder and COO of cryptocurrency payment service Oobit, believes the DeFi market will eventually fully recover.
“It’s similar to the hotel business. The hospitality sector suffers during geopolitical events, but after a few months, travellers return, and a year later, new visitor records are attained. The DeFi space would experience similar developments, Miller predicted.
According to on-chain intelligence company PeckShield, over 73%, or $52.3 million, of the stolen assets have already been returned by the exploiters. Curve is paying a US$1.85 million bounty to anyone who can identify the exploiter.