Welcome to Finance Redefined, your weekly dose of essential decentralized finance (DeFi) insights — a newsletter crafted to bring you the most significant developments from the past week.
This week in DeFi saw more regulatory moves as the United States Commodity Futures Trading Commission (CFTC) charged Uniswap Labs with illegally offering leveraged crypto trading for retail investors. The CFTC’s director warned of more potential enforcement actions toward DeFi ecosystems.
In the broader DeFi space, Polygon’s native cryptocurrency was upgraded to the Polygon Ecosystem Token (POL). Polygon said the token would be a “hyperproductive” token and better serve the ultimate vision of Polygon 2.0, which aims to unite the entire Web3 space via AggLayer, including layer-1 blockchains.
CFTC charges Uniswap with illegal derivatives trading
The CFTC has charged decentralized exchange (DEX) developer Uniswap Labs with illegally offering leveraged cryptocurrency trading to US retail investors, according to a Sept. 4 announcement.
The CFTC said Uniswap Labs agreed to settle the charges by paying a $175,000 civil penalty and by agreeing to cease violating the Commodity Exchange Act (CEA).
The CFTC’s enforcement division “will vigorously enforce the CEA as digital asset platforms and DeFi ecosystems evolve,” Ian McGinley, the CFTC’s director of enforcement, said in a statement. “DeFi operators must be vigilant to ensure that transactions comply with the law.”
Polygon’s MATIC upgraded to POL, driving “hyperproductive” token utility
Polygon’s native cryptocurrency has executed a key technical upgrade to enhance its utility and usher in Polygon 2.0.
Polygon’s (MATIC) token was upgraded to its new POL token on a 1:1 basis, becoming the network’s native gas and staking token as of Sept. 4, according to an announcement shared with Cointelegraph.
According to Marc Boiron, the CEO of Polygon Labs, the upgrade will better enable the community to participate in the network’s growth. Boiron told Cointelegraph in an exclusive interview:
“Now that there are 2% emissions being introduced through this upgrade, it’s going to give an opportunity for the community to participate […] Technically, even though the full migration hasn’t happened, [season 1 of the community grants program] created some emissions that the community’s been able to use.”
Polygon Labs CEO Marc Boiron, interview with Cointelegraph’s Zoltan Vardai. Source: YouTube
“Unlucky” MEV bot takes out $12 million loan just to make $20 in profit
An “unlucky” maximum extractable value (MEV) bot took out a staggering $12 million flash loan but only made $20 from its exploits.
In a Sept. 5 X post, blockchain analytics platform Arkham Intelligence stated that the MEV bot took out a $11.97 million loan in Wrapped Ether (WETH) to “sandwich” a user trying to swap around $5,000 worth of Shuffle (SHFL) tokens.
Source: Arkham Intelligence
According to Arkham data, the MEV bot undertook a total of 14 transactions across the duration of its sandwich attack — lending, borrowing and returning around $700,000 in USD Coin (USDC) and WETH loans across decentralized finance protocols Aave and Uniswap.
Solana price falls 12% as Pump.fun sells $41 million in SOL tokens
The Solana token’s price saw a double-digit decline this past week as memecoin launch platform Pump.fun continued to sell its holdings.
The Solana (SOL) coin price fell over 12% during the week leading up to 11:06 am UTC on Sept. 4 to trade at $128. The token is down 3.8% on the daily chart, according to Cointelegraph data.
Solana’s price decline comes after the fee account associated with memecoin deployer Pump.fun sold another $1.38 million worth of SOL coins, according to a Sept. 3 X post by Lookonchain:
“The Pump.fun Fee Account sold 10,300 $SOL ($1.38M) at $134.46 again 40 mins ago!”
Penpie protocol exploited, suffers $27 million loss
The Penpie protocol — an independent decentralized finance protocol built atop Pendle— suffered an exploit on Sept. 3 and was drained of $27 million in client funds at the time of writing.
Onchain sleuths traced the offending transaction back to an address ending in “bb7,” which was one of multiple addresses used by the hacker. As a precaution, Penpie has suspended all deposits and withdrawals at this time.
Spokespeople for the DeFi protocol also reassured users that all customer funds remain safe following the hack and paused all contracts until the issue is resolved.
DeFi Market overview
According to data from Cointelegraph Markets Pro and TradingView, the majority of the 100 largest cryptocurrencies by market cap ended the week in the red.
Of the top 100, the Beam gaming network’s (BEAM) token fell 22% as the week’s biggest loser, followed by the Immutable (IMX) token, which is down nearly 20% on the weekly chart.
Total value locked in DeFi. Source: DefiLlama
Thanks for reading our summary of this week’s most impactful DeFi developments. Join us next Friday for more stories, insights and education regarding this dynamically advancing space.