Seeming oracle attack causes $100m in Ethereum DeFi liquidations
It appears we just saw our latest DeFi exploit/attack, but this one was much different than all the rest.
Bitcoin, Ethereum, and the rest of the crypto market spiked dramatically lower on Wednesday evening as buying pressure finally abated. The running theory is that due to it being Thanksgiving, the buying pressure that had come from institutional pressures was temporarily taken offline.
Whatever the case, BTC dropped 14 percent from its highs while ETH sustained heavy losses of 18 percent.
When the market began to drop, users began to notice that Ethereum transaction fees had begun to spike by approximately 1,000 percent. Liquidations, referencing how on-chain loans are regularly liquidated amid price crunches, were cited as the cause.
This appears to be correct, but the liquidations were not natural: according to DeFi tracker LoanScan, approximately $100 million worth of loans were liquidated on Compound in the past day. Analysts purport that it was a result of an oracle manipulation attack.
Compound is a decentralized loaning platform where users can pool assets such as Wrapped Bitcoin, Ethereum, and stablecoins and withdraw other coins as a loan.
In crypto, oracles are a technology that allows smart contracts to speak with data sources that aren’t based on a blockchain.
The most popular type of oracle is Chainlink, which is integrated into countless DeFi applications and blockchains.
It’s most often used to provide price feeds for DeFi platforms, such as with decentralized loan platforms, decentralized exchanges, etc.
Compound appears to use its own oracle technology, which takes the prices of coins on centralized exchanges, then feeds it back into its own protocol to determine if liquidations need to be made, etc.
This technology was apparently exploited during the recent market drop.
While it made sense that Compound sustained liquidations during the drop lower, things moved much faster on the platform than it did on Aave and MakerDAO, other DeFi protocols through which users can obtain loans.
LoanScan reports that MakerDAO liquidated under $1 worth of collateral while dYdX did $7 million. Compound’s $100 million day clearly stands out.
As noted by many on Twitter, what seemingly happened was that someone/natural market pressures pushed the price of DAI/USDC to 1.30 on Coinbase. Coinbase is often used as an exchange to watch by oracles due to the lack of manipulation/spoofing affiliated with the exchanges.
DAI trading at $1.30, at least in the mind of the oracle, meant that there were a number of users that took out loans in DAI were under the liquidation ratio. Their positions were subsequently liquidated to ensure that suppliers would not be underwater.
This is still a developing story with many moving parts. CryptoSlate will update this article when more is known about the situation.
- Bitcoin, Ethereum to Regain Lost Ground as Investors Buy the Dip
- Ethereum Classic hard fork receives Binance’s support
- Ethereum Classic plans ‘Thanos’ hard fork to restore mining with older GPUs
- Next Moves For Bitcoin & Ethereum **INSANE DATA**
- Ethereum 2.0 Deposit Threshold Met: Proof-of-Stake ‘Beacon’ Chain Starts in 7 Days | Altcoins Bitcoin News
Bitcoin, Ethereum to Regain Lost Ground as Investors Buy the Dip
Roughly $2 billion in long positions have been liquidated during the most recent correction in the cryptocurrency market. On-chain analysis now shows that investors may not have to wait long to make up their losses.
Both Bitcoin and Ethereum are already showing signs of a potential rebound.
The flagship cryptocurrency took a 17% nosedive after rising to a new yearly high of nearly $19,500 on Nov. 25. Since then, prices have been consolidating within a narrow trading range without providing a clear path for where they are headed next.
The lackluster price action seen in the past few days forced the Bollinger bands to squeeze on the 1-hour chart, indicating that a major price movement is underway.
Some of the most prominent technical analysts in the industry view squeezes as stagnation periods that are usually succeeded by high volatility.
The longer the squeeze, the more violent the breakout that follows.
Given the lack of direction for Bitcoin’s trend, the area between the lower and upper bands can be considered a reasonable no-trade zone. Only a candlestick close above or below any of these critical hurdles will determine whether or not the pioneer cryptocurrency is poised to recover lost ground.
Slicing through the overhead resistance at $17,420 would likely be followed by a spike in buy orders behind Bitcoin. The potential increase in demand could have the strength to push prices back above $18,000.
As a matter of fact, one of the most significant resistance barriers ahead of BTC sits at $18,350.
Conversely, if sell orders begin to pile up around the current price levels, Bitcoin might break below the underlying support at $16,500.
Turning this demand wall level into resistance will likely result in further losses.
A downswing below this price point may trigger panic selling among investors, pushing prices down to $15,350 or even $13,500.
The $475 resistance level has capped Ethereum’s price action since early September.
But on Nov. 20, the buying pressure behind Ether was significant enough to allow it to finally break through this hurdle and rise more than 30%, pushing prices to a new yearly high of $620.
From a technical perspective, the upswing was correlated with the breakout of an ascending triangle developed on ETH’s 1-day chart for the last three months. A horizontal resistance wall formed along with the swing-highs, while a rising trendline was created along with the swing-lows.
The distance between the widest point of the triangle projected a target of $730.
Now that Ethereum retested the breakout point at $475, it could be poised for another leg up to reach the triangle’s target.
Such a bullish thesis holds when looking at Santiment’s holder distribution chart.
The behavioral analytics firm recorded a spike in buying pressure as prices were collapsing. This market behavior indicates that some investors took advantage of the downward price action to “buy the dip.”
Indeed, the number of addresses holding 100,000 to 1 million ETH shot up in the past 24 hours. Roughly four new whales also joined the network, representing a 2.6% increase in a short period.
When considering that these large investors hold between $51 million and $510 million in Ether, the sudden spike in buying pressure can translate into millions of dollars.
Ethereum may thus have the ability to rebound towards higher highs if whales continue loading up.
Regardless of the bullish outlook, IntoTheBlock’s “In/Out of the Money Around Price” (IOMAP) model reveals a major supply barrier that may prevent the second-largest cryptocurrency by market cap from achieving its upside potential.
Based on this on-chain metric, the area between $523 and $570 is filled by more than 1 million addresses that had previously purchased over 13 million ETH. Such a massive supply wall has the ability to absorb some of the buying pressure seen recently.
But if Ethereum can slice through this hurdle, it would likely climb towards $730.
On the flip side, the IOMAP cohorts show that the $475 support level may not be able to contain another sell-off.
Only 1.3 million addresses bought roughly 1.6 million ETH around this price level, making it weak support compared to the overhead resistance.
Slicing through this hurdle will likely jeopardize the optimistic scenario and lead to further losses.
On-chain data shows a close relationship between the exchange inflow of stablecoins and Bitcoin’s price action. Numerous times throughout the past year, a spike in the number of stablecoins transferred to known exchange wallets was followed by a bullish impulse.
Dino Ibisbegovic, content and SEO manager at Santiment, maintains that when stablecoins begin to flood exchanges, it is indicative of an increase in “buy the dip” sentiment.
“I reported on this phenomenon back in May following Bitcoin’s +10% pump, and once again earlier this month, on the back of BTC’s +16.9% week. In both cases, I noted that Bitcoin’s bounceback seems to occur when stablecoin whales and/or retail owners start offloading their stablecoin bags – and especially if there’s a corresponding spike in the inflow of stablecoins to exchanges,” said Ibisbegovic.
Recently, Santiment recorded a major uptick in the number of stablecoins sent to known exchange wallets during the correction.
More than 720 million USDT, 230 million DAI, 85 million BUSD, and 317 million USDC were transferred to exchanges.
Given the recent market behavior, it is very likely that sidelined investors are taking advantage of the low prices to re-enter the market.
For this reason, it is imperative to pay close attention to the support and resistance levels previously mentioned.
If Bitcoin and Ethereum manage to break their respective resistance barriers, a further advance will be almost guaranteed.
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Ethereum Classic hard fork receives Binance’s support
After an intense rally witnessed in the cryptocurrency market, the trends have reversed. Bitcoin along with altcoins has been moving down the price scale, but this has not stopped the upcoming developments. Ethereum Classic is set for its hard fork, Thanos [ECIP 1099], scheduled to take place on 29 November. In order to keep up with the developing ecosystem, Binance has announced to support this upcoming hard fork.
The announcement read:
“Binance will support the upcoming Ethereum Classic (ETC) hard fork & upgrade at the Ethereum Classic block height of 11,700,000. Deposits and withdrawals of ETC will be suspended on 2020/11/28 02:00 AM (UTC) and will reopen deposits and withdrawals for ETC once we deem the upgraded network to be stable.”
Tackling a 51% attack
The Thanos hard fork will mark an important milestone for ETH as the network will support existing miners and attract new ones while maintaining compatibility with Ethereum [ETH]. This upgrade will also equip the ecosystem to withstand a 51% attack, as we recently saw it vulnerable to.
The founder and Chairman of Ethereum Classic Labs, James Wo noted:
“After the successful implementation of MESS, the finality algorithm that provides 51% protection, we continue to see Ethereum Classic innovate and grow in a way that distinguishes itself and increases functionality for its users.”
The Thanos upgrade will help in reducing the Directed Acyclic Graph [DAG] size to cultivate a more distribute and healthy mining ecosystem, increasing the hash rate, while allowing miners to continue to mine ETC.
The Mordor Testnet was activated in October and it implemented the Thanos upgrade. The mainnet activation has been estimated to take place on the block 11,700,000 on 29 November.
Looked at as the next natural step in ETC’s development, the team has advised Miners to upgrade their mining software to continue to mine the digital asset. The clients have also been asked to upgrade their nodes to Core-geth v1.11.16 or later.
Author: by admin
Ethereum Classic plans ‘Thanos’ hard fork to restore mining with older GPUs
Ethereum Classic (ETC) is planning on executing the Thanos hard fork, an upgrade that would ensure several more years of mining functionality for graphics cards with 4 gigabytes of RAM.
The upgrade, scheduled for block 11,700,000 — set to be mined between November 28 and November 29 — will roll back the epoch parameter for Ethereum Classic’s mining algorithm, Ethash.
Ethash features a set of pre-computed data used during the mining process, called DAG. The data set grows at a rate of about one gigabyte every 18 months, and is currently very close to reaching 4 GB. This poses a problem for many graphics cards and some ASICs used for Ethash mining, as these devices will no longer be able to mine Ethereum Classic.
This mechanism is an important component of Ethash’s resistance to ASICs. Memory is relatively expensive and the constant growth of the DAG would eventually deprecate any ASIC and discourage heavy investment.
The Thanos hard fork aims to halve the size of the DAG, allowing 4 GB devices to keep mining for another three years.
The purpose of the hard fork is largely to attract more hashrate originating from Ethereum (ETH), which is also expected to completely throw 4 GB miners off before the end of 2020.
Due to the several successful instances of 51% attacks on ETC, the community is looking to boost its hash rate and resistance to further manipulation attempts.
While another proposal seeks to change the mining algorithm entirely, it is generating controversy and may require more time to be passed, if ever. The Thanos hard fork is thus presented as a short-term fix to capture a significant portion of the total GPU hash rate and secure the network.
According to statistics captured by Hive OS, about 24% of its users are still deploying 4 GB cards, and only 2% of all devices mine Ethereum Classic. Ethereum Classic’s hash rate is currently just above 1% of that of Ethereum, so even a small percentage of Ethereum miners migrating to ETC would significantly boost its security.
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Ethereum 2.0 Deposit Threshold Met: Proof-of-Stake ‘Beacon’ Chain Starts in 7 Days | Altcoins Bitcoin News
The Ethereum network’s ETH 2.0 contract has crossed the threshold needed to initiate the upcoming upgrade. Currently, there’s more 694,368 ether worth over $422 million resting in the contract, as developers hope the proof-of-stake launch will begin on December 1.
At the end of the first week of November, the Ethereum Foundation initiated the first process of the highly anticipated Ethereum 2.0 (ETH 2.0) upgrade specifications, which detailed the initial rules of the genesis phase 0. The genesis phase 0 contract specification noted that there needed to be approximately 524,288 ETH and at least 16,384 validators to invoke the proof-of-stake process.
The requirements needed to kickstart Ethereum 2.0 for December 1, mandated that the threshold be met by November 24, 2020. Additionally, a web portal called Launch Pad was published so users can learn how to be an ETH validator and secure the blockchain.
The requirements needed to spark the genesis phase 0 process were officially completed on the 24th and there’s now 694,368 ether worth $422 million in the contract.
The contract address has seen approximately 16,736 transactions of around 32 ether per transaction. 32 ETH is what is needed to become a validator and earn a stake on the Ethereum chain. At the current exchange rate of $608 per ether, it costs close to $20k per staking validator. Roughly the last 25% of the ether needed to meet the threshold was deposited into the contract in less than a four-hour timespan.
Following the deposit milestone, a great number of Ethereum proponents and developers celebrated. “We reached it,” said Ethereum 2.0 R&D member Hsiao-Wei Wang. “Thanks to all the Eth2 teams and the community that wrote the history. And thanks to the Ethereum critics who made us stronger. Don’t forget to update your Eth2 client in a couple days,” Wang added.
The “Eth 2.0 Deposit Contract – Progress Meter Bot” also tweeted about the landmark occasion and stated:
We have liftoff. Thank you to the devs, the researchers, educators, and community members who made this happen. See you on December 1st @ noon UTC.
Many Ethereum supporters also understand that the Ethereum 2.0 genesis phase 0 will initially start with the “Beacon” blockchain, a baby-step that will make it so the upgrade will have less of an impact on the main network. The ETH 2.0 upgrade will start in seven days’ time and the Beacon chain will begin the first of four initial phases.
Estimates say that Ethereum 2.0 validators could earn about 20% in annualized rewards. After the requirements were filled, Ethereum proponent Tom Shaughnessy said that the Ethereum 2.0 launch “got more attention in an hour than every other layer 1 did this entire year put together.”
Ethereum Foundation member Hudson Jameson tweeted about how the Ethereum 2.0 Beacon chain launch will happen the day prior, and what needs to happen in order to create a successful launch.
“The beacon chain marks the beginning of the transition to Eth 2.0, but that doesn’t mean that everything immediately changes,” Jameson wrote. “Eth 2.0 is a multi-year process and the first few pieces of that process won’t heavily affect the current Ethereum mainnet.”
Jameson also stressed that whatever happens, the Ethereum community should be impressed with the Ethereum 2.0 development team. He also explained when he thought the Beacon chain launch would begin.
“My opinion (not an official stance of the Ethereum Foundation) is that we will launch between December 1st and December 5th,” Jameson concluded. “I base this on how quickly deposits are coming in as of the last 48 hours.”
At the time of publication, ethereum (ETH) is trading for $608 per ether, as the token has gained 26% during the last seven days and 49% in the last 30 days.
What do you think about the culmination of the highly anticipated Ethereum 2.0 launch? Let us know what you think about this subject in the comments section below.
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