In this latest transmission, we look at Prisma’s recent TVL cap and debt cap increase, J.Page swap router, Alchemix Curve hack post-mortem, Frax V3 Audit update and Gud Llamas.
Prisma Cap Increase
On September 13th, the Prisma team announced a cap increase for their four collateral types: wstETH, rETH, cbETH and sfrxETH. The protocol had already managed to attract $37M in total value locked (TVL) and a $20m mkUSD Debt cap during its official launch—which took less than 8 hours to fill.
The cap increase, which was scheduled for Friday 15th, saw USD caps increase to over $50M in collateral and the mkUSD debt cap increase to $30M.
The demand has been massive, and this is most likely due to the Prisma Point System that was introduced at launch, with speculators linking the points system to an incentivised airdrop of the PRISMA token.
With existing depositors (who want to increase their deposits) or those who missed the guarded launch entirely, trying to enter during the second cap increase. When the Caps went live at 13:00 UTC on the 15th, it took 1 hour and 40 minutes to fill.
Users who deposit can mint mkUSD by opening a vault, which is a loan against their specific collateral type. They can then deposit their mkUSD into the stability pool, which is financed by users (known as stability providers) and earn further Prisma points. Additionally, Liquidity Providers now also earn points.
The peg has also been performing very well, holding $1 since launch, remaining between a narrow band of $1 and $1.001.
It was a fantastic start, and it will be interesting to see how tight the band remains once the Debt cap increases into the hundreds of millions.
The community Dune Dashboard went live on 20th September, which shows a number of important data points, including all collateral inflows, culmative depositors, mkUSD/crvUSD trading volume on Curve and much more!
J.Page Swap Router
On September 14th, kp Founder of J.Page announced the swift creation of a smart contract that he developed to facilitate crvUSD flash loans—an example of how potential applications could utilize the jpage infrastructure.
Exploring the contract's function as a safety net for crvUSD loans, it empowers individuals to secure crvUSD loans with just ETH as collateral to cover transaction costs. The contract operates with the assumption that the loan will yield profits, implementing safeguards to ensure the contract's financial integrity before completing the transaction.
One potential scenario for this contract involves borrowers utilizing loans to settle problematic crvUSD debts without the obligation to maintain crvUSD or collateral balances.
It's important to note that when it comes to this particular contract, the ability to liquidate loans is restricted to non-wstETH crvUSD controller contracts due to the protective measures in place for the controller contract methods being called.
It's crucial to exercise caution since this contract has not undergone an official audit.
Alchemix Post Mortem
On September 21st the Alchemix team released a post mortem following the Curve hack back at the end of July.
Originally the Curve team reached out to the Alchemix, alerting them to a vulnerability affecting several pools, including the alETH-ETH pool.
Alchemix Multisig team swiftly took action to withdraw AMO-owned liquidity from the compromised pool. They managed to remove 8,027 alETH before the remaining assets were drained by the exploit.
The attacker absconded with 4,821 alETH and 7,258 ETH.
For those who remember, the security breach stemmed from a latent vulnerability within the Vyper compiler, which had been used to create the affected Curve pools—the bug was subsequently patched in version 0.3.1.
It's worth noting some key observations about the hack:
The attack appeared to be hastily executed and may not have considered frontrunning. An attempt to exploit pETH had failed, potentially prompting the attacker to develop multiple iterations of the attack contract to avoid a repeat.
There is speculation that the attacker left traces on Github by possibly cloning the OZ library, with a fixed timeframe from the initial attack to the deployment of the first contract.
The attacker's rush to act resulted in random mechanisms aimed at thwarting frontrunning, including the activation of the attack and various "key" parameters needed for the function to execute.
Alchemix is collaborating with Curve to assess LP positions before the attack and formulate a compensation plan. Compensation will involve returning the recovered funds to LPers, including the Alchemix AMO, and the possibility of compensation from Curve in the form of vested CRV tokens.
FRAX V3 Audit
On September 21, Sam, Founder of Frax, confirmed in the protocol telegram channel that the V3 audit would conclude on the 22nd. Frax V3 is the newest iteration of the stablecoin, which has a number of upcoming features that vastly improve upon its overall decentralization—some of which have yet to be disclosed.
V2 had a dependence on USDC, and because of this, was affected when USDC de-pegged during the Silicon Valley Bank collapse saga we covered early this year. Removing this significant reliance on USDC will naturally be a boon for FRAX decentralization and help to reduce any third-party risks.
Another focus of V3 is the commitment to achieving a fully on-chain, trustless governance model through frxGov. It’s an innovative approach that eliminates the need for traditional multi-signature setups, and users will play a significant part in the decision-making process.
Other additions, that we know of, include the introduction of Borrow AMM (Automated Market Maker), which will revolutionize lending strategies and enhance the stability of Frax; FraxBonds, which will include duration exposure, automatically converting into FRAX stablecoins upon maturity and Real World Assets (RWAs).
Frax Improvement Proposal (FIP) 277—which was penned by Sam back in August— looked to onboard a FinresPBC:
A conduit setup to accomplish the task of enabling cash deposits and other low-risk cash-equivalent assets (such as reverse repo contracts and treasury bills) in order for the Frax Core Developers to create a traditional financial infrastructure that will enable Frax to execute its V3 RWA asset strategy.
No doubt, following the conclusion of the audit, we’ll see more announcements in regard to the deployment of V3 and further information on upcoming features.
With the stablecoin landscape booming with competition and new joiners such as crvUSD and mkUSD, it’s brilliant to see veterans like Frax constantly evolving, prioritizing decentralization, and striving for innovative and attractive features that improve stability for the long term.
Gud Llamas
The Llamas have been busy supporting the Polygon PoS ecosystem, a lot of which has stemmed from the jobs marketplace introduced by the team.
A great example of this was Llama 574 Sepyke adding ERC-3009 support to Polygon.
So, what is ERC-3009, and what does it enable? Well, a few benefits for users are to delegate the gas payments, pay for gas in the token itself rather than in ETH, perform one or more token transfers in a single atomic transaction, and batch multiple transactions with minimal overhead.
This is just one of the many examples of public good how the Llamas are contributing to the wider ecosystem.