As the decentralized finance juggernaut rolls inexorably forward, the exploitation of defi project Bzx – in which $350K, or around 2% of total assets was taken – has called the decentralization of the industry into doubt. The attack forced an admin key reset to redeem lost funds and sparked a surge in defi insurance, with major players hastily taking out cover to immunize themselves from financial loss. Exactly how decentralized is decentralized finance, critics are wondering.
DEX Volume Swells 71% in a Week
Decentralized exchanges, around which the defi movement revolves, are going strong. More than $2.3B was traded on Ethereum-based DEXs last year, and 2020 is on course to comfortably surpass that. $119M was traded in the last seven days, according to Dune Analytics, marking a 71% increase. Meanwhile, new DEXs are springing up regularly to meet growing demand. The latest, Dexive, will operate as a dual Ethereum and Neo decentralized exchange, with integrated trading features such as asset details, news portal, discussion forum and microblog. There are plans to ultimately integrate other blockchains such as Eos and Zilliqa to create a universal DEX.
Latest DEX volume according to Dune Analytics
While demand for decentralized token trading, and the defi primitives it supports, ramps up, the industry has looked shaky of late. The Bzx exploit that occurred on February 15 has sparked intense debate as to whether decentralized trading protocols are truly decentralized, or whether the presence of a “kill switch” nullifies all such claims. Bzx is the seventh largest defi protocol, with over $18 million worth of funds locked.