Finance Redefined: Millions Locked in DeFi Bridge Contracts Amid Liquid Staking on BNB Smart Chain
Arkham Research issued a notification urging DeFi wallet owners to scrutinize their addresses and attempt to recover funds that have been immobilized for months in bridge contracts.
Welcome to Finance Redefined, your weekly digest of essential decentralized finance (DeFi) insights — a newsletter tailored to bring you the most significant developments from the previous week.
In the realm of DeFi, the past week witnessed BNB Chain unveiling native liquid staking on its BNB Smart Chain (BSC), a move poised to assist ecosystem participants in fortifying the network while maintaining asset liquidity.
Furthermore, DeFi protocol Chainlink introduced a cross-chain protocol aimed at enhancing interoperability across nine blockchain networks, facilitating more seamless cross-chain smart contracts.
In other updates, Arkham Research raised concerns about nearly half a dozen DeFi wallets containing millions in assets stuck within DeFi bridge contracts.
BNB Chain’s Announcement on Native Liquid Staking on BSC
BNB Chain disclosed its plans to introduce native liquid staking on its BNB Smart Chain as part of its transition to migrate the functions of the BNB Beacon Chain to BSC, leading to the eventual shutdown of the former by June 2024. The company outlined that the features of BNB Beacon Chain would be transferred to BSC before its closure.
By enabling liquid staking on BSC, BNB Chain aims to empower ecosystem participants to secure the network while preserving asset liquidity. Although the specific rollout date for the liquid staking feature was not provided, BNB Chain indicated that it would occur in either April or May.
Chainlink’s Cross-Chain Interoperability Protocol (CCIP) Launch
Chainlink’s Cross-Chain Interoperability Protocol (CCIP) entered general availability, facilitating enhanced cross-chain connectivity. The protocol enables developers to utilize CCIP for cross-chain token transfers and smart contract messaging across various blockchain networks in a permissionless manner.
Additionally, developers can initiate and execute function calls on smart contracts deployed on different blockchains, thereby enhancing cross-chain smart contract interoperability.
CCIP’s general availability on the mainnet aims to streamline implementation for developers, thereby bolstering cross-chain connectivity, according to Sergey Nazarov, co-founder of Chainlink.
Potential Yield Crisis for EigenLayer
EigenLayer, the largest restaking protocol on Ethereum by total value locked (TVL), is potentially facing a significant yield crisis, according to industry observers. The rapid growth in TVL may exceed the capacity of its Actively Validated Services (AVS), resulting in a substantial reduction in yield.
EigenLayer recently removed limits on all liquid staking tokens (LSTs) on April 16, following its mainnet launch on April 10. However, AVS on the protocol require comparatively lesser staked Ether for security, raising concerns about potential future issues.
Whale Wallets Stranded in Bridge Contracts
Numerous crypto whale wallets, including those associated with Coinbase and Vitalik Buterin, are ensnared in multiple DeFi bridge contracts, with assets ranging from six to seven figures.
Arkham Research highlighted that most of these bridge protocols are native contracts, necessitating manual retrieval of funds by users, many of whom have forgotten about them. The firm flagged and urged linked users to verify if they could access and retrieve funds stranded for several months.
Market Overview of DeFi
Data from Cointelegraph Markets Pro and TradingView indicates a bearish trend for DeFi’s top 100 tokens by market capitalization, with most recording losses on the weekly charts. The total value locked in DeFi protocols dipped below $100 billion.
