DeFi protocols Aave and Lido have requested retroactive funding from their autonomous decentralized organizations.
Several of the largest decentralized finance (DeFi) projects, while surviving the crypto winter, have been forced to apply for funding from their own autonomous decentralized organizations.
Aave Companies, the developer behind the largest DeFi lending project, has requested retroactive compensation for the successful development and implementation of V3 of the Aave Protocol.
Meanwhile, the Lido Finance DAO, another top project based on the total value of cryptocurrencies locked on the platform, also recently approved a funding proposal.
Aave
In a government board posting, the developer requested $15 million for work incurred over the course of a year and $1.28 million for audits, for a total of $16.28 million.
Although the voting officially closes today, it had already achieved the necessary quorum for its approval. According to one proposal, this is the first time the development team has asked the DAO for money. Its liquid assets currently stand at $378 million, down from more than $800 million in April.
As the Aave protocol has evolved into what it is today, the costs associated with development have increased substantially,” the proposal said.
“Creating an innovative, secure, battle-tested version of a protocol like Aave V3 requires experienced builders across a variety of skill sets who are fairly compensated for their work.”
Lido DAO
Following several rejected proposals brought before the community, Lido DAO has agreed to raise $10 million through the sale of its native token to venture capital firm Dragonfly Capital. Under the proposal, it will similarly cover two years of expenses.
“Honestly, we moved too slowly,” said Jacob Blish, head of business development at Lido Finance. Commenting on the failure of the project, Blish acknowledged that Lido had been focused on everything else but managing his money in the midst of the bull market and failed to anticipate the fallout from the crisis earlier.
Over the past year, the value of Lido DAO’s liquid assets fell to around $344 million from around $800 million.
DeFi Projects under Attack
It is worth remembering that the flash loan was introduced by the Marble Protocol in 2019, on the Ethereum blockchain. The innovation was described as a “smart bank” that allows users to obtain risk-free loans through a smart contract.
Marble created flash loans to combat the two risks taken by traditional lenders. The most obvious is when the borrower takes the money and disappears. The second risk for a lender is a lack of liquidity. If a lender lends too much of its assets at inappropriate times or does not receive repayments on time, it could unexpectedly become insolvent and be unable to meet its obligations. In this sense, flash loans mitigate both risks.
As DeFi projects have been affected by the market, they still remain insecure from hackers. Earlier yesterday, the New Free DAO DeFi project lost over $1.25 million in a flash loan attack, according to PeckShield, causing the price of the NFD token to drop over 99%.
Their Twitter post read like this: “PeckShield has detected that $NFD has dropped -99% probably falls victim to a flash loan-assisted attack…The exploiter grabbed ~4,500 $BNB (~$1.25M) and has swapped ~2,000 $BNB to ~550k $BSC-USD.”
The attacker has made off with $1.25 million in BNB and exchanged it for BSC-USD. Flash loan hacks are a popular means of attack in the DeFi space as they are comparatively easy to execute.
By Audy Castaneda
