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Rumors of bankruptcy have been swirling around EVODEFI, a bridge in the Oasis protocol ecosystem that could be short of $66 million in funding.
Likely $66 million in unbacked funds
Various users on Twitter on June 7 suggested that There could be a multi-million dollar discrepancy in EVODeFi’s protocol.
Specifically, those reports suggest that the project has 18 million USDT but requires 96.8 million USDT to remain solvent. Similarly, they suggest that it is 91.5 BTC but 293 BTC is needed for solvency. At current prices, EVDeFi could be reduced to around $84 million.
However, EVDeFi is believed to have a plethora of other assets apart from the above shortfalls. The protocol has 27 million USDC but only 10.8 million USDC is needed; It also has 4229 ETH but only 3421 ETH is needed. Those additional funds are worth $18 million, an amount that would reduce the total shortfall to $66 million.
Rug Doctor, who leads the DeFi security and education project RagDoc, supported the above hypothesis. “I’m assuming he has about $50 million in separate debt from just chatting with his team today,” he said. crypto briefing,
Rag Doctor believes that the project mined unbacked Tether (USDT) to buy back other assets, thereby backing itself and ValleySwap during periods of financial despair.
he shared with crypto briefing An on-chain transaction clearly showing simultaneous USDT withdrawals to five different wallets within a single transaction. The inexorable nature of that transaction – although unverified – suggests that the assets are uncorrelated.
EvoDeFi has frozen and restored services
EVODeFi responded to the turmoil by halting its bridge on June 7th claiming that That “too much speculation” and volatile asset prices were hindering Bridge’s ability to safely withdraw user funds. EVDeFi has now resumed operations from June 8.
protocol is also pause for time Users are required to fill up the KYC form before processing the withdrawal requests of the users.
Rug Doctor gave a more general warning, stating that bridges are “generally the weakest point of any DeFi protocol” and should be a “last resort after careful risk-benefit analysis”. He added that the EVDeFi crisis is “an unfortunate example of how an anonymous team can ultimately abuse their governance privileges to hurt users.”
Rag Doctor said it has worked with Binance to freeze EVODFI’s account and is compiling the information to send to law enforcement.
Widespread impact of the crisis on prices
Rumors about EVODeFi’s lack of Tether caused USDT to lose its $1 value peg on some Oasis-based exchanges. USDT fell to $0.16 on June 6, bounced back to around $0.63 on June 7, and is currently trading at $0.14 on two of Oasis’s largest decentralized exchanges, ValleySwap and YuzuSwap.
Oasis Foundation has released Statement Attributing those losses to FUD rather than protocol failures. It says the Oasis stablecoin has not lost its peg; Instead, it says that “EvoDeFi-bridged assets are trading below their expected value on ValleySwap because of fears that they are not backed one-to-one.”
Oasis distanced itself from EVODEFI and ValleySwap, stating that it is neither affiliated with nor supporting any of the projects. it before warning Users about EVDeFi and connected protocols in April.
Disclosure: At the time of writing, the author of this article owns ETH and several other cryptocurrencies.