Seedphrase Daily ? Roses are red. Crypto is dead. If you want to survive, don’t leave us on read.
Today’s Agenda ?:
? A $100M hack that was completely legal…? The brutal truth about “the metaverse.” Is it a good investment for you? ? Meme of the Day
? How a hacker finessed $100M and avoided all legal issues.
In the second massive DeFi hack this week, Mango Markets was drained of $100M in funds due to an exploit found by a “hacker.”
? How he managed to drain the DAO.
Let’s get this straight. It wasn’t a hack.
The “hacker” found a flaw in the Mango protocol and was able to take in leveraged trades to drain the liquidity from the DAO.
The attacker funded one account with 5M USDC collateral. He offered 483M units of MNGO perpetual contracts on the Mango order book and bought them for $0.03 per unit.With 5M in $USDC collateral, he bought those 483M units of Mango Perp.He then started drastically moving the price up to $.91.And after taking out an unrealized loan of $116M, it was distributed amongst a variety of tokens, leaving the Mango treasury with -116.7M.
The assets taken include ?:
Which essentially wiped out ALL of Mango’s liquidity.
This wasn’t your typical hack. No. No. No.
This was a finesse done by someone highly intelligent who knew the ins and outs of the system.
And to an extent, you have to respect the fact that not every person can do this.
But obviously, for the people in Mango, sorry for your loss.
? What happened after
He used the stolen funds to pit the community against the developers.
? How? How? How does he keep doing this?
Using the same funds stolen from the exploit, he told the members of the DAO that he’d return the majority of the loot if the community agreed to repay the bad debt taken during a June operation to save a different Solana project called Solend.
He then cast 33M votes in favour of the proposal, which gave it an approval rate of 99.9% (since he owned all the liquidity).
Voting ends on Friday and still needs another 67M “yes” votes to reach the quota.
Bro is playing chess while everyone is playing checkers.
? Mango’s response
As long as Mango can repay the bad debt created in June (around $25M), he will send the $MSOL, $SOL and $MNGO to an address announced by the Mango team.
Currently, Mango has $70M in its treasury, which will cover a bad debt in the protocol and be viewed as a big bounty/insurance, while all users without bad debt will be made whole.
Mangos co-founder had this to say:
To everyone worried about their deposits on Mango: I will do everything in my power to recover your funds
— daffy (@dadadadaffy)
Oct 12, 2022
? Final Thoughts
The DeFi space is not as secure as we think.
We hate to say it, but centralized exchanges seem to be a little safer from hackers than DeFi. With that said, CeFi exchanges like Coinbase and Binance pose their own risks.
? Here’s a thread breaking down the 4 major DeFi hacks that went down this week:
Four hacks in one day might be a new record ?
More than $115M was stolen from DeFi protocols TODAY.
— The Defiant (@DefiantNews)
Oct 12, 2022
? Golden Nugget: From what we’ve researched, the safest place to trade is on CEX. Hide yo kids, hide yo wife, hide yo funds in a ledger.
The metaverse is probably one of the most (in)famous narratives in crypto. With tons of celebrities like Snoop Dogg and companies like Meta promoting this world’s future, it’s all bark, no bite.
According to Dappadar, the biggest “metaverses”:
Dencentraland: Has only 6,992 daily active users with a $1.3B market cap.
Sandbox: Has 4,503 daily active users with a $1.17B market cap.
Active users mean wallet addresses interacting with the platform’s smart contract, logging in and purchasing with its native coin.
Not people who log in to drop into events.
What the Metaverse is RIGHT NOW.
From popular brands, we have ?:
Snapple, who opened a bodega in Decentraland. Tony Hawk announcing a virtual skatepark in the SandboxDigital yachts selling for $650K People were paying hundreds of thousands of dollars for plots of land next to Snoop Dogg.
? All of them are worth essentially nothing…
The numbers don’t add up.
To us, this just shows that the “metaverse” was just a narrative from the peak bull run for companies to pump the prices and keep money flowing.
Who do you know that’s actually going in the metaverse?
Graphics suck Users are low The idea of everyone living in a virtual world is still far away.
Enter: Meta’s metaverse and new VR headset, the Quest Pro. ?
They are using a combination of virtual reality and augmented reality.
The headset includes cameras to see the space around the user to enhance and add to the experience (think about the Xbox connect.)
Real Use Cases ?
Joey Khamis designed for Kanye and was on our Podcast ?
He uses the headset to design digital shoes and augment his experience.
VR for workVR for calling Make you feel like Tony Stark when working, allowing you to mix reality with the virtual.
The point is : Meta is at the forefront of Metaverse, which I’d hope so since their whole rebrand revolves around it. But without being sarcastic or pessimistic, they are probably the only people (right now) creating actual use cases.
Check out this video of their headset in action!
? Meme of the Day
Mom could have had a doctor that cured cancer, but instead got this.
How it started How it’s going
— Hawks (@NFTHawks)
Oct 10, 2022
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DISCLAIMER: None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research