Fantom in turmoil – Fantom (FTM) is a layer 1 blockchain. In October 2021, the ecosystem DeFi of Fantom exploded, reaching $7.7 billion in March 2022. Thereafter, the TVL has been falling steadily, and the latest events surrounding Multichain will only worsen the situation..
Multichain: a $126 million hack
On July 7, the cross-chain bridge protocol Multichain bridge protocol was the target of a hack. All in all, 126 million dollars were transferred to an unknown address.
In practice, the attack mainly targeted the protocol deployed on Fantom. As a result, over $106 million in USDC, wBTC, wETH and DAI were moved to Fantom.
Unfortunately for Fantom, the protocol was extremely dependent on Multichain. Indeed, Multichain was the main bridge for sending funds to and from Fantom.
« While the Fantom Foundation has always supported builders choosing what’s best for them/their project and thus a position of builder neutrality, much of the TVL and network volume has historically been driven by Multichain, in part due to its precursor advantage. »
More recently, we learned of the detention, by Chinese authorities, of Multichain’s CEO since the end of May.
Indeed, the Multichain teams have announced that they are ceasing operations. They are unable to operate the platform, as all keys and accesses are held by the CEO, who is currently locked up.
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The consequences of the Multichain hack for Fantom
As you can imagine, this hack sounds like a thunderclap for the Fantom ecosystem. Before the hack, the protocol had around $200 million in TVL. Following the hack, this amount dropped to around $110 million. Finally, TVL has dropped to $71 million on July 15.
In an attempt to stop the bleeding, the Fantom Foundation has announced actively working to diversify bridge services. Thus, on July 12, the foundation highlighted the bridges Axelar and LayerZero to transfer funds to Fantom.
In addition, the foundation announced that it will feed the liquidity pools of these protocols:
« The Foundation will seek to feed the pools of assets issued by Axelar and LayerZero directly with the bridges themselves in order to encourage protocol liquidity and trust. »
Of course, they’re not abandoning Multichain just yet. So, after managed to freeze over $62 million in collaboration with Circle and TetherFantom wishes to continue his quest for the stolen funds.
In a ad dated July 15, Fantom explains that it has approached Multichain’s teams in order to better understand the situation. In addition, the foundation hopes to be able to identify and attempt to rescue other assets affected by the hack.
« We have set up a group with active Multichain employees to better understand the situation from their point of view and provide support where possible. »
At the same time, the Multichain hack also affected the Fantom Foundation’s cash position. In fact, the foundation had more than 449,000 MULTI tokens at its disposal. These had been withdrawn from the SushiSwap pools at the end of May.following rumors of Multichain’s insolvency.
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