DeFi Protocol Balancer Urges Liquidity Providers To Remove Liquidity From Five Pools
The Decentralized Finance protocol Balancer urges liquidity providers to withdraw funds from five liquidity pools as soon as possible. They did not mention why they are warning liquidity providers to remove liquidity, so the reason remains a mystery so far.
Balancer is one of the largest Decentralized Finance protocols that holds its sixth position by volume. According to analytics platform DefiLlama, this platform conducts more than $52 million in crypto trades every day.
Hackers target DeFi to exploit and steal cryptocurrencies. Balancers informed users that they will talk about the reason for warning liquidity providers to remove liquidy in the future. It is stated that they set the protocol fees to zero in order to mitigate the issue by using the emergency multi-sig.
DeFi protocol Balancer has an emergency DAO that is supposed to take action in case of possible loss of funds or any attempt of malicious activities. As a result, users will be protected. But emergency DAO cannot handle this issue, that's why Balancer urges liquidity providers to take action immediately to remove liquidity.
Recently Decentralized Finance protocol Defrost Finance has been exploited and people lost their crypto. Not only that, there is a drama going on accusing Defrost Finance team of a possible attempt to rug pull.
People do not feel comfortable using centralized crypto exchanges seeing the collapse of FTX. Now people's attention is on Decentralized Finance (DeFi). How decentralized is Decentralized Finance (DeFi)?
DeFi Protocol Mojito Markets paused its development due to the exposure of FTX. It is surprising but the truth is, they held their project funds under the custody of the FTX. Now they do not have the fund to continue Mojito Markets' operation. You will find it hard to believe that Mojito Markets core team kept their personal fund on FTX, and they lost their project funds as well as personal funds.
There is no doubt DeFi has huge potential, but it is not risk-free when you get involved in Decentralized Finance. Hackers do their best to exploit any vulnerability. Moreover, the negligence of DeFi team is also a risk factor. Decentralized Finance has to be at least fairly decentralized. Otherwise, there will be only CeFi in disguise of DeFi.
So what do you think? Please feel free to leave your comments. Thank you for reading this post. That's it for now. I'll be back with another post.