Fantom-Based SpiritSwap Shutting Down Its Operations
One of the popular decentralized exchanges (DEX) on the Fantom Opera Network SpiritSwap is going to make a tough choice to shut down its operations. SpiritSwap will keep running its operations till September 1, 2023. Now they look for a new team that can take over the project. If that does not happen, unfortunately, they will have no option except to close the operations.
People have the time to remove liquidity from the protocol safely. After the announcement, SpiritSwap (SPIRIT) token price started falling drastically. The SPIRIT token price was around $0.0012. Now the token price is almost $0.0006 which is a 50% decline at the moment of writing this.
So what just happened? Why did SpiritSwap have to make this choice? Every business has its cost to run its operation. Now this project has come to a point when it cannot bear the expenses like operating costs, salaries, and marketing expenses to run the operations. The multichain hack was the reason that drained their treasury.
Cross-chain protocol Multichain was forced to cease its operations. The protocol was exploited for almost $130 million and the way the lockup assets on the Multichain MPC address moved to an unknown address, that was abnormal.
The Multichain CEO Zhaojun was arrested and he was under the custody of Chinese police. The Multichain team failed to contact the CEO. From the beginning, all operational funds and investments have been under CEO's control. It was unexpected to end up things like that, but it did.
Due to having exposure to the Multichain, SpiritSwap got into trouble in the first place. It was the most used decentralized exchange on Fantom. And you will be surprised to know that at the peak, the Total Value Locked (TVL) of the protocol was around $373 million. Now the TVL stands at around $2.83 million.
When we use a decentralized exchange, we are happy with the facility we get from it. You can invest in DeFi, provide liquidity in the protocol, and at the same time, earn rewards. It is great to see what you get as returns. But do you seriously consider the risks you are taking?
When you hear the word decentralized in crypto, it does not always mean that's truly decentralized. That can be a buzzword every crypto project is more than happy to use in its marketing campaign. Certain aspects of centralization can be enough to demolish the whole empire.
