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DeFi

DeFi strategists and investors stand to gain from a ‘permissionless’ quantitative strategy platform built on Uniswap v3

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As decentralized finance (DeFi) has matured into an industry with over $200 billion locked in protocols, so has the risk appetite across the spectrum of investors. These varying risk tolerance levels call for a more diversified range of asset management products to meet investors’ demands.

Bella Protocol is a DeFi asset management platform that claims to have found a solution to this issue. The platform aims to be the “BlackRock of crypto wealth management” with a suite of products that seek to simplify the yield farming process and eliminate gas fees.

Bella Virtuoso – the next phase of the Bella Protocol – is a permissionless DeFi asset management platform that will connect investors with the best Liquidity Provider (LP) strategies on Uniswap v3. Bella describes Uniswap v3 as a “game-changer” in efficient capital utilization, but one that comes at the cost of considerably high barriers to entry.

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Although Uniswap v3 lets users customize the price range for providing liquidity, there is no real indicator that serves to guide LPs when setting up a price range. In fact, Bella claims that because they are so concerned with managing impermanent loss, most LPs fail to consider that the concentrated liquidity of Uniswap v3 will significantly reduce their exposure. Moreover, there is often a high gas fee involved when it comes to rebalancing a portfolio.

Bella Virtuoso lets DeFi strategists and investors benefit from their ideal strategies using backtesting and implementation on a built-in Uniswap v3 simulator.

Objectives aligned

The idea behind Bella Virtuoso is to provide an inclusive solution for every type of investor while celebrating the wisdom of quant strategy composers. Professional traders and DeFi strategists earn a share of the profit that the average investor generates from using their strategies.

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Meanwhile, investors can choose the strategy best suited to their risk tolerance level from the range of investment strategies on offer.

“Everyone will be able to have fair access to premier asset management services. Uniswap v3 offers a phenomenal tool to increase capital efficiency. By building Bella Virtuoso, we are leveraging the wisdom of community quant developers to help investors truly tap in the capital-efficiency and flexibility of Uniswap v3,” said Felix Xu, a core developer at Bella Protocol.

An essential component in achieving this will be the deployment of Tuner – a programmatic Uniswap v3 simulator that allows strategy builders to backtest their strategies with mainnet data.

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Tuner independently reproduces the intricate design and implementation of Uniswap v3 on a transaction-by-transaction basis without the Ethereum virtual machine (EVM). The company explains that the tool can fast-forward and rewind transactions and even take or recover from a snapshot. In this way, the platform says that strategists will be able to perform “near-to-perfect” backtesting with on-chain historical data.

Looking ahead

In the near future, Bella Protocol intends to include a number of platform updates that will further benefit users. In Q1 2022, the platform will include a “strategy execution bot” to automatically adjust the price range of concentrated liquidity. After this is deployed, investors will no longer be required to manually adjust the price range to maximize the fund’s utilization rate, saving time and gas fee.

In Q2 and Q3, the platform says its focus will be on the bigger picture of connecting and educating users while also curating quant strategies. Bella says it will include a smart contract-based fund management system to safeguard user funds. It will also feature a simplified user interface with visualizations of past performance, backtesting historicals, and metrics such as Sharpe Ratio and Sortino Ratio.

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For now, however, Bella Protocol’s existing product – Bella Flex Savings v2 running on Curve.fi – is nearing $30 million in total value locked (TVL). In this new version, the platform says it can offer an annual percentage yield (APY) as high as 30% because all returns are automatically reinvested into underlying protocols to compound returns.

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DeFi

What is Decentralized Finance (DeFi)?

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Bitcoin (a payment system where anyone in the world can send money to anyone else) was just the beginning of the crypto revolution. People who develop decentralized applications (or dapps for short) seek to take accessibility one step further.

Decentralized Finance (or DeFi) was pointed out as a possible solution to lower the entry barrier for those who have difficulty gaining access to bank accounts.

More recently, DeFi are being used by cryptocurrency owners for other purposes: to make more money.

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What are DeFi?

As a whole, DeFi applications are financial products that operate on a public blockchain such as Ethereum.

These products are enabled, that is, they do not need third parties. Instead of financial intermediaries such as brokers and banks, everything is automated in the protocol through standalone contracts.

Do you want to take out a loan? You don’t need the bank to lend you the money. You can get a loan directly from your peers.

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Ready to bet on bitcoin futures and other derivatives? Give up finding a bettor. You can let the protocol do it all.

Want to convert one asset to another? Decentralized brokers (or DEXs) can facilitate a transaction without taking a large commission.

Who invented DeFi?

There isn’t a single creator of DeFi, but dapps appeared in Ethereum, invented by Vitalik Buterin. They have since expanded to other networks that use autonomous contracts to automate transactions, including Solana, Binance Smart Chain and Avalanche.

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Andreessen-Horowitz (a16z), the major venture capital firm, has led multi-million investment rounds in both the Compound and MakerDAO, protocols that are the cornerstones of the current DeFi system.

What is so special about DeFi?

DeFi have several fundamental features.

First, they are “open”, meaning you can use the applications when creating a wallet (usually without showing any identifying information such as name and address). This is theoretically (if not technologically) simpler than having a bank account.

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Second, you can move funds almost instantly via a blockchain, so you don’t have to wait for the bank transfer to take place.

Third, the fees (at least for now) are much better than in traditional banks, although transaction costs vary depending on the blockchain network.

Finally, dapps work together as “Legos of money”. This “composability” allows anyone to create, modify, mix and match, link or build on any existing DeFi product without permission.

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Unfortunately, this feature can be one of DeFi’s biggest weaknesses, as if a fundamental element, such as the stablecoin DAI, becomes vulnerable or becomes corrupted, the entire ecosystem built around the DAI can collapse.

What can be done with DeFi?

Borrowing and lending

If you have cryptocurrencies, you can lend them to a protocol, such as Aave and Compound, in exchange for interest and/or rewards. It is also possible to borrow cryptoactives from a protocol, which can be very useful if you want to make a trade.

But be careful! Most DeFi protocols use over-guarantees, where more money is allocated than the amount you want to borrow; if the asset’s value drops too low, the protocol can take its warrant to avoid losses.

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Many DeFi users use loans as a way to earn assets through “yield farming,” in which they lock funds in an asset pool to gain rewards.

Since rates vary depending on protocol and asset, experienced yield farmers move their assets and capitalize at the best rates.

Negotiation

At centralized brokers such as Coinbase and Binance, you are dependent on the broker to take custody of your assets on every trade. Decentralized brokers remove the middleman so that people can trade directly with each other.

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Also, DEXs such as Uniswap and PancakeSwap allow people to list new tokens for trading. Lack of verification increases risk, but it also allows people to “get early” on new assets before they hit the markets.

Derivatives

Sometimes you don’t need to be limited to trading specific currencies or tokens. Derivatives platforms like dYdX and Synthetix allow people to do more than spot trading.

For example, users can engage in leveraged trades, where they bet more than they have or create “synthetic assets” that mimic traditional stocks and commodities.

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How are dapps developed?

Anyone capable of writing standalone contract code is capable of creating dapps. There are several tools to test and/or implement standalone contracts, including Truffe and Ganache (on Ethereum).

After downloading the framework for creating autonomous contracts, you can create a token that allows a protocol to use the blockchain network. On Ethereum, the token default is ERC-20; at Solana, SLP; and in Binance Smart Chain, BEP20.

Having a token allows the protocol to interact directly with the currency of the first-tier blockchain. But projects also promote their tokens to drive decentralization.

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The Compound Loans protocol, for example, uses COMP as its governance token; those who have it make decisions about the protocol’s code and treasury allocations.

How to use DeFi products?

Anyone can use DeFi products by going to a dapp’s website and connecting with a crypto wallet, like MetaMask on Ethereum or Phantom on Solana. Most dapps do not ask users to provide personal information or register.

However, since dapps are built on a blockchain, you must use that blockchain’s currencies to pay for transactions. Ether (ETH) is required to pay transactions on the Ethereum network, just as SOL is required on the Solana blockchain.

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The future of DeFi

As of November 2020, less than $20 billion worth of locked-in value on various DeFi products, primarily on Ethereum. As early as November 2021, that number had risen to nearly $98 billion.

If the trend continues and the DeFi maximalists are right, this is just the beginning of a huge DeFi wave. True advocates argue that the advantages of an open and decentralized financial system are irresistible for not capturing trillions of dollars of value.

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DeFi

BadgerDAO: Hackers drain $10 million in latest DeFi breach

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  • BadgerDAO suffers $10 million hack
  • Traders were sent illicit permission notifications
  • BADGER loses 15% of its value

The decentralized finance industry of the crypto sector has now become one of the most sought-after industries. This is because it provides users with anonymity, and they can carry out their activities without the prying eyes of financial institutions. Furthermore, traders are open to making huge amounts of profits in the protocols in the sector by staking or farming. However, some illicit actors would rather exploit and steal from people instead of making their profits. In yet another hack case in the DeFi sector, hackers have exploited BadgerDAO, draining $10 million from the decentralized finance protocol.

Traders got illicit permission notifications

BadgerDAO is a protocol in the decentralized finance sector that allows traders access to various lending services and takes collateral in Bitcoin. According to the platform, upon calculating funds missing through the exploits, things are sitting around $10 million. In the reports that made the rounds today, users claimed that the hack was perpetrated through BadgerDAO’s interface and not its smart contracts like most hacks. Users claimed they were sent notifications about allowing new permissions while carrying out activities on the platform. With some users allowing the permissions, the hackers could cart away various amounts of digital assets going to a worth of $10 million.

BadgerDAO’s native token plummets

After the hack, the protocol developers said that users complained that they witnessed the unauthorized drawing of funds from their accounts. However, the protocol has moved into action swiftly, putting everything on the protocol on hold at the moment. The developers have also claimed that engineers are working tirelessly to fix the issue and ascertain the level of damage that the breach may have caused. However, BadgerDAO has refused to comment on the exact amount of missing funds on the platform and the level of damage that needs repair before operations can continue.

Some analysis websites have claimed that the amount exploited from the platform is $100 million. After the hack, the native token of the platform, BADGER, dipped in value, losing about 15% of its value, and is currently trading around $22. Hacks have now become predominant in the DeFi sector as the year draws to a close. Some days ago, MonoX, another DeFi protocol, got hacked with the illicit actors carting away more than $30 million in different digital assets.

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Someone Just Lost $50 Million Worth of Bitcoin to DeFi Hacker

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A single user of the Badger DAO protocol has lost a whopping $50 million worth of Bitcoin to a hacker

Badger DAO, a Bitcoin-focused decentralized finance project built on the Ethereum blockchain, has been drained of roughly $100 million as a result of a nasty front-end attack.

A single user has lost 896 BTC (roughly $50 million), according to blockchain security company PeckShield.

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In a Twitter statement, the team has acknowledged reports of unauthorized withdrawals, adding that its engineers are investigating the issue.

The protocol’s smart contracts have been temporarily halted.

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According to data provided by DeFi Pulse, Badger DAO is the 23rd biggest DeFi protocol on Ethereum. Last month, it topped $1 billion in total value locked.

Badger DAO allows users to earn passive income with Bitcoin by converting it to either Wrapped Bitcoin (WBTC) or renBTC and depositing it into Sett vaults that algorithmically allocate and autocompound users’ yields.

The hack happened just days before the yield vault protocol’s one-year anniversary.

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BADGER, the native token of the Badger DAO project, is down 15.3% on the news, according to CoinGecko data. 

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