Frog becomes F “rug”, a billion-dollar panic triggered by a tweet

Recently, two tweets about the former CFO of Frog Nation have spread throughout DeFi and even the entire currency circle. As CFO, 0xSifu not only holds the vault power of Wonderland, the largest DeFi 2.0 protocol, but also has a huge impact on the income of other Frog Nation ecological protocols, involving more than one billion US dollars. After the news that 0xSifu was suspected of fraud, it also pushed Frog Nation, which was at a critical stage of development, into the fire pit.

Explosive news in the early hours: CFO has repeatedly been suspected of fraud

In the early morning of the 27th Eastern Time, Frog Nation founder Daniele tweeted: “Today, allegations about our team member 0xSifu will be widely circulated. I want to let everyone know that I know something about this, but I don’t think a person’s past determines his future. I value the time I spent with him before I knew who 0xSifu was.”

Frog becomes F "rug", a billion-dollar panic triggered by a tweet

A minute later, zachxbt announced his chat record with Daniele on Twitter, confirming that 0xSifu had been involved in fraud crimes many times.

Frog becomes F "rug", a billion-dollar panic triggered by a tweet

In 2005, 0xSifu ran an identity theft gang called Shadowcrew under the identity of Omar Dhanani, specializing in cybercrime such as credit card theft, identity theft and other Ponzi schemes. In addition, he also ran another Ponzi scheme called Midas Gold and ran away with money. Soon after, he was arrested and jailed in the United States along with six other Shadowcrew associates.

After being released from prison, 0xSifu went to Canada again under the pseudonym Michael Patryn. In 2018, he founded the cryptocurrency exchange QuadrigaCX in Canada with Gerald Cotten. The exchange was also a Ponzi scheme, with Cotten and “Patryn” paying old users’ withdrawals with new users’ deposits, leaving everyone’s withdrawals stuck for weeks or even months later.

It didn’t take long for Cotten to “die” unexpectedly while traveling in India (both his death certificate and his wife’s response were suspected of being forged), making the $1.70 worth of crypto assets stored on the exchange unclaimable by users. While many Canadians lost their life savings, “Patryn” was able to get away with a lot of money.

Today, Frog Nation founder Daniele has appointed 0xSifu as his CFO, handing over nearly $800 million in the Wonderland vault to the ex-convict. Of course, 0xSifu’s own assets have also grown by a factor of 10 during this period.

Frog becomes F "rug", a billion-dollar panic triggered by a tweet

events at the juncture

After the news of 0xSifu, all key Frog Nation Tokens were hit hard. Wonderland’s TIME fell 30% to trade from around $500 to $370; Abracadabra’s SPELL fell 15%, from $0.007 to $0.006. However, the impact of this exposure incident on the Frog Nation ecology is far more than the impact on the Token price.

Frog Nation is a DeFi project network founded by Daniele. It consists of multiple projects and aims to grow together, promote each other, and achieve larger-scale ecological development. The protocols in its ecosystem have achieved great success before: Abracadabra platform stablecoin MIM adoption rate has increased rapidly within a few months, and Wonderland has surpassed Olympus DAO to become the largest DeFi 2.0 protocol.

Recently, Frog Nation is at a critical development node, and several plans related to the ecological future are being advanced at the same time. If all goes well, Frog Nation will be a hard-to-match “DeFi gangster”:

Merge Abracadabra with Wonderland

Abracadabra and Wonderland are the two most successful platforms in the Frog Nation ecosystem. The former has an annual revenue of $300 million, while the latter has a treasury asset of $800 million. But Wonderland has been looking for a new way out recently to replace the rebasing model of DeFi 2.0. After this week’s mass liquidation event, in order to alleviate TIME’s selling pressure, Daniele proposed to merge Abracadabra and Wonderland to form a super-large decentralized VC, with a view to allowing token holders to farm and invest from the protocol vaults. The airdrops issued by the project are rewarded.

This new VC mechanism has been experimented with on Wonderland’s new Token wMEMO. Just some time ago, Wonderland has finalized a key investment in the cross-chain bridge project Wormhole. This investment will make MIM Wormhole’s preferred stablecoin, with the purpose of greatly increasing the adoption rate and liquidity of MIM and helping MIM achieve the first cross-chain solution. A vision for a stablecoin. And wMEMO holders will be able to get Wormhole airdrops.

Merge Sushi Swap

In a recent blog post, Daniele stated that the Frog Nation team will take over SushiSwap to help clean up and restore the efficiency of Sushi, making it part of the Frog Nation ecosystem.

This plan has many benefits for both parties. The Frog Nation ecosystem is equivalent to adding an AMM that is fully controlled by itself. If its development can be on the right track, it will become another important source of income. The Sushi community was really relatively chaotic before. It started out by relying on vampire attacks. Later, the team and the community fell into a crisis of trust, resulting in Token’s poor performance in the past. Therefore, a strong new team is indeed needed to reshape the situation. .

Needless to say, one of the important factors driving this merger was the community’s trust in Daniele and the Frog Nation team.

Seize the development opportunity of ve(3,3)

Daniele revealed in a previous AMA that he was negotiating with the Convex team to give MIM a competitive edge in Convex War. This makes sense why Daniele is collaborating with AC on the new AMM project Solidly (previously known as ve(3,3)), in the rhythm “What is the ve(3,3) that Brother AC is desperately promoting? ” mentioned in the article, Solidly is like Curve on Fantom, the more Solidly Tokens held, the greater the voting power of the protocol incentives.

You know, the previous protocol on Fantom was a big fight for the ve(3,3) snapshot. However, the cooperation between Daniele and AC is very likely to give the protocol within the Frog Nation ecosystem an innate competitive advantage.

When ecological development is at such a critical juncture, any mistakes made by the team may have ripple effects within the ecology, bringing unimaginable consequences. Everything seemed to be going smoothly, but at such a critical point, the principled mistakes of the top team were exposed, which directly shook the foundation of Frog Nation’s development and everyone’s belief in its prospects.

MIM stripping

Shortly after the news of 0xSifu was exposed, the ripples reached Abracadabra. On the morning of the 28th, a large number of users began to exchange their MIMs for 3CRV through the MIM-3CRV liquidity pool on the Curve platform, which seriously skewed the proportion of assets in the pool. In the end, there was less than 5% of 3CRV left in the entire pool at one time, and MIM also began to disengage. At the time of writing, MIM is trading at $0.98 against DAI, but it is still unraveling.

Frog becomes F "rug", a billion-dollar panic triggered by a tweet

To make matters worse, many people cannot get 3CRV directly from MIM-3CRV, so they first exchange MIM for UST, and then exchange UST for 3CRV, which forms a selling pressure on UST, and implicates the price of LUNA to begin to decline.

Although Abracadabra has launched a mint program to encourage users to mint a total of 43,881,642 new MIMs with 3CRV, it is still difficult to withstand the current torrent of selling, and MIMs simply cannot get enough market demand. Now, many users of Anchor platform Degenbox will do this: deposit UST and lend 90% of MIM, then convert MIM to UST and repeat the operation, and finally get more than 100% of the stable currency APY. Even during MIM’s riveting, many people are reluctant to give up higher APY in order to return the discounted MIM.

This is a huge blow to MIM, which is intended to be the cross-chain stablecoin with the highest adoption rate. Although there will be Wormhole as support in the future, users’ trust and demand for its anchoring ability will be difficult to restore in the short term.

Concerns from partners

In addition, AC also expressed his dissatisfaction on Twitter, writing: “Do things with principles, a long history of fraud, theft and malicious behavior is not a ‘mistake’, but a clear intention.. . Let 0xSifu manage funds, especially users’ funds, enough to be considered negligent… I just want to get off Willy Wonka’s magic car right now. “

Although AC has indicated that it will continue to work with Daniele in the future, it is clear that in order to reduce the impact of this incident on Solidly, AC is drawing a line with Daniele. Solidly can be said to be an important project related to the future of the Fantom ecosystem. As a result, such a situation occurred shortly after the release, which did bring a lot of trouble to the subsequent development of the project. The depth of cooperation between the two in the future and the benefits Frog Nation can get in the future will all be affected.

Frog becomes F "rug", a billion-dollar panic triggered by a tweet

Now, the Frog Nation team’s image in the community has taken a turn for the worse, and many people call it “F(rug) Nation”. Coincidentally, Yearn Finance had previously planned to merge Sushi. After this incident, some members of the Sushi community proposed to abandon Frog Nation and rejoin Yearn. If something like this happens, Frog Nation will really make things worse.

DeFi magician or boiled frog?

Daniele enjoys a very high reputation as one of the souls of Frog Nation and even the entire DeFi field. It must be admitted that he was indeed an excellent DeFi magician before: the Abracadabra platform has played the role of various income-generating assets and promoted the development of the Frog Nation ecosystem.

Frog becomes F "rug", a billion-dollar panic triggered by a tweet

But after the news of 0xSifu was exposed, the fire in the backyard also burned on Daniele himself, and discussions about whether Daniele was suspected of “boiling a frog in warm water” also surfaced.

Not long ago, there was a massive liquidation in Wonderland that caused the price of the native Token TIME to plummet from $800 to $360 within a few hours. It was found that the trigger of this liquidation seems to be inseparable from Daniele and 0xSifu.

Frog becomes F "rug", a billion-dollar panic triggered by a tweet

Before the large-scale liquidation occurred, team members such as Daniele and 0xSifu used Wonderland’s new Token wMEMO as collateral to lend a large amount of MIM and transferred these stablecoins to the Bitfinex exchange, which effectively meant that the team was not actually selling wMEMO. “Cash-out” was performed below.

Frog becomes F "rug", a billion-dollar panic triggered by a tweet

This massive liquidation may have been triggered by the liquidation of team-related borrowings. However, during the entire liquidation process, no team member responded, and the agreed repurchase that should have been in place did not happen, so that the token price eventually fell below the endorsement price, erasing the investment of many users, which was actually a soft rug pull .

What is even more frightening is that this is not the first time that this kind of thing has happened. When DeFi 2.0 generally plummeted before, TIME has already fallen below the endorsement price. Likewise, the team did nothing about it, and the endorsement price kept falling along with the token price. Rhythm editor in “TVL plummets, is DeFi 2.0 really cool? ” is also mentioned in the article.

And now, although the authenticity of the news has not been confirmed, rumors about the relationship between Daniele and Bitfinex have also begun to ferment.

Frog becomes F "rug", a billion-dollar panic triggered by a tweet

At present, 0xSifu himself has also responded to the matter, expressing his willingness to accept the final decision of the community.

Frog becomes F "rug", a billion-dollar panic triggered by a tweet

Although the vote initiated by the Wonderland DAO has also decided to remove 0xSifu from the team, and the price of Frog Nation-related Tokens has also rebounded, we can’t help but start to think, in the world of decentralized finance, who has been given the greatest right? Is it an individual or a mechanistic reason for such an event to occur? Are the funds people are investing in DeFi really safe? Obviously, Frog Nation’s handling of this matter is not only related to its own ecology, but also affects the future development of the entire DeFi.

Posted by:CoinYuppie,Reprinted with attribution to:
Coinyuppie is an open information publishing platform, all information provided is not related to the views and positions of coinyuppie, and does not constitute any investment and financial advice. Users are expected to carefully screen and prevent risks.

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