Egg yolk wassup Chico Army!...We have Euphoria, the markets are ripe.
It’s a special thing to experience.
You're on top of the world, can do no wrong.
Until it happens, the RUG is pulled.
Don’t ever be caught slipping, because those DeFi protocols you see popping up daily, they
are being developed at the speed of light, and there is always a period of darkness.
You ready to get REAL…..dark.
Because it’s time for Chico Crypto!
Crypto is new, it’s young, it is still a baby.
Grand daddy BTC is only 12 years old...the first decentralized currency which had to
integrate itself into centralized systems.
And those first years were rough for BTC, let me tell you that.
Battered & bruised, bitcoin barely made it out alive.
Nearly 2 years after the initial launch in January of 2009, Jeff Garzick, early core
dev, posted this on BitcoinTalk “The "value out" in this block #74,638 is quite strange:
with the screenshot of the code.
Jeff Garzick in August of 2010 just discovered the largest Bitcoin BUG in it’s history.
An inflation BUG an unknown attacker had discovered a way to create themselves some extra BTC.
How many extra??
184 billion more BTC.
If you know the supply is hardcapped at 21 million, you understand the gravity of this.
Has the attacker been more modest, setting their sights a little lower, it might not
have been discovered before the damage was done.
Jeff spotted it within 90 mins, and it was patched and corrected within 5 hours by Satoshi
Nakomoto.
So what’s the point I’m trying to get across here?
Well, these BUGs can lay dormant in protocols for some time, and attackers are just waiting
for the right moment to exploit.
Remember Ravencoin???
Aka overstock coin??
I’m sure many of you don’t, but those around in 2017 and 2018 do.
Much hype...with Raven, it did well...a new Bitcoin of sorts is what they said.
Top tier developers had created a next level proof of work protocol.
Well Raven suffered a similar fate to BTC...but they weren’t able to notice it in time.
In June of 2020, yes over 2 years after its initial launch in January of 2018...it was
exploited with an inflation BUG...that they were not able to catch, and the attacker was
able to mix and send to exchanges.
Need another example?
How about Stellar lumens.
Stellar launched in June of 2014...3 years later, in June of 2017, on it’s dang anniversary,
the attacker exploited it with an inflation bug for 2.2 billion lumens.
As we can see from the block’s article, the attacker exploited it 110 times, and Stellar
didn’t catch it, they had to burn from their community reserves to make up for it!
So Today, all these new chains: Cardano, Binance Smart Chain, Elrond, Algorand, Tezos, EOS,
and even the ones I like: Polkadot, or the untested ETH2 and proof of stake...they may
have dormant bugs.
Waiting to be exploited.
That is just a warning, as the past tells us it happens, even to Big names like Stellar.
And that is just at base protocol level, bugs, hacks and the like.
It’s easier to exploit, when smart contracts are involved, widening the attack surface.
As smart contracts, are contracts that do things with your assets…. that have value!
So we gotta back up, once again to the early BTC days.
Bitcoin is limited in it’s smart contract set, as it does not support turing complete
smart contracts.
This means BTC is limited in what it can do, obviously it can’t do DeFi.
But this meant, in the early days, no smart contracts, bitcoin had to bend the knee to
centralized systems.
Of course the first bitcoin transactions were p2p, between two anonymous people.
As that was the only way to get it done, but eventually Online trading venues were created
that were centralized at the core, because they had to be.
The first popular bitcoin exchange to hit the scenes was Mt. Gox...what happened to
it?
Founded in 2010….hacked by 2011, and then Exploited….hacked….to it’s death in
2014….
You follow a timeline of hacks and exploits on exchanges….ya, it’s crazy how often
it happens, even to centralized entities and again the big names...Like Binance, never
forget, they wanted to re-org the bitcoin blockchain because of that!
So now, let’s fast forward to today.
DeFi, is a surging a blurging because of turning complete smart contracts on Ethereum.
Looking at TVL, total value locked up in Ethereum DeFi...it has surged and crossed the 40 billion
dollar mark.
Shoot, I remember back in 2019, getting to the 1 billion dollar level with DeFi was a
big thing, I should know I covered it, I knew DeFi was coming to kick off the bull run,
with this video posted nearly 1 and
a half years ago.
Let’s watch now when I still had my long hair…
So, we are that stage I was talking about today.
2 years since DeFi made its first strides.
Many of those DeFi tokens have 10x’d and beyond.
Chico called and predicted that like no one else could….
But I’m also calling and predicting something else.
And it’s not a bright, green pastures outlook like I had back then.
With this acceleration to beyond 40 billion TVL, 2021 will be the year of the GREAT DEFI
HACK or Exploit….where billion of dollars will be drained
Why do I think this??
Well according to the block, in 2020 there were 15 major DeFi hacks, where 120 million
dollars was exploited...with the two largest being 25 million and 24 million.
And as we can see, BIG DeFi names bzx, even uniswap, bancor, balancer, akropolis, origin’s
stablecoin origin dollar, and even that pickle got hit for over 19 million.
All of those DeFi hacks, from BIG defi names.
They all happened in 2020 when the TVL of DeFi ranged from 1 billion dollars to 16 billion
dollars.
That TVL is over 40 billion in just 2 months, an over 2x, and is showing no signs of slowing
down.
What’s happening today???
Even more teams popping up daily, with yield bearing, farming assets, swallowing up peoples
ethereum & erc20 assets.
Teams more inexperienced than the teams that got hacked in 2020, and many of the teams
fully anonymous…..
And the man himself, who created the protocol for DeFi to profiliterate warned of this in
June of last year, during the DeFi summer hype.
Let’s listen to Vitalik’s words on the Unchained podcast
So
did you hear what Vitalik said.
DeFi can’t promise a 2 percent chance of breaking.
That is a fact, many of the protocols can’t.
I predict with a strong conviction that DeFi is going to reach 100 billion dollar TVL this
year, most likely during the summer of 2021 that level will be reached.
What’s a 2 percent break of 100 billion locked in DeFi???
That’s 2 billion dollars.
So is DeFi going to break by 1 to 2 percent in 2021??
Well at the rate things are moving, I would say yes.
Of course, you have Ethereum DeFi, the hundreds of dapps and smart contracts sucking up TVL..but
now we have other chains, some with their own smart contracts creating DeFi ecosystems.
More smart contracts, more languages, more TVL...when it’s turing complete.
The attack surface grows….
Who to & when is it gonna happen, the great DeFi hack of 2021??
I’m no miss cleo, future predictor so I can’t give you that, but it can happen to
even the best, 2020 is a pure example of that.
How to protect assets in DeFi then??
Well I Never go all in on a DeFi project, I never put all my eggs into one place in
DeFi, because if all your eggs are in the place that gets exploited.
All your eggs go away…
So I’ll leave you all with this question to ponder on…. who came first, the Chico
or the Egg?
Cheers I’ll see you next time!