Base DeFi Ecosystem of Coinbase Encounters Initial Obstacles: Fraud and Security Breaches

In the ever-evolving realm of decentralized finance (DeFi), where innovation is accompanied by risks, Coinbase’s Base DeFi ecosystem has experienced a tumultuous debut. The platform aims to introduce a broader audience to web3 and DeFi through its layer two solutions but has faced a challenging start, plagued by scams and security breaches.

Hackers Take Advantage of Weaknesses, Resulting in Significant Losses

The DeFi lender Exactly Protocol, which operates on the Optimism network, recently suffered a major setback. An astonishing 7,160 ETH, valued at over $12 million, disappeared from its reserves due to vulnerabilities in smart contracts that hackers cleverly exploited. This security breach not only underscored the weaknesses within the DeFi sector but also raised alarms regarding the safety of users’ assets.

In a more localized incident, RocketSwap, the second-largest decentralized exchange (DEX) on Coinbase’s Base, fell prey to a hack that resulted in the loss of 471 ETH, further emphasizing the urgent need for enhanced security protocols within the expanding DeFi environment.

The SwirlLend Incident: A Multi-Faceted Rug Pull

SwirlLend, a once-promising DeFi lending protocol, initially launched successfully on both Coinbase’s Base and ConsenSys’ L2 solution, Linea. However, this early achievement was short-lived, as the protocol’s team executed a blatant rug pull. They absconded with an impressive 277 ETH after systematically draining the protocol’s liquidity pools. To make matters worse, they vanished from social media, leaving investors in a lurch. This event serves as a stark reminder of the necessity for thorough due diligence and accountability in the DeFi sector.

Escalating Scam Coins Endanger Base’s Reputation

Despite the obstacles and challenges, Coinbase’s Base DeFi ecosystem has demonstrated notable growth. Assets on the platform surged from zero to an impressive $160 million within just two weeks of its launch on August 8th, according to data from DeFiLlama. However, this success has not come without its drawbacks.

The ecosystem has been infiltrated by a wave of scam coins, with over 500 such tokens already appearing on the platform. Among these, BALD, a meme coin that emerged prior to Base’s public launch, is particularly noteworthy. Operating for only a few days, BALD managed to extract millions from unsuspecting users before making a hasty exit.

The Aftermath: Navigating Losses and Recovery

As the situation stabilizes, the consequences of these events become evident. Exactly Protocol’s EXA token has experienced a sharp decline of more than 20% in the last 24 hours, as reported by CoinGecko. Prior to the hack, Exactly Protocol had deposits exceeding $110 million. Unfortunately, the aftermath has seen this figure drop to $30 million, highlighting the vulnerability of the DeFi landscape.

Coinbase’s Base DeFi ecosystem’s initial phase has been characterized by turmoil and obstacles. The series of hacks and scams have revealed weaknesses that require immediate attention. As the platform endeavors to achieve its goal of bringing mainstream users into the DeFi space, it must concurrently strengthen its security measures and cultivate a trustworthy environment within its community. Only through collaborative efforts can the potential of DeFi be fully realized while mitigating the risks associated with its rapid development.

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