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Algofi, the largest decentralized finance protocol on layer-1 blockchain Algorand, said it will shut down and plans to halt lending, borrowing and trading imminently.

The pilot will relax regulations for digital bonds and equities – but not unbacked crypto, like bitcoin or ether.

Aave Companies, a key contributor to the Aave DeFi lending protocol, has proposed launching the decentralized stablecoin GHO as an ERC-20 token on the Ethereum mainnet.

The proposal seeks to introduce GHO through Facilitators, allowing users of Aave version 3 (V3) to mint GHO against their collateral, according to the Aave Improvement Proposal.

Stablecoin borrowing on Aave would become more competitive and generate additional revenue for the DAO if the proposal is approved implemented, Aave Companies said. “If approved, the introduction of GHO would make stablecoin borrowing on the Aave Protocol more competitive and generate additional revenue for the Aave DAO by providing to the DAO treasury 100% of the interest payments made on GHO borrows,” it wrote.

The Aave DAO will also have the ability to adjust GHO’s interest rate through decentralized governance.

The proposal is currently pending, with voting set to commence later today until July 14. The proposed launch follows extensive community discussions through multiple phases of governance and months of testing on Ethereum’s Goerli testnet.

How GHO works

Facilitators are used to generate and burn GHO tokens, with the proposal combining two previously approved Facilitators: the Aave V3 Ethereum Pool Facilitator and the FlashMinter Facilitator.

The Aave V3 Ethereum Pool Facilitator will allow users to borrow GHO using collateral deposited in the V3 Ethereum mainnet pool. The FlashMinter Facilitator enables users to flash mint GHO without collateral, providing it is repaid in a single transaction, enhancing GHO’s ability to maintain its peg through efficient arbitrage.

The proposal includes a plan to use Staked Aave (stkAAVE) tokens as a mechanism to reduce the borrowing cost for GHO stablecoin users. stkAAVE represents a staked version of the Aave token.

Aave Companies is also considering a multi-chain strategy following the proposed GHO launch on Ethereum.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

BitOasis said it’s working closely with the Virtual Assets Regulatory Authority to fulfil the conditions.

Rodeo Finance, a DeFi protocol, seemingly fell victim to a flash loan attack on Tuesday, with the perpetrator making off with about 810 ether ($1.5 million) on the Arbitrum network, the latest in a series of decentralized finance (DeFi) exploits.

Blockchain security firm PeckShield, which initially detected the incident, conducted further analysis of on-chain data. Its analysis indicates that the attacker transferred the ill-gotten gains from Arbitrum to Ethereum. They then exchanged the stolen tokens for various other assets before converting them back to ether. The final stage of the exploit saw the ether being routed through Tornado Cash, a popular transaction mixer on the Ethereum network, effectively obfuscating the trail of funds.

Flash loans: A double-edged sword in DeFi

Flash loans are a peculiar feature in the DeFi space, offering loans that must be returned within the same transaction. Originally designed to facilitate arbitrage trading and improve capital efficiency, these mechanisms have unfortunately become tools for hackers who manipulate DeFi price data feeds, also known as oracles, to execute exploits.

The Rodeo Finance team has not yet issued a response or statement regarding the incident.

This exploit is not an isolated occurrence, rather it is part of a trend that has been plaguing the Arbitrum ecosystem over the past few months. In April, Sentiment, another DeFi protocol running on Arbitrum, lost $1 million to a hacker. This was followed by an even larger security breach in May, where the Jimbos protocol was stripped of a staggering $7.5 million.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Circle CEO Jeremy Allaire said that Yuan-backed stablecoins may offer a more immediate path for China’s currency internationalization efforts rather than the eCNY central bank digital currency (CBDC).

“If eventually the Chinese government wants to see the RMB used more freely in trade and commerce around the world, it may be that stablecoins are the path to do that more than the central bank digital currency,” Allaire said in a recent interview with the South China Morning Post.

More specifically, Allaire said a stablecoin pegged to the offshore Yuan (CNH) could facilitate increased use of the currency in trade and commerce globally. However, the team behind private CNH and Hong Kong dollar stablecoins was detained in May, according to SCMP.

Hong Kong crypto hub

Acknowledging the unlikelihood of mainland China embracing the broader cryptocurrency industry, Allaire said he remains optimistic about web3 development in the Hong Kong Chinese special administrative region and its regulatory approach toward stablecoins.

“The reality is that every other major financial market in the world is also embracing digital assets, and the biggest financial institutions in the world are embracing digital assets. So for Hong Kong to be relevant, it has to,” Allaire said.

“I think there is Chinese government support for that,” he added. “That’s different than feeling like it says something about opening up the trading of crypto on the mainland. I don’t think there’s anything there.”

With concerns over the role of stablecoins once CBDCs are more widely available, Allaire said CBDCs are complementary and private stablecoins drive innovation.

“If central banks are going to upgrade their own systems to move away from legacy technology into more modern distributed ledger technology, that’s great,” he said. “There’s a whole bunch of things that are useful from that, but I view that as very different than the work that the private sector does to innovate on the public internet.”

The Hong Kong Monetary Authority (HKMA) plans to introduce stablecoin regulations by 2024 and the Securities and Futures Commission of Hong Kong is developing complementary regulations. The Hong Kong government also recently set up a web3 task force to help Hong Kong’s desire to reestablish itself as a global hub for the crypto industry.

“We’re excited that this is a priority for the Hong Kong government and it seems like it’s a real priority for the HKMA,” Allaire said. “That’s tremendously positive and is really motivating for us to want to be able to grow our business here.”

Last month, Allaire said he was paying close attention to regulatory developments in Hong Kong and saw “enormous demand for digital dollars” in the region.

Circle’s USDC is the second-largest U.S. dollar-pegged stablecoin behind Tether’s USDT, with a circulating supply of $21.5 billion, according to CoinGecko data.

© 2023 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

PLUS: Mantle Network is mulling a $200 million ecosystem fund for its new layer-2 blockchain.

Central bankers, wary of displacing their own fiat currencies, pointed to the past year’s prominent hacks and collapses.

The financial watchdog conducted inspections in conjunction with the South West Regional Organized Crime Unit and the police forces of Greater London, Bedfordshire and Hertfordshire.

Bitcoin Ordinals, a method of generating non-fungible tokens (NFT) through a process called inscribing, debuted in January, bringing the NFT and smart contract narrative to the Bitcoin blockchain.