The $280M DeFi Exploit That Changes Crypto Forever | Dan Elitzer & Odysseus
A $280M DeFi exploit exposed the hidden fragility of crypto’s most trusted systems.
Dan Elitzer and Odysseus break down how the attack happened, why bridge risk and protocol composability made the damage so severe, what Arbitrum’s intervention means for immutability, and why DeFi now needs an aerospace-grade security mindset to survive the AI era.
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TIMESTAMPS
0:00 Intro
0:57 Worst DeFi Hack Ever?
7:01 What Happened?
10:11 How Sophisticated?
11:42 Explaining the Hack to TradFi
16:51 Who’s to Blame?
22:13 L2 Architecture Consequences
28:17 How Does it Get Resolved?
31:46 Circuit Breakers & Rate Limiters
34:05 AAVE V4
34:51 Arbitrum Intervention Implications
42:02 Code is Law vs Human Governance
51:59 Stage 1 vs Stage 2 Rollups
55:29 Post-Hack DeFi
1:03:05 Aerospace Level Security
1:09:49 Will DeFi Survive?
1:14:33 Closing & Disclaimers
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RESOURCES
Dan Elitezer
https://x.com/delitzer
Odysseus
https://x.com/odysseas_eth
Odysseus Article
https://x.com/odysseas_eth/status/2019833220431507504
Phylax Systems
https://phylax.systems/
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Not financial or tax advice. See our investment disclosures here:
https://www.bankless.com/disclosures
How to Fix DeFi with Dan Elitzer
We get back to basics on the show with Dan who answers some fundamental questions about DeFi and what it means to actually be a decentralized protocol. What are the threats to DeFi and how can we build a great decentralized future.
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Topics Covered
0:00 Intro
3:34 Let's Talk About DeFi
8:09 Intro To Dan
10:51 What About DeFi is Broken?
15:05 Why is DeFi Vulnerable?
17:23 What is an Oracle?
20:12 What if Chainlink Goes Down?
27:08 What Does it Mean To Be DeFi?
33:17 What Apps Are Actually Decentralized?
41:15 How Dependancy Free Apps Emerge
45:36 Solving the Liquidity Issue
47:57 Bring Your Own Oracle
54:36 Is Orcale Free The Future?
59:35 Closing and Disclaimers
———
Resources:
Dan Elitzer
https://twitter.com/delitzer
Why DeFi is Broken and How to Fix It, Pt 1: Oracle-Free Protocols
https://www.nascent.xyz/idea/why-defi-is-broken-and-how-to-fix-it-pt-1-oracle-free-protocols
Some of Dan’s favorites:
Panoptic - https://twitter.com/Panoptic_xyz?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor
Timeless - https://twitter.com/Timeless_Fi?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor
Blend by Blur - https://twitter.com/blur_io?ref_src=twsrc%5Egoogle%7Ctwcamp%5Eserp%7Ctwgr%5Eauthor
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Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research.
Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here:
https://www.bankless.com/disclosures
143 - UNIChain is Inevitable with Dan Elitzer
✨ DEBRIEF | Unpacking the Episode: https://shows.banklesshq.com/p/debrief-unichain-is-inevitable
Dan Elitzer is the co-founder of Nascent, a VC firm working on the frontier of crypto Previously, he was previously leading IDEO CoLab Ventures, and has been on the frontier of crypto innovations for as long as we can remember.
Dan helps us unpack The AppChain Thesis, a possible outcome where every big DeFi app is going to have its own chain. How will this reshape crypto? Where do we find opportunities? Does this thesis even make sense?
Further, Dan, Ryan, and David cover the case for why Uniswap is going to have its own chain, why Dan thinks there’s an inevitable economic incentive for large DeFi apps to start their own chains, the main objections to The AppChain Thesis, and so much more.
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----- Topics Covered
0:00 Intro 6:45 Dan's Predictive Track Record 9:52 Roll-Apps 14:00 The App Chain Prediction 17:46 UNIChain 23:30 MEV 29:22 Summarizing the Costs 33:50 Who Gets the Money? 36:07 Are the Taxes Worth the Services? 43:48 Why DeFi Apps Haven't Launched App Chains Yet 48:40 Uniswap Nation State 55:33 Uniswap's App Chain Model Sovereignty 1:00:04 Uniswap's Control & Ethereum's Alignment 1:03:38 Uniswap's Composability 1:08:56 What Does This Mean For L1s 1:16:50 Investing in the Apps? 1:20:57 Aggregation Theory 1:23:22 Censorship 1:27:21 Final Takes 1:29:37 Closing & Disclaimers
------ Resources:
Dan Elitzer https://twitter.com/delitzer
The inevitably of Unichain https://medium.com/nascent-xyz/the-inevitability-of-unichain-bc600c92c5c4
Aggregation Theory - Stratechery https://stratechery.com/aggregation-theory/
----- Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research.
Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. Additionally, the Bankless writers hold crypto assets. See our investment disclosures here: https://www.bankless.com/disclosures
SotN#28: Uncollateralized Stablecoins w/ Dan Elitzer (ESD, BasisCash, backed by Faith & Yield!)
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State of the Nation #28
Algorithmic Stablecoins, with Dan Elitzer
Dan Elitzer recently co-founded Nascent (nascent.xyz), a venture capital company that is deep into the weeds in some of the most experimental projects in the Ethereum ecosystem.
In the 2nd half of 2020, some of the coolest experimental projects have been Algorithmic, Uncollateralized Stablecoins.
These are stablecoins without dollars in a bank, or without crypto in a vault. They are completely backed by financial incentives.... and faith in those incentives.
In this episode of State of the Nation, we begin by defining the 'Stablecoin Trilemma' (https://imgur.com/a/Uj0HBL3), and discuss some of the history of stablecoins.
Then we turn to the current design philosophy behind algorithmic stablecoins, how they work, what makes them stable, and who gets the upside?
We largely discuss Empty Set Dollar (ESD, https://www.emptyset.finance/), but also discuss Basis Cash, and Ampleforth.
Tune in, to hear about this exciting emerging corner of the DeFi ecosystem!
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Not financial or tax advice. This channel is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This video is not tax advice. Talk to your accountant. Do your own research.
Disclosure. From time-to-time we may add links in this channel to products we use. We may receive commission if you make a purchase through one of these links. We'll always disclose when this is the case
"Fair Launch is a New Way for Founders to Express Themselves:" Gavin McDermott of IDEO CoLab
Hello Defiers! In this week’s interview, I spoke with Gavin McDermott. He's an investor at IDEO CoLab Ventures, the venture arm of design firm IDEO, and he’s one of the creators of Fair Launch Capital. While the name might suggest otherwise, Fair Launch Capital isn’t an investment firm, or at least it’s not a traditional investment firm. Instead, it gives startups no-strings-attached funding so that they can afford security audits and launch their projects in a safe way. They’re asked to consider paying it forward by returning at least the same amount they got but ideally more, to fund the next project.
The idea came after the team saw that many founders in crypto were feeling forced to either sell tokens before their platform launched or raise venture capital as one option to pay for audits, or release their projects without the proper security checks. Gavin is hoping fair launch capital provides a viable alternative to venture capital, even if it does end up disrupting his fund's own business model. Since the group unveiled this new funding mechanism late august, the term “fair launch” has taken a life of its own, becoming a gold standard for any new DeFi venture.
"It Was Exciting But it Was Also Terrifying:" Dan Elitzer and Clinton Bembry on Yam Finance's Backstory
In this week’s episode, I spoke with Dan Elitzer and Clinton Bembry, who were part of the founding team of Yam. Yam Finance is an experiment in rebasing cryptocurrencies, plus token incentives, plus full on-chain governance, plus a DAO-like treasury managed by token holders. It’s also testing the power of the emoji and opened the flood gates to meme-based DeFi tokens.
Dan and Clinton tell me the back story of how this crazy project was created, how the group loosely coalesced in a chat group and from there it was just 10 days until launch. They talked about how the project blew past all their wildest expectations, and about the absolute terror of having hundreds of millions of dollars flow into the unaudited code they had pushed into the world.
DeFi Yield Farming: Why It's All the Rage But Risky - Ep.180
Dan Elitzer, investor at IDEO CoLab Ventures, and Will Price, data scientist at Flipside Crypto, discuss the yield farming craze. In this episode, we cover:
the goals of protocols offering liquidity mining
the goals of users yield farming right now
whether users of Compound will have much awareness of COMP in the future
how Compound is trying to dampen inorganic activity and properly align incentives
how incentives in one DeFi protocol can screw up another's such as changes in Compound's liquidity mining program causing Dai to lose its peg
whether the activity created by liquidity mining is sustainable and how
whether Compound is overvalued and how to determine valuations for DeFi tokens
the security risks that come with trying yield farming
how teams can keep their protocols safe given the composability of DeFi and the growing number of developments in the space
whether the yield farming craze will cause the price of ETH to rise and why the prevalence of stablecoins might prevent that
whether new DeFi tokens could push flagging layer 1s out of the top 10
what will happen if even more Bitcoin comes to DeFi
how the next big thing in DeFi might be trying to stack yield across protocols and eventually prime brokerage protocols
Thank you to our sponsor!
Crypto.com: https://www.crypto.com
Episode links:
Dan Elitzer: https://twitter.com/delitzer
IDEO CoLab Ventures: https://www.ideocolab.com/ventures/
Will Price: https://twitter.com/will__price
Flipside Crypto: https://flipsidecrypto.com
Total value locked in Compound: https://defipulse.com/compound
What liquidity bootstrapping pools are: https://medium.com/balancer-protocol/building-liquidity-into-token-distribution-a49d4286e0d4
Dan on earning more from borrowing USDT than lending it on Compound: https://twitter.com/delitzer/status/1272642107128164354
Tony Sheng on how yield farming works and how much you can earn from it: https://twitter.com/tonysheng/status/1274393189231689728
And his followup on the risks of yield farming: https://twitter.com/tonysheng/status/1274780457729617920
The purpose of COMP for governance: https://medium.com/compound-finance/compound-community-ownership-ee0ed1252cc3
https://medium.com/compound-finance/expanding-compound-governance-ce13fcd4fe36
Risks of so much BAT being held in Compound: https://twitter.com/spencernoon/status/1276897377446776832?s=20
https://twitter.com/defiprime/status/1277026665952980992?s=20
https://twitter.com/devops199fan/status/1274732220192829441?s=20
Cyrus of MakerDAO concerned about the risks COMP poses to the Dai peg: https://forum.makerdao.com/t/upcoming-comp-farming-change-could-impact-the-dai-peg/2965
Dan Guido and Taylor Monahan on Unchained discussing DeFi security: https://unchainedpodcast.com/defi-security-with-so-many-hacks-will-it-ever-be-safe/
Twitter discussion on whether ETH price will rise due to yield farming: https://twitter.com/RyanSAdams/status/1274781676875452421
What will happen to other Layer 1s? https://twitter.com/Shaughnessy119/status/1274376237239189504?s=20
Aquaponic yield farming: https://bankless.substack.com/p/aquaponic-yield-farming
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18 - COMP Growth Hacking DeFi | Dan Elitzer
Episode: #18 June 22, 2020
A DeFi token called COMP gained over 900% last week. DeFi going parabolic. What in the world is going on? Are these DeFi tokens real? If they are, is this the start of the another 2017 style bull market?
How much can you money as a yield farmer?
We bring on Dan Elitzer a Venture Capitalist, writer, DeFi futurist, yield farmer and the absolute best person to tell us what's going on.
Covered:
Why COMP went parabolic
Why DeFi tokens are real this time
The spark for the next bull run
DeFi tokens as rocket fuel
Why ETH is getting left behind (so far!)
The best yield farming opportunities
Superfluid yield farming
The downside of DeFi tokens
Where this is taking us next
Join us next Monday for a fresh episode!
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----- Resources discussed:
(Article) Superfluid Collateral in Open Finance
(Article) Meet the SAFG
(Article) Voting for cash flows
(Listen) Episode 12: Protocol Sink Thesis
(Listen) Episode 11: Going Bankless with Compound
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