A new blockchain platform named Poly Network is the latest effort to rival the large players in the public blockchain ecosystem like Ethereum and Bitcoin. However, unlike other platforms, Poly’s blockchain is not a public network in the traditional sense of the word. Instead, it is a private chain, where all the nodes are owned by a small group of people called the Poly Consensus. This setup raises a number of interesting questions, especially in light of the ongoing East-West divide in the cryptocurrency industry.
A new report published this week by the World Economic Forum details the growing crypto divide in the Middle East and North Africa, and the potential implications on the adoption of blockchain technology. While the region’s financial market is growing, it is not growing at the same pace as the rest of the world, and this has led to frustrations on the part of stakeholders.
The crypto community has been buzzing this week over a recent hack of a small cryptocurrency exchange called Poly. The hack, which took place on February 9, saw an unknown hacker gain control of Poly’s customers’ private keys, which – if used for cryptocurrency transactions – could have allowed the intruder to move their coins to another address.. Read more about when does crypto market close and let us know what you think.
This weekly collection of news from Mainland China, Taiwan, and Hong Kong aims to compile the most significant stories in the sector, such as prominent initiatives, legislative developments, and corporate blockchain integrations.
Following the exploits of ThorCHAIN and Chainswap, it’s fair to conclude that hacking cross-chain bridges is the season’s style. Poly Network, a local initiative, was robbed of $615 million this week, prompting the crypto community to go on a spectacular witch hunt to find the perpetrator. Despite the fact that most news sources have thoroughly covered this subject, there are still a few things worth discussing.
What are the names of these projects?
The first point is that, despite having over $600 million in total value locked, most western DeFi customers had never heard of Poly Network. On Twitter, Dovey Wan of Primitive Capital observed that the “Chinese crypto community always has its own version to use the same blockchain infra, for good and ill, most are unseen and lack of accessible to westerners.”
Like the PlusToken instance in 2018, most CT only learned about this “crosschain” project with over $500 million TVL after Poly was attacked.
Despite the prohibition, and despite numerous carpets and hacks, mainland China has a VERY active but totally distinct “Defi” community.
August 11, 2023 — Dovey “Rug The Fiat” Wan (@DoveyWan)
So, why are Chinese initiatives slipping through the cracks? The first issue may be a cultural and linguistic barrier, as Chinese marketing firms try to fit into the fast-paced and arcane world of Crypto Twitter.
Rather of attempting to win over worldwide groups, they concentrate on integrations that may immediately attract people.
Poly Network received almost 58 percent of its online traffic from third-party website referrals, according to SimilarWeb, with Chinese DApps OpenOcean, O3 Swap, and Wing Finance topping the list. Compound Finance, on the other hand, gets more than half of its traffic from direct clicks, with just 16% originating from third-party websites.
CoinMarketCap and CoinGecko are the two major referral sources for Compound. This demonstrates that there is a clear difference between how Chinese and foreign consumers act, and that capturing both groups requires two different methods.
Poly Network is a DeFi island, with Chinese dApps and websites serving as the primary onramps for users. Similarweb is the source.
Getting the web untangled
Another controversial topic is the fact that many of these big Chinese DeFi operations are linked to others. The O3 network, which is fostered by Neo, has connections to the Poly Network. The degree to which Neo is engaged is unclear, but it explains why Poly Network founders seldom promote their company in public. These so-called “founders” are often simply mouthpieces for the main business. The parent business reaps all of the advantages of releasing a second token while avoiding the reputational and legal risks associated with doing so. If the side project succeeds, it will be able to provide assistance for the main network. If it doesn’t work, everyone goes on with their lives as if it never occurred.
Now that many of their users’ assets have been compromised as a result of the assault, O3Swap has a major public relations issue. The crew has had to cope with criticism before, when they were accused of having a backdoor function built into their programming that allowed them to rug pull. Although this has never been used, it does raise questions about the creators’ intentions.
Following the breach, there was a lot of criticism on local social media, with many questioning the integrity of Chinese-made projects. You could beat him to death before he touched a Chinese project, according to one Weibo user, while another simply labeled it an inside job.
O3Swap’s code has a possible backdoor, according to a user. Weibo is the source of this information.
The bigger issue here is that prior to DeFi, substandard projects would never get off the ground, leading to a slow and painful soft decline in value for token holders. In this model, investors might still get the chance to recover some of their funds by selling on secondary markets.
In the new DeFi forks model, code may be released quickly and accumulate hundreds of millions of dollars in TVL without any risk controls. Audits may be shallow, and large returns might entice ordinary investors to provide liquidity. If the code is breached, all assets are destroyed, resulting in a considerably larger and more immediate loss for investors.
In search of silver linings
The Chinese blockchain community’s fast and unified reaction was a big plus in all of this. Slowmist, a smart contract auditor, worked swiftly with exchanges to restrict the attacker’s ability to liquidate assets. According to the company’s blog:
“Special thanks to Hoo, Poly Network, Huobi ZLabs, ChainNews, WePiggy, TokenPocket, Bibox, OkLink, and many more individual partners for synchronizing important attacker information with the SlowMist security team on time under the assumption of compliance, buying crucial time for attacker tracking.”
Huobi’s co-founder Du June echoed this sentiment on social media, pledging to do all in their ability to safeguard the crypto community. This will be a good indication for Chinese DeFi consumers who wish to see local players regain their confidence.
The huge amount of money stolen from the #PolyNetwork tonight has been noticed by Huobi. The addresses involved are already being tracked and identified by our risk control and security staff. We’ll do all we can to help and defend the cryptocurrency community. #StrongerTogether
10 August 2023 — Du Jun (@DujunX)
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