2024 wrapped: The year of Bitcoin ATH and DeFi renaissance

• We launched new assets for deposits and investments: ETH, BTC, and SOL

• If you are in the US, you can now fund their Exponential Wallet directly from your bank account

• DeFi is multi-chain, that’s why we added 7 new blockchains for deposits and investments

• To make DeFi easier, we added support to reinvest token rewards when pools grant them

• Our risk ratings made it onto DeFiLlama’s yields dashboard

• We dropped the ultimate explainer for DeFi yield

• Maker’s DAI: We downgraded DAI to “Average” risk due to its growing reliance on real-world assets (RWAs), which now account for over 30% of its collateral. While this helped boost the DAI Savings Rate to 8%, it also introduced counterparty and legal risks that have already led to four smaller vault defaults. Our concerns about RWA dependencies highlight the potential instability that a large default could pose to DAI’s peg.

• Multichain: We rated Multichain a “Watch Out” due to its reliance on a trust-heavy consensus model, which significantly increased the risk of losing user funds. This concern proved warranted when the protocol was exploited for $126M, with unauthorized withdrawals draining its cross-chain bridges. Before the exploit, Multichain faced mounting operational issues, including delayed transactions and the unexplained disappearance of its CEO, which left critical technical maintenance unaddressed. The breach caused widespread fallout as the bridge served as a single point of failure for chains like Fantom and Moonriver.

• Tangible: We rated Tangible a “Watch Out” due to its USDR stablecoin being backed by illiquid real estate and its own TNGBL token, creating significant redemption risks. When users lost confidence in USDR’s peg, it triggered a bank run as they rushed to redeem USDR for DAI. Since our rating, USDR has depegged significantly and is now trading at around $0.30.

• UwU: We rated UwU a “Watch Out” due to governance concerns surrounding its founder, Michael Patryn (Sifu), the lack of a governance system, and the use of questionable assets as collateral. These risks materialized when the protocol was hacked for $19.4M in an oracle manipulation attack. The incident underscored our concerns, with the exploit swiftly draining funds and further casting doubt on the protocol’s integrity.

• unshETH: We rated unshETH a “Watch Out” due to its status as a new, experimental project with limited testing and centralization concerns, given its reliance on a 2/3 multisig. These concerns were validated when the protocol lost $375,000 after mistakenly leaking its private key on GitHub, enabling the attacker to drain funds.

• Sherlock: We rated Sherlock’s USDC staking pool a D due to its lack of full collateralization for smart contract exploit coverage and the high-risk nature of insurance protocols in DeFi. These concerns were realized when Sherlock paid out a $4.5M claim to Euler after its exploit, depleting reserves by over 90%. With stakers at risk of losing up to 50% of their funds per claim, this incident left Sherlock struggling to honor its coverage and attract new depositors.

• Sonne: We rated Sonne a “Watch Out” due to its lack of audits, an anonymous team, and reliance on a limited multisig setup. The protocol was exploited for $20M due to Sonne failing to address a well-known Compound V2 attack vector.

• Radiant: We rated Radiant a “Watch Out” due to its anonymous team, significant centralization risks from its ability to upgrade contracts, and a limited multisig setup controlling the DAO Reserve wallet. The protocol suffered a $50M exploit when an attacker took control of its multisig, executed a malicious contract upgrade, and drained its lending pools.

• Ethena: We played it safe and initially rated Ethena’s USDe staking pool a D, overestimating the risk of a “death spiral” due to potential reflexivity risks in their carry trade model, which could result ina collateral depeg or persistently negative funding rates. However, further analysis revealed robust risk mitigation strategies, including a 7-day unstaking queue to stabilize markets during negative funding rates, an insurance fund to buffer against losses, diversified collateral in both ETH and BTC perpetuals, and mint/redeem caps to manage liquidity shocks. These measures reduce reflexivity risks and provide resilience in adverse scenarios, leadingus to update our risk rating.

• Raft: Raft enables users to mint the R stablecoin by depositing ETH as collateral. Despite being well-audited, an infinite mint exploit caused R to depeg when an attacker inflated collateral values through a flash loan to mint 6.7M R tokens. This incident highlighted vulnerabilities in collateral and liquidation mechanisms, and we are in the process of improving our Risk Framework to better account for these risks.

• 1000+ Pool reports with original analysis and yield data

• 208 Research reports on individual protocols (+80% of DeFi TVL)

• 253 Reports on individual assets, their risks, and original explanations (90% of DeFi TVL)

• 32 Blockchains researched and risk-rated (+91% of DeFi TVL)

• Harvest-Moonwell cbBTC

• Curve eBTC-tBTC

• Yearn ETH+

• Introducing Exponential Edge

• What is Tricrypto?

• Safety-first DeFi starts with security