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For all the criticism directed at Lido over the past several years, it remains the second-largest protocol on Ethereum, with nearly $19 billion in user deposits as of Tuesday morning. It generated $40 million in revenue last year, half of which goes to the Lido DAO, a cooperative run by tokenholders.

And yet its token is in the dumps.

LDO has touched $0.27 a couple of times this month, marking an all-time low. It is remarkably poor performance for an asset tied to such a successful business.

I’ve written about this before — nobody wants governance tokens that give them a say in protocol management. The average investor wants no part in running a business. Even the small coterie of whales that functionally run most major DAOs can’t accumulate enough tokens to regularly reach quorum.

Like other DAOs, Lido has turned to the most obvious solution to placate frustrated investors: buying back its tokens.

In November, Steakhouse Financial, a firm that integrated with Lido DAO to form the Lido Finance Operations Team, put forward a programme that would only trigger under certain conditions, to wit: Ether trading above $3,000 and the DAO bringing in more than $40 million in annualised revenue.

Once those conditions are met, the protocol would use 50% of treasury inflows from staking over the initial $40 million to buy LDO tokens.

But that proposal has foundered. In the Lido forum, employees have assured DAO members a more detailed version of the proposal is in the works.

Members’ patience, however, is running out as LDO hits all-time lows.

“Until we fix the tokenomics we should accept that LDO tokens have no real economic value because they are merely votes, not dividend-paying shares,” one member wrote in the forum.

“They could be called worthless papers, with profits coming from later buyers paying earlier buyers.”

Sensing unrest, perhaps, the Lido Ecosystem Foundation on Friday proposed using up to 10,000 staked Ether tokens, worth about $20 million on Tuesday, to purchase LDO. It cited the token’s rock-bottom price as the motivation.

“This is not a routine fluctuation,” the Foundation wrote. “It represents one of the most significant dislocations between LDO’s market price and its underlying protocol fundamentals in the token’s history.”

The proposal was not an “addition, specification or replacement” to November’s automated buyback programme, the Foundation added. “The current proposal is an one-off initiative to utilize market opportunities.”

Lido DAO members have voiced their support and LDO has rallied some 18%, to $0.32, since Friday.

“I’m sure that LDO is really undervalued right now, it makes sense for the DAO to use some of its idle [staked Ether] instead of just letting it sit there doing nothing,” one member wrote.

Now, the question is: is LDO truly undervalued, or is the market just waking up to the reality that governance tokens — and, perhaps, the DAO model writ large — aren’t all that interesting?

Top DeFi stories of the week

This week in DeFi governance

VOTE: Arbitrum DAO votes to upgrade code of conduct

VOTE: Arbitrum DAO votes to implement new gas pricing algorithm

VOTE: Aave DAO votes to establish GHO-based savings product

Post of the week

AGI is finally here.

some people are saying that Anthropic’s Mythos model is so powerful that it can actually explain futarchy

— Gwart (@GwartyGwart) March 30, 2026

Aleks Gilbert is DL News’ New York-based DeFi correspondent. Have a tip? Email him at aleks@dlnews.com.

On Monday, Dromos Labs, the firm behind the Aerodrome and Velodrome decentralised exchanges, announced at the EthCC conference in Cannes a new feature called “Predictive Allocation,” which it says will increase the efficiency of how its protocols distribute token rewards by 80%.

The feature, set to go live in July, brings the same kind of asymmetric upside that exists in prediction markets to the company’s exchanges, Alex Cutler, CEO of Dromos Labs, told DL News.

“You have the ability to place a bet on something and if your bet is correct you get an outsized reward.”

Prediction markets, like Polymarket and Kalshi, have captured the attention of DeFi developers — including Ethereum co-founder Vitalik Buterin — because of their ability to aggregate information and get closer to the truth than conventional sources.

How it works

Aerodrome and Velodrome both use a vote-escrow model pioneered by Curve Finance to direct liquidity. Here, those who own governance tokens can vote on which liquidity pools receive more tokens as rewards, incentivising liquidity providers to deposit assets.

In return, governance token holders receive so-called bribes to direct rewards to certain liquidity pools.

Currently, token holders vote weekly on which liquidity pools receive the most token incentives.

That will change to a new system where token holders can change their votes in real time. This, according to Cutler, will make the system more efficient and incentivise liquidity providers to be more proactive.

In short, governance token holders can bet on where the best rewards will be before the demand materialises, and those who predict demand best stand to earn the most rewards.

It isn’t a true prediction market like Polymarket and Kalshi, but should benefit from the same market forces.

Cutler said the change will bring Aerodrome and Velodrome another step closer to being able to compete with rival centralised exchanges, which typically provide traders with slightly better prices on swaps.

“If you are able to allocate capital in a predictive way to create markets that don’t exist yet or don’t exist in the correct size, that is not the kind of thing you could do on a centralised order book,” Cutler said.

The feature should also help Dromos Labs as it prepares to launch a new exchange on Ethereum later this year to compete with market leader Uniswap.

AI in DeFi

The new feature is also a bet on the increasing use of artificial intelligence in the $130 billion DeFi ecosystem.

Cutler said big market makers like Wintermute already use algorithms to optimise which liquidity pools on Aerodrome and Velodrome they vote for.

As AI becomes more powerful, those market makers will use it to gain an even bigger edge.

“Imagine a marketplace of agents competing for capital because they think they’ve got the best predictive piece,” Cutler said.

The increased competition should boost market efficiency and create better prices for traders using Dromos Labs’ exchanges.

Dromos Labs’ big year

The Predictive Allocation feature is the latest big update from Dromos Labs in recent months.

In November, the Aerodrome developer announced plans to launch a new exchange and token later this year.

The new protocol, called Aero, aims to further simplify the process of swapping tokens across different blockchains and get better at drawing in investors who provide liquidity, which will allow it to offer crypto traders better prices than its competitors.

Aero will launch on Ethereum, putting it in direct competition with Uniswap on the blockchain where the latter has long dominated.

“We’re very excited for that markets-based competition, where it’s 100% about, ‘what is the most capital efficient?’” Luis Alberto, the executive director of the Aerodrome and Velodrome Foundations, previously told DL News.

“Even if you like the Uniswap brand, if you’re a trader, you’re going to take the most efficient route possible, because you want to trade the best price possible. And so it doesn’t matter who’s offering it.”

Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.

Aave Labs on Monday launched Aave v4, a redesigned version of its $24 billion predecessor, Aave v3.

V4 will run alongside v3, Aave Labs executives stressed. The company backtracked on plans to push v3 users to the newer protocol after an outcry from members of the Aave DAO cooperative, which governs the Aave protocols.

Aave v3 is the largest protocol in decentralised finance, with nearly $24 billion in user deposits. It enables peer-to-peer lending of crypto assets.

V4 introduces what Labs calls a hub-and-spoke model in which hubs serve as liquidity pools and spokes serve as tailored lending markets.

“This represents the first complete rework of the Aave protocol since Aave V1,” Emilio Frangella, head of engineering at Aave Labs, said on X.

The new design will prevent the siloing of liquidity, the Aave Labs executive said.

“This also reduces or completely eliminates the need to bootstrap liquidity through incentives or other initiatives whenever a new borrowing configuration (identified as a market in previous iterations) is deployed.”

Aave founder and Aave Labs CEO Stani Kulechov has said the new protocol will be flexible enough to lead Aave into new markets. In a lengthy post last month, he said he envisions a future in which Aave finances the development of real-world infrastructure, such as solar energy arrays, data centers, and water desalination plants.

In a slick, three-minute video released on Monday, Kulechov recounted Aave’s origins and hinted at that future once again.

“Aave v4 is actually taking Aave into a new environment where we can start funding opportunities in the real world,” he said.

“The architecture is completely modular, which means that it’s easy to extend into new use cases that will emerge. In the future, for example, it can be lending against data.”

Aave v4 launched on Ethereum with just three hubs, part of a gradual rollout that prioritises security over “immediate growth.” Each hub offers a different risk-reward calculus, according to Frangella.

“Core” is most similar to Aave v3, he said. “Plus” offers higher yield. And “Prime” is geared toward lending and borrowing stablecoins, “with a limited set of collaterals selected for maximum stability and predictability.”

The rollout of Aave v4 and its user interface, Aave Pro, follows a contentious period in which Labs and prominent members of Aave DAO fought over the protocol’s future direction and Labs’ growing influence in DAO affairs.

Aave Labs pushed for the DAO to turn its attention from the ongoing maintenance of v3 to promoting v4. That push was among several issues that led to the acrimonious departures of two major contributors to the DAO, Bored Ghosts Developing and Aave Chan Initiative. Both have said they will not seek DAO renewal of their contracts this year.

Asked whether Labs would take a more hands-on approach to running the protocol, an Aave spokesperson said in a statement earlier this month that the company “continues to play an important role in building, offering strategic direction, securing important partnerships, and growing awareness, etc., which the community has supported.”

But the DAO “remains the governing body, responsible for key decisions, including hiring service providers, protocol upgrades, risk parameters, asset listings, treasury allocation, and expansion to new networks,” they added.

Aleks Gilbert is DL News’ New York-based DeFi correspondent. Have a tip? Email him at aleks@dlnews.com.

In an industry that typically airs its grievances online rather than in front of a judge, it’s a rare case of a crypto dispute reaching the courts.

Singapore’s Protection from Harassment Court has ordered crypto wallet OneKey’s founder Wang Lei, who is better known as Yishi, and the pseudonymous user behind the X account @web3feng to stop making threatening or abusive statements about Haowi Wong, according to documents seen by DL News.

“This situation is no longer about technical discussions or differences in opinion. It involved sustained personal attacks, serious allegations such as fraud, and even threatening behavior. At that point, it crosses out of ‘DeFi discourse’ and becomes real-world harm,” Wong told DL News.

The two respondents didn’t appear in court, and they didn’t immediately respond to DL News’ requests for comments.

The March 24 ruling specifically bars them from posting claims that Wang defrauded others or spread false information. The two were also ordered to pay 2,500 Singaporean dollars, about 1,900 US dollars, in damages and costs by April 7.

“DeFi is meant to solve trust issues by removing the black boxes of traditional finance. But that doesn’t mean DeFi exists outside the rule of law,” Wong told DL News.

“If we normalize a situation where anyone can spread falsehoods or attack others without any cost, the ones who suffer most are those genuinely building — and ultimately, the entire industry itself.”

The case originated from the June 2025 exploit of stablecoin lending protocol Resupply that cost users $9.3 million. As the protocol allowed users to lend their crvUSD stablecoins into Curve vaults to earn yield, it was perceived by some to be formally affiliated with Curve.

The dispute involved multiple online statements, issued on X and in private group chats, accusing Curve of direct responsibility in the Resupply exploit and levelling personal accusations against Curve contributor Wong.

“Steer clear of all projects associated with Curve/Yearn,” Wang said at the time, to which Curve founder Michael Egorov responded, “no single person from Curve working on that project.”

Egorov told DL News that Curve Finance wasn’t formally involved in the Singapore court case, and Haowi took them to court “just because he loves Curve!”

“He just cannot tolerate FUD!” Egorov told DL News, referring to the common crypto refrain accusing critics of spreading “fear, uncertainty, and doubt” about projects sensitive to volatile investor sentiment.

OneKey said in June that Wang’s advocacy represented his “personal behavior” and that the company “had never instigated, organized or manipulated any KOL or user in any form to launch a public opinion attack on Curve or any project.”

Disclaimer: The two co-founders of DL News were previously core contributors to the Curve protocol.

Ekin Genç is DL News’ Editor-in-Chief based in Oxford, United Kingdom. Got a tip? Email at ekin@dlnews.com.

On Thursday, a pseudonymous delegate who goes by statelayer Sudoswap’s decentralised autonomous organisation, or DAO, published a proposal that would claim approximately $800,000 in fees accumulated by the protocol and allow DAO members to exchange their tokens for a portion of it.

Sudoswap is an onchain automated market maker for non-fungible tokens, or NFTs, built on Ethereum.

If the proposal passes a vote, it will let holders redeem each SUDO token they own for around $0.03 worth of Ether — triple the market value of SUDO tokens before the proposal was revealed.

Those buying up SUDO are hopeful that the proposal will pass, yielding them a return of around 225% per token.

“The rage quit smart contract has no time limit, and is opt-in,” the proposal said. “SUDO may be exchanged for ETH at the fixed rate as long as sufficient ETH remains in the smart contract.”

The scheme is the latest example of what in DeFi is termed a “rage quit” — where token holders of old, forgotten DeFi protocols propose liquidating any remaining funds the protocol holds and distributing them to token holders, effectively dissolving the organisations.

In 2023, holders of Hector Network’s token voted to dissolve its DAO following claims of mismanagement. The protocol later entered receivership, with some assets clawed back.

The same year, token holders at Solana-based Parrot Protocol also voted through a similar dissolution.

DAO rage quitting is similar to another manoeuvre called raiding.”

Here, activist investors target DeFi protocols where the value of assets held by the DAO is greater than the market value of its governance token. The investors buy up the protocol’s token and use the voting power it confers to push through a proposal to liquidate the DAO, allowing them to profit.

NFT exchange

Sudoswap allows users to buy and sell NFTs instantly from liquidity pools — like decentralised exchange Uniswap — rather than relying on peer-to-peer order books, like OpenSea.

The project launched in July 2022 and introduced the SUDO governance token in early 2023 through an airdrop to early users and liquidity providers.

The protocol found some success, generating almost $5 million in fees over its lifetime, according to DefiLlama data.

However, as interest in NFTs plummeted throughout 2023 and 2024, so too did interest in Sudoswap. Use of the protocol dried up, and the SUDO token plummeted in value.

In addition to distributing Sudoswap fees, the proposal will also prevent users from minting more SUDO tokens by transferring ownership of its smart contracts to the burn address. This, statelayer said, will remove the risk of a potential governance attack.

The vote to distribute the Sudoswap fees will begin on March 28. Token holders have three days to cast their votes.

Sudoswap founder Owen Shen, who goes by 0xmons online, did not immediately respond to a request for comment.

Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.

That upgrade, Hegota, is expected in the latter half of 2026. Last month, Ethereum developers chose its first “headliner”: Fork-Choice Enforced Inclusion Lists, or FOCIL, a highly-anticipated yet controversial proposal that stands to boost the network’s censorship resistance.

But they declined to name the addition of so-called frame transactions as a second headliner. Instead, they agreed to consider it for inclusion as, functionally, a nice-to-have, rather than a must-have.

Several developers who attended Thursday’s virtual, live-streamed meeting, including Ethereum co-founder Vitalik Buterin, spoke in support of the frame transactions proposal. But Ethereum client developers such as Nethermind’s Ben Adams pushed back, citing its complexity.

“The headliner is more, ‘This is what we are shipping in the fork, we hold the fork until it ships,’” he said, using the technical term for a blockchain upgrade. That could delay Hegota at a time when Ethereum leadership is trying to speed the cadence of upgrades.

Frame transactions are a new type of transaction that would prepare the blockchain for a post-quantum world and offer a more robust version of account abstraction. Account abstraction would bring a more traditional web experience to blockchain-based applications, including familiar username-and-password-style logins and fee-free transactions.

“Native account abstraction on Ethereum is long overdue,” developer Parthasarathy Ramanujam said on Thursday’s call. “If frame transactions isn’t chosen as a headliner, the worry is that we may never implement native account abstraction in the near future.”

Rejecting frame transactions would be a setback for Ethereum, according to Biconomy co-founder Ahmed Al-Balaghi.

“We’re all wanting Ethereum to win, and for that to happen we really need the UX to be way better,” Al-Balaghi said.

“There are so many awesome things that we can do on the UX level from frame transactions,” he continued. “There’s so many use cases on the privacy side. I think there’s going to be a lot of innovation that will come from this.”

But client developers were less enthused.

“We think it’s too complex for what it delivers,” Besu’s Daniel Lehrner said.

Rather than commit to frame transactions, Ethereum developers should agree to focus on account abstraction more generally as they debate what improvements should go into the Hegota upgrade, said Daniel Lumi, senior product manager at Arbitrum developer Offchain Labs.

“We hear this everyday from users, from enterprises,” he said. “This is the single most important user experience choice.”

But client developers rejected that commitment as well, calling it too vague. Instead, they agreed to tag frame transactions as “considered for inclusion,” a formal designation that means it will receive thorough vetting as a non-headliner proposal in future meetings.

“It seems like there’s overall agreement account abstraction is something that’s important, that needs attention,” Ansgar Dietrichs, an Ethereum Foundation leader and the call’s emcee, said.

“I do think it will receive that attention now, everyone here wants to work on a resolution. That I think is the informal takeaway from this call.”

Aleks Gilbert is DL News’ New York-based DeFi correspondent. Have a tip? You can reach him at aleks@dlnews.com.

Bad actors are now using the large language models that power AI chatbots like ChatGPT and Claude to search thousands of lines of code a second. Their goal? Identify vulnerabilities that have slipped by developers and auditors.

And it’s old, undermaintained deployments that are most at risk, crypto security experts warn.

“AI has made legacy-contract hunting cheaper, faster, and more scalable, especially for old forks, dusty deployments, under-maintained vaults, and inherited code paths,” Gabi Urrutia, field chief information security officer at Halborn, a blockchain security firm, told DL News.

“AI does not need to invent novel vulnerability classes to create more damage; it only needs to find old ones faster and at scale.”

Accelerating AI growth, fuelled by record levels of funding for top companies including OpenAI, Anthropic, and xAI, is rapidly reshuffling the crypto industry.

What was once a hypothetical risk posed by AI less than a year ago has quickly become a stark reality. The problem now is that bad actors are further ahead in utilising the technology than those tasked with securing the $130 billion DeFi ecosystem.

“Offensive capacity is improving far faster than defensive tooling.”

Gerrit Hall, Firepan

While evidence suggests attackers are using AI to speed up and scale their attacks, crypto security firms and auditors are only just starting to incorporate the technology into their defences.

The situation has spooked even the most veteran DeFi developers.

“Everybody should stop using DeFi. It’s simply too dangerous right now due to the rapidly increasing power of AI coding agents” Gerrit Hall, co-founder of smart contract security platform Firepan, who also spent five years working on DeFi exchange Curve Finance, said in a recent interview.

“Offensive capacity is improving far faster than defensive tooling.”

A numbers game

Previously, looking for bugs in code took a long time. For hackers, it was only worth it to spend time on high-value targets, where finding a bug would result in a big payout.

But now AI can automate much of the drudgery, hackers are searching anything and everything — even if they only stand to steal a few hundred dollars worth of crypto.

“Attackers can profit at much lower value thresholds than defenders can justify for equivalent detection effort,” Urrutia said. “That is enough to change attacker economics even without perfect attribution.”

In December, researchers at Anthropic, the developer behind Claude, published a report that showed its AI agents, working against a benchmark of 405 real smart contracts that had been exploited between 2020 and 2025, were able to exploit 63% of them. This would have hypothetically allowed the agents to steal a combined $4.6 million.

When Anthropic tasked its AI models with hacking 2,849 recently deployed contracts without any known vulnerabilities, those agents uncovered two novel vulnerabilities and produced exploits worth $3,694, while only spending $3,476.

“This demonstrates as a proof-of-concept that profitable, real-world autonomous exploitation is technically feasible,” the Anthropic researchers said.

Identifying AI-assisted exploits

To be sure, it’s difficult for security researchers to identify specific instances where hackers have relied on AI to exploit DeFi protocols.

Yet multiple security experts who spoke to DL News said that the evidence they’ve seen has convinced them it’s happening at scale.

“We observe repeated, identical exploit attempts across multiple contracts simultaneously.”

Stephen Ajayi, Hacken

“The patterns we are observing are consistent with AI-driven automation,” Stephen Ajayi, dapp audit technical lead at Hacken, a blockchain security firm, told DL News.

“We observe repeated, identical exploit attempts across multiple contracts simultaneously, which is consistent with scripted or agent-driven reconnaissance.”

According to Ajayi, attackers are now probing thousands of smart contracts in minutes, a volume that also suggests automation rather than manual effort.

The recent $26 million hack of DeFi protocol Truebit, while not confirmed to have been carried out with the help of AI, is a likely candidate, Urrutia said.

“Public analysis described the issue as a pricing-logic flaw in an older contract compiled with Solidity 0.6.10,” he said. “That is exactly the kind of target profile that becomes more attractive when AI can cheaply triage old codebases and surface exploitable edge cases.”

He’s not the only one to say so.

At the time, several other crypto security researchers speculated that the Truebit exploit, which targeted code deployed over five years prior, could have been identified with the help of AI.

Fighting back

The good news, experts say, is that there is plenty DeFi developers can do to fight back against AI-armed hackers. But it will require a fundamental change to what is considered secure.

“‘Audited once’ is no longer a serious security model.”

Gabi Urrutia

“‘Audited once’ is no longer a serious security model,” Urrutia said. “If attackers can continuously re-scan the long tail of old contracts, then dormant risk becomes active risk again.”

Instead of DeFi protocols getting audited before their code goes live, they will need to invest in constant screening using the latest AI models to ensure potential exploits are discovered by the protocol’s developers first.

“If attackers are using AI to find vulnerabilities, defenders must do the same,” Ajayi said. “Automated adversarial testing — using AI agents to continuously probe production systems — will become standard practice, much like automated penetration testing is today.”

There has already been some success in using AI to catch code bugs. Last month, Octane Security, a self-described AI-native security firm, used its AI tool to find a high-severity bug in Nethermind, software that runs the Ethereum blockchain.

Even so, security researchers must still find ways to attribute whether AI played a role in exploits. “Without better audit trails and standardised logging for agent actions, defenders will remain behind,” Ajayi said.

For the builders themselves, the next few years could be the most challenging yet for the decentralised economy.

“If we manage to create something that doesn’t get exploited in the next decade, that’s good enough to create a nice tidy empire,” Firepan’s Hall said.

“The sad reality [is] most DeFi protocols won’t last so long.”

Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.

That’s how much time and money an exploiter spent on creating a governance proposal to hand over the entire Moonwell protocol.

Moonwell is a multichain lending protocol that provides liquidity for the Moonbeam and Moonriver ecosystems. It has around $85 million in total value locked, according to DefiLlama. Moonbeam is a parachain network on Polkadot, and Moonriver is the equivalent network on Polkadot’s developer network Kusama.

If the attacker’s proposal is successful, the exploiter would gain total control over key components of the lending protocol, including its seven markets and the protocol’s core smart contract.

It would also allow the attacker to drain more than $1 million in user funds, according to blockchain intelligence firm Blockful.

Voting on the proposal ends on Friday. Holders of MFAM, the governance token for Moonwell, can still vote against the proposal to block it.

The proposal’s voting activity shows that 68% of votes cast are against it as of Thursday.

Blockful, however, warns that the exploiter may have additional unidentified wallets holding MFAM that may be used.

Instead, Blockful recommends that Moonwell’s multisig signers act to move admin powers away from the attackers, a defensive move called the “Break Glass Guardian,” according to forum posts.

“Since the attacker can still have hidden wallets, ready to vote in the last block in case of opposition, we recommend the core team use the Guardian to guarantee user funds are safe,” the firm wrote on Thursday.

DAO governance

Governing crypto protocols via decentralised communities has long been a painstaking experiment.

In 2024, a group of Compound Finance investors, led by the pseudonymous user Humpy, accumulated enough Compound governance tokens to force through a proposal that would have moved some $24 million from the project’s treasury into a private vault.

Humpy ultimately reached a truce and returned the tokens.

More recently, a dispute within the Aave community shed another light on what a decentralised autonomous organisation actually owns.

In December, it was found that fees generated by an integration with a decentralised exchange called CoW Swap were being routed directly to Aave Labs, a decision not approved by the lending protocol’s DAO.

The Moonwell debacle reveals yet another attack surface: using cheap tokens to manage governance.

Attack analysis

The Moonwell attacker purchased 40 million MFAM tokens to make a proposal, and subsequently voted the proposal past quorum.

With the token price at $0.000025 before the purchase, the attacker spent roughly $1,800 to present “MIP-R39: Protocol Recovery - Admin Migration” on Tuesday.

The exploiter used a smart contract to purchase the tokens. Blockful also indicated that the smart contract contained malicious code that would automate the steps needed to drain the protocol’s liquidity.

“This proposal is clearly an attack,” the intelligence firm wrote on Wednesday.

“The proposal contract that will get ownership of the markets in case this proposal gets executed already includes the transactions necessary to exploit them.”

Neither Blockful nor Moonwell immediately responded to requests for comment.

Liam Kelly is DL News’ Berlin-based DeFi correspondent. Have a tip? Get in touch at liam@dlnews.com.

The entity was one of several decentralised finance protocols affected by the collapse of Resolv’s USR stablecoin.

Some kpk yield vaults on Morpho had “limited exposure” to the RLP token, another yield token within the Resolv ecosystem.

“When the risk was detected, we immediately set the risk tolerance on the affected market to zero and blocked new allocations,” the project said on Wednesday.

“All Ethereum funds [have been] fully recovered. Zero loss to depositors.”

Stablecoin collapse

Resolv’s stablecoin, typically pegged to $1, fell as low as $0.2 on Monday. An attacker was able to mint some 80 million tokens using less than $200,000 in collateral.

They then swapped the USR tokens for staked versions, before swapping the staked tokens for Circle’s USDC stablecoin. In the end, they made off with approximately $23 million.

The episode served as yet another reminder of the double-edged nature of DeFi’s interoperability.

As USR plummeted, it became clear that many other projects aside from kpk were also affected.

Gauntlet, Re7 Labs, and 9summits were also Morpho curators that had created customised pools — called vaults — with exposure to Resolv.

In a brief post-mortem, kpk shared more details about how its infrastructure reacted under stress. Critically, the project indicated that it did not need to intervene to protect its users.

It immediately blocked new allocations to the vaults once the exploit was clear, and kpk vaults’ withdrawal queue allowed investors to exit their positions as liquidity returned.

“Same block, no manual intervention needed,” kpk said.

To be sure, the project, like others affected, took Monday’s opportunity to tighten oversight and improve its safety mechanisms.

That includes faster automation triggers, better integration with security alerting services, and other emergency responses, kpk said.

In the meantime, deposits into its Ethereum yield vault are back online.

Liam Kelly is DL News’ Berlin-based DeFi correspondent. Have a tip? Get in touch at liam@dlnews.com.

On Tuesday, the non-profit organisation stewarding Ethereum published a new roadmap outlining how various developer teams were preparing for the advancement of ultra-powerful computers.

In it, the foundation’s quantum team forecasts that the network should have a host of initial upgrades completed by 2029.

That includes several key new hard forks to protect Ethereum from the potentially destructive effects of quantum compute.

“Quantum computing will eventually break the public-key cryptography that secures ownership, authentication, and consensus across all digital systems,” the foundation said, adding that they don’t expect this to occur imminently.

Still, it will take years to bootstrap Ethereum to accommodate quantum, with developer networks already in the works to test some quantum functionality as of March.

“The work must begin well before the threat arrives.”

The quantum threat

Quantum computing poses a legitimate threat to the cryptography that underpins blockchain networks, such as Bitcoin and Ethereum.

While traditional computers would need billions of years to crack these algorithms through brute force, a hypothetical quantum computer could derive a private key and spend a wallet’s funds in a matter of hours, suggest some researchers.

Quantum computing has been top of mind for core developers and investors of both Bitcoin and Ethereum.

Pierre-Luc Dallaire-Demers, a quantum computing researcher, told DL News in October that he expects quantum computers to crack Bitcoin’s cryptography within four to five years.

BlackRock explicitly flagged quantum computing as a risk factor in its amended prospectus for its flagship iShares Bitcoin Trust, filed in May.

Bitcoin developers are already working on a proposal, dubbed BIP360, that aims to address quantum risks.

“Our whole motto is: prepared, not scared,” one of the proposal’s authors, Hunter Beast, previously told DL News.

Likewise, the Ethereum Foundation has formed a dedicated quantum team in January to confront these risks — the very team behind the newly launched website outlining the technical roadmap.

Necessary changes

Researchers inside the Ethereum Foundation’s quantum team don’t expect “cryptographically relevant” quantum computing to arrive for another eight to 12 years.

That’s in line with what researchers investigating Bitcoin’s quantum computing threat have also found.

To prepare the network for this change, the Ethereum group has proposed four key hard forks

First, the “I” fork would provide network validators with a quantum-safe public key that they can have ready in case a quantum computer is suddenly developed. Then, the “J” fork would make it cheaper in gas fees to verify a quantum-safe signature.

These two upgrades are already being considered for inclusion in the upcoming Hegota fork expected for later this year.

The “L” fork compresses the network’s ability to express the blockchain’s state into zero-knowledge proofs. And finally, the “M” fork would also protect layer-2 networks against future quantum threats.

As for full execution-layer migration, that wouldn’t happen for a few years after these forks are completed by 2029.

“Based on our team’s current assessment, layer 1 protocol upgrades could be completed by 2029, with full execution-layer migration taking additional years beyond that,” researchers write.

Liam Kelly is DL News’ Berlin-based DeFi correspondent. Have a tip? Get in touch at liam@dlnews.com.

This weekend’s Resolv hack has cast another harsh spotlight on risk management in DeFi, where Murphy’s Law seems to reign.

The adage goes, “Whatever can go wrong will go wrong.” Protocol developers know this, and they spend a fortune on code audits and risk analyses. And still, they get hacked.

Resolv hired Steakhouse Financial to serve as its risk manager. Just five days before the exploit, Steakhouse published an “economic and operational overview” of Resolv. As of Sunday, that overview includes the following note at the very top: “Unfortunately, one of the risks we highlighted in the below report materialised.”

As a refresher, Resolv’s attacker created $80 million in unbacked USR stablecoins after gaining access to the project’s private keys. As the attacker converted those tokens into Ether, USR’s peg collapsed, and they ultimately made off with just $23 million in crypto.

USR, which is supposed to stay pegged to $1, is currently trading just above 20 cents. Its mint and redeem functions have been turned off to mitigate further damage.

But Resolv Labs and USR holders weren’t the only victims of the exploit, as my colleague Liam Kelly noted in his coverage of the exploit.

Several protocols had integrated USR. Many of these protocols use a so-called curator model in which third-party asset managers create bespoke lending markets, allowing them to serve a wide range of lenders and borrowers.

“The Resolv hack isn’t just another exploit — it’s a structural failure in how DeFi prices risk,” Kevin Yang, a managing partner at Gate Ventures, wrote on X. “You can’t scale TVL to the trillions with duct-taped security.”

DeFi risk ratings firm Credora, which previously gave USR a junk rating, said the exploit touched on two issues.

“The proximate cause of the exploit was high operational risk from a single privileged access key with substantial, unchecked minting authority,” it wrote in its analysis of the incident.

“That was compounded by the absence of onchain safeguards that could have contained the damage even if the key were compromised.”

Part of the issue is that DeFi audits don’t always check for this vulnerability.

“Resolv’s smart contracts had received multiple audits from well-regarded security firms, none of which identified the privileged key vulnerability prior to the exploit,” Credora wrote.

So, what’s next?

Users have been encouraged to remove liquidity from affected vaults lest they face further losses. And Resolv has messaged the hacker, offering to end its pursuit in exchange for return of 90% of the Ether. It gave the hacker a Thursday deadline to comply.

Still, it couldn’t have come at a worse time for the industry, which is seeing widespread layoffs and poor price action despite regulatory tailwinds in the US.

“It’s feeling really dark in DeFi right now,” Jai Bhavnani, CEO of crypto company Waymont, wrote on X. “The Resolv hack felt like the final nail in the coffin. LPs are realising most protocols are too much risk, too little reward.”

Top DeFi stories of the week

This week in DeFi governance

PROPOSAL: Aave DAO considers activation of Aave v4 on Ethereum

VOTE: Spark votes to adopt a risk curation framework

PROPOSAL: Arbitrum DAO considers updating code of conduct and DAO procedures

Post of the week

Some prediction market users have a remarkable record of making huge bets on geopolitics that pay off within minutes. Nobody’s happy.

I’m ngl macro trading was more fun before the defining edge was whether you were in the inner circle of people who knew what the president was about to tweet.

— Citrini (@Citrini7) March 24, 2026

Aleks Gilbert is DL News’ New York-based DeFi correspondent. Have a tip? Email him at aleks@dlnews.com.

Fernando Martinelli, the firm’s CEO and co-founder, announced the news in a post on the Balancer governance forum on Monday, attributing it to the exploit the protocol suffered in November that saw attackers swipe some $128 million from users.

However, it isn’t the end for the decentralised crypto exchange and automated market maker.

“Balancer still has a chance to turn things around and prove to token holders who stay that there can be product market fit and sustainability,” Martinelli said.

“The next 12 months will be crucial for the team to prove this [is] possible.”

The news comes amid a wave of shutdowns, restructurings and job cuts impacting decentralised finance projects in recent weeks.

Projects that have shuttered include Tally, a DAO governance platform, Step Finance, a Solana portfolio management app, and Parsec, a DeFi and NFT data hub.

Among the reasons cited by the firms were failures to secure new funding, the impact of hacks, and misalignment with the shifting crypto market.

‘Ongoing legal exposure’

Balancer’s November exploit “created real and ongoing legal exposure” that could threaten the existence of the protocol in the future if left unchecked, Martinelli said.

“The reality is that Balancer Labs, as a corporate entity, has become a liability rather than an asset to the protocol’s future, and is just not sustainable as is without any sources of revenue.”

Balancer DAO, the protocol’s token holder collective, and the Balancer Foundation, a corporate entity that works with the DAO, will continue to operate.

Launched in March 2020, Balancer is a decentralised exchange and automated market maker primarily on Ethereum.

It pioneered self-balancing liquidity pools, where the protocol adjusts the proportion of assets in pools to maintain targeted percentage weights, even if individual token prices fluctuate.

On November 3, a hacker exploited Balancer’s code, allowing them to swap tokens at wildly favourable prices, draining the protocol’s liquidity pools.

“This was a highly sophisticated exploit,” BlockSec, a crypto security firm, said shortly after the hack.

Balancer’s future

The exploit caused investors to flee the protocol, taking its deposits from $775 million before the hack, to just $154 million as of March 23.

Martinelli said he considered shutting support for Balancer down altogether, but decided against it because the protocol is still generating revenue.

“Over the last three months, Balancer generated over $1 million in total fees annualised. That’s not nothing,” he said.

The protocol will undergo some big changes going forward, however.

Essential Balancer Labs team members will be absorbed into a new entity, called Balancer OpCo, pending a governance vote. Martinelli himself will cease to have any formal relationship with the protocol, but said he is happy to help out as an advisor.

New emissions of BAL tokens will stop completely, and all fees the protocol generates will be routed to the DAO treasury, where they will be used to buy back existing BAL tokens on the open market.

This, Martinelli said, offers BAL holders the ability to exit their investments at a fair price.

“If you believe in the restructured Balancer, you stay. If you don’t, you get a fair exit,” Martinelli said.

“That’s honest dealing, and it clears the overhang.”

Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.

Aave v4 still faces another vote in the coming weeks. But its near-unanimous support from the DAO was significant, as its impending release had become a point of contention within the DAO.

The current version of the protocol, Aave v3, is the largest in decentralised finance, with more than $25 billion in user deposits. But its creator Aave Labs has pushed for the DAO to turn its attention to v4.

That push was among several issues that led to the acrimonious departures of two major contributors to the DAO, Bored Ghosts Developing and Aave Chan Initiative. Both have said they will not seek DAO renewal of their contracts this year.

Last month, Aave Labs proposed pausing work to improve v3 and even changing its lending and borrowing parameters in order to compel users to migrate to v4.

Bored Ghosts said it was a step too far.

“We believe even proposing this on the main revenue-maker & fully functional engine of Aave, is borderline outrageous,” it wrote.

Labs later backtracked, saying there would be “no forced migration.”

“While we think it is important for the DAO to align strategically behind V4 as part of this proposal, the timeline is up for discussion,” Labs wrote in the Aave governance forum.

“Aave V3 is a battle-tested protocol, and it will continue to operate as a core part of the ecosystem for as long as the DAO decides it should.”

Still, Labs says v4 will dramatically expand the amount of revenue the DAO can collect through a hub-and-spoke model that allows for tailored lending markets without fracturing liquidity.

“At launch, [v4] will serve V3 users with higher capital efficiency and more advanced features,” the company previously wrote.

The proposal approved on Monday by the DAO prioritises security over “immediate growth.”

“It will bring V4 online with conservative parameters and minimal assets,” the proposal reads. “When live conditions support it, the DAO can lift caps, extend or resize credit lines, onboard additional assets, and configure new Hubs or Spokes.”

Aleks Gilbert is DL News’ New York-based DeFi correspondent. Have a tip? Email him at aleks@dlnews.com.

However, one part of the industry seems to have benefited from market contraction: onchain crypto options trading platforms.

“It’s one of the best things that’s happened for us,” Nick Forster, CEO and co-founder of onchain options app Derive, told DL News. “It laid bare that perps aren’t the be-all and end-all in terms of financial instruments.”

Finally, after years of failed attempts, options contracts for assets like Bitcoin and Ethereum that are created and traded directly on the blockchain, are gaining steam.

Premiums trading volume for so-called onchain crypto options soared to over $51 million so far in March — the best month on record, according to data from DefiLlama.

That’s despite waning interest in Bitcoin futures trading generally, which is down some 56% from its October peak, according to Coinglass data.

Previously, fledgling perp exchanges dominated the onchain yield generation market, according to Forster. Traders looking for low risk gains piled into these exchanges to earn token airdrops, making up to 20% annually.

But after October 10, market conditions tightened, making it harder for traders to generate the kind of profits they previously had through such strategies.

“It made options viable as a yield generation source in crypto for the first time,” Forster said. “It’s ultimately why it’s so big in traditional finance — you can generate yield in a very structured and tailored way with any form of collateral.”

Tough nut to crack

Options contracts are a kind of financial derivative that lets traders place bullish or bearish bets on financial assets. They’re already a significant part of the crypto trading market, accounting for over $41 billion worth of open interest, according to Coinglass.

Proponents argue that remaking the crypto options market on blockchain rails will increase transparency, lower barriers to entry and reduce custodial risk.

Yet despite the purported benefits, onchain options have been a tough nut to crack.

Numerous attempts have fizzled out over the years as technical limitations, a lack of interest, and fierce competition weighed on their viability.

Another factor driving the recent success is crypto’s adoption among traditional financial players.

Institutions have piled into crypto exchange-traded funds since the first US Bitcoin ETFs were approved in 2024. Many of the biggest wealth managers have begun advising clients on small allocations to Bitcoin, while Blackrock CEO Larry Fink has championed the industry on the world stage.

Wall Street firms are much more at home trading options, which are widely used to hedge trades across traditional financial markets. So interest in trading them is growing as the crypto market becomes more institutionalised.

Rethinking options

So far, most of the success has been captured by Derive, which has been working on its app since 2021. But others, such as the newly-launched derivatives app Kyan, could also help bring more attention to onchain options.

A rethinking of how onchain options work, paired with additional features unavailable on centralised counterparts, is helping apps like Derive and Kyan to compete.

“We’ve now moved into this era where the market participants no longer care as much about 100% decentralisation,” Cozy, a pseudonymous founding contributor at Kyan, told DL News. “They want something that’s onchain for transparency, but they’re willing to accept trade-offs for performance.”

By leaning into this hybrid approach, both Kyan and Derive say they have been able to make themselves competitive with centralised options trading venues.

“When you’re able to provide the same experience that people get on Deribit or Binance or, OKX trading options, you’re able to close that gap,” Cozy said.

Deribit is currently the biggest crypto options trading platform accounting for over 80% of all crypto options trading volume. US exchange Coinbase acquired it for $2.9 billion in August.

Building an options market onchain also opens the door for new features.

A big unlock offered by Derive and Kyan is called portfolio margin, which means calculating the amount of collateral a trader needs based on all their open trades instead of each individually, making options trading more efficient.

“We’re able to provide additional legs. We’re able to provide capital efficiency through portfolio margin. We’re able to provide perps and options in one place so you don’t have to switch between tabs to try to hedge out of position,” Cozy said.

David vs Goliath

Still, options likely won’t overtake perpetual futures, or perps, which are by far the most popular way for traders to speculate on crypto.

Perps are simpler to understand than options, but open up traders to the risk of getting liquidated.

Kyan’s strategy is to help guide traders through using options to make them more attractive to those who would otherwise trade with perps.

“You have to create stepping stones and easy tools if you want [retail traders] to participate,” Cozy said. “We’ve tried to make a more seamless user experience, while providing not just the same tools, but more advanced tools than are offered on the traditional exchanges.”

To be sure, Deribit’s position in the market is still strong. Open interest on the platform sits at over $35 billion compared to Derive’s $2 billion.

But Derive is edging into the incumbent’s market, according to Forster.

FalconX, a crypto prime brokerage, has been partnered with Deribit to provide asset custody and credit services since 2024. In October, the firm announced it had also partnered with Derive to provide market making services.

“There’s a lot of dealers looking for a new venue, which is great,” Forster said, speaking of Deribit. “On the taker side as well, a lot of their clientele in Asia aren’t necessarily comfortable with Coinbase.”

“Those two things create an opportunity for someone to come in.”

Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.

The attacker created 80 million in unbacked USR tokens after gaining access to the project’s private keys, Resolv Labs said Monday morning.

With those tokens minted, the attacker then swapped the USR tokens for staked versions and swapped them for Circle’s dollar-pegged stablecoin before using those holdings to buy Ether.

All in all, they made off with roughly $23 million in Ether, according to onchain data, and left USR tokenholders in the lurch.

CoinGecko shows that the USR stablecoin is now trading below $0.4, having fallen as low as $0.02.

The project’s mint and redeem functions have been turned off to mitigate further damage, the Resolv team said.

Resolv Labs’ stablecoin maintains its peg by leveraging trading strategies that balance long and short positions across volatile assets.

When users deposit Ether to mint USR, the protocol simultaneously opens equal short positions — bets the price of Ether will drop — so that no matter the asset’s volatility, the USR token is balanced.

The latest exploit, however, had little to do with this mechanism.

Private key exploit

The exploiter at Resolv Labs was able to mint 80 million USR tokens using between $100,000 and $200,000 in collateral after compromising the project’s private keys, according to Chainalysis.

They were able to override the protocol’s logic after accessing Resolv’s key management service on Amazon Web Services.

This notice is issued on behalf of Resolv Digital Assets Ltd. in relation to the Resolv protocol.

Earlier today, a malicious actor gained unauthorized access to Resolv infrastructure through compromised private key, resulting in the minting of approximately $80M of…

— Resolv Labs (@ResolvLabs) March 22, 2026

Private keys are a critical component of smart contracts, as they allow holders to perform actions they want, such as minting millions of a specific token.

The mint contract had no oracle or max mint checks in place to prevent this action, according to the co-founder of AI-enabled onchain explorer Herd, Andrew Whong.

Interoperability strikes back

Resolv Labs and USR holders weren’t the only victims of the exploit.

Various protocols that had integrated the stablecoin were also hit hard, namely those using a curator model to generate yield for their users.

Morpho Labs, a lending protocol that uses a curator model, provided a stark example of how exploits like Resolv’s can ripple across DeFi.

The Morpho protocol allows third-party managers to customise their lending pools and establish their own security parameters and token listings. These managers are called curators.

The risk falls on the curators of these pools rather than Morpho, should something go wrong.

“I want to reiterate that there is no vulnerability in Morpho contracts. They are safe and operating as intended,” Merlin Egalite, a confounder at Morpo, said on Monday.

“For guidance on vaults that may have exposure to USR or Resolv-related assets, we recommend following the relevant curator communications.”

Gauntlet, Re7 Labs, kpk, and 9summits were Morpho curators that had created customised pools — called vaults — with exposure to USR.

In some cases, these curators had automated liquidity services that continued to provide liquidity to their USR vaults hours after the exploit, further aggravating damages, the founder of Chaos Labs, Omer Goldberg, said.

In total, roughly 15 vaults with more than $10,000 in liquidity were impacted by the Resolv exploit, said Morpho co-founder Paul Frambot.

“Curators have responded quickly to a challenging situation with the Morpho team assisting where needed,” he said.

“That said, we will continue working with curators to further improve the tools available to help them through future events.”

Liam Kelly is DL News’ Berlin-based DeFi correspondent. Have a tip? Get in touch at liam@dlnews.com.

Post mortems from Aave and CoW Swap, the DeFi apps the trader used, chalked up the trade to a tragic case of user error. But not everyone was convinced by the explanation.

Some have speculated that the lopsided swap was actually an elaborate way to launder funds disguised as a terrible, yet legitimate, transaction.

That’s almost certainly not the case, according to experts.

“There are far cleaner, more efficient and less visible ways to move funds than through a trade that immediately attracts this level of scrutiny, public attention and forensic analysis,” Nikita Ovchinnik, CEO of Barter, a solver on decentralised exchange CoW Swap, told DL News.

“The sheer amount of buzz around this case cuts against the laundering theory rather than supporting it.”

Money laundering is a persistent liability in the crypto industry.

It’s hard to eliminate completely. Once one money laundering strategy has been identified and prevented, criminals spin up more in a perpetual game of whack-a-mole with crypto security firms and exchanges.

In 2023, top crypto exchange Binance pleaded guilty and agreed to pay more than $4 billion in penalties to resolve charges of money laundering and sanctions violations brought by the US government.

In 2024, BitMEX, best known for inventing the perpetual swap contract, admitted to failing to establish and maintain an adequate anti-money laundering programme.

OKX, a California-based exchange, also pleaded guilty in February 2025 to operating an unlicensed money transmitting business and violating US anti-money laundering laws.

A colossal error?

On March 12, an unknown trader attempted to use DeFi lender Aave’s website to swap $50 million worth of the USDT stablecoin for Aave tokens, in what should have been a routine transaction.

However, the permissionless apps the trader used offered a highly imbalanced trade. Despite on-screen warnings the trader accepted the swap, exchanging their $50 million USDT for just 327 Aave tokens, worth just $37,000.

Once the trade was confirmed, over a dozen arbitrage bots rushed to take advantage of the situation and extract the surplus funds using a technique called backrunning.

For many, it was hard to believe a trader could make such a colossal error with such a huge amount of money.

Yet that’s still the most likely explanation, according to 0xngmi, the pseudonymous head of DefiLlama, DL News’ sister company.

He listed several reasons why.

Firstly, the bungled transaction was sent to the Ethereum public mempool, a waiting room for transactions before they’re added to the blockchain. This, 0xngmi said, meant that anyone could have tried to extract money from the transaction, with no guarantee that it would have gone to a predetermined party.

“If it was some kind of money laundering scheme, it would have been passed directly to the backrun bot to reduce risk,” 0xngmi said.

Additionally, over $35 million from the transaction was kept by Titan, the well-known block builder who processed the transaction.

Any money launderer would need to be in cahoots with Titan, which seems highly unlikely, 0xngmi said.

Finally, significant sums were taken by Aave, CoW Swap, and liquid staking protocol Lido in fees from the transaction, making it a very inefficient way to launder money.

Creative money laundering

Suspicions that the $50 million swap blunder could be an elaborate money laundering scheme aren’t unfounded.

Crypto security experts have previously documented several unconventional and creative methods through which criminals have attempted to launder their ill-gotten gains.

Last year, a lawsuit brought against Pump.fun, a memecoin creation platform, alleged that North Korean crime syndicate Lazarus Group used the platform to launder money stolen in the $1.5 billion hack of crypto exchange Bybit.

The plaintiffs allege Lazarus Group created a memecoin called “QinShihuang,” and used stolen funds to pump its value, stimulating organic interest from other Pump.fun users, and blending illicit capital with that of retail traders before cashing out.

In 2022, Chainalysis, a blockchain security firm, also identified “small but visible” examples of criminals using marketplaces for non-fungible tokens, or NFTs, to launder money.

In this case, however, all the evidence points to the lopsided Aave trade being a tragic case of user error, analysts say.

“What’s easier, a crazy confluence of factors lead to a guy doing money laundering in an extremely inefficient way and with insane risk,” 0xngmi said.

“Or a guy simply clicked a checkbox without looking when doing a swap.”

Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.

Last week, the crypto industry looked on in horror as an unknown trader on the Ethereum blockchain immolated some $50 million by agreeing to an extremely lopsided swap, routed through permissionless decentralised finance apps.

Despite on-screen warnings, the trader agreed to convert around $50 million worth of Tether’s USDT stablecoin for 327 Aave tokens, worth just $37,000.

“Before confirming the transaction, the user was shown a clear warning on Aave’s interface indicating that the trade carried an extraordinary price impact,” Nikita Ovchinnik, CEO of Barter, a solver on decentralised exchange CoW Swap, told DL News.

“The interface required an additional confirmation step, including a checkbox acknowledging the risk, before the order was approved on a mobile device.”

Post mortems from Aave and CoW Swap, the DeFi apps the trader used, have helped shed light on the gory details.

The issue was that the trade used a liquidity pool on decentralised exchange Sushiswap that contained less than $100,000 of assets to fulfil the $50 million swap.

Many experts have since suggested additional safeguards to prevent the apps from serving up highly imbalanced trades in the future.

The question now asked by onlookers is not just how the money was lost, but where it went.

Following the money

The biggest winner of the incident was Titan, a so-called block builder on Ethereum, who profited at least $35 million, according to an onchain analysis conducted by DL News.

After the lopsided swap was executed, the liquidity pool that facilitated it became severely imbalanced. The first person to swap Aave tokens for Ether in the pool stood to receive an extremely good price on them, around 1,000 times higher than the current market rate.

Arbitrage bots rushed to take advantage of that opportunity, along with others made available by the lopsided swap.

That’s where Titan came in.

When Ethereum users want to transact on the blockchain they send transactions to the mempool — a waiting room for transactions before they’re added to the blockchain.

Block builders like Titan take those mempool transactions and fit them into blocks. Users can pay block builders tips to get their transactions included before others.

Those arbitrage bots offered to split the money they stood to make from rebalancing the liquidity pool with Titan to ensure they were the ones given first priority to do so.

The result? Titan walked away with some $35 million in tips, while the bots themselves profited around $13 million in total.

Approximately $1.2 million of those tips were split with Lido, the liquid staking protocol, as one of its validators was responsible for proposing the block that titan built.

To be sure, there was no hack or exploit. Just permissionless code working as intended, and various parties acting within the confines set by it.

Big fees

While Titan and the arbitrage bots profited the most from the $50 million blunder, they weren’t the only ones to make money.

Aave, whose website interface the trader used to submit swap, also took a cut. According to the protocol’s post mortem published on March 14, it received just over $110,000, based on a 0.25% fee the Aave website interface charges users.

Aave Labs has since offered to return the fees it collected. The trader has yet to take the company up on the offer, however.

While the trade was submitted through Aave’s website, the protocol itself didn’t execute it. That was outsourced to CoW Swap.

CoW Swap works by offering submitted trades to solvers, complex algorithms that compete to fulfil swaps at the best possible prices. If a solver can fulfil a swap at a better price than the trader agreed to, that surplus is split between the trader, the solver, and the CoW Swap protocol.

The CoW Swap solver who fulfilled the lopsided trade generated a surplus of around four Aave tokens, worth $452. The solver also earned a fee of around $340, according to Barter.

Lastly, the liquidity pools the CoW Swap solver used to fulfil the trade also took fees.

The trade consisted of two legs, the first, which converted USDT to Ether, was handled by Uniswap. The second, which converted Ether for Aave tokens at the extremely unfavourable rate, was handled by Sushiswap.

Who is to blame?

The conversation surrounding the incident now centres on who is ultimately to blame, and how such an unfortunate episode could be prevented in the future.

In its post mortem, Aave said it is implementing a new feature called Aave Shield, which automatically blocks any swap with a price impact greater than 25% by default.

CoW Swap said in its post mortem that it is investigating solver execution failures and a potential mempool leak, and plans to publish its findings in future updates.

“The user owns none of this failure,” Ehsan, a Canadian blockchain researcher, said in the aftermath of the incident.

“Aave’s CoW adapter integration created the illusion of a safer swap than the one that was actually signed. Then CoW’s solver/liquidity-selection stack took that weak order and executed it through a pool that should never have been touched for a trade this size.”

Ehsan isn’t the only one to argue that the trader isn’t responsible for the blunder.

“If an interface knows it is handling an extraordinary order, showing a warning checkbox is not enough,” Ovchinnik said.

“It should actively guide the user toward suitable execution methods.”

Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.

The perpetual contract will track the S&P 500 and allow non-US investors to gain leveraged exposure to the top index, 24/7, according to a Wednesday statement.

“We believe digitally-native investors should demand the institutional-quality standards that define our indices, and we are thrilled to work with Trade[XYZ] to do so,” Cameron Drinkwater, chief product and operations officer at S&P Dow Jones Indices, said in a statement.

Hyperliquid is a crypto-native decentralised derivatives exchange. It has seen a boom in trading with war in the Middle East as it also allows traders to bet on the price of other assets, onchain, like oil and gold.

Constant trades

When traditional markets are closed, Hyperliquid, as a crypto-native exchange, continues processing trades.

This has led to a surge in activity — especially on weekends when geopolitical tensions crescendo and Wall Street is shut.

Platforms like Trade[XYZ] have built the infrastructure to allow tokenized commodities to run on the decentralised exchange.

Unlike other trading platforms, anyone can start trading on Hyperliquid — as a DEX, it does not require know-your-customer (KYC) checks.

Wall Street push

Round-the-clock trading is a hot topic as Wall Street bigwigs push to bring real world assets onchain.

BlackRock CEO Larry Fink has for years spoken about tokenisation of assets; the boss of the world’s biggest asset manager has said blockchain rails will speed up finance and bring more transparency to the industry.

In February, BlackRock announced that it was working with decentralised exchange Uniswap to bring one of its funds onchain.

And in January, the New York Stock Exchange said it was building a platform allowing traders to buy and sell tokenised versions of US-listed equities and exchange-traded funds and settle those trades on the blockchain, 24/7.

Hyperliquid’s native token, HYPE, was trading nearly 6% higher over a 24-hour period on Wednesday, priced at nearly $43, according to CoinGecko.

Mathew Di Salvo is a news correspondent with DL News. Got a tip? Email at mdisalvo@dlnews.com.

The project, backed by payments giant Stripe and crypto venture firm Paradigm, announced the launch of its highly-anticipated blockchain on Wednesday alongside new tools to support so-called machine payments — transactions executed by artificial intelligence agents.

AI agents are autonomous software programmes designed to achieve specific goals without constant human oversight. They sit at the bleeding edge of the booming AI sector, yet doubts about their capabilities abound.

“Agents can already write code, coordinate services, retrieve data, and execute complex workflows across the internet,” Tempo said in a blog post announcing its blockchain’s launch. “But as these systems become more capable, they increasingly need to transact.”

Tempo aims to provide a standardised way for AI agents to coordinate payments for services, like accessing datasets or buying computing power, by themselves.

The launch comes as more and more crypto projects pivot to weaving AI into their offerings.

Last month, Tomasz Stańczak, a former co-director of the Ethereum Foundation, pushed for the $280 billion blockchain and its developers to utilise the technology to review and edit proposals, moderate meetings, write code, and even accept or reject network upgrades.

Several other crypto projects, including the Near blockchain and Render have also shifted their focus to AI in recent years.

‘Machine Payments Protocol’

For the longest time Tempo was teased as a blockchain purpose-built for stablecoins, tokens pegged to currencies like the US dollar, British pound, or euro.

“When we first announced Tempo in September, our premise was simple: if stablecoins become a core layer of internet commerce, the infrastructure that moves money needs to be purpose-built for payments,” Tempo said in its blog post.

Now, it appears Tempo is expanding its remit to building payments infrastructure for AI agents, too.

That will be powered by Tempo’s Machine Payments Protocol — or MPP.

The protocol lets AI agents enter a session in which they can continuously pay for services automatically, as long as they’re within pre-defined limits.

At the end of a session, those transactions can be aggregated into a single settlement transaction, which Tempo says allows the system to scale to larger and larger numbers of users — or agents — without getting clogged.

Excitement builds

Tempo has generated a lot of excitement within the crypto industry since it was first announced in September.

The project has stacked top talent in the leadup to its launch.

Last month, Farcaster co-founders Dan Romero and Varun Srinivasan joined the project. Farcaster, which Romero and Srinivasan led for the past five years, was acquired in January by Neynar, as the social media app struggled to catch on with users.

Former Ethereum Foundation researcher Dankrad Feist joined Tempo’s ranks in October, while Optimism Labs CEO Liam Horne and Rice University Professor Mallesh Pai also joined late last year.

Tempo has already inked over a dozen high-profile partnerships with AI firms Anthropic and Open AI, payments firms Mastercard and Visa, and neobanks Nubank and Revolut, among others.

Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.

GM, Tim here.

A Friday manifesto from the Ethereum Foundation has driven a wedge between the blockchain’s most ardent supporters.

The 38-page document reaffirms the foundation’s commitment to cypherpunk principles — censorship resistance, open source, privacy, and security — as non-negotiable foundations.

The issue? Many Ethereum backers say it signals that the nonprofit is turning its back on the transformation it made under Tomasz Stańczak, who resigned as co-executive director last month.

During his tenure, Stańczak worked to help Ethereum achieve greater commercial success through pioneering business development, engaging institutions, and supporting those building apps on the blockchain — many initiatives that are now coming into fruition with Wall Street’s adoption of the blockchain.

“The EF Mandate is a 180 from the direction the Foundation was heading under the recent leadership changes,” said Kydo, a DeFi veteran and chief of staff at Eigen Labs.

“A few months ago, the signal was clear — lean into real-world adoption, support stablecoins, engage with institutions, help Ethereum win the race for relevance. Tomasz was brought in to operationalise that pivot. This document effectively undoes most of it.”

Other prominent critics of the new mandate include Dankrad Feist, a former Ethereum Foundation researcher; Mason Nystrom, an investor at Pantera Capital; and Yuga Cohler, a senior engineering manager at Coinbase.

Many Ethereum believers are frustrated that the main guiding force behind the $280 billion blockchain appears to be more focused on ideology than prioritising commercial success.

They often cite Ethereum’s lagging price as the most visible victim.

Since the bottom of the previous crypto bear market, Bitcoin has rallied some 348% while Ethereum has gained just 130%.

‘Unhinged’

When Ethereum was launched all the way back in 2015, its goals were to create a neutral platform for decentralised apps and promote trust minimisation and security.

But as the years went by, rival blockchains popped up trying to outcompete Ethereum by offering faster transactions and cheaper fees.

At the same time, interest in blockchain technology from traditional financial institutions put additional pressure on Ethereum to commercialise, lest it be overtaken and outcompeted by one of those upstart rivals.

“This manifesto is so unhinged,” Awa Sun Yin, co-founder of blockchain interoperability project Anoma, said.

“It’s not written by an organisation that’s finally growing up. Quite the opposite, it looks like the organisation is stuck in their idealistic adolescence while completely ignoring the reality of what’s needed to further the industry.”

‘Principles matter’

In contrast, those on the other side of the argument say Ethereum — and blockchain technology in general — shouldn’t allow itself to be co-opted by an industry that it was designed to compete against.

“The mission is so simple, yet so powerful: Make the individual unruggable,” Pascal Caversaccio, an independent Ethereum security researcher, said.

“Not by fucking governments. Not by fucking corporations. Not by fucking institutions. Principles matter because without them every system eventually becomes another way to fucking control people.”

The debate between ideology and commercial success is becoming a heated issue as Ethereum faces competition from a cohort of new commercially focused blockchains.

They include Tempo, a stablecoin-focused blockchain backed by payments giant Stripe, and Canton Network, a blockchain aimed at financial institutions and backed by major banks including Goldman Sachs, among others.

Yet as traditional finance becomes more and more entangled with the crypto industry, the Ethereum Foundation may be the only organisation able to stay true to crypto’s founding principles.

“EF currently is the only player with both the resources and network effects to not just keep the cypherpunk dream alive but also to actually make it happen,” Evgeny Gaevoy, CEO of crypto market maker Wintermute, said.

“Will this accrue to ETH price wise short term? Certainly not. Will it accrue to it long term? Only if it wins.”

Top DeFi stories of the week

This week in DeFi governance

VOTE: Fluid DAO votes to fund new foundation with $250,000 as part of approved monthly grant scheme

TEMP CHECK: Aave DAO weighs in on licensing for the protocol’s upcoming fourth version

VOTE: Compound DAO votes to top up COMP token rewards for users of Ethereum and Optimism versions

Post of the week

Crypto pundits slam former UK Prime Minister Boris Johnson’s poorly executed criticism of Bitcoin.

What's really funny about this Daily Mail piece written by boris johnson is that they publish this photo as if it genuinely is satoshi

the daily mail is the top digital newspaper in the uk

madness pic.twitter.com/OeaBWJOVz4

— Joe Nakamoto ⚡️ (@JoeNakamoto) March 16, 2026

Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.

Like Eisenberg, Peraire-Bueno made millions when he took advantage of a design flaw in crypto software, the attorney said. And, like Eisenberg, Peraire-Bueno should be acquitted, he added.

Prosecutors have charged Peraire-Bueno and his brother Anton Peraire-Bueno with wire fraud, as well as conspiracy to commit wire fraud, launder money, and receive stolen property.

But a month-long trial ended last November with a hung jury.

Prosecutors want a retrial, which could begin later this year. But the brothers have asked the judge to toss all charges, arguing the government never presented enough evidence to secure a conviction.

Friday’s hearing was scheduled to settle the brothers’ request. Judge Jessica Clarke said she would issue a ruling on the matter before potentially scheduling a new trial, which would not begin before November.

The case is highly technical, covering the complex market that determines how pending transactions are ordered and settled on Ethereum.

Still, it’s the latest criminal case to seize the attention of US advocates of decentralised finance.

Crypto think tank Coin Center has called the brothers’ prosecution a “radical” attempt to “impose a novel and alien code of conduct” on Ethereum validators, the people running the software that powers the $88 billion network.

A conviction would “massively chill public participation in these innovative systems,” Coin Center wrote in a letter to the court last year. The DeFi Education Fund has also submitted a letter to the court arguing for the brothers’ acquittal.

‘Attacking Ethereum’

In 2024, the MIT-educated brothers were accused of “attacking Ethereum” and stealing $25 million from three traders.

The scheme was a classic bait-and-switch. It took advantage of the three traders’ MEV bots — Ethereum-based, automated trading programmes that scan the blockchain seeking profitable opportunities to front-run pending transactions.

The complicated scheme began when the brothers created more than a dozen Ethereum validators.

When one was selected to add a new block to the network, the brothers quickly proposed a “bait transaction” meant to trick the MEV bots into buying $25 million in illiquid crypto.

The bots expected to be able to buy, and then quickly sell the crypto at a profit.

Instead, the brothers were able to trick another component of the Ethereum block-building system known as MEV-boost into revealing the contents of the pending block.

That allowed the brothers to “tamper” with the block, changing the bait transaction from a purchase into a sell order, according to their indictment. That effectively put $25 million in stablecoins and other cryptocurrencies into the brothers’ pockets, leaving the bots holding the illiquid crypto.

Finally, the re-ordered block was added to Ethereum, sealing the transaction on an immutable ledger.

In the courtroom

The debate in the courtroom on Friday focused on the wire fraud charge and, specifically, whether a proposed transaction, such as the bait transaction, amounted to a “promise.”

Prosecutors argued switching the bait transaction from a purchase to a sale was a deception, as was the brothers’ use of a so-called invalid signature — the move that tricked MEV-boost into revealing the contents of the block that contained the bots’ orders.

James Peraire-Bueno’s attorney, Patrick Looby, disputed this.

“There was nothing in the lure transactions themselves that made a promise about that relative order” of transactions in the block, he told Judge Clarke.

Looby pointed to last year’s acquittal of Eisenberg, who had tricked the DeFi protocol Mango Markets into letting him borrow millions of dollars in crypto against nearly worthless collateral.

The judge in that case acquitted Eisenberg of his fraud charge, in part because the trader had merely taken advantage of a flaw in Mango’s design, and the service lacked any terms that forbade his behaviour.

Similarly, Ethereum and MEV-boost lack any terms of service, Looby said.

“What about the slashing penalty itself?” Clarke asked, referring to a penalty the brothers incurred when they submitted the invalid signature. “Does that operate like a rule?”

No, Looby shot back — it was merely a “disincentive.”

‘Deception, tricks’

Assistant US Attorney Danielle Kudla said it was up to jurors to decide whether the brothers had defrauded traders on Ethereum.

Whether there were terms of service was beside the point, she continued. Nearly every step the brothers took was done to trick the bots.

“This case has always been about deception, tricks, misrepresentations on the blockchain,” she said.

The bait transactions were designed to lure those specific bots, according to the prosecutor. At trial, the bots’ owners said they would not have allowed the programmes to execute those fateful transactions had they known what would happen next.

While MEV-boost didn’t have terms of service, it did have specifications stating the software was designed to prevent validators from modifying blocks. Moreover, MEV-boost creator Flashbots rushed to fix the bug that allowed the invalid signature, pushing a patch within 24 hours of the incident.

That made the case very different from Eisenberg’s, Kudla said. And prosecutors have appealed the judge’s decision to acquit Eisenberg, she added, suggesting courts have a ways to go before settling debates around blockchain-based fraud.

Tornado Cash co-founder Roman Storm has a similar motion for acquittal pending in the same court. His hearing is in April.

Aleks Gilbert is DL News’ New York-based DeFi correspondent. Have a tip? You can reach him at aleks@dlnews.com.

The digital cooperative that runs Sky voted on Thursday to reduce the buyback programme from $300,000 per day to $37,600 per day, an 87% reduction.

The reduction will last just three months. Sky founder Rune Christensen has suggested it is a necessary precaution due to the war in Iran.

“The world is about to experience a massive oil shock and a lot of financial infrastructure will break from this,” he wrote in the cooperative’s Discord server this week.

But critics say it was an overdue move, given the declining resources backing USDS and DAI, the two stablecoins issued by Sky, formerly known as Maker.

In recent weeks, the supply of USDS has surged, according to DefiLlama data. Over the past 30 days, it has grown more than 22%, to about $7.9 billion. DAI has grown almost 2% in that span, to $4.5 billion.

At the same time, Sky’s aggregate backstop capital — the surplus crypto meant to stabilise USDS and DAI in the event they become undercapitalised — has held flat, at about $50 million.

“This Sky Protocol governance proposal is part of a broader capital scaling strategy to build up the protocol’s backstop,” Sky wrote in a post on X this week.

“This adjustment would improve capital efficiency, preserve flexibility, and support the long-term strength of USDS and the wider Sky ecosystem.”

Buyback programmes have soared over the past year as DAOs — the digital cooperatives that manage major DeFi protocols — rush to juice the value of their languishing tokens.

So-called governance tokens grant membership in DAOs, empowering investors to propose and vote on changes to major decentralised financial protocols, such as Lido, Aave, and, of course, Sky.

But investors have shown little interest in running DeFi protocols. Votes often fail to reach quorum, even as DAOs functionally pay members to participate via token-based incentive programs.

Several DAOs established buyback programmes funded by protocol revenue. That, in theory, would tie the tokens’ value to the success of those protocols, some of which generate hundreds of millions of dollars in fees every year.

The practice has its critics, who say the money would be better spent on growth initiatives.

Still, Sky members stood by the buyback programme even as some warned the protocol’s backstop capital — also referred to as its surplus buffer — was hitting multi-year lows.

Last year, ratings agency S&P Global gave Sky a B- credit rating, putting USDS and DAI on par with government bonds from the Democratic Republic of the Congo. That was due, in part, to its low surplus buffer.

“We see Sky’s capital and earnings as a material ratings weakness given the protocol’s limited amount of surplus reserve buffer to cover potential credit losses on the assets and its weak earnings capacity,” S&P wrote in its assessment.

Since February 2025, Sky has used $300,000 in USDS every day to purchase SKY, the protocol’s governance token. It then distributes those tokens to SKY stakers. Staking is required to participate in Sky governance, meaning the buyback programme effectively serves to incentivise participation among the DAO’s members.

Those buybacks have cost Sky $116.6 million in USDS tokens since February 2025, according to data gathered by BlockAnalytica.

Pausing buybacks will allow Sky to replenish the buffer, proponents have said. And even if it failed to stabilise USDS and DAI, Sky has other mechanisms to ensure its stablecoins remain on-peg, according to Christensen.

Those include issuing and selling new SKY tokens and clawing back crypto used to capitalise Sky subsidiaries such as Spark, Christensen wrote last month. As of Thursday, Sky could claw back about $25 million in such crypto.

SKY has increased about 5% over the past week, to eight cents per token. Bitcoin and Ethereum are up 0.5% and 1.8% over that span, respectively.

Aleks Gilbert is DL News’ New York-based DeFi correspondent. Have a tip? You can reach him at aleks@dlnews.com.

In an internal Slack message shared on social media on Thursday, Jing Wang said that the company was letting go of 20 employees.

“This is about doing fewer things well, making decisions faster, and reducing coordination overhead,” he said.

Parting employees will get between three and five months of base pay as severance, as well as six months of healthcare benefits.

OP Labs builds the layer 2 network called Optimism. The company launched the mainnet on December 21.

As one of the very first layer 2 networks to hit the market, it now hosts hundreds of decentralised financial applications, according to DefiLlama.

The layoffs come fast on the heels of Coinbase, the largest crypto exchange in the US, leaving the so-called Optimism Collective in February.

A spokesperson for Optimism confirmed with DL News at that time that Coinbase will stop sharing revenue from its layer 2 network, Base.

That revenue has topped $16 million over the course of the partnership.

“This is a hit to near-term onchain revenues,” Wang said. “But as Crypto Twitter has been saying for ages, we needed to evolve our biz model.”

In Wednesday’s message, Wang added that OP Labs is well-capitalised and has sufficient runway to continue operations.

Crypto goes institutional

With dwindling token prices in 2026, OP Labs isn’t the only crypto firm to trim its headcount.

In January, Polygon Labs reportedly laid off roughly 60 employees, and Mantra, a layer 1 blockchain focused on real-world assets, announced significant staff reductions as part of a restructuring.

Meanwhile, as clearer regulations in the US come into focus, larger institutions and banking groups are entering a hiring spree for top crypto talent.

BlackRock, Citigroup, Visa, Fidelity, Mastercard, and JPMorganChase are all hiring for dozens of blockchain- and crypto-related roles, according to their respective careers pages.

The roles are myriad, ranging from fraud prevention to tokenising assets to leading cybersecurity.

Liam Kelly is DL News’ Berlin-based DeFi correspondent. Have a tip? Get in touch at liam@dlnews.com.

Founder Hart Lambur explained the rationale succinctly on social media on Wednesday.

“Having a token generally hurts more than it helps,” he wrote.

The proposal concerns Across Protocol, a so-called bridge that allows users to move crypto between otherwise siloed blockchains. Across was the fourth-largest bridge when measured by user deposits on Wednesday.

Across is governed by investors who hold the ACX token. Risk Labs has proposed creating a private company, and converting current investors’ tokens into shares in that company. Alternatively, Risk Labs could buy out ACX holders who are uninterested in shares in the new company, according to the proposal.

The proposal comes amid a crisis of confidence for proponents of DAOs. The digital cooperatives were meant to provide a more democratic way to structure businesses, offering token-gated membership that empowered investors to suggest and vote on ways to improve a protocol.

But many of these so-called governance tokens have languished, and the DAO model has proven controversial, suffering low engagement and claims of “decentralisation theatre.”

Most recently, the DAO that manages Aave, the world’s largest decentralised financial protocol, saw months of bitter infighting that culminated in the planned departure of two prominent service providers.

In its proposal, Risk Labs said its token-centric management model has prevented it from striking deals with other companies.

“Transitioning to a traditional legal entity would meaningfully improve our ability to enter enforceable contracts, structure revenue agreements, and deliver more value to Across stakeholders,” the proposal reads.

The value of ACX doubled after Risk Labs’ proposal was published on Wednesday, jumping to more than six cents per token. That suggested many investors also saw the DAO model as a drag on Across’ fortunes.

Lambur said transitioning to a private company would allow Across to focus on stablecoins and artificial intelligence, two sectors that are expected to boom in the coming years.

According to the proposal, tokenholders could exchange their tokens for shares in the new company on a one-to-one basis.

“All token holders—institutional investors, employees, everyday token holders—are treated the same,” the proposal reads.

But there’s a catch: that option would be limited to ACX holders with more than 5 million tokens, a quantity worth about $30,000 as of Wednesday evening.

Another 100 US-based investors and roughly 500 international investors would be able to swap tokens for shares through a special-purpose vehicle. But that option would also be limited to investors with a certain number of ACX tokens, according to the proposal.

ACX holders who don’t meet that criteria or who aren’t interested in shares would be able to sell their tokens for four cents apiece — a 25% premium on the token’s pre-proposal price.

Risk Labs has also built the Uma protocol, which helps to settle disputes on Polymarket.

Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can reach him at aleks@dlnews.com.

Those prosecutors called privacy a “cover story” and a “distraction” during their closing argument in Storm’s first criminal trial last July.

“The real money wasn’t in so-called ‘privacy’ for normal people,” prosecutor Benjamin Gianforti said. “It was in hiding dirty money for criminals.”

But it didn’t quite convince the jurors, who were split on the two most severe charges: conspiracy to launder money and conspiracy to evade sanctions, each of which comes with a maximum prison sentence of 20 years.

Jurors did convict on the third, lesser charge of operating an unlicensed money-transmitting business, which comes with a max sentence of five years.

Storm decried prosecutors’ decision on X on Monday night. He said he was being pursued “for writing open-source code. For a protocol I don’t control. For transactions I never touched.”

“A jury already couldn’t agree this was criminal,” he continued. “But the SDNY prosecutors want to keep trying with the hope of getting a different answer.”

In a two-page letter to Judge Katherine Polk Failla, prosecutors said they were ready to begin a retrial “this spring,” but were told the defence wouldn’t be ready before September.

Prosecutors requested that the new trial begin on October 5 or 12, “to avoid the emergence of further scheduling conflicts and any additional delays.” They expect it to last three weeks.

But the feds’ request doesn’t necessarily mean there will be a second trial.

After the first one ended, Storm asked Failla to toss all three charges. Prosecutors’ evidence did not prove he had acted with criminal intent and that the case should never have been tried in New York, he argued.

Storm has a hearing on that motion scheduled for April 9. And a recent decision from Failla suggests she’s sympathetic to some of the arguments he and his supporters have made in his defence.

This month, Failla dismissed a class-action lawsuit targeting the creators of Uniswap, the world’s largest decentralised exchange.

That lawsuit was filed by traders who lost money on “scam tokens” they found on Uniswap.

Here’s the judge’s take, summed up in a single sentence: “Plaintiffs cannot hold defendants liable for the misconduct of the unidentified third-party issuers.”

And that sounds a lot like the argument one of Storm’s attorneys, David Patton, made during the first trial’s closing arguments.

Tornado Cash makes it difficult, if not impossible, to trace crypto transactions on Ethereum and several other blockchains.

“Did that make it very useful to criminals? Of course it did,” Patton said. But that was true of many other everyday items.

“Probably the most obvious example is something you check in at the courthouse every day: your phone.”

Top DeFi stories of the week

This week in DeFi governance

VOTE: Sky votes to reduce buybacks for three months

VOTE: World Liberty Financial votes to introduce staking system

VOTE: Uniswap DAO votes to extend incentives campaign

Post of the week

Wise words. Remember this every time you stumble upon a new Twitter beef.

A few personal thoughts on competition.

First, and most importantly, life’s way too short to have real enemies. So don’t ever take competition too seriously. Their job is to beat you and your job is to beat them. Everything else is tactics. Some of which can be very annoying,…

— Michael Bentley (@euler_mab) March 4, 2026

Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can reach him at aleks@dlnews.com.

Hyperliquid’s HYPE token is now the fund’s largest non-Bitcoin position, Hayes said in a lengthy newsletter post on Monday.

It would pay off handsomely if Hayes’ forecast comes to pass: He predicts that HYPE tokens will hit $150 by August, a fivefold increase from their Monday price. He cited Hyperliquid’s aggressive buyback programme, the rapid growth of its permissionless markets, and the end of competitors’ incentive campaigns.

HYPE has soared more than 9% since Hayes’ comments were published.

The surge can also be attributed to traders rushing in to trade tokenised oil perpetuals on the decentralised exchange over the weekend amid the escalating conflict in the Middle East.

More than $160 million in oil contract volume changed hands on Hyperliquid in the past 24 hours.

“Pandora’s box is open,” Hyunsu Jung, CEO of Hyperliquid treasury firm Hyperion DeFi, told DL News. “The narrative around onchain financial services is changing.”

History of predictions

Hayes is and influential trader. But the BitMEX founder is known for making bold predictions, only to quickly reverse course.

Last year, he predicted Hyperliquid’s annualised fees would grow more than 100-fold by 2028, to $258 billion. A month later, a Maelstrom colleague published a report arguing HYPE would take a hit as its creators began selling previously locked tokens, and the fund sold some $5 million in HYPE.

Since then, HYPE has fallen from about $45 per token. It hit an eight-month low of $20 at the end of January, but has since recovered to about $34.

While Bitcoin continues to trade below $70,000 — far from the all-time high it hit last year — exchanges such as Hyperliquid can see profits rise even during downturns, Hayes argued. That’s because a downswing in prices can lead to increased trading and, in turn, exchange revenue.

Moreover, Hyperliquid spends roughly 97% of its revenue on buying back its token.

“No other project in all of crypto hands as much money back to token holders as Hyperliquid,” Hayes wrote.

His $150 price target requires Hyperliquid to grow its 30-day, annualised revenue to $1.4 billion, a figure it hit last August. Hayes says that is possible if the outsize growth of Hyperliquid’s permissionless markets, introduced in October, continues over the next several months.

“Hyperliquid must give traders something new and shiny to trade on-chain,” he wrote.

Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can reach him at aleks@dlnews.com.

Analysts at Kaiko measured revenue for various blockchain networks, including Solana and Ethereum, using 2025 data and found that all but one network posted annual losses.

More importantly, a new institutional demographic is taking a much harder look at these numbers, thanks in part to the arrival of spot crypto exchange-traded funds.

“This exposes an uncomfortable reality the market has largely ignored,” wrote Laurens Fraussen, a research analyst at Kaiko, on Tuesday.

“While these protocols were never designed to run as traditional businesses, this matters increasingly for the investors, institutions, and retail traders who now hold these tokens.

Blockchain business

Blockchain revenue, unlike revenue ginned up by a traditional company, follows a slightly different arithmetic.

Networks like Ethereum, Solana, and Tron are constantly issuing new native tokens to pay validators for securing the network.

This constant issuance, not unlike equity issuance from a traditional company, dilutes the value of existing token holders and should be understood as a cost on the network.

That doesn’t mean that these networks aren’t generating revenues. Last year, Ethereum raked in over $260 million while Solana generated $170 million.

It’s just that this revenue is being outpaced by inflationary pressures on the token’s price due to constant dilution.

“Ethereum and Solana generate meaningful revenue, $260 million and $170 million, respectively,” Fraussen said. “But inflation costs of $1.88 billion and $4.32 billion make both deeply unprofitable to holders.”

What’s driving Tron?

Meanwhile, Tron raked in $624 million last year while incurring very little inflationary costs.

In fact, in 2025, the Tron network was destroying more of its native TRX token than it was issuing, creating a deflationary supply dynamic, according to Fraussen.

The latest date paints a similar picture. Tron continues to lead blockchain revenue by chain, according to DefiLlama.

The Tron network has established itself as the primary blockchain for stablecoin transactions, providing it with a steady revenue stream.

“The result is a revenue floor that Ethereum and Solana lack,” said Fraussens, “where fee income tracks speculation rather than utility.

Liam Kelly is DL News’ Berlin-based DeFi correspondent. Have a tip? Get in touch at liam@dlnews.com.

Court victories come hard and fast for Uniswap right now.

Last month, a judge dismissed a patent infringement lawsuit brought against Uniswap by Bancor, a competing decentralised exchange.

Now, another federal judge has dismissed the final element of a class action lawsuit that targeted Uniswap’s creators.

Unlike the patent infringement case, this one is a win for decentralised finance writ large.

Here’s why.

The lawsuit was brought in 2022 by traders who lost money on “scam tokens” they found on Uniswap. But those scammy tokens weren’t created by Uniswap. In fact, their issuers have never been identified.

Here’s the judge’s take, summed up in a single sentence: “Plaintiffs cannot hold defendants liable for the misconduct of the unidentified third-party issuers.”

This is a recurring theme in crypto litigation. Victims of a purported crime looking for someone to blame often turn to the platform where the crime occurred, rather than the anonymous perpetrators of said crime.

The reason is obvious. True DeFi protocols are permissionless and immutable. That first term means that anybody can use the protocol, no questions asked. The second means that nobody, not even the protocols’ creators, can change the protocols to, say, limit access to “good guys.”

This freedom is a double-edged sword, allowing all kinds of malfeasance in the world of DeFi.

Take, for example, the criminal trial of Roman Storm. The software engineer was charged with conspiracy to launder money and evade sanctions after he released Tornado Cash, a protocol that helps users obfuscate their onchain crypto movements.

One of those users was North Korea, which used the crypto mixer to launder some $500 million in stolen crypto.

Jurors were deadlocked on the money laundering and sanctions evasion charges. But they convicted him of a lesser ofense, operating an unlicensed money transmitting business. He faces up to five years in prison.

In Uniswap’s case, traders from North Carolina, Idaho, New York, and Australia alleged they used a website built by Uniswap Labs to access the Uniswap protocol. There, they found and purchased 38 tokens that turned out to be rug pulls or pump-and-dump schemes.

The traders sued Uniswap, alleging it was functionally an unregistered broker-dealer and that it had aided and abetted fraud.

In 2023, a federal court dismissed the claims, arguing their concerns were “better addressed to Congress than to this Court,” as Judge Katherine Polk Failla put it in her Monday ruling, which included a brief history of the case.

“After all, no plaintiff would sue the New York Stock Exchange or NASDAQ for tweeting that its exchange was a safe place to trade after that plaintiff had lost money due to an issuer’s fraudulent schemes,” the judge’s 2022 ruling read.

Last year, an appellate court dismissed the traders’ appeal. But it asked the lower court to reconsider the allegations made under state law. The traders filed an amended complaint that added fresh state-level charges.

On Monday, Failla said the complaint suffers the same flaw as its predecessors.

“Despite three chances to get it right, Plaintiffs remain unable to allege plausible claims,” she wrote. “Plaintiffs’ theories of liability are still predicated on Defendants having ‘facilitated’ the scam trades ‘by providing a marketplace and facilities for bringing together buyers and sellers of Tokens[.]’”

Uniswap founder Hayden Adams took a victory lap on social media.

“If you write open source smart contract code, and the code is used by scammers, the scammers are liable, not the open source devs,” he wrote. “Good, sensible outcome.”

Top DeFi stories of the week

This week in DeFi governance

VOTE: Aave DAO votes to deploy on Monad

VOTE: Lido DAO votes to establish auto-renewing delegate incentive program

VOTE: Arbitrum DAO votes to use new quorum model

Post of the week

As my colleague Liam Kelly just reported, Aave DAO service provider and delegate Aave Chain Initiative is rage-quitting. It’s a profound development in a long-running civil war over the fate of the largest DeFi protocol, so I’m giving you three standout posts this week.

https://t.co/74E9xB7jj8 pic.twitter.com/lRrv4AkVG7

— Marc ”七十 Billy” Zeller (@Marczeller) March 3, 2026

GG, one of the few remaining functioning DAOs is folding back under founder control - similar happened to Maker / SKY

FWIW I think its safe to conclude DAOs in this form are dysfunctional and not competitive with traditional org structures, they only work to a point

I hope… https://t.co/wl908Mnotu

— daddy fiskantes ⭐️🩸 (@Fiskantes) March 3, 2026

Most DAOs were never about distributing power. They've just been LARPing to pass the "Howey Test" and avoid security laws.

Under current administration you no longer have to pretend. Not worth it to participate when you realize it's just a plutocracy with extra steps.. https://t.co/dbwIKVEvaZ

— Wesley— oss/acc (@wslyvh) March 3, 2026

Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can reach him at aleks@dlnews.com.

Marc Zeller, the founder of ACI, announced the move on Wednesday via a governance post.

In the post, he outlined that his firm, which conducts business development and manages governance for the wider Aave community, will wind down its operations over the next four months.

Zeller pointed to a crucial governance vote that passed on Saturday, which moved forward a proposal to grant Aave Labs, the core development firm behind the protocol, “the largest budget in DAO history.”

Stani Kulechov, the Finnish founder of Aave and CEO of Aave Labs, said the protocol will continue to operate as normal during the transition.

“We thank Marc for everything he has contributed and wish him well,“ Kulechov said on Tuesday.

A decentralised autonomous organisation is a community of token holders who can vote and propose amendments to a specific DeFi protocol to enhance it.

Zeller alleged that the vote was backed almost entirely by crypto addresses linked to the Labs entity.

“There is no role for an independent service provider in an environment where the largest budget recipient holds undisclosed voting power and uses it on its own proposals,” the post reads.

ACI’s exit from the largest protocol in decentralised finance is just the latest salvo in what has been a tumultuous passage for Aave.

Aave’s bumpy ride

Last month, BGD Labs, the developer team that deployed major updates to the latest iteration of the Aave Labs-built codebase, called V3, also exited the ecosystem.

The project’s native AAVE token plummeted 6% on February 20 after “the most productive engineering team” called it quits.

Zeller told DL News today that this event was the final straw.

“Everything was entirely preventable,” he said.

The primary contention revolves around a protracted conflict between Aave Labs and the purported agency that its DAO actually enjoys.

This could include hiring – or firing – a new auditor to revise the code or whether a protocol should launch on a new blockchain network.

In December, the community issued a proposal to transfer all of the project’s intellectual property, including social media accounts and the aave.com website, to the DAO. That proposal failed on Christmas Day.

To defuse the conflict, Labs proposed directing all revenue from Aave-branded products, including the Aave website, to the DAO.

But that proposal also included language “ratifying” Aave V4 as the “core technical foundation for future development.”

That would mean pausing work on Aave V3 and even changing its lending and borrowing parameters to compel users to migrate to V4 — a red line for BDG Labs.

The organisation viewed pausing work on a robust, lucrative version of the protocol’s codebase to move users to an unproven version as reckless.

As for what’s next, Zeller said he’s keeping an eye on what BDG Labs will do next.

“If they build a protocol, I’ll join,” he told DL News. “But now, I need time to wind down gracefully.”

Update: This story was updated on March 3, 2026, at 5 pm CET to include a comment from Aave Labs CEO, Stani Kulechov.

Liam Kelly is DL News’ Berlin-based DeFi correspondent. Have a tip? Get in touch at liam@dlnews.com.

The proposal passed a so-called snapshot vote with more than 52% of votes cast in its favour and 42% in opposition.

Kulechov’s company, Aave Labs, has already amended the proposal in response to DAO feedback. Last week, Labs relaxed its aggressive timeline for moving Aave users to a newer version of the Aave protocol, v4.

The initial timeline frightened some members of the DAO, who said it was a risk the digital cooperative could not afford. More three-quarters of the DAO’s $286 million in lifetime revenue has come from the current version of the protocol, v3, according to data from TokenLogic.

V4 is currently undergoing security audits and is expected to be released later this year.

The controversial, wide-ranging proposal would have Aave Labs direct all revenue from Aave-branded products to the DAO. Such products include aave.com and the Aave mobile application.

But it would also have the DAO pay Labs $25 million for ongoing product development, another $17.5 million “payable upon specific product launches,” and 75,000 Aave tokens, worth about $9 million at Monday’s prices.

Critics have said that request is too steep, given the size of Aave’s treasury.

“We recognise there are many improvements based on feedback to be made to get the proposal to its final stage,” Aave Labs said on the DAO’s forum on Sunday.

“The goal is a token-centric model that positions Aave for the next decade of growth.”

Margin of Victory

The vote comes amid a heated debate over the future of the DAO and the Aave protocol.

Aave v3 is the largest protocol in DeFi, with nearly $27 billion in user deposits. But Labs has pushed for the DAO to turn its attention to v4, arguing it could dramatically boost protocol revenue.

“Aave V3 has served the protocol well, but it is approaching its architectural limits,” Labs wrote in the proposal. “V4’s architecture expands the range of revenue models the protocol can support.”

But prominent members of the cooperative have criticised Labs over its growing influence in DAO affairs. Marc Zeller, the head of Aave Chan Initiative, an Aave DAO delegate and service provider, previously referred to it as a “slow-motion coup.”

On Monday, Zeller said ACI would not continue debating the proposal, citing Kulechov’s use of Aave tokens to sway the outcome of the vote.

“The dice are loaded,” Zeller wrote in the Aave DAO governance forum.

“Continuing to negotiate inside a process where the outcome is predetermined does one thing: it gives that process legitimacy it hasn’t earned. We won’t do that.”

But Blockchain Capital General Partner Aleks Larsen said the proposal’s margin of victory would have been higher if his firm could participate in snapshot votes.

“A number of funds with material AAVE positions, Blockchain Capital included, hold tokens at a custodian that had deprecated Snapshot support,” he wrote.

“We were planning on signaling Yae in support of moving the Aave Labs proposal forward in the governance process, and had we and other institutional investors at this custodian had not been limited, we believe the proposal would have succeeded by a materially larger margin.”

Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can reach him at aleks@dlnews.com.

That’s frightened delegates who say it’s a risk the DAO cannot afford — the current version of Aave, v3, is a smash hit, and its would-be replacement, v4, has yet to see the light of day.

This week, the critics notched a small victory. Before voting began on Wednesday, Aave Labs, the company behind the proposal, relaxed its aggressive timeline for moving Aave users to v4.

“While we think it is important for the DAO to align strategically behind V4 as part of this proposal, the timeline is up for discussion,” Labs, the company that built the protocol, wrote in the Aave governance forum earlier this week.

“Aave V3 is a battle-tested protocol, and it will continue to operate as a core part of the ecosystem for as long as the DAO decides it should.”

Voting is set to end on Saturday. As of Friday evening, “aye” votes held a narrow lead, with 52%.

Contractor departure

With more than $26.3 billion in user deposits, Aave is the largest protocol in decentralised finance. V3 accounts for more than 97% of Aave’s deposits, according to DefiLlama data. It has generated $184 million in revenue since its launch in 2022.

Before Labs’ about-face this week, it had proposed pausing work to improve v3 and even changing its lending and borrowing parameters in order to compel users to migrate to v4.

That didn’t just anger delegates. Bored Ghosts Developing, a major Aave DAO contractor founded by a former Labs executive, said it would not seek renewal of its contract this year.

“We believe even proposing this on the main revenue-maker & fully functional engine of Aave, is borderline outrageous,” Bored Ghosts wrote.

On Monday, Labs said it would not seek to force users to move to v4 after all.

“If a V3 market serves a particular chain or ecosystem well, the DAO has the authority to keep it running indefinitely,” the company wrote. “V4 also brings new use cases and opportunities that do not exist on V3, which we expect will drive adoption on its own terms … There will be no forced migration.”

Funding request

The proposal went well beyond cementing v4’s status as the future of the Aave protocol, however.

Labs has proposed directing all of its revenue from Aave-branded products to Aave DAO. It is a concession to critics who were furious to learn in December that Labs had ended its practice of sending the DAO certain revenue from aave.com, a website the company built.

The company has also proposed creating a foundation that would own and defend Aave trademarks, as well as a service provider agreement with the DAO that would see the cooperative pay Labs $25 million for ongoing product development and another $17.5 million “payable upon specific product launches.”

The proposal garnered several prominent supporters. But it also drew scepticism from major delegates, including Marc Zeller, one of Labs’ fiercest critics in recent months.

Zeller said the requested payment was far too high, amounting to 31% of the DAO’s war chest. Among other things, he requested that Labs break up its asks into multiple votes.

“Each stands on its own merits,” he wrote. “The community can support what it agrees with and refine what it doesn’t.”

Instead, Labs advanced the proposal to an initial vote.

Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can reach him at aleks@dlnews.com.

The price of the Uniswap token, UNI, has outperformed major cryptocurrencies over the past seven days, rising 9% in that span as of Friday afternoon New York time. Bitcoin and Ethereum, meanwhile, fell 3.5% and 2.4%, respectively.

The proposals would activate Uniswap’s so-called fee switch on two versions of the Uniswap protocol deployed across eight layer 2 blockchains: Base, Arbitrum, OP Mainnet, World Chain, X Layer, Celo, Soneium, and Zora.

Activation of the fee switch would direct at least one-sixth of the fees collected on those blockchains from liquidity providers to a so-called token jar, where they can be claimed by investors who burn, or destroy, Uniswap tokens of equal value.

The fee switch has been active on v2 and the largest v3 trading pools on Ethereum since late December. It has generated a cumulative $3.3 million since then, according to DefiLlama data.

The proposal — which also seeks to flip the fee switch on all remaining v3 pools on Ethereum — would likely double that revenue. Base has overtaken Ethereum as the top fee-generating blockchain for Uniswap in 2026, with traders there paying $55 million across all four versions of Uniswap since January 1. Traders using Uniswap on Ethereum have paid just $37 million in fees in that span.

Uniswap is the largest decentralised exchange. It processed transactions worth more than $1.7 billion over the past 24 hours and more than $69 billion over the past month.

Founder Hayden Adams said the rollout of the fee switch on Ethereum had been a success, citing the growth in user deposits in crypto terms. (Deposits fell in dollar terms due to the collapse in the value of Ether over the past month.)

“Since UNIfication, we’ve monitored the first wave of fees on v2 and a large subset of v3 pools on mainnet,” Adams wrote on X, referring to the title of the November proposal that flipped the fee switch on Ethereum.

“Rollout went very well, with market adjusted [user deposits] up and burn working efficiently.”

After years of debate, Uniswap leadership proposed a fee switch in November. By encouraging Uniswap investors to destroy their tokens in exchange for protocol-generated fees, it reduces the UNI supply and, in theory, boosts its value.

But UNI has plummeted along with the rest of the crypto market since UNIfication was proposed, falling 59% to $3.74.

The wide-ranging proposal did more than flip the fee switch on Ethereum. It also burned almost 100 million UNI, the amount of tokens that would have been removed from circulation had the fee switch been implemented since Uniswap’s inception several years ago.

UNIfication also approved the development of a new mechanism to boost liquidity provider earnings, the eventual disbandment of the Uniswap Foundation, and the end of Uniswap Labs’ collection of additional fees from interfaces that allow non-technical traders to use the Uniswap protocol, including a Labs-built website and crypto wallet.

The proposal to expand the fee switch passed an initial vote unanimously. A final pair of votes ends on March 4.

Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can reach him at aleks@dlnews.com.

That roadmap features several changes to parts of the blockchain that are vulnerable to quantum computers. It does not include a proposed timeline for those changes, though at least one proposed change is currently being considered for inclusion in an Ethereum upgrade expected to arrive in the latter half of 2026.

Quantum computers are still theoretical, but researchers’ rapid progress building them has frightened some blockchain engineers and even pro-crypto Wall Street executives.

It has roiled the Bitcoin community, which is divided over the urgency of the issue. Ethereum developers, however, have signalled they want to take a more proactive approach to the looming threat.

Buterin is among the most concerned. He warned in November that quantum computers could break Ethereum’s underlying security model before the next US presidential election in 2028.

His solutions to the quantum threat, all explained in highly technical jargon, include certain hash-based signatures, recursive STARKs, native account abstraction, and protocol-layer recursive signature and proof aggregation.

Put simply, they would update the cryptography that currently secures the blockchain. And at least one of those changes could arrive by the end of the year.

Hegota

Ethereum developers are currently debating which improvements should be included in a forthcoming upgrade dubbed Hegota.

Several weeks ago, Ethereum Foundation developer Felix Lange suggested that Hegota include frame transactions — a new type of transaction that would offer a more robust version of account abstraction.

“It’s also for us the most important one, because of the readiness for the post-quantum world,” Lange said.

“We feel like we have to get started with the off-ramp from ECDSA, and in order to do that, we need a comprehensive system that can deal with whatever signature algorithms we want to use.”

ECDSA is the acronym for the quantum-vulnerable cryptography that undergirds Ethereum currently.

Buterin previously suggested he supported including frame transactions in Hegota. On Thursday, he appeared to renew his push for the feature.

Adding frame transactions would give Ethereum users “first-class accounts that can use any signature algorithm,” including those that cannot be broken by quantum computers, Buterin wrote.

Other proposals in Buterin’s quantum roadmap require advances in computer science.

“It’s manageable, but there’s a lot of engineering work to do,” he wrote.

Quantum focus

Last month, the Ethereum Foundation said it had established a post-quantum team following “years of quiet R&D.”

The Swiss nonprofit would also host new, bi-weekly calls in which Ethereum developers would discuss quantum security and offer a new $1 million prize to anyone who can help harden quantum-resistant cryptography.

Foundation employees are also working on a website that will detail a post-quantum strategy for Ethereum that “targets a full transition in coming years with zero loss of funds and zero downtime,” according to researcher Justin Drake.

But support from Buterin and the Ethereum Foundation doesn’t necessarily mean Ethereum developers will go along, a point that Drake emphasised earlier this week when he released a “strawman roadmap” for the blockchain.

The “strawmap” it was named due to “the limits of drafting a roadmap in a highly decentralised ecosystem.”

“An ‘official’ roadmap reflecting all Ethereum stakeholders is effectively impossible,” Drake wrote, calling it “one reasonably coherent path among millions of possible outcomes.”

It details potential Ethereum upgrades through the end of the decade and features five focus areas, including quantum resistance.

Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can contact him at aleks@dlnews.com.

The foundation would allow Fluid’s developers to comply with anti-money laundering and know-your-customer rules as they seek to strike deals with traditional financial institutions.

“Establishing the Fluid Foundation allows the protocol to meet AML, KYC, banking, and regulatory requirements when interacting with off-chain counterparties, without compromising the decentralised governance that token holders have today,” DeFi Made Here, the new foundation’s pseudonymous director, wrote on X this week.

“The Foundation cannot be owned; it is governed by its constitutional documents, which give $FLUID token holders ultimate authority.”

DeFi Made Here, or DMH, was previously the chief operating officer at Fluid developer InstaDapp.

Fluid, a decentralised financial protocol with more than $1 billion in user deposits, features a decentralised exchange and a lending-and-borrowing platform, putting it in competition with Aave and Morpho.

All eyes on Aave

The proposal comes as stakeholders in Aave, the world’s largest decentralised financial protocol, clash over ownership of brand assets, including aave.com and related social media accounts.

Aave’s fight has seen its token plummet relative to rival protocol Morpho’s over the past 90 days, though its share of the crypto lending market has remained largely unchanged.

But DMH said the proposal was not motivated by the trouble at Aave.

“Regarding allegations that this is done because of Aave governance drama - this is not true,” they wrote on X this week.

“We’ve been actively working on setting up the foundation for the past 6 months - much earlier than things escalated at Aave.”

Aave Labs, the company that built the Aave protocol, has clashed with members of Aave DAO, the digital cooperative that controls the protocol. DAO members have chafed at Labs’ growing influence, and some have demanded that Labs relinquish brand assets, such as the Aave website.

In a bid to settle the fight, Labs recently proposed creating a foundation to own and defend Aave trademarks and “operate in alignment with DAO-approved parameters,” among other things.

Labs did not detail the proposed foundation’s structure, and DAO members have expressed displeasure with other elements of the proposal.

Token holders remain in charge

DMH said the new foundation has already been incorporated in the Cayman Islands, and its funding would come exclusively from the DAO that governs the Fluid protocol.

“Token holders will continue to retain oversight over objectives, budgets, and major decisions as they do now.”

Significantly, InstaDapp would relinquish all intellectual property, including websites and the protocol’s smart contracts.

“Instead of these assets remaining with the team or early contributors, they will transition into a neutral, mission-aligned entity: the Fluid Foundation,” DMH wrote. “This gives token holders real, enforceable control over Fluid’s IP for the first time.”

InstaDapp employees will hold director seats at the foundation and manage its day-to-day operations, though they will be bound by DAO votes, according to DMH.

The DAO controls the revenue generated by the protocol, and DMH has requested that it approve a $250,000-per-month grant to the foundation “to fund the team responsible for maintaining and growing the protocol.”

DMH and InstaDapp did not immediately respond to requests for comment sent over X.

The transfer of IP and the monthly grant are both subject to DAO approval. In the Fluid governance forum, one commenter said the grant took up too great a share of protocol revenue and questioned the need to transfer IP ownership to a DAO-controlled foundation.

But others were supportive.

“Doing this before a potential equity+token ownership conflict arises is smart,” Ignas, a delegate in several DAOs, wrote. “Aave is going through similar discussions now but under tension. Fluid is getting ahead of it.”

Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can reach him at aleks@dlnews.com.

An investigation released by pseudonymous crypto sleuth ZachXBT on Thursday pinned the schemes on Broox Bauer, an employee who handled business development for the platform.

Bauer, along with several associates, allegedly used Axiom’s internal tools to look up customers’ crypto wallets and track their activity, giving the group a significant advantage over other traders.

“There was little to no monitoring or access controls in place to mitigate this abuse from happening in the first place,” ZachXBT said. “The extent of data granted to employees in an easily accessible dashboard is unusual for business development roles.”

It’s not clear how much Bauer and his associates made through the schemes, which allegedly started just months after the platform launched in January 2025.

In a recorded call that took place in early February, Broox allegedly outlined a plan to help one of his associates profit $200,000 by abusing his privileged access, ZachXBT said.

Bauer did not immediately respond to DL News’ request for comment.

Insider trading concerns

The accusations come as concerns over insider trading of crypto assets and on prediction markets like Polymarket and Kalshi reach a fever pitch.

On Tuesday, the administrator overseeing Terraform Labs’ winding down filed a lawsuit against Jane Street, alleging that the high-frequency trading firm used nonpublic information to profit from Terraform’s collapse.

Last month, several Democratic politicians in the US co-sponsored the Public Integrity in Financial Prediction Markets Act of 2026, a bill that prohibits elected officials from buying, selling or exchanging prediction market contracts tied to the administration’s policies.

On February 23, ZachXBT teased that he planned to release an exposé on alleged insider trading, leading to the creation of a Polymarket prediction market that let bettors gamble on the named project.

Before the investigation was posted, bettors gave Axiom around a 30% chance of being named, the highest out of all available options.

Profitable company

Axiom is a crypto trading platform founded in 2024 by Henry Zhang, otherwise known as Mist, and Preston Ellis, who also goes by Cal — both recent college graduates at the time.

The platform went through Y Combinator’s Winter 2025 batch and launched in early-access shortly after. It quickly became one of the most profitable companies in the crypto industry, generating over $390 million in revenue to date, according to DefiLlama data.

ZachXBT is a prolific crypto sleuth who has conducted dozens of investigations across the industry. He said he was retained by Axiom to investigate allegations of misconduct.

“We are surprised and disappointed to hear that someone on our team abused internal customer support tools to look up user wallets,” Axiom said in response to the investigation.

“We have removed access to these tools and will continue to investigate and hold the offending parties responsible.”

Wallet spreadsheet

According to ZachXBT’s investigation, Bauer and his associates created a spreadsheet compiling the wallet addresses of potential targets obtained by abusing Axiom’s tools.

Multiple people named on the spreadsheet or in leaked screenshots were contacted and independently confirmed the accuracy of wallet data attributed to them, ZachXBT said.

It wasn’t just wallet addresses that the group had access to. Axiom’s tools allow Bauer to look up a user’s entire wallet list, the wallets that user is tracking, their transaction history, nicknames of wallets, and linked accounts.

“Given Broox is based in NYC I think the case presents itself as a good opportunity for SDNY since it may fall within their jurisdiction,” ZachXBT said.

The US Attorney’s Office for the Southern District of New York — SDNY — is one of the most active federal prosecutors in pursuing crypto-related fraud, manipulation, Ponzi schemes, insider trading, and money laundering cases.

The federal trial court has litigated some of the most high-profile crypto cases, including those against FTX founder Sam Bankman-Fried, Terraform Labs founder Do Kwon, and Mango Markets exploiter Avraham Eisenberg.

“Whether or not criminal charges are filed, I hope the Axiom co-founders further investigate the abuse and consider taking legal action against the employees involved,” ZachXBT said.

Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.

According to the February 25 proposal, those who hold and stake 10 million WLFI tokens — dubbed Node stakers — will receive the right to convert USD1 directly to other stablecoins through the project’s partner market makers. This will allow Node stakers to profit from small price differences that emerge between USD1 and other dollar-pegged tokens.

“WLFI subsidises the market makers to maintain one-to-one parity, effectively passing the arbitrage opportunity — which today is captured exclusively by institutional market makers at ~10–15 bps — to Node stakers,” the project said in the proposal. Bps, or basis points, is a common financial term referring to one hundredth of a percentage point.

At current WLFI token prices, governance participants need to spend around $1 million to become Node stakers.

Since the start of the year, World Liberty Financial’s USD1 stablecoin has swelled to a circulating supply of over 4.7 billion, becoming the fifth-largest stablecoin on the market.

Although USD1 and many of its rivals are backed one-to-one by dollars, they are not hardcoded to trade at that price, and instead rely on market forces to keep them close to their targeted value.

This creates a lucrative opportunity for market makers — financial firms or individuals who continuously offer to both buy and sell various stablecoins and profit when they deviate from their targeted value.

World Liberty Financial’s new proposal ensures that firms that want to take advantage of market-making opportunities for USD1 also give something back to the project.

WLFI lock-ups

The proposal comes just days after World Liberty Financial said it suffered a “coordinated attack” that briefly knocked USD1 off its target dollar value.

“Attackers hacked several WLFI co-founder accounts, paid influencers to spread FUD, and opened massive WLFI shorts to profit from the manufactured chaos,” a Monday post from the official World Liberty Financial X account said.

USD1 returned to its targeted dollar value the same day it broke its peg. Yet, spooked investors have pulled out over $290 million from the Trump-linked stablecoin since the incident, according to DefiLlama data.

World Liberty Financial’s proposed staking system also overhauls how the project’s governance operates more generally.

Those who wish to vote on proposals must lock up their tokens for a minimum of 180 days.

According to the proposal, governance power will be weighted by the amount of tokens staked and the remaining lock-up duration using a non-linear formula to prevent excessive concentration of voting power.

“This ensures that voting power is held by participants with long-term alignment to the protocol who elect to participate in the governance consensus mechanism, not short-term holders or speculators,” the project said.

In addition to the $1 million Node staker requirement, those who stake over $5 million worth of WLFI will receive additional benefits, including guaranteed direct access to the project’s team for partnership discussions and eligibility for any future economic incentives.

Stakers will receive additional WLFI tokens as rewards at an annual rate of around 2%, as long as they participate in governance votes. WLFI staking rewards will be funded by the project’s treasury.

The WLFI token has traded down around 1.6% since the proposal was posted to the World Liberty Financial governance forum.

Tim Craig is DL News’ Edinburgh-based DeFi Correspondent. Reach out with tips at tim@dlnews.com.

Octane Security, a self-described “AI-native security firm,” said on Wednesday its AI tool found a high-severity bug in Nethermind, software that runs the Ethereum blockchain.

Nethermind fixed the bug before it could be exploited, Octane said. Nearly 40% of Ethereum validators use Nethermind, and an exploit could have caused them to miss blocks, affecting Ethereum’s liveness and availability.

“This is one of the highest-stakes demonstrations yet of AI-led vulnerability research,” Giovanni Vignone, founder and CEO of Octane Security, said in a statement.

“AI has dramatically accelerated vulnerability research. Bug hypotheses, exploit verification, and production-grade reports can now happen 10× faster, which rewrites the threat model for every organisation putting code onchain.”

Octane’s announcement comes just five days after AI firm Anthropic rattled cybersecurity stocks with a new security tool that “scans codebases for security vulnerabilities and suggests targeted software patches for human review.”

Moonwell

AI has taken the tech world by storm, enabling experienced software engineers to write code faster than ever before. In crypto, it has fuelled the idea of agentic AI where programmes conduct trades independent of human beings.

But it has also fanned concerns.

This week, a report from Citrini Research rattled Wall Street by envisioning a future where AI has replaced human workers and nuked the world economy. The S&P dropped more than 1% on Monday as a result.

Even AI developers are worried about the potential military applications of their creations, as Anthropic’s clash with the White House shows.

And AI has triggered fears that the technology can be used to break cybersecurity.

Some have worried it could empower hackers. Others are concerned engineers could become over-reliant on AI-written code and release buggy software.

That concern came to life earlier this month, when a bug in AI-generated code cost users of crypto protocol Moonwell nearly $2.7 million in crypto. One Moonwell software engineer said the code in question had passed an audit from crypto security firm Halborn.

“AI coding will become more and more prevalent, and the increasing adoption of vibe coding remains one reason why more investment in design, threat modelling, formal methods, fuzzing, and 24/7 monitoring are critical steps for every web3 team to take,” Seth Hallem, CEO at crypto security firm Certora, told DL News after the Moonwell incident.

Octane’s experience suggests that investment might increasingly flow toward AI.

In the run-up to the launch of Ethereum upgrade Fusaka last year, Octane joined an audit contest sponsored by Gnosis and Lido. The contest rewarded security researchers for finding bugs in Nethermind and the other so-called clients that run Ethereum.

Octane partnered with pseudonymous security researcher Guhu, who reviewed potential bugs flagged by the company’s AI.

Octane and Guhu submitted 17 issues, 16 of which were fixed by client teams. Nine were considered severe, and, of those, “six are believed to be unique,” the company said. They ultimately placed fourth in the contest, earning $70,633 in rewards.

They also submitted the Nethermind bug to a bug bounty program run by the Ethereum Foundation.

According to Octane, a hacker could sabotage validators running Nethermind by submitting a “malformed transaction.”

“This could have caused sustained missed slots across all Nethermind-based proposers for as long as the malformed transaction remained in the pool,” the company said.

“Exploitation would have removed that capacity from the network, causing affected validators to miss block rewards, incur inactivity leak penalties, and degrade overall network liveness and availability.”

The bug was never exploited and was promptly patched. The Ethereum Foundation awarded Octane a $50,000 bug bounty, the company said.

“If you are not using AI to find and fix flaws continuously, you are competing against the blackhats who are,” Vignone said.

Aleks Gilbert is DL News’ New York-based DeFi correspondent. You can reach him at aleks@dlnews.com.