Welcome to Finance Redefined, a weekly newsletter designed to bring you the most important events of the past week, providing essential insights into decentralized finance (DeFi).
This week in DeFi, there was more regulatory action as the U.S. Commodity Futures Trading Commission (CFTC) charged Uniswap Labs with illegally offering leveraged cryptocurrency trading to retail investors. The CFTC’s director warned of more potential enforcement actions against the DeFi ecosystem.
In the broader DeFi space, Polygon’s native cryptocurrency has been upgraded to the Polygon Ecosystem Token (POL). Polygon says this token will be a “hyper-productive” token and better aligns with Polygon 2.0’s ultimate vision of unifying the entire Web3 space via AggLayer, including layer 1 blockchains.
CFTC Charges Uniswap with Illegal Derivatives Trading
The CFTC announced on September 4 that it has charged Uniswap Labs, a decentralized exchange (DEX) developer, with illegally offering leveraged cryptocurrency trading to U.S. retail investors.
The CFTC said that Uniswap Labs agreed to settle the charges by paying a $175,000 civil penalty and agreeing to cease and desist from violating the Commodity Exchange Act (CEA).
The CFTC’s Enforcement Division will “vigorously enforce the CEA as the digital asset platforms and DeFi ecosystem evolve,” Ian McGinley, the CFTC’s chief enforcement officer, said in a statement. “DeFi operators must be vigilant to ensure that their transactions comply with the law.”
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Polygon’s MATIC Upgrades to POL, Driving “Ultra-Productive” Token Utility
Polygon’s native cryptocurrency has undergone a major technical upgrade to enhance its usability and introduce Polygon 2.0.
According to an announcement shared with Cointelegraph, the Polygon (MATIC) token will be upgraded to the new POL token on a 1:1 basis starting September 4, becoming the network’s native gas and staking token.
According to Marc Boiron, CEO of Polygon Labs, this upgrade will allow the community to better participate in the network’s growth. In an exclusive interview with Cointelegraph, Boiron said:
“With this upgrade, the 2% emissions reduction will give the community an opportunity to participate. (…) Technically, even if the full migration did not happen (Season 1 of the Community Grant Program), there was some emissions reduction that the community could use.”
Polygon Labs CEO Marc Boiron Interviewed by Cointelegraph’s Zoltan Vardai. Source: YouTube
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‘Unlucky’ MEV Bot Borrows $12 Million for $20 Profit
A “hapless” maximum extractable value (MEV) bot received a whopping $12 million in flash loans but only made $20 using them.
In a September 5 post, blockchain analytics platform Arkham Intelligence revealed that the MEV bot had borrowed $11.97 million in Wrapped Ether (WETH) to “sandwich” users who were trying to exchange Shuffle (SHFL) tokens worth around $5,000.
Source: Arkham Intelligence
According to Arkham data, the MEV bot made a total of 14 transactions during the sandwich attack period, lending, borrowing, and returning USD Coin (USDC) and WETH loans on decentralized finance protocols Aave and Uniswap, totaling approximately $700,000.
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Solana Price Drops 12% as Pump.fun Sells $41M SOL Tokens
The price of Solana tokens has been in a double-digit decline over the past week, as Pumpfun, the platform that launched Mimecoin, continues to sell off its tokens.
The Solana (SOL) coin price was trading at $128 as of 11:06 AM UTC on September 4, down more than 12% over the past week. According to Cointelegraph data, the token was down 3.8% on the daily chart.
According to a September 3 X post on Lookonchain, the Solana price drop occurred after a fee account associated with Memecoin distributor Pump.fun sold an additional $1.38 million worth of SOL coins.
“Pump.fun commission account sold $10,300 SOL ($1.38 million) at $134.46 again 40 minutes ago!”
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Penpie Protocol Exploited, $27 Million Lost
The Penpie protocol, an independent decentralized finance protocol built on Pendle, was attacked on September 3rd, resulting in $27 million in customer funds being stolen at the time of writing.
On-chain detectives traced the problematic transactions to an address ending in “bb7,” one of several used by the hacker. As a precaution, Penpie has now suspended all deposits and withdrawals.
A DeFi protocol spokesperson assured users that all customer funds remain safe following the hack and that all contracts are suspended until the issue is resolved.
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DeFi Market Overview
According to data from Cointelegraph Markets Pro and TradingView, most of the top 100 cryptocurrencies by market cap ended the week in decline.
Among the top 100 tokens, the Beam Gaming Network (BEAM) token was the biggest loser this week, down 22%, followed by the Immutable (IMX) token, down around 20% on the weekly chart.
Total value locked in DeFi. Source: DefiLlama
Thanks for reading our roundup of the most impactful DeFi developments of the week. Join us next Friday for more stories, insights, and education on this dynamic and evolving space.