DeFi protocol Kannagi Finance launched solely a month in the past, promising excessive yields for stablecoin deposits and lending. As such, the challenge gained loads of hype within the zkSync neighborhood for bringing fashionable decentralized finance (DeFi) options to the Ethereum Layer 2 community scaling resolution.
Earlier than its launch, Kannagi Finance claimed to be totally different from different yield farming protocols and promised customers the perfect yield and buying and selling charge rewards with its KANA tokens. Nonetheless, latest developments from Kannagi Finance level to what many may name a rug pull.
The Aftermath: Investor Losses Complete $2 Million
The DeFi house strikes quick, and Kannagi Finance was no exception. This zkSync-based income aggregator launched this yr promising excessive yields with most returns with low charges/slippage. This attracted quite a few traders and the entire worth locked (TVL) in Kannagi’s swimming pools reached $2.22 million on July twenty fourth.
Nonetheless, information from DeFi TVL aggregator DefiLlama shows that Kannagi’s dev workforce has allegedly pulled over $2 million value of consumer funds and disappeared into skinny air. As of the time of writing, the entire worth locked within the decentralized yield aggregator has dropped from $2.13 million to $0.17.
Peckshield, a blockchain safety firm, additionally tweeted relating to the difficulty, because the challenge appears to have disappeared from social media.
#PeckShieldAlert #rugpull @zachxbt has reported that @Kannagi_Zksync on #zkSync has rugged for over ~$1M. @Kannagi_Zksync already deleted its social accounts/teams.
The scammer’s tackle: 0x95ec03b821f164ce55cbb26f23f591a9bd40d6c1 pic.twitter.com/5FdyO94XZs
— PeckShieldAlert (@PeckShieldAlert) July 29, 2023
Social media channels of Kannagi Finance, together with Twitter and its web site have all been deleted with out prior warning.
Rug Pulls In DeFi
Rug pulls, or exit scams, are sadly all too frequent within the cryptocurrency house. Since September 2020, practically two million traders have change into victims of those scams. In keeping with Chainalysis, over $2.8 billion value of cryptocurrency was stolen in rug pulls all through 2021 alone.
Complete market cap sitting at $1.14 trillion | Supply: Crypto Total Market Cap on Tradingview.com
An identical report by blockchain danger monitoring agency Solidus Labs, additionally confirmed that a median of 350 crypto rip-off tokens had been developed per day in 2022.
Exploitations, specifically, appear to be rampant on zkSync Period prior to now month. Earlier this week, one other lending protocol on the Layer 2 resolution known as EraLend was exploited and $3.4 million value of crypto was stolen. The hacker drained the funds in a number of USDC transactions and the lending protocol has since suspended all borrowing operations.
Whereas crypto crimes have been down significantly in 2023, rug pulls like this function an necessary warning for the DeFi neighborhood. It highlights the dangers of investing in unregulated DeFi platforms with nameless founders.
Featured picture from Bitcoin Depot, chart from Tradingview.com