Fantom Feels the Tremors of Multichain's DemiseAndre Cronje, the co-founder of Fantom, painted a grim picture of the state of the smart contract platform, following the controversial demise of Multichain. He labelled Multichain’s downfall as a “massive setback” for Fantom, which has recently witnessed a significant decrease in activity due to Multichain’s issues.
Fantom’s Drastic Decline in Total Value Locked
DefiLlama’s data reveals an alarming decrease in Fantom’s total value locked (TVL). It has plummeted from a substantial $364 million in early May to a meager $70 million by July 14. To put this into context, at the height of its performance in 2022, Fantom’s TVL was a staggering $7.5 billion. Similarly, the value of its native token, Fantom (FTM), has also taken a hit, slumping from $0.41 to $0.28 during the same time frame.
Cronje made his feelings known in a Fantom forum thread, stating, “Multichain was a huge blow.” He further expressed his regret over the misplaced trust in Multichain’s assurances. The promises of server decentralization, accessibility, and geolocation distribution didn’t hold water. He reiterated a significant lesson learned: “Don’t trust, verify (saying this to myself).”
Cronje’s comments come in the wake of Multichain’s announcement on July 14 of its impending shutdown. This shocking decision followed the arrest of its CEO in May, who held singular control over Multichain’s servers.
Multichain’s leadership vacuum and growing technical hurdles culminated in severe exploitation on July 6. More than $125 million worth of cryptocurrencies were siphoned off from several wallets, impacting the Ethereum side of Fantom, along with Moonriver and Dogechain bridges. These withdrawals accounted for the majority of funds safeguarded on each bridge.
Multichain had stored all shards of its private keys in a cloud server account exclusively managed by its CEO. This account was later exploited to drain the funds from the protocol.
The fallout from Multichain’s issues reverberated across the ecosystem, particularly impacting the lending protocol Geist Finance, which had to close permanently due to the incurred losses. Before the cyber intrusion, more than $29 million worth of crypto assets were locked in contracts running on the Fantom network. Consequently, Geist’s closure dealt a significant blow to Fantom’s TVL.
Fantom’s Countermeasures: On the Road to Recovery
In a reactive move, stablecoin issuers Circle and Tether froze over $65 million in assets connected to the attack. It’s understood that Fantom is in discussions with both organizations for native issuance and considering rollups for native bridge infrastructure. Andre Cronje conveyed the team’s relentless efforts to mitigate the situation, saying, “We are exploring all options at this point, working with relevant organizations to try and recover assets.”
This situation reflects the volatility of the crypto landscape and highlights the urgent need for enhanced security measures. The ongoing quest to restore Fantom’s value locked and rebuild trust within its ecosystem represents a struggle familiar to many within the world of blockchain technology. However, with the resilience shown by Andre Cronje and his team, it’s clear they are committed to overcoming these hurdles, exemplifying the tenacity so often seen in this dynamic industry.
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