Coinbase’s Base DeFi Ecosystem Faces Early Challenges: Scams and Hacks

In the dynamic world of decentralized finance (DeFi), where innovation and risks go hand in hand, Coinbase’s Base DeFi ecosystem has had a turbulent introduction. The platform, with its sights set on introducing the masses to web3 and DeFi through its layer two solutions, has encountered a rocky start, marred by scams and security breaches.

Hackers Exploit Vulnerabilities, Leaving a Trail of Losses

The DeFi lender Exactly Protocol, operating on the Optimism network, recently found itself reeling from a significant loss. A staggering 7,160 ETH, equivalent to over $12 million, vanished from its coffers due to smart contract vulnerabilities that hackers astutely exploited. This breach of security not only highlighted the vulnerabilities within the DeFi space but also raised concerns about the safety of users’ funds.

Hitting even closer to home, RocketSwap, the second-largest decentralized exchange (DEX) on Coinbase’s Base, experienced its own nightmare. The platform fell victim to a hack that drained 471 ETH, further underscoring the pressing need for robust security measures within the burgeoning DeFi landscape.

The SwirlLend Debacle: A Rug Pull on Multiple Fronts

SwirlLend, a promising DeFi lending protocol, had a promising start, going live on both Coinbase’s Base and ConsenSys’ L2 solution, Linea. However, this initial success was short-lived, as the protocol’s team executed a brazen rug pull. The team made off with a staggering 277 ETH after systematically emptying the protocol’s pools. Adding insult to injury, they disappeared from social media platforms, leaving investors high and dry. This incident serves as a grim reminder of the importance of thorough due diligence and accountability in the DeFi space.

Rising Scam Coins Threaten Base’s Credibility

Despite the challenges and setbacks, Coinbase’s Base DeFi ecosystem has shown remarkable growth. Assets on the platform skyrocketed from zero to an impressive $160 million within a mere two weeks since its launch on August 8th, as indicated by DeFiLlama data. However, this success has not been without its pitfalls.

The ecosystem has been plagued by the emergence of scam coins, with over 500 such coins already infiltrating the platform. Among these, BALD, a meme coin that surfaced before Base’s public launch, stands out. Operating for just a few days, BALD managed to siphon off millions from unsuspecting users before making a swift exit.

The Aftermath: Balancing Losses and Recovery

As the dust settles, the repercussions of these incidents become clear. Exactly Protocol’s EXA token has witnessed a steep decline of more than 20% within the last 24 hours, according to CoinGecko. Before falling victim to the hack, Exactly Protocol boasted deposits exceeding $110 million. Unfortunately, the aftermath has seen this figure plummet to $30 million, a stark reminder of the fragility of the DeFi landscape.

Coinbase’s Base DeFi ecosystem’s initial journey has been marked by turmoil and challenges. The series of hacks and scams have exposed vulnerabilities that demand urgent attention. As the platform strives to fulfill its vision of introducing mainstream users to the world of DeFi, it must simultaneously fortify its security measures and foster an environment of trust within its community. Only through collective efforts can the potential of DeFi be fully harnessed while minimizing the risks associated with its rapid evolution.