- A user lost 90% of 785,000 DEGEN assets due to poor liquidity in a cross-chain transaction from DEGEN Chain to Base.
- The incident highlighted issues with the DEGEN/ETH pool and the confusing user interface, causing significant slippage.
- The company assured a full refund and promised imminent changes to improve platform reliability and user confidence.
An incident in the crypto community has recently surfaced. A user known as Tempe.degen lost 90% of his assets, totaling 785,000 DEGEN, during a cross-chain transaction. This loss, caused by poor liquidity in previous chain transactions and resulting in substantial slippage, has sparked reactions across the crypto community, raising concerns about the security and reliability of cross-chain transactions.
2/3 Degen L3 is in a tough spot. We’ve received terrible service from our providers, and apologies aren’t cutting it. Outages and lost user funds are unacceptable, especially from companies claiming to specialize in this.
— Degen(@degentokenbase) July 16, 2024
(@degentokenbase) Poor Liquidity Causes Major Slippage
The issue arose when Tempe.degen attempted to transfer DEGEN from its original chain to Base. Before cross-chain transactions can occur, DEGEN assets must be converted to ETH on the DEGEN Chain. Subsequently, the asset moves to Base and is reconverted to DEGEN before being sent to the user’s address. During this process, a scarcity of ETH in the DEGEN/ETH pool caused slippage, resulting in the substantial loss of assets.
Tempe.degen highlighted that the chain did not use the appropriate bridge, and the user interface needed to be clearer. These factors contributed to the unfortunate outcome, highlighting the complexities and risks involved in cross-chain transactions. Poor liquidity remains a major problem for some pools, prompting DeFi founders to seek solutions to improve the situation across the board.
Crypto Community Reacts to Security Concerns
The loss experienced by Tempe.degen has led to a broader discussion within the crypto community about the safety and security of cross-chain transactions. Crypto enthusiasts pointed out that such losses could hinder the sector’s growth. Low sentiments due to related incidents could affect market confidence and slow down the adoption of cryptocurrencies.
In response to the incident, the company behind the DEGEN Chain acknowledged the issue and assured affected users of a full refund. A spokesperson stated, “Bugs like this should never happen, especially when user funds are involved. If you’ve faced a similar problem, we’ll create a form to ensure everyone gets refunded.”
Company Promises Reforms
The company also took responsibility for the incident, highlighting the poor service from providers involved in the process. They assured the community of imminent changes to improve the platform’s reliability. These changes will include a shake-up in the coming weeks to get the best service possible.
This incident underscores the need for improved security measures and liquidity management in cross-chain transactions. As crypto adoption grows, ensuring investors’ safety and confidence is paramount to fostering wider market growth.
Poor liquidity and inadequate bridges have resulted in substantial losses, prompting calls for better security measures. The company’s swift response and promise of reforms aim to restore user confidence.
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