Frog becomes F "rug," a tweet that sparked a billion-dollar scare

Original author: 0x137, Rhythm BlockBeats

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Recently, two pieces of information on Twitter about the former CFO of Frog Nation spread throughout DeFi and even the entire currency circle. As CFO, 0xSifu not only holds the treasury power of Wonderland, the largest DeFi 2.0 protocol, but also has a huge impact on the income of other Frog Nation ecological protocols, involving more than one billion US dollars. After the news that 0xSifu was involved in fraud came out, it also pushed Frog Nation, which was at a critical stage of development, into a fire pit.

Broken news in the wee hours of the morning: CFO has been suspected of fraud many times

In the early hours of the 27th Eastern Time, Daniele, the founder of Frog Nation, tweeted: "Today's accusations about our team member 0xSifu will spread widely. .I want everyone to know that I know something about this, but I don't think a person's past can determine his future. I value the time I spent with him before knowing who 0xSifu is."

One minute later, zachxbt published his chat records with Daniele on Twitter, confirming that 0xSifu had been involved in fraud crimes many times.

As Omar Dhanani, 0xSifu ran an identity theft ring called Shadowcrew in 2005, specializing in cybercrime such as credit card theft, identity theft and other Ponzi schemes. He also ran another Ponzi scheme himself called Midas Gold and ran away with the money. Soon after, he was arrested and imprisoned in the United States along with six other Shadowcrew accomplices.

After being released from prison, 0xSifu went to Canada again under the pseudonym Michael Patryn. In 2018, he co-founded cryptocurrency exchange QuadrigaCX in Canada with Gerald Cotten. This exchange is also a Ponzi scheme, Cotten and "Patryn" will use the deposits of new users to pay the withdrawals of old users, so that everyone's withdrawals will be trapped for weeks or even months later.

Not long after, Cotten accidentally "died" while traveling in India (both his death certificate and his wife's response were questioned as falsified). Crypto assets worth $170 million on the exchange cannot be withdrawn by users. While many Canadians lost their life savings, "Patryn" got away with a lot of money.

Now, Daniele, the founder of Frog Nation, appointed 0xSifu as his CFO, handing over nearly 800 million US dollars in the Wonderland treasury to the ex-convict . Of course, 0xSifu's own assets have also increased by as much as 10 times during this period.

Events at critical moments

After the news of 0xSifu, all the key Frog Nation Tokens were hit hard. Wonderland’s TIME is down 30%, trading from around $500 to $370, while Abracadabra’s SPELL is down 15%, from $0.007 to $0.006. However, the impact of this exposure on Frog Nation’s ecology is far more than just the impact on Token prices.

Frog Nation is a DeFi project network founded by Daniele. It is composed of multiple projects and aims to grow together and promote each other to achieve a larger ecological development . The protocols in its ecology have achieved great success before: the adoption rate of the stable currency MIM on the Abracadabra platform has increased rapidly within a few months, and Wonderland has surpassed Olympus DAO to become the largest DeFi 2.0 protocol.

Recently, Frog Nation is at a critical development point, and several plans related to the ecological future are being promoted at the same time. If all goes well, Frog Nation will be an unrivaled "DeFi gangster":

Merging Abracadabra and Wonderland

Abracadabra and Wonderland are the two most successful platforms in the Frog Nation ecosystem. The former has an annual revenue of US$300 million, while the latter has US$800 million in treasury assets. But Wonderland has been looking for a new way out recently to replace the rebase model of DeFi 2.0. After this week's large-scale liquidation event, in order to alleviate the selling pressure of TIME, Daniele proposed to merge Abracadabra and Wonderland to form a super-large-scale decentralized VC, in order to allow Token holders to pass the Farming from the agreement treasury and the investment The airdrop issued by the project earns income.

This new VC mechanism has been tested on Wonderland's new Token wMEMO. Just some time ago, Wonderland has finalized the key investment in Wormhole, a cross-chain bridge project. This investment will make MIM the preferred stablecoin of Wormhole. The vision of a stable currency. And wMEMO holders will be able to get Wormhole airdrops.

Merge Sushi Swap

Daniele stated in a recent blog post that the Frog Nation team will take over SushiSwap to help clean up and restore Sushi's efficiency as part of the Frog Nation ecosystem .

This plan has many benefits for both parties. The Frog Nation ecology is equivalent to adding an AMM that is fully controlled by itself. If its development can be on the right track, it will become another important source of income. However, Sushi’s community was indeed relatively chaotic before. It started out relying on vampire attacks. Later, the team and the community fell into a crisis of trust, which led to the poor performance of Token in the past. Therefore, a strong new team is really needed to reshape the situation. .

Without a doubt, one of the factors driving this merger is the community's trust in Daniele and the Frog Nation team.

Seize the development opportunity of ve(3,3)

Daniele revealed in a previous AMA that he was negotiating with the Convex team to give MIM a competitive advantage in Convex War. This makes sense why Daniele wants to cooperate with AC on the new AMM project Solidly (previously known as ve(3,3)), in Rhythm "What exactly is ve(3,3) that Brother AC is desperately promoting? " mentioned in the article that Solidly is like Curve on Fantom, the more agreements that hold Solidly Token, the greater the incentive voting power.

You know, the agreement on Fantom before can be said to be a big fight for ve(3,3) snapshots. However, the cooperation between Daniele and AC is very likely to give the protocols within the Frog Nation ecosystem an inherent competitive advantage.

When the ecological development is at such a juncture, any mistake of the team may have a ripple effect within the ecology, bringing unimaginable consequences. Everything seemed to be going smoothly, but at such a critical juncture, the principled mistakes of the top team were exposed, directly shaking the foundation of Frog Nation's development and everyone's belief in its prospects.

MIM stripping

Not long after the news of 0xSifu was exposed, the ripples spread to Abracadabra. On the morning of the 28th, a large number of users began to exchange their MIM for 3CRV through the MIM-3CRV liquidity pool on the Curve platform, which seriously skewed the proportion of assets in the pool. Eventually, less than 5% or so of 3CRV remained in the entire pool, and the MIMs began to unravel. At the time of writing, MIM/DAI is trading at $0.98, but is still unhinged.

What's worse is that many people can't get 3CRV directly from MIM-3CRV, so they first exchange MIM for UST, and then use UST for 3CRV, which forms a sell-off of UST Pressure, and implicated the price of LUNA began to decline.

Although Abracadabra has launched the mint plan to encourage users to use 3CRV to mint a total of 43,881,642 new MIMs, it is still difficult to withstand the current selling torrent. MIM simply couldn't get enough market demand. Now, many users of the Anchor platform Degenbox will do this: deposit UST and lend 90% of MIM, then convert MIM to UST and repeat the operation, and finally get more than 100% of the stablecoin APY. Even during this MIM divestment, many people are not willing to give up a higher APY just to return the discounted MIM.

This is a huge blow to MIM, which aims to be the most adopted cross-chain stablecoin. Although there will be Wormhole as support in the future, users will be anchored to it Trust in and demand for capabilities has been hard to recover in the short term.

Concerns from partners

In addition, AC also expressed his dissatisfaction on Twitter, he wrote: "Doing things must be principled, a series of long-term fraud, theft And a history of malicious behavior is not a "mistake" but a clear intent...Letting 0xSifu manage funds, especially users' funds, is enough to be considered negligent...I just want to get off Willy Wonka's magic car now. "

Although AC stated that it will continue to cooperate with Daniele in the future, it can be clearly seen that in order to reduce the impact of this incident on Solidly, AC is cooperating with Daniele Draw a line. Solidly can be said to be an important project related to the future of Fantom's ecology. As a result, such a situation occurred shortly after its release, which did bring a lot of trouble to the subsequent development of the project. The depth of future cooperation between the two and the benefits that Frog Nation can receive in the future will be affected.

Now, the image of the Frog Nation team in the community has taken a turn for the worse, and many people call it "F(rug) Nation". Coincidentally, Yearn Finance also planned to merge with Sushi before. After this incident fermented, some members of the Sushi community proposed to abandon Frog Nation and join Yearn again. If something like this happens, Frog Nation will really be in trouble.

DeFi magician or boiled frog?

As one of the soul figures of Frog Nation and even the entire DeFi field, Daniele enjoys a very high reputation. It must be admitted that he was indeed an excellent DeFi magician before: the Abracadabra platform has played the role of various income-generating assets well and promoted the development of the Frog Nation ecology.

But in 0xSif u's message was After the exposure, the fire in the backyard also burned on Daniele himself, and discussions about whether Daniele was suspected of "boiling frogs in warm water" also surfaced.

Not long ago, a large-scale liquidation occurred in Wonderland, which caused the price of native Token TIME to plummet from $800 to $360 within a few hours. Someone found that the trigger of this liquidation seems to be inseparable from Daniele and 0xSifu.

Before the large-scale liquidation occurred, team members such as Daniele and 0xSifu used Wonderland’s new Token wMEMO as collateral to lend a large amount of MIM, and transferred these stable coins to the Bitfinex exchange, which actually Meaning the team "cashed out" without actually selling wMEMO.

This massive liquidation may have been triggered precisely by the liquidation of team-related loans. However, during the entire liquidation process, none of the team members responded, and the agreement repurchase that should have been in place did not happen, which caused the Token price to fall below the endorsement price and wiped out the investment of many users. In fact, it was a soft rug pull .

What's even more frightening is that this is not the first time this has happened. When DeFi 2.0 generally plummeted before, TIME had already fallen below the endorsement price. Similarly, the team has done nothing about it, and the endorsement price has also continued to drop along with the Token price. The editor of Rhythm is in "TVL plummeted, is DeFi 2.0 really cold?" " This is also mentioned in the article.

And now, although the authenticity of the news has not been confirmed, rumors about Daniele's relationship with Bitfinex have also begun to ferment.

At present, 0xSifu himself has responded to this matter, expressing his willingness to accept the final decision of the community.

Although the vote initiated by Wonderland DAO has also decided to remove 0xSifu from the team, and the price of Frog Nation related Token has also rebounded, but we can't help but start thinking, In the world of decentralized finance, who is endowed with the greatest power? Is the occurrence of such an incident due to personal or mechanism reasons? Is the money people put into DeFi really safe? Obviously, the way Frog Nation handles this matter is not only related to its own ecology, but also affects the future development of the entire DeFi.

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