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Cardano's DeFi TVL Impacted by Nomad Hack, Analysis Shows: Details

Thu, 08/11/2022 - 12:21
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Tomiwabold Olajide
Cross-chain protocol Nomad is one of multiple bridges deployed to Milkomeda
Cardano's DeFi TVL Impacted by Nomad Hack, Analysis Shows: Details
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A week ago, the Nomad cross-chain bridge was hacked in what was noted to be "one of DeFi's most chaotic attacks to date." Millions of dollars worth of wrapped Bitcoin (WBTC), wrapped Ethereum (WETH), USD Coin (USDC) and other assets were stolen as a hacker attacked a smart contract in the Nomad Bridge in which tokens were locked.

Milkomeda, a Layer 2 protocol (roll-up) delivering EVM capabilities to non-EVM blockchains, then issued an alert that users of Nomad-based assets on Milkomeda and Cardano could have been affected. Milkomeda C1, an EVM side chain launched in late March, enables Ethereum dApps to be deployed in the Cardano ecosystem. The cross-chain protocol, Nomad, is one of the multiple bridges deployed to Milkomeda.

How the Cardano DeFi ecosystem was affected

The consequences of the hack did not go unnoticed in the Cardano DeFi ecosystem, as the WingRiders DEX suffered a collapse in its TVL, pulling down the total value locked in the Cardano DeFi ecosystem as a whole. Before this time, the WingRiders had the largest share of dominance in Cardano's TVL, controlling more than 35%. The total value locked (TVL) is the number of user funds deposited into the DeFi protocols.

On Aug. 2, when the news of the Nomad hack surfaced online, WingRiders' TVL collapsed by nearly 60%, while Cardano's TVL plunged from a $135.39 million record at the start of August to $89.29 million per DefiLlama data.

The post-mortem analysis provided by the Cardano daily Twitter account gives the reason for the massive drop in the TVL of the WingRiders DEX as that it was the destination of wrapped assets from Nomad to Milkomeda.

The WingRiders smart contracts, however, have no known vulnerabilities, and other DEXes continue to function properly. The WingRiders TVL, on the other hand, is down by 57.70% on a monthly basis because there is no longer any asset on Nomad, and the wrapped asset of Nomad has lost value.

At the time of publication, Cardano's TVL was demonstrating a 24-hour increase of 6.27% at $98.58 million. With the inclusion of staking, the TVL was higher at $124.71 million. Minswap now has the greatest dominance of Cardano's TVL at 41.28%. WingRiders DEX demonstrated an increase of 16.25% in the last seven days. Several DEXes were also up both on a seven-day and a monthly basis.

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About the author

Tomiwabold is a cryptocurrency analyst and an experienced technical analyst. He pays close attention to cryptocurrency research, conducting comprehensive price analysis and exchanging predictions of estimated market trends. Tomiwabold earned his degree at the University of Lagos.