An Overview of StellaSwap’s Response & Action Plan Going Forward

What Happened?

What Does it Mean to Users?

  • Basepool 4pool: USDC.mad — USDT.mad — DAI.mad — FRAX (Canonical)
  • Dual ETH Pool: ETH.mad — ETH.multi
  • ETH.mad — GLMR
  • USDC.mad — GLMR
  • WBTC.mad — GLMR
  • MAI Metapool: MAI<>Basepool
  • Users who made trades lost a good chunk of their LPs: Users who were quick to react ran to trade away their Nomad assets for non-Nomad assets lost value as time went buy, as the deteriorating peg and increasing slippages resulted in higher user losses as time went by.
  • Users who kept their LP lost a significant chunk of value: Regrettably, those that did not unstake their LP lost a significant chunk of their LP value as Nomad assets depegged. Nomad USDC lost 84% of their value at one point. Users faced tremendous impermanent loss due to the deterioration of value for Nomad assets. It got to the point where trading out Nomad assets were not a worthwhile endeavor, as users lost most of their LP value.
  • Users cannot bridge out to Ethereum due to Nomad’s bridge closure: The exploit led Nomad to close their bridge since there was nothing left for redemption due to the loss of collaterals that were backing the bridged assets on Ethereum. The bridge has yet to be opened, so those holding Nomad assets now cannot bridge to Ethereum.

How Did StellaSwap Respond?

  • 22:58 PM (UTC), 1 Aug: Within the hour of the exploit, we immediately pinged Nomad for confirmation on the exploit. We received a response 10 mins later that Nomad was currently investigating the event and that they’ll respond once more information is clear. We constantly followed up to get more clarity on the situation so that we can respond to users.
  • 23:05 PM (UTC), 1 Aug: Our first decisive response to users was manifested in our Discord group, where we mentioned that we were directly in communication with Nomad. We offered a possibility for users to hedge their risks. Albeit little information, that was what we thought was a suitable possibility at that point of time.
  • 10:26 AM (UTC), 2 Aug: Nomad released a public announcement on the situation. Up till this point, we had no reply from Nomad on the situation on our direct chats, and our main source of information was through Nomad’s Twitter, like everyone else.
  • 15:04 PM (UTC), 2 Aug: In the absence of information and communications directly from Nomad, StellaSwap had to assume the worst and made further changes to facilitate support for users. We launched $MAI & $FRAX farms (Update #2) to protect non-Nomad assets from getting badly devalued due to impermanent loss and slippages. The entire team was actively utilized to address user questions on Discord, and provide reassurance. Given the absence of communication from Nomad, we had to assume most of the things.
  • 21:25 PM (UTC), 2 Aug: We received a reply from Nomad on the current situation and their action plan. Nomad thereafter released their fund recovery process a few hours later.
  • 05:39 AM (UTC), 3 Aug: StellaSwap announced update #3 that included the current state of Nomad, postponement of Athos IDO and disabling of Nomad’s bridge on our UI.

High-Level Protocol Metrics

Infrastructure Metrics

  • TVL: 65% reduction of TVL from $55 million to $14 million, currently
  • Trade Volume: Recorded highest trading volume in excess of $30 million within the 24 hours period after the exploit. Thereafter, volumes stayed flat around $2m — $3m on a rolling 24hr period.
  • Transaction Count: There was a surge in transactions on StellaSwap due to the exploit.
  • Farm Volumes: Majority of trading volumes were centered around Nomad farms, which are now retired.

Community Metrics

  • New Users: We saw a sharp increase in our social handles; 23% increase in our Discord users and over 3,000 new followers on Twitter.

Roadmap Ahead

  1. We need to plan for StellaSwap’s restructuring, given that Nomad assets represented a core part of our protocol and moving forward entails hard decision that we must make for our future
  2. We need to establish a viable infrastructure for when the resolution plan from Nomad occurs, which could be soon or far ahead. This entails the continual support for Nomad assets and required liquidity components + depth for LP withdrawal, among other things

StellaSwap’s Restructuring Plan

  • Focus on substrate-native assets via cross-consensus messaging (XCM), thereby mitigating against bridge risks and enriching the Polkadot ecosystem as a whole. This entails focusing on cross-(para)chain assets listings, as well as adoption of strategic native assets like aUSD from Acala, FRAX, native USDT (where minting occurs on Polkadot) and MAI. Within 48 hours of the exploit, we launched Interlay’s native token INTR on StellaSwap. Users can expect Interlay’s iBTC farm next week.
  • Greater stakeholder interaction at the onboarding stage of inter-protocol integrations, ensuring the highest degree of security and a continual process for risk mitigation at a project basis and at the ecosystem level. As the leading DEX on Moonbeam, we recognize that there is a strong dependency for the usability of assets across various protocols on Moonbeam.
  • Set up internal risk management tools that govern key risk vectors such as bridging risks, and embarking on a risk-calculated approach for our infrastructure, such as greater silo-ing of bridged asset farms. This will ensure safeguard to stop or mitigate against systemic risks that occur as a result of a compromised vector.

Product Development

  1. IDO Launchpad: We’ve had massive support from the community for our very first IDO featuring Athos Finance, with over 100 users that has passed KYC. We remain committed to seeing this through, and are working on the finaldetails on when the IDO would occur.
  2. Liquid Staking (stGLMR): Opening up liquidity for staked GLMR would introduce a layer of usability and composability of GLMR, thereby actualizing the powerful possibilities of DeFi.
  3. Concentrated Liquidity (Con.Liq): In the pursuit of innovation, StellaSwap is keen on integrating Con.Liq to drastically improve the trading experience for users, through the most efficient mechanism for price discovery that we see today. This would add tremendous value for all stakeholders, especially for liquidity providers via maximizing utilization rates as well as tokenholders, via effective emissions handling

Community-First Approach

About StellaSwap

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StellaSwap

StellaSwap

StellaSwap.com, Leading Moonbeam DEX and DeFi gateway on Moonbeam. Swap, earn & stake effortlessly from a single unified platform.