November 28, 2020 View Online
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Another week, another Monday. Trump just declared that he won the Election. Buckle up and enjoy the show!

In today’s edition: we take a first look at yAxis Project and Oraichain, along with breaking down the recent Value DeFi exploit.

Aftermath of Value DeFi $6M Flash Loan Attack

value defi exploit hack 6M attack
Value DeFi fell victim to a complex flash loan attack using Aave and Uniswap which drained their flagship MultiStables vault by $6 million. A starch reminder after the recent exploits of Akropolis protocol and Harvest Finance that DeFi product users need to remember this tech is highly experimental.

To make matters worse for Value DeFi, the MultiStables Vault was flaunted to have these three innovative security features: “1) Flash-loan attack prevention 2) Fake-token attack prevention 3) Re-entrance attack prevention.” The attacker may even have specifically targeted Value DeFi protocol off the back of their boast, as he signed a follow-up transaction with: "do you really know flashloan?" input data.

Double Flash Loan Attack

The hacker used a complex process involving a double flash loan. It started with a flash loan of around 80,000 ETH from Aave, and then a flash swap to secure $116 million DAI from Uniswap. At this point, the attacker swapped the ETH for various stablecoins and deposited DAI into Value’s stablecoin vault.

Then the attack exploited the pricing oracle utilized by Value DeFi’s withdrawal method by completing a series of stablecoin swaps in Curve. To summarize, the exploit let the attacker drain around $6.5 million worth of DAI from the multi vault pool before paying back the flash loans. You can see the full transaction here on etherscan.

Value DeFi Compensation Plan

The team plans to create a compensation fund that will use a combination of developer and insurance funds. Along with a percentage of the fees generated by the protocol. However, the proposal is to create an elastic supply IOU “I owe you” token. This would deploy at a 1:1 ratio for every dollar lost by the hack.
  • The compensation fund will buy back IOU tokens to burn them until the lost funds have been paid back. Essentially, the team hopes this market pressure will keep the IOU token to hold a $1 peg.
  • IOU token will automatically rebase every week to accrue interest, at the rate of 10% APY. This compensates affected farmers for their lack of access to capital.
  • IOU tokens will be tradable, meaning affected depositors could exit early even at a profit if there is enough market demand.
Of course, the VALUE token dipped since the attack with the price falling to a new low of $1.90 on Saturday, a drop of over 22% in 24 hours. However, since then the price is stabilizing at $2.05 though it was trading around $2.80 before the attack.

Due to its innovative nature DeFi protocols continue to be vulnerable to ever-expanding attack vectors. Value DeFi states their team has no plans to give up despite the attack. And will come back stronger, with more security, while pushing their roadmap forward!

Oracle Platform for Artificial Intelligence Models

what is oraichain oracle data AI model
Oraichain is a data oracle platform that focuses on connecting trustless applications with Artificial Intelligence models. The platform is powered by the ORAI token for payments and governance. Here we will take a look at what is Oraichain building in the blockchain data oracle sector.

What is Oraichain?

Oraichain is a bridge for connecting AI to smart contracts, the core technology of providing data streams to trustless applications is similar to Tellor or DIA. However, Oraichain is taking a more niche approach by focusing on AI models. Currently, smart contract languages such as Solidity or Vyper are much too strict to implement AI models natively on-chain. Generally speaking, they require inputs that are 100% accurate because code is the law.
What is Oraichain? Oracle Platform for Artificial Intelligence Models
Whereas, an AI model for face recognition would work off percentages of accuracy. Furthermore, to implement an efficient AI strategy you need high amounts of storage to input lots of data. But, blockchain networks such as Ethereum often limit the storage to help keep transaction fees down. As a result, Oraichain aims to bridge the gap by enabling secure access between smart contracts and Artificial Intelligence models.

Key Features of Oraichain

The platform is a public blockchain that implements a delegated proof of stake (dPoS) consensus protocol. In this way the transaction times are fast and data requests can be completed quickly. ORAI is the platform’s native cryptocurrency for paying network transaction fees, such as making data requests or setting up a validator.

Below are the key benefits of using Oraichain:
  • Oracle AI: Data streams for smart contracts to connect with AI models that can enhance their DeFi products.
  • Marketplace: Library of public AI algorithms available to connect with dApps or any application.
  • Publisher: Create, manage, and sell your own AI services via the marketplace.
  • Staking: Token holders can stake their ORAI to participate in securing the network, and earn rewards in the process.
  • Crowdsource: A request portal that deals with crowdfunding to develop new AI services, not on the market.
  • DAO: Oraichain is community-driven, where ORAI tokens provide holders with voting power.
A unique point of Oraichain is that the quality of provided AI models is constantly tested. When a data request comes through, it will also contain test cases. As a result, the AI provider must pass these test cases before receiving any payment for sourcing the data request. The idea is that test cases will be an incentive for providers to keep improving the accuracy of their AI models.

Oraichain Use Cases

What is Oraichain? Oracle Platform for Artificial Intelligence Models
  • DeFi products with AI strategies: the yield farming platform yAI finance uses Oraichain to source AI-powered risk management for its vault trading strategies. For example, its farming strategy automatically optimizes itself based on an AI model that calculates metrics such as ROI, Risk Score, and Price Prediction. The idea is that an AI-based trading performance will have better risk management for buying and selling tokens, as it's not influenced by human psychology.
  • Face authentication: Oraichain could enable the use of smart contracts through face authentication. In certain scenarios, this would be more convenient than always needing your private key, such as checking your balance.
  • Detecting fake news: The marketplace can combine results from various AI providers for a decentralized way of checking for fake news.
  • Quality control: with AI models the possibilities for designing smart contracts that can provide decentralized quality control are endless: counterfeit detection for supply chains, diagnostics for X-ray images, KYC verification, handwriting detection, loan decisions from user’s credit score, and more.
As with other cryptocurrency projects building in the data oracle sector, the demand for these platforms will expand as the DeFi economy continues to grow. Oraichain shows it is more than capable of fulfilling those demands with its MVP product yAI finance. Furthermore, the platform is filling a niche area of data streams powered by AI models that industry leaders such as Chainlink or Band Protocol may overlook. Mainnet launch in on their roadmap for February 2021. To summarize, we recommend watching their announcements and future exchange listings closely!

What is yAxis? The Meta Yield Aggregator

yAxis defi yield aggregator metavault
yAxis is a yield aggregator product that aims to put simplicity above all. Currently, the landscape of the DeFi farming economy is growing at an explosive rate. As a result, it is more and more complicated for the average user to find the product that offers the best returns on their deposits. However, with yAxis’ MetaVault users get exposure to the maximum yield with nearly no effort, the platform aims to become Set It and forget it.

What is yAxis?

The first thing to understand about yAxis is that it operates above the yield strategy layer of the DeFi economy. As a result, yAxis can take advantage of the best opportunities found in yVaults, pJars, DFI Money, or Value DeFi.
To summarize, the MetaVault will automatically choose the best yield farming strategy for you. Furthermore, if the vault decides to switch to a different strategy it will automatically take the most optimal path to do so. Users can deposit multiple different types of stablecoins to pool funds together as a way to save on gas fees. In return, you would receive the MetaVault token (MVLT) which represents your share of the MetaVault. To withdraw your deposit plus interest, you just need to return your MVLT to the MetaVault.

Advantages of the MetaVault

  • Deposit multiple stablecoins (USDT, USDC, or DAI) in one click.
  • Withdraw to any supported stablecoin in one click.
  • Auto-compounding and auto-reinvest.
  • Auto-stake your MVLT tokens to earn the governance token YAX rewards.
  • Community governance for deciding the current farming strategy.
  • A performance fee that market-buys YAX tokens and distributes them to stakers.
This first iteration of the MetaVault does require users to click to transfer to a different strategy meaning it is not entirely hands-off.
However, the team states the next version will feature full automation when the community votes through a strategy change.

What is the YAX token?

The community determines the MetaVault strategy through staking YAX tokens. This will happen in a custom governance platform that should go live with MetaVault v2 in December. Once live, the governance UI will display factors such as APY, vault withdrawal fees, price slippage for converting assets, and strategy risks.
Essentially, tokens holders will stake their YAX tokens to decide what they believe is the best strategy for the platform. As an incentive for active participation, YAX voters earn a performance fee generated by the MetaVault. Furthermore, YAX’s token distribution is following a fair launch with no pre-mine or developer fund. The protocol allocates 10% of YAX rewards to a treasury fund which will be deployed through community governance.

Liquidity mining program… you can earn YAX tokens by depositing funds into the MetaVault, or by providing liquidity to the Uniswap YAX/ETH pair.
  • Note you have to stake your Uniswap LP tokens in the farm pool to earn rewards.
Looking to the future… MetaVault will never face limitations of using one yield aggregator, meaning it can achieve higher capital efficiency and could implement cross-chain strategies. Excitingly, the team is developing an additional product in stealth known only as Project Y.O.D.A. for release in Q1 2021.

NFT Spotlight

Be sure to check the listing on Rarible or OpenSea to view the digital crypto artwork in its full glory, as some art is animated.
Red Panda

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The Beast 2020

The more things change the more they stay the same.

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The information provided on this email should not be taken as investment advice, financial advice, trading advice, or any other sort of advice. dExplain does not recommend the use of any decentralized application nor that any cryptocurrency should be bought, sold, or held by you. You should do your own research and consult a financial advisor before making any investments.

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