Andre Cronje Laments Impact of Multichain Integration: Fantom TVL Takes a Hit

Andre Cronje, co-founder of Fantom, has described the Multichain incident as a significant setback for the smart contract platform, leading to a notable decline in activity in recent weeks.

Data from DefiLlama reveals a substantial drop in Fantom’s total value locked (TVL), falling from over $364 million in early May to approximately $70 million as of July 14. At its peak in 2022, Fantom’s TVL reached a high of $7.5 billion. Concurrently, the native coin Fantom experienced a price decline from $0.41 to $0.28 during the same period.

In a forum thread on Fantom, Cronje expressed his disappointment, referring to the Multichain situation as a “big blow.” He mentioned that he had received assurances from the Multichain team regarding server decentralization, access, and geolocation distribution, but stressed the importance of “don’t trust, verify,” even for himself.

Cronje’s comments come in the wake of Multichain’s announcement on July 14 that it would cease operations following the arrest of its CEO in May. The CEO had exclusive control over Multichain’s servers.

Compounding the challenges faced by Multichain, an exploit occurred on July 6, resulting in the withdrawal of over $125 million worth of cryptocurrencies from multiple wallets, affecting the Ethereum side of Fantom, Moonriver, and Dogechain bridges. These withdrawals constituted a significant portion of the funds held on each bridge.

Multichain had stored all shards of its private keys in a cloud server account under the sole control of its CEO. This cloud server account was later exploited, leading to the draining of funds from the protocol.

The repercussions of the Multichain incident also impacted the lending protocol Geist Finance, which permanently closed due to losses from the exploit. Prior to the hack, over $29 million worth of crypto assets were locked in contracts running on the Fantom network. Geist’s closure had a substantial impact on Fantom’s TVL.

Following the exploit, stablecoin issuers Circle and Tether have frozen more than $65 million in assets linked to the attack. Fantom is actively engaging with both companies for native issuance and reviewing rollups for native bridge infrastructure. Cronje emphasized that they are exploring all available options and working with relevant organizations to recover the assets affected by the incident.

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