Fantom, a smart contract platform, has experienced a significant decline in activity and total value locked (TVL) due to the recent problems faced by Multichain, according to co-founder Andre Cronje. DefiLlama data shows that Fantom’s TVL decreased from over $364 million in early May to approximately $70 million on July 14. In 2022, Fantom’s TVL reached its peak at $7.5 billion.
Cronje expressed his disappointment in Multichain’s debacle, stating that it was a major setback for the smart contract platform. He had previously received assurances from the Multichain team regarding server decentralization, access, and geolocation distribution. Cronje emphasized the importance of verifying information rather than blindly trusting it.
The downturn in Fantom’s TVL can be attributed to Multichain’s announcement on July 14, revealing that operations would be shut down following the arrest of their CEO in May. With the CEO being the sole person in control of Multichain’s servers, the arrest and subsequent technical challenges led to an exploit on July 6, resulting in the withdrawal of over $125 million worth of cryptocurrencies from multiple wallets. This exploit significantly impacted the Ethereum side of Fantom, Moonriver, and Dogechain bridges, as the majority of funds held on each bridge were affected.
Furthermore, Geist Finance, a lending protocol, had to permanently cease operations due to losses incurred from the exploit. Prior to the hack, contracts running on the Fantom network contained over $29 million worth of crypto assets. The closure of Geist Finance had a substantial impact on Fantom’s TVL. Circle and Tether, stablecoin issuers, took action by freezing over $65 million in assets tied to the attack. Fantom is actively engaging with both companies for native issuance and reviewing rollups for native bridge infrastructure in an effort to recover the assets.
In light of these events, Fantom is exploring various options and collaborating with relevant organizations to mitigate the impact of the exploit. Andre Cronje has expressed the platform’s determination to recover the assets and is working towards finding a solution.
The ripple effect of Multichain’s problems extends beyond Fantom, impacting other entities like Geist Finance and causing disruptions in the broader crypto space. The incident highlights the importance of robust security measures and decentralized control to safeguard against such exploits.
As Fantom deals with the aftermath of Multichain’s issues, it faces the challenge of rebuilding trust and reassessing its infrastructure to prevent similar incidents in the future.