Fantom: Following Multichain Bridge hack, TVL falls to 2-year low
- Fantom’s TVL hit a two-year low.
- FTM saw increased distribution as key momentum indicators trended downwards.
The total value of assets locked (TVL) across DeFi protocols housed within Layer 1 blockchain Fantom [FTM] has plummeted by 67% in the past few weeks due to the failure of the Multichain bridge, data from TheBlock revealed.
The recent failure of the Multichain bridge had a severe impact on the Fantom ecosystem. TVL in Fantom's DeFi protocols dropped by 67% as a result, in just a few weeks. pic.twitter.com/qYXxdo4mSb
— The Block Pro (@TheBlockPro__) July 21, 2023
Read Fantom’s [FTM] Price Prediction 2023-24
On July 7, 2023, the Fantom Multichain bridge was hacked, resulting in the loss of $126 million worth of cryptocurrency. The attacker exploited a vulnerability in the bridge’s code to withdraw funds from the bridge’s Fantom network.
The hack was discovered by Multichain, who immediately halted the bridge and advised users to revoke all contract approvals related to Multichain.
The Multichain service stopped currently, and all bridge transactions will be stuck on the source chains.
There is no confirmed resume time.
Please don’t use the Multichain bridging service now.
— Multichain (Previously Anyswap) (@MultichainOrg) July 7, 2023
Fantom cries for help
Information from DeFi data provider DefiLlama revealed that prior to the launch, Fantom’s TVL was $201.4 million. As users sought safety by removing their funds from the protocols on the chain, its TVL trended downwards and was pegged at $81.84 million at press time.
The last time Fantom’s TVL was this low was in May 2021.
For context, seven out of the top 10 leading DeFi protocols on Fantom have suffered double-digit TVL declines in the last month. With a current TVL of $9.55 million, Beefy Finance suffered the biggest drop in TVL, recording a 65% decrease in the last 30 days.
Regarding network activity on Fantom, data from Artemis revealed an uptick in daily active addresses since the hack. It grew by 60% from 7 July, sitting at 40,970 active addresses on Fantom as of 20 July.
During that period, significant fluctuations in daily transaction counts indicated that the surge in active addresses might have been driven by previously inactive users rallying to the protocols on the chain after the hack, seeking to withdraw their funds.
FTM bears the brunt, but…
At press time, Fantom’s native coin FTM traded at $0.2582, experiencing a 15% drop in value last month, per data from CoinMarketCap.
Assessing its price movement on a D1 chart revealed a significant decline in accumulation. At press time, key momentum indicators trended downwards, suggesting that many traders have taken to distributing their FTM coins to hedge against further losses.
For example, the Relative Strength Index (RSI) was 41.01. The Money Flow Index (MFI) rested in oversold territory at 27.47. The Chaikin Money Flow (CMF) indicator was below its zero-center line, signaling increased liquidity exit from the FTM market.
Realistic or not, here’s FTM’s market cap in BTC’s terms
A CMF value below the zero line is a sign of weakness in the market.
Despite the drop in FTM accumulation, its funding rates across exchanges remained positive. This meant that demand for long positions was relatively high compared to short positions as traders placed bets in favor of a price rally.