Fantom Co-Founder Worries as Multichain Issues Impact Smart Contract Platform

 Fantom Co-Founder Worries as Multichain Issues Impact Smart Contract Platform

Fantom Co-Founder Worries as Multichain

Andre Cronje, one of the co-founders of the Fantom network, has expressed his concerns regarding the recent difficulties faced by Multichain, stating that it has had a significant negative impact on the smart contract platform.

Over the past few weeks, Fantom has witnessed a notable decline in activity. Data from DefiLlama shows that the total value locked (TVL) in Fantom has dropped from over $364 million in early May to approximately $70 million as of July 14. The platform's TVL had reached its peak at $7.5 billion in 2022.

Furthermore, the price of Fantom's native token, Fantom (FTM), has experienced a decrease from $0.41 to $0.28 within the same timeframe.

Cronje expressed his disappointment in a forum thread on Fantom, highlighting the significant impact of Multichain's failure. He had received assurances from the Multichain team regarding server decentralization, access, and geolocation distribution.

Reflecting on the situation, Cronje emphasized the importance of "don't trust, verify," even within his own projects.

On July 14, Multichain made an announcement stating that it would cease operations due to the arrest of its CEO in May. The CEO's arrest left the company in disarray as they were the sole controller of Multichain's servers.

Adding to Multichain's challenges, the platform fell victim to an exploit on July 6. This exploit resulted in the withdrawal of over $125 million worth of cryptocurrencies from multiple wallets, impacting the Ethereum side of Fantom, Moonriver, and Dogechain bridges. The funds held on each bridge were significantly affected by these withdrawals.

It was discovered that Multichain had stored all shards of its private keys in a "cloud server account" solely controlled by its CEO. An unauthorized individual took advantage of this account to drain funds from the protocol.

The consequences of Multichain's issues extended to the lending protocol Geist Finance, which was forced to permanently shut down due to losses incurred from the exploit. Geist Finance had over $29 million worth of crypto assets locked in contracts on the Fantom network before the hack. The closure of Geist Finance had a profound impact on Fantom's TVL.

In response to the exploit, stablecoin issuers Circle and Tether have frozen over $65 million in assets associated with the attack.

Fantom is actively collaborating with both companies to explore options for native issuance and reviewing rollups for native bridge infrastructure. Cronje reiterated their commitment to recovering assets and stated that they are engaging with relevant organizations in pursuit of a solution.