Liquidity protocol DeFi Edge halts deposits, affecting crypto investors

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Liquidity management protocol DeFi Edge has blocked all deposits to its strategy contracts made from its user interface on Oct. 14, leaving users scrambling to find an alternative. On Sept. 30, the protocol’s team posted to X announcing that some strategies would be “delisted.” However, the new deposit block appears to affect all strategies and not just the ones that were mentioned in the post. Withdrawals from DeFi Edge are still functioning as of the time of publication. DeFi Edge is a decentralized finance (DeFi) protocol used by investors who want to provide liquidity to decentralized crypto exchanges. It automates some of the tasks that liquidity providers have to perform, such as rebalancing their inventories and claiming fees. The app is integrated with multiple exchanges, including PancakeSwap, Thena, Camelot, Lynex, QuickSwap and others. On Sept. 29 — the day before the DeFi Edge team announced it was delisting some strategies — the protocol held over $4.8 million worth of cryptocurrency in its contracts. On Sept. 30, the team announced on X that it was “delisting” some strategies used for the Camelot exchange on the Arbitrum network. It stated that users should withdraw their funds before Oct. 10, as these strategies would no longer be managed after that date. On Oct. 4, PancakeSwap on the BNB Network announced that all of its DeFi Edge contracts would be delisted: “Attention all users:  @DeFiEdge  will stop maintaining all its Position Manager vaults on PancakeSwap from 10 Oct 2024. Please remove your funds from their vaults before that to avoid any issues.” Two days later, DeFi Edge shared the post from its own X account. It added: “We urge you to remove your liquidity using PCS UI before 10th October.” Despite the warning, many users did not withdraw their liquidity prior to the deadline. According to data from blockchain analytics platform DefiLlama, over $3.6 million worth of cryptocurrency was still locked within DeFi Edge’s contracts by Oct. 10. Some users may have been unaware of the announcement, as the app’s user interface made no mention of it during the time period. As of Oct. 14, every strategy listed on the app’s interface displays a message stating, “You are not whitelisted. Please reach out in the DeFi Edge Discord community.” The strategies affected include some announced in the X posts on Sept. 30 and Oct. 8, as well as others that were unrelated, such as those used for QuickSwap, Thena and Uniswap. Related: Uniswap Labs, UNI holders could make $468M a year from new L2: DeFi Report The error message contains a link to the protocol’s official Discord channel. Cointelegraph contacted the team through this Discord channel but did not receive a response by the time of publication. The channel does not contain any announcements of how a user can become whitelisted, if at all. As of Oct. 14, approximately $3.64 million worth of cryptocurrency remains within DeFi Edge contracts. Liquidity management apps have been plagued by exploits in the past. On Jan. 22, DeFi Edge’s competitor, Concentric, lost $1.8 million when an attacker stole the development team’s private key. The protocol subsequently closed down and never reopened. On Jan. 4, liquidity manager Gamma Protocol also suffered a $400,000 exploit . However, the team later patched the vulnerability and reopened the protocol. A Gamma representative told Cointelegraph on Oct. 14 that it does not plan to require users to be whitelisted. Magazine: Proposed change could save Ethereum from L2 ‘roadmap to hell’ 