A Degen Chain user recently suffered a significant loss, losing 90% of his assets, totaling 785,000 DEGEN, during a cross-chain transaction. This loss was due to substantial slippage caused by low liquidity. The incident has sparked reactions from the crypto community, highlighting ongoing concerns about the security of cross-chain transactions.
Liquidity Causes Slippage
The problem began when the user, known as Tempe.degen, attempted to transfer DEGEN from its original chain to Base. For this cross-chain transaction to occur, DEGEN assets must first be converted to ETH on the DEGEN Chain.
The asset then moves to Base and is reconverted to DEGEN before being sent to the user’s address. During this process, a scarcity of ETH in the DEGEN/ETH pool caused significant slippage, resulting in the substantial loss of assets.
Tempe.degen pointed out that the chain did not use the appropriate bridge and that the user interface was confusing. These factors contributed to the unfortunate outcome, underscoring the complexities and risks associated with cross-chain transactions. Poor liquidity remains a major issue for some pools, prompting DeFi founders to seek solutions to improve the situation.
Platform Takes Full Responsibility
In response to the incident, the company behind DEGEN Chain acknowledged the issue and assured affected users of a full refund. A spokesperson stated, “One of our users lost almost 90% of their funds during a bridge transfer from Degen Chain to Base. Bugs like this should never happen, especially when user funds are involved. If you’ve faced a similar problem, we’ll create a form to ensure everyone gets refunded.”
Additionally, the platform highlighted poor service from providers and took responsibility for the incident. They assured the community that changes would be made to improve the platform’s reliability. These changes will include a shake-up in the coming weeks to provide the best service possible.
This incident underscores the need for improved security measures and liquidity management in cross-chain transactions. As crypto adoption grows, ensuring investors’ safety and confidence is crucial to fostering wider market growth.
The company’s swift response and promise of reforms aim to restore user confidence and highlight the ongoing challenges in the DeFi space.
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