In the evolving crypto ecosystem, growing concerns over the state of Multichain – a major platform for moving assets between different blockchains – have prompted key players to strengthen their defenses. Wild rumors surrounding Multichain’s safety and the fate of its team have surfaced, fueled by the platform’s silence and apparent technical issues affecting some users’ ability to withdraw tokens. In response, several entities are mitigating risk, shining a light on the potential dangers crypto bridges pose beyond the most prominent risks like hacks from groups like North Korea.
Multichain’s anyUSDC tokens and others like it dominate 50% of Fantom‘s stablecoin market, despite being bridged assets instead of native ones issued directly onto the chain by Circle. In this setup, all USDC tokens on Fantom rely on bridges to retain their value, which only works as long as the bridge operates smoothly. However, during the height of Multichain’s recent issues, wrapped USDC tokens on Fantom lost their dollar peg, leading some arbitrage traders to grab wrapped USDC tokens at a 30% discount.
The world’s largest crypto exchange, Binance, highlighted the risks of non-native assets when it implored traders to carefully consider the issuer behind stablecoins they hold. Even though the Fantom ecosystem’s heavy reliance on Multichain has not resulted in a mass exodus, total value locked has remained relatively steady, with only minor outflows to other chains observed. Michael Kong, CEO of the Fantom Foundation, stated that the “multichain bridge is fully operational and safe with Fantom” and whatever is happening internally with Multichain has no impact on bridged assets on Fantom.
Meanwhile, Squid Router, a bridging protocol built on Axelar that uses swaps instead of wrapped tokens to move value across chains, reported a surge in activity during the Multichain madness. Bridge transactions on Axelar also increased sixfold during the spike. The wrapping of assets for bridging has also caused unease beyond stablecoin markets; Binance has temporarily suspended deposits in 10 Multichain-bridged tokens while awaiting clarity from the Multichain team.
Bridging aggregation service Li.Fi has also taken preventative measures, closing access to Multichain. Amid all this commotion, Multichain’s namesake asset MULTI has suffered, dropping by 54% since the crisis of confidence began. The current crypto landscape underlines the need for greater transparency and communication between key players as the potential for wider-ranging consequences of unstable bridging practices arises.
Source: Coindesk
