News of another project on the Fantom chain winding down has been circulating through the crypto community. This move results from growing concerns over multichain exposure, following the recent debacle faced by the well-known Chinese cross-chain protocol, Multichain. SpiritSwap, a decentralized exchange (DEX) built on the Fantom blockchain, revealed plans to cease operations by September 1 due to unprecedented exposure to Multichain.
Exposing the severity of the issue, developers highlighted that the Multichain hack left SpiritSwap’s entire treasury drained and incapable of financing critical operational aspects including costs, salaries, and marketing efforts. Founded in 2021, SpiritSwap was one of the popular DEXs on Fantom, reaching a total value locked (TVL) high of $374 million in January 2022. Now, the TVL stands significantly lower at $2.92 million at the time of writing, further decimated by the Multichain incident.
Adding to the negativity surrounding Multichain, news surfaced that its co-founder, Zhaojun He, was detained by Chinese authorities in May on undisclosed charges. Astoundingly, Zhaojun He held all access to Multichain private keys and servers at the time of his arrest, casting a dark shadow over the enterprise and its operations. As a result of this uncertainty, Multichain and its user funds have been swapped for stablecoins and removed from the protocol.
The case of Fantom turns even more interesting. A mix of seized funds and capital flight due to the incident dropped Fantom’s TVL from $364 million in May to just $72 million currently. Before this unfortunate event, Fantom had a lending protocol, Geist Finance, which announced its closure due to exposure to Multichain.
These incidents have painted a cautious picture for the crypto community. Multichain was the cross-chain protocol of choice for Fantom before the incident, and its arrest and subsequent issues have left a big question mark on the project’s future. Likewise, projects like SpiritSwap and Geist Finance have keenly felt the brunt of such unexpected risks associated with multichain protocols.
That said, there also lies an opportunity for a new team to take over and revive the project – a new chance for growth. Yet, if no change in ownership takes place by the deadline, the DEX has ominously stated it will terminate all operations. The crypto markets remain cautiously optimistic, understanding, as always, that the path to innovation does not always run smooth.
Source: Cointelegraph
