Degen Chain User Loses 90% of Funds, Users In Trouble?

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As a researcher with a background in blockchain technology and decentralized finance (DeFi), I have seen my fair share of incidents involving asset losses due to technical glitches or poor user interface design. However, the recent case of Tempe.degen’s 90% asset loss during a cross-chain transaction on DEGEN Chain was particularly disheartening.

A user on the Degen Chain platform suffered a significant loss, amounting to 90% of his total assets or approximately 785,000 DEGEN tokens, due to discrepancies during cross-chain transactions between the Degen Chain and Base. These issues were caused by insufficient liquidity in prior transactions on the Degen Chain. This unfortunate event has generated concern within the crypto community as security incidents persist in casting a shadow over the market sentiment.

DEGEN Chain User Loses Assets

Tempe.degen, a user of the Farcaster platform, experienced a significant loss as 90% of their assets were wiped out during the bridge transfer from DEGEN to Base. The process involves converting the assets into ETH on the DEGEN Chain first, then moving it to Base and finally reconverting it back to DEGEN before sending it to the intended user addresses. In simpler terms, Tempe.degen had to convert their DEGEN assets into ETH within the DEGEN Chain for the bridge transfer, which was then converted back to DEGEN on Base before being sent to the recipient’s address.

Tempe.degen brought up concerns about the inappropriate use of a bridge and the perplexing user interface in the chain. This problem originated from the DEGEN/ETH pool, where a shortage of ETH resulted in significant slippage. Lack of sufficient liquidity is a prevailing challenge for several pools as DeFi pioneers continue their efforts to address this issue. It was noted that losses occurring during cross-chain transactions can adversely affect growth in the crypto community.

As a market analyst, I would rephrase this as follows: With the expansion of crypto, investors are increasingly focusing on broader growth driven by heightened market trust. Consequently, my analysis indicates that the current sentiments are connected to this developmental phase.

Platform Takes Full Responsibility

In response to the issue at hand, the company quickly admitted fault, expressing disappointment that such glitches occur and promising a complete reimbursement for those affected.

“A user on our platform experienced a significant loss, approaching 90%, during the transfer of their funds from Degen Chain to Base. Such incidents are unacceptable, particularly when it comes to handling users’ funds. If you’ve gone through a similar ordeal, we will provide a form to ensure all affected individuals receive reimbursement.”

We acknowledge our role in the delay of addressing these concerns, but it’s time for significant changes. In the upcoming weeks, we’ll implement major overhauls to deliver optimal service. This process won’t be instantaneous, but rest assured, we will make a positive transformation and apologize for any inconvenience caused.

— Degen (@degentokenbase) July 16, 2024

Additionally, the platform brought attention to the subpar offerings of suppliers, acknowledging the issue and vowing improvements. Expect significant adjustments within the upcoming weeks for optimal service delivery.

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2024-07-16 15:00