GizmoLab Report: Cutting-Edge Developments in Web3📈

A Quick TL;DR:

- PayPal Expands Crypto Features for U.S. Businesses

- Onyx Protocol Exploited for $3.8M Due to Known Bug

- Coinbase’s Base Reaches $2 Billion in Total Value Locked

- Aave’s WBTC Holdings Hit Record High Amid Ownership Restructure

- Ledger Expands Crypto Buying with Topper Integration

PayPal Introduces Cryptocurrency Buying, Holding, and Selling for U.S. Business Accounts

PayPal has rolled out new cryptocurrency features for U.S. business accounts, allowing merchants to buy, hold, and sell digital currencies directly from their accounts. Announced on Wednesday, this feature is currently unavailable in New York but aims to meet the growing demand for crypto services from businesses nationwide. PayPal's senior VP of blockchain, Jose Fernandez da Ponte, noted that business owners had been seeking access to the same cryptocurrency capabilities offered to individual consumers.

In addition, PayPal now allows business accounts to transfer crypto externally to third-party wallets. This move marks another step in PayPal's increasing involvement in the crypto space, which began with its 2020 introduction of consumer crypto services. In 2023, PayPal launched its stablecoin, PayPal USD (PYUSD), integrated it into the Xoom platform for fee-free transfers, and extended its availability to the Solana blockchain. These developments provide greater flexibility and utility for merchants handling digital currencies.

Onyx Protocol Hit by Second Exploit, Loses $3.8 Million via Vulnerability in Compound Finance Codebase

Decentralized finance (DeFi) platform Onyx suffered a $3.8 million exploit on Sept. 26, marking the second time the protocol has been targeted using a known vulnerability in the Compound Finance v2 codebase. The attack was further facilitated by a flaw in Onyx’s non-fungible token (NFT) liquidation contract, according to a report by blockchain security firm PeckShield. This issue allowed the attacker to exploit the protocol by inflating self-liquidation rewards due to poor validation of user inputs.

The drained funds included 4.1 million virtual USD (VUSD), 7.35 million Onyxcoin (XCN), and smaller amounts of Wrapped Bitcoin (WBTC), Dai, and Tether (USDT). Onyx acknowledged the incident and pointed to the faulty NFT contract as the primary cause. The same Compound Finance bug had previously been exploited to target Onyx in November 2023 and Hundred Finance earlier in 2023. This exploit highlights ongoing vulnerabilities in DeFi protocols and their underlying smart contracts, posing significant risks to users.

Coinbase’s Layer 2 Network Base Surpasses $2 Billion in Total Value Locked, Becomes Second-Largest Optimistic Rollup

Base, the Layer 2 Ethereum network developed by Coinbase, has reached $2.08 billion in total value locked (TVL), positioning it as the second-largest optimistic rollup, just behind Arbitrum. This marks an impressive 370% year-to-date growth, rising from $430 million at the start of the year, according to DeFiLlama data. Base’s success is driven by decentralized exchange Aerodrome, which holds over $1 billion in deposits, along with Uniswap’s contribution of approximately $220 million. Launched in August 2023, Base enhances Ethereum’s transaction efficiency by processing transactions off-chain and posting data periodically on-chain.

The network has also surpassed others in terms of user activity, boasting the highest active addresses and daily transactions among optimistic rollups. This surge comes amidst a broader resurgence in decentralized finance (DeFi), as key indicators like active loans and TVL show substantial recovery from 2023 lows. Coinbase is also currently engaged in legal battles with the SEC, seeking regulatory clarity for its operations in the U.S. crypto market.

Aave’s Wrapped Bitcoin Holdings Surge to Record High Despite Imminent Ownership Restructure and Rival Protocols Limiting Exposure

Aave’s holdings of Wrapped Bitcoin (WBTC) reached an all-time high, with 37,050 WBTC worth $2.42 billion deposited in Aave v3, reflecting a 10% increase since August. This surge comes amid an upcoming ownership restructure of WBTC, causing rival decentralized finance (DeFi) protocols to reduce their exposure to the token. Despite this, Aave also integrated two new Bitcoin-backed tokens—Coinbase’s cbBTC and Threshold’s tBTC—further diversifying its offerings. Coinbase launched cbBTC on Sept. 12, and within days, Aave became its largest holder.

Additionally, Aave's community continues to resist limiting exposure to WBTC, preferring instead to onboard new assets. Meanwhile, BitGo, WBTC’s current custodian, is planning to transfer protocol control to a joint venture, including Tron’s founder, Justin Sun. This development has triggered concerns among other DeFi platforms like Sky (formerly MakerDAO), which moved to limit WBTC use due to fears over Sun’s involvement. Lastly, TrueCoin settled charges with the SEC for misleading investors about TUSD’s backing, adding to the controversy surrounding Sun-affiliated projects.

Ledger Hardware Wallet Integrates Uphold’s Topper, Expanding Crypto Purchasing Options

Ledger, the leading hardware wallet provider for cryptocurrency, has expanded its crypto purchasing options by integrating Topper, a fiat-to-crypto on-ramp from Uphold, into its Ledger Live app. Announced on September 26, the integration adds a new method for users to buy Bitcoin and other cryptocurrencies directly using fiat currencies like the US dollar. Currently, Ledger Live offers 14 on-ramp services but only one off-ramp solution, with plans to add more.

Topper supports 228 crypto assets across 36 networks and aims to launch an off-ramp feature by Q4 2024. The integration brings new flexibility to crypto users, allowing them to buy and store digital assets securely on Ledger’s hardware wallet. While Ledger’s hardware wallet is self-custodial and doesn’t require KYC, on-ramp transactions through Topper do require identification. This partnership enhances the ease of access for global users, especially in high crypto adoption areas, and aligns with Ledger’s long-term goal of increasing crypto adoption.

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