Kannagi Finance Rug Pull: A $2.13 Million DeFi Scam
Kannagi Finance's Disappearance
Kannagi Finance, a decentralized finance (DeFi) platform, has reportedly executed a rug pull, vanishing with approximately $2.13 million of investor funds. The platform's digital presence, including its official website and social media channels, has been wiped out.
Understanding the Rug Pull
A rug pull is a deceptive act where project developers abruptly remove liquidity, causing substantial losses for investors. Despite a smart contract audit by SolidProof, no audit was conducted for the Vault contracts involved in this incident.
Fund Movement and Investigation
Blockchain security entities have reported that 600 Ethereum (ETH), valued at about $1.1 million, linked to Kannagi Finance, were transferred to the Tornado Cash crypto mixer. Investigations are ongoing to trace these transactions and uncover further details.
Kannagi Finance and the zkSync Era Network
Operating on the zkSync Era network, Kannagi Finance automates yield farming, facilitating passive income through smart contracts. The zkSync Era is a layer 2 protocol that enhances Ethereum's scalability using zero-knowledge technology while preserving its security and decentralization.
Impact on Total Value Locked
As of late July, Kannagi Finance's total value locked (TVL) plummeted from $2.13 million to a mere $0.17, indicating nearly total losses for users. This incident follows the $3.4 million hack of EraLend on the zkSync Era network, further tarnishing its reputation.
Broader Implications for zkSync Era
The zkSync Era network, which once boasted a TVL exceeding $500 million, has seen a significant decline, with current figures standing at $154.59 million. The Kannagi Finance debacle, alongside the EraLend hack, has contributed to this downturn, impacting the network's credibility and investor confidence.
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