Vitalik Buterin wants to turn UniSwap (UNI) into an oracle token

Ethereum inventor Vitalik Buterin wants to fundamentally change the token model of the decentralized exchange UniSwap and thereby make the entire DeFi space more secure.

The total capital managed by DeFi protocols has again reached an all-time high. At 164.16 billion US dollars, Total Value Locked (TVL) grew by 22.89 billion US dollars compared to the previous week.

But not only the total capital in the smart contracts of DeFi protocols is growing at record speed. The number of users in the Ethereum DeFi sector continues to climb.

The data from Dune Analytics illustrate the rapid adaptation of DeFi protocols. Since the beginning of the recordings, the number of users has increased enormously. At the time of going to press, over 2.1 million Ethereum addresses have already interacted with protocols from Decentralized Finance. However, this number presumably overestimates the true number of users. This is because some DeFi users do not only have a single Ethereum address. Still, the growth is remarkable.

But growth also has its downsides. Again and again there are frauds, hacks and smart contract errors that cause users to lose a lot of money – unfortunately this week too.

DeFi project loses over $ 25 million

xToken is a DeFi project that automates different staking strategies for its users. Past Wednesday the project fell victim to a hacking attack that stole tokens worth over 25 million US dollars. The attack resulted in xToken’s TVL falling nearly 30 percent.

According to the analyst Igor Igamberdiev the attacker used a Flashloan from dYdX to manipulate courses. These course manipulations made it possible for him to steal various tokens from the smart contract of the xToken protocol.

The founder of xToken, Michale Cohen, now has a report on the hack released, in which he said the project will come up with a detailed plan for holders to recover their tokens in the coming days. At the moment it is still unclear how exactly this will work.

Vitalik Buterin: “UNI should become an oracle token”

Ethereum inventor Vitalik Buterin has im UniSwap Governance Forum published a proposal for the UNI token. He suggests that the UNI token, similar to Augur’s ERC-20 token REPv2, should be expanded to include an oracle function. In doing so, he wants to establish a stable and secure cursor oracle for the trading pair Ethereum and the US dollar, on which the smart contracts of other DeFi protocols can be oriented.

Simply put, this means that, for example, Flashloan attacks or other attacks on cursor oracles could be prevented in the future, as it would be much more difficult to manipulate the oracles. Overall, the DeFi space would be safer for all participants and DeFi protocols could be based on the course data secured by the UNI token. In addition, the liquidity of the logs could become even lower as a result, so Buterin:

A cursor oracle for the trading pair ETH and US dollar enables more prudent risk management. It also becomes more difficult to manipulate cursor oracles, creating a more robust ecosystem with greater depth and liquidity.

Furthermore believes Vitalik Buterin that the UNI token is best suited for this task as it has the largest market capitalization of all DeFi tokens. Because the larger the market capitalization of an oracle token, the more difficult it is to get its data to manipulate.