Crypto Giants Binance and Others Distance Themselves from Multichain Amid Bridging Rumors
Amid mounting concerns surrounding the condition of Multichain, a prominent platform for asset transfers across various blockchains, significant participants in the cryptocurrency ecosystem are strengthening their defenses.
Because Bitcoin
May 26, 2023
CoinDesk reported that amid concerns about Multichain, a significant platform for asset transfers across blockchains, key players in the crypto ecosystem are strengthening their defenses. Speculation and rumors have emerged following technical issues that hindered token withdrawals from the protocol.
The lack of clear communication from Multichain has fueled further speculation about its safety and the fate of its team. The ambiguous situation has prompted various entities to proactively manage risk, demonstrating the broader potential risks associated with crypto bridges beyond the well-known threat of hacking.
Multichain's prominence among bridges adds complexity to the situation. It ranks as the third-largest bridging protocol in terms of transfer volume and total value locked, according to Messari and DeFiLlama data. Like other bridges, Multichain uses a mint-and-lock mechanism to transfer assets across 92 blockchains. For example, when USDC stablecoin is bridged from Ethereum to Fantom via Multichain, it becomes a "wrapped" token called anyUSDC. Despite being bridged assets, anyUSDC and other wrapped USDC tokens dominate 50% of Fantom's stablecoin market. However, when Multichain faced issues, wrapped USDC tokens on Fantom lost their dollar peg. This caused some traders to buy them at a 30% discount. Multichain is responsible for 80% of the stablecoins on Fantom. Binance, the world's largest crypto exchange, warned traders about the risks of non-native assets in a tweet.
Despite high reliance on Multichain, the Fantom ecosystem has not witnessed a mass exodus. Parsec data shows steady total value locked, despite some outflows to other chains.
According to Michael Kong, CEO of the Fantom Foundation, the multichain bridge with Fantom remains fully operational and secure. Internal issues with Multichain do not affect the bridged assets on Fantom, CoinDesk further reports.
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