Welcome to the latest edition of Cointelegraph's decentralized finance newsletter.

As the calendar yr comes to an end, Cardano's personable leader Charles Hoskinson shares a message of optimism, unity and collaboration for the time to come of crypto.

As a gesture of goodwill for the holiday season, this week our long-form DeFi newsletter will be published in total here every bit an article alongside the regular email. Subscribe below for total access to next week's edition!

Polygon fixes potential billion-dollar protocol vulnerability

Layer-two protocol Polygon announced this week the rectification of a potentially multi-billion-dollar vulnerability in its proof-of-stake Genesis contract through implementing an Emergency Bor Upgrade to the mainnet.

The incident and subsequent upgrade took place at the offset of December. If compromised to the fullest extent by a malicious entity, the vulnerability could take resulted in almost $24 billion in financial losses, equating to 92.vii% of the network's native MATIC tokens and effectively causing imminent demise.

According to a recent blog postal service from Polygon, two good-willed whitehat hackers, Leon Spacewalker and Whitehat2, discovered the incident on Dec. 3 and December. iv, respectively, alerting blockchain security platform Immunefi.

Following procedural investigation and authentication from Immunefi, the data was passed to Polygon, which upgraded the network on Dec. five, albeit a hacker was able to drain 801,601 MATIC ($2.04 million) earlier the problems was resolved.

Polygon co-founder Jaynti Kanani emphasized the network'south power to promptly resolve the critical bug, noting in a web log post that:

"What'due south important is that this was a examination of our network's resilience also every bit our power to human activity decisively under pressure. Considering how much was at stake, I believe our squad has made the all-time decisions possible given the circumstances."

Leon Spacewalker is set to be rewarded a cool $two.2 million in stablecoins for their efforts, while the second anonymous hacker, Whitehat2, will pocket $1.27 million in MATIC tokens straight from Polygon.

Related: Here's how Polygon is challenging the limitations of Ethereum, as told by co-founder Sandeep Nailwal

Cardano founder Charles Hoskinson predicts DeFi "greater extinction"

This week, in an end-of-year YouTube live stream titled "DApps and Cardano DeFi Alliance," Cardano founder Charles Hoskinson spoke candidly about the emerging landscape of DeFi projects and creators on Cardano in improver to advising participants about the volatile nature of exponential markets.

"It's very hard to practice this kind of engineering science and to do information technology right, with an eye and foresight for the future. Unfortunately, many of the projects in this space will non stand up the examination of fourth dimension. Information technology's just a fact that we will see a not bad extinction occur in the side by side five to x years."

Broadcasting with axiomatic enthusiasm from "warm sunny Colorado" — a location which he humorously describes as "e'er warm, always sunny, sometimes Colorado" — Hoskinson predicted a big year ahead for the cryptocurrency space and his beloved Cardano.

The "only thing that holds us back is united states," he said before exclaiming that empathetic and friendly collaboration is a central component to productive dialogue and progress toward our shared pursuit of a more prosperous financial future.

Following the successful launch of Cardano's smart contracts in September through the Alonzo difficult fork, the projection has come up under scrutiny for tedious developments on its roadmap. Despite this, Hoskinson believes that the user count will exceed 10 times the current 2 million in 2022 because of the vast demand within the nonfungible token space.

Aslope this, Hoskinson introduced the Cardano DeFi Alliance, an initiative that seeks to construct an open-source library of resources, tools, services and all-time practices to cultivate the growth of the entire DeFi ecosystem.

Related: Cardano'south ADA cost eyes 30% rally with a potential 'triple bottom' setup

Huobi Enquiry predicts rise in play-to-earn games in 2022

Huobi Inquiry, the research arm of crypto exchange Huobi, has identified GameFi — which refers to the combination of gaming and decentralized finance — every bit an emerging trend based on its quantitative analysis of on-chain data.

In an extensive blog postal service, Huobi detailed GameFi projects' sharp increases in user action and volume transacted since June, stating "DApp rankings show that five of the peak nine apps are GameFi apps." Farther, "as of early on December [2021], GameFi's weekly active users take reached nine.21 million, a record high."

The researchers noted that these games differ from traditional games, such as Globe of Warcraft, across three distinctive categories: gratuitous trading of game materials, free trading and pricing of game currencies, and protection of holding rights.

Huobi Enquiry argues that GameFi's ability to "significantly reduce transaction fees for golden farming," a term used to denote the conversion of in-game tokens to real-world currency, is the primary reason for its heightened financial appeal:

"In GameFi, the owners have the right to decide whether to sell sure resources or not, which lifts the degree of user independence and stimulates market competition, thus saving transaction costs."

Additionally, developers in the GameFi infinite have the advantage of deploying private property rights via nonfungible tokens at a lower price: "This not simply is a comparative advantage that traditional game developers never had, but also reflects the intrinsic value of blockchain technology in the gaming industry," the business firm stated.

Related: Korean regime tells Apple and Google stores to have downwardly P2E games

Token performances

Analytical data reveals that DeFi'due south total value locked has decreased by 1.8% during the calendar week to $140 billion, seemingly slowing down for the holiday season.

Data from Cointelegraph Markets Pro and TradingView reveals that DeFi's top 100 tokens by market place capitalization have mainly been bullish over the concluding seven days.

SushiSwap (SUSHI) took the lead this week with 42% gains. Oasis Network (ROSE) blossomed 37.5%, while Fantom (FTM) grew 26.ane%. Gnosis (GNO) and PancakeSwap (Cake) claimed fourth and 5th places this week with 25.4% and 3%, respectively.

Interviews, features and other cool stuff

  • 5 ways derivatives could change the cryptocurrency sector in 2022
  • What is a honeypot crypto scam and how to spot information technology?
  • Analysts say 2022 volition be 'defined by agility and toll-efficiency' instead of 'blockchain purity'

Cheers for reading our summary of this week's most impactful DeFi developments. Join us once more next Friday for more stories, insights and education in this dynamically advancing infinite. Happy New Year!