Fantom-based DeFi projects are leaving bridged tokens due to Multichain’s instability.

Takeaways

• The Multichain (MULTI) bridge-builder’s chaos is causing concern in the Fantom (FTM) ecosystem, despite reassurances from the Fantom Foundation.
• DeFi protocols are attempting to protect themselves from a potential bridge outage that could devalue or strand wrapped assets, including USDC, ETH, and many others, issued by Multichain.

A few decentralized finance (DeFi) projects on the Fantom blockchain (FTM) have started moving crypto to other networks this week due to fears that Multichain’s (MULTI) mounting bridging crisis could put their tokens’ value at risk.

On Wednesday, the decentralized exchange (DEX) Beethoven X transferred $300,000 in treasury stablecoins from Fantom to Ethereum. Protocol builder Byte Masons did the same with ether (ETH) and USD coin (USDC) used in trading pools. Earlier this week, DeFi yield farm Beefy transferred $200,000 in tokens owned by Binance from Fantom to BSC at the request of the world’s largest exchange.

Disclosed on Discord servers, these actions showcase how Multichain’s faltering infrastructure and AWOL CEO are sending shockwaves through Fantom, the blockchain most heavily dependent on Multichain’s bridges for moving popular cryptocurrencies into and out of its on-chain economy.

For now, the moves appear precautionary: Multichain’s Fantom infrastructure worked fine at press time, even as its routes to other minor chains were failing. Michael Kong, CEO of the Fantom Foundation, told CoinDesk the “Multichain bridge is fully operational and safe.”

• EOS EVM v050 launches with Yield+ Liquidity mining for EOS
• Fantom pays developers for gas fees
• THORChain’s new feature may push back RUNE bears

However, fear, uncertainty, and doubt (FUD) are spreading quickly. “The current FUD surrounding Multichain has severely impacted the entire Fantom ecosystem,” a contributor to the Mummy (MMY) exchange told their Discord community early Thursday, “and Mummy is not exempt from this wave.”

Multichain’s vital role at Fantom

The fears stem from Multichain’s importance to Fantom. Nearly 40% of cryptocurrencies on the Fantom network (excluding FTM itself) got there by way of Multichain’s Fantom bridges, according to quant trading firm Thanefield. If anything were to happen to that connection, those wrapped assets could de-peg and, in the worst case, get stranded.

A CoinDesk review of nine Discord servers for Fantom-based DeFi projects found that community members and project leaders are growing increasingly concerned about the state of Multichain – the bridge-builder who can’t maintain its servers because its CEO has disappeared – and how its crisis could affect Fantom.

No one is talking about abandoning Fantom outright. On the contrary, the messages reviewed by CoinDesk showed that even those teams taking the most aggressive measures remain publicly committed to the ecosystem, a major outpost for DeFi traders. They’re looking to the Fantom Foundation to broker new partnerships that would solve the current dependency on Multichain.

One surefire way to solve the crisis would be to bring a native form of the USDC stablecoin to Fantom, thereby eliminating the need for wrapped versions whose fates are dependent on the bridges who issue them. But that hasn’t happened yet, leaving Multichain’s bridged stablecoins (80% of stablecoins on Fantom are bridged in via Multichain, according to Thanefield) as the predominant trading pairs in the ecosystem.

Leaving Multichain-linked assets

Some protocols are moving away from Multichain-linked assets even now. The DEX Equalizer (EQUAL) has begun incentivizing traders toward USDC issued by bridge-builder Axelar over that of Multichain, the ecosystem’s predominant stablecoin.

The team building Hector (HEC) has told its community that stablecoin airlifts to other chains are on the table. At decentralized lending protocol Tarot (TAROT), the team said Thursday it is “reevaluating” its risk framework for integrating bridged stablecoins.

A depegging of USDC could spell trouble for derivatives protocols reliant on tokens meant to trade for $1 staying at that level, said GrapeHayz, a pseudonymous member of Equalizer’s Discord.

“I hope you can think about the domino effect if the bridged USDC token is not worth 1 dollar but maybe 60-70 cents,” he said in a Discord message invoking the fallout from Terra Luna’s collapse. “I don’t think we will get there, but this is the elephant in the room.”

Beethoven X (BEETS) is a decentralized exchange that has already transferred $300,000 worth of Fantom-based stablecoins to Ethereum. The exchange is now taking steps to protect itself in case Multichain’s Fantom bridges experience any issues. This morning, the key contributors of BEETS submitted an emergency governance proposal to move $1 million in treasury-owned liquidity to other blockchains.

This article was edited by Nick Baker.