Cross-chain bridge protocol Multichain reported that some of its bridges were unavailable due to “force majeure” on Wednesday, adding that the time to resume service was unknown.
Some transactions have been stuck on its bridge pathways for longer than five days. At the time of writing, the blockchain scanner shows around 115 transactions have been pending for longer than 24 hours. The bridge also saw $18 million more withdrawals than deposits over the same period, likely fuelled by the vague service disruption announcement and rumors that the team behind the protocol has been arrested in China.
One of the biggest contributors to these withdrawals was the Fantom blockchain, which accounts for the bulk of Multichain’s $1.78 billion in Total Value Locked (TVL). Fantom withdrew $2.4 million worth of Multichain’s native token MULTI from its liquidity pool on SushiSwap, blockchain data shows.
Fantom Foundation Director Andre Cronje told The Block in a Telegram message that there was “no point” providing liquidity in times of uncertainty, but expects to resume doing so after the team makes a statement around the issues.
“You can see in the wallet the funds haven’t been sold, as soon as Multichain is able to release a statement around this and clear it up we will LP again,” Cronje said.
The Block also reported that Cronje was not too concerned by Fantom’s close ties to Multichain, despite the fact that Multichain-issued tokens account for 78% of the market cap of tokens on Fantom. Cronje said the assets were secured by the multi-party computation protocol and the Fantom bridge would be unaffected.
“If something did happen, it would impact multichain-issued USDC, DAI, and wBTC. Everything else of significance is natively issued,” he said.
Still, Multichain-issued tokens account for 81% of the stablecoin market cap within the Fantom ecosystem, according to data from An Ape’s Prologue.
After the rumors involving the Multichain team being arrested, we decided to take a look at the protocols with the highest exposure to it.
In first place comes Fantom, with 35% of its total TVL locked in it and a significant portion of the chain's assets issued by the bridge. pic.twitter.com/ZTp6TH1bod
— Thanefield Research (@ThanefieldRes) May 24, 2023
DeFi researcher Ignas noted on Twitter that despite Fantom’s reliance on Multichain, there was no significant outflow of capital in terms of Fantom’s TVL. Meanwhile, Multichain liquidity providers on Fantom were more obviously panicking, evidenced by the $33 million withdrawals and mere $1.7 million deposits made on the day.
“Perhaps the worst is yet to come, but on-chain data doesn’t reveal a massive outflow of capital. Yet what’s worrying is the lack of communication from the team. It has been shared that the current Multichain CEO Zhaojun hasn’t been online in a week,” said Ignas.
