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Fantom Foundation Withdraws Funds from Multichain Amidst Uncertainty

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TL;DR Breakdown

  • Fantom Foundation, under Andre Cronje’s leadership, has withdrawn funds from SushiSwap’s liquidity pools as a precautionary measure in response to uncertainties surrounding the Multichain protocol.
  • Multichain has faced technical challenges, including prolonged downtime and unresponsive leadership. The withdrawal aims to mitigate risks until Multichain provides clarity on the situation, after which Fantom Foundation plans to resume liquidity provision activities.

In a recent development, Fantom Foundation, led by Director Andre Cronje, has chosen to withdraw its funds from liquidity pools on the popular decentralized exchange, SushiSwap. This decision comes in response to the ongoing uncertainty surrounding the Multichain protocol. Cronje explained that during times of ambiguity, it is prudent to exercise caution, thus prompting the temporary withdrawal of funds.

The foundation’s move involves the withdrawal of $2.4 million worth of MULTI, the native token of the Multichain protocol. However, it’s important to note that these funds have not been sold. Cronje emphasized that the decision was made to await a statement from Multichain, which is expected to shed light on the situation. Once clarity is provided, the foundation intends to resume liquidity provision activities.

Unexplained Downtime and Concerns Surrounding Multichain

Multichain has experienced a series of challenges recently, including five days of stuck transactions. Furthermore, several cross-chain bridge pathways, such as Kava, zkSync, and Polygon zkEVM, remain offline. Initially, the protocol cited an upgrade as the cause for the technical issues, but this explanation was later changed to a vague “force majeure.” Compounding concerns, the Multichain project’s leadership team has been unresponsive, leaving the community with lingering doubts and uncertainties.

Fantom Foundation’s close association with Multichain adds to the significance of this situation. According to data from The Block Research, a substantial 38% of the total-value locked on the Fantom blockchain is connected to Multichain. Additionally, Multichain-issued tokens contribute to 78% of the market cap of tokens on the Fantom network.

Nevertheless, Cronje expressed confidence in the security of assets held within the Fantom ecosystem. He highlighted that the multi-party computation protocol safeguards the funds, and the Fantom bridge remains unaffected by the current issues plaguing Multichain. Cronje emphasized that any potential impact would primarily affect multichain-issued USDC, DAI, and wBTC, while assets natively issued on the Fantom blockchain would remain secure.

Fantom Foundation’s Forward Outlook and Future Plans

The decision by Fantom Foundation to withdraw funds from liquidity pools on SushiSwap showcases the organization’s commitment to mitigating risks and prioritizing the interests of its stakeholders. As they await a formal statement from Multichain, the foundation intends to resume liquidity provision activities once clarity is provided. This measured approach ensures that the foundation can continue supporting the growth of the Fantom ecosystem while maintaining prudence in navigating uncertain situations.

Moving forward, Fantom Foundation aims to strengthen its existing protocols and infrastructure, reinforcing the security and reliability of its blockchain network. The foundation’s focus on native issuance of significant assets serves as a protective measure against potential disruptions arising from external factors such as the current Multichain situation.

As the situation surrounding Multichain unfolds, industry observers will keenly watch for updates from the project’s leadership team. The resolution of technical challenges and improved communication are essential for restoring confidence among users and stakeholders alike. Fantom Foundation’s cautious approach demonstrates its commitment to safeguarding the interests of its users and ensuring the long-term stability and success of the Fantom ecosystem.

Conclusion 

Fantom Foundation’s decision to withdraw funds from Multichain liquidity pools in response to ongoing uncertainty reflects its commitment to prudence and risk management. While Multichain faces technical challenges and unexplained downtime, Fantom Foundation remains confident in the security of assets within its native ecosystem. By closely monitoring the situation and resuming liquidity provision activities when clarity is obtained, the foundation aims to navigate through this period of uncertainty and continue fostering growth and stability within the Fantom blockchain network.

Disclaimer. The information provided is not trading advice. Cryptopolitan.com holds no liability for any investments made based on the information provided on this page. We strongly recommend independent research and/or consultation with a qualified professional before making any investment decisions.

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