Crypto Developers Faked the DeFi Ecosystem, Inflating Solana’s TVL

Sunny was the newest DeFi app came to Solana last summer, during the blockchain bull run, when its native token quintupled. Sunny was only two weeks old at the beginning of September when billions of dollars worth of cryptocurrency was invested in this yield farm.

Sunny Aggregator was built on Saber by Ian Macalinao, the main architect of Saber. Ian developed a network of interwoven DeFi protocols that projected billions of dollars of double-count value into the Saber ecosystem while coding as 11 seemingly independent developers. As the network neared its zenith in November, Solana’s total value locked (TVL) rose briefly.

Solana Network’s TVL at its peak

At their peak, Saber and Sunny accounted for $7.5 billion of Solana’s $10.5 billion TVL. According to DeFiLlama, the Solana NetworkSaber’s TVL continued to grow even after the Saber ecosystem began to slow down in mid-September 2021, peaking at $15 billion around November 9, while Saber’s TVL had declined 64% to then.

Ian said that while he didn’t like this vanity stat, he was annoyed that Ethereum TVL was so much higher than Solana’s. In his opinion, DeFi projects on Ethereum, the largest blockchain for DeFi, are “stacked” to count deposits twice.

In public, Ian and Dylan referred to their unnamed characters as “friends” or “friends of friends.” Ian said that his “Ship Capital” programmers club was creating the blueprints for his perfect DeFi ecosystem. It was all anchored by Saber and its so-called Liquidity Provider (LP) tokens.

When an ecosystem is developed entirely by a few people, it lacks authenticity. He intended to make it look like multiple people were working on his protocol rather than submitting 20+ unrelated programs as one.

Ian’s Anons and “Sybil Attack”

There are solid reasons to seek refuge behind a pseudonym. However, Ian’s armed “anons” carried out a “Sybil attack”, exploiting the trust of crypto users.

The Macalinao launched “Saber Public Goods” in May to spread the prolific code of the “Saber team” in Solana. There are eight of Ian’s eleven hidden projects there. There is little information about the anons and the master of him. Sunny and Cashio, whose tokens disintegrated, did not appear.

Surya Khosla was Ian’s alias when he created the Sunny Aggregator. Saint Eclectic, Sunny’s skeptic, was hesitant to invest his LP tokens in the efforts of this enigmatic individual, an anonymous with an AI-generated face.

Surya benefited from one factor: Ian’s stooge claimed to know Dylan quite well in real life. Dylan Macalinao tweeted on September 9 that he was comfortable placing his cryptocurrency on the Sunny Aggregator. Dylan explained: “We audited his code.”

Dylan gave Surya the credibility to persuade skeptics like Saint. The problem was that Surya Khosla, the main developer, did not exist. Sunny Aggregator was built by Dylan’s brother Ian. Surya was a fictional character invented by Ian. Ian’s initial foray into assumed identities for Saber was far from his last.

Ship Capital’s “friends” included 0xGhostchain, the creator of Cashio; Goki Rajesh, the creator of the Goki multisignature wallet; Swaglioni, the “grandmaster” of the TribecaDAO governance platform; Larry Jarry of mining rewards aggregator Quarry; and Surya Khosla from Saber Yield Farm.

Understanding Ian’s Actions

Ian, Dylan and the anonymous stooges were constantly supportive of Ship Capital’s efforts on social media. They hyped each other’s releases and integrations, applauded each other’s thinkfluencer tweets, and gave each other credit for motivating them to build on Solana. They even broadcast Ian’s self-referential memes.

From time to time they got philosophical. When prominent Solana developer Armani Ferrante tweeted on December 29, “If you’re not making mistakes, you’re too slow,” five Ian stooges responded in four minutes.

Quotes from Ian Macalinao’s experiment. Image: Twitter.

Others tried to dance around the truth. “Team size =! Success,” Ian tweeted on December 7, 2021. “I would gladly pay @larrinator01 and @0xGoki 10x the market rate. They don’t need my money…”

When outsiders questioned the validity of Ian’s anons, they were cunning. It’s hard to say if Ian tampered with his anonymous Twitter accounts after his workbench. However, two people who have worked with Ship Capital recall the strange behavior of the crew. After verifying one identity, another’s Telegram account would be backed up.

CASH Decentralized Stablecoin Cashio

CASH from Cashio it was introduced in November, near the zenith of the cryptocurrency market, as a decentralized stablecoin with dollar-pegged cryptocurrencies backed by “liquidity provider” tokens.

As collateral, Cashio exclusively accepted LP tokens from Saber. Last November, Saber, an “automatic market maker” with over $1 billion in TVL, was a key DeFi trading platform for stablecoin pairs on Solana. (The current TVL for Saber is $90.6 million.)

Cashio relies on Ian Anons Saber ecosystem projects to generate performance. First, he used Crate under the alias “kiwipepper” to wrap Saber LP tokens in “tokenized baskets.” These boxes were routed through the Arrow performance routing platform, which Ian created using “oliver’s code”.

Cashio also claimed that by staking these deposit derivatives on “Surya’s” Sunny Aggregator and Quarry, which Ian created under the alias “Larry Jarry”, he received returns. Cashio’s treasure, which a decentralized autonomous organization (DAO) ruled, received benefits.

Their Saber LP tokens were accepted by Cashio’s DeFi machine, which then spit out CASH tokens. It was a successful business. CASH holders can earn 10%-30% profit by placing their LP-backed stablecoins in Sunny liquidity pools. One trader said that he would only receive 5-10% if he placed his Saber LP tokens in Sunny instead of Cashio. The fact that the same digital asset backed both was irrelevant.

$52 million Hack to Cashio

The $52 million hack that caused Cashio to implode on March 23 was a salvo at Ship Capital. Because he created the coding for Cashio, Ian pushed hard for others to bet more. He expressed his regret at the “catastrophic” loss of him in a protocol he developed under an assumed name and supported under his real name.

Ian pleaded with the hacker, a self-described Robin Hood figure who railed against American and European bigwigs, “to consider returning the funds.” Of the $39 million that the breach victims requested, the hacker ultimately refunded $14 million.

If the hacker did not refund users in full, Ian said he would try to compensate affected personal users with their Saber and Sunny tokens. Although he will not pay the full amount, this is all he can provide. However, he never kept his unpublished promise.

“A Barrier to Criticism”

The pseudonym is common in cryptography, although it does not prove the crime. Thirteen years after the invention of bitcoin, the real name of its developer, Satoshi Nakamoto, is still unknown. Despite a recent sell-off, the pioneering cryptocurrency has a market capitalization of $442 billion. On the other hand, Ian wants to focus on adding value to his vision of what he feels is the ideal way of doing things.

According to Discord server logs, Ian’s entry into Solanaland in October 2020 was not the first rodeo of self-proclaimed “shipooor” code. His GitHub commit career spans more than a decade, beginning with the first public crypto contribution, on an EOS project, in late 2017.

In early January 2021, Ian explored the tokenomics of a doomed stablecoin on Basis.Cash Discord. He became “obsessed” with creating decentralized money there. He tried and failed to develop a multi-protocol DeFi ecosystem along the way, resulting in “criticism and ridicule.”

Cashio Discord Server on Feb 19th. Image: Discord

The next step for the Macalinao

Were these anonymous builders flocking to Saber? Ian reflected on this in a panel discussion at last year’s Solana conference in Lisbon, Portugal, titled “From Zero to $2 Billion: How Saber Became the Biggest DeFi App on Solana.”

Sunny was a “friend’s” project; Crate, the pseudonym for Ian, kiwipepper’s symbolic basket-making mechanism, was another. He said one such friend of friends created Cashio, a Saber LP token-backed stablecoin project that provided liquidity to Sunny Aggregator.

On July 23, the brothers launched a “DAO accelerator program” to attract other developers to Saber. “How would your protocol fully integrate with the Saber Protocol, thereby improving Saber’s volume/TVL/capital efficiency?” ask on your application form.

That effort comes as the brothers leave Solana for Aptos, a new blockchain, and bring Saber with them. According to a venture funding source, several Solana developers are on the way. The Macalinaos trust it: They own a venture capital firm in Aptos. The protagonist is the name of your VC. It was once known as “Capital of Ships”.

Users of the Seven Saber ecosystem said they felt abandoned by the Macalinao brothers. Some people lost money in CASH tokens (the old stablecoin went to zero), while others claim that their cryptocurrency is trapped in derivative tokens created by Sunny. Brad Garlic Bread, a pseudonymous user, stated that he lost approximately $300,000 with Sunny and Saber.

Other SUNNY token holders asked Ian about the future of the yield aggregator. Saber moves to Aptos; Will Sunny do the same? They were curious about the main developer of Sunny.

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