DeFi risk management protocol Cozy Finance is facing a sustained attack on its Optimism deployment, with attackers stealing approximately $170,000. Security firm Blockaid has released preliminary details and flagged the attacker addresses. It remains unclear if the attack is still active, and users are advised to exercise caution when interacting with Cozy Finance contracts.
Blockaid monitors detected an attack on Cozy, a DeFi risk management protocol on Optimism, resulting in approximately $170,000 in losses. The incident was reported by ChainCatcher.
A research piece by Castle Labs argues that Bitcoin has reached institutional scale without developing a comparably deep native financial layer. The report says only 311,000 BTC, or about 1.5% of the 20.05 million active supply, is generating any kind of yield, while the other 98.5% remains idle. By contrast, 32.5% of circulating ETH is staked for roughly 2% native yield, with liquid staking products such as Lido’s stETH extending that base layer into broader DeFi. The study maps the current BTC yield stack across three routes: failed centralized lenders, DeFi activity on EVM chains and Solana through wrapped or bridged representations of BTC, and Bitcoin L2 and staking protocols such as Babylon, Lombard, Stacks, Rootstock, and BOB. Each route carries a different trust model. CeFi exposed depositors to opaque counterparties and custody loss, while DeFi requires users to accept bridge, custodian, and smart contract risk. Bitcoin L2 systems move closer to Bitcoin’s trust assumptions, but still rely on signer sets, committees, or staged security models. The report uses Stacks as a case study for what it calls a more Bitcoin-native financial architecture. It highlights Stacks’ Bitcoin-anchored execution, the 15-signer sBTC bridge, and the upcoming PoX-5 upgrade, which is expected in late August and is designed to let BTC holders earn BTC-denominated yield while keeping BTC locked on Bitcoin L1 under self-custody. The paper argues that the core challenge is no longer whether demand exists, but whether BTC finance can grow without pushing holders too far away from Bitcoin’s original security model.
Chaos Labs ended its three-year risk management contract with Aave, turning down a $5M budget increase. Founder Omer Goldberg cited workload doubling and legal ambiguity; Aave Labs CEO Stani Kulechov alleged Chaos demanded sole risk controller status and replacement of Chainlink. Aave's TVL grew from $5B to $26B under Chaos but core contributors keep leaving.
Onchain analysts flagged that a Justin Sun-linked wallet pulled 274M USDT from Aave just 21 minutes after the protocol froze rsETH markets following the KelpDAO exploit, raising DeFi monitoring questions.
Rhea Finance, a lending protocol in the NEAR ecosystem, lost about $18.4 million after attackers exploited a flaw in its margin trading function, manipulated swap routes, and triggered widespread liquidations.
A KelpDAO rsETH exploit that drained nearly $300 million has triggered broad DeFi withdrawals, pushing total TVL down by $14.17 billion and hitting Aave particularly hard.
On-chain analysts say a wallet linked to Justin Sun withdrew $274 million in USDT from Aave just 21 minutes after the protocol froze rsETH markets following the KelpDAO exploit.
