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What is Chainge, where is it heading, and is it for you?

Ever since Chainge launched its app it has been the most important part of the Fusion ecosystem.

Chainge handles crosschain transactions between chains in a way where it routes all of them through Fusion and every action in Chainge, such as "earn", "pooling" or just using the DEX will route the assets used onto Fusion. Simply put: It's built in a way where users of Chainge will end up using Fusion whether they intended to or not.

Chainge is attractive because of it's many generous rewards, sources of passive income for its users, and advanced ways to bet on the markets through options. Those who use it can find so many ways to make money in new innovative ways that it's quite crazy. But the point of this article is not to describe all that, other than to say that the app can help you create some mad passive income, even if you are using low-risk financial strategies.

Further Chainge is extremly easy to use. Arguably it's the easiest app to use out of any crypto app that is interacting through actual on-chain transactions instead of centralized servers.

"But" (Yes, here is where the but starts) the fact that it's so easy to use is dependent on quite a large level of trust. When you interact in Chainge the "exactness" of what you are signing, is not all that clear. Though from a UX perspective it's highly intuative as to what you want to be doing and to execute that - a single tap in the app can set off a large number of interactions on multiple chains and contracts in ways you might not even quite understand. So, if you want 100% control of what you are doing then you might find this part of Chainge problematic.

Recent events have also showed that is definatly something that needs to be kept in mind, even for the not so paranoid.

Not every Chainge interaction always goes as expected. Sometimes things get stuck due a contract needing to be refilled with reward tokens. Sometimes display errors occur, making you uncertain as to how much you really have and what actually happened on the blockchain. Most of the time it's all fixed and handled relatively quickly and everything goes back to normal. On New Year's eve, however, the toughest test -yet- for Chainge smoothness came when futures and written options was meant to become spot, and active options expired. Would everything convert as expected? Most of it did - but one thing failed horribly, and it was not a small thing.

The major part of Chainge TVL (total value locked) has consisted of the impairment-loss-safe futures pools, where you could earn enormous rewards with extremely low financial risk. I haven't checked this exactly, but I'm pretty sure it made out more than 75% of Chainge's TVL. What was meant to happen was for these pools to become spot (both the futures and the OG assets) and the pools would dissolve completely. This also actually happened, but in a way where the completely wrong amounts were given out to the wrong users. As a result people who were in the pools as the conversion happened seem to have lost as much as 50% of their assets or gained 50% more assets.

A situation which of course was unacceptable both for Chainge and its users (who had been in these pools). Chainge promised all would be settled correctly, but the solution they ended up using is a little scary. For users who ended up with too much assets in this random distribution a pop-up appeared as they opened the app with very little specific information. But clicking the pop-up meant that they agreed to sign a transaction that would return the extra assets they had recieved. If the wallet didn't currently have the assets, the pop-up keeps appearing until the debt is completely settled. Users in Beginner mode on Chainge really have no option to refuse to pay it back, because they don't have full custody of their keys.

The shared custody allows Chainge to forcibly claim their due share, before the money in the wallet could be brought anywhere else.

The same situation does not apply for users who are in expert mode, because they can interact with their wallet through another app. However, Chainge's strong position on Fusion and the high level of difficulty of using cross-chain interactions without the app in combination of having to give up (in many cases 100% apy opportunities) still makes it a sensible choice for those who recieved 50% gains and had secured them in some other wallet to also return the money.

I think there are definatly two things to learn for everyone, regardless of how paranoid or trusting you are.

  1. If you use Chainge - use it in expert mode. Otherwise you are truly not at all in control and can be locked out of your funds. Chainge will have nearly the exact same powers over you as a CEX has. If you use expert mode on the other hand, you can regardless of Chainge's decisions move your current funds wherever you may desire.

  2. If you use futures pools, remove the assets from the pool before New Year's Eve. Keeping them in as the pool expires is a completely unneccessary risk (even though I don't expect this mess to repeat at the end of 2022, it's better to be safe than sorry, when it's easy to be so).

Overall it looks like most of the damage of this situation will be repaired and users will all end up having what they should have, but the situation has also revealed some very interesting and perhaps scary parts about how much power you have as a user and how much power Chainge has. I think things revealed by this situation are both good and bad.

Good: Chainge came in a very tough spot, but is going above and beyond to make it right to settle things correctly. This makes them trustworthy, but defintly not trustless ( so, not the decentralized dream).

Good: Assets that run on Fusion through Chainge couldn't just be claimed back by them "just like that" when they accidentally came out of their possession in a true sense. This means users who have BTC, ETH and USDT running on Fusion through Chainge DCRM truly owns these assets in a deeper sense, than if Chainge could have reclaimed these at will.

Good: Most of the damage will be repaired.

Bad: The way in which Chainge "tricked" users to return funds could have been done in a much more transparent way. The way it happened may make some people feel a bit "scamed" and to top it off, they often seem to get vile treatment when asking about it in the Chainge chat.

Bad: The situation has undoubtebly hurt both Chainge and Fusion and maybe even the more general "DeFi dream". And brings out the thought: If Chainge can manage to reclaim a debt of millions with a simple pop-up. What else could they end up doing with it?

For me, Chainge still stands for so much more good than bad (there's absolutely no better source of passive income that's so easy and intuative to use and something akin to their escrow service is something I've wanted to see in crypto for a very, very long time), but recent events definatly tainted the image and changed my perspective. I've always tried to highlight that people need to use the expert mode and will continue to highlight it even more now.

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1 Comment

Karol Madejski
Karol Madejski
Dec 06, 2022

new technological challenge I love such toys especially the beginnings

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