Everyone is talking about the $UST attack right now, including Janet Yellen. But no one is talking about how much money the attacker made (or how brilliant it was). Lets dig in.

Our story starts in late March, when the Luna Foundation Guard (or LFG) starts buying BTC to help back $UST. LFG started accumulating BTC on 3/22, and by March 26th had a $1bn+ BTC position. This is leg #1 that made this trade (or attack) brilliant.

The second leg comes in the form of the 4pool Frax announcement for $UST on April 1st. This added the second leg needed to help execute the strategy in a capital efficient way (liquidity will be lower and then the attack is on).

We don't know when the attacker borrowed 100k BTC to start the position, other than that it was sold into Kwon's buying (still speculation). LFG bought 15k BTC between March 27th and April 11th, so lets just take the average price between these dates ($42k).

So you have a ~$4.2bn short position built. Over the same time, the attacker builds a $1bn OTC position in $UST. The stage is now set to create a run on the bank and get paid on your BTC short. In anticipation of the 4pool, LFG initially removes $150mm from 3pool liquidity.

The liquidity was pulled on 5/8 and then the attacker uses $350mm of UST to drain curve liquidity (and LFG pulls another $100mm of liquidity).

But this only starts the de-pegging (down to 0.972 at the lows). LFG begins selling $BTC to defend the peg, causing downward pressure on BTC while the run on $UST was just getting started.

With the Curve liquidity drained, the attacker used the remainder of their $1b OTC $UST position ($650mm or so) to start offloading on Binance. As withdrawals from Anchor turned from concern into panic, this caused a real de-peg as people fled for the exits

So LFG is selling $BTC to restore the peg while the attacker is selling $UST on Binance. Eventually the chain gets congested and the CEXs suspend withdrawals of $UST, fueling the bank run panic. $UST de-pegs to 60c at the bottom, while $BTC bleeds out.

The crypto community panics as they wonder how much $BTC will be sold to keep the peg. There are liquidations across the board and LUNA pukes because of its redemption mechanism (the attacker very well could have shorted LUNA as well). BTC fell 25% from $42k on 4/11 to $31.3k

So how much did our attacker make? There aren't details on where they covered obviously, but if they are able to cover (or buy back) the entire position at ~$32k, that means they made $952mm on the short.

On the $350mm of $UST curve dumps I don't think they took much of a loss, lets assume 3% or just $11m. And lets assume that all the Binance dumps were done at 80c, thats another $125mm cost of doing business. For a grand total profit of $815mm (bf borrow cost).

BTC was the perfect playground for the trade, as the liquidity was there to pull it off. While having LFG involved in BTC, and foreseeing they would sell to keep the peg (and prevent LUNA from dying) was the kicker.

Lastly, the liquidity being low on 3pool in advance of 4pool allowed the attacker to drain it with only $350mm, causing the broader panic in both BTC and $UST. Any shorts on LUNA would've added a lot of P&L here as well, with it falling -65% since 5/7.

And for the reply guys, yes I know a lot of this involves some speculation & assumptions. But a lot of money was made here either way, and I thought it would be cool to dive into how they did it.

What is Bitcoin?

The blockchain is a shared, immutable ledger that helps businesses record transactions and track assets. The blockchain can track tangible assets like cars, houses, and land. Tangible assets like intellectual property can also be tracked on the blockchain.

Imagine a blockchain as a distributed database split among computer nodes. A blockchain stores data in blocks. When a block is full, it is closed and linked to the next. As a result, all subsequent information is compiled into a new block that will be added to the chain once it is filled.

The blockchain is designed so that adding a transaction requires consensus. That means a majority of network nodes must approve a transaction. No single authority can control transactions on the blockchain. The network nodes use cryptographic keys and passwords to validate each other's transactions.

Blockchain History

The blockchain was not as popular in 1991 when Stuart Haber and W. Scott Stornetta worked on it. The blocks were designed to prevent tampering with document timestamps. Stuart Haber and W. Scott Stornetta improved their work in 1992 by using Merkle trees to increase efficiency and collect more documents on a single block.

In 2004, he developed Reusable Proof of Work. This system allows users to verify token transfers in real time. Satoshi Nakamoto invented distributed blockchains in 2008. He improved the blockchain design so that new blocks could be added to the chain without being signed by trusted parties.

Satoshi Nakomoto mined the first Bitcoin block in 2009, earning 50 Bitcoins. Then, in 2013, Vitalik Buterin stated that Bitcoin needed a scripting language for building decentralized applications. He then created Ethereum, a new blockchain-based platform for decentralized apps. Since the Ethereum launch in 2015, different blockchain platforms have been launched: from Hyperledger by Linux Foundation, EOS.IO by block.one, IOTA, NEO and Monero dash blockchain. The block chain industry is still growing, and so are the businesses built on them.

Blockchain Components

The Blockchain is made up of many parts:

1. Node: The node is split into two parts: full and partial. The full node has the authority to validate, accept, or reject any transaction. Partial nodes or lightweight nodes only keep the transaction's hash value. It doesn't keep a full copy of the blockchain, so it has limited storage and processing power.

2. Ledger: A public database of information. A ledger can be public, decentralized, or distributed. Anyone on the blockchain can access the public ledger and add data to it. It allows each node to participate in every transaction. The distributed ledger copies the database to all nodes. A group of nodes can verify transactions or add data blocks to the blockchain.

3. Wallet: A blockchain wallet allows users to send, receive, store, and exchange digital assets, as well as monitor and manage their value. Wallets come in two flavors: hardware and software. Online or offline wallets exist. Online or hot wallets are used when online. Without an internet connection, offline wallets like paper and hardware wallets can store private keys and sign transactions. Wallets generally secure transactions with a private key and wallet address.

4. Nonce: A nonce is a short term for a "number used once''. It describes a unique random number. Nonces are frequently generated to modify cryptographic results. A nonce is a number that changes over time and is used to prevent value reuse. To prevent document reproduction, it can be a timestamp. A cryptographic hash function can also use it to vary input. Nonces can be used for authentication, hashing, or even electronic signatures.

5. Hash: A hash is a mathematical function that converts inputs of arbitrary length to outputs of fixed length. That is, regardless of file size, the hash will remain unique. A hash cannot generate input from hashed output, but it can identify a file. Hashes can be used to verify message integrity and authenticate data. Cryptographic hash functions add security to standard hash functions, making it difficult to decipher message contents or track senders.

Blockchain: Pros and Cons

The blockchain provides a trustworthy, secure, and trackable platform for business transactions quickly and affordably. The blockchain reduces paperwork, documentation errors, and the need for third parties to verify transactions.

Blockchain security relies on a system of unaltered transaction records with end-to-end encryption, reducing fraud and unauthorized activity. The blockchain also helps verify the authenticity of items like farm food, medicines, and even employee certification. The ability to control data gives users a level of privacy that no other platform can match.

In the case of Bitcoin, the blockchain can only handle seven transactions per second. Unlike Hyperledger and Visa, which can handle ten thousand transactions per second. Also, each participant node must verify and approve transactions, slowing down exchanges and limiting scalability.

The blockchain requires a lot of energy to run. In addition, the blockchain is not a hugely distributable system and it is destructible. The security of the block chain can be compromised by hackers; it is not completely foolproof. Also, since blockchain entries are immutable, data cannot be removed. The blockchain's high energy consumption and limited scalability reduce its efficiency.

Why Is Blockchain So Popular?
The blockchain is a technology giant. In 2018, 90% of US and European banks began exploring blockchain's potential. In 2021, 24% of companies are expected to invest $5 million to $10 million in blockchain. By the end of 2024, it is expected that corporations will spend $20 billion annually on blockchain technical services.

Blockchain is used in cryptocurrency, medical records storage, identity verification, election voting, security, agriculture, business, and many other fields. The blockchain offers a more secure, decentralized, and less corrupt system of making global payments, which cryptocurrency enthusiasts love. Users who want to save time and energy prefer it because it is faster and less bureaucratic than banking and healthcare systems.

Most organizations have jumped on the blockchain bandwagon, and for good reason: the blockchain industry has never had more potential. The launch of IBM's Blockchain Wire, Paystack, Aza Finance and Bloom are visible proof of the wonders that the blockchain has done. The blockchain's cryptocurrency segment may not be as popular in the future as the blockchain's other segments, as evidenced by the various industries where it is used. The blockchain is here to stay, and it will be discussed for a long time, not just in tech, but in many industries.

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Photo by Juanjo Jaramillo on Unsplash

Calling APIs is the most common thing to do in any modern web application. When it comes to talking with an API then most of the time we need to do a lot of repetitive things like getting data from an API call, handling the success or error case, and so on.

When calling tens of hundreds of API calls we always have to do those tedious tasks. We can handle those things efficiently by putting a higher level of abstraction over those barebone API calls, whereas in some small applications, sometimes we don’t even care.

The problem comes when we start adding new features on top of the existing features without handling the API calls in an efficient and reusable manner. In that case for all of those API calls related repetitions, we end up with a lot of repetitive code across the whole application.

In React, we have different approaches for calling an API. Nowadays mostly we use React hooks. With React hooks, it’s possible to handle API calls in a very clean and consistent way throughout the application in spite of whatever the application size is. So let’s see how we can make a clean and reusable API calling layer using React hooks for a simple web application.

I’m using a code sandbox for this blog which you can get here.

import "./styles.css";
import React, { useEffect, useState } from "react";
import axios from "axios";

export default function App() {
  const [posts, setPosts] = useState(null);
  const [error, setError] = useState("");
  const [loading, setLoading] = useState(false);

  useEffect(() => {
    handlePosts();
  }, []);

  const handlePosts = async () => {
    setLoading(true);
    try {
      const result = await axios.get(
        "https://jsonplaceholder.typicode.com/posts"
      );
      setPosts(result.data);
    } catch (err) {
      setError(err.message || "Unexpected Error!");
    } finally {
      setLoading(false);
    }
  };

  return (
    <div className="App">
      <div>
        <h1>Posts</h1>
        {loading && <p>Posts are loading!</p>}
        {error && <p>{error}</p>}
        <ul>
          {posts?.map((post) => (
            <li key={post.id}>{post.title}</li>
          ))}
        </ul>
      </div>
    </div>
  );
}

I know the example above isn’t the best code but at least it’s working and it’s valid code. I will try to improve that later. For now, we can just focus on the bare minimum things for calling an API.

Here, you can try to get posts data from JsonPlaceholer. Those are the most common steps we follow for calling an API like requesting data, handling loading, success, and error cases.

If we try to call another API from the same component then how that would gonna look? Let’s see.

500: Internal Server Error

Now it’s going insane! For calling two simple APIs we’ve done a lot of duplication. On a top-level view, the component is doing nothing but just making two GET requests and handling the success and error cases. For each request, it’s maintaining three states which will periodically increase later if we’ve more calls.

Let’s refactor to make the code more reusable with fewer repetitions.

Step 1: Create a Hook for the Redundant API Request Codes

Most of the repetitions we have done so far are about requesting data, handing the async things, handling errors, success, and loading states. How about encapsulating those things inside a hook?

The only unique things we are doing inside handleComments and handlePosts are calling different endpoints. The rest of the things are pretty much the same. So we can create a hook that will handle the redundant works for us and from outside we’ll let it know which API to call.

500: Internal Server Error

Here, this request function is identical to what we were doing on the handlePosts and handleComments. The only difference is, it’s calling an async function apiFunc which we will provide as a parameter with this hook. This apiFunc is the only independent thing among any of the API calls we need.

With hooks in action, let’s change our old codes in App component, like this:

500: Internal Server Error

How about the current code? Isn’t it beautiful without any repetitions and duplicate API call handling things?

Let’s continue our journey from the current code. We can make App component more elegant. Now it knows a lot of details about the underlying library for the API call. It shouldn’t know that. So, here’s the next step…

Step 2: One Component Should Take Just One Responsibility

Our App component knows too much about the API calling mechanism. Its responsibility should just request the data. How the data will be requested under the hood, it shouldn’t care about that.

We will extract the API client-related codes from the App component. Also, we will group all the API request-related codes based on the API resource. Now, this is our API client:

import axios from "axios";

const apiClient = axios.create({
  // Later read this URL from an environment variable
  baseURL: "https://jsonplaceholder.typicode.com"
});

export default apiClient;

All API calls for comments resource will be in the following file:

import client from "./client";

const getComments = () => client.get("/comments");

export default {
  getComments
};

All API calls for posts resource are placed in the following file:

import client from "./client";

const getPosts = () => client.get("/posts");

export default {
  getPosts
};

Finally, the App component looks like the following:

import "./styles.css";
import React, { useEffect } from "react";
import commentsApi from "./api/comments";
import postsApi from "./api/posts";
import useApi from "./hooks/useApi";

export default function App() {
  const getPostsApi = useApi(postsApi.getPosts);
  const getCommentsApi = useApi(commentsApi.getComments);

  useEffect(() => {
    getPostsApi.request();
    getCommentsApi.request();
  }, []);

  return (
    <div className="App">
      {/* Post List */}
      <div>
        <h1>Posts</h1>
        {getPostsApi.loading && <p>Posts are loading!</p>}
        {getPostsApi.error && <p>{getPostsApi.error}</p>}
        <ul>
          {getPostsApi.data?.map((post) => (
            <li key={post.id}>{post.title}</li>
          ))}
        </ul>
      </div>
      {/* Comment List */}
      <div>
        <h1>Comments</h1>
        {getCommentsApi.loading && <p>Comments are loading!</p>}
        {getCommentsApi.error && <p>{getCommentsApi.error}</p>}
        <ul>
          {getCommentsApi.data?.map((comment) => (
            <li key={comment.id}>{comment.name}</li>
          ))}
        </ul>
      </div>
    </div>
  );
}

Now it doesn’t know anything about how the APIs get called. Tomorrow if we want to change the API calling library from axios to fetch or anything else, our App component code will not get affected. We can just change the codes form client.js This is the beauty of abstraction.

Apart from the abstraction of API calls, Appcomponent isn’t right the place to show the list of the posts and comments. It’s a high-level component. It shouldn’t handle such low-level data interpolation things.

So we should move this data display-related things to another low-level component. Here I placed those directly in the App component just for the demonstration purpose and not to distract with component composition-related things.

Final Thoughts

The React library gives the flexibility for using any kind of third-party library based on the application’s needs. As it doesn’t have any predefined architecture so different teams/developers adopted different approaches to developing applications with React. There’s nothing good or bad. We choose the development practice based on our needs/choices. One thing that is there beyond any choices is writing clean and maintainable codes.