Users are getting their loans closed out like crazy on Ethereum right now. The liquidators are on the prowl, Brady writes.

Why it matters: Decentralized finance (DeFi) has its faults and its inefficiencies, but it has one big advantage over traditional finance: transparency. Everyone always knows just what's going on.

• One of the chief use cases for DeFi is lending: People earn interest on deposits of assets, and, if they want, they use those deposits as collateral for withdrawals.
• In DeFi, every deposit and every loan is clearly posted on the blockchain.

Speaking of lending: Yesterday we wrote about Celsius, which is a crypto lender, but it's not DeFi. It's centralized. Much of its business is not out in the open, so questions swirled around the lender all weekend until it confirmed it was shutting off withdrawals.

Context: DeFi projects are run by robots on the internet. These lenders aren't run by companies. They are software that has a set of rules around how they function.

• Every loan is guaranteed by collateral. In fact, they are over-collateralized. That collateral can get sold off to close the loan at any time if it gets low.
• There's also a fee against the borrower if they let their loan get liquidated, which encourages borrowers to keep an eye on them.

By the numbers: The three largest lending platforms on the Ethereum blockchain have had over $253 million in liquidations over the last seven days, according to Dune Analytics.

• What's more, almost all of those liquidations have happened in the last five days. Back on June 5, there were $398 in liquidations the whole day. On June 12, there was more than $25 million.
• June 13 was much, much worse. MakerDAO had $33 million in liquidations that day. Aave and Compound both had $31 million.

Be smart: The total amount of funds deposited in MakerDAO actually went up slightly from June 13 to 14, by about $50 million. It is likely that lots of smaller borrowers were wiped out while big ones topped up their loans to stay safe.

• This is born out when you look at the largest depositors on MakerDAO, many of which are massively overcollateralized.

Our thought bubble: While this sounds pretty brutal, so far it's all been orderly. The system is functioning as it should.

• As long as loans get closed out before loans are undercollateralized, the system remains solvent.
• It can happen. One time the price of ether fell so fast that MakerDAO was undercollateralized for a few days.

The bottom line: So far, in DeFi, the algorithmic repo man has come for a lot of people's stuff, but it hasn't come for the bank itself yet.

If you were reading the newsletter through May, you remember that we wrote endlessly about Terra, the blockchain that ran the algorithmic stablecoin terraUSD, Brady writes.

• That's the stablecoin that famously blew up, signaling much of the crypto market that it was time to get out.

Catch up fast: The builders of Terra, Terraform Labs, moved to launch a new blockchain without the stablecoin (which had been the main point of the prior blockchain).

• The measure went through, launching a new chain in late May, which took over the name "Terra." The old chain is now "Terra Classic."

Both blockchains have a governance token called terra (LUNA) — everyone calls them "luna." The old coin is worth much, much less than a penny, and the new one is somehow worth more than $2.

• Be smart: With a massive outstanding supply, the market cap of terra luna classic (LUNC) is still almost $400 million even at its diminutive price-per-coin, according to Coin Market Cap.

The bottom line: Blockchains are hard to kill, but so are zombies.

The first thing I noticed when I opened the Safuu website was the "Yahoo News" logo, as if the project had been written up by reporters there. I thought: "I bet it's just a press release that ran over a PR wire."

• It was, Brady writes.

Safuu presents itself as a decentralized finance project. We discovered it when we made a "Culture hash" entry in a newsletter edition last week about a woman concerned her husband had gotten sucked into a crypto cult.

• She didn't name the project, but she did name its CEO, Bryan Legend.

The intrigue: Safuu has almost 47,000 Twitter followers, 32,000 Discord members and a claim that it can turn $1,000 into almost $4 million in a year.

Why it matters: Crypto may or may not be key technology for the future internet-of-value, but it's definitely beset with dodgy projects. Sometimes it is worth digging into these things just so regular people have a heads up.

How it works: Safuu is all built around driving value to its safuu (SAFUU) token by... giving away more safuu.

• When safuu is bought or sold, each transaction incurs a very high fee, 14% on buys and 16% on sells.
• Those fees get used in various ways, all theoretically designed to make the safuu token bigger and stronger, including regular token burns, to reduce supply.
• The crazy returns come from new tokens automatically distributed to everyone who holds tokens. That will continue until it hits its max supply of 3.25 billion tokens in 13.5 years.

Wait but why: It's not really clear what problem Safuu aims to solve other than "I wish I had more money than I do." I mean, hey: it's a real problem.

• From its documentation: "Safuu provides a decentralized financial asset which rewards users with a sustainable fixed compound interest model through use of its unique SAP [Safuu Auto-staking Protocol] protocol."

After initially responding to Axios via Twitter DM, Safuu CEO Legend never agreed to discuss the project.

By the numbers: Safuu's astronomical 383,000% interest rate is technically in crypto terms. No doubt, a user will really gather up tons more safuu tokens, but will they be worth anything?

• That said, it does also present those returns in dollar terms in its docs.

State of play: The token price has been falling consistently, from $310 in March, down to about $10.58, as of this writing.

For more: The YouTube crypto investigator, Coffeezilla, dug into Safuu, poking at the background of its CEO and looking closely at what happened to those high transaction taxes.

Go deeper.

🏹 Dubai-based hedge fund Three Arrows Capital faces uncertain future. (The Block)

🥶 Crypto lender Celsius Network reportedly hired restructuring attorneys after freezing customer accounts. (WSJ)

🦑 Kraken, an exchange, announces it is on track to hire 500 more people this year, despite downturn, alongside controversial culture statement. (Kraken)

🪢 Stablecoin firm Tether says rumors about its commercial paper holdings are "completely false." (Tether)

Coiners living their best life might want to mute a few key terms on Twitter as the world susses out the latest crypto disaster stories, Crystal writes.

The issue: Everything is fine, nothing is wrong. Dare to live in a Crypto Twitter bubble where that is true.

• Cutting out "insolvent" and/or "forced liquidation" might keep your feed free of any references to major lenders and or connected hedge fund(s) that may or may not be able to pay their debts.
• "Decorrelation" will strip any claims that coins and stocks are starting to separate and move independently of one another... because there's no correlation between stocks and crypto, allegedly.
• Su Zhu's "supercycle" thesis — that the price of bitcoin would climb and avert a sustained bear market — turned out to be horribly incorrect. We only want right answers!
• "Priced in" as in the ugliness of [waves everything] has been accounted for in token prices, therefore, the bottom must be here — no more pain ahead.

💭 Our thought bubble: With all eyes on the Fed's interest-rate decision today promising more pain for markets — plugging our ears sounds quite delicious.