Azoundria: Created page with "{{Imported Case Study With About|source=https://www.quadrigainitiative.com/casestudy/essencefinancechistablecoinrugpull.php}} {{Unattributed Sources}} Essence Finance Logo/HomepageEssence Finance promised a fully collateralized stablecoin named CHI, which was supposed to be fully backed more than 100% by assets. The stablecoin traded at a rate very close to $1 USD right up until October 25th, when the price started rapidly falling. The..."

2024-12-03T21:16:31Z

Created page with "{{Imported Case Study With About|source=https://www.quadrigainitiative.com/casestudy/essencefinancechistablecoinrugpull.php}} {{Unattributed Sources}} thumb|Essence Finance Logo/HomepageEssence Finance promised a fully collateralized stablecoin named CHI, which was supposed to be fully backed more than 100% by assets. The stablecoin traded at a rate very close to $1 USD right up until October 25th, when the price started rapidly falling. The..."

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{{Imported Case Study With About|source=https://www.quadrigainitiative.com/casestudy/essencefinancechistablecoinrugpull.php}}
{{Unattributed Sources}}

[[File:Essencefinance.jpg|thumb|Essence Finance Logo/Homepage]]Essence Finance promised a fully collateralized stablecoin named CHI, which was supposed to be fully backed more than 100% by assets. The stablecoin traded at a rate very close to $1 USD right up until October 25th, when the price started rapidly falling. The project is accused of performing a rug pull, extracting the $20m worth of liquidity backing the stablecoins. While the project has not posted an update since the price event, their Twitter/X account and website remain online.<ref name="essencefinance-16885" /><ref name="essencefinancedocs-16886" /><ref name="coingecko-16887" /><ref name="newsdotbitcoin-16888" /><ref name="bitget-16889" /><ref name="chaincatcher-16890" /><ref name="geckoterminal-16891" /><ref name="wublockchaintwitter-16892" /><ref name="cointime-16893" /><ref name="essencefitwitter-16894" />

== About Essence Finance ==
"A fully-collateralized, decentralized stablecoin built around the needs of the decentralized finance ecosystem. Providing access to a scalable solution for a decentralized stablecoin."

"Essence Finance is unlocking a new paradigm for decentralized finance, providing a stable and decentralized way to store and transfer value, without sacrificing the core principles of decentralization and security."

"Integrate CHI into existing apps or use it to build new innovative services. Give your users access to the stability of the dollar while maintaining decentralization."

"Yes, CHI can always be redeemed for $1 of collateral through the dApp. Essence Finance will always maintain a minimum collateral ratio of 100%, meaning CHI will always be redeemable for the underlying collateral."

"Users can issue new CHI into circulation by depositing $1 of collateral (+ a small fee), this process is referred to as minting. Similarly, when a user wants to redeem CHI in exchange underlying collateral, it removes CHI from circulation, this is referred to as burning."

"ZEN is the governance token of Essence Finance. Essence is a community-driven protocol, and ZEN holders are the collective stewards of the PCV (Protocol Owned Value) and the Essence ecosystem."

"A core principle of Essence is its fully decentralized design and minimal dependence on any centralized assets or protocols. It is controlled by the ZEN token holders. The Essence DAO is responsible for utilizing all of the flexible and power features of Essence to continually enhance the protocol in an ever-changing DeFi space."

== The Reality ==
This sections is included if a case involved deception or information that was unknown at the time. Examples include:

* When the service was actually started (if different than the "official story").
* Who actually ran a service and their own personal history.
* How the service was structured behind the scenes. (For example, there was no "trading bot".)
* Details of what audits reported and how vulnerabilities were missed during auditing.

== What Happened ==
The specific events of the loss and how it came about. What actually happened to cause the loss and some of the events leading up to it.
{| class="wikitable"
|+Key Event Timeline - Essence Finance Chi Stablecoin Rug Pull
!Date
!Event
!Description
|-
|September 10th, 2024 12:37:00 PM MDT
|Final Tweet From Project
|The final tweet from the project about a new trading pair which is available for the stablecoin.
|-
|October 25th, 2024 4:24:32 PM MDT
|Price Normalcy
|Price At 0.998792.
|-
|October 25th, 2024 5:26:36 PM MDT
|Price Starts Dropping
|Price At 0.991694.
|-
|October 25th, 2024 6:23:38 PM MDT
|Price Starts Dropping
|Price At 0.958128.
|-
|October 25th, 2024 7:23:40 PM MDT
|Price Repidly Dropping
|Price At 0.314190.
|-
|October 25th, 2024 8:23:53 PM MDT
|Price Continues Dropping
|Price At 0.110134.
|-
|October 25th, 2024 10:25:00 PM MDT
|Wu Blockchain Tweet
|Wu Blockchain publishes a tweet with suspicions of the protocol rug pulling on users.
|-
|October 25th, 2024 10:43:03 PM MDT
|CoinTime Article Published
|An article is published by CoinTime.
|-
|October 26th, 2024 8:26:44 AM MDT
|Bitcoin News Article
|An article is published by Bitcoin News.
|}

== Technical Details ==
This section includes specific detailed technical analysis of any security breaches which happened. What specific software vulnerabilities contributed to the problem and how were they exploited?

== Total Amount Lost ==
The total amount lost has been estimated at $20,000,000 USD.

How much was lost and how was it calculated? If there are conflicting reports, which are accurate and where does the discrepancy lie?

== Immediate Reactions ==
"Scroll ecosystem stablecoin project Essence Finance is suspected of rugpulled, its stablecoin CHI has fallen by more than 92% to $0.077 in the past 24h, more than $20 million of collateral is suspected to have been removed. The last tweet was posted on September 11. The audit report of the project comes from FEI Protocol V2."

"ChainCatcher news, the Scroll ecosystem stablecoin project Essence Finance is suspected to have undergone a Rug Pull, with its stablecoin CHI dropping 93.94% to $0.06 in the past 6 hours, and over $20 million in collateral is suspected to have been removed. The last post from its official X was on September 11. The project's audit report is from FEI Protocol V2."

"Early on Oct. 26, the U.S. dollar value of Essence Finance’s decentralized stablecoin, CHI, plunged by more than 90% after rumors emerged that more than $20 million of collateral had been removed. According to Geckoterminal data, the value of the stablecoin, which normally trades at par with the U.S. dollar, dropped by nearly 98% to $0.01338 in less than 24 hours. The huge drop has sparked allegations of a rug pull against the protocol’s developers. At the time of publication, Essence Finance had not issued a statement about the incident or acknowledged its impact on the protocol’s operations."

== Ultimate Outcome ==
What was the end result? Was any investigation done? Were any individuals prosecuted? Was there a lawsuit? Was any tracing done?

== Total Amount Recovered ==
There do not appear to have been any funds recovered in this case.

What funds were recovered? What funds were reimbursed for those affected users?

== Ongoing Developments ==
What parts of this case are still remaining to be concluded?
== Individual Prevention Policies ==
{{Prevention:Individuals:Placeholder}}

{{Prevention:Individuals:End}}

== Platform Prevention Policies ==
{{Prevention:Platforms:Placeholder}}

{{Prevention:Platforms:End}}

== Regulatory Prevention Policies ==
{{Prevention:Regulators:Placeholder}}

{{Prevention:Regulators:End}}

== References ==
<references><ref name="essencefinance-16885">[https://essencefinance.io/ Essence Finance - The Stablecoin For DeFi] (Accessed Dec 3, 2024)</ref>

<ref name="essencefinancedocs-16886">[https://docs.essencefinance.io/ Introduction | Essence Finance] (Accessed Dec 3, 2024)</ref>

<ref name="coingecko-16887">[https://www.coingecko.com/en/coins/chi-usd https://www.coingecko.com/en/coins/chi-usd] (Accessed Dec 3, 2024)</ref>

<ref name="newsdotbitcoin-16888">[https://news.bitcoin.com/stablecoin-plunges-98-in-24-hours-sparks-rug-pull-allegations/ Stablecoin Plunges 98% in 24 Hours, Sparks Rug Pull Allegations – News Bytes Bitcoin News] (Accessed Dec 3, 2024)</ref>

<ref name="bitget-16889">[https://www.bitget.com/news/detail/12560604306420 https://www.bitget.com/news/detail/12560604306420] (Accessed Dec 3, 2024)</ref>

<ref name="chaincatcher-16890">[https://www.chaincatcher.com/en/article/2148952 The Scroll ecological stablecoin project Essence Finance is suspected of a rug pull - ChainCatcher] (Accessed Dec 3, 2024)</ref>

<ref name="geckoterminal-16891">[https://www.geckoterminal.com/zh/scroll/pools/0x1afbc62f221be90d82e0f4cfeef011451942d6e1 CHI/USDC - Chi USD 在 Tokan Exchange 上的价格 | GeckoTerminal] (Accessed Dec 3, 2024)</ref>

<ref name="wublockchaintwitter-16892">[https://twitter.com/WuBlockchain/status/1850030908444987403 @WuBlockchain Twitter] (Accessed Dec 3, 2024)</ref>

<ref name="cointime-16893">[https://www.cointime.ai/flash-news/scroll-ecosystem-stablecoin-project-essence-finance-suspected-of-rug-pull-42311 Scroll Ecosystem Stablecoin Project Essence Finance Suspected of Rug Pull - Cointime] (Accessed Dec 3, 2024)</ref>

<ref name="essencefitwitter-16894">[https://twitter.com/Essence_Fi/status/1833575508853809605 @Essence_Fi Twitter] (Accessed Dec 3, 2024)</ref></references>

Essence Finance Chi Stablecoin Rug Pull - Revision history