Cetus Attack Report, BNB Chain’s Rising Projects, and Crypto VC Challenges in 2025

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The crypto landscape in 2025 continues to evolve with high-stakes security incidents, shifting investment dynamics, and explosive activity on key blockchain ecosystems. From Cetus’ detailed post-mortem of a major exploit to the resurgence of BNB Chain and candid reflections from top-tier VCs, this deep dive unpacks the latest developments shaping the industry.

🔍 Cetus Incident Report: Anatomy of the May 22 Attack

On May 22, 2025, Cetus Protocol suffered a significant smart contract exploit targeting its Constant Liquidity Market Maker (CLMM) system on the Sui network. The breach stemmed from a critical misunderstanding of bit-shifting logic in an open-source dependency called inter_mate. Specifically, the vulnerable function checked_shlw incorrectly validated input values against a ≤ 2^256 threshold instead of the intended ≤ 2^192, effectively disabling overflow protection.

👉 Discover how leading DeFi platforms are strengthening security after major exploits.

Attack Flow and Technical Breakdown

The attacker executed a multi-stage maneuver:

  1. Price Manipulation: Initiated flash swaps to artificially depress asset prices in targeted pools.
  2. Liquidity Injection: Opened positions at favorable ticks and exploited flawed validation in the add_liquidity function to deposit minimal assets while registering massive virtual liquidity.
  3. Profit Extraction: Removed liquidity repeatedly across cycles, draining substantial funds from the pool.
  4. Funds Movement: Converted part of the stolen assets into ETH and bridged them to Ethereum via cross-chain protocols.

Notably, this vulnerability was distinct from previously flagged audit concerns about MAX_U64 limits, which had already been resolved and posed no immediate risk.

Response and Asset Recovery

Cetus acted swiftly upon detecting anomalies:

Post-Incident Security Overhaul

To prevent future breaches, Cetus is implementing six core upgrades:

  1. Comprehensive Re-audit: Partnering with Sui’s security team and third-party auditors for full contract review prior to CLMM restart.
  2. Ongoing Audits: Launching regular security assessments tied to Total Value Locked (TVL).
  3. Enhanced Monitoring: Upgrading on-chain surveillance with dynamic risk parameter tuning and flow velocity caps.
  4. LP Recovery Plan: Designing a community-driven proposal for validator voting to expedite user fund restitution.
  5. Bug Bounty Expansion: Strengthening incentives for ethical hackers.
  6. Code Quality Transparency: Increasing test coverage and publishing verifiable metrics.

This incident underscores that security in DeFi extends beyond code—it demands continuous vigilance, ecosystem coordination, and transparent communication.

🚀 BNB Chain Resurgence: Top 10 Active Projects Driving Momentum

After periods of relative quiet, BNB Chain has re-emerged as a hub of innovation and user engagement. Driven by strategic partnerships, new listings on Binance Alpha, and surging meme coin activity, these ten projects are leading the charge.

1. $B (BUILDon) – The Meme Coin with Utility

Launched via Fourmeme with a lion mascot, $B gained traction after integrating with USD1 and launching a trading competition. Now one of USD1’s primary liquidity sources, $B has surpassed a $400 million market cap—making it the most strategically significant meme project on BNB Chain.

2. $B2 (B² Network) – Bitcoin’s zkEVM L2

Positioned as “the most practical Layer 2 for Bitcoin,” B² Network enables EVM compatibility and seamless interaction between BTC and ETH addresses. Its focus on interoperability has made it a standout in the multi-chain narrative.

3. $KOGE (48 Club) – The Veteran DAO Token

As BNB Chain’s first DAO (active since 2018), 48 Club boasts over 500 members focused on investment and governance. With renewed attention from Binance Alpha, $KOGE saw trading volume exceed **$1 billion**, proving legacy communities still hold market sway.

4. $RWA (Allo) – Real-World Asset Tokenization

Allo has tokenized **$2.2 billion** in real-world assets including real estate and art. Its native token $RWA has surged amid growing institutional interest in RWA trends and strong platform fundamentals.

5. $MERL (Merlin Chain) – Revitalizing Bitcoin’s Ecosystem

Backed by Bitmap, Merlin Chain builds DeFi and metaverse applications natively on Bitcoin. As a Binance Alpha launchpad project, $MERL benefits from strong ecosystem support and compelling “make Bitcoin fun again” storytelling.

6. $SKYAI – AI Agent Data Infrastructure

SKYAI bridges multi-chain data with large language models using the MCP standard. Operating across Solana and BSC, it represents the convergence of AI and infrastructure—a high-potential niche attracting developer interest.

7. $BANK (Lorenzo Protocol) – Modular Bitcoin L2

Built on Babylon, Lorenzo Protocol delivers secure smart contract execution and USD1 integration. Aligned with BUILDon’s expansion strategy, $BANK captured early momentum through synergistic narratives and platform visibility.

8. $AIOT (OKZOO) – AIoT Meets DePIN & GameFi

OKZOO leverages P-mini hardware to collect environmental data, rewarding users with $AIOT tokens. With over 10 million users and a viral V2 virtual pet launch, it exemplifies next-gen DePIN evolution blending physical and digital economies.

(Projects 9–10 not detailed in source material but implied within broader BNB Chain momentum context)

This wave of innovation signals that BNB Chain is far from stagnant—its combination of low fees, exchange backing, and community energy makes it fertile ground for emerging trends.

💼 The State of Crypto VC: A Candid Industry Roundtable

A panel of leading investors—including Du Jun (ABCDE), KK (Hash Global), Will Wang (Generative Ventures), Jademont (Waterdrip Capital), Henry (NGC Ventures), and Loners Liu (CatcherVC)—shared unfiltered insights on the challenges facing early-stage crypto investing.

Key Pain Points for VCs in 2025

1. Excessive Lock-Up Periods
Unlike traditional equity (6-month lock-ups post-IPO), many crypto tokens impose 3-year vesting schedules, delaying returns despite high paper valuations.

2. Poor Risk-Return Alignment
Despite elevated risks due to regulatory uncertainty and illiquidity, actual ROI often underperforms due to token inflation and lack of clear exit paths.

3. Market Saturation
Just like the equity “unicorn glut,” crypto faces an oversupply of projects chasing limited liquidity—leading to a bottleneck in meaningful exits.

👉 See how institutional investors are adapting their strategies in today’s crypto market.

Shifting Investment Strategies

KK outlined two strategic pillars guiding Hash Global’s approach:

“We’re not chasing hype,” KK emphasized. “We’re helping traditional businesses answer: Why use Web3? The answer lies in unified ledgers, transparent settlements, and trustless global transactions—things Web2 simply can’t deliver.”

He cited a recent conversation with a tourism executive skeptical of Web3 until presented with the analogy: Bitcoin is to traditional finance what Web3 is to future internet commerce.

👉 Learn how top VCs identify sustainable Web3 business models before token launches.

The consensus? Successful VCs must now act as integrators—helping established companies adopt blockchain seamlessly (e.g., invisible wallet creation, faster settlements) before introducing tokenomics only when product-market fit is proven.

🔑 Core Keywords Identified

❓ Frequently Asked Questions

Q: What caused the Cetus Protocol hack?
A: The attack exploited a logic error in the checked_shlw function due to incorrect bit-shift validation in a dependent library, allowing attackers to inject fake liquidity and drain funds.

Q: How much money did Cetus recover after the attack?
A: Over $160 million was frozen through coordinated action with Sui validators, marking one of the largest successful asset freezes in DeFi history.

Q: Why is BNB Chain seeing renewed activity in 2025?
A: Strategic initiatives like Binance Alpha, strong meme coin momentum (e.g., $B), and innovative projects in RWA ($RWA), AI ($SKYAI), and Bitcoin L2s ($MERL) have revitalized the ecosystem.

Q: Are crypto VCs still profitable in 2025?
A: Many face challenges due to long lock-ups, token dilution, and poor exit liquidity. However, those focusing on real-world utility and traditional industry integration are finding sustainable opportunities.

Q: What’s the future of stablecoins like USDe?
A: Projects like Ethena use delta-neutral hedging with multi-asset collateral (ETH, BTC, SOL) and short positions on exchanges to maintain peg stability—offering scalable alternatives to fiat-backed models.

Q: How can Web3 achieve mass adoption?
A: By solving real business problems—such as faster cross-border payments or transparent royalty distribution—without requiring users to understand blockchain upfront. Gradual onboarding increases adoption success.