DEGEN tokens may have to relaunch on a new chain as ConduitXYZ holds bridge keys hostage

Degen (DEGEN), the reward token for Farcaster users, may have to relaunch on a new chain, after ConduitXYZ caused a long delay in transaction processing. 

Degen (DEGEN), a token for the Farcaster community, may relaunch its chain after a disagreement with its service provider ConduitXYZ. Degen used the service for its rollup infrastructure, and ConduitXYZ ended up holding some of the project’s rollup keys. This meant Degen could not migrate away from the service, even after a bad upgrade caused significant losses. 

Initially, the team wanted to migrate the DEGEN L3 chain to another infrastructure provider. Degen also runs a partially decentralized L2 chain, bringing together the Farcaster community with on-chain services. For the past three months, Degen tried to deal with the matter privately, before opening up its problems to the community. 

“DEGEN stands ready to create a new chain and remunerate all holders and developers on the original L3. While this is not an ideal path forward, we hope the community can forgive us for trusting too much and erring on the side of kindness,” the team announced in a recent statement about the conflict.

On its side, ConduitXYZ offered a contract to migrate with support, avoiding on-chain risks. The service provider presented the contract, signed on their side, but as of the end of October, Degen did not accept the terms. 

Degen stated that it did not receive compensation for lost value during the chain downtime in May, and the offer for six months of free services was followed by double payments for the next six months. The unfavorable conditions pushed Degen to look for other solutions. 

The Degen community stood behind the project, suggesting ConduitXYZ has not been honest in offering its services and not accepting other terms of payment or offboarding. For now, Degen has not announced plans for a relaunch to a new chain or service. 

Degen tried to migrate since August, considers a new chain

The Degen team has been negotiating a migration with ConduitXYZ, during which time the service provider refused to give Degen the rollup keys. For the past few months, Degen claims ConduitXYZ retained fees for its infrastructure services and refused to move on with the migration. 

The Degen bridge was also affected by a faulty upgrade, which led to 54 hours of downtime for the bridging service. The DEGEN L3 bridge processes $200K in daily traffic, leading to a loss of user funds and opportunities. As a result, the bridge lost 75% of its traffic, retaining only around $4M in value locked. ConduitXYZ has not compensated the DEGEN L3 users as the Degen team demanded. In the case of a new chain relaunch, Degen will aim to renew all balances. Additionally, Degen claims ConduigXYZ lost some of its on-chain history data, leaving users with a broken block explorer.

As a result of the losses, Degen has considered a chain relaunch to carry out its activity. The project claimed it had several partnerships in the pipeline and ConduitXYZ could not provide the technical assistance to sign the necessary transactions. One of the main areas of development is with meme token platforms, where the DEGEN token will gain cross-chain compatibility and be used for tipping and DeFi on several protocols. 

The migration of DEGEN L3 to a new provider or a new chain does not affect the other features of the project. DEGEN token usage and tipping on Farcaster are still working, and the main service has not abandoned Base as its main platform. Farcaster has slowed down its activity from its heyday in the first half of 2024, coinciding with the price action of DEGEN. 

In March and April, Farcaster carried more than 1.2M casts or postings. A few months later, the activity stabilized at around 500K casts. Farcaster retains around 700K total users, and its activity overlaps with other social media.

After the news of the failed migration, the DEGEN token slid from $0.009 to $0.0081, sinking toward its weekly lows. DEGEN started off in April when Farcaster and SocialFi were more popular, peaking at $0.05. Since then, the token has been losing value, despite its presence on Coinbase.