Category: Crypto Trends

The Decentralized Autonomous Organization (DAO) ArenaDAO has witnessed a unanimous backing for the sale of its notable governance token, ARENA, to Paradigm, a Crypto-Native Investment Firm. Following the opening of the vote on-chain, ARENA has jumped an impressive 11.12% in the hour and 48.99% in the past 24 hours.

As per Dex Screener, the market capitalization of the tokens once released into circulation stands at $79.8 million. However, the price that Paradigm has purchased the tokens is based on a fully diluted valuation of $40 million. In terms of the 24-hour volume, it stands at a modest $61,000 as noted by the popular tracking website, GeckoTerminal.

With a total of nine addresses deciding to provide their support to the vote, the proposed $6 million sale to Paradigm will be authorized, and the funds will be used as working capital for Code4Rena, an on-chain voting platform. Furthermore, the vote is scheduled to end in a week’s time, 23 March 2021.

Despite the high-value security threats present in the Decentralized Finance (DeFi) domain, the author of the DAO governance proposal commented, “We’re excited to have [Paradigm’s] expertise in helping Code4Rena achieve our shared mission of making the web3 ecosystem more secure, whilst rewarding all contributors.”

With respect to the token lock-up contract, 55 million tokens were sent to five addresses over the past fifteen hours, two of which were active in the ongoing vote. Meanwhile, Code4Rena serves as an audit platform for smart contracts, entering into guaranteed payouts as per the platform’s technical documents.

It is also worth taking note of the fact that just last year, the security contest organizer allowed 46 users alone to earn more than $40,000 for their mission of uncovering vulnerabilities. Paradigm’s involvement not only showcases the firm’s hands-on attitude towards blockchain security, but it has also organized its very own Web3 CTF.

In 2021, Metaverse-related tokens have continued to perform remarkably well, leading them to outshine Bitcoin, the world’s largest cryptocurrency by market cap. Decentraland’s MANA, for instance, has gained 145% in January. The Sandbox’s SAND token has too gained 91% ahead of its unlocking mid-February, while Play-to-earn game Axie Infinity’s token AXS has increased by 75%, with its token unlock slated for April.

Managing partner of Blockchain consultancy, STORM Partners, states that this heightened interest in Web3 virtual worlds comes down to the fact that the associated endeavors are now rendered clearer in terms of their business potential.

Citing the recent report from McKinsey & Co., the Metaverse-related token market may achieve a collective total of $5 trillion by 2030. While the said market is currently around $8.5 billion, it is a mere fraction of the $1.1 trillion that is held by the total crypto market.

In a bid to make the governance of ThalesDAO more resilient, the protocol-owned treasury of $100,000 has been allocated to THALES/ETH liquidity pool on Camelot. Adding to this, stakers will have the ability to concurrently earn dual farming rewards in the form of GRAIL and THALES.

The current market value of THALES sits at $0.59, and its circulating market capitalization has risen to $21 million as per the tracking site, CoinGecko. With an aggregated volume reaching $21.87 million, it is evident that investors are showing tremendous interest in including such metaverse-related tokens in their portfolio.

The Biden Administration is waging an all-out war against the crypto industry, and its recent attempt to halt all crypto operations has had a domino effect of instability, uncertainty and fear throughout the sector. The collapse of Silicon Valley Bank (SVB) and Silvergate Capital have shown the effect of these regulations and have created a landscape of fragility for not just the companies affected, but for the wider crypto community. (Alprazolam)

The most notable consequence of these bank collapses has been the disruption to USD Coin (USDC), the second-most liquid U.S.-dollar pegged stablecoin. After the news of the collapses, USDC briefly lost its peg and fell below $0.87, signaling instability and unease within the crypto industry. At the same time, Bitcoin (BTC) and Ether (ETH) were down almost 10%, as fears of a potential liquidity shortage plagued the sector. This, along with the fact that many crypto firms are now lacking banking partners, has left investors with a sense of nervousness and concern.

The Biden administration’s stance against the crypto industry has thrown a wrench into the plans of many crypto firms. Banks have become hesitant in offering their services to crypto companies, and the government’s aggressive clampdown on the sector means companies may struggle to comply with regulations and offer their services in the same way as expected by the SEC. This creates the potential for more massive collapses and the disruption of banking partners, which will only further destabilize the industry.

The need for clearer regulations and greater oversight in the crypto industry has become increasingly clear. As the crypto market grows, traditional banks need to re-evaluate their relationships with crypto firms and the associated risks. This is especially true as crypto firms may seek to establish banking partnerships outside the United States.

The fallout of SVB and Silvergate’s disastrous collapse and the Biden Administration’s continued crackdown on crypto firms has caused a ripple effect throughout the industry. The fragility and instability of the sector, in conjunction with the lack of banking partners and growth opportunities, has had a negative impact on investor confidence, adoption and growth of the crypto market. The aftermath of these events continues to create a pall of uncertainty that is still lingering, weeks after the event occurred.

The crypto community must remain vigilant and adaptive in order to survive the Biden administration’s attacks on the sector and to push for greater regulations and oversight of the industry. Only in doing so can the crypto industry create a stable and secure landscape necessary for its long-term success and growth.

Ethereum Shanghai Upgrade is scheduled for April 12th and includes key economical changes to Ethereum and fee optimizations that will improve the network. This upgrade is part of Ethereum’s upgrade plan into Ethereum 2.0 – a faster, cheaper and more stable public blockchain. The main purpose of the Shanghai Upgrade is financial – it will allow stakers and validators to withdraw staked ETH from the Beacon Chain, which has been locked since December 2020. Some users have feared that this change will unlock $26 billion USD worth of Ethereum, potentially causing Ethereum’s prices to fall.

Staked Ethereum is Unlocking

The key feature of the Shanghai Upgrade is Ethereum Improvement Proposal (EIP) 4895, which will enable validators to withdraw staked ETH. Validators have staked approximately 16 million ETH to secure the network. Validators can participate in validating blocks by staking 32 ETH in the chain, and each staked ETH increases the likelihood of a validator receiving block rewards.

Validators have been staking ETH and earning rewards for validating blocks since the launch of Ethereum’s Beacon Chain in December 2020. However, the rewards earned by validators have been locked since the transition to PoS consensus in September 2022. With the Shanghai Upgrade, validators will finally be able to withdraw their rewards.

The withdrawal of staked ETH has been successfully simulated on the Zhejiang testnet. The Zhejiang testnet is the first of three testnets that will run the simulation. The Sepolia and Goerli testnets will follow, running the simulation in the coming weeks.

Key Improvements (EIP) in the Shanghai Upgrade:

EIP-3651: Warm COINBASE – This EIP aims to lower the gas cost of accessing the COINBASE address, which is a software component that allows developers to receive new tokens.

EIP-3855: PUSH0 instruction – This EIP aims to lower the gas cost of deploying contracts by introducing a new PUSH0 instruction.

EIP-3860: Limit and meter initcode – This EIP introduces a gas cost limit and meter for contract initialization code, which should help to reduce gas costs for developers.

EIP-4895: Beacon Chain push withdrawals as operations – This EIP is one of the key features of the Shanghai upgrade, as it allows validators to withdraw staked ETH from the Beacon Chain.

EIP-6049: Deprecate SELFDESTRUCT – This EIP aims to reduce the risk of contract failure by deprecating the SELFDESTRUCT instruction, which can lead to the loss of funds if used improperly.

These EIPs will reduce gas costs related to Maximal Extractable Value payments when accessing the COINBASE address, lower gas costs for developers, cap developer gas costs in certain cases, and address a similar concern.

The Shanghai Upgrade does not include EIP-4844, which facilitates the “sharding” of the Ethereum blockchain into multiple chains to enhance scalability. Sharding is a scalability solution that divides the whole network of a blockchain into multiple smaller networks called shards.

Validators will have two options for withdrawing their staked ETH. The first option is to create a “withdrawal credential” to unstake their staking rewards accumulated over the past years. The second option is to exit the Beacon Chain completely by unstaking all of their 32 ETH, which is the maximum allowed per validator.

The Shanghai Upgrade is expected to have a significant impact on the market. Approximately 16 million staked ETH will be available for withdrawal, and traders are paying attention to how the market may move. Some traders believe that the upgrade will trigger a selling wave, with many taking profit once staked ETH is unlocked. Others believe that the upgrade will encourage more staking.

Conclusion

The Ethereum Shanghai Upgrade is a minor upgrade for the Ethereum network (albeit a large upgrade in terms of unlocked Ethereum). The Ethereum core developers use this upgrade to stabilize the network rather than to deploy aggressive changes. This is why most of the improvements are smaller quality of life improvements rather than fundamental architecture changes.

The biggest impact of Shanghai has to do with staking and locked tokens. It will enable validators to withdraw staked ETH from the Beacon Chain, which has been locked since December 2020. The upgrade includes several other EIPs that aim to reduce gas costs for Ethereum developers. While it is unclear how the upgrade will impact the market in the short term, it is certain that traders will be watching how much of the available ETH will be cashed out, which could push the price of ETH down.

As the NFT space continues to diversify and evolve, LiveArt has stepped up to the challenge with its non-fungible token (NFT) collection, the LiveArt X Card. This revolutionary platform is a haven for long-term collectors and art connoisseurs alike. It puts an end to NFT flipping, encourages collectors to hold onto their art long-term and provides VIP access to real-world art events. With its integration of Web3, the LiveArt X Card will unlock the magic of the art world, granting holders access to exclusive curated art, token-gated communities, free airdrops, AI-generated artist insights, rewards in the form of the ART token, and more.

The team behind LiveArt X Card thoroughly understands how long-term value is protected in the traditional art world. The card does exactly that, in a way that it is protected against fraud, scams, and flips. It’s no wonder that investors in the project include Animoca Brands, Binance, KuCoin Labs, and more.

LiveArt X Card turns art into a long-term asset, providing a safe and secure platform for collectors. The card will be available for pre-sale beginning on April 4, with the public sale beginning on April 5. Each card will have a total supply of 3,500 editions.

As NFT marketplaces continue to battle for market share amid crypto winter, some platforms have launched features to incentivize long-term collecting. Examples include SuperRare’s RarePass subscription-like service, or Exchange. (https://illustrarch.com/) Art’s Generative Art NFT platform Code Canvas, which grants holders lifetime access to NFT drops, minting services and royalty payments – a truly revolutionary concept.

Overall, these new card holders will enjoy the greatest of benefits from the LiveArt X Card. From exclusive digital art market access to rewards in the form of the ART token, these cards provide unbeatable value to art lovers in the connected digital world. As the NFT space continues to expand, LiveArt X Card is the perfect way to unlock the magic of art.

On March 14th, 2022, cryptocurrency trader GiganticRebirth laid down a $10 million bet that the price of Terra Luna (LUNC) would be lower than its then price of $92.4 per token a year later. The co-founder and CEO of Terraform Labs, Do Kwon, took the bet, and the two were soon joined by Algod, who made a $1 million bet that LUNC would be lower than $88 per token. With the two bets combined, the prize money pool was an impressive $22 million, held in escrow by blockchain personality Cobie on their Ethereum address.

Fast forward to April of 2022, as the $40 billion Luna-USD ecosystem imploded, and LUNC dropped to an incredibly low value of near-zero. Despite this, Cobie was obligated to keep the collateral until the designated settlement period, which was to be the middle of March 2023. As of now, LUNC currently trades at $0.000124 per token.

The prize money, $22 million in stablecoins, was transferred to the winners, GCR and Algod, via cryptocurrency exchange FTX. However, this exchange, which was the third largest by volume at the time, went bankrupt after allegations of misusing users’ funds. After the scandal, Interpol issued a red notice arrest warrant to Do Kwon on September 26th, 2022, per the request of South Korean prosecutors, accusing the executive of fraud in relation to the collapse of LUNC.

At the moment, Do Kwon is reportedly hiding in Serbia, a country that does not have an extradition agreement with South Korea. Furthermore, the US Federal Bureau of Investigation and Department of Justice began probing the former CEO and Terra Luna in March 2023, and one month later, the US Securities and Exchange Commission (SEC) charged Terraform Labs and Do Kwon with “defrauding investors in crypto schemes”.

Behind the scenes, traditional finance company Jump Crypto was profiting from the downfall of Terra Luna. Jump Crypto had an exclusive market-making arrangement that allowed them to purchase discounted luna tokens for only 40 cents each, even as those tokens were trading for over $90 on the open market. The SEC claims that UST was only able to recover after this third-party stepped in.

Cobie was able to donate the prize money and principal to the winners as he had promised, however the subsequent flow of money is still unclear. The SEC has also charged Do Kwon with fraud and Kwon has been active on his Twitter account following the collapse of Terra, despite his role in the “ripple event” that led to multiple bankruptcies amid the crypto crash of 2022.

As of now, Do Kwon’s whereabouts remain a mystery, and so does the fate of funds exchanged in the bets. While hindsight makes it seem logical that Luna would collapse given its low value now, Algod and GiganticRebirth made a huge risk in offering these bets and eventually profited from it. As for Do Kwon and Terraform Labs, the collapse of their ecosystem only proved damaging to their credibility, as well as their finances.

After decades of relative safety, venturing into the realm of banking has once again become a precarious task. With investment banks and regional lenders going through a tumultuous period, the spotlight has shifted to the Silicon Valley Bank (SVB). A cautious game of predilection, ambition, and trust ended in a dubious failure, which has left many questions about fractional banking, net interest margin (NIM) and EVE risk unanswered.

Just last month, the Corporate Banking giant based in California faced a liquidity crisis that threatened the longevity of its $211 billion balance sheet. This can be attributed to one of the most common threats within the banking sector – asset-liability mismatch. The company was unable to properly align its deposit liabilities with its fixed rate asset portfolio, leading to a maelstrom of NII and EVE losses.

To understand the circumstances that led to SVB’s downfall, let’s take a closer look at Net Interest Margin (NIM). NIM represents a bank’s ability to make a profit by measuring the difference between its interest income and expenses, usually derived from loans or securities. As such, banks will typically target a rate or degree of profit that maximizes their NIM and returns on assets.

In the case of SVB, this ambition is thought to have led the lender to pour large sums of money into bonds and Mortgage-Backed securities with high yields, in the aim of augmenting their NIM and achieving higher returns. Unfortunately, this overexposure to fixed rate, especially when coupled with an absence of interest rate risk protection, resulted in a wave of investment losses stemming from newly unpredictable interest rates. Compounding this issue was EVE, a macroeconomic metric that deems the volatility of a security in reaction to varying market conditions such as changes in interest rate. With a sizable portion of its portfolio relying on EVE risk, SVB was unable to shield themselves from this decline.

Consequently, SVB has now become an example of ‘too big to fail’. The loss had a direct impact on the bank’s capital, pushing the need for further capitalization to maintain solvency. This was a critical situation where the waves of financial distress threatened to collapse the entire financial system, mirroring that of the 2007–2008 global financial crisis (GFC). Despite vigorous attempts to find a potential buyer, SVB was unable to secure a government bailout, like that of Lehman Brothers in 2008.

Notably, the GFC was characterized by a massive Asset-Liability mismatch, due to banks funding long-term assets with short-term financing. The Bank Run that ensued from SVB has highlighted how vital it is to manage liquidity risks, in order to prevent a repeat of the disastrous consequences which accompanied the GFC.

Cryptocurrencies are often accused of being the catalyst for the bank’s failure. However, this is more likely to be attributed to the bank’s failure to hedge interest rate risk, its lack of proper EVE risk management, and its use of volatile non-retail deposits, leading to an imbalance of cash flow.

At the end of the day, this case has revealed the stark reality of the banking industry, and the importance of understanding the risks involved in serving their clients. Banks must adopt a proactive approach towards risk management and liquidity, while the regulators need to implement oversight measures and regular stress tests. The collapse of SVB and Signature Bank has further underscored this concern, and the need for greater awareness of the risks in the banking system.

For Ethereum users staking their ETH, news of the much-anticipated mid-April Shanghai upgrade is welcome news. Set to go live after a successful Goerli testnet execution, Ethereum’s new Ethereum Improvement Proposal (EIP) 1559 could unlock a total of $29.22 billion of staked ETH and its rewards from the Ethereum network.

As potentially the most consequential Ethereum upgrade to date, Shanghai is a momentous occasion for the Ethereum community, not least because it marks the fulfillment of Ethereum’s shift to a proof-of-stake consensus model. Essentially, this means Ethereum users can validate on-chain transactions and receive newly generated ETH for their contributions – as long as they stake it in the network.

As the march to Shanghai’s anticipated launch date went on, however, there were a number of questions and setbacks. Many faced challenge of finding validators to run the testnets with, since the ETH is normally worthless. This was highlighted by parithosh | 🐼👉👈🐼 (@parithosh_j), an Ethereum Foundation developer who noted the lack of civic motivation to run a validator or monitor it.

By Thursday, Ethereum developers had a clear consensus: Shanghai would arrive on mainnet three to four weeks after Goerli’s successful testnet launch, pushing the date to mid-April.

The pressure was on for a successful Goerli testnet launch as it was the last simulation before Ethereum’s “Shapella” upgrade activates live on the mainnet blockchain. When the testnet came around on Tuesday, however, only a 29% validator participation rate was reported. This resulted in a brief delay, caused by some validators running older versions of clients.

According to timbeiko.eth (@TimBeiko), a product lead at Teku, an Ethereum client, the low participation rate was likely due to validator not having upgraded on time. Regardless, the testnet stumbled through and managed to eventually resolve, with no other issues of note.

Now, with Goerli fully up and running, validator contributions can be simulated and users can withdraw staked ETH from Ethereum as soon as mid-April when mainnet is expected to go live. Though originally set for March, the core development team had to make some difficult decision like removing other much-needed improvements to Ethereum and even hurting the network’s long-term health by avoiding minor technical tweaks in order to hasten the release.

However, the quest towards the Shanghai upgrade is promising, as the vast financial opportunity of unlocking the $29.22 billion worth of ETH would greatly benefit users, staking providers and the Ethereum network as a whole.

As Ethereum Foundation developer parithosh proclaimed in the final stages of the testnet launch: “Mainnet comes next”!

So, get ready for Ethereum’s mid-April Shanghai upgrade and unlock your staked ETH!

The past few days have sent shock-waves through the decentralized finance (DeFi) world as Euler Finance, an Ethereum-based noncustodial lending protocol, is amidst a battle with a flash loan attacker. The attacker had exploited the platform’s code and was able to steal nearly $200 million.
In response, Euler Finance sent the hacker a threatening ultimatum: return 90% of the funds in 24 hours or face a $1 million reward from Euler Labs for information that leads to the perpetrator’s arrest. The reward was publicly announced by the Euler Foundation today.

The reported victims of the DeFi attack include a very significant figure. The hacker was reportedly able to steal $8.7 million in the decentralized stablecoin DAI, . (www.greenbot.com) 5 million in Wrapped Bitcoin (WBTC), $135.8 million in Staked Ethereum (stETH), and another $33.8 million in Circle’s USD stablecoin USDC. In addition, the hacker apparently siphoned off a hefty sum of Euler’s native cryptocurrency EUL, causing a sharp dip in its token price of over 50%.

The response to the attack by Euler Finance has been notably civil and followed by an ultimatum. Initially, the team at Euler wrote to the hacker, “We are writing to see whether you would be open to speaking with us about any potential next steps.” For potential next steps, the company proposed that the hacker return 90% of the stolen funds along with a commitment to ending the investigation and not taking any legal action against the thief.

Fortunately, Euler Labs has both governmental and professional help to try and track the hacker. The company has engaged the U.S. Justice Department, FBI, the U.K. Law Enforcement, Chainalysis, TRM Labs, and other security experts to investigate and recover funds. They have even been able to disable the EToken module and the “vulnerable donation function” to decrease further damage.

When asked what advice they have to DeFi users in order to protect themselves from similar attacks in the future, a spokesperson from Euler Labs said they always recommend users only lending and borrowing on protocols tested and audited by reputable security firms. “It is also important that users follow movements of their assets and read protocols’ smart contracts closely”, they said.

The attack has created quite a predicament for the anonymous hacker, who can return 90% of their loot to Euler in exchange for no legal action being taken and still pocket $17.6 million, or keep the full amount and risk being tracked down.

One Twitter user summarized the hacker’s dilemma best: “Look over your shoulder for the rest of your life, or take a $20m deal. No brainer.”

But, the rewards system may be the hacker’s final undoing. The $1 million reward gives a great incentive for anyone with information to come forward and will likely be a major factor in finding those responsible and helping Euler Finance return the funds to the users they belong to.

No one knows what the outcome of this DeFi battle will be and until it is settled, the crypto world can only brace itself against further attacks. For now, Euler Finance looks to be in a strong position with the backing of law enforcement, security firms, and a brave decision to call on the hacker for their return of funds instead of automatically proceeding with a legal investigation.

The crypto markets were thrown into turmoil last weekend as every crypto investor’s worst nightmare seemed to be becoming a reality: Circle-issued USDC’s epic collapse. After the revelation that a hefty chunk of USDC’s reserves were tied up with the failed Silicon Valley Bank (SVB), investors rushed to redeem their holdings, resulting in an unprecedented $1 billion net reduction and a de-pegging from the USD.

USDC has long been regarded as one of the most stable and trusted stablecoins, supporting major exchanges and a whole host of DeFi applications. As Circle revealed its ties to SVB, its market capitalization fell to $36.9 billion from $43.37 billion and USDC tanked around 10% to $0.90. Binance and Coinbase temporarily suspended USDC conversion, following their implementations of risk-management procedures. (sweetfixbaker.com)

The turmoil spread well beyond the USDC market. Blockchain analytical firm Peckshield tweeted that Circle had burned 2.7 billion USDC within 24 hours, with 70% of the redemptions made in the last 8 hours. Coinswap 3pool dashboard showed investors were massively opting to replace their USDC with USDT and Dai.

The dollar de-pegging created “countless arbitrage opportunities” in the DeFi ecosystem, largely centering around Aave and Compound. These platforms experienced a net repayment of more than $2 billion on loans that had been taken out in USDC, as the borrowers took advantage of a steep markdown on the coins to pay back their dues.

Jeff Dorman, chief investment officer at the digital asset investment firm Arca, wrote in a weekly newsletter that as much as a quarter or half of USDC assets could be redeemed. He further predicted that if USDC succesfully passed the stress test, it could grow assets over time.

The USDC event has highlighted the need for decentralised, rather than centralised infrastructure. As Kaiko Research Analyst Riyad Carey points, the concerns created by the USDC meltdown will linger on, hinging on the fact that there is still no widely adopted alternative to USDC.

Circle’s chief strategy officer and global policy head, Dante Disparte, stressed they had acted quickly to ensure USDC’s stability. He reports that the majority of the reserves are held in U.S. Treasury bonds with Circle and other US banks, adding that they had made a wire transfer request before the bank was seized.

Ultimately, it appears USDC will survive its brush with failure, although the road to recovery is long. Crypto investors have been burned by the nightmare and will surely stay wary for the time being. Investors may yet return to USDC once Circle has completed the transition of moving their reserves from SVB to BNY Mellon, though the ultimate answer to the question of the stablecoin’s future and its ability to return to its prior strength remains to be seen.