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Newsletter #15

Happy Thanksgiving! We at Team Boxmining would like to give a big thank you to YOU, for your support and your presence in our community. WE LOVE YOU!

Ledger Black Friday sales!

Ledger is offering 40% off ALL their wallets until 30 Nov! The Nano X is selling for USD$71.40 (originally $119) and the Nano S for USD $35.40 (originally $59), tax and shipping excluded.

Check out our reviews of the Ledger Nano X and Nano S!

Click HERE to buy! Enter code “BLACKFRIDAY20” at checkout!

Market situation: Black Friday sale?

As we pointed out in the last newsletter, a retrace was to be expected rather soon and that is exactly what happened…in time for Black Friday. Nothing strange actually: every strong bull season needs strong retraces to shake out weak hands, let traders take profits and reposition into the market. $BTC has topped out at more or less $19500 (620$ for $ETH) on all the exchanges, to then pull back in the $16 thousands area ($16227 on Bitstamp). This means the dip went 16-17% lower than the local top (around 23% for $ETH, that went as low as $480).

Now it is probably a waiting game to see whether the bottom is in or not. If we have a look at the previous cycle for example, we can see that 40% retraces lasting for few weeks before full recovery were common and to be expected at least a few times before reaching ATH. If we go even further back, probably one of the most shocking events had happened on April 10th 2013, where in a three day span the price collapsed 82%!

$BTC 2016-2017 retraces
$BTC 2016-2017 retraces

Crypto Exchanges have recently seen huge volumes on their platform and being most of them due to opened leveraged positions, a tiny drop in price can start a cascading liquidation process that quickly plummets the price even further. Glassnode, as a matter of fact, has registered a peak of $262 million liquidated in one hour on November the 26th.

$262 million liquidated in one hour!

Here’s how this cascading process works on exchanges and how NOT to get caught up with it!

DON’T get rekt in crypto

A few hours before the massive liquidations, Brian Armstrong, CEO at Coinbase, shared some “concerns” he had on Twitter regarding rumors that U.S. Treasury and Secretary Mnuchin were planning to rush out regulations regarding self-hosted crypto wallets before the end of his term.

Even though it has been known for a while that governments are trying to catch up with crypto regulations, some may argue that this contributed to the FUD and thus to the cascading effect, but as always there’s no way to say if it is true or not, and honestly it appears to be unlikely in this case. What we need to remember in order to not get caught by surprise and change our strategy at last second is that, in any cycle, shakeouts will happen multiple times no matter what, and they shouldn’t create fear.

Close to $90m of loans liquidated on Compound ($COMP)

As the price was dropping fast, a lot of holders were “cashing out” and moving their funds to stablecoins to avoid further losses. As a result, $DAI price has risen much more than it should have, reaching $1.3 on Coinbase ($DAI should always maintain a value of around $1). Coinbase and Uniswap are used as price oracles by Compound and with this unexpected (some say it could be due to a malicious actor) rise in price, some of Compound’s collateralized positions became suddenly not big enough to sustain the borrow assets.

The way this system works is simple: let’s say I have 1000$ worth in $ETH and I want to borrow some $DAI because I like to hold my long-term exposure to Ethereum but I need liquidity to perform other trades. If the Collateral Factor for $DAI is 75%, I will be able to borrow $750 worth of $DAI at most. If then the $DAI price rises to $1.3, which is a 30% increase, my loan has now become worth $975 which is more than what is allowed by the contract based on my collateral. This would trigger the immediate liquidation of my position.

The problem was not on Compound’s end, whose smart contract apparently worked as it was supposed to. Nevertheless, Robert Leshner, the Founder, shared his understanding for the affected users, wishing that this event could be used as a catalyst to improve the systems even further.

China’s national treasury is now a crypto whale

The PlusToken scam was one of the largest Ponzi schemes of recent history. Initially alleging to be a high-yield investment platform, its administrators closed down the operation in June 2019 by withdrawing over USD$3bn worth of cryptocurrencies with the message “sorry we have run”.

109 people have been arrested in connection with this scam.

Recently Court filings in China have shown that USD$4.2 billion worth of cryptocurrencies had been seized, and will be forfeited to the national treasury- making them very crypto rich now.

Victims of the scam have no rights for return of their assets, since trading and dealing in cryptocurrencies in China is illegal.

Learn more about the PlusToken scam here.

Red flags of the week

Pickle Finance ($PICKLE) got exploited by nearly $20 million

New week, new exploit. Unfortunately, this is becoming too predictable and apparently, we can’t do anything but witness attackers exploiting DeFi protocols.

This time was Pickle Finance. On November 21, instead of performing a “classic” flashloan like in previous attacks, a malicious entity used a fake jar (“evil jar”) to swap funds with the real cDai jar. This was a very complicated attack and this flow chart posted by Vasa on Twitter can help understand what really happened.

When the attack was confirmed, insurance DeFi project Cover Protocol received the first claim from affected Pickle users who lost funds. Their claims have now been accepted and and to date, over USD $280,000 in claim redemptions have been paid out!

This shows how Insurance Protocols could (and maybe should?) be a fundamental part of DeFi in the next future as users need to trust they won’t be left alone when an exploit or hack happens.

Fake customer support accounts

More and more warnings have been shared by our Telegram group on fake “customer support” accounts contacting them via. email, text or telegram message. These scammers would send fake links for you to click (which may contain malware), or even directly ask you to send them your cryptocurrencies or recovery phrase so they can “help” you with your technical issue. Here’s some tips:

  • Ask yourself, did you even make a customer support request? Some scammers would send unsolicited emails claiming that your account has been compromised.
  • Check you are joining the correct customer support group on Telegram.
  • Check carefully before clicking links provided by the “customer support”.
  • Don’t send anyone your recovery phrase or cryptocurrencies. Once they can recover your device or receive your currencies there’s no way to get it back!
  • If in doubt, contact the official company/project and ask them if the message is genuine.

Exchange news

Exchanges are hitting US customers with lots of bad news this week, with Binance.com giving US customers 14 days notice to withdraw their funds or risk being blocked, to CoinBase Pro disabling margin trading. This comes as US regulators are tightening the grip on the crypto industry.

On the upside, after more than 1 month, OKEx has reopened withdrawals on 27 November 2020 and have lined up lots of rewards and loyalty programs to thank users for their patience during the suspension. Find out more about the suspension and how you can join the rewards programs!

Here’s our recap of all the cryptocurrency exchange news in November 2020!

Andre Cronje’s latest experiment

After the previous experiment Keep3r Network ($KP3R), Andre Cronje is at it again!

Andre Cronje and the Yearn ($YFI) team have been pretty active lately announcing different collaborations (among which CreamPickle Finance and Cover Protocol), but probably the most anticipated news is his new project Deriswap.

Cronje defines Deriswap as, “Capital efficient swaps, futures, options, and loans”. Though currently still being audited, Deriswap will combine all these different functions in a single contract. This will let users maximize their rewards taking advantage of multiple types of exposure to the market. 

It is still unclear whether this will be a separate project or will be integrated into the Yearn ecosystem, and it is not sure if a new token will be created. Many followers have been waiting news for days now knowing that any new token by Cronje looks like a “almost” sure bet (incredibly enough, it also seems that whenever he tweets about a project, the underlying asset has a spike in price; it has recently happened to $CREAM, $PICKLE and $COVER).

ETH2 threshold has been met!

The minimum requirements to trigger the beginning of Ethereum 2 Phase 0 Beacon Chain has been reached!  524,288 ETH (16384 validators) have been deposited in the smart contract and will contribute to the Proof of Stake of the “second life” of Ethereum.

For all the details we have a full article on ETH 2.0!

Boxmining happenings this week

We had a cool conversation with Sam Bankman-fried (FTX Exchange, Serum DEX and Alameda Reserach). Sam Bankman-fried (known by the community as “SBF”) is certainly someone at the centre of the DeFi revolution, exchange space, and crypto trading. With the recent launch of Securities trading on FTX – we find out what’s Sam’s big play behind this move. We dig deep on his insights and 5000 IQ plays in this space!

Persistence One ($XPRT) is an asset-based lending/borrowing and debt issuance/management hybrid protocol, bringing the power of real-world assets to DeFi. It does so by facilitating crypto-assets borrowing, using real-world assets as invoiced NFTs, and then using them as wrapped financial products. Have a look at the interview with Tushar Aggarwal, founder and CEO, and to our article to learn more!

Kira Network ($KEX) uses a new approach to powering DeFi apps — utilizing liquidity of assets at stake through mechanism of staking derivatives. Check out our article and interview with Co-founders Milana Valmont and Mateusz Grzelak about Kira Network and what it can bring to the Defi Space.

Click here for back issues of our newsletters!

Michael
I’ve been involved in the Bitcoin and Blockchain space since 2012. Something I notice right away is that accurate factual information is hard to come by in this space. More often than not, we find extremely biased information that exploit the complexity of blockchain to obscure facts. The objective of this site is simple – to provide independent insights into the blockchain space.

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