2 July

Ethereum has a technical endgame – an open, transparent world computer – but nobody knows what Ethereum is for. The point, the rationale, why we are here. Compare the situation to Bitcoin where the political endgame can be summarized in one word: hyperbitcoinization. Bitcoin’s goal is to transition from a fiat monetary system to a Bitcoin standard.

What is the equivalent one-word term in Ethereum? To find it, it is important to understand the contemporary Ethereum political landscape. The spectrum contains the following:

  • Cypherpunk: Ethereum is rooted in an earlier tradition of privacy and tech advocacy, which thought coders should use encryption and computing to build neutral infrastructure others can imbue with meaning. Ethereum’s politics is its apolitical stance and the only focus is to create open source tools that requires little human mediation.
  • Experimental liberalism: Ethereum’s combination of experimental governance (e.g., soulbound tokens) and market-making (e.g. Quadratic Voting) can generate new liberal democratic political innovations. This position is associated with the network’s founder Vitalik Buterin and Microsoft’s Glen Weyl.
  • Solarpunk: The social coordination enabled by DAOs can create positive externalities on wider society, with a warm ambient humanism embedded in its aesthetics.
  • Lunarpunk: The privacy enhancements afforded by zero-knowledge proof variations on Ethereum-native technologies (DAOs, DeFi, NFTs) are necessary to protect crypto culture against contemporary surveillance capitalism.

Is there some common thread running through these positions that would correspond to Bitcoin’s compact hyperbitcoinization? Across the spectrum, Ethereum’s goal is to transition from a deteriorating inherited financial system built on unsustainable practices. Seeking consensus across the spectrum, the political endgame of Ethereum can be summarized in one word: hyper-regenization.

  • Regenerative economics rather than illusory limitless growth: Ethereum offers retroactive and proactive public goods funding through the Quadratic Funding (QF) mechanism. It contains the potential to expand the cypherpunk mechanism of neutral public goods beyond Ethereum and Web3, into the traditional political world, as the solarpunks suggests with their focus on positive externalities.
  • Regenerative citizenship: Ethereum could reward good citizenship through retroactive airdrops, such as participation in Gitcoin rounds, governance voting, testnets and community channels. The activities of the citizens of experimental liberalism could be captured in soulbound tokens that grow over time.
  • Regenerative decentralization rather than centralization atrophy: Ethereum is an information commons or common knowledge pool. Transparency allows us to recognize, albeit not without its challenges, when centralized clusters are emerging. Recent efforts to re-decentralize client diversity and current efforts to re-decentralize staking reveal the cultural instincts to disrupt centralization atrophy are intact.

What is Ethereum for? To bring about ever more hyper-regenization.”

Crypto industry figures welcomed, for the most part, the European Union’s (EU) landmark crypto law, the Markets in Crypto Assets (MiCA) regulation, agreed upon late Thursday. But the picture is more complicated when looking at the details.

Sheila Warren of the Crypto Council for Innovation said the new crypto law mostly avoids stifling innovation – and indeed may prove a net positive.

Legal and regulatory certainty for the market will enable more crypto firms to invest and innovate across the region. Until now, every different [EU] member state has their own regulation, or they didn’t have anything, so it was very hard for different companies and projects to be present and offer their services in the whole market.

Lobby group Blockchain for Europe said rules for crypto asset service providers such as exchanges and wallets are “savvy,” and that the law will let decentralized finance (DeFi) prosper. Meanwhile, conventional investment banks, a heavily regulated sector that doesn’t want to get undercut by more lightly overseen crypto firms, also seem to appreciate the balance struck.

One of the most eye-catching measures would be a cap, which means stablecoins that aren’t tied to a single fiat currency would have to stop issuing if daily transactions exceed 200 million euros ($209 million) – intended to stop private companies usurping the role of the euro. For some, that’s an “arbitrary restriction,” and an example of the law discriminating against a means of payment because of the technology it uses.

Given that the top four stablecoins in the market currently significantly exceed this volume, this could be a barrier to stablecoins becoming widespread in the EU.

Markezic also noted that, in practice, it will be impossible for decentralized stablecoins – those that don’t have a single identifiable issuer – to comply with the rules that in practice oblige a central entity to take charge.

Other restrictions in the law, like ban on interest payments for users, and heavy restrictions on how reserves can be invested, have led some to ask if there will ever be an incentive for stablecoin issuers, and the DeFi ecosystem they bring with them, to set up in Europe at all.”

The decentralized autonomous organization (DAO) is emerging as Web3’s answer to the traditional LLC or C-corp. The number of new DAO governance proposals, which codify a company’s organizational and operational structure, has risen eightfold in the past year. In May 2021, only 700 DAOs were operational. Today there are more than 6,000.

Many brands and companies aren’t in a position to fully decentralize their corporate structure, eliminate titles and put all decisions in the hands of a decentralized community of pseudonymous members. Every company, however, can implement a hybrid DAO model that gives customers a greater voice, increasing engagement and putting brands in a position to thrive in a decentralized future.

A hybrid DAO model – where projects deploy a community-owned token – can enhance customer engagement by offering all stakeholders an opportunity to have a voice in a variety of decisions that enhance buy-in, inform better products and cultivate community.

When brands give customers more of a voice, they foster an avid following of loyal customers who are highly invested in the future of the brand/product because they are contributing to elements of decision making.

Simply put, insights into customer demands and desires help brands to be more successful in delivering what people actually want. Crowdsourcing ideas can lead to even stronger end results when it comes to changes to products, branding, design and more. In other words, brands can benefit from the wisdom of the crowd.

Brands and companies that adopt a hybrid DAO model will create a shift from thinking of buyers as “customers” to thinking of them as team members and part of their community. Ultimately, the rise of the metaverse and Web3 will favor brands that adopt this type of model over those that do not, making a hybrid DAO model a multifaceted competitive differentiator that can set brands apart from the competition both now and in the years ahead.”

BlockFi and FTX US have reached a deal that will provide the embattled crypto company with a $400 million credit facility. The deal also gives FTX US the right to acquire BlockFi and will, according to BlockFi CEO Zac Prince, “protect client funds.”

As a matter of principle, we fundamentally believe in protecting client funds. Not only because it’s absolutely the right thing to do, but this also benefits the ongoing health and adoption of crypto financial services worldwide.”

See Also: Voyager Digital Temporarily Suspends All Trading, Withdrawals and Deposits
See Also: Custodia Bank’s CEO Says Bad Actors and Regulators Caused Crypto Crash

Crypto investment platform BnkToTheFuture proposed three recovery plans on Thursday aimed at helping users affected by the insolvency of crypto lender Celsius Network. A community vote for the three proposals is underway as of Friday, following which BnkToTheFuture is expected to hold a formal meeting with Celsius board members.

The first proposal calls for restructuring and relaunching Celsius, which would allow depositors to benefit from ‘any recovery through financial engineering.’ This could refer to the issuance of additional tokens or additional fundraising.

The second proposal is to form a pool of the most influential holders of bitcoin (BTC) and have them ‘co-invest with the community‘ in a bid to raise significant amounts of capital for Celsius. The third proposal is to ‘form an operational plan that allows a new entity and team to rebuild and make depositors whole.'”

See Also: Crypto Lender Celsius Network Exploring Options to ‘Preserve and Protect’ Assets
See Also: The Collapse of 3AC (Video)

“Hundreds of Bored Ape owners have signed up to a new nonfungible token (NFT) licensing marketplace that enables hodlers to rent out their Apne’s IP to brands. Blockchain accelerator Mouse Belt Labs launched the marketplace called Boredjobs, claiming that it will list all 10,000 BAYC NFTs on its website for brands to browse through and indicate interest in hiring for campaigns.

The Bored Ape Yacht Club gave its owners a fantastic opportunity to utilize the IP rights of the NFTs they purchased. Unfortunately, they did not provide them with an instruction manual on how to put them to work. Bored Jobs is creating that instruction manual.”

Tether has cut its holdings of commercial paper by 58% to $8.5 billion, with a further reduction to $3.5 billion expected at the end of the month as it seeks to tackle speculation about the quality of support for its dollar-pegged USDT token. The company held $20.1 billion of commercial paper in May.

According to an update on Tether’s website, it aims to bring the figure down to zero as it diversifies its holdings into U.S. Treasury bonds. The market cap of Tether’s USDT stablecoin has plunged to $66.1 billion from $82.2 billion since May due to an increasing amount of user redemptions.”

Longterm Indicators Suggest Potential Bottom

1 July

The SEC rejected Grayscale’s application earlier Wednesday, citing concerns about market manipulation, the role of Tether in the broader bitcoin ecosystem and the lack of a surveillance-sharing agreement between a “regulated market of significant size” and a regulated exchange, echoing concerns the regulator has expressed for years in rejecting other spot bitcoin ETF applications.

In the filing, Grayscale simply asks the U.S. Court of Appeals for the District of Columbia Circuit to review the SEC’s order. Essentially, the company will argue that the SEC has to allow products that are like other products already trading, in this case bitcoin futures ETFs. Verrilli told reporters earlier in June that the SEC’s approval of futures ETFs indicate the underlying market must be seen as reliable.

Grayscale supports and believes in the SEC’s mandate to protect investors, maintain fair, orderly, and efficient markets and facilitate capital formation – and we are deeply disappointed by and vehemently disagree with the SEC’s decision to continue to deny spot bitcoin ETFs from coming to the U.S. market.”

See Also: New spot Bitcoin ETF launches at Euronext Amsterdam Exchange
See Also: Messari Research: DCG’s Barry Silbert Wins From SEC ETF Stalemate, but Investors Lose
See Also: Grayscale’s legal challenge to SEC sparks response from the community

“While it is hard to assess how much more deleveraging still needs to happen, the bank said, its indicators suggest the process is already well advanced. Multiple failures among companies in the industry should not surprise given the backdrop of deleveraging and the 70% drop in digital asset market capitalization since November, the report says.

The failure of 3AC is a manifestation of this deleveraging process, the note says, adding that the process seems well advanced, ‘making the bottom formation process in crypto markets more volatile.’ Bitcoin (BTC) miners are another source of stress for crypto markets, JPMorgan said, given the pressure to sell their tokens to deleverage or to cover the cost of their operations.

JPMorgan identifies two reasons to suggest that the cycle may not be very protracted: Stronger crypto companies with more robust balance sheets are stepping in to help contain contagion, and the continued healthy pace of venture capital (VC) funding, an important source of capital for the digital assets ecosystem.

See Also: Genesis Faces ‘Hundreds of Millions’ in Losses as 3AC Exposure Swamps Crypto Lenders: Sources
See Also: Singapore Central Bank Censures Three Arrows Capital for Alleged Misleading and False Disclosures
See Also: FTX Close to Buying BlockFi for Just $25M
See Also: FTX Passed on Deal to Purchase Celsius Due to Deficient Balance Sheet: Report

European Union (EU) policymakers have struck a deal on landmark legislation to regulate crypto assets and service providers throughout the bloc’s 27 member nations. The legislative package sets up requirements for crypto issuers to publish a kind of technical manifesto called a “white paper,” to register with the authorities and to keep proper bank-style reserves for stablecoins.

Lawmaker Ernest Urtasun tweeted that the deal would include a cap on large stablecoins that become widely used as a means of payment, meaning that they can’t exceed 200 million euros of transactions per day.

MiCA has been broadly welcomed by the industry because it can increase credibility, promote adoption by conventional banks and offer crypto companies a single license to operate across the bloc.

Those who are in this space are thinking of being innovative will now do it in a way that sits within our regulation rather than in the Wild West.

The legislative deal comes as U.S. lawmakers consider rules of their own, particularly for the stablecoin market. It also follows hot on the heels of controversial anti-money laundering measures that the EU agreed to impose on crypto service providers Wednesday.”

See Also: Biden Official Says US Government Could Pass Stablecoin Rules by End of Year
See Also: Hurry Up With Crypto ID Checks, FATF Tells Countries
See Also: DeFi Shouldn’t Be Regulated, Crypto Advocates Tell UK Regulator

“Meta, formerly known as Facebook, has begun rolling out NFTs for some U.S. creators on its flagship social network. Facebook is starting with Ethereum and Polygon NFTs but will soon add support for NFTs on Solana and Flow.

According to the post, users will have a “digital collectibles” tab on their Facebook profiles where they can showcase their NFTs. Users will be able to connect their cryptocurrency wallets to their Facebook profiles. They’ll also be able to turn their NFTs into Facebook posts. Collectors will also be able to share their NFTs as augmented reality stickers.”

See Also: Music Streaming Company Napster To Launch Its Own Token On Algorand

For the riskiest class of crypto assets, which includes those that aren’t backed by conventional reserves or asset-pegged stablecoins that aren’t satisfactorily stabilized, there would be an exposure limit set at 1% of Tier 1 capital, or the core capital held in a bank’s reserve. For large banks like JPMorgan Chase (JPM), 1% of Tier 1 capital can amount to billions of dollars.

This would imply, for example, no large exposure limits on cryptoasset where there is no counterparty, such as bitcoin.

The Committee seems to have softened its position on crypto holdings where the bank is able to insure against its risk after a receiving a barrage of complaints that its previous approach was too cautious. Under the new plan, lighter rules would apply to cryptos that have an equivalent liquid derivative such as an exchange-traded fund, given the possibility to “hedge” exposures.

The committee is seeking comments on the plans by the end of September.”

See Also: Societe Generale Selects Swiss Crypto Custody Specialist Metaco for Security Token Push

“The asset dropped 5.5% in the past 24 hours, and is on track for a record 40% monthly decline. Speaking at the ECB meeting, Powell said he was more concerned about the challenge posed by inflation than about the possibility of higher interest rates pushing the U.S. economy into a recession.

Is there a risk we would go too far? Certainly, there’s a risk. The bigger mistake to make – let’s put it that way – would be to fail to restore price stability.

About a week ago, his comments suggested rate hikes could soften before next year.”

See Also: After 8 years dumping billions of XRP, Jed McCaleb’s stack runs out in weeks

30 June

The liquidation of crypto hedge fund Three Arrows Capital was ordered by a British Virgin Islands court on Monday. Partners from New York-based Teneo Restructuring have been called in to handle the insolvency.

Crypto brokerage Voyager Digital (VOYG.TO) issued a default notice to 3AC this week after the fund failed to make required payments on loans of 15,250 bitcoins and $350 million in USDC. 3AC has been an active investor in the digital asset industry in recent years with investments across non-fungible tokens, decentralized finance, layer 1 blockchain firms and crypto companies.”

“MakerDAO is currently voting on a proposal aimed at helping it weather the bear market and utilize untapped reserves by investing 500 million Dai (DAI) stablecoins into a combination of United States treasuries and bonds.

This proposal represents a major step for MakerDAO, as it signals its intent to extend beyond the crypto realm and earn yield from traditional “safe” financial investments with its flagship DAI. Once an option is chosen, European wholesale lender Monetalis will provide MakerDAO access to the financial instruments it wants.

As TradFi is seeing interest rate increase due to the FED. Maker protocol working with TradFi to take advantage of the high interest would be able to strengthen its revenue model.”

“A Wednesday meeting secured a final deal on anti-money laundering legislation for crypto transfers and largely overturned a proposal from the EU Parliament to impose laundering checks on all payments to private wallets.

The final proposals will mean customer identity needs to be verified for even the smallest crypto transfers, if it’s between two regulated digital wallet providers – but payments to unhosted private wallets will largely be left out of laundering checks.

It strikes the right balance in mitigating risks for fighting money laundering in the crypto sector without preventing innovation and overburdening businesses.”

See Also: US Infrastructure Law’s Reporting Requirements for Crypto Brokers Likely to Face Delay
See Also: Governments May Restrict Foreign Access to Their CBDCs, Riksbank Official Says

“The scaling solution allows developers to launch application-specific blockchains on the Polygon network. Avail can be deployed on any Ethereum Virtual Machine (EVM)-compatible blockchain.

The new product would allow developers to access blockchain data “off-chain,” meaning they would not need to continually check data from the network for an application deployed on Polygon. Applications built on Avail would give developers the ability to update, fork and change how their blockchains handle execution.

This is critical for [decentralized finance] and game developers that may need to patch bugs, experiment with execution or just reduce their dependencies on external chains.”

See Also: Polkadot Chief Gavin Wood Announces Blockchain Governance Upgrade

Private and publicly listed crypto miners owe up to $4 billion in debt used to finance the construction of gargantuan facilities across North America. As the value of the miners’ output dramatically falls along with the price of bitcoin (BTC), they have to make tough decisions about how to survive – including selling off hard-earned coins and equipment.

Bitcoin mining revenue in dollar-denominated terms per kilowatt hour (kWh) has more than halved since the start of the year. Miners that borrowed money to finance their expansion plans are now having to make tough decisions. Many of those loans are underwater today and borrowers need significant revenues beyond the financing to remain current.

Older machine models are becoming unprofitable and turned off – the hashrate decreased by 11% between June 12 and June 27. Miners have been selling bitcoin to exchanges at record paces. In May, bitcoin miners sold over 100% of their monthly production, compared to 30% between January and April.

In due course, we’ll see some defaulted loans, unclaimed miners, and acquisition targets.

Miners’ difficulties in paying their installments engender risk for the overall ecosystem, as they leave lenders exposed to defaults. According to Van Huis, lenders BlockFi and NYDIG have given out “horrible credit” that miners will have a hard time repaying given current market conditions.

Industry sources agreed the industry will consolidate in the coming months as weaker players are forced to offload assets.”

29 June

“The crypto custody firm is enrolling customers a few months ahead of Ethereum’s planned transition to a proof-of-stake mechanism. The transition to PoS, which is intended to be faster and more energy efficient than PoW, is expected to occur in August.

Rewards for validators are expected to double to about 8% or 9% after the Merge as transaction priority fees currently paid to miners start to be distributed to validators.

Institutional staking is definitely a win for institutional investors. [Ethereum] is the biggest network to do proof-of-stake, and having it bank-supported legitimizes [staking] as a real alternative to proof of work.”

See Also: Ledger Live Adds Yield Earning Capability via Alkemi Earn

The bank reiterated its view that blockchain technology delivers the most significant evolution of software since the internet, adding that the emerging ecosystem of Web3 applications has the ‘potential to transform every industry.’

Client engagement continues to grow and focus remains on the rapid development and disruptive nature of blockchain technology.

Participants said regulatory clarity is critical for institutional and corporate engagement, which could ultimately speed up real-world use and result in mainstream adoption as consumer confidence in the sector increases. It was a consensus view that institutional investors and corporates are preparing to enter the digital assets ecosystem, but remain on the sidelines until a comprehensive regulatory framework is established.”

See Also: Crypto more popular than mutual funds among millennials, survey shows

“The State Duma, the lower house of the Russian legislature, has passed a bill on the taxation of digital assets that exempts their sale from value-added tax (VAT) in the Russian Federation. In addition, the bill established income tax rates of 13% for Russian exchanges on the first 5 million rubles (currently about U$93,000) of the taxable base annually, 15% on amounts above that limit and 15% across the board for foreign exchange operators. The current tax rate for companies is 20%.

The government noted in the bill that a separate tax procedure for digital assets is key to the creation of an effective and competitive digital economy. Russia has tempered its skeptical stance on cryptocurrency as the country has increasingly felt the pressure of Western economic sanctions.

I think all self-respecting states will have a national digital currency within three years. […] We should be ready as soon as possible. Plus, this will settle the issue of being blocked from SWIFT, because this integration will make SWIFT unnecessary.”

“The crypto industry was “brought to its knees” in recent weeks by an “old-fashioned Madoff-style Ponzi scheme” wrapped in a trade that was similar to the positions that sunk Long Term Capital Management (LTCM), research firm FSInsight said in a report Friday.

Madoff in this scenario would be the founders of 3AC, Su Zhu and Kyle Davies, who used their reputation to ‘recklessly borrow from just about every institutional lender in the business,’ resulting in pain for some high-profile firms in the industry, including Voyager Digital, Babel Finance and BlockFi. Bernie Madoff was an American financier who ran the largest Ponzi scheme in U.S. history.

Given the size of the exposure that companies like Voyager Digital and BlockFi had to the fund, it appears that the vast majority of 3AC’s assets were bought with debt and its collateralization ratio was quite small. It is likely that Zhu and Davies were simply ‘using borrowed funds to repay interest on loans issued by lenders, while ‘cooking their books’ to show massive returns on capital.’

As asset prices collapsed and margin calls were triggered, 3AC could no longer hold its “daisy chain of leverage together,” which caused illiquidity issues across the whole crypto lending market. The overleveraged nature of this arbitrage trade is similar to the types of trades that were the “death knell” for Long Term Capital Management.”

See Also: CoinFLEX Says Roger Ver Owes It $47M USDC as Spat Turns Public

“U.S. SEC Chair Gary Gensler has reiterated his claim that bitcoin (BTC) is a commodity. His interpretation is partially rooted in precedent and, one would hope, reality.

Some, like bitcoin, and that’s the only one, Jim, I’m going to say because I’m not going to talk about any one of these tokens [that] my predecessors and others have said [are] a commodity.

The government’s stamp of approval seems to separate BTC from “crypto,” but decentralization is a path.”

See Also: Community reacts after SEC’s Gensler affirms BTC’s commodity status

Post-merge MEV Reward Structure

28 June

Grayscale Investments said Monday it would work with market-making heavyweights Jane Street and Virtu Financial as authorized participants should its Grayscale Bitcoin Trust (GBTC) garner SEC approval to be converted into an ETF. “Authorized participants” are specialized traders that can create and redeem shares of an ETF.

A decision on Grayscale’s ETF application is due on or before July 6, and the heavy betting is that the SEC will deny the proposal. Nevertheless, CEO Michael Sonnenshein this morning reiterated his company’s “unequivocal” commitment to converting GBTC from a trust to a spot ETF.

Additionally, Grayscale earlier this month hired high-powered attorney and former Obama administration official Donald B. Verrilli to assist in those efforts, and has made little secret of its intent to take the SEC to court should the agency deny the ETF application.”

See Also: Grayscale reports 99% of SEC comment letters support spot Bitcoin ETF

“The first and most obvious indication of a bear market is when the spot price of Bitcoin (BTC) falls below the 200-day MA and an even more extreme scenario, the 200-week MA. Glassnode also demonstrated that falling below 0.5 the Mayer Multiple (MM) is an exceedingly rare occasion that hasn’t happened since 2015.

Only 84 out of 4160 trading days (2%) have recorded a closing MM value below 0.5. For the first time in history, the 2021-22 cycle has recorded a lower MM value (0.487) than the previous cycle’s low (0.511).

[Further], Glassnode said instances when spot prices trade below the realized price are uncommon, noting that this is only the third time this has happened in the last six years and the fifth time it’s happened since Bitcoin’s launch in 2009.

Spot prices are currently trading at an 11.3% discount to the realized price, signifying that the average market participant is now underwater on their position.

In the midst of this, Bitcoin and Ethereum have both traded below their previous cycle ATHs which is a first in history.

Factoring in all the negative metrics, Glassnode assesses that the market is in the midst of a capitulation event. Miners have started selling their stacks, which is another indicator that capitulation has taken place. Such events often signify the bottom price range of a cycle.

See Also: Recession Fears Halt Crypto Bounce
See Also: Crypto Hedge Funds, Traders Short Tether After UST’s Implosion: Report

Voyager Digital has issued a notice of default to Three Arrows Capital (3AC) after the beleaguered hedge fund failed to make the required payments on its loans of 15,250 bitcoins and $350 million in USDC, worth about $670 million at current prices.

Voyager also announced it has drawn down $75 million of the emergency $200 million cash and USDC credit line provided by Alameda Ventures. As of Monday morning, the company has $137 million of cash and crypto assets on hand.”

See Also: Morgan Creek Is Trying to Counter FTX’s BlockFi Bailout, Leaked Call Shows
See Also: Robinhood Shares Spike on Report FTX May Be Seeking to Acquire It
See Also: Solana’s Biggest DeFi Lender Almost Got Rekt. Then Binance Stepped In

“Arbitrum and Optimism sit 4th and 5th when it comes to fees earned by all Layer 1 and 2 networks — behind only Ethereum, BSC, and Bitcoin. [A significant] source of revenue for rollups is MEV. Increasingly a key differentiator between L2s, each rollup platform’s approach to MEV has significant implications for the future value accrual of its native token.

Optimism is taking what’s known as an “offensive” approach to MEV. Rooted in the belief that MEV is fundamental to blockchain and attempts to remove it are futile, Optimism will eventually incorporate what is known as MEV auctions (MEVA).

MEVA seeks to isolate and redirect the revenue generated by MEV by auctioning off the right to extract it to the highest bidder. Optimism plans to allocate the revenue it earns via MEVA to funding public goods via retroactive public goods funding. In doing so, the L2 believes it will be able to create a self-sustaining ecosystem that, in the long run, will provide more value to all its stakeholders.

Arbitrum on the other hand, is taking a “defensive” approach to MEV, which is grounded in the idea that MEV is a tax on users. Rather than seeking to capture and re-allocate it, Arbitrum focuses on minimizing MEV within its system.

To do this, the Arbitrum network will implement what is known as Fair Ordering or Fair Sequencing, wherein all transactions in a batch are processed based on the order in which they are received. In doing so, Arbitrum intends to reduce the amount of MEV extracted, thereby making the rollup less expensive and more attractive to users and builders.

Offensive MEV provides an L2 with a stream of revenue that can be used to directly accrue value to its native token. While Optimism’s MEV revenue will at first be used entirely to fund public goods, a portion — or even all — can eventually be allocated to tokenholders through either a traditional single-sided staking pool, or through the decentralization of the sequencer (more on that later). In being used to fund public goods, MEV may help an L2 token indirectly accrue more value through improving the overall health and long-term sustainability of its ecosystem.

While defensive MEV deprives a rollup of a source of revenue that can be used to directly accrue value to its native token or bolster its ecosystem, it may indirectly improve the value of an L2 token. Users may be more inclined to transact on a network in which MEV does not run as rampant, bolstering its adoption and network effects.

Although it is very unlikely L2 tokens will be net-deflationary — or have the same monetary premium as ETH — they may still trade with an “index premium,” as they represent the broadest way to gain exposure to their respective ecosystems.”

“While blockchain primarily deals with things like data integrity and immutability — making sure that information data that sits on a blockchain is of high quality — AI uses data that is stored efficiently to provide meaningful and timely insights that researchers, analysts and developers can act on. People are only now beginning to realize the need for high-quality data to train an engine.

AI can help us to not just make the right decisions through a specific situation, but it can also provide predictive heads-up as it gets more trained and intelligent. However, blockchain as a framework is quite capable of being an information highway.”

See Also: The Intelligent Crypto Thesis

“Ripps first began minting his RR/BAYC NFTs on May 13 on Foundation, and after Yuga sent him an initial DMCA takedown claim, it quickly rescinded the claim when Ripps fought it. OpenSea, the largest NFT marketplace, has since removed Ripps’s collection because of “a claim of intellectual property infringement,” but not before it saw nearly $3.5 million in total volume traded.

This is no mere monkey business… These actions are calculated, intentional, and willful with the stated purpose of causing actual and monetary harm to Yuga Labs and to the holders of authentic Bored Ape Yacht Club NFTs.”

See Also: Anonymous vows to bring Do Kwon’s ‘crimes’ to light

25 June

The Wall Street firm is seeking $2 billion in commitments from investors to buy distressed assets at steep discounts if the crypto lender goes bankrupt. Citigroup and Akin Gump have both recommended Celsius file for bankruptcy, according to people familiar with the matter.

The assets, most likely cryptocurrencies having to be sold on the cheap, would then likely be managed by participants in the fundraising push. Goldman Sachs appears to be gauging interest and soliciting commitments from Web3 crypto funds, funds specializing in distressed assets and traditional financial institutions with ample cash on hand.

Celsius had more than $8 billion lent out to clients and $12 billion in assets under management as of May of this year.”

See Also: FTX in Talks to Acquire Part of BlockFi: Report
See Also: Celsius Network hires advisers ahead of potential bankruptcy: Report

A key metric known in crypto markets as the “Grayscale discount” is narrowing, possibly a sign of optimism on the part of some traders as the deadline approaches for the U.S. SEC to rule on a proposal to convert the Grayscale Bitcoin Trust – the world’s largest cryptocurrency fund – into an exchange-traded fund.

GBTC shares were recently trading at a discount of 29% to bitcoin’s price, according to data from Skew. That’s down from 34% last week.

In traditional markets, stocks rallied after a University of Michigan survey showed that consumers tempered their expectations for future inflation compared with the prior reading.”

See Also: Grayscale Bitcoin Trust’s ‘GBTC Discount’ Narrows With ETF Decision on Horizon
See Also: Bitcoin gives ‘encouraging signs’ — Watch these BTC price levels next
See Also: Bitcoin miner ‘capitulation event’ may have already happened — Research

“Coinbase Derivatives Exchange, formerly known as FairX, is launching its first crypto derivatives product this month, hoping to attract more retail traders. The futures exchange, which is regulated by the CFTC, will launch its derivatives product, Nano Bitcoin futures (BIT), on June 27.

At 1/100th of the size of a Bitcoin, it requires less upfront capital than traditional futures products and creates a real opportunity for significant expansion of retail participation in US regulated crypto futures markets.

Coinbase said it’s also awaiting regulatory approval on its own futures commission merchant (FCM) license to offer margined futures contracts.”

See Also: Moody’s Downgrades Coinbase’s Debt on Profitability Concerns

THORChain allows users to trade bitcoin (BTC) for any other supported asset without the use of bridges or wrapped assets. The protocol currently supports swaps between seven major ecosystems: bitcoin, ether (ETH), binance coins (BNB), dogecoin (DOGE), litecoin (LTC), bitcoin cash (BCH) and rune (RUNE). Support for cosmos (ATOM) and avalanche (AVAX) is expected shortly.

Developers said the protocol’s focus after the mainnet launch would be on integrating with more decentralized exchanges (DEX) and exchange aggregators.”

24 June

“The analogy for me is the dot-com boom when $5 trillion was wiped off values. A lot of companies went, but the technology didn’t go away. Those that survived—the Amazons and the eBays—turned out to be the dominant players.

The Deputy Governor added that no matter what happens to cryptocurrencies in the coming months, he expects ‘crypto technology and finance to continue. It has the possibility of huge efficiencies and changes in market structure.’

Mark Cuban recently joined the discussion as well, saying that ‘companies that were sustained by cheap, easy money—but didn’t have valid business prospects—will disappear.

See Also: MATIC Jumps as Polygon Introduces Improved Privacy for DAOs

“The government-owned bank’s Institute of Research and Expertise entertained the idea in a report titled “Global Payments Under the Sanctions: Current State and Perspectives” that says the Ministry of Finance must create a framework for how Russian companies under sanctions can use cryptocurrencies.

Gold can be a useful tool to compensate for the loss of most of Russia’s export revenue, the authors say. The metal can also serve as backing for a “golden ruble” stablecoin. The stablecoin would be used exclusively for settling import and export transactions, not for payment inside Russia, it says.

Americans won’t have any means to block operations with the crypto-golden ruble because the price will be tied to the price of gold on the global market.

One drawback: The stablecoin will need to exist for seven to 10 years before it establishes a track record as a reliable cryptocurrency, the authors note.

The authors also suggest increasing collaboration with China, India and other BRICS countries, Brazil and South Africa, including the creation of a blockchain-based settlement system.”

Powell said that the U.S. central bank plans to recommend to Congress how to advance a potential central bank digital currency (CBDC).

It’s something we really need to explore as a country. It’s a very important potential financial innovation that will affect all Americans. Our plan is to work on both the policy side and the technological side in coming years and come to Congress with a recommendation at some point.

One question around CBDCs is do we want a private stablecoin to wind up being the digital dollar? I think the answer is no. If we’re going to have a digital dollar, it should be government-guaranteed money, not private money.”

Cryptocurrency broker Voyager Digital reduced its daily withdrawal limit to $10,000 from $25,000.

Voyager shares (VOYG) plunged by more than 60% Wednesday after the company said it had an aggregated exposure of $720 million to Three Arrows Capital.”

See Also: CoinFLEX Pauses Withdrawals Amid ‘Extreme Market Conditions’ and Counterparty Uncertainty

“Solana Labs has announced an Android-based software kit for developing mobile Web3 apps. The firm will also release its own smartphone called Saga, which will be released in 2023. Solana Mobile Stack (SMS) is an open-source software kit designed to enable the development of native Android apps built around the Solana blockchain.

Another new feature called Seed Vault is a software custody solution that keeps private keys and seed phrases (essentially the passwords that unlock crypto funds) and other sensitive information secure on an Android device. Lastly, SMS includes Solana Pay for Android, which enables mobile payments via the platform. Solana Labs will also launch a new Solana dapp Store.”

See Also: NHL Partners With Sweet to Offer Digital Collectibles, NFTs

23 June

“As part of a new series of connect-to-consumer initiatives developed this year, Shopify will allow merchants to connect with fans and drive sales by creating exclusive merchandise for tokenholders. The feature serves as a gateway between NFT communities and consumer brands on the platform.

In addition, vendors can partner with other brands for upcoming NFT drops and team up with Shopify’s merchandising partners to develop premium products. Furthermore, vendors can mint custom NFTs on popular blockchains like Ethereum (ETH), Polygon (MATIC), Solana (SOL) and Flow (FLOW). Afterward, they can list and sell them right from their store.

See Also: EBay Acquires NFT Marketplace KnownOrigin for Undisclosed Amount
See Also: Meta set to begin testing NFTs on Instagram Stories with Spark AR
See Also: Ledger Launches NFT Marketplace and Services Platform for Enterprises

Voyager Digital (VOYG) shares fell more than 60% after the crypto broker disclosed its exposure to hedge fund Three Arrows Capital (3AC) and said it may issue a “notice of default” to the crypto fund if it fails to make a loan repayment. Voyager’s exposure to 3AC consists of 15,250 bitcoins ($370 million) and $350 million USDC, the company said in a statement Wednesday.

Failure by 3AC to repay either requested amount by these specified dates will constitute an event of default. Voyager intends to pursue recovery from 3AC and is in discussions with the Company’s advisors regarding the legal remedies available. The Company is unable to assess at this point the amount it will be able to recover from 3AC.

Wall Street analysts have turned cautious on Voyager, and are opting to steer clear of purchasing shares until there’s more clarity. BTIG analyst Mark Palmer downgraded the firm’s recommendation on Voyager shares to neutral from buy.

The 3AC exposure raises survivability questions for VOYG.”

See Also: SEC’s Hester Peirce opposes crypto bailouts — SBF didn’t get the memo

“During a hearing before the Senate Banking Committee on Wednesday, Powell said that a soft landing “is going to be very challenging,” and that a recession is “certainly a possibility.” Powell said the Fed will continue to raise interest rates until it sees a clear sign that inflation is cooling down.

We are not trying to provoke and do not think we will need to provoke a recession, but we do think it’s absolutely essential that we restore price stability. Financial conditions have already priced in additional rate increases, but we need to go ahead and have them.

Digital finance products, in some ways, are quite similar to products that have existed in the banking system or the capital markets, but they’re just not regulated the same way. So we need to do that.”

See Also: US Fed Evaluating SEC’s Position on Digital Assets Custody, Powell Says
See Also: Digital Dollar Would Secure Greenback as Global Reserve Currency, Lawmaker Argues
See Also: Chainalysis Launches 24/7 Hotline for Crypto Crime Victims

“Meta, Microsoft, Nvidia, Unity, Sony, and 30 other companies are coming together to build the infrastructure for an interoperable metaverse. The forum will focus on pragmatic, action-based projects and open-source tooling to accelerate the adoption of metaverse standards, while also developing consistent terminology and deployment guidelines.

One of the goals of the forum is to ensure that one company does not dominate the development of the metaverse, similar to how the development of the World Wide Web was led by multiple stakeholders.

Industry leaders have stated that the potential of the metaverse will be best realized if it is built on a foundation of open standards.”

“Cryptocurrency exchange dYdX announced Wednesday that it is launching a standalone blockchain in a bid to decentralize the platform. The layer 1 blockchain will become the home of the DYDX token. The chain, which will introduce the fourth version of the dYdX platform, will be built in the Cosmos blockchain ecosystem. dYdX noted that having a standalone chain on Cosmos would provide the platform with extra flexibility around fees and features.

Compared with most decentralized exchanges, which use automated market makers (AMMs) and liquidity pools to fill orders, dYdX will continue to use a traditional order book model with the new version of its platform. DYdX has long maintained that order books, which directly match buyers to sellers, are better suited to handle institution-sized transactions.”

See Also: Introducing Oasis Earn

BAYC Investigation (Recommended watch)

22 June

Bitcoin investment firm NYDIG and professional services giant Deloitte said they will work together to help businesses of different sizes incorporate digital assets into their operations. Deloitte’s clients include 90% of the Fortune 500 companies as well as 7,000 private firms.

The two formed a strategic alliance that will help NYDIG expand its client base by offering bitcoin products in banking, consumer loyalty, rewards programs and employee benefits to the consultancy’s customers while strengthening Deloitte’s digital asset offerings.

The future of financial services will center around the use of digital assets, and we are focused on advising our clients on ways to engage in a regulated and compliant way.”

See Also: Bank of Israel experiments with central bank digital currency smart contracts and privacy

This weekend, Bankman-Fried discussed the “responsibility” he feels to bail out crypto firms in crisis. He repeated the sentiment on Twitter, where he said the principal concern is mitigating retail losses, disclosing risks and preventing bad debts from spreading across the sector.

Today, FTX supplied the struggling crypto lender BlockFi with $250 million in credit. Last week, Bankman-Fried’s trading outfit Alameda Research bailed out crypto broker Voyager Digital. Of course, these lifelines aren’t simply altruistic, but also a way for FTX to expand.

Bankman-Fried is a self-proclaimed “effective altruist,” or capitalist who believes in earning as much as possible to give as much back. It’s unclear whether his actions now fall in the former or latter camps: Perhaps he’s intervening today to profit tomorrow.

Crypto is supposed to be guided by certain core principles including financial transparency and free markets. Perhaps the most important is the idea that autonomous code, not humans, should determine winners and losers in markets – ensuring that everyone plays by the same rules. So is there a moral hazard in Bankman-Fried stepping in?

Today, the firms that seem at the greatest risk of default are those that are primarily reproducing the worst aspects of the legacy financial system – all without consumer protections. Celsius and Three Arrows were taking risky bets with client funds. And centralized exchanges are black boxes. If crypto learns anything from the ongoing market reckoning, let it be that its only real hope in breaking away from the convoluted, easily corrupted legacy financial system is in real decentralization.

Progressive politicians of JP Morgan’s day were driven to create the Fed in part after witnessing Morgan and his peers’ influence in the economy. Despite his altruistic intentions, the Pujo Committee feared that Morgan could influence markets for his own gain.

For his part, Bankman-Fried is amenable to working with regulators. He’s said he’d spend upward of $1 billion in political contributions in part to earn officials’ ears. Changes need to be made, especially if crypto’s largest players are just going to create a worse banking system.

But the real change, challenges and opportunities of the crypto industry will happen at the protocol level – not directed by any one person.”

See Also: BlockFi Receives $250M Credit Facility From FTX
See Also: Celsius Up 50% Amid GameStop-Style Short Squeeze Attempt
See Also: ‘Enormous Outflows’ From Largest Bitcoin ETF May Have Triggered BTC Crash

Uniswap Labs said Tuesday it has acquired NFT marketplace aggregator Genie in a push to support trading of non-fungible tokens “soon.”

NFTs will be integrated into our products, starting with the Uniswap web app, where soon you’ll be able to buy and sell NFTs across all major marketplaces. We’ll also integrate NFTs into our developer APIs and widgets, making Uniswap a comprehensive platform for users and builders in web3.”

See Also: Ethereum Sepolia testnet Beacon Chain launched and ready for trial merge

A video released by investigative YouTuber Philip Rusnack, known as Philion, has revived the debate over whether Yuga Labs’ flagship Bored Ape Yacht Club (BAYC) nonfungible token (NFT) collection employs racist imagery and white supremacist esotericism. In the hour-long video released Monday on YouTube, Rusnack laid out his case, claiming that BAYC is “one massive alt-right inside joke.”

There is a point at which these similarities are no longer coincidences.

Mark Pitcavage, a senior research fellow at the Anti-Defamation League’s (ADL) Center on Extremism — who is often cited as an extremism expert — said in a February interview with Input that he saw no correlation between the logo and the Totenkopf.

Ripps has faced allegations that his complied research is a publicity tactic to sell his own BAYC derivative NFT collection called RR/BAYC, featuring over 6,000 NFTs based on the original collection.

The partnership allows DeFi liquidity providers to earn interest using USDC stablecoins via Tower Fund Capital, a SEC-Reg D private lender for real estate investment loans with a $140 million debt fund.

I think the timing is great given the unfolding of centralized applications where the transparency was not there. TrueFi, Maple and Goldfinch are also showcasing with Tower Fund these opportunities to be lending into real estate with full transparency, showing that DeFi capital can be allocated to specific opportunities in a way that is no longer a black box.

It’s just the latest in a series of tie-ups for Teller exploring real world assets and traditional financial services offerings, such as insurance products, to provide DeFi with an alternative to simply earning yield on cryptocurrency.”

“Twitter’s board, according to an SEC filing today, is unanimously asking shareholders at an upcoming special meeting to approve Elon Musk’s $44 billion bid to acquire the social media giant. Board members said in the Securities and Exchange Commission filing that the proposed takeover is ‘advisable and in the best interests of Twitter and its stockholders.’

If completed, the buyout could become a major milestone for crypto. In the months following Musk’s April offer, the billionaire has emphasized that integrating payment services—possibly Dogecoin—with the platform is one of three “critical areas” he intends to prioritize once taking the company private. Musk has repeatedly stated that he intends for Twitter to enable payments in both fiat and crypto.”

Crypto TA