Friday, 10 February 2023

Market Summary

Market Summary 10 February 2023

Bitcoin Price: US$ 21,796.35 (-5.08%)
Ethereum Price: US$ 1,545.34 (-6.37%) 

 

Bitzlato Co-Founder Released After Arrest in Moscow, Pledges Relaunch of Seized Exchange

  • Anton Shkurenko, a co-founder of Russian crypto exchange Bitzlato shuttered by the U.S. Department of Justice (DOJ) in January, disputed money laundering allegations by U.S. and E.U. authorities.
  • Shkurenko spoke with CoinDesk after Russian media reported he had been arrested in Moscow on Monday. He said he had been stopped by the police for an ID check, and was released after a conversation. Though he declined to identify what unit of law enforcement detained him, he said he signed an obligation to appear when requested by investigators and received a no-detention warrant to avoid further arrests.
  • Police detained him because he is on the Interpol wanted list, Shkurenko said, but he is unaware of any active criminal cases involving him in Russia. “Otherwise, I wouldn’t be speaking to you now,” he said on a Zoom call, sitting against what looked like an apartment wall decorated with patterned wallpaper.
  • “I hope I convinced the prosecutor of my innocence,” he said, adding he cannot disclose details of an ongoing investigation. Bitzlato shut down last month following a cross-jurisdictional investigation by several U.S. and European agencies, which found connections between the then-little-known exchange and darknet marketplace Hydra.
  • Shkurenko said he is a “tech consultant” for Bitzlato, but apparently one with a lot of power: He used to be one of the key holders for the exchange’s crypto wallets. He allegedly handed control over those wallets to other members of the team, he told CoinDesk.
  • As for Bitzlato and the allegations it processed over $700 millions of illicit funds, according to authorities, Shkurenko said the exchange did everything to cut off criminals and “is not ashamed” of its work. The U.S. Treasury Department’s Financial Crimes Enforcement Network (FinCEN) formally labeled the exchange a “primary money-laundering concern,” a powerful measure often used to cut off a business from the global financial system.

 

SEC’s targeting of Kraken staking program sends shockwaves through industry

  • The Securities and Exchange Commission’s move to charge crypto exchange Kraken with failing to register the offer and sale of its “crypto asset staking-as-a-service program” signals an aggressive new posture by the markets regulator over a key revenue stream for exchanges. 
  • Kraken settled with the agency on Thursday afternoon, ending its staking program and agreeing to pay $30 million in disgorgement, prejudgment interest and civil penalties. But the move likely signals more headaches for crypto companies in the U.S. as the SEC looks to further crack down on the passive investment offering after several high-profile failures have left customers in court seeking pennies on the dollar — or satoshis on the bitcoin. 
  • Staking-as-a-service providers are generally not providing proper disclosures and there is not a “reliable way as an investor to know the answers to these important investment questions,” SEC Chair Gary Gensler said in a video that accompanied the settlement announcement.
  • If a platform goes under, investors end up in line in bankruptcy court, Gensler said, pointing to multiple bankruptcies over the past few months. “That’s why it’s so important that these companies and platforms comply with the securities law,” Gensler said.

 

OP Token Falls After Surprise Optimism Airdrop

  • Optimism Network conducted a surprise token airdrop Thursday, sending 11.7 million governance tokens to more than 300,000 wallets, according to a blog post by layer 2 blockchain’s caretaker group, Optimism Collective
  • Optimism’s airdrop is part of the blockchain’s initiative to distribute 19% of its initial governance token supply as the blockchain forges a path toward wider adoption. Optimism distributed 5% of its initial governance token supply, or more than 200 million tokens, in its first airdrop last May.
  • The airdrop comes as Optimism looks for an edge over its largest competitor, Arbitrum, another Ethereum layer 2 albeit one without a token. Abritrum currently boasts more than double the amount of transacting wallets as Optimism, widening the gap between the two exchange’s transacting wallets over the past month.

 

Board Member of Crypto-Friendly Silvergate Bank Leaves for Polygon

  • A member of Silvergate’s board of directors resigned Thursday, the crypto-friendly bank disclosed in a recent filing with the Securities and Exchange Commission (SEC).
  • Rebecca Rettig, who initially joined Silvergate’s board in March of last year, notified the company that she would be resigning yesterday. A graduate of Columbia Law School, she previously served as general counsel at Aave Companies, the group behind the decentralized finance (DeFi) platform Aave.
  • Silvergate stated in the filing that Rettig has decided to leave the company because she “has accepted an executive position at another company” and will focus on her new commitments, adding it was “not the result of any dispute or disagreement.”
  • Rettig tweeted Thursday that she’d be moving on to Polygon Labs to serve as the company’s first chief policy officer. Silvergate nor Rettig responded immediately to Decrypt’s request for comment.

 

Paris Hilton to Launch Metaverse Dating Experience ‘Parisland’ in The Sandbox

  • It’s no secret that Paris Hilton loves the metaverse. 
  • Now, she wants fans to find love in it, too, via her dating experience in “Parisland,” launched inside The Sandbox game. 
  • Beginning February 13, players entering Parisland will be able to virtually meet five other players, complete quests, and ultimately choose a partner.
  • According to a statement, the gamified experience is being billed as an “imaginary reality show” in the metaverse. Besides hitting on random strangers online, activities in Parisland include shopping for outfits, selecting wedding rings, investigating a secret inside a burger (yes, really), and “rescuing a castaway.” 

 

Paxos facing probe by New York regulator: CoinDesk

  • Stablecoin issuer Paxos is being investigated by the New York Department of Financial Services, according to a CoinDesk report.
  • The news comes after rumors that Paxos was asked to withdraw an application with the U.S. Office of the Comptroller of the Currency, something the stablecoin issuer denies. 
  • Paxos holds a virtual currency license that was issued by the New York Department of Financial Services. The regulator issued stablecoin guidance in June, following the Terra collapse, and told issuers that stablecoins must be backed by assets that are kept separate from the issuers’ funds. 

 

Liquid Staking Tokens Rally as Kraken Shuts Staking Service to Settle With SEC

  • Governance tokens of the largest liquid staking protocols surged on news that U.S.-based crypto exchange Kraken had settled with the U.S. Securities and Exchange Commission (SEC) on Thursday to sunset its crypto staking service.
  • The LDO governance token of Lido Finance, the largest liquid staking protocol with some $8.4 billion of staked ether (ETH) on the platform, jumped 10.4% in an hour, according to data by CoinGecko. Competitor Rocket Pool’s RPL jumped 7.3%. Smaller liquid staking platform’s tokens such as Persistence’s pSTAKE and StaFi’s FIS gained 6.7 and 11.4%, respectively.
  • Prices have more recently pared some of their earlier gains.
  • The rally served as a counterweight to Thursday’s downturn in the broader crypto market. The CoinDesk Market Index (CMI), that tracks the price of a basket of cryptocurrencies, decreased 2.2% in an hour. Bitcoin (BTC) and ether (ETH) are both in the red in the past 24 hours, with much of their declines occurring in the last three hours.

 

DeFi Giant MakerDAO Integrates Blockchain Data Provider Chainlink for DAI Stablecoin

  • MakerDAO, one of the largest decentralized finance (DeFi) platforms, successfully onboarded blockchain data provider Chainlink’s smart contract automation into its Keeper system that maintains the stability of Maker’s DAI stablecoin, Chainlink Labs said Thursday.
  • Chainlink Automation will run specific tasks, including price updates, liquidity balancing for the DAI Direct Deposit Module (D3M) and debt ceiling upgrades for assets held as collateral, according to the press release.
  • “This network of automated bots perform essential tasks to maintain the Maker protocol and will be greatly expanded through the integration with Chainlink’s renowned, hyper-reliable automation platform,” Nadia Álvarez, a member of MakerDAO’s Growth Core Unit, said in a statement.
  • Maker is an automated crypto lender with some $7 billion of assets pledged on the platform, which also issues the $5 billion DAI stablecoin. A decentralized autonomous organization governs the protocol by proposals and votings, and holders of the maker (MKR) governance token can support or oppose decisions.
  • The community approved the move in an executive vote that concluded Thursday 03:23 UTC. The integration will be available for execution on Saturday, MakerDAO’s voting page shows.

 

Bitcoin slips as memecoins lead loses; GBTC discount to NAV widens

  • Cryptocurrency prices slipped across the board, even as the sector buzzes about the future of AI and big data tokens.
  • Bitcoin was trading at $22,722 by 9:35 a.m. EST, down 1.5% over the past day, according to TradingView data. 
  • Ether fell 1.6% over the past 24 hours, trading at about $1,645. Binance’s BNB dropped 3%, while Cardano’s ADA fell 2.8%. Dog-themed memecoins experienced sharper sell-offs, with dogecoin down 3.1% and shiba inu losing 5.2%.
  • Grayscale’s bitcoin trust, GBTC, has been trading down throughout the week, having reached a high of $12.93 last week. The fund’s discount to net asset value has also widened to 43.5%, the widest gap since early January, according to The Block data.
  • Artificial intelligence and big data tokens have rallied recently on the back of a sudden fascination with AI chatbots, but the move has split opinions, with Fantom’s Lead Developer Andre Cronje saying AI and blockchain aren’t complimentary. 
  • The convergence between machine learning and blockchain data could be a “killer use case,” according to 21Shares Director of Research Eli Ndinga, who stated that “blockchain data is a dark and complex forest with mechanisms that varies across ecosystems like Ethereum and Solana.”
  • “The Graph (GRT), up 147% in 30 days, built a global API to index blockchain data across dozens of ecosystems to retrieve for example, token prices on decentralized exchanges without the need to download a full node,” he added.

 

Aave’s GHO stablecoin goes live on Ethereum’s Goerli testnet

  • Aave Companies, the developer behind the Aave DeFi project, has launched the protocol’s native stablecoin called GHO on Goerli, an Ethereum testnet network, the team said on Thursday.
  • Users wishing to test out GHO on Goerli can now access the stablecoin’s codebase on GitHub, according to the announcement. Today’s deployment on Goerli is part of the planned rollout of the stablecoin on the Ethereum mainnet.
  • Aave DAO, the community that oversees the Aave protocol, will vote to approve GHO’s official mainnet launch. This will happen at a later date.
  • GHO, when launched, will be Aave’s native stablecoin pegged to the U.S. dollar. The token will be similar to MakerDAO’s DAI stablecoin in that it will be overcollateralized. This means that users will have to supply collateral in amounts exceeding the value of GHO they wish to mint.
  • Collateral assets for GHO will also generate yield, according to previously released details about the planned stablecoin. Aave DAO will earn interest payments from borrowers of the stablecoin. All repaid interest will be directed to the Aave DAO treasury, according to Thursday’s update.
  • The Aave DAO will also control the facilitator set for the GHO stablecoin. Facilitators are those who can mint and burn GHO tokens. Aave Companies recently recommended that the Ethereum V3 pool be the first facilitator upon the GHO mainnet launch.

 

Tether Reports $700M in Profits Despite ‘Tumultuous End to 2022’: CTO

  • Tether, the issuer behind the industry’s largest stablecoin USDT, continues to hold enough reserves to back the token despite processing $21 billion in redemptions last year, according to its latest attestation report.
  • To make good on its promise of being backed by the U.S. dollar, Tether has to hold enough cash reserves for holders to turn their USDT into fiat dollars at any time. Last summer, the company hired the accounting firm BDO Italia to produce quarterly reports on the firm’s reserves.
  • According to today’s report, the consolidated total assets held by the company as of December 31, 2022, amounted to at least $67,044,148,175.
  • That’s against total liabilities of $66,083,530,757, most of which is accounted for by issued USDT.
  • In a statement coinciding with the report’s release, Tether’s chief technology officer Paolo Ardoino said the company had been able to execute over $21 billion in redemptions during the various upheavals of 2022.

 

Tron Launches $100M AI Development Fund

  • Smart contract blockchain Tron is leaning into the artificial intelligence revolution with the launch of a new $100 million AI development fund.
  • The aim of the fund is to encourage developers to create applications on the Tron blockchain using emerging AI tools such as OpenAI’s ChatGPT, both in the backend and frontend of development.
  • The move forms part of a wider push to integrate AI with the Tron blockchain. Earlier this week, Tron founder Justin Sun tweeted that the platform would provide “an AI-oriented decentralized payment framework” for ChatGPT and OpenAI, incorporating Tron oracle WINkLink in combination with DeFi applications JUST and SUN, as well as AI integration in smart contract development and the APENFT marketplace.

 

JPMorgan Says Ethereum’s Shanghai Upgrade to Raise Staking Toward Proof-of-Stake Blockchain Average

  • Ethereum’s Shanghai upgrade, scheduled for mid-March, will raise the blockchain’s staking ratio in the medium term, JPMorgan (JPM) said in a research report Wednesday.
  • There is plenty of room for the 14% ratio to rise, the bank said, given that the average for other proof-of-stake (PoS) networks is about four times as high.
  • “Assuming the staking ratio converges over time to the 60% average of other major PoS networks, the validator number could increase from 0.5 million to 2.2 million and the yield would fall from 7.4% current to around 5%,” analysts led by Nikolaos Panigirtzoglou wrote. In a proof-of-stake system, validators attest that a block is accurate and can be added to the blockchain.
  • A large portion of the future increase in staking will likely move to liquid staking protocols such as Lido, the bank said. These protocols “enable liquidity for staked assets, which would otherwise be locked in the staking contracts, by providing an equal amount of derivative token in exchange for staked ether which can be traded.”
  • JPMorgan notes that liquid staking protocol derivative tokens have normally traded at prices below their underlying asset, but as the Shanghai upgrade nears they are converging to parity with ether (ETH).
  • It could be argued that the utility of these liquid staking protocols would be reduced as the upgrade date approaches, the note said. The counterargument is that the utility of these protocols is not limited to only providing liquidity, but also acting as an intermediary for retail investors who would otherwise face a barrier of 32 ETH ($52,000) for staking, the note said.
  • As a result, liquid staking protocols have become major decentralized finance (DeFi) players, prompting concerns about network centralization, the note added.

 

Bitcoin Network Activity Spikes to Two-Year High Thanks to NFTs, CryptoQuant Says

  • Network activity on the Bitcoin blockchain has hit a level not seen since China banned crypto miners in May 2021, according to a report by CryptoQuant that cites on-chain data.
  • This uptick in activity stems from the popularity of the Ordinals protocol, which allows for non-fungible tokens (NFT) to be stored on the Bitcoin blockchain. NFT activity on Bitcoin has risen exponentially, according to research from BitMEX, with over 13,000 Ordinals minted since December.
  • According to CryptoQuant’s data, the seven-day moving average of transactions on the Bitcoin blockchain hit 345,000, a figure not seen since the second quarter of 2021, when miners had to pack up and leave China.
  • Ordinals store the NFTs directly on-chain, unlike NFTs on Ethereum, which use services such as IPFS or Filecoin to store them. This has resulted in some of the largest block sizes in the history of Bitcoin, with many blocks hitting the 4 megabyte (MB) block size limit.
  • It has also led to an increase in transaction fees, but they are still below levels seen last year.
  • Within the Bitcoin community, the popularity of Ordinals has triggered a significant debate on whether this is the “right” use for the Bitcoin blockchain. Pseudonymous creator Satoshi Nakamoto, in posts from the forum Bitcoin Talk, was strongly against non-financial uses of Bitcoin.
  • While some of those against Ordinals cite the possibility of a rise of transaction fees as a reason to oppose them, CryptoQuant notes that an uptick in demand for block space, coupled with a rise in fees generated by miners, is positive for long-term network security for Bitcoin.

 

Value locked in Rocketpool doubles in two months, rises to $1 billion

  • The value locked in Ethereum liquid staking protocol Rocketpool reached $1 billion, as it seeks to capture more of the liquid staking market.
  • The majority of this value, $641 million, is in staked ether, while the remaining $359 million is in the project’s native token RPL.
  • The project now has a 5.64% share of the Ethereum liquid staking market. That puts it third behind Lido — which makes up the lion’s share of the market, at 74% — and Coinbase, which has a 16% share.
  • “It’s a big milestone. And we’re really proud of the growth that we’ve kind of managed to achieve,” said Darren Langley, general manager at Rocketpool. “In terms of the TVL, I think we just want to build the best product that we can and serve the community. In terms of our node operators, yes, we’re just very intent on building and making sure that we produce the best and safest product we can.”

 

Cardano Upgrade Aims to Improve Cross-Chain Features as On-Chain DeFi Crosses $100M TVL

  • An upcoming upgrade on Cardano will make enhancements to cross-chain functionality for decentralized finance (DeFi) applications building on the network, developers tweeted Thursday.
  • The proposal was submitted on Wednesday and will take effect on Feb.11 at 00:00 UTC, as per tweets from Cardano code maintainer IOG. The upgrade will initially be tested in a virtual testing environment that mimics real-world performance before it is eventually released on mainnet.
  • The upgrade is said to bring enhanced cryptographic features to Cardano while improving cross-chain decentralized application (dapp) development on Plutus – the smart contract platform of the Cardano blockchain.
  • Cross-chain bridges are software applications that enable transactions to occur between various blockchains. Such a feature on Cardano would allow developers to build applications that connect Cardano with other blockchains, which would in-turn give access to users other blockchains to interact easily with financial services offered by Cardano dapps.

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