Market Summary

Bitcoin Price: US$19,060.00 (-0.38%)
Ethereum Price: US$ 1,280.11 (-0.77%) 

Has Flashbots’ Market Share Plateaued?

• Portugal’s Finance Minister submits a draft proposal for a 28% capital gains tax on crypto held for less than a year.
• Google integrates with Coinbase Commerce to begin accepting digital currency payments for cloud services in early 2023.
• The EU‘s Economic and Monetary Affairs Committee votes 28 to 1 in favor of its landmark crypto legislation.
• Polygon launches public zkEVM testnet and aims for a full mainnet launch in early 2023.
• BNY Melon, the world’s biggest custodian of financial assets, begins accepting clients’ crypto assets for its custody business.
• MEV-Boost is open-source middleware developed by Flashbots and run by Ethereum validators to maximize their staking rewards. MEV-Boost does this by allowing validators to access a competitive block-building marketplace.
• Builders create the most profitable block possible by arranging transaction order flow. While validators who run MEV-Boost must pay builders for this service, they come out ahead due to the increased value extracted from the builder’s block.
• Notably, Flashbots appears to be complying with OFAC sanctions by censoring transactions associated with Tornado Cash. Many have raised concerns over such censorship and the potential risk of centralization caused by Flashbots’ growing market share.
• The share of Ethereum blocks proposed by Flashbots’ MEV-Boost increased from 12% on the day of the Merge to a peak of 41% three weeks later on October 6th. On that day, just 59% of all Ethereum blocks proposed did not use Flashbots’ MEV-Boost.
• That trend has since slowed down, with Flashbots’ share of proposed blocks staying flat over the past week. However, this may prove to be temporary as validators are incentivized to use Flashbots’ due to its ability to generate higher fees than competitors.
• Since the Merge, BloXroute Max Profit (which does not censor transactions) has earned a daily average of 0.11 ETH per block proposed while BloXroute Regulated (which censors transactions) has earned 0.12 ETH per block proposed. Over the same period, Flashbots’ has earned 0.16 ETH per block proposed.

Large Bitcoin transaction briefly caused many Lightning Network nodes to fall out of sync

• A Bitcoin developer made a large multi-sig transaction on the Bitcoin network.
• The transaction caused many nodes on the Lightning Network to fall out of sync, due to a bug.
• The issue has since been resolved.

U.S. Treasury fines crypto exchange Bittrex $29 million over years-long sanctions violations

• The U.S. Treasury Department has fined crypto exchange Bittrex for sanctions violations.
• The Office of Foreign Asset Control (OFAC) and the Financial Crimes Enforcement Network (FinCEN) announced settlements totaling $29 million with Bittrex on Tuesday morning.
• “Bittrex has agreed to remit $29,280,829.20 for its willful violations of the BSA’s AML program and SAR requirements. FinCEN will credit the payment of $24,280,829.20 as part of Bittrex’s agreement to settle its potential liability with OFAC,” the department said in a statement.
• OFAC director Andrea Gacki said alongside the announcement: “Virtual currency exchanges operating worldwide should understand both who — and where — their customers are.”

BNB Smart Chain to Perform Hard Fork as Fix for $100M Exploit

• The BNB Smart Chain (BSC) will this week perform a hard fork as a fix for the exploit on Oct. 6 that drained an estimated $100 million from the platform.
• The “temporary urgent patch” release will occur at around 08:00 UTC (12 p.m. ET) on Wednesday, Oct. 12, according to a post on GitHub Tuesday.
• A hard fork is a change to a blockchain protocol that renders older versions invalid. It may be performed when a network makes fundamental changes to its mechanics or governance or, as in this case, as a means of fixing weaknesses that have resulted in hacks or exploits.

Justin Sun ‘Optimistic’ About Crypto’s Return to China, Addresses Huobi Acquisition

• Justin Sun, the founder of Tron blockchain network, isn’t ruling out the possibility of one day acquiring Hong Kong-based crypto exchange Huobi Global and perhaps even bringing the exchange back to mainland China.
• Sun, who is one of five advisers on Huobi’s global advisory board, told CoinDesk TV this hypothetical situation will depend on the Chinese government changing its stance on cryptocurrencies, and would require “thorough due diligence of the exchange.”
• “In the future we might have a chance to purchase Huobi, but not this time,” Sun said during an appearance on “First Mover” on Tuesday. He spoke days after Hong Kong-based About Capital announced plans to buy Huobi, a major crypto exchange throughout Asia.

Cosmos Developer To Offer a Stablecoin Built for the Interchain

• Two weeks after Cosmoverse, developers from the Cosmos interchain community are back to building. For Dean Tribble, the CEO and founder of Agoric, the focus is on a new Cosmos stablecoin and the dapps that will use it.
• Agoric, an open-source development company working on the Cosmos software development kit (SDK), is developing its native stablecoin (IST) for the interchain network and assisting the development of five decentralized applications that will launch alongside the Agoric mainnet.
• Tribble founded Agoric in 2018 with the general mission of enabling large-scale decentralized cooperation, but he had been working in distributed systems and smart contract technology since 1989.
• He and his team built Agoric, a proof-of-stake chain, to enable application developers to be able to write smart contracts in a hardened version of JavaScript.
• “Not only can JavaScript actually work in a smart contract environment with deterministic execution, but it’s a framework that build[s] upon the work of others. And it’s that building upon the work of others that gets you exponential growth of an ecosystem — and that is our target,” Tribble said in an interview with Blockworks.

SEC Rejects WisdomTree Bitcoin Spot ETF Application—Again

• The Securities and Exchange Commission (SEC) has once again stonewalled the launch of a Bitcoin spot ETF in the United States. 
• On Tuesday, the commission released an order rejecting Cboe BZX Exchange’s latest application for the product, on grounds similar to those cited in multiple applications before it. 
• “The Commission concludes that BZX has not met its burden under the Exchange Act and the Commission’s Rules of Practice,” read the filing. 
• Specifically, the SEC ruled that the exchange hasn’t demonstrated that its WisdomTree Bitcoin Trust would be “designed to prevent fraudulent and manipulative acts and practices” while protecting investors and public interest. 

OpenSea Adds Avalanche NFT Support

• OpenSea has added NFTs from the Avalanche blockchain to its online marketplace, the company announced Tuesday. 
• The marketplace—which saw roughly $350 million in Ethereum NFT volume traded last month—now supports NFTs from seven different blockchains: Ethereum, Polygon, Klaytn, Solana, Optimism, Arbitrum, and now Avalanche. 

Solana-Based Decentralized Finance Platform Mango Hit by $100 Million Exploit

• Mango, a decentralized finance platform hosted on the Solana blockchain, has been exploited for over $100 million.
• The exploit was initially reported on Twitter by blockchain auditors OtterSec, who say “the attacker was able to manipulate their Mango collateral.”
• “The [MGNO] governance token was valued for far more than it should be,” OtterSec’s Robert Chen told CoinDesk. “With that, [the attacker] was able to take out large loans against it and then drain Mango’s [liquidity] pools. It’s like a lending-borrowing race: if you have overvalued collateral, you can then borrow against that collateral, and that’s what they did.”
• According to Chen, it remains unclear how, exactly, the attacker managed to inflate MNGO’s value in the eyes of the Mango protocol, though there are already several theories floating around on Twitter suggesting how the heist could’ve been pulled off.

In SEC Lawsuit, Grayscale Calls Spot ETF Rejection ‘Arbitrary, Capricious, and Discriminatory’

• Grayscale Investments called the the U S. Securities and Exchange Commission’s (SEC) June decision to reject its application to convert its flagship Grayscale Bitcoin Trust (GBTC) into a spot bitcoin exchange traded fund (ETF) “arbitrary, capricious, and discriminatory” in an opening legal brief filed as part of its lawsuit against the regulator.
• Grayscale filed suit against the SEC on June 29th, asking the U.S. Court of Appeals for the District of Columbia Circuit to review the regulator’s decision, which the SEC has published earlier in the day.

Google Partners With Coinbase to Accept Crypto Payments for Cloud Services

• Google will start accepting crypto payments for cloud services early next year.
• Announced Tuesday at Google’s Cloud Next conference, the tech giant said it will receive crypto payment via an integration with crypto exchange Coinbase.
• Crypto payments will initially be rolled out to a handful of customers involved in the Web3 industry. Google will also user Coinbase’s custody service, Coinbase Prime.
• “We want to make building in Web3 faster and easier, and this partnership with Coinbase helps developers get one step closer to that goal,” said Thomas Kurian, CEO of Google Cloud.
• The tech giant has been adding to its crypto features and services recently, with Ethereum wallet balances now showing up when an address is searched on Google, and BNB Chain partnering with Google Cloud to support the growth of early-stage Web3 and blockchain startups. The search giant also provided a countdown clock to Ethereum’s recent upgrade to proof of stake.

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