Monday, 17 October 2022

Market Summary

Market Summary 17 October 2022

Bitcoin Price: US$19,262.98 (+1.02%)
Ethereum Price: US$ 1,305.95 (+2.43%) 


CPI Recap, Rising Retail Shorts, and ETH Liquidation Levels (VIDEO)

  • Join us for a conversation discussing the recent CPI report, its implications for the markets, and the other big events that are top of mind within both traditional and crypto markets.
  • The topics that we discussed this week include:
    • CPI recap+market reaction
    • BOE pension fund situation
    • Rising retail short interest and put premiums
    • Liquidation levels of interest for ETH


$114M Mango Markets Exploiter Outs Himself, Returns Most of the Money

  • Avraham Eisenberg, who says he’s part of a group that drained $114 million from decentralized crypto exchange Mango Markets last week, returned $67 million to the Solana-based DeFi hub on Saturday as he defended his actions — which some have called an exploit — as both legal and highly lucrative.
  • Today’s tweets from Eisenberg – who was accused this week of being the Mango exploiter after allegedly executing similar attacks in the past – mark the first time he has publicly acknowledged his role in the exploit. “I believe all of our actions were legal,” he tweeted.
  • Mango Markets said in a tweet that its decentralized autonomous organization (DAO) community would vote in the coming days to decide how to divvy up the returned funds. Mango’s thread did not lay out a timeline for refunds but said there would be “multiple DAO votes next week.”
  • “Everything has to go through DAO proposals,” Daffy Durairaj, co-founder of Mango Markets, wrote in the project’s Discord. “My personal goal is to make depositors whole and that’s what I’ll aim towards. But the mix of tokens and positions everyone had might be different”


CEO Armstrong plans to sell part of his Coinbase stake to fund science research

  • Coinbase CEO Brian Armstrong revealed plans to reduce his stake in the U.S. exchange giant in favor of funding research endeavors in science and technology.
  • Armstrong made this known in a Twitter thread on Friday as he stated that he will sell about 2% of his Coinbase stake. As CEO, Armstrong owns 16% of the company. According to a 2022 proxy statement by Coinbase, Armstrong’s stake amounts to almost 60% control of the firm’s voting shares.
  • According to the announcement, the Coinbase CEO is looking to fund science and technology research. “I’m passionate about accelerating science and tech to help solve some of the biggest challenges in the world,” Armstrong said.
  • The Coinbase CEO also clarified that his decision to sell some of his shares does not indicate a desire to step down as the company’s leader. Armstrong said he intends to run Coinbase “for a very long time,” adding: “I remain super bullish on crypto and Coinbase. I’m fully dedicated to growing our business and advancing our mission, but I am also excited to contribute in a different way.”


European VCs are finally launching crypto funds — what took them so long?

  • As crypto’s last bear market was drawing to a close, 1kx, a crypto fund that’s backed Matter Labs, Gnosis and Qredo, held an invite-only crypto summit as part of 2019’s Berlin Blockchain Week.
  • 1kx founding partner Lasse Clausen extended an invitation to most of the venture capitalists he knew, aiming to school them on blockchain technology. Only one showed up.
  • “European VCs completely slept on blockchain,” says Clausen, “That meant most VCs didn’t have the mandate from their limited partnership agreement to buy tokens”
  • Kicked into gear by last year’s bull market, European VCs are finally beginning to roll out crypto funds and taste token exposure as the size of Europe’s blockchain scene continues to swell.


Ethereum Layer 2 protocols Arbitrum and Optimism continue to gain traction

  • Ethereum-based Layer 2 protocols Arbitrum and Optimism have seen a steady increase in transactions since the beginning of the year.
  • Both protocols set new all-time highs on transaction counts in September.
  • One key distinction between the two is that Arbitrum does not have a governance token. Optimism formally announced the launch of its token at the end of April and released it the following month.
  • Optimism’s transaction count began rising leading up to the governance token announcement. The protocol then saw a surge when the token formally went live across exchanges on May 31. This led to interest and speculation for a potential Arbitrum token launch.
  • Arbitrum currently has the highest Total Value Locked (TVL) across all Layer 2 networks, with roughly 50% market share. Optimism has a market share of approximately 30%, according to L2Beat.


Flashbots unveils upgrade that could resolve censorship concerns

  • Flashbots has announced an upgrade that aims to address censorship resistance and concerns over decentralization.
  • Robert Miller, product lead for Flashbots, discussed solving these concerns earlier this month and said it was working on a decentralized solution. The protocol, known as SUAVE, which has been in stealth development for the last year, was revealed this afternoon.
  • SUAVE aims to progressively decentralize the block-building process by open-sourcing its code and development, allowing anyone to contribute. It will feature cross-chain and multi-chain support, and work with any Ethereum-compatible blockchain or rollup.


Censored Ethereum Blocks Hit the 51% Threshold Over the Past 24 Hours

  • The Ethereum blockchain reached a new censorship milestone Friday when 51% of the blocks produced over the last 24 hours followed the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) compliance recommendations.
  • With that, the majority of the blocks over the past day were delivered by relays that screened out transactions associated with Tornado Cash – a service that mixes transactions to make them anonymous – to comply with OFAC after it banned Americans from using the mixing protocol.
  • Maximal extractable value (MEV) refers to the rewards that block builders and validators receive from reordering transactions within a block. Flashbots, an Ethereum-based research and development team, has been working on ways to curb the potential harms of MEV extraction by building MEV-Boost, a piece of software that allows validators to request blocks from a network of builders via a middleman called a relay.


Grayscale Lawsuit Moves Forward as GBTC Discount Widens

  • With cryptoasset manager Grayscale Investments filing its first brief against the SEC this week, the ball is now in the US securities regulator’s court. 
  • The litigation stems from the SEC denying Grayscale Bitcoin Trust’s (GBTC) proposed conversion to a spot bitcoin ETF — one of many similar denied attempts. The watchdog has only given the go-ahead to derivatives-based products. 
  • The lawsuit progresses as GBTC shares are trading at a widening discount to the underlying spot price of bitcoin — a persistent issue Grayscale Chief Legal Officer Craig Salm said could be fixed by overturning the SEC’s decision. 
  • Amicus briefs are due Oct. 18. The SEC is then scheduled to submit its own brief by Nov. 9, after which Grayscale can respond by the end of the month. 
  • The final briefs are scheduled to be due on Dec. 21.
  • “There’s an investor protection issue, here, and there’s a fairness issue, here — in many ways it’s not about bitcoin at all,” Salm told Blockworks. “It’s really just about equal treatment under the statute, so we’re looking forward to the SEC’s reply and then going from there.”

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