Thursday, 20 October 2022

Market Summary

Market Summary 20 October 2022

Bitcoin Price: US$19,123.97 (-1.05%)
Ethereum Price: US$ 1,285.09 (-1.95%) 

 

ETH Deposited in Tornado Cash Declines by 60% After OFAC Sanctions

  • a16z says it does not support the idea of breaking MakerDAO‘s governance into smaller units called MetaDAOs.
  • The IRS releases draft guidance for the 2022 tax year explicitly stating that digital assets include NFTs as well.
  • Former Celsius exec Aaron Iovine joins JPMorgan as executive director of digital assets regulatory policy.
  • Interpol sets up a special team in Singapore to help governments fight crimes involving crypto.
  • Brazil’s Nubank plans to issue its own token called Nucoins which will offer discounts and perks to customers.
  • Tornado Cash is an open-source crypto mixer that enhances on-chain privacy on EVM-compatible networks. On Aug. 8, the Office of Foreign Assets Control (OFAC) imposed sanctions on the protocol.
  • As a result of the sanctions, ETH deposited in Tornado Cash has declined almost 60% from 224K ETH on the day before sanctions were announced to 91K ETH today. Unique depositors have also declined from 700-800 previously to under 100 currently.
  • The protocol uses multiple smart contracts that accept different quantities of ETH and ERC-20 deposits. Users can withdraw these deposits to different addresses at a later point. By using zero-knowledge proofs, the protocol breaks the link between the sender and the recipient.
  • Tornado Cash has been often used by hackers who use the service to erase on-chain links that can be traced to their real-world identity. Most recently, the attacker behind the TempleDAO exploit sent 1.9K ETH to Tornado Cash.
  • The tool can also be helpful for users who simply seek to enhance their on-chain privacy. Accordingly, US-based advocacy group Coin Center is suing OFAC over its sanctions.
  •  Gaming Guilds Update. Despite increasing net profitability throughout H1 2022, Yield Guild’s current earnings don’t paint a picture of health and prosperity.
  • With the exclusion of June 2022, no other month has been net profitable for the guild this year. Yield Guild’s forward-looking earnings projections through year-end don’t give much hope for relief either.
  • At best, it could be interpreted as a slowdown and resulting plateau in net profitability. At worst, the guild may be set to see a continued decline in profits into the new year.
  • This would certainly call into question the viability of the guild’s current strategies.
  • The value of Yield Guild’s total assets under management was bolstered significantly by the YGG token launch in July 2021. Of course, this is in the context of the YGG token price increasing substantially post-launch.
  • However, what was positive for total AUM value on the way up is proportionally negative on the way down. With YGG down 96.9% from its all-time high, Yield Guild’s total AUM is unsurprisingly also down -93.4% from its high.

 

Fidelity’s Crypto Platform to Add Ether Trading for Institutional Clients

  • Institutional clients of Fidelity Digital Assets will be able to trade ether (ETH) beginning Oct. 28, according to a memo sent out by the investment firm.
  • The move is the latest step towards making crypto available to institutional clients by Fidelity, the parent company of Fidelity Digital Assets. Earlier this month, the giant asset management firm said it started a new Ethereum Index Fund for accredited investors, after raising about $5 million since sales started on Sept. 26.

 

Ethereum Alarm Clock’s smart contract is being targeted by exploiters

  • An exploited Ethereum Alarm Clock contract has allowed exploiters to receive more ETH-denominated refunds than intended.
  • Ethereum Alarm Clock is a protocol that allows users to schedule future Ethereum transactions. The transaction scheduling logic it uses occurs in smart contracts.
  • Blockchain security and analytics company Peckshield reported the ongoing exploit earlier this morning.
  • Under the exploit, the attacker first calls a cancel() function on the Ethereum Alarm Clock contract with an abnormally high transaction fee. The exploit occurs in the following step, where the transaction fee refund is calculated too high, paying out a higher value than intended.

 

Celestia Labs Raises $55M to Build Modular Blockchain Network

  • Celestia Labs, the team behind the Celestia blockchain network, has raised $55 million in a combined Series A and B round led by venture capital firms Bain Capital Crypto and Polychain Capital.
  • The fundraise pushes Celestia into unicorn status with a $1 billion valuation and was four times oversubscribed, says a person familiar with the matter.
  • Other participants in the round included Coinbase Ventures, Jump Crypto, FTX Ventures, Placeholder, Galaxy, Delphi Digital and several other venture capital and angel investors. Celestia previously raised $1.5 million in a seed round last March at an undisclosed valuation.
  • Founded in 2019, Celestia Labs is remaking blockchain architecture by betting on “modular” blockchain networks, which Celestia says makes it easier to deploy and scale blockchains.

 

Bitcoin Futures ‘Backwardation’ Could Signal Bearish Mood

  • Bitcoin futures listed on the Chicago Mercantile Exchange slipped into prolonged backwardation during September, theoretically a bearish signal, according to a weekly report from crypto platform Luno.
  • Backwardation is an unusual condition in futures markets when contracts for maturity or delivery many months in the future are trading at lower prices than the near-term, or “front-month,” contract. It sometimes can signal that traders prices falling in the medium or long term.
  • This hasn’t happened in the bitcoin futures market for a sustained stretch of time since May 2019, according to Luno. What is rare is the “prolonged” episode of backwardation, as described by Luno. The condition has appeared for short periods of time, including in May 2021 for a few days.
  • “A steeper futures curve (i.e., a high next-month premium over front-month expiry) indicates bullish sentiment,” the report stated. “A flat futures curve or a downward trending curve implies the opposite – longs require compensation for the risk of exposure in further dated and less liquid BTC contracts.” The report was produced for Luno by the Norwegian crypto-market analysis firm Arcane Research. (Luno is owned by Digital Currency Group, of which CoinDesk is an independent subsidiary.)

 

Decentralized music startup Audius aims to provide virtual concerts via SoundStage acquisition

  • Audius, a decentralized music firm with Katy Perry, The Chainsmokers and other music giants as investors, has acquired the virtual music experience platform SoundStage. 
  • Audius intends to bolster its presence in the metaverse by providing virtual concerts through this acquisition. 
  • “For the first time, Audius artists will be able to offer an interactive live music experience to their fans, further cementing Audius as the best place for creators to aggregate and serve their fanbases,” Audius CEO and co-founder Roneil Rumburg told The Block. “Soundstage.fm is an exciting addition to the suite of tools Audius offers for artists to create new and different experiences for their fans.”

 

Terra Developers Unveil 4-Year Plan to Revive LUNA Ecosystem

  • Terra developers floated a new proposal earlier this week as they look to revive the once-mighty network, even as Do Kwon, the platform’s controversial co-founder, faces a warrant for his arrest on charges of fraud. Authorities have been searching for Kwon since last month, but he has denied that he is on the run.
  • Termed the “Terra Expedition,” the proposal is a revised version of the developer mining program and developer alignment program that were established when the Terra network started.
  • The majority of LUNA tokens must be voted in favor of the proposal before it can go into effect.
  • The new program would be funded with 9.5% of the total supply of LUNA tokens that was earmarked at the launch of a new Terra blockchain. (A new Terra blockchain was started earlier this year after the original network and its two related digital tokens imploded in May.)
  • The incentive program for the new network would run for four years and be managed by a community-elected committee that will evaluate the plan every 12 months.

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