Tuesday, 3 May 2022

Market Summary

Market Summary 3 May 2022

Bitcoin Price: US$ 38,525.16 (+0.15%)
Ethereum Price: US$ 2,856.54 (+1.12%)


Otherdeed Burns, Looming Signals, & Intro to Webaverse

  • Yuga Lab’s Otherdeed for Otherside had its mint over the past Sunday. While many users were elated to successfully mint their NFTs, others were left with a hole in their wallets.
  • The Otherdeed land sale was unprecedented in popularity and was likely the largest community to simultaneously compete and mint for an NFT project. This resulted in gas prices hitting as high as 79k Gwei from their low points of 25 Gwei on the same day. Otherdeed only cost 0.35 ETH per mint, but as gas prices spiked, users paid upwards of 2-3 ETH to front-run each other during the sale.
  • This front-running activity caused a lot of ETH to be burned. Over the seven-hour period shown in the chart, 68K ETH (~$190M) was burned, most of which was due to the Otherdeed sale.
  • Moreover, as the mints sold out, users started experiencing failed transactions that wasted the ETH they spent on gas totaling ~1.6k ETH. Fortunately, Yuga Labs will be refunding users that failed their transactions during the mint.
  • This sparked a discussion on Twitter that blamed Yuga Labs for not optimizing the minting contract which could’ve saved users millions in gas fees. Yuga Labs on the other hand think that migrating ApeCoin to its own chain could mitigate such issues in the future.
  • As a tip for users minting NFTs, one can consider using “Flashbots Protect RPC” for Ethereum as the failed transactions will not be included in blocks and hence users will not be charged gas fees for their transactions failing. Check here to learn how to add Flashbots RPC to your wallet.
  • Sentiment in crypto ebbs and flows like a tide rolling in and out. The last several months have been a mixed bag of “the bottom is in” to “the market has a one-way ticket to new lows”. One proxy to measure risk appetite is the ETHBTC pair, which has gone through multiple peaks and troughs over the last several months. Its latest mini topping pattern means we’re likely to see more consolidation for ETHBTC in the short run, though the trend is gradually moving up and to the right.
  • In this episode, we sit down with Jin, Avaer, and Ahad from Webaverse, a fully open source and open license web metaverse. We discuss the ethos behind building on open standards, Upstreet, the MMO built on Webaverse, the NFT drop, and much more. 


Mark Cuban proposes using Dogecoin to solve Twitter’s crypto ad problem

  • On Sunday, American entrepreneur Marc Andreessen posted a screenshot of what appears to be a Twitter user impersonating his name to promote a “free crypto” giveaway. “What algorithm could possibly catch this type of content?” asked Andreessen. To which Tesla’s CEO Elon Musk replied, “humans,” sparking a discussion on how to best curate the high number of cryptocurrency scams and spam ads on the platform.
  • But, it was billionaire investor Mark Cuban who then suggested a rather unconventional solution. As told by Cuban, the problem can be solved by first adding an “Optimistic Rollup,” or layer-2 solution, to Dogecoin (DOGE). 
  • To post on Twitter on an unlimited basis, everyone would need to put up one DOGE ($0.13 per coin at the time of writing) as collateral. Then, if anyone contests a post and humans confirm that it is spam, those who flagged the post would receive and share the spammer’s DOGE. Consequently, spammers would then need to put up 100 DOGE as collateral for the right to create further posts. If, however, the post turns out to not be spam, the contesters would lose their DOGE.
  • In other words, it is a prediction system that creates monetary consequences, albeit minor, to deter spamming. Though, users were quick to point out the possibility that scammers may be well-funded and could simply “out-contest” posts marked as spam in such a pay-to-win system.


El Salvador Bitcoin wallet shows ‘strong sign of adoption,’ exec says

  • El Salvador’s government-backed Bitcoin (BTC) wallet has reached significant success in terms of adoption, according to an exec at the cryptocurrency exchange behind the wallet.
  • The Chivo wallet was launched in conjunction with BTC becoming legal tender in El Salvador on Sept. 7, 2021. The official platform allows users to buy and sell Bitcoin, offering cryptocurrency custody and exchange services provided by the Mexican crypto trading platform Bitso.
  • Bitso essentially provides back-end technology so that the government of El Salvador can purchase Bitcoin and ensure that BTC is convertible to the United States dollar, Bitso’s chief corporate and regulatory affairs officer Felipe Vallejo told Cointelegraph on Friday.
  • “Ever since it began working with the government in September, Bitso has continued to provide liquidity to the Chivo wallet,” Vallejo said. He added that Bitso started to operate in El Salvador through Chivo and is currently present in the country via that platform only. However, the exchange is active in Mexico, Brazil, Argentina and Colombia.


Indian IT Ministry directs crypto exchanges to store user data for 5 years

  • The Indian Computer Emergency Response Team (CERT-in), which falls under the Ministry of Electronics and Information Technology, issued a new directive on Thursday, forcing crypto exchanges, virtual private network (VPN) providers and data centers to store a wide range of user data for up to five years.
  • Under the newly issued directive, crypto exchanges operating in India will be required to store customers’ names, ownership patterns, contact information and various other data.
  • Crypto exchanges and VPN services providers are also required to report any cyber incident within six hours of its occurrence and must hand over the collected data to the authorities upon order. The official directive read:
  • “When required by order/direction of CERT-In, for the purposes of cyber incident response, protective and preventive actions related to cyber incidents, the service provider/intermediary/data center/body corporate is mandated to take action or provide information or any such assistance to CERT-In.”
  • The new directives will come into force on June 22, which may force many VPN service providers and privacy-focused crypto platforms that don’t collect or store critical user data to shut their operations.


Bitcoin ATM installation slowdown continues for 4th month in 2022

  • April 2022 marked the fourth consecutive month of the slowdown in the installation of Bitcoin  (BTC) ATMs, which began at the start of the year.
  • Bitcoin ATMs serve a crucial purpose for the Bitcoin economy, helping users physically retrieve or deposit holdings against the corresponding cash reserves.


Fed ‘will determine the fate of the market’ — 5 things to know in Bitcoin this week

  • The U.S. central bank will make what is becoming a monthly dictation of what markets do this week with a new rate hike announcement.
  • With a decision on United States economic policy due on May 4, however, the coming days may be a matter of knee-jerk reactions as markets attempt to align themselves with central bank policy.
  • As inflation runs rampant worldwide, it is expected that Chair Jerome Powell will make good on his previous pledges and announce key interest rate hikes.
  • “First came the Fed. Then the Netflixpocalypse. Then the Russian invasion. Then the sanctions. Then the Fed and the largest treasury dump ever. This week it was earnings. Next week the Fed again,” macro analyst Alex Krueger summarized over the weekend:“The Fed’s QT announcement on Wed will determine the fate of the market.” 
  • Krueger was referring to a policy known as quantitative tightening (QT) — the counterpart to quantitative easing, or QE, which describes the Fed’s pace of economic support withdrawal in a bid to reduce its $9 trillion balance sheet.


Ethereum burning spikes to new high on Yuga Labs’ NFT hype

  • The burning rate of Ethereum has spiked to new all-time high (ATH) levels following the heavily anticipated sale of tokenized land plots in Yuga Labs’ upcoming Metaverse project the “Otherside.”
  • Yuga Labs, the creators of the Bored Ape Yacht Club (BAYC), sold 55,000 virtual land nonfungible tokens (NFTs) dubbed “Otherdeeds” on Sunday. The overwhelming demand for the tokens saw Ethereum gas fees shoot up so high that a handful of users paid as high as 2.6 Ether (ETH), or $7,400 at the time of writing, to 5 ETH, or $14,270, just to get their transactions through.
  • According to data compiled from Glassnode and Data Always, nearly 70,000 ETH was burned on Sunday, which is more than triple the previous ATH of around 20,000 in mid-January.


Solana suffers 7th outage in 2022 as bots invade the network

  • The Solana network suffered a seven-hour outage overnight between Saturday and Sunday due to a large number of transactions from the nonfungible token (NFT) minting bots.
  • A record-breaking four million transactions, or 100 gigabits of data per second, congested the network causing validators to be knocked out of consensus resulting in Solana going dark at roughly 8:00 pm UTC on Saturday.
  • It wasn’t until seven hours later on Sunday, 3:00 am UTC that validators were able to successfully restart the main network.
  • The bots hoarded a popular application used by Solana NFT projects to launch collections called Candy Machine. In a Twitter post by Metaplex, the company confirmed that traffic from bots on their app was partially to blame for the network crash.
  • Metaplex shared that it would be implementing a 0.01 Solana (SOL), or $0.89 at the time of writing, charge on wallets that attempt to complete an invalid transaction which the firm said “is typically done by bots that are blindly trying to mint.”


Bitcoin network difficulty breaks into a new all-time high of 29.794T

  • Reassuring its position as the most resilient blockchain network against attacks, the Bitcoin network recorded a new all-time high network difficulty for the second time this month in April — jumping from its previous all-time high of 28.587 trillion to 29.794 trillion.
  • Greater network difficulty demands greater computational power to successfully mine a Bitcoin (BTC) block, which prevents bad actors from taking over the network and manipulating transactions, also known as double-spending.
  • As evidenced by data from Blockchain.com, Bitcoin’s network difficulty has seen almost a year-long uptrend since August 1, 2021. Before that, between May and July 2021, was a timeline when BTC network difficulty fell nearly 45.5% from 25.046 trillion to 13.673 trillion — at the time raising momentary concerns about the network’s vulnerability.
  • The month of April also was witness to one of the lowest average transaction fees on the Bitcoin network — the cost associated with transferring BTC. For the first time in two years, on April 18, the average BTC transaction fee fell to $1.039, which at its highest was $62.788 in April 2021. 


Avalanche (AVAX) loses 30%+ in April, but its DeFi footprint leaves room to be bullish

  • Avalanche (AVAX) price is down more than 30% in April, but despite the negative price move, the smart contract platform remains a top contender for decentralized applications due to its scalability, low-cost transactions and its large footprint in the decentralized finance (DeFi) landscape.
  • Avalanche was able to amass over $9 billion in total value locked (TVL) by offering a proof-of-stake (PoS) layer-1 scaling solution. This indicator is extremely relevant because it measures the deposits on the network’s smart contracts. For instance, the BNB Chain, running since September 2020, holds $10.4 billion in TVL.


US crypto adoption remains high despite global inflation fears

  • A quantitative analytics report published by DappRadar has unveiled a number of revelatory behavioral market indicators for the global adoption of digital assets.
  • The blockchain data portrays a positive sentiment for the Web3 and metaverse sectors, especially in the United States; a reactionary rise in crypto interest throughout Ukraine and Russia following the outbreak of the conflict and the impact of the well-documented surge i gas prices throughout Europe on inflationary metrics.
  • In the category titled “Countries with highest social media indicators for Web3 Metaverse,” the United States ranked highest with a 2.2 score, followed by Indonesia and India with 1.4 and 0.6, respectively. The United Kingdom came in seventh with 0.3.


Eth2 deposit contract now holds 10% of the circulating ETH supply

  • The deposit contract for staking Ethereum (ETH) on the Beacon Chain reached a balance of 12 million ETH on Friday. The total locked value of Ether in the Eth2 contract is worth about $34.5 billion.
  • The deposit contract was launched in November 2020 and currently holds around 10% of the total circulating supply of ETH.


Dfinity Foundation files lawsuit against Meta over infinity logo

  • Lawyers for Dfinity Foundation, a Switzerland-based nonprofit behind the Internet Computer blockchain, have filed a lawsuit against Facebook’s parent company Meta for trademark infringement over its infinity logo.
  • In a Friday court filing with the United States District Court for the Northern District of California, Dfinity’s legal team claimed Meta Platforms was registering use of its logo, which also uses the mathematical symbol for the concept of infinity, “in some of the same or similar areas in which Dfinity has already obtained registration for its mark.” According to the blockchain firm, Meta filed an application with the U.S. Patent and Trademark Office, or USPTO, in March 2022, while the same office granted Dfinity registration in October 2018. Dfinity’s legal team also said the company had been using the infinity symbol on its website since March 2017.
  • While many experts credit mathematician John Wallis with first using the “loopy” symbol to represent the concept of infinity in the 17th century, the design may go back centuries prior to that usage. Dfinity’s lawsuit seemed to be based not on Meta’s logo using the infinity symbol itself, but rather registering a trademark for use in fields offering similar goods and services, including computer software incorporating blockchain technology.

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