Tuesday, 7 June 2022

Market Summary

Market Summary 7 June 2022

Bitcoin Price: US$ 31,373.10  (+4.86%)
Ethereum Price: US$ 1,859.84 (+2.97%) 

 

STEPN’s Contraction, Auction Market Theory, and Arweave’s Ascension

  • STEPN has been one of the biggest hits in crypto over the past few months — at least in terms of raw usage. The idea of being able to “earn” just by going on a run is compelling, though many have questioned the sustainability of such a product.
  • However, after briefly zooming past 100K daily active users, STEPN’s numbers have begun to contract. For the most part, this is a casualty of dropping token prices.
  • When people use StepN, they’re paid in the project’s native GST token. And as you can see in the above chart, GST took quite a hit, down 92% over the last five weeks. Since GST’s price is down, users of STEPN earn less in USD terms, making it less appealing than it was.
  • STEPN has had other issues as well, with a spam protection initiative flagging real users and bots instead of just bots. This, alongside their move to restrict players in mainland China, has put the project under some duress.

 

Balancer’s Balancing Act and Governance House Tries for Aave

  • This proposal outlines funding and accountability processes for groups contributing to Balancer as subDAOs or individuals. It also proposes requirements for receiving Balancer funding as a service provider/subDAO. The requirements include domain expertise, critical objectives of the service provider, budget forecasts, accountability community meetings, and record transfers. This proposal mandates veBAL holders to ensure the accountability of subDAOs and service providers through being active in governance. The proposal also asks that delegates recuse themselves from voting on votes about affiliated subDAOs.
  • The community generally supports this proposal, at least in the forum. One user explicitly argues that the framework’s flexible/lightweight nature allows the DAO to attract a more diverse set of contributors, which is essential in a landscape where DAO contributors are hard to come by. He also points out that subDAOs need to balance offering stable jobs to contributors and receiving quarterly payments from the DAO.
  • There are some concerns and amendments that people are suggesting, mainly around the accountability of subDAOs and concerns over the framework’s lack of details. One user thinks there is insufficient accountability from subDAOs as most accountability comes from a monthly community meeting. They cite cases where DAOs have awarded funds and have received little in return. However, the proposer has responded that the community should take the lead in drafting KPIs to assess if subDAOs are performing and reminds him that subDAOs need to request funds each quarter. Another user proposes the idea that Balancer could set a maximum percentage of their treasury to fund subDAOs to add additional control. Meanwhile, others are concerned that this model is too open-ended and potentially risky.
  • Avacado DAO announces a liquidity pool and farm on PancakeSwap.
  • Friktion announces that ETH<>AVAX cross-chain deposits are live.
  • Meebits DAO announces the date for their kicks NFT drop.

 

Bad day for Binance with SEC investigation and Reuters exposé

  • The United States Securities and Exchange Commission (SEC) is investigating whether Binance Holdings broke securities rules when it launched its BNB token in an initial coin offering (ICO) five years ago, Bloomberg reported on June 6.
  • Binance is the world’s largest crypto exchange, and BNB is the fifth largest cryptocurrency.
  • The BNB ICO took place in July 2017 on several platforms, during the height of the so-called ICO boom, and the Binance exchange opened just days afterward. According to Bloomberg, citing unnamed people familiar with the matter, at least one U.S. resident claimed to have taken part in the ICO, which could be a crucial fact for an SEC case, if the agency chose to pursue one. The SEC has claimed most cryptocurrencies are securities and brought cases against a number of ICO projects.
  • Binance founder and CEO Changpeng Zhao, often known as CZ, said in a 2020 blogpost that the wording of the BNB whitepaper was changed in January 2019 because “the potential for being misunderstood as a security is higher in certain regions.” Binance’s American arm, Binance.US, was created later that year.
  • Also on May 6, Reuters published a lengthy special report alleging that Binance processed at least $2.35 billion of transactions from hacks, investment frauds, and narcotics sales between 2017 and 2021, and had weak KYC/AML protections for those years.

 

Traders think Bitcoin bottomed, but on-chain metrics point to one more capitulation event

  • With the crypto market clearly trading in bear market territory, the question on everyone’s mind is “where is the bottom?”
  • One metric that can help provide some possible guidance is the Mayer Multiple, an oscillator that tracks the ratio between price and the 200-day moving average.
  • In previous bear markets, “oversold or undervalued conditions have coincided with the Mayer Multiple falling in the range of 0.6–0.8,” according to Glassnode and that is precisely the range where Bitcoin now finds itself.
  • Based on the price action from previous bear markets, the recent trading range of Bitcoin between $25,200 and $33,700 lines up with the B phase of the previous bear market cycles and could mark the low of BTC in the current cycle.
  • The Bitcoin realized price model also offers insight into what a potential price bottom for Bitcoin could be, with the current reading provided by the Bitcoin data provider LookIntoBitcoin suggesting the realized price for BTC is $23,601 as of June 5.
  • Selling in the current market conditions has largely been dominated by short-term hodlers, similar to the behavior that was seen during the two previous extended bear markets where long-term holders held more than 90% of the profit in the market.
  • According to Glassnode, miners have also been net sellers in recent months as the decline in BTC has hampered the profitability for miners resulting in “an aggregate miner balance reduction of between 5K and 8K BTC per month.”

 

CertiK shares security tips following third BAYC security compromise in six months

  • On June 4, the popular nonfungible token, or NFT, project Bored Ape Yacht Club (BAYC) suffered its third security compromise this year. Nearly 142 Ether (ETH) ($250,000) worth of NFTs was stolen after hackers gained access to the Discord account of a BAYC community manager and posted a message with a link to a fake website.
  • The link advertised a limited-time free-NFT giveaway to users who connected their wallets, which were then drained of NFTs. During two prior occasions in April, hackers breached BAYC’s Discord and Instagram pages and managed to siphon 91 NFTs, worth over $1.3 million at the time of the second attempt, via a phishing link. 
  • As told by blockchain security firm CertiK, hackers quickly moved stolen funds to obfuscation platform Tornado Cash, making it impossible to trace any further flow of funds on the blockchain. In a statement to Cointelegraph, sources at CertiK explained that however legitimate the project may seem, “NFT holders should also be highly suspicious of anyone claiming to offer free assets, as these can often be phishing attacks.” In addition, CertiK wrote:
  • “In the case of the June 4th attack, the malicious carbon-copy site had some small differences. Firstly, there were no links to social media sites on the phishing site. There was also an added tab titled “claim free land” and specifically targeted popular NFT projects.”
  • As a precautionary measure, Certik recommended crypto enthusiasts look for subtle peculiarities on such sites, as they are frequently an indicator of malicious activity. “At the very least, users engaging with such giveaways should always make an effort to confirm the legitimacy of the site by comparing it with a known and confirmed site and looking for any discrepancies,” they concluded.

 

Hong Kong’s Securities and Futures Commission warn of nonfungible token risks

  • On Monday, Hong Kong’s Securities and Futures Commission (SFC) released a statement warning investors about the risks of nonfungible tokens, or NFTs, which have soared in popularity in recent years. The regulatory body wrote: 
  • “As with other virtual assets, NFTs are exposed to heightened risks, including illiquid secondary markets, volatility, opaque pricing, hacking and fraud. Investors should be mindful of these risks, and if they cannot fully understand them and bear the potential losses, they should not invest in NFTs.”
  • However, it appears that the SFC’s specific concern lies in the securitization of NFTs. “The majority of NFTs observed by the SFC are intended to represent a unique copy of an underlying asset such as a digital image, artwork, music or video,” which do not require regulation by the SFC.

 

New York’s push to ban crypto mining triggers response from community

  • As the state of New York pushes forward a bill that will ban proof-of-work (PoW) mining once approved, members of the crypto community express their disagreement through social media. 
  • In a Twitter thread, Jake Chervinsky, the head of policy at Blockchain Association, explained that the move will not “reduce carbon emissions” at all. According to Chervinsky, a mining ban will only push miners away from New York to build in other areas where the state has no influence over them.
  • Chervinsky hopes that New York Governor Kathy Hochul will veto the bill “for the sake of New York.” The lawyer noted that the move sends a message that “crypto is not welcome” in the state. If the bill is implemented, Chervinsky mentioned that it will be a policy error from the world’s financial capital.
  • Apart from Chervinsky, United States senatorial candidate Bruce Fenton also opposed the move. In a tweet, he said that governments do not have the right to determine the specific software people run. He noted that “code is speech,” implying that the ban is a move against freedom of speech.
  • Ethereum founder Vitalik Buterin also agreed with Fenton. Sharing his thoughts on the issue, Buterin said that the government should not choose which applications are “okay” uses of electricity. He suggested the implementation of carbon pricing and using the earnings to compensate users with low income

 

Blockchain-based move-to-earn app STEPN under DDoS attacks after upgrade

  • Solana (SOL)-based move-to-earn application STEPN has reported multiple denial-of-service (DDoS) attacks in the aftermath of the platform proceeding with a major anti-cheating upgrade.
  • STEPN took to Twitter on June 5 to report that the platform had suffered a number of DDoS attacks that havecaused recovery maintenance and associated improper performance.
  • According to the statement, STEPN was expecting to secure and recover the servers in up to 12 hours but has not posted an update for 20 hours by the time of writing.
  • “Our engineers are working hard to fix the problems. We will announce here once recovery is complete. Thank you so much for everyone’s patience,” STEPN wrote.
  • The attacks came shortly after STEPN introduced its anti-cheating system referred to as “STEPN’s Model for Anti-Cheating,” or SMAC, on Friday. The system aims to eliminate fake users from the platform as well as to prevent fraudulent motion data on the STEPN app in an attempt to gain unfair profit from the platform.

 

Australian mayor downplays crypto volatility, recommends it for rates payments

  • Tom Tate, the mayor of the Gold Coast, Australia, has suggested that cryptocurrency could be used by residents to pay local taxes in future years, though critics have flagged volatility and the recent market crash as a cause for concern. 
  • “Why can’t we pay rates on cryptocurrency if the risk is not high?” asked Tate, speaking to local media outlet ABC News on June 5, just over a week before the council is due to hand down its annual budget. “The volatility is not that bad.”
  • Tate was elected as mayor of the Gold Coast, Australia’s sixth-largest city in 2012, and has proven a popular choice as he was re-elected for a second term in 2016 and a third in 2020. He added that the move hasn’t been confirmed but they were looking ahead. 
  • “It sends a signal that we’re innovative and bring in the younger generation … [but] I’m not saying we’re doing it, I’m just saying we’re always looking at the next level.”
  • However, critics have argued that the price volatility of cryptocurrencies amid a market crash could dampen the enthusiasm to accept crypto as payment.

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