Welcome to The Wise Guy,
Where we take cryptocurrency seriously, but we also know how to have a good time.
That’s why we’ve curated the crème de la crème from not one, not two, but FIVE newsletters.
MilkRoad, Defiant, Messari, Bankless, and CoinDesk Node.
Defiant’s Top Story
Trader Joe’s Files Lawsuit Against Avalanche DEX
In an ongoing legal battle, Trader Joe’s, the popular U.S. grocery chain, has sued Trader Joe, an Avalanche-based decentralized exchange (DEX), alleging trademark infringement, cybersquatting, and unfair competition. The grocery chain is seeking to shut down Trader Joe’s website and obtain damages.
This is not the first time Trader Joe’s has taken legal action against Trader Joe. A previous attempt to seize the exchange’s domain was rejected by the World Intellectual Property Organization last year.
Lido’s Funding Request on Arbitrum Falls Short
Lido, a prominent staking protocol, recently proposed a request for 4 million ARB to fuel incentives on the Arbitrum network. Unfortunately, the proposal did not garner enough support, with only 43.6% of delegated votes in favor. Lido was among nearly 100 projects vying for funding through Arbitrum’s Short-Term Incentive Program.
Critics of Lido celebrated the rejection, arguing that the project’s growing staking dominance could undermine Ethereum’s decentralization if it exceeds a certain threshold. Currently, Lido controls over 31.5% of staked Ether, raising concerns among researchers.
MetaMask Collaborates with Stripe for Fiat On-Ramp
Good news for U.S. users of MetaMask, the popular Ethereum wallet. They can now use Stripe, a well-known payment platform, to purchase cryptocurrencies with USD directly through MetaMask. This partnership marks the continuation of MetaMask’s efforts in providing seamless fiat-to-crypto on-ramp solutions.
The move comes in the wake of PayPal expanding its partnership with MetaMask, indicating rising competition among leading payment firms in the web3 space, despite being relatively new to the digital asset landscape.
Former Voyager CEO Charged with Fraud by CFTC
Stephen Ehrlich, the former CEO of Voyager Digital, a now insolvent centralized lender, has been charged with fraud by the Commodity Futures Trading Commission (CFTC). Ehrlich is accused of misrepresenting the company’s operations and misappropriating client funds for risky lending activities.
This case adds to the ongoing fallout from last year’s catastrophic failures in centralized finance (CeFi). Another major player in the industry, FTX, is currently facing separate charges from the Federal Trade Commission.
Goldfinch Writes Down Stratos Loan to Zero
Goldfinch, a protocol focused on real-world asset integration in DeFi, has chosen to write down $7 million of a $20 million loan issued to Stratos, a U.S. credit fund. As a result, the remaining balance of the loan has been reduced to zero. However, the Goldfinch team has committed to financially backstop any losses suffered by protocol users due to this write-down.
This incident serves as a reminder of the challenges and complexities associated with bringing real-world assets into the decentralized finance space, despite the recent surge in DeFi integrations.
Farcaster Launches Permissionless Onboarding
Lido, a leading liquid staking protocol, recently incurred a penalty of 20 ETH due to some of its validators managed by Launchnodes going offline. The validators remain offline while an investigation is underway, resulting in the penalty.
This financial setback is not expected to significantly impact Lido, as the penalty represents a small percentage of its daily rewards and total value locked (TVL). However, critics of Lido’s substantial staking dominance may view this incident as further evidence of the project’s potential concerns.
Messari’s Desk
Key Insights
- The TVL of Wrapped Beacon ETH on BSC increased by 216% in Q3, reaching $261 million.
- Transfer volumes of top SocialFi applications grew by 159%, while volumes of top GameFi applications fell by 19%.
- The NFT sector saw growth in secondary transfers (+15%), unique buyers (+20%), and unique sellers (+12%) on BNB Chain’s ecosystem.
- The total value bridged (TVB) reached $4.7 million by the end of September, growing 23% since the mainnet announcement.
- Several technical developments were rolled out during Q3, including the launch of opBNB mainnet, ZhangHeng Upgrade, Plato hard fork, and more.
BNB Chain Overview
- BNB Chain is an ecosystem of blockchains, each serving a specific function. The five core components of BNB Chain are:
- BNB Beacon Chain: staking and governance layer
- BNB Smart Chain: smart contract layer
- BNB Greenfield: storage network
- opBNB: optimistic rollup
- zkBNB: zero-knowledge rollup
- BNB Beacon Chain, the first chain to launch in the ecosystem, provides governance and staking functionality. BNB Smart Chain, a compatible smart contract execution layer, launched in September 2020. BNB Greenfield is a decentralized cloud storage network with a bridge to BSC. opBNB and zkBNB are scalability solutions for BSC.
Ecosystem Performance Analysis
DeFi
- The price of BNB fell by 23% in Q3, leading to a drop in average daily TVL in USD terms in DeFi protocols on BSC.
- The TVL of Wrapped Beacon ETH on BSC rose by 216% in Q3, reaching $261 million.
- TVL became more distributed among DeFi protocols, with PancakeSwap accounting for 39% of the TVL on BSC.
- Binance Labs funded several DeFi protocols in Q3.
Stablecoins
- BNB Smart Chain has the third-highest stablecoin market cap, supporting roughly $4.9 billion.
- USDT accounted for nearly 81% of the total stablecoin volume on BSC in Q3.
NFTs
Secondary NFT sales volume fell by 11% in Q3, but the number of unique buyers and sellers grew by 19% and 11%.
Avavio, ChainGPT, and SpaceCatch were among the notable NFT developments on BSC.
GameFi
SecondLive and Alien Worlds were among the top GameFi applications on BSC.
Transfer volume did not necessarily correspond to the number of unique active wallets.
SocialFi
XCAD Network and Galxe were the top SocialFi applications on BSC in terms of transfer volume.
Friend3, a pay-per-group application, launched in Q3 and gained significant transfer volume.
SocialFi vs. GameFi
SocialFi applications attracted almost the same number of unique active wallets as GameFi applications.
However, GameFi applications generated a larger transfer volume, with Alien Worlds and MOBOX leading the way.
Bankless’ Desk
We’ve got some drama from the SBF trial, a trademark lawsuit, a relaunch announcement, some concerns over a tokenization project, and news about J.P. Morgan moving onchain. Let’s dive in!
Caroline Takes to the Stand
The star witness in the SBF trial, Alameda CEO Caroline Ellison, made some explosive claims this week. She testified that Sam directed her to take billions of dollars from FTX customers for investments. Ellison also revealed details about a $150 million bribe offered to Chinese officials to release funds. It seems like things are getting intense in the courtroom.
Trader Joe Sued by Trader Joe’s
In a surprising turn of events, the grocery store chain Trader Joe’s is suing the decentralized finance platform Trader Joe for trademark infringement. Trader Joe’s wants to shut down the platform, but it may face a challenge as one of the project’s co-founders claims that it was named after the grocer. It’s a battle of the Traders!
Stars Arena to Relaunch
Stars Arena, a friend.tech fork on Avalanche, is making a comeback after a major hack. The platform lost $2.9 million, but they were able to negotiate for the return of most of the stolen funds. With the help of private investors, they plan to reopen soon. This time, they’re addressing concerns raised about security by auditing their smart contract and open-sourcing their code. Let’s hope they’ve learned their lesson!
Intangibly Backed: USDR Depgs
Tangible, a tokenization project on Polygon, faced a setback when $12 million of USDR tokens were redeemed for DAI. This drained the project’s liquid reserves and left USDR only 91.4% collateralized. The backing for USDR comes mainly from illiquid real estate holdings, which has caused some concern in the market. To address the issue, Tangible plans to transform the real estate assets into fungible “basket tokens” if there is a lack of demand for USDR. It’s a challenging situation for USDR holders.
J.P. Morgan Moving Onchain
J.P. Morgan made headlines by carrying out the first blockchain-based collateral settlement for its clients. They used their Tokenized Collateral Network (TCN) to tokenize shares of a money market fund and transfer them as collateral for an OTC derivatives transaction.
This move signifies a major upgrade for the traditional financial system, as it reduces friction and improves collateral mobility. It’s exciting to see big players like J.P. Morgan embracing blockchain technology.
That wraps up our recap for this week. Stay tuned for more news and updates from the crypto world.
MilkRoad
So, I stumbled upon something really interesting recently. Have you heard about Palau? It’s this amazing island located in the western Pacific Ocean, near the Philippines. It’s known for its breathtaking views and is considered one of the smallest countries in the world. Talk about small but mighty!
But even though Palau is a paradise, it’s been facing a couple of challenges. First, tourism is a significant part of its economy, and the pandemic has hit it hard. The second challenge is that getting access to physical money is quite difficult. The cost of transporting coins and bills often exceeds the value of the money itself.
Now, here comes the solution—crypto! Palau has set its sights on becoming “Crypto’s Island” and has launched a Digital Residency Program to make it happen.
Here’s how it works: You apply for a Web3 ID, which is a real ID backed by the Republic of Palau. If your application is approved, you receive a physical government-issued ID and a digital NFT version.
This government-issued ID comes with some cool perks. For example, it can be used for KYC on major exchanges and ID verification for various purposes like hotel bookings, DMV registrations, or even making purchases at places like Costco or CVS. And here’s a big one—there’s 0% income tax and 0% capital gains tax. On top of that, you get to enjoy at least six months of physical residency on the island. Pretty sweet, right?
Now, let’s look at the benefits for Palau. First, they gain an additional source of revenue from digital residency fees. Plus, they hope that by attracting digital residents, it will ultimately boost tourism as well. Imagine if people with physical residency on the island decide to spend some time of the year there. And lastly, Palau gets to tap into the expertise and creativity of crypto-minded individuals who can help build the necessary infrastructure to turn Palau into a future “crypto island.”
Although it’s not yet clear if this endeavor will be successful, it has gained some traction already. Notable figures like billionaire investor Tim Draper and Ethereum founder Vitalik Buterin have already become digital residents of Palau. Their involvement definitely adds some weight to the initiative.
So, here’s the big question—would you consider becoming a digital resident of Palau? Let us know your thoughts!
CoinDesk’s Best Story
BTC ETF
The deadline for the U.S. Securities and Exchange Commission (SEC) to respond to Grayscale Investments’ plan to convert its Bitcoin Trust (GBTC) into a spot bitcoin exchange-traded fund (ETF) is tonight. If the SEC remains silent, Grayscale’s application will be revived.
Many industry insiders believe that the SEC will let the deadline pass, especially after a court criticized the SEC’s initial denial. Grayscale’s application is not the only one awaiting the SEC’s decision; BlackRock and Fidelity also have pending ETF applications.
BlockFi CEO Testifies
BlockFi CEO Zac Prince testified against his former counterpart, Sam Bankman-Fried, revealing how his lending firm was forced to declare bankruptcy due to its involvement with FTX and Alameda Research.
If you want more detailed coverage of the SBF trial, you can subscribe to “The SBF Trial” newsletter, written by CoinDesk reporters and editors present at the trial.
Chainalysis Data Platform
Chainalysis, a global blockchain data platform, provides valuable tools and insights for crypto exchanges, financial institutions, government agencies, and cybersecurity companies worldwide.
They have built a trusted blockchain knowledge graph that powers investigations, risk management, and market intelligence. Chainalysis has been instrumental in solving major criminal cases and ensuring safe consumer access to cryptocurrency. For more information, stay ahead with Chainalysis.
Coinbase Opposes IRS Proposal
Coinbase has voiced its concerns about a recent proposal from the U.S. Internal Revenue Service (IRS) that could have negative implications for the crypto industry and individuals’ privacy.
The proposal aims to define crypto brokers and establish guidelines for tax payments. Coinbase argues that this represents an undue invasion of privacy, with potential detrimental effects on the industry. The IRS recognizes the significance of crypto in the “tax gap” and intends to address this by ensuring proper tax reporting.
Token Burn for Flare Blockchain
The developer of Flare blockchain plans to burn 2.1 billion FLR tokens to foster ecosystem development and maintain token value. This token burn will remove more than 2% of FLR’s total supply that was initially allocated to Flare’s early backers. The burn will occur gradually according to an agreed-upon proposal, preventing further token dilution and supporting the overall health of the ecosystem.
Lawsuits Against ex-CEO of Voyager Digital
Two regulatory bodies have filed separate lawsuits against Steve Ehrlich, the former CEO of Voyager Digital, on allegations of fraud and misleading customers. The Commodity Futures Trading Commission (CFTC) claims Ehrlich misled customers about the company’s financial health and operated the business without proper licensing.
The Federal Trade Commission (FTC) accuses him of falsely claiming that customer funds were protected by the FDIC. In a settlement agreement, Voyager will be prohibited from handling customer assets, but the bankrupt firm will be allowed to repay customers. Interestingly, the CFTC referred to Circle’s USDC stablecoin and bitcoin as commodities in its filing, although one commissioner expressed disagreement with the claim about registration requirements.
Twice weekly crypto goodness, coming your way! Catch us every Monday, Tuesday and Friday. And hey, don’t forget to check us out on Wednesdays for all the latest AI news – because why limit yourself to just one kind of intelligence?
