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
🔄 Curve Founder’s Strategic Move
Michael Egorov, the founder of Curve, has been on a selling spree of CRV tokens through over-the-counter (OTC) trades. Why, you ask? It turns out that Curve suffered a staggering $70M hack that caused the price of CRV to take a nosedive.
Egorov’s urgent selling of tokens is part of his strategy to manage and pay off outstanding loans across various DeFi lending platforms. Fortunately, the price of CRV has stabilized, and Egorov’s repayments have reduced the risk of liquidation. However, these OTC transactions have also sparked debates about transparency within the DeFi community.
💼 MetaMask’s New Addition:
MetaMask, the popular wallet and browser extension, has introduced a new feature in its Portfolio app that allows users to stake their Ether and MATIC tokens.
This update offers a user-friendly way to compare the staking rates of different providers and diversify stakes across them. As staking gains more mainstream attention, regulatory bodies like the IRS and SEC have started increasing their scrutiny. The IRS now requires staking rewards to be reported as income, while the SEC considers staking services as securities offerings. With tools like MetaMask making staking easier, it’s crucial for both users and platforms to stay informed about any regulatory shifts.
Messari’s Desk
🏦 Coinbase’s Impressive Q2 Results
Coinbase recently announced its Q2 2023 results, and they exceeded Wall Street estimates. With a net revenue of $663 million, Coinbase demonstrated its ability to effectively monetize its large retail user base.
Although the trading volume experienced a 37% decline, Coinbase still managed to gain market share as industry volumes dropped by 48%. This was partly due to the increasing share of “simple trades,” which helped improve margins. Notably, subscription and services revenue surpassed transaction revenue for the first time in Coinbase’s history.
Additionally, Coinbase showcased its resilience and strong execution by transitioning away from relying solely on trading fees as a revenue driver.
⛓️ Base Chain Shenanigans
Coinbase’s Base Layer-2 mainnet had an eventful period recently. Initially, Coinbase opened up the mainnet to developers, but without a public bridge UI. Instead, they created a portal proxy contract for developers to bridge ETH into the rollup and test their contracts, but it wasn’t designed for ETH to exit the Base chain. However, things took an unexpected turn when someone launched a meme coin called $BALD.
This led to a frenzy as more than 40,000 ETH was bridged into Base chain for speculative trading of $BALD, causing its market cap to surge before crashing by 95%. Due to the one-way bridge design, early speculators couldn’t exit easily, resulting in the recycled wealth being invested in other freshly launched meme coins.
The mania lasted until an exploit hit the LeetSwap DEX, causing trading functionality to be paused temporarily. To provide a solution, Base released a public bridge UI on August 3rd, giving users an easy way to bridge in and out of the Base mainnet.
⚡FTX’s Revival as FTX 2.0
FTX, which faced a collapse months ago, is making a comeback under a new restructuring plan called FTX 2.0. The plan involves categorizing users and former FTX lenders into distinct classes of creditors. International exchange creditors have the option to pool their funds and contribute to the revival of the exchange.
In return, they would receive a stake in the newly minted FTX 2.0, instead of immediate cash payouts. This approach has sparked heated debate among creditors, with some supporting the exchange’s revival while others prefer prompt cash liquidation.
Bankless’ Desk
⚡️ DOJ’s Criminal Fraud Charges
The Department of Justice (DOJ) is reportedly considering filing criminal fraud charges against Binance, the popular cryptocurrency exchange. This would mark a significant escalation from the ongoing lawsuits filed against Binance by the Securities and Exchange Commission (SEC) and the Commodity Futures Trading Commission (CFTC).
However, what makes this story even more intriguing is that the DOJ is apparently hesitant to pursue criminal charges due to concerns that it might cause a “run on the exchange.” It’s quite an unexpected display of restraint from the government, unexpectedly showing some concern for U.S. crypto users, even those accessing Binance’s services through a VPN.
💼 Fines and Alternative Agreements
In addition to criminal charges, the DOJ is said to be considering alternative actions such as imposing fines or reaching deferred or non-prosecution agreements with Binance. These potential outcomes would still carry significant consequences but might be a somewhat milder approach compared to criminal charges.
Milk Road’s Educational Desk
Welcome back to our Market Movers segment, where we bring you the latest updates on the winners and losers in the crypto market. Let’s dive into this week’s highlights:
🚀 THE WINNER
Optimism Optimism is making waves in the crypto space as a popular Layer 2 solution on Ethereum. It aims to improve transaction speed and reduce costs. With about 120,000 active users and $850M in total value locked (TVL), Optimism has been making strides.
Two key developments have contributed to Optimism’s recent success. Firstly, Coinbase launched BASE, its own Layer 2 network built on Optimism’s OP Stack. This integration makes it easier for developers to create and share resources while generating transaction fee revenue for Optimism’s treasury. Additionally, Worldcoin’s launch on Optimism has helped boost the network’s daily transactions, surpassing Arbitrum for the first time.
As a result, Optimism’s native token, $OP, has experienced an 11% increase over the past week and a 35% increase over the last month. With more projects embracing the OP stack, Optimism’s future looks promising.
📉 THE LOSER:
HEX Hex, a high-interest blockchain certificate of deposit, has been facing challenges recently. Designed to allow investors to earn interest by staking their tokens, HEX has been dubbed crypto’s equivalent of a “bank fixed deposit”.
However, the Securities and Exchange Commission (SEC) has filed a lawsuit against Hex’s founder, Richard Heart, classifying HEX as a security.
The allegations against Heart include conducting an unregistered securities offering, raising over $1B illegally from investors. Furthermore, the SEC accuses Heart of misusing investor funds for personal purchases, such as luxury items.
As a result, HEX’s price has plummeted by 40% over the past week, leading certain platforms like Uniswap to delist the token due to the regulatory concerns surrounding it.
While the situation involving Heart and HEX remains controversial, it’s essential to exercise caution and apply the old Milk Road Rule #8: Don’t take investment advice from someone who matches their hat, bag, and shoes.
CoinDesk’s Best Story
Coin Based
Coinbase, the popular crypto exchange, is asking a judge to dismiss the lawsuit filed by the U.S. Securities and Exchange Commission (SEC). Coinbase argues that the SEC is overstepping its jurisdiction by accusing the exchange of violating federal securities laws.
The SEC claims that Coinbase operated as an unregistered broker, exchange, and clearing agency for 13 tokens that are considered unregistered securities. Coinbase counters that the SEC has not provided evidence that any of the cryptocurrencies in question are securities. The SEC must file a response by October 3. Coinbase, which was once known for its compliance-focused approach, has been increasingly critical of the SEC.
Tainted Flows
The hacker responsible for draining $61 million in assets from decentralized exchange Curve Finance has returned some of the stolen crypto after negotiations with one of the victims. According to blockchain data, the hacker transferred nearly $10 million of ETH and alETH to Alchemix’s multisignature wallet in multiple transactions.
Over the weekend, Curve, Metronome, and Alchemix suffered losses due to an unknown hacker exploiting a coding bug to loot multiple trading pools. It has become common for crypto hackers to return stolen funds to avoid detection on the blockchain.
Goodbye Revolution
Revolut, the digital bank, has announced the closure of its U.S. crypto platform due to the uncertain regulatory environment. This decision affects less than 1% of Revolut’s global crypto customers.
The platform stated that it is actively seeking alternative solutions and hopes to reenter the U.S. market in the future. However, this closure does not impact any other markets served by Revolut. In other news, Trader Joe, a popular decentralized exchange, has expanded to Ethereum, specifically its stablecoin pools, through Arbitrum, BNB Chain, and Avalanche.
Additionally, GMX V2, the second version of the popular decentralized exchange on the Arbitrum L2 network, attracted over $1 million in capital on its first trading day. GMX V2 will coexist with the current GMX platform and offer greater access to alternative currencies, including dogecoin.
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?
