🧐 Christensen Calls For MakerDAO to Float Stablecoin

Hello Defiers! Here’s what we’re covering today:

News

• Christensen Calls For MakerDAO to Float Stablecoin
• SushiSwap Members Rejoice as Whale Bails from Token
• FBI Says ‘Complexity’ Makes DeFi Vulnerable to Hacks

👀 Defiant Premium Story for Paid Subscribers (📜Scroll to the end!)

• Arbitrum Executes Nitro Upgrade in Push to Scale Ethereum

Podcast

🎙Listen to the exclusive interview with Jake Chervinsky in this week’s podcast episode:

The Tube

• Tutorial: Stay on top of NFT projects with Lifeboat Fi

DeFi Explainers

• Market Cap vs. Circulating Supply

Elsewhere

• Top execs from Genesis and Galaxy are raising a $500 million fund: The Block
• OpenSea Adds Polygon Support to Expand Features, Accept MATIC: Decrypt
• Given the Sanctions on Tornado Cash, Is Ethereum Censorship Resistant?: Unchained
• Polkadot’s August newsletter is out! Check the latest reports on Polkadot: Polkadot

Trending in The Defiant

• Why The Merge Might Fail
• Stargate’s STG Token Surges Ahead Of FTX Listing
• Coinbase Launches cbETH Liquid Staking Token

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DAO Governance

🧐 Christensen Calls For MakerDAO to Float Stablecoin

Outspoken Founder Says U.S. Clampdown Closing ‘Window of Opportunity’ for DeFi

By Samuel Haig

REVERSAL In what would mark a dramatic strategic reversal, Rune Christensen, the founder of MakerDAO, is calling for the DeFi stalwart to reduce its exposure to real-world assets and freely float the value of its stablecoin, DAI, against the dollar.

DEPEG The move would depeg the currently stable DAI token from the U.S. dollar and prevent holders from redeeming it on a one-to-one basis for other stablecoins. It would also do away with one of DAI’s core value propositions, and could result in the token trading below the dollar.

CRACKDOWN Christensen argued that MakerDAO may not have a choice. Invoking the U.S. government crackdown and the meltdown of major crypto platforms, Christensen said MakerDAO, along with the rest of decentralized finance, was facing an existential crisis.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

DEX Drama

😅 SushiSwap Members Rejoice as Whale Bails from Token

After Shaping Sushi’s Reform Plan Arca Hits the Exits

By Samuel Haig

SOLD Arca, a crypto-focused asset manager, appears to have sold its $3.1M position in SushiSwap’s token. And many of the crypto exchange’s community members couldn’t be happier.

STAKING On Aug. 30, a transaction from a wallet associated with Arca was flagged in the SushiSwap community Discord for withdrawing more than 3.1M SUSHI from staking and transferring the tokens to FTX, a centralized cryptocurrency exchange.

INFLUX A sudden influx of volume was spotted on FTX shortly after, with the price of SUSHI abruptly sliding from $1.10 to $1.07 over the course of a single three-minute candle. The asset has since traded between $1.02 and $1.07 in the past 24 hours

SUPPLY On July 17, 2021, Arca’s chief investment officer, Jeff Dorman, tweeted that the firm was “one of the largest xSUSHI holders” and controlled 7.5% of its circulating supply.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

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Exploits

🦹🏻‍♂️ FBI Says ‘Complexity’ Makes DeFi Vulnerable to Hacks

Feds Cite Chainalysis Report in Issuing Consumer Warning

By Aleksandar Gilbert

NEWS The FBI warned investors on Monday to approach decentralized finance with caution, citing the growing share of crypto hacks that target DeFi protocols. Pointing to analysis from crypto forensics firm Chainalysis, the FBI said that 97% of crypto stolen in the first three months of 2022 came from DeFi platforms, up from 72% in 2021.

CODE The bureau said the vulnerabilities in DeFi platforms stem from the “complexity of cross-chain functionality” and the fact that projects are largely open source, meaning their code is publicly available.

WEAKNESSES Open-source code makes it possible for white hat hackers to sift through code and identify weaknesses on a project’s behalf, for which those hackers typically earn bounties. But it also means criminals can do the same and exploit DeFi software.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

The Tube

📺 Tutorial: Stay on top of NFT projects with Lifeboat Fi

DeFi Explainers

⚖️ Market Cap vs. Circulating Supply

A Step-by-Step Guide to Two Key Metrics in Crypto

By Rahul Nambiampurath

SUPPLY The most common way to rank cryptocurrencies is by using their market capitalization. This is the value of all the coins or tokens available for purchase on the market. In other words, a market cap is not calculated by a cryptocurrency’s total supply, but by its circulating supply.

COINS Every cryptocurrency has different circulating supplies, and some don’t limit maximum supply. Such a dynamic makes all the difference on how traders approach certain coins over others.

How To Calculate Market Cap?

ALTERNATIVE Market cap is best viewed as cryptocurrency’s total tradeable value. We calculate it by multiplying the number of tradable coins by the price of each coin. For example, the Ethereum alternative smart contract platform, Avalanche (AVAX), has 284,926,959 tradable AVAX coins.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

Elsewhere

🔗 Top execs from Genesis and Galaxy are raising a $500 million fund: The Block

Top executives from crypto trading and investment firms Galaxy Digital and Genesis are set to launch a new crypto fund, according to an SEC filing.

🔗 OpenSea Adds Polygon Support to Expand Features, Accept MATIC: Decrypt

OpenSea, the number one NFT marketplace by volume, announced today the integration of the layer two scaling solution Polygon into its Seaport protocol implementation.

🔗 Given the Sanctions on Tornado Cash, Is Ethereum Censorship Resistant?: Unchained

Andrew Hinkes, partner at K&L Gates and adjunct professor at NYU, and Martin Koeppelman, cofounder of Gnosis, talk about the sanctions on Tornado Cash, how they will impact Ethereum on the base layer, and the likelihood of having two chains.

https://twitter.com/Polkadot/status/1564612090068885506?s=20&t=ap6vTtYRaRhHWGHAKiaFig

Trending in The Defiant

• Why The Merge Might FailYes, hard as it is to believe, after all the setbacks, breakthroughs, delays, two steps forward, one step back…
• Stargate’s STG Token Surges Ahead Of FTX Listing Stargate Finance had an eventful start. The cross-chain protocol held an auction for its STG token on Mar. 17, only to have trading firm Alameda Research, buy all 100M of them in the very first block, as confirmed by then-CEO, Sam Trabucco.
• Coinbase Launches cbETH Liquid Staking TokenA new token representing staked Ether just hit the blockchain.

🧑‍💻 ✍️ Stories in The Defiant are written by Owen Fernau, Aleksandar Gilbert, Samuel Haig, and yyctrader, and edited by Edward Robinson, yyctrader and Camila Russo. Videos were produced by Robin Schmidt and Alp Gasimov. Podcast was led by Camila, edited by Alp.

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🚀Arbitrum Executes Nitro Upgrade in Push to Scale Ethereum

Migration Commenced At 1030 ET

By Samuel Haig

Arbitrum, Ethereum’s leading Layer 2 network, has kicked off its major Nitro upgrade, in a bid to further bolster the scalability of the Layer 2 (L2) rollup network.

On Aug. 31, Arbitrum started the process of migrating the Arbitrum One chain to Arbitrum Nitro. The upgrade began at 10:30 AM New York time and is expected to take two to four hours to complete.

“Nitro is to Arbitrum One what The Merge is to Ethereum,” said Anthony Sassano, the host of The Daily Gwei podcast. He said the upgrade reduces transaction fees while also bolstering the chain’s scalability and security.

Arbitrum is currently Ethereum’s largest L2 chain by total value locked (TVL) with $2.5B, according to L2beat. Arbitrum is also the fourth-largest smart contract network by TVL, running behind Ethereum, Tron, and Binance Chain, according to DeFi Llama.

Steven Goldfeder, the co-founder of Offchain labs, the team behind Arbitrum, tweeted that the move to Nitro is akin to upgrading the engine of an aircraft mid-flight.“We’ve built a brand new engine to power L2,” he said.

Twitter user DataSnoot responded “don’t know if it’s… fair to say you are changing it mid-air if the chain will have a downtime.” Goldfeder replied “please keep your seatbelt on.”

Activity Spikes

Activity on Arbitrum has jumped in anticipation for Nitro.

On Aug. 29, Nansen, a crypto analytics provider, tweeted that daily transactions had surged above 180,000 on the network. Data from Nansen shows that 99,000 unique addresses were active on Arbitrum over the past seven days, and 302,000 wallets were active on the network for the past 30 days.

Daily transactions and gas usage on Arbitrum. Source: Nansen.

Rollups

Arbitrum uses optimistic rollups to offer reduced transaction fees compared to the Ethereum mainnet. Rollups work by bundling together transactions executed on Layer 2 and submitting them in batches for validation on Ethereum’s base layer.

Optimistic rollups assume transactions are accurate but allow seven days for network participants to contest them, and require L2 validators to post significant collateral. Validators found to be submitting inaccurate transactions will have their collateral slashed.

The GitHub account of Offchain labs said that Nitro bolsters its scalability by offering an improved sequencer, fraud proofs, token bridges, cross-chain communication, and advanced calldata compression.

The upgrade also includes replacing Arbitrum’s custom-built Ethereum Virtual Machine (EVM) emulator with the popular Geth EVM. “Essentially, Nitro runs Geth at layer 2 on top of Ethereum, and can prove fraud over the core engine of Geth compiled to WASM,” the documentation said.

Arbitrum Odyssey

Odyssey, Arbitrum’s eight-week campaign intended to promote adoption of the L2 by offering NFTs as rewards for network engagement, is set to resume in the coming days or weeks now that the Nitro upgrade is complete.

Odyssey began in late June, but was paused following roughly one week pending the Nitro upgrade after on-chain activity surged to record highs and drove gas fees above those on the Ethereum mainnet.

Offchain Labs also launched Arbitrum Nova, an L2 designed for gaming and social applications, on Aug. 9. The chain is designed to enable extremely low transaction fees and rapid block times.

Reddit, the social media network, has tapped Nova for its Community Points tokens. Community Points are issued to reward users who are active on the Fortnite and Cryptocurrency subreddits, with Reddit also intending to launch the feature across other subreddits in the future.