🤖Bitcoin and Ethereum Hash Rates Hit All-Time Highs Despite Bear Market

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Algo Stablecoins are Dead. Discuss.

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G7 countries urge swift regulation of crypto assets: Reuters
Mashinsky says ‘Sharks of Wall Street’ circling around Celsius and other projects: Cointelegraph
US Treasury Official Warns Crypto Industry to Proactively Sanction 'Problematic' Wallets: CoinDesk

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Web3 Social Media

👀Decentralized Social Graph Lens Protocol Goes Live

By Jason Levin

NEWS The team behind DeFi mainstay Aave has launched Lens Protocol, a decentralized social graph that allows developers to build web3 social media platforms all run on the Polygon network. Using Lens, users can mint a profile, follow others, and create and collect posts all on-chain.

PARTICIPATE As of May 18, anyone can follow a Lens profile, but the only people able to create a Lens profile are the 30,000 original signers of Lens Protocol’s open letter – including big names in crypto ranging from Royal co-founder 3LAU to crypto influencer Cooper Turley.

Although minting profiles is currently closed, Aave founder Stani Kulechov assured The Defiant that there are plans to open access to more wallets in the future.

INCENTIVES To increase growth, Lens is offering $250,000 in grants to developers to build new apps on Lens; potential ideas range from a curation app to a gaming app.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

FTX Expands Into Equities

📈 FTX Launches US Equities Trading with Stablecoins as a Funding Option

By Jason Levin

Sam Bankman-Fried, the meme-loving billionaire founder of crypto exchange FTX, is back in the news.

A week after Bankman-Fried purchased a 7.6% stake in Robinhood, FTX has launched its stock trading platform, FTX Stocks, in beta.

FTX Stocks offers trading and investing in a range of US securities including common stocks and ETFs. The platform offers no-fee brokerage accounts, commission-less trading, free market data, and no minimum required balances or tiered systems.

The move comes days after Robinhood announced its own foray into web3 with a DeFi wallet.

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Miners Stand Strong

⚔️ Bitcoin and Ethereum Hash Rates Hit All-Time Highs Despite Bear Market

By Aleksandar Gilbert

Cryptocurrency miners continue to pump computing power into the Ethereum and Bitcoin networks despite their tokens’ recent price drop.

The hash rate for Ethereum hit an all-time high on May 13, when it topped out at more than 1,126 terahashes per second, according to ycharts.com. Bitcoin’s hash rate peaked two days later at over 254 million terahashes per second, per blockchain.com.

The hash rate is the computational power used to validate blockchains; the higher the hash rate, the more secure the network since more validators are securing the network. This makes a so-called 51% attack much harder to execute as a malicious actor would need to control a majority of the hashing power.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

⍺ June 8 Ropsten Merge Indicates Ethereum’s PoS Transition Is On Track for Q3: Joe Lubin

By Samuel Haig

Ethereum is merging on the Ropsten public testnet in just three weeks.

In light of the news, Joe Lubin, the founder of dev shop ConsenSys, made a May 17 appearance on Bloomberg to discuss Ethereum’s forthcoming transition to Proof-of-Stake.

“The first major testnet is scheduled to merge in early June, the current plan is June 8,” Lubin said. “Now, there will be a couple of other major testnets that will merge a few weeks after that, and if all goes according to plan, we could see a Q3 merge.”

The Merge will unify the Eth2 Beacon Chain with Ethereum’s Proof-of-Work mainnet, shifting the network to Proof-of-Stake consensus. The transition is tipped to reduce Ethereum’s energy by more than 99.9% by abandoning the energy-intensive mining process.

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Algo Stables Wreak Havoc

💸 Tether Has Reduced Commercial Paper Backing USDT by 20% Since April

By Robert Stevens

The world’s largest US dollar stablecoin, Tether (USDT), today announced its first attestation report in six months. The report disclosed that Tether had decreased its commercial paper holdings – short-term commercial debt – by 17% from December 2021 through March 2022, from $24.2B to $20.1B.

Tether said it has decreased its commercial paper holdings by a further 20% since the start of April. That would mean that about $16B of commercial paper backs the $74 billion stablecoin. The attestation, from accountancy firm MHA Cayman, said that USDT is backed by assets that amount to at least $83 billion.

Tether replaced much of the commercial paper with U.S. treasury bills – debt from the U.S. government – and a “significant average maturity reduction with [a] focus on more short-term assets.” The company has also increased the average quality of its commercial paper from A-2 to A-1. A-1 is commercial paper issued by companies that ratings agencies believe are the least likely to default on their debt payments.

“This latest attestation further highlights that Tether is fully backed and that the composition of its reserves is strong, conservative, and liquid. As promised, it demonstrates a commitment by the company to reduce its commercial paper investments,” said Paolo Ardoino, the CTO of Tether, in a statement.

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CBDC On Ethereum’s L2

🔥 EY And Polygon Unveil ZK and Optimistic Rollup Hybrid

By Samuel Haig

Accounting firm Ernst & Young and Ethereum scaling company Polygon has launched the mainnet beta of its rollup for businesses, Nightfall.

Ernst & Young (EY), one of the ‘Big Four’ financial services behemoths, started work on Nightfall in 2019 to make its customers’ Ethereum transactions private. But the company was so swamped by Ethereum’s high gas fees that in September 2021 it started working with Polygon to cut the costs of those private transactions.

On May 17, the pair deployed the beta version of Nightfall’s third iteration. Nightfall 3 is a rollup – a scaling solution that collects batches of transactions, settles them on another blockchain, then rolls them up into a single transaction on Ethereum. Rollups benefit from Ethereum’s security while cutting costs and speeding things up.

Nightfall is a hybrid of two popular types of rollups: privacy-preserving zero-knowledge proofs, which only publicly disclose the time and date of a transaction, and optimistic rollups, which assume the transactions are accurate but allow validators to contest them. ZK rollups are faster but optimistic rollups are similar to the Ethereum Virtual Machine, making things easier for developers.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

The Tube

📺 Algo Stablecoins are Dead. Discuss.

Elsewhere

🔗 G7 countries urge swift regulation of crypto assets: Reuters

The world's top financial leaders called on Thursday for the swift and comprehensive regulation of cryptocurrencies following turmoil that has seen the demise of the Terra stablecoin last week, a draft communique showed on Thursday. "In light of the recent turmoil in the crypto-asset market, the G7 urges the FSB (Financial Stability Board)...to advance the swift development and implementation of consistent and comprehensive regulation," finance ministers and central bankers from the Group of Seven industrialised nations said in the document.

🔗 Mashinsky says ‘Sharks of Wall Street’ circling around Celsius and other projects: Cointelegraph

The CEO of crypto lending and staking platform Celsius Alex Mashinsky believes “the Sharks of Wall Street” can smell blood in the water and are causing instability at several crypto projects. Mashinsky attributes recent Celsius (CEL) price falls, the brief Tether (USDT) depegging, and collapse of Terra (LUNA) — at least in part — to short sellers on Wall Street. CEL has fallen from its all-time high of $8.05 to $0.82, which is a 90% drop.

🔗 US Treasury Official Warns Crypto Industry to Proactively Sanction 'Problematic' Wallets: CoinDesk

A high-ranking U.S. financial crimes enforcement officer on Thursday directed the crypto industry to proactively blacklist “problematic” wallets even before Treasury Dept. officials order them to do so. Alessio Evangelista, the associate director for Enforcement at the Financial Crimes Enforcement Network (FinCEN), said that “too often” crypto service providers have opted to keep their heads in the sand about blatantly suspect wallets “right up until the day of an OFAC designation or criminal indictment.”

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Terra Founder Faces Government Investigations, Lawsuits, and $78M Fine for Tax EvasionSouth Korean authorities have formed an emergency financial crimes unit to investigate the collapse of stablecoin protocol Terra, and fined the protocol’s founder, Do Kwon, $78M for tax evasion, local media reported. The government agencies want to understand why UST, Terra’s US dollar stablecoin, lost its peg on May 9. The crash wiped $18 billion from the stablecoin market, $26B from Terra’s TVL, and sent Terra’s network token, LUNA, from $65 to a fraction of a cent within four days of the crash.
Fantom’s SCREAM Falls 50% After Algorithmic Stablecoins Cause Bad DebtScream is the latest DeFi protocol to suffer at the hands of faulty algorithmic stablecoins. Opportunistic traders have taken advantage of the Fantom-based lending protocol having fixed the value of the network’s native stablecoins fUSD and DEI at $1 despite the tokens trading below their pegs.
Elite Fashion Brands Continue Building in the MetaverseLast August, Burberry launched wearable NFTs for a crypto video game called Blankos Block Party. Sharky B NFTs, sold together with a jetpack, armbands, and pool shoes, generated about $375,000 in sales. Now, brands such as Gucci, Louis Vuitton, Nike and Adidas, want to dress this burgeoning market, too.

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

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