🥶 Compound ETH Market Frozen Due to Upgrade Bug

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

News

• Compound ETH Market Frozen Due to Upgrade Bug
• Bitcoin Dominance Drops Under 40% For The First Time Since January

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

• Mt. Gox Trustee Repayment Announcement Triggers Fear in Bitcoin Market

NFT Roundup

• Moonbirds Fly High On $50M Round and New Collections

Podcast

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

DeFi Explainers

• What is The Merge?
• What Is a Sweep-the-Floor NFT Trading Strategy?

Elsewhere

• Arbitrum Nitro Launch with Steven Goldfeder & Harry Kalodner: Bankless
• District of Columbia Suing MicroStrategy Founder Michael Saylor for Tax Fraud: CoinDesk
• Crypto Lawyer Kyle Roche Pulls Out of Lawsuits Against Tether, Binance and Others: Decrypt
• What's @Polkadotup to? A @MessariCrypto@nickdgarcia report analyzed Polkadot's 2022 milestones, highlighting 435k active chain users and 3.5% increase in $DOT staking: Polkadot

Trending in The Defiant

• Christensen Calls For MakerDAO to Float Stablecoin
• SushiSwap Members Rejoice as Whale Bails from Token
• Why The Merge Might Fail

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DeFi Lending

🥶 Compound ETH Market Frozen Due to Upgrade Bug

Withdrawals and Liquidations in cETH Will Remain Frozen For A Week

By Aleksandar Gilbert

FREEZING Despite three separate audits, an update to crypto lending protocol Compound contained a software bug, freezing the protocol’s $800M Ether market when it took effect Tuesday.

TVL Compound’s ether market, cETH, is its second-largest, after its market for dollar-pegged stablecoin USD Coin (USDC). Compound is the ninth-largest DeFi protocol with $2.68B in total value locked (TVL), according to The Defiant Terminal.

SOLUTION Withdrawals and liquidations in cETH will remain frozen for about a week, while the proposed solution – to undo the problematic upgrade – makes its way through Compound’s rigid governance process. Deposits remain unaffected, according to the protocol.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

Bitcoin Market Action

📉 Bitcoin Dominance Drops Under 40% For The First Time Since January

ETH Miner Balances At All-Time Highs Ahead Of The Merge

By Owen Fernau

FALLEN Bitcoin dominance (BTC.D), which is the market capitalization of BTC relative to that of all digital assets, has fallen below 40% for just the second time since 2018 and stands at an eight-month low, according to data from CoinMarketCap.

CONTRAST The move stands in contrast to the last crypto bear market which kicked off in 2018 and saw BTC.D rise throughout the carnage to above 70% in September 2019 as alternative crypto assets collapsed in price.

Bitcoin Dominance. Source: CoinMarketCap

FORCE Perhaps predictably, Ether has emerged as a primary force driving BTC.D close to all-time lows. ETH dominance (ETH.D) stands at 20% as of Aug. 30 after crawling upwards from a low of below 8% during the last quarter of 2019.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

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NFT Roundup

🌜 Moonbirds Fly High On $50M Round and New Collections

Proof Collective Bags a16z Cash and Phantom Offer Scam Roils NFT Market

By yyctrader

NEWS Institutional investors continue to place bullish bets on NFTs despite the current bear market in digital assets.

FUNDING Proof Collective, the company behind the popular Moonbirds collection, said on Aug. 30 that it had raised $50M in a Series A funding round led by venture capital behemoth a16z. Other investors include Seven Seven Six, True Ventures, and Collab+Currency.

GAMES The news came just a day after Limit Break revealed that it had raised an eye-popping $200M to build Web3 games. The company’s DigiDaigaku NFT collection commands a floor price of 12.3 ETH ($19,000) at the time of writing.

COLLECTION In a livestream on Tuesday, Proof CEO Kevin Rose outlined the company’s plans, which include a third NFT collection of 20,000 profile pictures (PFPs), called Moonbird Mythics, and a $PROOF token. Both are expected to launch in 2023.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

DeFi Explainers

🧐 What is The Merge?

A Step-by-Step Guide to Ethereum’s Historic Upgrade

By Rahul Nambiampurath

STAKING In 2014, Ethereum launched Beacon Chain, a Proof-of-Stake (PoS) network that differed from the original. Up until that time, Ethereum has used the same type of consensus mechanism to maintain its blockchain as Bitcoin — Proof-of-Work. Beacon introduced a new way to add blocks of data to the chain — staking.

MINERS From Sept. 15 to 16 2022, Ethereum will become a PoS network when Beacon merges with its mainnet. The move will ditch miners and computational work in favor of economic staking and validators. Here’s a primer explaining what this means for decentralized finance:

NEXT MOVE While Bitcoin legitimized the concept of peer-to-peer (P2P) digital money, it was Ethereum that spearheaded the blockchain’s next move — smart contracts that deploy decentralized applications (dApps). Bitcoin accounts for about 40% of the total market capitalization in crypto. Ethereum broadened smart contracts for many uses — borrowing, lending, predictive markets, NFT marketplaces, exchanges, gaming, governance, wallets, storage, and even gambling.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

DeFi Explainers

🧹 What Is a Sweep-the-Floor NFT Trading Strategy?

Understanding a Key Investing Practice in Nonfungible Tokens

By Rahul Nambiampurath

RISKIER As speculative assets go, NFTs are at the riskier end of the spectrum. And they’ve fetched astonishing sums in the marketplace. From Yuga Labs’ Bored Ape Yacht Club to Chiru Labs’ Azuki, a dozen NFT collections recorded $400M in total sales. Even after May’s market crash in 2022, the floor price of top collections remained at around 70 ETH.

STRATEGY New traders are searching for the next hit collection. This is where the “sweep the floor” NFT trading strategy comes into play.

The floor price of Azuki. Source: OpenSea

TRACTION The floor price is the fundamental metric in the NFT market. The NFT market behaves much like the commodities market, with one big difference: the former is decentralized. The price determination in the NFT market is organic. As the project gains public traction, more people rush to buy items from an NFT collection, typically composed of 10,000 NFTs. And the more they buy, the more the minimum price rises.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

Elsewhere

🔗 Arbitrum Nitro Launch with Steven Goldfeder & Harry Kalodner: Bankless

On today's episode, we welcome back Steven Goldfeder and Harry Kalodner for their second appearance on Bankless. Both times for huge Arbitrum launches!

🔗 District of Columbia Suing MicroStrategy Founder Michael Saylor for Tax Fraud: CoinDesk

The District of Columbia is suing MicroStrategy (MSTR) founder and Executive Chairman Michael Saylor for allegedly never paying any income taxes in the district in the more than 10 years he has lived there, Attorney General Karl A. Racine announced in a tweet on Wednesday.

🔗 Crypto Lawyer Kyle Roche Pulls Out of Lawsuits Against Tether, Binance and Others: Decrypt

High-profile crypto attorney Kyle Roche has withdrawn from several class action suits against Binance and other major crypto companies, just days after the release of leaked videos in which he discussed his relationships with crypto clients over drinks.

CoolWallet @coolwallet🤔 What's @Polkadot up to? A @MessariCrypto @NickDGarcia report analyzed Polkadot's 2022 milestones, highlighting 435k active chain users and 3.5% increase in $DOT staking Read more about the chain's achievements so far and their upcoming developments👇 bit.ly/3cwl9kD9:30 AM ∙ Aug 31, 2022188Likes43Retweets

Trending in The Defiant

• Christensen Calls For MakerDAO to Float StablecoinIn 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.
• SushiSwap Members Rejoice as Whale Bails from TokenArca, 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.
• Why The Merge Might FailYes, hard as it is to believe, after all the setbacks, breakthroughs, delays, two steps forward, one step back…

🧑‍💻 ✍️ 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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🌋 Mt. Gox Trustee Repayment Announcement Triggers Fear in Bitcoin Market

Outstanding Claims by Ripped Off Customers Worth $2.8B

By Samuel Haig

FLOOD Is Mt. Gox, the notorious exchange that crashed spectacularly in 2014, about to rise from the dead and flood the market with Bitcoin? Or is an arcane legal document that surfaced on Wednesday being widely misunderstood?

RUMORS Those are the questions roiling crypto after the announcement was published to Mt. Gox’s moribund website on Aug. 31. Straight away, rumors flew that Mt. Gox was poised to release $2.8B worth of BTC it held n mid-September.

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The statement suggested that a trustee managing the remnants of the failed venture will begin reimbursing claims for lost Bitcoin filed by Mt. Gox customers years ago.

“The Rehabilitation Trustee is currently preparing to make repayments in accordance with the rehabilitation plan,” said the statement.

The announcement said the start date for “The Assignment” is Sept. 15.

The release sparked speculation a wave of BTC was about to hit. “You ready for the mtgox Bitcoin dump?” tweeted Richard Heart, the crypto influencer with 256,000 followers on Twitter.

Setting a Date

Yet Eric Wall, a software engineer and Mt. Gox creditor, said the trustee is simply setting a date when customers can no longer sell their claim in the open market.

“Mt. Gox is *NOT* distributing 140k coins on September 15,” he tweeted.

“The way this works is that MtGox is going to need banking details and exchange info from thousands and thousands of people,” Wall said. “That will take time. How long, you ask? Weeks? Month? Who knows.”

Influencers

Marshall Hayner, a Mt. Gox creditor and the founder and CEO of Metallicus, a digital asset banking platform, tweeted that creditors are not at all close to receiving their Bitcoin. “Most people like me also have no intention of selling it,” he said. “Don’t believe what influencers on Twitter are telling you.”

“Mt. Gox BTC holders are up over 3,500%. Why would they not sell?” replied Ksvpi.

In 2010, Mt. Gox emerged as one of the first Bitcoin exchanges. It quickly became a leading platform for purchasing and selling BTC, handling around three-quarters of global combined Bitcoin trading in mid-2013 and attracting more than 24,700 customers worldwide prior to its collapse the following year.

Suspended

But issues began to mount for the Japan-based platform in 2013. In May, U.S. Department of Homeland Security accused Mt. Gox’s U.S.-based subsidiary of operating an unregistered money transmitting business and subsequently seized $5M from the unit. The platform then suspended USD withdrawals in June following pressure from its Japanese banking partner.

Despite claiming to have resumed withdrawals in July, Wired reported in November that many Mt Gox customers had been waiting weeks or even months for withdrawals to clear.

In February 2014, Mt. Gox pulled the rug out from under its users by halting withdrawals. Within weeks, the exchange was dead.

Customer Funds

Mt Gox filed for bankruptcy protection and reported that 850,000 BTC had been stolen from the platform. The stolen BTC equated to 7% of Bitcoin’s circulating supply at the time and included 750,000 BTC in customer funds. It filed for liquidation in April.

In September 2019, Mt Gox’s bankruptcy trustee was in possession of 141,686 BTC, in addition to Bitcoin Cash coins and cash. The assets will be distributed to creditors at a later date once claims have been processed.

Despite the flurry of expectations this week, that may not be anytime soon.