🦄 Recap: DeFi Week of Nov. 6

Hello Defiers!

And so ends a week few of us will ever forget. To think that 10 days ago FTX was considered the gold standard of crypto, a steadfast steward of digital assets that normies could trust and a bridge to the mainstream marketplace via Super Bowl commercials and FTX-branded sports arenas, is, well, rather mind blowing.

With his just-woke-up vibe and gift for breaking the complexities of crypto down into sound bites, Sam Bankman-Fried became the industry’s self-styled evangelist. While lesser projects (eg Celsius, Three Arrows, Terra) crashed and burned, SBF and FTX held firm, providing a helping hand to crypto players struggling to weather the bear market and casting its mission in the altruistic light of philanthropy.

If only.

Make no mistake, the damage from FTX’s collapse is serious. It isn’t just the market action — that can be overcome, in time — it’s reputational. That FTX, a supposed stalwart in a sea of volatility, could self-destruct in cloud of apparent self-dealing impugns the credibility of the entire crypto project. And even though SBF apologized — “I fucked up,” he tweeted, as Aleksandar Gilbert reported in his story on the thread — DeFi will be living down this calamity for some time to come.

The Defiant covered the news and the fallout from the FTX crisis on a number of fronts. Sam Haig provided a daily overview, and be sure to read his mid-week take on the crisis where he reported on evidence that FTX had used its ersatz token, FTT, to plug a $4B hole in the trading book at Alameda Research, the exchange’s interlinked hedge fund. Sam clearly laid out what went wrong and what would happen next. If you can only read one story on the fiasco, this is the one.

You should also check out Owen Fernau’s analytical piece on the contagion in DeFi. The black box model at FTX-Alameda is an anthema in decentralized finance and yet platforms such as Solana suffered mightily this week as investors ran for cover. Owen’s story on Solana was the first to explain the ramifications of its investment links with FTX and how they were backfiring. Likewise, Aleks Gilbert wrote a penetrating story on how Solend, the lending project on Solana, was struggling to liquidate a souring loan as a result of the FTX fallout.

Meanwhile, yyctrader and Aleks wrote ultra-fast takes on how the market reacted to the torque from the news, including a piece on Thursday reporting on the surprising fall in consumer prices in October. Was ever a rally more welcome?

Our crack YouTube channel also get in on the action with segments on SBF’s fall from hero to zero, and Camila Russo presenting the news on Binance’s cancelled rescue of FTX. Rounding out the week, Cami spoke with Hamzah Khan, head of DeFi of Polygon, about the blockchain network’s work with Reddit and Robinhood. What a relief just to talk about business!

Enjoy!

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Podcast

🎙 Polygon’s Hamzah Khan Wants to Make DeFi More Accessible Than Running Water

This week on The Defiant Podcast we speak with Hamzah Khan, Head of Defi at Polygon. Polygon is one of the biggest players in DeFi with $1.5B in TVL and in the blockchain space in general. Hamzah begins by giving us a brief overview of the Polygon ecosystem.

Despite the bear market, Polygon has been forging high-profile NFT partnerships with companies like Instagram and Reddit. Its network was also used by JP Morgan’s Onyx unit to conduct the first interbank on-chain forex swap and was chosen by Robinhood to debut its Web3 wallet. We dive into the details of these partnerships with Hamzah.

Unlike its sidechain counterpart, Polygon zkEVM will be directly built on Ethereum to serve as a Layer 2. Hamzah goes on to explain the main differences between the two scaling solutions and breaks down the advantages and disadvantages of each.

And finally, Hamzah shares his insights into the DeFi ecosystem on Polygon —where most of the activity happens and the innovations he’s excited about.

Defiant Video

📺 Robinhood is coming after MetaMask with Polygon Web3 Wallets

📺 FTX UPDATE: BINANCE ABANDONS ACQUISITION PLAN

📺 Feds Seize $3.36 Billion Crypto Linked to Silk Road

📺 FTX Insolvency Rumors Are Flying and Binance’s CZ is Making it Worse

📺🎙 Podcast: Robinhood is coming after MetaMask with Polygon Web3 Wallets

📺 Weekly Recap Nov.6 : Art Gobblers, Coinbase Savings, Chicken Bonds, JPMorgan in DeFi, Instagram NFTs

FTX Crisis: Fallout From a Cancelled Deal

😬 FTX Crisis Shifts Into New Phase as Contagion Spreads and Investors Scramble for Cover

Turmoil Reins With Bitcoin Plunging to Two-Year Low and Solana Cratering

Samuel Haig rounds up all the action after CZ pulls the plug on Binnance takeover of FTX…

Twelve hours after Binance nixed hopes of a tidy bailout of FTX, turmoil rages in the crypto markets. Digital assets are hitting new lows, a potential savior has emerged in the form of Tron’s Justin Sun, and fears are mounting that more damage is to come as authorities circle the stricken exchange and its sister firm, Alameda Research.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

FTX Crisis: Contagion Sweeps DeFi

🕋 DeFi Supporters Say FTX’s Black Box Model Shows Peril of Centralization

Contagion Wipes Out $10B of DeFi’s Market Cap in 48 Hours

Owen Fernau reports on the effects of the centralized exchange’s failure on the DeFi sector…

Don’t blame DeFi. That’s the vibe running through the decentralized finance community as project teams and investors cope with the damage wrought by the meltdown of FTX, the centralized derivatives exchange.

Even though DeFi stalwarts had nothing to do with the practices that sank Sam Bankman-Fried’s high-profile company they have been impacted by the contagion from its demise.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

FTX Crisis: SBF Apologizes

🤷🏻‍♂️ SBF Surfaces With Apology and Details on FTX’s Condition

Embattled Crypto Head to Close Alameda; confirms $5B in Withdrawals on Sunday

Aleksandar Gilbert reports on the FTX chief’s mea culpa on Twitter…

Breaking his silence during a two-day period when the crypto market erased $131B in value, Sam Bankman-Fried finally offered up a mea culpa for the damage wrought by the murky practices at his exchange FTX, and the hedge fund he controls, Alameda Research.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

FTX Crisis: Alameda’s Tradebook Sparks Fear

😥 Focus Turns to Alameda as Investors Fear Binance Deal Not the Answer for Stricken FTX

Evidence Emerges FTX Used FTT Token for $4B Bailout of Alameda in September

Samuel Haig rounds up all the action as Binance deal wavers and investors concentrate on Alameda’s position…

As cryptocurrency investors and users reckon with the fallout from Binance’s shocking takeover of FTX, one thing is clear: the episode is a disaster for the burgeoning industry.

“These events quickly sent the broader market into a tailspin, heaping more pressure on the prices of crypto,” Bobby Ong, the co-founder of CoinGecko, told The Defiant. “Collapses such as these only serve to erode the confidence of users and the general public towards the industry, and could become a hindrance to growing adoption.”

The questions now are how bad is it, and how long will it last?

👉READ THE FULL STORY IN THE DEFIANT.IO👈

FTX Crisis: An Investment Backfires

😬 Solana Supporters Buck Up Network As FTX Contagion Takes Toll

Alameda and FTX Have Extensive Links with Layer 1 Blockchain Network

Owen Fernau reports on Solana’s exposure to the meltdown…

It’s safe to say that last week few Solana fans were worried about contagion from a centralized derivatives exchange that focused on putting its name on sports arenas and not DeFi.

Yet the rapid unraveling of confidence in FTX, the mammoth crypto derivatives exchange, and its sister firm, Alameda Research, has swept up Solana and whipsawed its tokenholders with unforeseen torque.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

Friday

FTX Crisis

• FTX Files for Chapter 11 Bankruptcy and SBF ResignsSam Bankman-Fried has resigned from his position as FTX CEO and the many companies in his crypto empire will file for chapter 11 bankruptcy.
• Crypto Lender BlockFi Suspends Withdrawals BlockFi, a centralized crypto lender which pays users a return on deposits of digital assets, has paused withdrawals on its platform.
• FTX-Backed Bitcoin and Ether Tokens Depeg On Solana Wrapped versions of Bitcoin and Ether on the Solana blockchain have lost their peg to the underlying assets in the wake of FTX’s bankruptcy filing.
• Bahamas Securities Commission to Freeze and Liquidate FTX AssetsThe Bahamas Securities Commission has stepped in to freeze the assets of FTX Digital Markets (FDM), Sam Bankman-Fried’s failing crypto exchange, in the latest blow to the once-mighty platform.
• FTX Withdrawals Resume But Only for Bahamas-Based AccountsWithdrawals are once again trickling out of FTX, but only for certain customers, according to Zane Tackett, FTX’s ex-head of institutional sales.
• Desperate To Get Crypto Out of FTX, Some Get CreativeWith withdrawals from FTX limited to Bahamian customers, some have found a clever way of spiriting their money out of the bankrupt crypto exchange.
• SBF Surfaces With Apology and Details on FTX’s ConditionBreaking his silence during a two-day period when the crypto market erased $131B in value, Sam Bankman-Fried finally offered up a mea culpa for the damage wrought by the murky practices at his exchange FTX, and the hedge fund he controls, Alameda Research.
• Tether Freezes $47M USDT Stake Held by FTXTether, the issuer behind the No. 1 U.S. dollar-backed stablecoin, USDT, froze almost $47M worth of USDT held by FTX exchange on the Tron blockchain.

News

• MetaMask Launches Integrated Bridge FeatureMetaMask, the leading web3 wallet provider, has released MetaMask Bridges, a bridge aggregation service. This feature allows users to transfer their assets across multiple blockchains from within the wallet.

Markets

• Investors Bargain Hunt as Inflation Report Spurs Market RallyWell that’s a relief. The crypto market rallied on Thursday after the U.S. government released data that shows inflation cooled in October to its lowest level since January.

Thursday

FTX Crisis

• Trapped FTX Users May Find Lifeline in Justin SunWhile many crypto traders wait with bated breath to learn the fate of their funds trapped on the failing FTX exchange, Justin Sun, the founder of Tron, may be preparing to throw a lifeline to FTX’s stranded customers.
• Solend Struggles to Liquidate Souring Loan as On-Chain Liquidity ‘Evaporates’The apparent collapse of crypto exchange FTX is wreaking havoc on the Solana ecosystem, with another centralized exchange reportedly halting stablecoin deposits to and from Solana and the blockchain’s largest protocol hanging on by its fingernails on Tuesday.
• Binance Walks Away From Deal To Acquire FTXBinance, the world’s largest crypto exchange, said it is walking away from its preliminary agreement to buy competitor FTX, an announcement that sent cryptocurrencies into a late afternoon tailspin Wednesday.

News

• OpenSea Will Enforce Royalties for Existing NFT CollectionsOpenSea, the leading NFT marketplace by volume, will continue to enforce creator fees on its platform for existing collections.
• Feds Crank Up Heat on Tornado Cash With Link to North Korea’s Nuclear ProgramThe Biden Administration has raised the stakes in the Tornado Cash sanctions case by alleging the crypto mixer was involved in facilitating transactions connected to North Korea’s nuclear weapons program.

DeFi Explainers

• What is 88mph?88mph is an Ethereum-based, decentralized application (dApp) for users who want to borrow and lend at a fixed interest rate.

Wednesday

FTX Crisis

• Focus Turns to Alameda as Investors Fear Binance Deal Not the Answer for Stricken FTXAs cryptocurrency investors and users reckon with the fallout from Binance’s shocking takeover of FTX, one thing is clear: the episode is a disaster for the burgeoning industry.
• Solana Supporters Buck Up Network As FTX Contagion Takes TollIt’s safe to say that last week few Solana fans were worried about contagion from a centralized derivatives exchange that focused on putting its name on sports arenas and not DeFi.
• Binance to Take Over FTX After Insolvency Concerns Spark Market RoutBinance, the world’s largest crypto exchange, plans to execute an emergency takeover of FTX, the crypto derivatives platform that has been hit with a crisis of confidence as its FTT token lost more than a quarter of its value on Monday, Changpeng Zhao, Binance’s CEO, said in a Twitter thread Tuesday.

News

• Ether Turns Net Deflationary Post-MergeEther is finally ultra-sound money. The largest smart contract platform by market capitalization has hit the much-anticipated milestone of zero net issuance, 54 days after it the network transitioned to proof-of-stake consensus.

Markets

• Crypto Markets Whipsawed After Binance’s Deal To Acquire FTX Fuels Short-Lived RallyCrypto markets are on track for their worst day since June as investors are choosing to stay on the sidelines of the nascent industry while yet another centralized crypto player finds itself on the ropes.

DeFi Explainers

• What is zkSync?Every computer network is limited by its throughput capacity. How much data can it handle before becoming too congested? This problem is especially acute with a specific type of computer network: blockchains.

Tuesday

FTX Crisis

• FTX Hit By $1.2B in Withdrawals as Confidence Wavers in Exchange GiantFTX’s reserves are under siege as a wave of users withdraw their assets from the derivatives exchange after its dependency on its token FTT and its relationship with a sister company, Alameda Research, raised doubts about its financial strength.
• CZ Cranks Up Pressure on FTX With Massive Token SaleIn a major development for FTX, Binance, a rival cryptocurrency exchange, is planning to dump FTT tokens on the market, according to CEO Changpeng Zhou.

News

• Polygon Working to Become ‘True Layer 2’Polygon, the most popular of Ethereum’s many scaling solutions, is working to address one of its most persistent critiques and tap into the security and decentralization of Ethereum, according to its co-founders.
• U.S. Authorities Seize $1B Worth of Bitcoin from Silk Road HeistThe U.S. Department of Justice said Nov. 7 that it seized more than 50,000 Bitcoin stolen from darkweb marketplace Silk Road a decade ago.
• Wintermute Elbows Into Crowded DEX MarketBebop, a decentralized exchange built by crypto market maker Wintermute, launched Tuesday on the Polygon blockchain with an old-fashioned approach to an issue that has plagued DeFi for two years — delivering assets at quoted prices.

NFT News

• OpenSea Roils NFT Market With ‘Enforcement Tool’ For CreatorsNFT creators are finally getting a little financial help. At least that’s the pitch from OpenSea. On Tuesday, OpenSea, the No. 1 NFT marketplace, plans to release an “on-chain enforcement tool” that will let artists stop their work from being sold on sites that do not distribute royalty fees.

DeFi Explainers

• What Is LUNC?Following the collapse of the Terra ecosystem in May 2022, the blockchain was rebranded and hard-forked into Terra 2.0. The LUNA Classic token was a part of that rebranding, as the renamed original LUNA leftover.

💜Community Love💜

Thanking all the amazing Defiers for the support and love this week (and always)!

“There are lots of bets against SOL being taken right now, but this does not feel justified from a technology perspective,” @PhilippPieper weighs in on the #sol debate: https://t.co/XEgufe7CwF@DefiantNews #Solana #FTX #Binance



— Swarm Markets (@SwarmMarkets) November 9, 2022

🧑‍💻 ✍️ 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 Alp Gasimov. Podcast was led by Camila, edited by Alp.

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