🦄 Recap: DeFi Week of Oct. 23
Hello Defiers! Happy Weekend! The world of Ethereum and its connected blockchain systems is complex and arcane, and it’s also filled with outsize personalities and loads of debate. For readers, this can be an intimidating and strange space to navigate. Th...
Hello Defiers! Happy Weekend!
The world of Ethereum and its connected blockchain systems is complex and arcane, and it’s also filled with outsize personalities and loads of debate. For readers, this can be an intimidating and strange space to navigate. That’s why The Defiant has been devoted to providing a map through the ether with deeply reported and well-written stories that reveal and explain the mysteries of decentralized finance, in addition to our daily news coverage.
As it happened, this week we produced quite a crop. For starters, check out Aleksandar Gilbert’s exclusive on L2 Beat’s scrutiny of Multichain. The bridging platform moved $80M worth of stablecoins around in unusual ways — an escrow account?— raising questions about the maneuvers in one of the most troubled segments in DeFi.
Meantime, Owen Fernau cast his analytical eye on an important emerging trend in network design — modular blockchains. His deep dive on Celestia and its $55M fundraising round takes readers into a little understood facet of DeFi. And Tarang Khaitan reported the ins and outs of USDC’s $10B decline in market cap.
Don’t miss Sam Haig’s latest installment on the reorg drama at MakerDAO, the No. 1 DeFi protocol. Sam spoke with founder Rune Christensen about his Endgame plan to break up the project and the blowback from the DeFi community. For more on that topic, see Cami Russo’s Daily Defiant video on Maker on our YouTube channel.
There was loads more: Owen Fernau’s thoughtful take on LooksRare’s controversial move to cut royalty fees for NFT creators; Sam Haig’s deeply reported story on zkSync’s highly anticipated V2 launch; and yyctrader’s smart take on the bullish turn in the markets this week.
What week would be complete with regulatory news? In the latest Defiant Podcast, Cami interviewed Gabriel Shapiro, general counsel at Delphi Labs. Never one to mince words, Shapiro talked about how the crackdown could make “100% of DeFi illegal.” Yikes. Important listening, to be sure…
Enjoy!
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Podcast
🎙️Delphi Labs' Gabriel Shapiro on How 100% of DeFi Could Become Illegal
This week on The Defiant Podcast we speak with Gabriel Shapiro, general counsel at Delphi Labs and a member of the LeXpunK group of crypto lawyers. He’s regarded as one of the most prominent voices on regulation in the crypto space, which has lately been a major point of discussion.
Recent developments include the latest draft of the DCCPA bill, Sam Bankman Fried’s industry standards proposal, the CFTC charging Ooki DAO, and the Tornado Cash sanctions. We begin our conversation with Gabriel sharing his thoughts on the current state of the crypto regulatory landscape in the U.S.
There are currently seven government bodies that govern crypto in the US. These are the SEC, CFTC, CFPB, IRS, FinCEN, OFAC, and Congress. We discuss how setting an overarching framework within which these bodies can operate could prevent them from regulating their own corners of the market.
In comparison to other DeFi projects that offer similar services, Ooki DAO is a relatively small player. With the CFTC coming after Ooki DAO, we explore the potential implications for the biggest players in the space like Aave and Compound.
FTX CEO Sam Bankman-Fried recently published a proposal detailing his beliefs on crypto regulation, which drew widespread criticism from the community. He proposed that every crypto transaction should comply with OFAC sanctions, and also that DeFi protocols and frontends should be considered separately where smart contracts can be deemed permissionless but frontends should register as brokers. Gabriel shares his thoughts on SBF’s proposal.
Defiant Video
📺 Daily Defiant: Did Multichain Use Millions in User Funds Without Permission?
📺 Daily Defiant: MakerDAO Just Voted on Plan That Changes Everything
📺 Daily Defiant: Everything you need to know about Reddit Avatar NFTs
📺 Daily Defiant: INTERPOL is training officers to fight crime in the metaverse
📺 Weekly Recap: SBF's Regulation Proposal, ETH Goes Deflationary, Controversial Aptos Launch, Vitalik's THE Protocol
Exclusive Report
🤨 Multichain Questioned About Management of Millions in User Funds
Bridging Platform’s Use of Escrow Accounts Come Under Scrutiny
Aleksandar Gilbert breaks news on the latest snafu to strike the bridging space.
Multichain, a bridging platform with $1B in total value locked, has transferred almost $80M in stablecoins and 300 Bitcoin in unusual moves that bear scrutiny, according to L2 Beat, a research project that analyzes the Layer 2 blockchain space.
Multichain transferred millions in user funds from escrow to provide liquidity elsewhere in its network, said L2 Beat, which is raising questions about the purpose of the transfers. The moves and L2’s scrutiny have not been reported before.
👉READ THE FULL STORY IN THE DEFIANT.IO👈
Emerging Trend
⚙️ Celestia’s ‘Modular Blockchain’ Attracts Investors Looking for Scaling Breakthrough
Warm Reception to Network Design Contrasts With Aptos Rollout
Owen Fernau delves into the vital yet little understood world of blockchain design in this report…
Last week, a blockchain called Aptos launched its mainnet only to be slapped with withering criticism from a crypto crowd jaded by promises of decentralization for the masses.
Two days later, a similar project called Celestia announced a $55M raise to noticeably less groaning and even a solid dose of enthusiasm.
The key difference: Celestia uses a newish design called “modular blockchain architecture” while Aptos is considered a “monolithic blockchain.” Investors and devs appear to be far more excited about the former rather than the latter.
👉READ THE FULL STORY IN THE DEFIANT.IO👈
MakerDAO Drama
🔥 Christensen Under Fire After MakerDAO Members Vote for His Reorganization Plan
Christensen Tells The Defiant the Endgame Plan Will ‘Overcome Fundamental Challenge’
In which Samuel Haig reports the latest developments in the rerog of DeFi’s No. 1 protocol…
Rune Christensen has won. But now the real contest begins. That’s the upshot of a just-closed vote taken by MakerDAO members and the backlash to its implications in the DeFi community.
The members of DeFi No. 1 protocol voted overwhelmingly in favor of making big changes to the project’s structure in line with the Endgame roadmap laid out by Christensen, MakerDAO’s founder, in May.
👉READ THE FULL STORY IN THE DEFIANT.IO👈
Deep Dive
🚀 zkSync Launches ‘Baby Alpha’ V2 as Skeptics Decry Marketing Hype
Matter Labs Says Network is First ‘Product Ready’ Rollup with ZK-powered EVM
Samuel Haig investigates the controversial rollout of the highly-anticipated iteration.
Matter Labs deployed zkSync 2.0 to the mainnet on Friday but skeptics questioned whether the iteration was ready for prime time. For weeks, Matter Labs has been promoting the Layer 2 blockchain network V2 as the first ever “product-ready” rollup with a zero-knowledge-powered Ethereum Virtual Machine. But not everyone is convinced by zkSync 2.0’s claim to have launched the first ever production-ready ZK-EVM rollups.
👉READ THE FULL STORY IN THE DEFIANT.IO👈
Opinion
🧐 Crypto Offers Plenty For the Political Right and the Left
Bitcoin Originated as Libertarian Cause But the Left Should Also Embrace the Asset
Guest writer Will Szamosszegi says surprising developments are making crypto more appealing across the divide.
For its first decade of existence, Bitcoin was largely associated with the libertarian values of freedom from state control. The digital store-of-value was born out of an online community of cypherpunks, a group of idealistic computer scientists and cryptography enthusiasts. They sought to create an internet-native currency as a means of avoiding government censorship and control within the burgeoning world of cyberspace.
👉READ THE FULL STORY IN THE DEFIANT.IO👈
Friday
- Arbitrum Co-Founder Says Ability to Process Transactions is FiniteWith its Nitro upgrade in the rearview mirror, Ethereum Layer 2 scaling solution Arbitrum is now turning its focus to research and development in hopes of solving its own major challenges long before they appear.
- LooksRare Irks NFT Creators by Dropping Mandatory Royalty FeesLooksRare, an NFT marketplace that made a big splash in its debut earlier this year, has dropped the mandatory royalty fees it previously charged to token buyers, the company said Thursday.
- Hong Kong Poised to Regulate Crypto Trading: ReportHong Kong is planning to regulate retail crypto trading in 2023 in a bid to reboot the city’s web3 sector, according to an Oct. 27 report from Bloomberg News.
- Google Ramps Up Web3 Strategy With Node Management OfferingIn a move that intensifies its commitment to web3, Google’s cloud division is launching node management services for Ethereum validators on Oct. 28, the company said.
Deep Dive
- zkSync Launches ‘Baby Alpha’ V2 as Skeptics Decry Marketing HypeMatter Labs deployed zkSync 2.0 to the mainnet on Friday but skeptics questioned whether the iteration was ready for prime time.
NFT Roundup
- RTFKT’s ‘Phygital’ Luggage Flies Off The ShelfRTFKT, the Nike-backed NFT studio behind the popular CloneX avatars, dropped a new collection on Oct. 27 in collaboration with luxury luggage manufacturer Rimowa.
Thursday
News
- USDC Market Cap Slides By $10B Since Tornado Cash BansCentre Consortium’s USDC, crypto’s second-largest stablecoin by market capitalization, is steadily losing market share.
- FTX Sees Spike In Liquidations Amid Market SurgeFTX, one of crypto’s largest exchanges processing over $10B in daily trading volume, is potentially having a record week in terms of liquidations.
- FTX Prepares Stablecoin For Launch: ReportAn FTX stablecoin is in the works and may launch in the “not too distant future,” CEO Sam Bankman-Fried told European crypto publication The Big Whale in a recent interview.
Defiant Explainers
- What Is Phantom?Phantom is the main digital wallet for the Solana blockchain. An Ethereum rival, Solana offers faster transaction speeds and more affordable transfer fees.
Wednesday
News
- Christensen Under Fire After MakerDAO Members Vote for His Reorganization PlanRune Christensen has won. But now the real contest begins. That’s the upshot of a just-closed vote taken by MakerDAO members and the backlash to its implications in the DeFi community.
- Apple Welcomes NFTs in App Store Under Tight New RulesWith an update to its App Store Review Guidelines, Apple reminded crypto proponents that regulators aren’t the only major players directing the space’s trajectory.
- UK May Soon Recognize Cryptoassets As Financial InstrumentsU.K. lawmakers have voted in favor of recognizing and regulating cryptoassets on par with existing financial instruments.
Markets
- Ether Hits Six-Week High As Strong Earnings Fuel Stock Market RallyStock markets rallied Tuesday on the back of better-than-expected earnings from General Motors, Coca-Cola and UPS. Treasury yields fell and the U.S. dollar weakened as investors cheered the latest sign of the economy’s resilience in the face of the Fed’s aggressive inflation-fighting measures.
DeFi Explainers
- What Is 0x Protocol?Ethereum is positioning itself as the open-source infrastructure for digital assets. Smart contracts that automate loans, NFT trading, play-to-earn games, exchanges are just some of the offerings designed to transform traditional finance into decentralized finance (DeFi).
Tuesday
News
- Near Protocol’s USN Stablecoin Shut Down After Suffering $40M ‘Collateral Gap’Decentral Bank, the DAO behind the Near-native USN stablecoin, is unwinding the project, it said on Oct. 24. The reason: USN has become undercollateralized by around $40M.
- Ethereum Derivative Hits Market as Concerns Mount Over ‘Significant Risk’In a move that may accelerate the growth of staked Ether in a post-Merge market, Oasis.app, a dApp that spun out of MakerDAO, launched a product letting users bolster their exposure to stETH staking yields, the venture announced on Oct. 24.
- Polkadot, Ethereum Co-Founder Gavin Wood Leaves Parity CEO RolePolkadot co-founder Gavin Wood has left his position as the CEO of Parity, the company that spearheads Polkadot development. Polkadot launched in 2020 and is the world’s eighth-largest blockchain by market capitalization.
Regulatory Report
- SBF Replies to ‘Constructive Feedback’ on His Regulatory ProposalsSam Bankman-Fried, the CEO of centralized exchange FTX and founder of trading firm Alameda Research, is trying to regain favor in the DeFi community after coming under fire for his opinions on regulation last week.
- EU Report on Crypto Regulations Draws Praise From Crypto AttorneysA report prepared for the executive branch of the European Union recommends a suite of light-touch regulations for decentralized finance that has industry observers cheering.
NFT News
- Trade Volume in Reddit’s NFTs Surges $2.5M in 24 HoursReddit’s NFT avatars are off to a surging start, with the collections driving $2.5M in trade volume over the past 24 hours, according to Dune Analytics. And the performance is a boon for Polygon, which is supporting the NFT marketplace.
- X2Y2 Dives Into NFT Lending With 0% FeesX2Y2, an NFT marketplace that did $143M of trading volume in the past month, has launched a new NFT Loan feature. The project aims to attract users by not charging any fees.
DeFi Explainers
- What Is Stacks?Bitcoin provides a global, decentralized payment network. It’s also a virtual wealth vault. But what if Bitcoin could become an ecosystem of dApps equivalent to Ethereum? Is that possible? Stacks aims to do that.
💜Community Love💜
Thanking all the amazing Defiers for the support and love this week (and always)!
anchor.fma16z’s Ali Yahya Says We’ve Entered The Golden Era Of Blockchain Applications by The Defiant - DeFi PodcastThis week on The Defiant Podcast we speak with Ali Yahya, General Partner at a16z, also known as Andreessen Horowitz. a16z is an investment giant - they’ve raised $6.7B between their crypto funds in the last two years and are the largest crypto-dedicated fund in the world. We start by discussing how…1:07 AM ∙ Oct 22, 2022161Likes37Retweets
newsletter.thedefiant.ioDeFi, NFT & Web3 Insights - The DefiantThe essential content platform for DeFi, NFT, Web3 and Open Economy insights. Join 75K+ DeFi | NFT | Web3 enthusiasts. Guides, news, analysis, opinion, and a private Discord for Defiant Premium members. Click to read DeFi, NFT & Web3 Insights - The Defiant, a Substack publication with tens of thousa…1:00 AM ∙ Oct 27, 2022138Likes69Retweets
Ali Yahya | alive.eth @alive_ethI had a lot of fun chatting with @CamiRusso and @DefiantNews about how new infrastructure developments in web3 are enabling new applications. Thanks for having me! https://t.co/0gpNVFBZul12:22 PM ∙ Oct 26, 20227Likes2Retweets
The Defiant @DefiantNews⚠️ Alpha Alert ⚠️ In this week's DeFi Alpha by @DeFi_Dad and @yyctrader1 👨🏫 🪂 Earn $ETH yield on @zksync with @argentHQ and potentially earn $ZKS airdrop 🎁 List NFTs on @blur_io to maximize your $BLUR airdrop Premium subs unlock new ⍺ every week 📥 https://t.co/WkeQdDQYos4:04 PM ∙ Oct 25, 202216Likes1Retweet
youtu.beSBF’s Regulation Proposal, ETH Goes Deflationary, Controversial Aptos Launch, Vitalik’s THE Protocol0:41 Today’s Agenda3:02 Ethereum blocks censored5:12 Controversial Aptos Launch9:00 SBF’s Industry Norms Manual21:35 Vitalik’s ’THE Protocol′24:00 ETH goes d...11:30 AM ∙ Oct 22, 202214Likes2Retweets
🧑💻 ✍️ 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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