🦄 Recap: DeFi Week of Oct. 9

Hello Defiers! Happy weekend!

It was a rough and tumble week in DeFi. Drama was busting out all over the place. First, there was a spate of exploits across the space. Tarang Khaitan covered the scramble by projects to negotiate with hackers and settle bounties. His piece on Mango Markets took us inside the action.

Meantime, Sam Haig continued his peerless coverage of the operatic tumult inside SushiSwap, the storied DEX that thought it had finally laid its troubles to rest with the election of new head chef Jared Grey. If only! No sooner did Grey settle in than Crypto Twitter exploded with wild allegations from a former colleague. Somewhere along the way intimate relations with a, uh, horse, came into the picture. Sam covered the initial news and then Grey’s detailed rebuttal to the charges. Cami Russo also reported on the episode on The Defiant YouTube channel with a Quick Take.

Back in the real world, Aleksandar Gilbert reported from Devcon Bogota on blockchain startup nxyz’s $40M funding round. Aleks also delivered an excellent analysis of the state of play in Lido’s staking operations. The upshot: Lido is flooding Layer 2s with staked ETH thanks to incentive programs.

Speaking of incentives, be sure to check out Owen Fernau’s report on Curve DAO’s approval of permissionless rewards. It was one of the hottest stories on The Defiant this week. Owen also reported on the news that the SEC is probing Yuga Labs.

Rounding out the week, Cami Russo spoke with Alex Zhang of Friends with Benefits, an influential DAO for creatives, in this week’s podcast. Alex shared his insights on the blooming of projects in web3.

Enjoy!

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Podcast

🎙️Friends with Benefits’ Alex Zhang on Building Web3 Communities That Endure

This week’s Defiant Podcast is from a conversation I had with Alex Zhang at the Unfinished Live conference. Alex is the mayor of Friend with Benefits, or FWB, a prominent DAO of creatives.

Friends with Benefits started as an experiment when its founder minted and airdropped the FWB token to an early community. FWB holders gained access to private chat groups on Discord. From there, it developed into a community of thousands of members, live events and even proprietary software. Alex explains the evolution and growth of Friends with Benefits.

A common criticism of Web3 is that it over-financializes communities and social media. To join Friends with Benefits, a user must hold 75 FWB in their Ethereum wallet. At its peak, membership would have set you back $14,000. At current prices, it costs roughly $600, which can still be considered a prohibitive price for most people. Alex shares his thoughts on this exclusionary feature of Web3.

In the past two years, we’ve seen a boom in Web3 communities sprouting from DeFi, DAOs, and NFTs. As we’re still in an experimental phase in this regard, meaning there are no strict rules and practices, we discuss how Alex finds running a DAO in this environment, given the less hierarchical and structureless nature found in Web3 communities.

Defiant Video

📺 Core US Inflation Rises to 40-Year High, What Does it Mean For Crypto?

📺 Quick Take: 4 DeFi Projects Get Hacked in 1 Day

📺 Quick Take: Shocking SushiSwap CEO Horse & Fraud Allegations

📺 Quick Take: CZ says crypto is about “security” but BSC gets hacked anyway

DEX Drama Part 1

😳 SushiSwap’s Grey Hit By Wild Allegations of Impropriety

DEX’s New Head Chef Rejects ‘Untrue’ Accusations of Ripoffs and Bestiality

In which Samuel Haig reports on the bizarre new imbroglio at SushiSwap…

Less than a week after SushiSwap sought to end a period of turmoil with the election of Jared Grey as head chef, the decentralized exchange was engulfed in controversy yet again as a series of extraordinary allegations were leveled at its new hire.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

DEX Drama Part 2

🍣 SushiSwap’s Grey Rebuts Accusations Made ‘Without Any Substantial Evidence’

Jared Grey Lays Out Detailed Defense of His Record as He Takes Up Post at DEX

Samuel Haig reports on Grey’s response to online salvo…

Jared Grey has said his piece. And yes, he addressed the horse. In a detailed response published on Thursday, SushiSwap’s new head chef rejected the extraordinary allegations leveled against him this week and defended his record and reputation.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

Devcon Dispatch

🤺 ‘We’ve Got To Fight Until The Entirety of Ethereum Gets Burned Down’

Crypto Influencer Eric Wall Talks Censorship Resistance At Devcon

By Aleksandar Gilbert

When investor and social media star Eric Wall took the main stage at Ethereum’s marquee conference in Bogota, Colombia Thursday afternoon, he came with a warning.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

Exploit Episodes

🦹🏻‍♂️ Attacker Behind $116M Mango Markets Exploit Eyes $65M Bounty

In What May Be A New Record For DeFi, Mango Markets, Temple DAO and RabbySwap All Exploited On Oct. 11

In which Tarang Khaitan delves into the spate of hacks in DeFi this week…

Mango Markets, a margin trading and lending platform on the Solana blockchain, was exploited to the tune of $116M on Oct. 11, the venture said on Twitter. The attacker managed to inflate the price of the platform’s native MNGO token and drain all the liquidity from the protocol, according to Joshua Lim, Head of Derivatives at Genesis Global Trading.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

Deep Dive

🌊 Lido Floods Layer 2s with Staked ETH After Launching Incentives Program

Lido Scrambles to Counter Coinbase and Rocket Pool as Staked ETH Market Heats Up

Aleksandar Gilbert plunges into the staking pool to report on the latest with Lido…

Lido is flooding Arbitrum and Optimism, Ethereum’s most popular scaling protocols, with its staked ETH tokens. And it’s set aside half a million dollars in incentives to do so. Less than a week after Lido announced its integration with Arbitrum and Optimism, the Layer 2 blockchains have received a combined $9M in wstETH.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

Opinion

🧐 Why MEV Matters and Other Post-Merge Revelations

PoS Ethereum Will Create Hidden Value But Block Construction is Vital

Guest writer Matt Cutler walks us through the many changes in Ethereum’s blockchain since the shift to Proof of Stake…

The Merge was undoubtedly the most significant Web3 network upgrade to date, with implications that go beyond switching consensus mechanisms and reducing energy consumption. In fact, this upgrade was the first step towards a future in which your Ethereum wallet pays you to use it.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

DeFi Explainers

🤔 What Is a DAO?

A Step-by-Step Guide to the Cooperative Entities at the Heart of DeFi

Rahul Nambiampurath lays out the mechanics of these fascinating models.

Since the dawn of commerce, business leaders have been coping with the problem of governance. Who has the right to run a company, and under what conditions? How much influence should shareholders have over a company’s strategic direction? Or for that matter, customers? And what role should boards of directors have in making sure companies operate in ethical and productive ways?

👉READ THE FULL STORY IN THE DEFIANT.IO👈

Friday

News

• Uniswap Votes to Launch V3 on zkSyncActing on a governance proposal by students from the University of Pennsylvania, Uniswap v3, the top decentralized exchange by trade volume, will deploy on the zkSync Layer 2 network following a vote on Oct. 14.
• Tether Drops Commercial Paper From USDT ReservesTether, the company behind USDT, crypto’s largest stablecoin with a market capitalization of $69B, has completely eliminated commercial paper from its reserves.
• Uniswap Fulfills its Unicorn Destiny with $165M Funding RoundThe DeFi company famed for its unicorn logo has finally become a real life unicorn. On Thursday, Uniswap Labs, the company behind the leading DEX Uniswap, raised a whopping $165M in a Series B fundraising round, according to an announcement.

Devcon Dispatches

• ‘We’ve Got To Fight Until The Entirety of Ethereum Gets Burned Down’When investor and social media star Eric Wall took the main stage at Ethereum’s marquee conference in Bogota, Colombia Thursday afternoon, he came with a warning.
• Solana NFT Marketplace Magic Eden To Make Royalties Optional In a controversial move announced Friday, Magic Eden, the largest marketplace for non-fungible tokens on Solana, said it would make artist royalty payments optional.

NFT Roundup

• Anthony Hopkins’ Metaverse Debut Sells Out in Seven MinutesOscar-winning actor Anthony Hopkins made his first foray into NFTs on Thursday, and collectors snapped up the 1,000 NFTs on sale within a matter of minutes.

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• Arrakis Loses Mojo as User Pulls $300M From Vault ProviderArrakis Finance, an automated liquidity management protocol, is sliding down the DeFi rankings.

DeFi Explainers

• What Is TVL?Total value locked (TVL) is one of the key indicators to help us understand the value of a smart contract protocol. Smart contracts recreate traditional finance by codifying contractual logic and automating it.

Thursday

News

• Coin Center Says Biden Administration ‘Criminalized’ Open Source CodeThe crypto industry’s fight back has begun. Coin Center, a non-profit advocacy organization representing the web3 industry in Washington D.C., sued the U.S. Treasury Department on Wednesday for sanctioning the smart contracts of decentralized crypto mixing protocol, Tornado Cash.
• SushiSwap’s Grey Rebuts Accusations Made ‘Without Any Substantial Evidence’Jared Grey has said his piece. And yes, he addressed the horse. In a detailed response published on Thursday, SushiSwap’s new head chef rejected the extraordinary allegations leveled against him this week and defended his record and reputation.
• Blockchain Indexing Startup nxyz Raises $40M In Funding Led By ParadigmIt isn’t sexy. It isn’t a brand-new blockchain or a celebrity-backed NFT collection. But five-month-old crypto firm nxyz has lined up a host of prominent venture capital firms behind its promise of “fast, reliable blockchain indexing.”

Special Report: Exploits

• Attacker Behind $116M Mango Markets Exploit Eyes $65M BountyMango Markets, a margin trading and lending platform on the Solana blockchain, was exploited to the tune of $116M on Oct. 11, the venture said on Twitter.

Opinion

• Why MEV Matters and Other Post-Merge RevelationsThe Merge was undoubtedly the most significant Web3 network upgrade to date, with implications that go beyond switching consensus mechanisms and reducing energy consumption.

DeFi Explainers

• What Is Lido?Proof of stake blockchains like Ethereum or Solana rely on economic staking instead of computational Proof of Work to execute transactions and secure the network. The problem is, staking makes funds illiquid when they are locked-in for this purpose.

Wednesday

News

• SEC Probing Yuga Labs’ Issuance of NFTs and Token: ReportYuga Labs Inc., the NFT juggernaut behind the Bored Ape Yacht Club and other splashy collections, is being investigated by the U.S. Securities and Exchange Commission, Bloomberg News reportedTuesday.
• France’s State Energy Giant Loves EthereumIn a surprising development given government skepticism toward cryptocurrencies, Electricite de France, the French state-owned energy supplier, is operating more than 150 Ethereum nodes, according to a report from The Big Whale, a web3 news outlet.
• Curve DAO Votes To Enable Permissionless RewardsCurve Finance, a decentralized exchange (DEX) that is DeFi’s third-largest protocol with $6B locked in its smart contracts, has concluded a governance vote to allow any project to add token rewards to its factory-deployed gauges.

DeFi Explainers

• What Is a DAO?Since the dawn of commerce, business leaders have been coping with the problem of governance. Who has the right to run a company, and under what conditions? How much influence should shareholders have over a company’s strategic direction? Or for that matter, customers? And what role should boards of directors have in making sure companies operate in ethical and productive ways?

Tuesday

News

• Lido Floods Layer 2s with Staked ETH After Launching Incentives ProgramLido is flooding Arbitrum and Optimism, Ethereum’s most popular scaling protocols, with its staked ETH tokens.
• Ether Turns Deflationary as Experimental Project Pushes Up Gas PricesWell, that didn’t take long. Less than a month since The Merge, ETH supply has dropped by more than 2,000 digital tokens, according to ultrasound.money.
• MakerDAO To Deploy $500M In Treasuries And Corporate BondsThe largest DeFi lender will soon invest up to $500M of USDC into U.S. treasuries and corporate bonds. A $1M test transaction has already been initiated with the full amount to follow shortly.
• SushiSwap’s Grey Hit By Wild Allegations of ImproprietyLess than a week after SushiSwap sought to end a period of turmoil with the election of Jared Grey as head chef, the decentralized exchange was engulfed in controversy yet again as a series of extraordinary allegations were leveled at its new hire.

News Analysis

• Mad about the Celsius Customer Dox? Pray Your CeFi App Doesn’t Go BankruptAt least they didn’t include home addresses. Bankrupt crypto lender Celsius disclosed the names and transaction histories of its customers in a court filing Wednesday, infuriating the privacy-obsessed crypto community, but drawing a shrug from experts who say that kind of disclosure is common in bankruptcy proceedings.

Exploits

• Hacker Pockets $677,000 and Free Pass to Settle TransitFinance ExploitIn a deal that demonstrates the mounting influence of bounties in crypto exploits, TransitFinance, a cross-chain swap aggregator, announced on Oct. 10 it had reached an agreement with a hacker behind the $29M exploit of the protocol last week.
• Seven Bored Apes Worth $700K StolenYet another holder of Bored Ape Yacht Club (BAYC) NFTs has fallen prey to a phishing scam. The latest theft resulted in the loss of seven of the NFTs, each worth over $100,000 at current floor prices.

DeFi Explainers

• What Is Aurora?More than half the traffic in the decentralized finance (DeFi) ecosystem runs is on Ethereum. This includes lending dApps, exchanges, blockchain games, and NFT marketplaces. So, how does a competitive blockchain challenge such a powerful first-mover advantage?

💜Community Love💜

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

I am traveling today so I just listened to a bunch of the @DefiantNews podcasts.



First up was Starkware, excellent listen that goes into simplified details of how their stack works. Has me bullish on Starkware.https://t.co/K6yPfPJBpZ



— joseph.eth is hiring devs senior fullstack ✨ (@josephdelong) October 4, 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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