🛑Weekly Recap: DeFi Derivatives Crackdown

Happy weekend Defiers!

U.S. regulators are taking shots at DeFi, with the U.S. Commodity and Futures Commission charging three decentralized derivatives protocols maintained by Delaware-based companies. Opyn, ZeroEx, and Deridex each copped six-figure fines from the CFTC for illegally offering unregistered derivatives products to U.S. persons.

Impact Theory, a media company that raised over $30M from NFT sales two years ago, settled a lawsuit filed by the U.S. Securities and Exchange Commission SEC lawsuit last week for $6.1M. Analysts fear the SEC may have targeted Impact Theory, a non-web3-native company, to get an easy settlement establishing precedent for future enforcement actions.

In bullish news, Ark Invest and 21Shares have teamed up to file for a spot Ether ETF in the United States. The news comes as analysts increasingly tip that the approval of a spot crypto ETF may be imminent in the United States. Spot ETFs would hold underlying crypto assets, unlike the current futures ETFs which hold derivatives.

Coinbase, Aave, and other top web3 teams joined forces to launch the Tokenized Asset Coalition. The organization will promote the tokenization of real-world assets, having formed as on-chain RWAs are gaining momentum — particularly for protocol treasury allocations.

The Arcade lending protocol served up a novel example of how DeFi users can leverage RWAs this past week, with one user offering a collection of designer t-shirts as collateral for a $1.1M loan on Arcade. A lender operating on Arcade funded the loan, with the t-shirt collateral receiving a $2.5M valuation from Sotheby’s.

Starknet ranked as the second-most active Layer 2 this past week, posting a record throughput of more than 10 transactions per second on Sept. 9 amid rampant speculation the project may launch a token soon. The milestone coincides with ZkSync Era closely rivaling the throughput of the Ethereum mainnet, with Era processing 29.8M transactions in the past 30 days compared to Ethereum’s 30.2M.

Ethereum’s on-chain activity is trending down despite the bubbling activity on Layer 2, with declining volume on NFT marketplaces and decentralized exchanges pushing Ethereum transaction fees to an eight-month low. The trend rendered Ether’s burn-rate inflationary for its first continual week in 2023, with more than 4,000 ETH added to Ethereum’s supply over the past seven days.

Stake, the popular online crypto-powered casino, promptly resumed operations after suffering a $41M hot wallet exploit. Stake said customer funds were not impacted by the incident, with Stake losing a “small portion” of its crypto reserves to the hacker.

The Twitter account of Ethereum chief scientist, Vitalik Buterin was also hacked this week, with the perpetrator sharing a malicious link to a fake NFT drop. The hacker made off with around $700,000 from unsuspecting victims.

Buterin also co-authored a paper reviewing the code for Privacy Pools, a coin-mixing protocol akin to Tornado Cash allowing users to demonstrate they are not interacting with sanctioned wallet addresses.

Enjoy!