DeFi Daily

⚔️ Fei Community Up In Arms Over Dissolution Plan

Hello Defiers! Here’s what we’re covering today: News Fei Community Up In Arms Over Dissolution Plan GitPOAP Raises $4.28M To Build Out On-Chain Credentials Aztec To Beef Up Controls After Alleged FTX Warning Ethermine To Drop PoW Ethereum Post-Merge

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

Trending in The Defiant

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Fei Team Contemplates Exit

⚔️ Fei Community Up In Arms Over Dissolution Plan

Team Cites Technical Challenges And Future Regulations As Risks

By Aleksandar Gilbert

UNCERTAIN FUTURE Amid “mounting technical, financial, and future regulatory risks,” the team behind Fei, the 17th largest stablecoin by market capitalization, is ready to call it quits. 

CONTROVERSY But their proposal, which would only partially repay victims of an $80M hack and compel Fei holders to redeem their tokens for DAI, the largest decentralized stablecoin, has been met with fury from some of the project’s earliest backers. 

PUSHBACK Shortly after the proposal went online Friday, Sam Kazemian, the founder of Frax Finance and an early Fei supporter, called it “a new low for DeFi.” Fei co-founder Joey Santoro is yet to respond to The Defiant’s request for comment. 

Critics say the Fei protocol has the money to fully reimburse everyone that lost money in the April 30 hack. Instead, skeptics claim that the team has proposed a partial redemption for hack victims while retaining much of the project’s remaining capital for themselves. 


Capital Raise

💸 GitPOAP Raises $4.28M To Build Out On-Chain Credentials

Platform Lets Projects Issue POAPs To Recognize GitHub Contributors

By: Jason Levin  

FUNDING ROUND GitPOAP has raised $4.28M in a pre-seed round to grow its credentialing platform that lets projects issue POAPs to recognize contributors on GitHub, the Microsoft-owned developer platform used by over 83M users including most web3 projects. 

POAPS GitPOAP has been used to issue POAPs — NFTs created using the Proof-of-Attendance Protocol — for contributions to 617 repositories crucial to the Ethereum ecosystem, including the Ethereum protocol and client teams, popular DeFi projects like Yearn, Gitcoin and Gnosis, and infrastructure projects including Solidity and OpenZeppelin.

BACKERS The funding round was led by Inflection and Libertus Capital with participation from notable angel investors, including former Coinbase CTO Balaji Srinivasan and POAP Founder Patricio Worthalter.

ON-CHAIN REPUTATION GitPOAP hopes to build a credentialing system by bringing engineers’ professional reputations on-chain. This could be incredibly helpful for both individual engineers as well as DAOs and web3 companies that could look at these credentials when making hiring decisions.  GitPOAP is available to any open-source project.



🏛 Feds Didn’t Just Sanction Tornado — They Forgot Code is Free Speech

Legal Precedent Says Code is Protected by First Amendment

By Philipp Pieper

NEWS The U.S. Department of the Treasury’s sanction of Tornado Cash on Aug. 8 was a remarkable development. It wasn’t just the sweeping scope of the action. Pulling the plug on an entire crypto platform isn’t something you see everyday. It was the fact that the authorities blacklisted a piece of code — not a person or a corporate entity. 

This is just the latest event demonstrating the long reach of regulators, even in the decentralized precincts of the internet.

UNCONSTITUTIONAL We at Swarm, a decentralized exchange based in Berlin, agree with other leaders in crypto that sanctioning Tornado Cash is unconstitutional and a startling act of  overreach from regulators. 

FREE SPEECH In a 1996 case “Bernstein v. U.S.,” a  U.S. federal court established “source code as speech,” which means it’s protected by the First Amendment of the U.S. Constitution. It is the leading case that applies this hallowed standard to encryption issues. safely protect their customers assets then its safe to say its brand as a truly innovative proposition will be tarnished.


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DEX Overhaul On Avalanche

👀 Trader Joe Launches ‘Liquidity Book’ To Improve Capital Efficiency

Joe V2 Introduces Concentrated Liquidity

By: Samuel Haig

JOE V2 Trader Joe, the largest decentralized exchange (DEX) on the Avalanche network with 191M in total value locked (TVL), has launched its v2 iteration today.

LIQUIDITY BOOK The Joe v2 protocol introduces a “Liquidity Book”  design to improve capital efficiency through concentrated liquidity, and a variable fee that adjusts in response to market volatility to offset risks for liquidity providers. 

CAPITAL EFFICIENCY “Concentrated liquidity allows liquidity providers to capture more fees with significantly less liquidity,” Trader Joe told The Defiant. “Instead of having one pool with unbound price ranges, Liquidity Book has multiple separate bins with different prices that can be used as building blocks for a liquidity position.”


USDT Reserves

💸 Tether Attestation Report Shows 58% Drop In Commercial Paper Holdings

The Market Capitalization Of The World’s Largest Stablecoin Is Down 19% Since May 2022

By Claire Gu

ATTESTATION Tether, the issuer of the world’s largest stablecoin, USDT, has released its latest quarterly attestation report compiled by its new accounting firm, BDO Italia.

COMMERCIAL PAPER As of June 30, holdings of commercial paper fell 58% to $8.5B from the previous quarter. Meanwhile, reverse repurchase agreements rose 28x to $3B from $105M.

MARKET CAP The world’s third-largest cryptocurrency only behind Bitcoin and Ether, USDT has a market cap of $67 billion, according to CoinGecko. That’s down 19% from a peak of $83B in May 2022. 

SCRUTINY USDT is a stablecoin backed 1:1 by government-regulated fiat dollars, but its reserves have been called into question many times over the years, including by the office of the New York Attorney General (NYAG). In February 2021, Tether was ordered to provide quarterly reserve reports and pay an $18.5M settlement.


Tornado Fallout

🚦 Popular 10KTF NFT Project Checks For Sanctioned Addresses

NFT Contract Consults Chainalysis’ On-Chain Sanctions Oracle

By: Jason Levin  

NEWS 10KTF’s recent Combat Crate NFT drop contained a little twist no one expected.

WEARABLES Based around a fictional artist named Wagmi-san, 10KTF enables holders of various popular NFTs like Bored Apes, Cryptopunks and Pudgy Penguins to craft digital wearables for their avatars. 

VOLUME Linked to Beeple, the NFT artist who rose to fame last year when his ‘Everydays’ collection sold for $69M at Christie’s, 10KTF has generated over 11,200 ETH ($18M) in secondary trading volume.  As of August 19, the 10KTF Combat Crates collection has done 605 ETH in trading volume.

DISTRIBUTION In the recent Combat Crate drop, NFT collector wiltchamberlain discovered that wallets that attempt to open their crates are checked against the Chainalysis on-chain sanctions oracle. This is a method to ascertain if a wallet or contract is on the sanctions list of the U.S. Treasury’s Office of Foreign Assets Control (OFAC).


AML Compliance

🚨 Aztec To Beef Up Controls After Alleged FTX Warning

Crypto Privacy Protocol Will Tighten Limits On Individual Depositors

By: Aleksandar Gilbert  

RESTRICTIONS In an effort to deter bad actors, Aztec, a crypto privacy protocol, will tighten limits on the amount of money individual users can funnel through its platform. 

CONTROVERSY The move comes amid mounting pressure from regulators and, allegedly, popular crypto exchange FTX. 

WARNING FTX has warned its users to avoid Aztec, which it has allegedly labeled a Tornado Cash-style “mixing service,” crypto reporter Colin Wu reported Thursday night. 

CONFUSION “To be clear–this is getting garbled,” FTX CEO Sam Bankman-Fried said in a tweet Friday. “We are constantly monitoring transactions for AML compliance, and do enhanced due diligence on certain transactions, but that does not mean that any accounts were frozen.”


Market Action

📉 Crypto Plunges As Dollar Rises, Merge Hype Cools 

$608M Of Leveraged Crypto Positions Have Been Liquidated

By: Aleksandar Gilbert

PULLBACK Crypto markets plunged early Friday, erasing a two-week bull run that briefly saw Ether trade over $2,000. 

Ether is trading at $1,700 at noon New York time Friday, 9% lower than 24 hours earlier, according to data from The Defiant’s newly released charting tool. Binance, Ripple, Cardano and Solana have all posted similar drops. 

USD RALLIES “Equities, crypto, and bonds are all down,” crypto trading firm GSR wrote in its daily market brief, but crypto was “the standout loser.” 

After a month-long surge in crypto prices, “a pullback has been a little bit due,” Karl Straky, a quantitative trader at crypto market maker Kairon Labs, told The Defiant. “I think the spark that ignited it was the strengthening [U.S.] Dollar.”


Merge Drama

💥 Ethermine To Drop PoW Ethereum Post-Merge

The Largest ETH Mining Pool Will Not Support Proof-of-Work Ethereum Forks

By: Jason Levin

NEWS Ethermine, the largest Ethereum mining pool in the world, will not support a Proof-of-Work (PoW) fork following the network’s upcoming transition to Proof-of-Stake (PoS), dubbed the Merge.

ACTIVITY There are 228,121 active miners currently using Ethermine and generating a total hashrate of 262.8 TH/s, according to its website. Hashrate is a measure of the computing power being used to secure a blockchain.

SPLIT Many Ethereum miners have been pushing to keep the current PoW consensus mechanism going, as the switch to PoS will make their expensive mining rigs redundant.


The Tube

📺 HUGE Threat to NFTs!


🔗 Citi head of forex to leave bank for digital assets role: The Block

Citi’s long-standing global head of foreign exchange, Itay Tuchman, has left the bank after more than two decades. The top exec was one of the chief architects of a push into digital assets within the institution, and while his destination is not yet clear, a source with close knowledge of the matter told The Block he is set for a role in digital assets. 

🔗 Pudgy Penguins Ethereum NFTs Pump 83% As Meta, Nansen Execs Join Advisory Board: Decrypt

First launched back in June 2021, the Ethereum NFT collection often referred to as the “Pudgys” is starting to see some of its long-term efforts pay off. The minimum purchase price, or floor price, for a Pudgy Penguin PFP NFT has spiked 83% in the past two weeks and 69% over the past month, according to data from NFTPriceFloor.

🔗 Hackers Lose 5 Ether While Trying to Attack Near Protocol’s Rainbow Bridge: CoinDesk

Attackers trying to exploit Near Protocol’s Rainbow bridge lost some 5 ether, or just over $8,000 at current rates, over the weekend after automated security processes by the bridge’s validators kicked in and mitigated the threat in under 31 seconds.

Trending in The Defiant

🧑‍💻 ✍️ Stories in The Defiant are written by Owen Fernau, Aleksandar Gilbert, Claire Gu, Samuel Haig, Jason Levin, 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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