📉 Bitcoin On Track To Extend Record Losing Streak
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Bitcoin’s Unrelenting Downtrend
By Jason Levin
Bitcoin has lost ground for eight consecutive weeks for the first time in history, and will extend its losing streak if it doesn’t reclaim $30,300 in the next three days.
Ether is trading at the lowest level relative to Bitcoin in seven months, a sign traders may be flocking to so-called digital gold and away from the world computer.
The ETH/BTC ratio is at 0.061, the lowest since October, as ETH has slumped 37% in the last 30 days, compared with BTC’s 23% slide. ETH is trading at $1,760, its lowest level since July 2021, while BTC is trading at $29,000.
Traders are flocking to the first and largest cryptocurrency amid a broad market sell-off. Investors are becoming more risk-averse as the US Federal Reserve plans to continue raising interest rates to fight rising consumer prices. On May 4, the central bank hiked rates by 50 basis points, the largest move in two decades.
Mischievous Miner Pushes Ropsten Merge Forward
By Samuel Haig
Ethereum developers foiled a “mischevious” miner’s attempt to expedite Ethereum’s transition to Proof-of-Stake on a public testnet by two weeks.
Developers expect Ethereum’s Eth2 Beacon Chain to merge with Ethereum’s mainnet this autumn. The transition, known as “The Merge”, will change the chain to Proof-of-Stake consensus and abandon Proof-of-Work miners. Ethereum’s developers want to test the merge on public testnets first, and have chosen Ropsten as their first target.
To do so, they coded a “difficulty bomb” into Ethereum and its testnets. When it explodes, mining will become so difficult that the network will be compelled to transition to Proof-of-Stake. The Ropsten bomb explodes at a specific block height, which the devs calculated would be on June 8.
But on May 26, Twitter flooded with posts flagging that the Ropsten Merge was suddenly on track to go live on May 27 — 13 days ahead of schedule, and three days before the Beacon Chain was scheduled to launch on Ropsten.
Vitalik on ‘Automated Stablecoins’
By Samuel Haig
Ethereum inventor Vitalik Buterin said that algorithmic stablecoins should be scrutinized according to how they fare under extreme market conditions, and whether they can safely wind down when hype falls away.
Despite the recent collapse of UST and LUNA, which knocked UST from its $1 peg and wiped billions from the market, Buterin argued in an essay on May 25 that automated stablecoins can make sense, while criticizing the exorbitant returns offered by those “doomed to collapse eventually.”
UST’s meltdown, which took place earlier this month after traders lost confidence in LUNA, the volatile coin that propped UST up instead of the cash reserves that back centralized stablecoins, prompted speculation that algorithmic stablecoins are fundamentally flawed.
But some algo-stables are robust, Buterin said. Buterin pointed to MakerDAO’s stable token DAI, which has already survived extreme market conditions.
Terra 2.0 Set to Rise From The Rubble
In a bid for survival that has received majority support from its community, Terra is forking its blockchain and ditching UST, the algorithmic stablecoin that collapsed in dramatic fashion two weeks ago.
“The distribution of UST has led to the development of one of the strongest developer ecosystems in crypto. The Terra ecosystem and its community are worth preserving,” Do Kwon, Terra’s embattled founder, wrote in his proposal to abandon the stablecoin and create a new blockchain. UST’s collapse “is Terra’s DAO hack moment – a chance to rise up anew from the ashes.”
The vote opened last week and ended on Wednesday. Kwon’s proposal needed a simple majority to pass, but easily crossed that threshold; wallets holding 65.5% of Terra’s governance token, LUNA, voted in favor. Addresses holding almost 21% abstained while less than 14% voted in opposition.
While the proposal garnered adequate support, many large LUNA holders remain unconvinced.
Optimism Token Incoming?
Tomorrow might be a good day for Optimism users.
The Layer-2 scaling solution for Ethereum announced that it would be dropping a token exactly a month ago on Apr. 26. Now, there’s speculation that the OP token will launch tomorrow, based on some intrepid blockchain sleuthing.
According to Twitter user olimpio, someone has been testing claim functionality by interacting with this contract, purportedly the official $OP token.
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PoolTogether To Crowdfund Legal Defense With NFTs
By Owen Fernau
The struggle for regulatory clarity in DeFi continues, and the upstart open finance space is leaning on its native tools to defend itself.
PoolTogether, one of the earliest DeFi projects launched in 2019, is a defendant in a class action lawsuit against the company as well its investors. It has turned to NFTs to raise funds to cover legal expenses. The mint went live at 7 a.m. EST and features three tiers of NFTs, priced from 0.1 ETH to 75 ETH.
According to the website, proceeds will go towards Pool Together Inc.’s legal expenses, with funds not used directly for legal expenses being retained by the company for business purposes.
The case levelled against PoolTogether Inc. may have far-reaching consequences, as it centers on a key distinction between company and protocol. “We want to set a precedent in the sense that if we win this case, we win for all DeFi protocols,” Richard Liriano, a longtime PoolTogether community member, told The Defiant.
Celebitry’s NFTs Stolen
By Jason Levin
A hacker stole Seth Green’s Bored Ape just weeks before the NFT was set to star in a TV show the Family Guy actor had written about the JPEG. But the show could air even if Green can’t get it back, Jordan Teague, co-founder of web3 law firm The Antifirm, told The Defiant.
Green said he lost his ape in a “scam GutterCats clone website” on May 17. Someone bought the stolen NFT for 106.5ETH (about $210,000), and Green wants it back so he can air his new show White Horse Tavern without battling his intellectual property rights in court.
But Teague said he needn’t worry: The intellectual property of Green’s Bored Ape wasn’t necessarily transferred away from Green when someone bought his stolen NFT.
That’s because everyone who has ever owned the NFT – including Green, the thief and its new owner – has IP rights over the NFT, Teague said. According to Teague, Green never lost his intellectual property right to his Bored Ape, even if he no longer controls the NFT.
International Stablecoins Proliferate
Tether launched a new stablecoin pegged to the Mexican Peso Thursday, marking the company’s first foray into Latin America while adding to a roster that already includes USD₮, the world’s largest stablecoin by market capitalization.
Dubbed MXN₮, the stablecoin is pegged 1:1 to the Peso, according to Tether, meaning each MXN₮ token is worth one Peso. It debuted on the Ethereum, Tron and Polygon blockchains.
“We have seen a rise in cryptocurrency usage in Latin America over the last year that has made it apparent that we need to expand our offerings,” Paolo Ardoino, Tether’s chief technology officer, said in a prepared statement. “MXN₮ can minimize volatility for those looking to convert their assets and investments from fiat to digital currencies.”
In announcing the move, Tether pointed to data showing 40% of Mexican companies would like to “adopt blockchain and cryptocurrencies in some form.” Additionally, the “multibillion-dollar flow of remittances into Mexico and the difficulties involved with money transfers, have created a unique opportunity for stablecoin usage and adoption.”
$AAVE Incentives Expire
By Samuel Haig
Aave has stopped offering incentives to Ethereum v2 users in its native token, AAVE.
At a total value-locked (TVL) of $8.57B, Aave is the third-largest DeFi protocol and the largest decentralized money market.
Aave had incentivized adoption on its v2 deployment since April 2021 by offering AAVE tokens to those that borrowed or supplied crypto. The rewards also let depositors continuously post borrowed assets as collateral, offsetting borrowing costs with the extra AAVE they earned.
But on May 22, the protocol’s rewards program expired on v2.
The crypto industry faces one of the most critical periods in its young history.
Bitcoin has lost 55% since reaching an all-time high of $69,000 in November 2021. Just a few weeks ago, the collapse of Terra, the second-largest DeFi ecosystem, left behind the most significant loss of wealth in modern history. Retail, institutional, and even corporate investors lost over $60 billion in LUNA and UST as the 7th and 10th largest tokens by market cap evaporated in a matter of days.
To make matters more complex, the correlation between crypto and stock markets reached an all-time high in 2022, the worst year for capital markets since WWII. The war in Ukraine, the highest inflation in 40 years, and current monetary policies are just a few of the headwinds favoring a bearish trend for the last six months.
The uneasiness of looking directly at another crypto winter is palpable. However, the industry has undergone an accelerated evolution since 2018, when the last winter lasted around 18 months, leaving hundreds of projects born during the ICO era frozen in our memories.
Federal Reserve Vice Chair Lael Brainard issued a reality check on those awaiting a digital dollar, saying that creating a central bank digital currency (CBDC) in the U.S. would likely take as long as five years. “It takes a long time,” Brainard said in a Thursday hearing, comparing such a project with the Fed’s still incomplete real-time payments system that has taken years to build. “It could take five years to put in place the requisite security features, the design features.”
ARK Invest and 21Shares are making another attempt to get their collaborative bitcoin exchange-traded fund through the Securities and Exchange Commission (SEC). Cboe BZX Exchange has filed a rule change proposal to list the ARK 21Shares Bitcoin ETF, putting the SEC on the clock for another decision.
European Central Bank president and Bitcoin critic Christine Lagarde has admitted she has a son who has invested in cryptocurrencies—but still says she wouldn’t touch digital assets. On the Dutch program College Tour, the banker was asked by an audience member if she owned any crypto. “No, I don’t [have any crypto] because I want to practice what I preach,” she said. “I actually have a son who invested in crypto—I follow very carefully.”
Trending in The Defiant
Outdated Node Clients Cause Blockchain Reorg on Eth2 Beacon Chain The Eth2 Beacon Chain’s validators fell out of step on May 25 after a client update boosted some clients but caused confusion among validators who hadn’t bothered to upgrade. The incident, called a blockchain reorganization, happens when nodes disagree on the order of the most recent block. Blockchains order blocks – batches of transactions – chronologically. That’s exactly what happened yesterday.
Mirror Taps Optimism for New Writing NFTs Web3 blog platform Mirror now lets writers sell their essays as NFTs. Mirror, a kind of Medium meets Web3, lets bloggers publish essays on the Ethereum blockchain, then vote on the best ones with the platform’s governance token. Now users can create NFTs of their posts, many of which ebulliently describe the future of Web3.
a16z Raises $4.5 Billion For Its Largest-Ever Crypto Fund Venture capital firm a16z has raised $4.5 billion for its fourth crypto fund, the firm announced Wednesday morning. The new fund dwarfs a16z’s previous fundraising efforts and brings the total amount of money the firm has raised for crypto ventures to $7.6 billion.
🧑💻 ✍️ Stories in The Defiant are written by Owen Fernau, Samuel Haig, Jason Levin, DeFiDad, Aleksandar Gilbert, and yyctrader, and edited by Edward Robinson, yyctrader, and Camila Russo. Videos are produced by Robin Schmidt, Alp Gasimov and Daniel Flynn. Podcast is led by Camila, edited by Alp.
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