😠 Frustration Turned to Anger For Creditor Who Foresaw Three Arrows Collapse
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FRUSTRATION On June 14, concern among executives at crypto firm Deribit turned to frustration. “As requested before,” Luuk Strijers, Deribit’s chief commercial officer, said in a Telegram group chat, “any sign of life would be appreciated.”
TARGET The target of Strijers’ ire was Kyle Davies, co-founder of Three Arrows Capital, the $10B crypto hedge fund that was then beginning its death spiral. The day before, Davies had ignored pleas from Strijers and other Deribit executives to provide a status update on a multimillion-dollar loan they’d given him, according to screenshots of the chat made public this week.
ANGER Three hours later, frustration turned to anger. “You really need to start communicating,” another executive said to Davies. “Deribit legal team is preparing for the worst now, including [a] plan of seizure of your assets and stocks. … Don’t do anything stupid and please communicate.” Now they’ll have to get in line.
Layer 2 Makes Bold Move to Increase Transaction Speed and Lower Fees
By Samuel Haig
AUDACIOUS Polygon just made an audacious move — it tapped zero-knowledge (ZK) technologies, a cryptographic breakthrough, to scale Ethereum as the network prepares its biggest upgrade ever.
HIGH-SPEED On July 20, Polygon open-sourced the code for zkEVM, its Layer 2 rollup that uses zero-knowledge technology. The rollup, a Layer 2 chain offering low-cost and high-speed Ethereum transactions, is fully compatible with Ethereum Virtual Machine (EVM) smart contracts. Polygon describes it as “the first EVM-equivalent ZK L2.”
TESTNET “You can build on Polygon zkEVM the same way you would on Ethereum,” Polygon wrote in a blog post. “You can deploy any Ethereum smart contract. Any tooling that works with Ethereum will work on Polygon zkEVM.” Polygon added that a testnet for zkEVM will soon be live.
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By Claire Gu
ORIGIN No amount of Smooth Love Potion is going to restore Axie Infinity’s healthy glow. But something else might — Origin, the most significant upgrade in the GameFi pioneer’s short history.
TOKENOMICS On April 7th, Axie Infinity quietly released the next iteration of its game in a soft launch. Axie’s legions of gamers, who came to rely on its tokenomics to make ends meet in the real world, are hoping it rejuvenates a venture that ushered in the play-to-earn model.
OPTIMISTIC Gabby Dizon, co-founder of YieldGuild, a group that supports Axie players, is optimistic the move will pay off. “The bear market will allow projects with funding to build without the noise, applying lessons learned throughout 2021, and ensure that the “fun factor” is prioritized when designing in-game experiences,” he told The Defiant.
By Owen Fernau
NEWS When will Uniswap, DeFi’s leading decentralized exchange in terms of trading volume, start to make money for itself?
FEE SWITCH It’s a question that people have asked since Uniswap V2, the second iteration of the protocol, was launched in May 2020. V2 included code to capture .05% of trading volume, but that function, also known as the “fee switch”, has never been activated.
RESPONSE A governance post and subsequent proposal by Leighton Cusack, co-founder of PoolTogether, a no-loss savings protocol, has pushed the fee switch discussion back into the spotlight. So far, the response from the Uniswap community has been overwhelmingly positive. In the first stage of Uniswap governance, UNI holders have voted “yes” with 3.5M UNI tokens with only 54 voting against as of July 20.
Is The Worst Behind Us?
Crypto markets’ recent rally reclaimed an old milestone on Wednesday, as overall market capitalization surpassed $1T for the first time since June 12.
After peaking above $3B in November 2021, crypto’s market cap has hovered around $900B during the past month. It dropped as low as $800B on June 18, according to data from TradingView.
NEWS Cryptocurrencies began trending upward last week. The top seven cryptocurrencies by market capitalization are all up at least 13% since June 12, according to data from The Defiant’s newly released charting feature.
RALLY The rally can be attributed to several things, according to Jeff Dorman, chief investment officer at crypto fund Arca: broader macroeconomic trends, positive developments within crypto and investors betting on the success of The Merge.
PIVOT “First and foremost, macro level, you’ve seen a little bit of an easing on the pressures,” Dorman told The Defiant. “You’ve seen the dollar stop going higher, you’ve seen front end yields start to come in a little bit. The [U.S. Federal Reserve] and other central banks have started to pivot a little bit towards, if not less aggressive inflation fighting [then] certainly at least more acknowledgement they might have caused too much damage to the economy and therefore would have to lower [interest] rates at some point.”
SCALING On Wednesday, a trio of unaffiliated companies said they have made progress toward building zero-knowledge protocols capable of scaling Ethereum. Ethereum sidechain Polygon released the source code for its Polygon zkEVM, short for zero-knowledge Ethereum virtual machine.
PRE-ALPHA Matter Labs, the company behind zkSync, unveiled a roadmap for zkSync 2.0 and plans to launch “the first zkEVM rollup” by year’s end. And Scroll, a company calling itself “the native zkEVM,” said it was releasing the “pre-alpha version” of its protocol.
HOLY GRAIL Polygon co-founder Mihailo Bjelic said that zkEVM takes it one step closer to the “holy grail of scaling.” A zkEVM would have “all the properties we ideally want/need,” he tweeted, “but it has been considered very hard (or even impossible!) to build!”
📢 "EthCC (Ethereum Community Conference), the largest annual European Ethereum conference created by the community, for the community, returns next week from 19-21 July 2022 in Paris, France, bringing together the top minds in Ethereum to share their vision for the future of the ecosystem post-Merge, and the next wave of dApps with real-world impact. Don't miss tuning in to the talks and workshops livestreamed.
SNOW CRASH Forty years ago Neal Stephenson enriched the dictionary with the term “metaverse.” In his novel Snow Crash, a virtual space is depicted as an escape hatch from a dystopian reality. Since then, many movies and video games have tried to capture the essence of this haven, which is now called the metaverse.
PROTOCOL “The only difference is that since the Street does not really exist — it’s just a computer-graphics protocol written down on a piece of paper somewhere — none of these things is being physically built.”
COLORFUL The 2018 blockbuster Ready Player One depicts the metaverse as a more colorful, exciting way to live within the shambled walls of poverty ruled by an iron-fisted corporation. However, none of these metaverses shows what happens when blockchain assets are mixed into the equation.
META When Facebook rebranded into Meta last December, the company provided its own definition of the metaverse.“The ‘metaverse’ is a set of virtual spaces where you can create and explore with other people who aren’t in the same physical space as you. You’ll be able to hang out with friends, work, play, learn, shop, create and more.”
It is a mistake to view bitcoin’s success as a trade-off against the creation of credit. Its future depends on it, says our columnist, a partner at Castle Island Ventures.
Tesla sold $936 million bitcoin in the second quarter of 2022, bringing its current holdings down to $218 million.
We are happy to announce that StakeWise has purchased cover for all its validators from Nexus Mutual, the leading provider of crypto protection.
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Yearn Finance Struggles to Find its Footing as Rates Rise Yearn Finance is being left behind. Even as other DeFi heavyweights such as Aave, MakerDAO, and Uniswap are outperforming Ether, the pioneering yield aggregator is losing support and value.
The Merge Set For Dress Rehearsal as Anticipation Builds for Launch Virtually all that’s left before The Merge takes place is a dress rehearsal. The final testnet deployment for the next iteration of Ethereum is set to go live on the Goerli network in three weeks. Ethereum’s devs hope the code for The Merge will undergo minimal changes between launching on Goerli and hitting the mainnet.
The Center Will Not Hold: How Select Crypto Projects are Decentralizing For almost any complex project, a certain level of activation energy is necessary to get the project off the ground. Individual leaders driving change, rapid iteration cycles, well-informed roadmaps — projects that want to move forward with some momentum naturally find it near-impossible to be decentralized in any significant way in the early days.
🧑💻 ✍️ 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.
The Defiant is a daily newsletter focusing on decentralized finance, a new financial system that’s being built on top of open blockchains. The space is evolving at breakneck speed and revolutionizing tech and money. Sign up to learn more and keep up on the latest, most interesting developments. Subscribers get full access, while free signups get only part of the content.Click here to pay with DAI (for $100/yr) or sub with fiat by clicking on the button above ($15/mo, $150/yr.