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Markets

Three Arrows to be Liquidated as Teneo Takes Control of Assets

Opinion

Allaying Regulators’ Concerns about MEV is Doable and Necessary

Podcast

🎙Listen to the exclusive interview with Hasu here:

Video

Hot Stuff: The NGRAVE is the most secure hardware wallet ever made. But is it any good?

Elsewhere

FTX walked away from a deal with Celsius after seeing state of its finances: sources: The Block
Genesis Faces ‘Hundreds of Millions’ in Losses as 3AC Exposure Swamps Crypto Lenders: Sources: CoinDesk
OpenSea hit by data breach after email delivery partner leaks addresses: The Block
FTX seeks to acquire troubled crypto lender BlockFi: sources: The Block
An update on Aave V3 Harmony after the @harmonyprotocol Horizon bridge exploit: Aave

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DAOs

🧐 MakerDAO Jolts its Members with Bold Governance Proposals

Storied DeFi Player Struggles to Balance Growth and Decentralization

By Owen Fernau

TEST The great DAO test has begun. There were always bound to be challenges running a new kind of business that relies on democratic decision-making. Companies, after all, tend to run optimally when they have clear, hierarchical control from a senior management team and chief executive.

SEARCHING Now MakerDAO, one of DeFi’s oldest and most prestigious lending protocols, is searching for a way to balance business efficiency with the egalitarian ethos of decentralized autonomous organizations.

FRAUGHT Its effort may very well show the way for the rest of the DAO community. If the actions this week are any guide, it’s going to be a complicated and fraught process.

PARALYSIS “The status quo is not working,” tweeted Sam MacPherson, the author of a proposal that would have formed a “Growth Task Force” at MakerDAO and a member of the Protocol Engineering Core Unit. “The DAO is not currently set up to make high level decisions which is leading to decision paralysis or less informed parties making sub optimal calls.”

*LOVE-001 would give the new Core Unit uniquely powerful input when onboarding new collateral.*

👉READ THE FULL STORY IN THE DEFIANT.IO👈

Crypto Funds

🌊 Three Arrows to be Liquidated as Teneo Takes Control of Assets

By Aleksandar Gilbert

ASSETS In what is believed to be the biggest failure of a crypto fund of its kind, Three Arrows Capital, the $10B hedge fund, will be taken over and its assets distributed among creditors after a court in the British Virgin Islands ordered its liquidation Monday, according to a person familiar with the matter.

LIQUIDATOR Two employees at Teneo, a New York-based consulting firm, have been appointed to handle the liquidation, according to the source, who was granted anonymity to discuss the sensitive deal. In the British Virgin Islands, a U.K. overseas territory in the Caribbean Sea, an appointed liquidator takes control of the company in question.

CREDITORS Liquidation is the process of closing a company and distributing its assets among creditors. In recent weeks, Three Arrows, a onetime high-flying institution that evangelized for a “super-cycle” in crypto, has suffered heavy losses from major positions in Terra’s failed UST stablecoin, Grayscale Bitcoin Trust, and Lido’s staked ether.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

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Blockchains

🔴 Polkadot to Form ‘Fellowship’ of Tokenholders as Part of Major Upgrade

By Samuel Haig

UPGRADES Gavin Wood, the founder of Polkadot and former CTO of Ethereum, said major upgrades are coming to the governance underpinning Polkadot and its experimental, sister-chain Kusama.

FELLOWSHIP Announced during the Polkadot Decoded conference, the Gov2 upgrade will replace the “first-class citizens” of Polkadot’s existing Council and Technical Committee with a “Polkadot Fellowship” to enable much broader participation in the governance process.

SMALL DEPOSIT Becoming a Fellowship candidate member will be “as easy as placing a small deposit,” the Polkadot team said, adding that the new system could allow tens of thousands of tokenholders to participate in governance. Fellowship members can initiate and participate in as many referendums as desired under the new system.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

Exploits

🥷🏻 North Korea’s Lazarus Group Linked to $100M Harmony Bridge Hack

By Samuel Haig

LINK North Korea’s notorious state-backed hackers, Lazarus Group, may have been behind last week’s $100M attack targeting Harmony’s cross-chain bridge, according to blockchain intelligence firm, Elliptic.

BRIDGE On June 23, Harmony, a Layer 1 blockchain, reported that a hacker had stolen nine-figures worth of assets from its cross-chain Horizon bridge, which enables assets to move between Harmony and the Ethereum and Binance Smart Chain networks. Cross-chain bridges have been a prime target for exploits.

PERP The perpetrator took a dozen different assets and quickly consolidated the loot into Ethereum using the Uniswap decentralized exchange. They then began using the blockchain mixer Tornado Cash to obfuscate and anonymize the transaction flow of many of the stolen assets from June 27.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

Layer 2s

⛽️ Arbitrum Pauses Odyssey as Gas Prices Spike

By Owen Fernau

HEAVY LOAD Arbitrum, the Layer 2 scaling solution, has abruptly paused its Odyssey program after it launched last week. The project cited a heavy load of transactions and spiking gas fees as reasons for the decision in its Twitter thread. Sysyphus, an influential voice on Twitter, highlighted that a swap on Arbitrum briefly cost more in gas than on Ethereum.

FASTER As a Layer 2, Arbitrum’s primary value propositions are transactions that are cheaper and faster than those on Ethereum. So if transaction costs are spiking over Ethereum’s, Arbitrum isn’t working as intended.

PROOFS According to Arbitrum, the program will be resumed once the team behind the L2 ships Nitro. Right now the L2 “throttles” network capacity, but with Nitro, which allows fraud proofs to be run on WASM code, those throttles will be released.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

Opinion

🏛 Allaying Regulators’ Concerns about MEV is Doable and Necessary

Block Validators and Block Builders To Play Key Role After The Merge

Guest writer John Jefferies unpacks the implications of the BIS’s take on Maximum Extractable Value…

MECHANISM On Jun 16, 2022, the Bank for International Settlements (BIS) released a well-researched bulletin titled Miners as intermediaries: extractable value and market manipulation in crypto and DeFi. This bulletin provides a good overview of Ethereum’s Maximum Extractable Value (MEV) mechanism. MEV is the additional profit delivered to miners to prioritize the ordering of blockchain transactions within a given block.

MANIPULATION The bulletin compares subtle forms of transaction order manipulation on the blockchain to broader market manipulation, equating MEV to insider trading. Yet, both of these comparisons stretch the similarities.

ARBITRAGE Most MEV is a result of well-informed investors and high-frequency traders taking advantage of arbitrage opportunities. Arbitrage is natural in most markets and is the mechanism that many economic systems use to achieve equilibrium. Arbitrage communicates price information across markets.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

The Tube

📺 Hot Stuff: The NGRAVE is the most secure hardware wallet ever made. But is it any good?

Elsewhere

🔗 FTX walked away from a deal with Celsius after seeing state of its finances: sources: The Block

Crypto exchange operator FTX looked at making a deal with troubled crypto lender Celsius but ultimately walked away, two people with knowledge of the matter told The Block.

🔗 Genesis Faces ‘Hundreds of Millions’ in Losses as 3AC Exposure Swamps Crypto Lenders: Sources: CoinDesk

Cryptocurrency market maker and lending firm Genesis Trading is facing potential losses into the “hundreds of millions,” according to three people familiar with the matter.

🔗 OpenSea hit by data breach after email delivery partner leaks addresses: The Block

NFT marketplace OpenSea has suffered a data breach after an employee at its email delivery partner leaked user data.

🔗 FTX seeks to acquire troubled crypto lender BlockFi: sources: The Block

Crypto exchange operator FTX is seeking to acquire BlockFi outright, The Block has learned.

bgdlabs @bgdlabs

An update on Aave V3 Harmony after the @harmonyprotocol Horizon bridge exploit

Harmony Horizon bridge exploit. Consequences to Aave V3 HarmonyTL;DR The Ethereum <> Harmony bridge has been exploited and as consequence, Aave V3 Harmony is potentially affected. We open this thread for the community to discuss and decide about different aspects, and for us (BGD) to help with all different technical details being/to-be considered. Context…governance.aave.com

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Puncturing the Hype About Illicit Finance in Crypto From the BBC to Reuters, the world’s leading mainstream media outlets steadily deliver provocative headlines implicating cryptocurrencies as primary facilitators of illicit activity.
Optimism’s TVL Doubles as Trading Activity Surges on Layer 2s Adoption of Ethereum’s top two Layer 2 chains are gaining traction as lower ranked rivals are losing market share. Optimism, Ethereum’s second-largest L2 by total value locked (TVL) with $741.5M, rocketed to new highs at the end of May, tagging a record $1.02B on June 2, double its level on May 28, according to L2beat.
Fear and Reveling in Goblintown: A Savage Journey into NFT Land Just before midnight in Hell’s Kitchen, we snuck out the backdoor at Terminal 5 and boarded a slapdash, wooden bus befitting mythical creatures associated with dirt, bugs, and the macabre. We were, after all, among the “VERY few” who’d been chosen to go down, down to Goblintown.

🧑‍💻 ✍️ 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, Daniel Flynn, and Alp Gasimov. Podcast was led by Camila, edited by Alp.

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DeFi, NFT & Web3 Insights - The Defiant

🧐 MakerDAO Jolts its Members with Bold…