Linfeng (Daniel) Z.

A new insightful paper by ICRIER on cryptoasset regulatory choices for consumer protection. "As a significant player in the burgeoning crypto landscape, India must proactively address concerns around investor protection by formulating a robust regulatory framework," the authors say. I couldn't agree more. Like many other G20 countries, India urgently needs a comprehensive regulatory framework for crypto assets that protects investors and supports innovation. The government must also allow self-regulation among responsible and compliant Indian players. Read the full report here: https://bit.ly/4cvpGO2 Mansi Kedia, Sruthi Vanguri, ICRIER

25

This week, our newsletter takes a bite into MEV. > MEV (Maximum Extractable Value) is the value captured by third parties on blockchain networks like Ethereum through transaction reordering, mainly from arbitrage, sandwich attacks, and liquidations. > MEV can improve network efficiency but also harms users and increases costs. Pre-Merge, MEV extraction reached $700M. > Searchers bundle and order transactions, competing to include them in blocks, with most MEV value eventually accruing to block producers (validators). > Sandwich attacks, while harmful, make up a small share of MEV profits but involve large transaction volumes. > As markets become more efficient, MEV will benefit validators through priority fees, supporting Ethereum's security and ETH stakers. Full newsletter in links below.

1

2 Comments

🚨Can UwU Lend Recover From a $19.5M Hack?🔍 DeFi lending protocol UwU Lend was targeted in a rapid $19.5 million theft, executed within just six minutes. This breach underlines the persistent security issues plaguing the DeFi sector. UwU Lend immediately paused its operations following the attack, undertaking significant efforts to remedy the damage and secure its platform. How will it regain user trust? Despite the significant heist, UwU Lend's total value locked astonishingly soared by 135% in a day. What's driving this surge amid the turmoil? Read more below: #recruitment #crypto #blockchain #web3

6

4 Comments

Don't miss this from ICBLA Senior Fellow Daniel Payne! As a Senior Fellow for ICBLA and a lecturer on blockchain compliance, I'm excited to share Daniel Payne's latest article on the recent $25 million Ethereum hack. Dive into the complexities of this case and understand why ETH's value soared despite serious allegations. 🧐 Enhance your knowledge on blockchain and cryptocurrency compliance with our comprehensive courses! #CryptoNews #Ethereum #Blockchain #ICBLA #CryptoLawEducation #ETH #CyberSecurity #Regulation #Innovation

2

Ethereum's scalability challenges have long been a focus, with Layer 2 (L2) solutions emerging as a prominent solution. L2s execute transactions off-chain while posting data proofs back to Ethereum, reducing mainnet congestion. The Dencun Upgrade introduced blob storage (EIP-4844), significantly lowering data availability costs for L2s and making transactions cheaper. While significant progress has been made, true decentralization in Optimistic Rollups is still evolving. Key components like permissionless fraud proofs are under development, and decentralized sequencers—which enhance trustlessness and reduce central points of failure—are actively being worked on by projects like Optimism and Arbitrum. Ultimately however user and developer adoption will determine which L2 thrives. Which L2 do you believe will succeed?

30

1 Comment

Lessons from Eigenlayer's Stakedrop Saga in the Crypto Space In the fast-paced world of #cryptocurrency, few events go unnoticed, especially when they involve significant players like #Eigenlayer. Recently, Eigenlayer, #Ethereum's second-largest protocol, made headlines with its announcement of a #stakedrop. However, what was intended as a strategic move to engage the community & bolster participation has instead sparked controversy & raised pertinent questions about transparency & fairness within the DeFi ecosystem. 🔎 The Stakedrop Details: Eigen Foundation's decision to allocate 15% of EIGEN's token supply to the community seemed promising at 1st. However, the inclusion of a non-transferable token structure & aggressive geo-restrictions left many stakeholders feeling marginalized & frustrated.The imbalance with only 5% tokens reserved for early users from Season One, further increased tensions. ❌ Snapshot Surprise & Suspicious Activity: The unexpected snapshot taken on March 15, 2024, caught stakers offguard, leading to accusations of a lack of transparency & fairness. Moreover, reports of suspicious wallet activity, particularly a surge in movement just before & after the snapshot, fueled allegations of insider trading. Such incidents raise concerns about the integrity of the stakedrop process & the safeguarding of investor interests. ❌ Geo-Restrictions & Community Reactions: Eigenlayer's initial allowance of deposits from users in banned jurisdictions, later revealing their ineligibility for stakedrop rewards, underscored a glaring lack of accountability. This, coupled with overwhelmingly negative reactions from the community, reflects a broader sentiment of distrust & dissatisfaction. Users' concerns over perceived rigged elements, unfair token allocations, & high fees highlight the importance of fostering transparency & trust within the crypto community. 💡 A Stark Warning Against Misleading Jargon: Emin Gün Sirer's critique of projects like Eigenlayer emphasizes the need for clarity & transparency in #blockchain #innovations. The use of complex jargon, he warns, can obscure substantive progress & mislead stakeholders about a project's true potential & utility. This serves as a timely reminder that real innovation should prioritize simplicity and clarity. 🛡 The Implications for the DeFi Sector: Prolonged lock-up periods, minimal returns & the acceptance of deposits from banned jurisdictions signal potential instability within the broader #DeFi ecosystem. Such actions could precipitate a crisis of confidence, leading to market-wide repercussions such as depeg events or panic selling. Eigenlayer's handling of its stakedrop has brought to light critical issues surrounding community values & transparency within the DeFi space. As investors and users, it is imperative to remain vigilant & critically assess platforms' policies and inherent risks. More details: Monet Work Abhay Mishra, Anuj Kumar, Haedarah Ali, Arindam Dawn, Saumya Singh

22

Will Do Kwon have fun being poor? The Financial Times reports: "Terraform Labs, the company behind the $40bn collapse of TerraUSD digital tokens in 2022, has agreed to pay $4.47bn in a case brought by the US Securities and Exchange Commission, making it the latest major cryptocurrency company to pay a hefty US penalty. The collapsed stablecoin operator and its chief executive, Do Kwon, were found liable by a New York jury in April in a civil case brought by the SEC, which accused them of arranging a cryptocurrency fraud that led to billions of dollars in losses." The civil penalty will essentially ensure that Terra is dead as a dodo: "“The entry of this judgment would ensure the maximal return of funds to harmed investors and put Terraform out of business for good,” the SEC said in a letter filed with the court. As part of the agreement proposed by the SEC to the court, Kwon will pay $204mn. He is also banned from serving as an officer or director of any public company." 🤔 I wonder who's going to have fun being poor now? Nor is his wealth his only (or even most immediate) concern: "Kwon is wanted by the US and South Korean authorities on separate criminal charges, but remains in Montenegro amid a legal fight over his extradition." So far the appetizer to his legal troubles seems sour but I wonder if the main course wouldn't be worse: downright bitter. But perhaps he will learn to look for the silver lining (after all, rose tinted glasses seem to come as standard issue for crypto participants): prison will spare him the cost of paying for food and lodging?

17

3 Comments

How stablecoins will eat payments, and what happens next ? Sticking with the theme of #stablecoins following the release of my #couchonomics episode with Dante A. Disparte from Circle (he will 👍 this article 👇 for sure) Expensive payments especially harm low margin businesses and cost sensitive users. For this reason, international payments, #remittances and even coffee ☕️ shops are the wedge use cases that will be the first to adopt Stablecoins at scale. Stablecoins could usher in a world of free, extendable, and instantaneous payments. As Patrick Collison, CEO of Stripe has noted, stablecoins are “room-temperature superconductors for financial services.” They will allow businesses to pursue new opportunities that could not otherwise survive the burden of incumbent payment rails or the friction of traditional gatekeepers. In the short term, stablecoins will create a structural change in financial products as #payments become free and open. Incumbent payments companies will seek new ways to #monetize, either by taking a cut of #yield or by selling services that are complementary to this newly commoditized #platform. As these #legacy businesses recognize the changing landscape, #entrepreneurs will create new solutions that will help these businesses take advantage of stablecoins. In the longer term, as stablecoins are adopted and the #technology improves, startups will seize the opportunities that are native to a world with free, #frictionless, and #instantaneous payments. Those startups will be founded today, unlocking new and unexpected scenarios and further #democratizing access to the opportunities afforded by the global financial system. Read the full article from Andreessen Horowitz here: https://lnkd.in/dD2bais9 Couchonomics with Arjun

22

2 Comments

The highly-anticipated Ethereum-compatible Layer 1 Monad has begun rolling out its testnet as part of a phased release, a source told The Block. Monad claims to have optimized the way Ethereum works to provide greater throughput — designed to offer up to 10,000 TPS with a one-second block time. However, this may be more challenging for node operators, with hardware requirements around twice as large compared to the main Ethereum blockchain. https://lnkd.in/ebaF7GV4

4

cheqd is the #VISA & #Mastercard of the Internet, a global trust infrastructure for persistent, immutable and verifiable data. cheqd cheqd is not a platform or an application, it is where platforms and apps build upon at the application layer. Like the analogy of cheqd being a VISA or Mastercard in the beginning, it brings together all these organisations and users into a global trust & governance framework. We have physical copies of our debit cards; we have physical copies of our driver's license. We have eftpos terminals / PoS where customers will tap a random piece of plastic that gives "Approved" which is the satisfactory acceptance of that monetary transaction - without a verified card that resolves with VISA/MC you will not get a successful transaction. But no one thinks about this, payments are that fast via NFC these days sometimes I don't even see the amount before my phone has reached consensus of the transaction - mostly coffee So this brings me to - why don't I have a digital way of verifying who I am without asking multitudes of questions or giving up my Personal Identifiable Information??? It is 2024. So, we need Selective Disclosure & Zero Knowledge Proofs - if we can get proof of a green tick trusting we will receive money, then we can get a green tick verifying the requested attributes of an individual's credentials, without exposing them. This brings me to the: https://gan.foundation/ Global Acceptance Networks, like VISA & MC are what build the foundations of today's payment infrastructure we use every, single, day. We don't interact with siloed ecosystems, applications or platforms - we operate with globally accepted standards and protocols / infrastructure. Some may call this Critical National Infrastructure. So? We need a Global Trust Framework for not just "Decentralized Identity" but for probably best described as paper processes that still exist today because our accounting methods have not caught up when it comes to trusted, verifiable data. Some may call this "Triple Entry Accounting" aka - the creation of #bitcoin, an immutable, persistent, public permissionless decentralized ledger. There are many narratives around what is being developed on open specifications like Decentralized Identifiers and Verifiable Credentials, one of those that has hit lightspeed is Artificial Intelligence #AI With the advance and public access to the endless AI available to users, it is absolutely critical that we establish standards that major tech companies need to come together and steer to make sure #GenAI is not used as misinformation activities, or fake news / deep fakes scams and frauds. And that is exactly what is happening!

17

6 Comments

Your USDT can be frozen right in your wallet. How is this possible? In 2023, Tether (the issuer of USDT) made an important announcement that shook the crypto community. The company froze 161 addresses under OFAC sanctions and continued close cooperation with regulators worldwide. 🔘 How does the freezing of USDT and USDC work? Despite their popularity, stablecoins USDT and USDC are managed by centralized companies — Tether and Circle. This means they have full control over issuance, transactions, and even freezing funds at specific addresses. This practice isn’t new. The first freezes by Tether date back to 2017, and the number of frozen addresses has increased each year. For example: Tether has already frozen 1,820 addresses with assets totaling $1.27 billion. Circle has frozen 241 addresses with $80 million. (A more modest amount) 🔘 Why are addresses frozen? Sanctions and fraud prevention. Companies comply with regulatory requirements, such as those from OFAC and the U.S. Department of Justice, freezing funds related to criminal activity. Reputation protection. Tether responds to reports of scams or mistakes. In 2020, they reversed a $1 million transaction mistakenly sent by a user. Maintaining relationships with regulators. Companies strive to keep good relations with regulators, especially in the U.S. In 2023, Tether spent around $700,000 on lobbying and holds more U.S. debt securities as reserves for its stablecoin than countries like Australia or Spain. 🔘 Why is this dangerous? While the freezing feature helps protect against fraud and illegal activity, it contradicts the principles of decentralization. Cryptocurrencies were designed to be an independent system, where decisions are made based on strict algorithms, without human intervention. 🔘 How does freezing work technically? It’s important to understand that the assets you see in blockchain explorers (like Etherscan) are not actually stored on addresses. They are merely data broadcast by USDT/USDC smart contracts. If the issuer decides to burn the assets, they simply stop showing up at that address. That’s how the ERC20 standard works. 🔘 What about DAI? DAI from MakerDAO was long considered a decentralized alternative to USDT and USDC. However, the new stablecoin USDS (instead of DAI) from MakerDAO (now SKY) introduces the possibility of freezing funds in smart contracts. While the community will decide on the freeze parameters, this step is driven by inevitable regulatory requirements. This shows how even decentralized projects are forced to adapt to new conditions. 🔘 How to avoid being frozen? Avoid sanctioned addresses. Check your counterparties and the origin of funds through AML services. Use reliable platforms. Buy USDT and USDC on trusted exchanges with good reputations or from exchangers you can trust. 💬 Freezing stablecoins is a reality we have to face. Full decentralization is becoming a utopia.

1

Everclear is a NEW The Arbitrum Foundation Orbit ⛓️ L2 built On 🟠 Gelato RaaS. Everclear coordinates the global liquidity settlement between modular chains, solving fragmentation. Like Visa instantly authorizing payments & aggregating transactions for final settlement. Learn More : https://lnkd.in/ee53X_29 #RaaS #L2 #Rollup #Arbitrum

12

Has the SEC gone too far this time? With the Wells Notice to RobinHood, the SEC is essentially pushing for Crypto PROHIBITION and not regulation. Consider that RobinHood was FORCED to offer crypto through a NON Broker Dealer affiliate as the SEC & FINRA would not allow the BD a "non securities" license. Today, those regulators seem to be claiming that the crypto products they offer ARE securities & the NON BD is breaking the law. Programmers would call such a contradiction a "deadly embrace" where the rules are such that NO FIRM CAN COMPLY. Thus, this action is emblematic of this administration attempting to PROHIBIT the 40% of Americans estimated to own crypto from doing so... FWIW, the future of capital markets is digital & the rest of the world is starting to embrace it. As a result, if this administration is re-elected and continues on its Prohibition path, I suspect that it will be as successful for crypto as prohibition was for alcohol... (with similar results in increased fraud, etc)

35

7 Comments

Catch up on the latest Ethereum developer call, ACDE #196, where developers earnestly discussed the possibility of splitting Pectra across two separate upgrades to reduce implementation risk. Full call summary: https://lnkd.in/e66jJsm7

4