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Dai stablecoin issuer MakerDAO passed a governance proposal to remove renBTC from being used as collateral and reduce exposure to what’s deemed a risky asset by the DAO. RenBTC is a wrapped bitcoin asset developed by the Alameda Research-backed project Ren Protocol.

MakerDAO lets users mint the dai stablecoin by depositing excess cryptocurrency collateral. In December 2020, MakerDAO allowed users to deposit renBTC tokens in specialized “RENBTC-A” vaults and mint dai. 

Earlier this year, Alameda Research, the sister trading firm of FTX exchange, acquired the Ren project and funded its development each quarter. After Alameda and the FTX exchange filed for Chapter 11 bankruptcy protection, the Ren team said that its existing tokenized bitcoin offering, referred to as Ren 1.0, would be shut down and replaced by a new community-run Ren 2.0.

The Ren team said it was left with a runway to completion by the end of the year. Meanwhile, it has put renBTC issuance on hold and asked users to burn the circulating tokens on Ethereum and claim them back to the original chain. To get to this second version of Ren, the team will need to secure additional funding, it added.

In response to this development, MakerDAO’s “risk core unit” team noted that since mints were disabled, renBTC potentially faced the risk of losing its pegged value to bitcoin. It then proposed closing renBTC vaults and liquidating the loan positions. 

“In light of the uncertainty surrounding the Ren Protocol, and following Risk Core Unit’s recommendation, Maker Governance voted to offboard the RENBTC-A vault type,” MakerDAO announced.

The vote on this proposal was passed yesterday with 100% of the votes of MakerDAO delegates in favor of it. “With Alameda filing for bankruptcy and the elevated risk of renBTC depegging, we support offboard renBTC as collateral to minimize risk to the platform,” said London Business School Blockchain, which works as a MakerDAO delegate.

Currently, there are multiple renBTC vaults on Maker that have loaned out more than 850,000 dai. These positions are to be liquidated starting Dec. 7, according to the approved vote. The liquidation ratio for these positions will be set at 5,000%. A high collateral ratio guarantees liquidations will be triggered, Maker’s risk unit said in the proposal. 

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Episode 117 of Season 4 of The Scoop was recorded live with The Block’s Frank Chaparro and CoinFund Managing Partner David Pakman.

Listen below, and subscribe to The Scoop on Apple, Spotify, Google Podcasts, Stitcher or wherever you listen to podcasts. Email feedback and revision requests can be sent to podcast@theblockcrypto.com.

Web3 investment firm CoinFund recently launched a $300 million fund targeting early-stage crypto and web3 startups.

In this episode of The Scoop, CoinFund Managing Partner David Pakman shares how this fund fits into CoinFund’s broader investment thesis for crypto and web3, including why the fund is specifically targeting early-stage startups.

The new fund is intended for new crypto startups already showing signs of success. As Pakman explains,

“We saw a lot of seed-stage companies graduating to have real progress and we wanted to invest in that stage too, so we raised a fund purposefully to invest at the Series A, maybe Series B stage of crypto projects that are showing some traction.”

While CoinFund is also looking to raise an additional $250 million fund specifically for seed-stage investments, Pakman says the early-stage investments typically see the most value creation:

“A company is showing a little bit of progress, they may be showing some evidence of product market fit, and they’re going to raise — not growth capital yet — but, you know, ten to fifteen million dollars… the steepest part of the value creation can happen just after that moment.”

During this episode Chaparro and Pakman also discuss:

• How raising capital in crypto compares to traditional finance;
• What is wrong with crypto regulation;
• Why crypto is currently in ‘the trough of disillusionment.’

This episode is brought to you by our sponsors Tron, Ledn

About Tron
Founded in 2013, Huobi Global is one of the largest virtual asset exchanges in the world. Huobi Global serves millions of users across international markets. Since its establishment, Huobi Global has committed to providing first class virtual asset investment services. Huobi Global’s robust infrastructure, product innovation and capital strength provides a truly customer-centric and secure trading environment to help our international users to achieve their investment objectives. Please refer to Huobi’s official website for more information: huobi.com.

About Ledn
Ledn was founded on the unshakeable conviction that digital assets have the power to democratize access to the global economy. We help you to experience the real life benefits of your Bitcoin without having to sell it. Start a savings account, take out a loan, or double your Bitcoin. For more information visit Ledn.io

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Crypto financial services firm Matrixport is seeking to raise $100 million in funding at a $1.5 billion valuation, as first reported by Bloomberg. The startup was looking to raise at a $1 billion valuation earlier this year. It most recently raised $100 million at a $1 billion valuation in a Series C fundraising round in August 2021.

According to the report, the startup currently has $50 million in commitments for this round and is still seeking commitments for the other half of the round.

“Matrixport routinely engages with key stakeholders, including investors, as part of its normal course of business,” said Ross Gan, Matrixport’s head of public relations, in a statement to The Block. “We’re excited and look forward to engaging on similar terms with participants in the other half of the funding round. The funding commitments represent the confidence in our ability to capture new opportunities with recent industry developments.”

This fundraising attempt comes at a challenging time for the crypto industry as the market grapples with the ripple effects of the collapse of the crypto exchange FTX — though a Matrixport spokesperson noted the process started “long before” the collapse of FTX.

Founded in 2019 by crypto billionaire Jihan Wu,  Matrixport offers various services, from lending to asset management and trading services. The startup was spun out of Wu’s other business, Bitmain, which is a crypto mining business.

The crypto winter chill

Matrixport has around $10 billion in assets under management, according to its website. It’s taken a hit from the collapse of hedge fund Three Arrows Capital and crypto exchange FTX this year. The firm gave a loan to 3AC that was 120% collateralized and liquidated the hedge fund when it failed to meet its margin call in the summer. However, it still experienced some losses, managing to recover around 80% of the loan, founding partner and chief operating officer Cynthia Wu told The Block.

It also had exposure to FTX through its fixed-income offerings. 79 clients incurred losses via three products on the Matrixport platform.

Investors in previous rounds for Matrixport have included DST Capital, Paradigm, Dragonfly and Tiger Global Management.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Blockchain operator Tron DAO and Justin Sun, its billionaire founder, have applied to contribute capital to Binance’s industry recovery fund.

Binance published details of the fund yesterday after CEO Changpeng Zhao had earlier signaled a plan to launch it. Binance poured an initial $1 billion into the vehicle. Meanwhile, Jump Crypto, Polygon Ventures, Aptos Labs, Animoca Brands, GSR, Kronos and Brooker Group agreed to an initial aggregate commitment of around $50 million.

“We were not aware of the announcement. Different players likely contacted Binance at different times. We have already applied to join this funding initiative and will hear back from them soon,” a Tron DAO spokesperson told The Block. A Binance spokesperson was unable to confirm the application when reached. 

Binance hopes the fund can mitigate some of the damage dealt to the crypto industry by the downfall of Sam Bankman-Fried’s empire of crypto companies, at the center of which stood crypto exchange FTX. A wide variety of businesses in the sector have been hit by FTX’s collapse, ranging from investment firms to early-stage DeFi projects.

By design, contributions to the industry recovery fund can be tracked using blockchain analytics. Binance said in its blog post yesterday that its investment could be increased to $2 billion “in the near future if the need arises.”

The fund will target projects that are deemed economically viable and innovative but facing liquidity issues as a result of the FTX crisis.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Argentina-based crypto app Lemon Cash has laid off about 100 people, 38% of staff, marking the latest round of cuts in the region.

Several other Latin America-based crypto companies have announced significant layoffs this year including Bitso, Buenbit and 2TM, parent of the Brazilian crypto exchange Mercado Bitcoin.

Lemon Cash CEO Marcelo Cavazzoli said the Latin America fintech industry could continue to see further layoffs as companies adjust to a difficult market and funding environment. Crypto-specific companies might have an easier time due to having higher margins, he added.

“Companies that are not adjusting now, they will adjust when they try to fundraise in the, let’s say, the next 12 months, 10 months,” Cavazzoli said. “They will be even in a worse situation because they will have less runway left and it’s going to be even harder.”

The news comes amid the fallout and ripple effects of FTX’s bankruptcy filing, on top of the slump in crypto asset prices over the past year. While venture funding was plentiful in previous years, Cavazzoli warned not to expect much in the future.

“There was a huge wave of investment in LatAm from the VC industry — not only in crypto but in tech in general — with gigantic rounds in fintech as well,” Cavazzoli said in an interview with The Block. “And I believe that made the tech industry in LatAm a bit too much dependent on further fundraises.”

Lemon Cash also revealed today that it closed a $27.8 million extension of its Series A funding round this year, bringing the total size of the round to $44 million. Firms including DST Global, Valor Capital, GoodWater Capital, CMT Digital and Cadenza participated. The company now has runway for three years, Cavazzoli said. 

Lemon Cash, an app with more than 1.6 million users in Argentina, allows users to buy and sell crypto as well as earn weekly crypto gains by holding crypto in the app. The company has also issued more than 760,000 Visa cards that allow users to automatically convert crypto into local currency. Additionally, it has minted more than 435,000 “Lemmy” NFTs on OpenSea.

Not unscathed

FTX Ventures participated in the Series A extension with a “very small percentage,” Cavazzoli said. Lemon has an “insignificant” amount of money stuck with FTX’s sister trading firm Alameda that it does not expect to get back, he said, declining to state the amount due to ongoing liquidations.

Lemon was using FTX and Alameda’s protocols for its Lemon Earn service, a spokesperson said, with Cavazzoli confirming that all of those user funds had been withdrawn. The only exposure Lemon continues to have in the companies is an amount in Alameda, which is similar to the FTX Ventures investment. 

Cavazzoli stressed that the FTX bankruptcy did not have any effects on Lemon’s users, and that the recent layoffs were previously planned. 

Next year

The CEO expects three main trends for 2023 as it innovates its products: customers will demand transparency in centralized exchanges, businesses will need to show sustainability to weather the ongoing bear market and Web3 adoption will be a major focus. 

The FTX situation inspired Cavazzoli to think about how to increase transparency in not only the Lemon Cash app, but the overall industry.

Lemon recently implemented an audited live proof-of-funds feature, allowing its users to see the company’s funds at any time in the app. It will expand on this by using the Merkle tree data structure to show its liabilities as well, it added. He expects two more local exchanges to use this feature as well and plans to make the technology open-source.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Ethereum core developers are moving toward putting EIP-4844 — a highly-anticipated scaling proposal — live in a future mainnet upgrade, according to an Ethereum core developer meeting. 

Developers have included EIP-4844, also called “proto-danksharding,” into a list called “considered for inclusion (CFI),” meaning they have committed to working on the proposed feature. If everything goes as planned, this feature will be deployed on the mainnet sometime next year. The proposal might be rolled out with or after the Shanghai upgrade, which aims to open up staking withdrawals for validators.

EIP-4844 aims to improve the scalability of Ethereum beyond what’s available with Layer 2 solutions. It will introduce a new kind of transaction format to Ethereum called “shard blob transactions,” allowing for off-chain data to be stored and accessed by Ethereum nodes temporarily to address scaling needs of blockchain apps. 

This feature is intended to make Ethereum even cheaper when using Layer 2 rollup solutions like Optimism and Arbitrum, where transactions are already five to ten times cheaper than the Ethereum base layer.

“Reminder: EIP-4844 adds a new fee market to Ethereum for short-lived data. Rollups would use this for data availability instead of hijacking regular gas. This is a game changer for the rollup-centric roadmap, as fees could be lowered ~100x,” said Liam Horne, CEO of OP Labs, the developer of Optimism network.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

More than 100 people were arrested in what the London’s Metropolitan Police calls “the UK’s biggest ever fraud operation” after taking down a fraud website called iSpoof used on 200,000 potential victims in Britain alone. 

iSpoof allowed scammers to pose as officials from banks such as Barclays, Santander, HSBC, Lloyds, Halifax, First Direct, Natwest, Nationwide and TSB. Criminals paid for the service in bitcoin, according to the police report.

Scotland Yard’s Cyber Crime Unit worked in cross-national cooperation, including authorities in the U.S. and Ukraine, to take down the site this week. In a 20-month period, the Met police claims the operation earned the criminals almost £3.2 million ($3.9 million).

The Cyber Crime Unit began investigating iSpoof in June 2021, and were able to trace bitcoin records. With almost 60,000 users on iSpoof, the investigation team narrowed suspects down to UK users who spent at least £100 worth of bitcoin on the site.

“The exploitation of technology by organized criminals is one of the greatest challenges for law enforcement in the 21st century,” said Commissioner Mark Rowley in the police statement.

The UK arrests may be followed up in other countries as a list of suspects was handed over to authorities in the Netherlands, Australia, France and Ireland.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Binance’s industry recovery fund, to which it’s already contributed $1 billion, has attracted some big names early on including Jump Crypto, Polygon Ventures and market maker GSR. 

Aptos Labs, Animoca Brands and Kronos are also among some of the other early contributors, CEO Changpeng Zhao said. These firms joined the recovery fund with an initial aggregate commitment of around $50 million. Binance expects more participants to join soon, with over 150 applications already received. 

The fund was announced last week to help mitigate the fallout stemming from FTX’s collapse. Binance’s initial commitment of 1 billion BUSD can be verified at the following address. The addresses of other participants will be available in the next week. 

Participants must set aside committed capital to access investment opportunities through the recovery fund’s application process. The capital can be in stablecoins or other tokens. Public addresses must be shared for transparency. 

With a flexible investment structure, the initiative will last for about six months. Binance stressed the recovery fund is not an investment fund. Binance intends to ramp up its investment to $2 billion “in the near future if the need arises.”

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Quick Take

• Synapse is a cross-chain interoperability protocol that enables composability across different chains.
• The Synapse bridge leverages the protocol to enable cross-chain asset swaps and transfers.
• Synapse’s V2 upgrade introduces optimistic verification and the Synapse chain, which is an Ethereum-based optimistic rollup.
• Synapse’s native token, SYN, will be used to secure the chain and incentivize optimistic verification participants.

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Blockchain development firm Starkware has open-sourced a new release of its programming language Cairo — the first step in a wider move to make its entire blockchain stack for StarkNet open source.

Cairo underpins Starkware’s Layer 2 networks, StarkNet and StarkEx. This is the first major release for the language since it was created and the new version will soon be brought to StarkNet, according to a statement.

“On a practical level this maximizes transparency about our code, and our coding process. And it strengthens the community’s ability to find bugs and improve the compiler. With each aspect of the tech stack that is open sourced, this sense of community involvement will grow and grow,” Abdelhamid Bakhta, exploration lead at StarkWare and former Ethereum core developer, said in the statement.

© 2022 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.