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Institutional clients of Coinbase Prime based in the US will now be able to stake ETH on the platform, with funds secured in the firm’s cold storage vault.

“Clients can create a wallet, decide how much to stake, and initiate staking from the ETH asset page on their Coinbase Prime account,” a blog post published today by the firm said.

Staking allows investors to earn a yield on their cryptocurrencies by committing them to a pool of assets, which helps support the liquidity and operations of a blockchain ecosystem. Often compared to a high-yield savings account, investors can earn upwards of 20% in annual yield on some platforms.

But the practice isn’t without risks. Staking often requires investors to store their funds with a third party known as a “custodian,” who, in some cases, technically owns the funds while they are being staked. Earlier this year, investors saw billions wiped away as custodians like Voyager and Celsius went bankrupt in response to the collapse of TerraUSD.

The blog post said that “securing client funds is our highest priority.” It added that all withdrawal keys are held in the firm’s cold storage vault and that staking transactions have to complete consensus before they are executed. This means they have to be added to a blockchain before the transaction is considered valid.

Staking is only possible on blockchains using the proof-of-stake consensus mechanism, which forces network participants – known as validators or “stakers” – to “lock up” a certain amount of their tokens. By forcing validators to maintain a financial stake, they are disincentivized from behavior that may compromise the network and consequently drive down the price.

At present, Ethereum is transitioning from a proof-of-work to a proof-of-stake blockchain system, meaning that both validation processes are running concurrently. Known as “The Merge”, the transition is expected to happen in September, at which point Ethereum mining will be phased out.

Coinbase Prime also staking for cryptocurrencies such as Solana, Polkadot, Cosmos, Tezos, Celo, and others.

© 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.

About half of the bitcoin mining companies tracked by The Block were up and the other half were down on the stock market on Monday.

The coin was trading closer to $23,00o at market close, after climbing above $24,000 over the weekend.

SAI.TECH, CleanSpark and HIVE Blockchain’s stock went up by 10.91%, 9.27% and 8.65% (on the Toronto Stock Exchange), respectively.

On the other side, Stronghold Digital Mining was down by 7.17%, followed by Marathon (-5.54%) and Cipher Mining (-5.23%).

Bitcoin miner Bitfarms announced in a July update that it increased total energy capacity by 21% last month, reaching a total of 166 megawatts.

The company was down by 3.42% on Nasdaq at market close.

Here’s how crypto mining companies performed on Monday, August 1:

© 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.

Super PACs linked to some of crypto’s biggest names are spending some serious cash in primary elections this week. The outside groups have reported boosting candidates in Arizona, Michigan and Missouri ahead of Tuesday’s primaries. 

Here’s a roundup of where crypto executives are putting their political dollars. 

Michigan

FTX CEO Sam Bankman-Fried has poured $27 million into Protect Our Future PAC, his pandemic-readiness political arm. The super PAC has reported spending $1.1 million for Michigan Democrat Adam Hollier. The state Senator is running in a wide-open primary in the deep blue district, meaning the winner will likely win the November general election.

Hollier is no stranger to crypto: He co-sponsored legislation to establish a blockchain and cryptocurrency commission in his role as a state lawmaker. 

Further, Protect Our Future isn’t the only PAC with crypto ties to wade into the Michigan primary.

Web3 Forward PAC, an outside group funded by another crypto PAC, has reported spending $412,000 to support Hollier. Web3 Forward is funded primarily by GMI PAC, which was launched at the beginning of the election cycle by crypto executives from Multicoin Capital, Messari, FTX and Blockchain Capital, among others. 

Arizona

Crypto-linked PACs are boosting a trio of Arizona Republicans ahead of Tuesday’s primary.

The crypto arm of one of the largest Republican super PACs in the country has spent more than $3 million on Arizona’s contentious Senate primary. Crypto Freedom PAC, a spinoff of the conservative Club for Growth, reported spending $1.1 million to boost Peter Thiel ally Blake Masters for Senate. The PAC has spent even more — $2.1 million — to attack primary opponent Jim Lamon. In turn, Lamon has made crypto a campaign issue. 

“A Crypto PAC is spending $1M attacking me to put Fake Blake in the Senate,” Lamon wrote on Twitter in June. “He will put SS at risk by having the treasury buy Bitcoin, all the while making a fortune for himself and his friends. Follow the money.”

Masters reported owning between $1 million and $5 million in bitcoin on a candidate financial disclosure last fall, along with smaller amounts of ether, dogecoin and other digital assets. 

Also in Arizona, FTX Digital Markets co-CEO Ryan Salame’s super PAC has spent more than $1 million for a pair of Republicans.

The PAC has spent $500,000 to boost Rep. David Schweikert, a co-chair of the Congressional Blockchain Caucus, and another $639,000 on texts, phone calls, mail and digital and TV ads promoting Navy veteran Eli Crane. The PAC’s pro-Schweikert TV spot calls the congressman a “taxpayer superhero.” Salame’s American Dream Federal Action PAC says it is focused on broad issues like national and economic security, not just digital assets.

Missouri

Crypto Innovation PAC has spent nearly a quarter million dollars in the Missouri Senate primary.

The group, which is funded by GMI PAC, is backing Eric Schmitt in the crowded and contentious Senate race. Salame’s American Dream Federal Action PAC is also playing in a Missouri primary. The group has spent $503,000 to support Republican Mark Alford, putting  TV ads on the air in the Show-Me State.

© 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 industry workers in New York who witnessed misconduct within their companies should file a whistleblower complaint, New York State Attorney General Tish James announced on Monday. 

James issued an “investor alert” urging those involved with crypto firms to contact her office if they have been impacted by recent chaos in the market, or if they witnessed improper behavior inside a crypto company.

“The recent turbulence and significant losses in the cryptocurrency market are concerning,” James said in a statement. “Investors were promised large returns on cryptocurrencies, but instead lost their hard-earned money. I urge any New Yorker who believes they were deceived by crypto platforms to contact my office, and I encourage workers in crypto companies who may have witnessed misconduct to file a whistleblower complaint.”

James’ call for whistleblowers comes as the crypto market sagged this summer. New Yorkers impacted by the Terra crash or by turmoil at Celsius, Voyager, and other firms to contact the office’s investor protection bureau. The state attorney general’s office also has an online whistleblower complaint portal.

James has taken aim at crypto firms in the past. The attorney general settled with BlockFi for nearly $1 million in June, and directed unregistered crypto lending platforms to cease operations for not allegedly not fulfilling legal obligations last fall. 

© 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

• Hiring in crypto has slowed but July was still another big month for industry moves.
• The NFT world welcomed an award-winning music producer joining while a founder at its most prominent marketplace exited.

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Declines in monthly NFT marketplace volume continued last month as the industry entered Q3 mired in the bear market.

But while retail may be down, there are signs from reports on Q2 investments that blockchain gaming and NFT projects were not as deeply affected by the downturn as other areas of crypto. 

Blockchain gaming dominates crypto venture market in Q2

Interest among investors for gaming and NFT projects is not easing despite the market downturn, Blockchain gaming accounted for 47% of investments from the top 10 most active crypto investors — among them Coinbase Ventures, a16z and Dragonfly Capital — in Q2 of 2022.

Out of 694 blockchain-related investment deals, 258 were related to NFTs and gaming, and represent a combined value of $2.6 billion, according to The Block Research.

“On average, NFTs/Gaming vertical proportionally take up almost half of all the most active deals, and, at least relatively, the interest in the blockchain gaming sector is not easing,” said The Block researcher Edvinas Rupkus.

Blockchain gaming accounts for 52% of all Unique Active Wallets

Gaming accounted for 1.1 million Unique Active Wallets (UAW), or 52%, in Q2, according to a July report from Dapp Radar.

Weekly NFT marketplace trading volumes remain low — with one exception

Monthly NFT marketplace volumes on Ethereum are down this month by 26% to a total of $678 million compared to last month’s $884.68 million in volume.

But NFTfi is bucking the trend, hitting nearly a record high in ETH volume last month. NFTfi offers lending in wETH of DAI through collateralizing NFTs from popular collections and doesn’t appear to have suffered so far in the recent NFT trading volumes collapse.

However, it should be noted things look a little different when the volume is shown in USD.

Layer-1s are battling to become the go-to gaming chain.

Layer-1s are competing to become the go-to gaming hub — and BNB Chain is in the lead by a long shot. Ethereum’s gas fee issues are causing the proliferation of more and more layer-1 chains offering NFT and gaming project-specific solutions.  

Splinterlands was the most played game of Q2

Splinterlands was the top game app of Q2 with 283k daily average unique active wallets, according to the Dapp Radar report. It is followed by Alien Worlds (188k), Farmers World (124k), Upland (45k), Axie Infinity (33k), Second Live (30k), Gameta (19k), MOBOX: NFT Gamer (19k), Mining Network (16k) and Pegaxy (16k).

However, Splinterlands is down 16% compared to last quarter, most likely due to the effect of reward structure changes including disincentivizing log-in rewards and overreliance on starter cards.

“These changes have flushed many low-effort participants and cut deep into the percentage of users who relied heavily on the free aspect of the game. The present community reflects the active player base for the dapp,” noted Dapp Radar.

The once-top blockchain game Axie Infinity is attempting to change its fortunes following the Ronin hack and the severe drop in its Smooth Love Potion token’s value earlier this year with the release of Axie: Origin and a complete revamp of the game.

Three in four US gamers associate the metaverse with Facebook/Meta

Facebook/Meta is still the primary association for the metaverse among many people, according to a survey of 1,000 US-based gamers by IT company Globant and YouGov.

When asked about companies associated with the metaverse, 73% named Facebook/Meta, 27% Epic Games and Fortnite, 21% Roblox, 15% The Sandbox, and 10% Niantic.

Just over half of the gamers believed the metaverse would change the video game industry and just four in 10 say the buzz around metaverse gaming is warranted.

And while advertisers and marketers are queuing up to partner with metaverse and NFT projects, potential players are less enthused. A total of 35% said they were comfortable with advertising in a metaverse space versus 40% who were uncomfortable with it. 

© 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.

Bitcoin miner Bitfarms increased its energy capacity to 166 megawatts in July — up 21% from June 30 — after finishing the second phase of construction at one of its locations in Canada.

The company’s total hash rate also rose by 5.6% to 3.8 exahash per second (EH/s), according to a monthly update released Monday. The company expects to reach 4 EH/s by the end of this month.

Production also increased at two of the miner’s other sites in Canada and Washington State. However, it had to contend with the heat.

“Unseasonably high temperatures in Québec and Washington state late in the month also slightly lowered miner productivity and affected our corporate hashrate,” said Bitfarms’ Chief Mining Officer, Ben Gagnon.

The company mined 500 BTC in July, having sold 1,623 BTC throughout the month. Part of those revenues was used to reduce a bitcoin-backed loan by $15 million, bringing the outstanding debt to $23 million.

The miner has already sold 3,000 BTC in June to pay down part of a $100 million loan from Galaxy Digital.

Bitfarms held 2,021 BTC in custody as of July 31, after selling 1,623 BTC last month.

© 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.

On Monday, the Securities and Exchange Commission charged 11 people as part of an alleged $300 million global crypto pyramid and Ponzi scheme.

Retail investors were allegedly bilked by Forsage, which claims to be a decentralized smart contract platform, the SEC said. The four founders of the company, who were last known to be living in Russia, the Republic of Georgia, and Indonesia, were charged, as were three U.S.-based promoters who endorsed Forsage on its website and social media platforms. Several are members of the so-called Crypto Crusaders, a promotional group for the alleged scheme that operated in at least five U.S. states.

“As the complaint alleges, Forsage is a fraudulent pyramid scheme launched on a massive scale and aggressively marketed to investors,” said Carolyn Welshhans, acting chief of the SEC’s Crypto Assets and Cyber Unit.

Forsage could not be reached for comment.

Forsage was launched in January 2020 by Vladimir Okhotnikov, Jane Doe a/k/a Lola Ferrari, Mikhail Sergeev, and Sergey Maslakov, allowing retail investors to enter into transactions via smart contracts that operated on the Ethereum, Tron and Binance blockchains. The SEC complaint alleges that Forsage actually operated as a pyramid scheme with investors profiting by recruiting others into the scheme. They also allegedly used assets from new investors to pay earlier investors.

Two defendants who did not admit or deny the allegations agreed to settle the charges. Both settlements are subject to court approval.

Officials in the Philippines and Montana filed cease and desist orders against Forsage for operating as a fraud over the past two years to no effect. The defendants allegedly continued to promote the scheme while denying the claims in YouTube videos.

© 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.

During its second-quarter earnings call on Friday, exchange operator Cboe reported a $460 million markdown on its recent purchase of ErisX, a crypto asset exchange acquired by the firm in May to help lead its reentry into the digital asset spot and derivatives markets.

Cboe also reported profits below Wall Street expectations, with rising compensation listed as a key factor in the missed targets.

The firm’s plans to acquire ErisX were announced on October 20, when the price of bitcoin was trading around $67,000. Since that time prices have dropped significantly, with the price of bitcoin currently hovering around $23,300.

On the results call, Cboe Global Markets chief executive Ed Tilly said since the closing of the ErisX transaction, the digital asset market environment had changed dramatically, which had led to the accounting adjustment.

Brian Schell, Cboe’s chief financial officer, said on the call that “we believe that our adjustment reflects the reality of the digital asset market environment today, but in no way changes our commitment to the digital asset space.” 

Despite the mark-down, Cboe reported rising revenue from options trading, futures trading, global foreign exchange trading, and North American and European equities.

The increase came from investors readjusting their portfolios to hedge against the recent economic downturn, which drove transaction volumes higher.

© 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

• Liquidity for purely on-chain perpetual futures remains generally low.  
• Composability of fully on-chain protocols offers competitive advantages, but this edge continues to be inaccessible at scale until liquidity grows.  
• Rage Trade attempts to offer deep liquidity through passive vaults while preserving high capital efficiency for LPs.

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