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An unknown attacker has stolen $2.3 million in tokens from a decentralized autonomous organization called FriesDAO. This comes amid a flurry of hacks and exploits this month, as October looks set to be a particularly bad month for crypto projects.

The exploit resulted from the hacker gaining control of FriesDAO’s “deployer wallet” and transferring out a large amount of FRIES, the project’s governance tokens, into their control. The perpetrator also drained other tokens from a staking pool, leveraging their access to the deployer wallet. The stolen tokens were sold off for $2.3 million of stablecoins held in the hacker’s address, security firm CertiK estimated. 

“It has come to our attention that the refund deployer contract was exploited and managed to obtain FRIES tokens which were subsequently refunded for USDC and sold into the Uniswap pool,” said FriesDAO, while notifying users of the hack.

FriesDAO’s deployer wallet was generated using Profanity, a wallet-generator tool that’s known to contain a critical vulnerability. Last month, security analysts at 1inch found that private keys of vanity addresses generated via Profanity could be calculated by malicious hackers to steal funds. After 1inch’s disclosure, the vulnerability was exploited by hackers to steal $160 million in crypto assets from market making firm Wintermute.

FriesDAO had also relied on Profanity to generate their deployer wallet address. Due to the vulnerability, the hacker extracted the wallet’s private key to move funds out, according to CertiK. The security firm told The Block in a statement that the FriesDAO exploit could have been avoided had the team been more diligent and replaced the deployer’s address in time.

“This attack was preventable, as the Profanity vulnerability has been public knowledge for over a month,” the spokesperson said. “CertiK calls on all Web3 projects which have used the Profanity tool to immediately transfer control of any assets held in affected wallets to securely-generated addresses.”

© 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.

Serum, a decentralized exchange on the Solana network, is currently mulling a proposal that will change the governance structure for the project.

Solana and Serum developers TDM Blockchain developed the proposal and filed its recommendations to the Serum DAO forum on Thursday. If passed, this will result in the creation of a new community token for the Serum DAO. Serum already has a native token called SRM. This new community token will be a locked version of SRM called gSRM. Both tokens will have a 1-to-1 relationship meaning that users get an equivalent number of gSRM for every SRM token locked.

If the proposal goes through, Serum’s new locked tokens will confer voting rights to holders. Community members will have to lock their SRM to obtain gSRM to be able to vote on governance proposals in the DAO. Users may also choose to unlock their tokens at any time. Locking or unlocking tokens will take seven days, according to the proposal but TDM stated that the DAO may choose to adjust this timeframe if it so wishes.

The main difference is that instead of all token holders getting a say in the voting process, it will only be those who have locked up their tokens for this reason.

Interacting with other DAOs

Apart from voting privileges, these locked tokens will also have another function. Serum DAO will be able to issue vested grants to individuals or other DAOs from the treasury. The recipients of these grants will then be able to participate in the DAO governance process as well.

TDM’s proposal also includes a provision for how to handle matters relating to grants from the DAO treasury. Voting on Serum treasury governance proposals will require a quorum of 50,000 votes in favor of such motions. These votes must also be greater than half of the total votes cast during the polls.

The Serum DAO community may also soon play host to other DAOs. TDM’s proposal called for DAO-to-DAO interaction within Realms, a Solana-based DAO tooling platform. Realms allows users to create and manage DAOs. This part of TDM’s proposal will enable DAOs registered on the Realms platform to join the Serum DAO.

© 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:

• Rapid Insights provide a deeper analysis of the current crypto landscape in a timely fashion.
• On particularly bad days, over half the blocks produced on the Ethereum Network (post-merge) enforced OFAC sanctions
• We concretely explain what it means to violate OFAC sanctions and what’s happening with censorship on Ethereum
• Disclaimer: This is a market commentary research piece and includes opinionated views from our research team. Nothing contained in this piece constitutes a solicitation, recommendation, endorsement, or offer by The Block Research

This research piece is available exclusively to
members of The Block Research.
You can continue reading
this Research content on The Block Research.

Cross-chain swap protocol Thorchain is back online after a software error halted the network for 20 hours.

At 1:45 p.m. UTC on Friday, Thorchain validators collectively resumed the network and started to make new blocks. Still, the network is not fully operational for on-chain trades, which will be turned on in a few hours after the pending queue of transactions has been cleared, the Thorchain team said on Twitter. 

“THORChain is back online and producing blocks. The network is signing outbound transactions, so pending swaps should start to go through. Once the queue is cleared, trading will be re-enabled. ETA 2-3 hours,” said the Thorchain team.

The Thorchain network validators lost consensus yesterday due to a “unique transaction type” software error that disrupted communication between their nodes. The error prevented validators from verifying new transactions on the network.

According to its official block explorer, Thorchain could not validate new transactions for 20 hours. During the outage, the investors did not lose any funds. However, exchange deposits and withdrawals for RUNE, the native coin of Thorchain, were suspended on centralized exchanges like Kucoin.

Later, Nine Realms, a development team working on Thorchain, released a new update for node operators which contained the patch for the software error. The Thorchain team released instructions for validators and how to upgrade to the new software.

The network was rebooted after a majority of validators upgraded their software and reached consensus again. 

Even though this was the first network downtime for Thorchain, the project has previously grappled with security issues. Last year, security bugs in Thorchain’s cross-chain swap were exploited multiple times, resulting in losses over $13 million.

© 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.

Asset manager WisdomTree met estimates as it reported $0.06 earnings per share for the third quarter, while revealing that its crypto holdings have fallen to less than $200 million.

WisdomTree’s crypto assets under management fell from $265 million to $178 million during the third quarter. The fund’s crypto holdings have now fallen 56% since January, from $406 million.

“Our approach is to bring crypto mainstream,” Jarret Lillien, the firm’s COO and president said, apparently unperturbed by the decline.

The asset manager also plans to bring “mainstream exposures, like fixed income, equities, and commodities, into the digital world through blockchain-enabled funds and tokenized exposures,” Lillien said.

“We’re building the foundation that will allow us to lead in the coming evolution of financial services and lay claim to the deepest exposures in the digital wrapper, positioning us, in an even larger opportunity, to expand into blockchain-enabled finance, where spending, saving and investing are merged.”

The fall in holdings tracks the decline in crypto prices and the global crypto market capitalization, which has fallen from $2.3 trillion in January to $1.03 trillion today. 

© 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

• This is part of The Block Research’s Market Commentary series
• October 28, 2022, Core Scientific filed an 8K announcement with the Securities & Exchange Commission detailing their financial performance concerns
• Management anticipates running out of cash by the end of 2022, if not sooner 
• Per today’s filing, Core Scientific will be unable to pay for some of its equipment and debt 
• Core Scientific joins the list of distressed digital asset firms hampered in 2022 
• For additional coverage of bankruptcies and financial woes within crypto please refer to The Block Research’s coverage of Celsius and Voyager Digital
• For additional coverage on digital asset miners please refer to The Block Research’s coverage of Riot, Marathon and Stronghold
• Disclaimer: This is a market commentary research piece and includes opinionated views from our research team. Nothing contained in this piece constitutes a solicitation, recommendation, endorsement, or offer by The Block Research

This research piece is available exclusively to
members of The Block Research.
You can continue reading
this Research content on The Block Research.

Bitcoin traded up following consumer spending data in the U.S., before surrendering these gains as the market digested the latest economic data.

The monthly personal consumer expenditures (PCE) was 0.5%, in line with the consensus before release. The annual change in PCE was 6.2% in September.

Bitcoin was trading at $20,280 following the release. The leading cryptocurrency by market cap briefly spiked before trading lower, then rising again. Economic indicators have driven crypto prices over the past few months.

BTCUSD chart by TradingView

PCE measures the price people in the U.S. pay for goods and services, or those buying on behalf of others. The index captures inflation, or deflation, across a range of consumer goods.

It is seen as the Fed’s preferred measure of inflation, because it can reflect changes in consumer behavior, thus giving a more comprehensive overview of the inflation picture than the consumer price index (CPI). CPI was hotter-than-expected in September, up 0.4% month-on-month and 8.2% year-on-year.

source: bea.gov

Today’s economic indicator follows yesterday’s better-than-expected GDP data. According to President Joe Biden, the U.S. economy grew by 2.6% in the third quarter, countering suggestions by “doomsayers” that the economy was underperforming.

© 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.

Frozen food conglomerate McCain Foods wants young consumers to farm its metaverse potatoes in a new game on Roblox.

The world’s largest manufacturer of prepared potato products is hoping to educate them about challenges facing the farming community and the benefits of regenerative farming, it said in a release.

Integrated into Roblox’s popular Livetopia game, Farms of the Future allows players to virtually grow potatoes using regenerative farming methods that improve and restore soil health. The free-to-play game will launch today.

Players are rewarded when they apply regenerative practices such as planting cover crops, integrating livestock through rotational grazing and encouraging biodiversity.

“It is important we reach out to younger consumers with the right message, in the right location, at the right moments of receptivity – meeting them where they are. This will be important in raising awareness for building a more sustainable food system through regenerative agriculture,” said Christine Kalvenes, McCain’s global head of innovation and marketing.

The announcement comes at a time of growing concern around protecting underage players on platforms like Roblox. Part of that includes looking at how brands advertise to them, both in the form of more traditional ads and more subliminally through “experiences.”

It’s hardly a new phenomenon. Branded mini-games, sometimes called advergames, certainly precede the metaverse. Taco Bell gave away games with its kid’s meals over two decades ago on floppy disks and IKEA released a furniture range on the Sims 2. Many of the brands releasing web3 projects now released branded games in the early noughties. 

Roblox is a popular choice for brand collaborations, but it’s not the only one McCain is working with. The company is also teaming up with Bored and Hungry, a Bored Ape Yacht Club-themed restaurant based in Long Beach, California.

The two are running pop-up locations in London and Toronto on Nov. 3-4 and Nov. 16-18, respectively, where McCain will promote its new “Regen Fries” grown using regenerative farming methods.

© 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 and ether traded down over the past 24 hours, while tech stocks experienced a blood bath after the bell. 

Bitcoin was trading at $20,218 on Coinbase, down roughly 1.4% in the past 24 hours, according to exchange data. Meanwhile, ether shed 2.4% in the same period to trade at $1,504.

Of the top 10 cryptocurrencies by market cap, dogecoin remained the outlier. Apparently buoyed by Elon Musk’s Twitter takeover, the memecoin gained 9.3% in the past day.

Elsewhere in equities, Meta’s stock traded down throughout the day on Thursday, hitting a 6-year low as market capitalization dropped below $265 billion. It exceeded $1 trillion last year.

The social media company wasn’t the only tech stock to experience crypto-type losses as other FAANG (Facebook, Apple, Amazon, Netflix, and Google) stocks also missed earnings. Amazon predicted a slowdown in sales growth for the final quarter, resulting in a sharp sell-off after hours as the stock plummeted 20%.

S&P 500 futures were down 0.65% this morning, Nasdaq 100 futures lost 1.06% and Dow Jones futures shed 0.15%.

As such, it appears that crypto’s correlation to the Nasdaq and equities in general is waning. UBS noted last month that bitcoin had shrugged off its “typical beta of 3x to major US stock indices” that fell twice as much in September. 

This deviation has continued through October, as bitcoin’s correlation to the Nasdaq fell from 0.76 on Oct. 3 to 0.27 today, according to The Block’s data dashboard. The last time bitcoin’s correlation to the Nasdaq was this low was January 12.

Macro Matters

The U.S. economy grew by 2.6% during the third quarter. Data released on Thursday indicated it appeared to be arresting its decline, as GDP had fallen in the two previous quarters. Crypto markets were largely unaffected by the news.

Source: bea.gov

President Joe Biden insisted the data proved “doomsayers” were wrong about the U.S. economy, saying, “Today we got further evidence that our economic recovery is continuing to power forward.”

In Europe, the ECB hiked interest rates by 75 basis points — in line with expectations — while repeating that additional rate increases will be necessary in the coming months. 

“There were few surprises from the post-meeting news conference either, with Lagarde reiterating that there is still ground to cover on normalizing policy and that the ECB remains “data-dependent” in determining the size of hikes to be delivered at each meeting,” said Mike Brown, head of market intelligence at Caxton. 

While the GDP data out of the U.S. did beat expectations, other parts of the economy still appear to be struggling and globally the picture remains uncertain.  

© 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.

UK media regulator Ofcom CEO Melanie Dawes warned this week that metaverse platforms like Meta will be subject to the upcoming Online Safety Bill.

Self-regulation won’t be acceptable under UK law, and platforms will have to toe the line if they want to operate in the country.

“I’m not sure I really see that ‘self-regulatory phase,’ to be honest, existing from a UK perspective. If you’ve got young people in an environment where there’s user-generated content according to the scope of the bill then that will already be caught by the Online Safety Bill,” she said at a Global Counsel event in London on Tuesday, as reported by CNBC.

The Online Safety Bill, which is currently making its way through the House of Commons, was introduced by the department for digital, culture, media and sport (DCMS) — not Ofcom itself, though it will receive new regulatory powers through it.

The bill ostensibly creates new rules for firms which host user-generated content and require them to remove illegal online material and, in the case of platforms likely to be accessed by children, “legal but harmful material” such as self-harming and eating disorder content.

As for the scope of it, the UK government website lists those affected by the bill as the biggest social media platforms, search engines, sites including forums and messaging apps, some online games, cloud storage and the most popular pornography sites. Metaverses are not specifically mentioned in the text.

“This landmark bill captures all services where users can interact online – from websites and apps to the metaverse and beyond. Services likely to be accessed by children will need to protect them from harm or face huge fines,” a DCMS spokesperson clarified in an emailed statement.

Platforms which fail to follow the rules will face fines up to 10% of their revenue and could be blocked.

A controversial proposal

The bill has proved a controversial proposal. Privacy groups claim it is “an extremely complex and incoherent piece of legislation that will undermine freedom of expression and information, privacy and the rule of law.”

A piece of secondary legislation which will define what is considered harmful has not yet been released.

Whether it’s social media, comments under news articles or gaming platforms, companies have long struggled to toe the fine line between safeguarding users and censorship. Where one group finds efforts made by the likes of Meta to police content too lax, another finds it too strict.

When it comes to children certain metaverse platforms have been singled out for exposing them to inappropriate content. Roblox has attracted substantial criticism following reports of children being harassed, scammed and abused while playing its games.

Some of the games themselves, which anyone can create and share, have also caused upset. Last month Roblox took down two games based on the war in Ukraine, including one in which players could play as Russian or Ukrainian soldiers and fight in a fictional city based on Kharkiv. In the other, players could watch the bombing of cities such as Mariupol. 

© 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.