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Binance’s push to promote its BUSD stablecoin is eating into the dominance of market leader tether, with trades against BUSD climbing to a third of all volume on the exchange. 

Trading of BUSD pairs rose to 36% in September and sits at 35% so far this month, according to The Block’s Data Dashboard. A year ago, this figure was just 17%. 

BUSD is the main stablecoin on the BNB Chain, a set of two blockchains associated with Binance. It’s pegged to the price of the U.S. dollar, unlike the chain’s native token BNB, which is free floating.

Thanks to Binance’s promotion, the stablecoin now represents a significant force in the trading landscape. While trading in tether (USDT) is still dominant across all exchanges, its share of trading fell to 58% in September while BUSD’s climbed to 24%.

At the same time, trading against stablecoins has continued to become more common. While in 2018, trading with bitcoin pairs made up as much as 35% of volume across exchanges, it now represents less than 3%. Similarly, trading against ether makes up less than 1% of such volume.

The rise in trading of BUSD can be partly attributed to Binance’s no-fee trading on BUSD trading pairs, which provided an incentive for traders to trade against it. This was amplified by Binance’s decision to convert its users’s stablecoin holdings — for USDC, USDP and TUSD — into BUSD.

With Binance representing about 74% of crypto exchange trading volume, it’s unsurprising that its decisions to prioritize the stablecoin have had a big impact.

The increased demand for BUSD trading has also matched with an increase in its supply. While the stablecoins USDC and USDT have seen their supplies decrease during this year, the supply of BUSD has been steadily growing. Its supply has risen from 14.4 billion at the start of the year to 21.4 billion currently. Despite this, it remains in third place with just half of USDC’s supply and only a third of USDT’s.

© 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 exchange operator FTX could launch its own stablecoin through a partnership, CEO Sam Bankman-Fried told The Big Whale in an interview.

“We certainly could. We know how to do it,” Bankman-Fried said when The Big Whale asked him if FTX will launch its own stablecoin. “We hold off on doing it because I think to some extent collaboration on that can be really powerful. And a lot of that ends with us trying to find the partners we’d be really excited to work with. But I think you’ll probably be hearing something from us on that topic in the not-too-distant future.”

While FTX is yet to decide its approach for a potential stablecoin launch, it won’t be the first exchange to do so. Rival Binance launched its native stablecoin BUSD in September 2019 in partnership with Paxos. BUSD is currently the third-largest stablecoin in the market, after tether and USDC, with a total supply of around 22 billion, according to data compiled by The Block Research.

Last month, Binance started to prioritize BUSD over several others on its trading platform. The company announced a “BUSD Auto-Conversion” that converts users’ existing balances and new deposits of USDC, USDP and TUSD stablecoins at a 1:1 ratio. Binance also ended trading pairs for the three stablecoins against BUSD and tether — as well as major cryptocurrencies like bitcoin and ether.

That move seems to be paying off Binance. The share of BUSD trading has increased on the platform, according to data compiled by The Block Research.

FTX did not immediately respond to The Block’s request for comment.

© 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.

Meta’s third quarter earnings showed a $3.7 billion hole in the balance sheet due to spending on its metaverse division, Reality Labs – resulting in a sharp sell-off after hours. 

Wednesday’s revelation means that Reality Labs has lost an eye-watering $9.4 billion so far this year. The social media giant said Reality Labs generated $285 million in revenue for the quarter, down from $558 million in 2021.

Meta’s stock initially jumped to $140 after hours, before eventually settling at $105.02 at a nearly 20% loss — or a 25% from its after-hours peak.

Meta Platforms chart by TradingView

Analysts reacted in a similar vein to the company’s earnings. Mark Zuckerberg’s plea for patience has fallen on deaf ears, AJ Bell’s head of investment analysis, Laith Khalaf, said. “Spouting on about the metaverse when in the here and now the social media business is struggling is about as palatable for the market as Jack banging on about magic beans to his mother when all she wants is to put food on the table,” Khalaf wrote in an emailed update. 

Whether or not Zuckerberg will find treasure at the top of “metaverse beanstalk” remains to be seen, Khalaf added, “but the market reaction to its third-quarter numbers was brutal.” 

Digital advertising poses another issue for Meta, Hargreaves Lansdown lead equity analyst Sophie Lund-Yates said. “Meta’s platforms don’t hold as much sway with marketing teams as they need to.”

“Meta also faces stiff competition from the likes of TikTok, Snap, etc., who are eating its lunch among younger consumers,” Neil Wilson, chief market analyst at markets.com, said, echoing Lund-Yates.

It’s not just Reality Labs and Zuckerberg’s metaverse motives that are cause for concern; expenses are rising, according to Wilson. 

“Overall expenses are soaring and seem to be getting out of control, with 2023 expenditure seen rising from around $86bn this year to between $96bn and $101bn,” he said. 

Crypto prices hold firm

Meanwhile, cryptocurrencies remained steady, with most holding onto gains from earlier in the week despite U.S. stock indexes closing down on Wednesday. 

Bitcoin was trading at $20,604 today, down 0.1% in the past 24 hours, according to data via Coinbase, while ether was trading at $1,548, up 1.1% in the same period. In traditional markets, the S&P 500 closed down 0.74% on Wednesday, while the Nasdaq 100 shed 2.26%.

Elsewhere, dogecoin was the big winner on Thursday, trading up over 13% to $0.075, according to Coinbase data. 

DOGEUSD chart by TradingView

Speculators have linked the rise in dogecoin to Elon Musk’s bid to takeover Twitter, which appears to be in the final stages, as the Tesla CEO stopped by the company’s HQ for coffee on Wednesday. 

© 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.

Multi-chain crypto wallet UvToken has been hacked for 5,011 BNB tokens (1.45 million) and the funds have already been routed into sanctioned crypto mixer Tornado Cash. This comes amid a flurry of hacks and exploits this month, as October looks set to be a particularly bad month for DeFi projects.

The incident occurred on the BNB Chain blockchain on Thursday morning at around 1 a.m. ET time, as noted by security firms Ancilia and Peckshield.

UvToken acknowledged the exploit, saying that its “staking project” was attacked. It’s currently working with security teams to investigate the exploit. UvToken lets users stake the native token into a specific contract, which was targeted, PeckShield noted.

The attacker likely took advantage of the UvToken staking contract’s failure to properly authenticate input data, PeckShield told The Block. The firm noted the contract may have contained a logic error that allowed the hacker to make a malicious call and seize the staked funds. 

The latest exploit represents another addition to the list of exploits that have plagued the crypto sector this month. So far in October, the crypto sector has witnessed a series of security exploits, including a $100 million hack of BSC Token Hub and a $114 million attack on Mango Markets, among several other incidents.

© 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.

The National Bank of Kazakhstan (NBK) has agreed to test Binance’s blockchain network BNB Chain for potential integration into the country’s central bank digital currency (CBDC), the exchange giant said. 

Binance recently met with two NBK officials — deputy governor Berik Sholpankulov and head of payment and technological center Binur Zhalenov — Binance CEO Changpeng Zhao tweeted on Wednesday. The company introduced the two officials to the BNB Chain community to discuss testing the blockchain integration in digital tenge, according to Zhao.

“Binance and NBK agreed to test NBK CBDC (digital tenge) integration on BNB Chain,” a Binance spokesperson told The Block when contacted for comment. “There is ongoing discussion on specific use cases to be tested.” The central bank didn’t immediately respond to The Block’s request for comment.

The NBK started the digital tenge pilot project in 2021 to study the benefits and costs of the possible implementation of digital currency. In July of this year, the central bank developed a decision-making model for digital tenge implementation, and by the end of this year, it is expected to make a final decision on the implementation.

“Implementation of digital tenge will increase financial inclusion, including via introducing offline payments,” the bank said at the time. “The digital tenge infrastructure will become an extra tool for the financial market’s participants and government agencies, which will provide an opportunity to create innovative services based on smart contract technology. In future, introduction of digital tenge will also enhance cross-border payments.”

Zhao, in his tweets, said Binance is looking forward to NBK preparing CBDC use cases and how it could integrate BNB Chain.

The development comes shortly after Binance received a license to operate in Kazakhstan. In August, the Astana Financial Services Authority awarded Binance a permit to offer crypto trading and custody services at the Astana International Financial Center. Earlier this month, Binance also signed an agreement with Kazakhstan’s Financial Monitoring Agency to formalize their shared interest in developing the digital asset market in the country.

© 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.

Stocks and crypto investment platform eToro today announced the acquisition of Bullsheet, a portfolio management startup.

The exact terms of the acquisition were not disclosed, but a person close to the deal said it was worth a few million euros.

Founded by Portuguese cousins Filipe Sommer and João Ramalho Carlos, Bullsheet is a portfolio management tool that gives users of eToro’s investment platform a way to analyse their portfolios.

The cousins became eToro customers in 2020 and developed a following on the platform — drawing on social features that allow prominent investors to share tips, and even to have their trades mirrored by fellow users.

The pair then built Bullsheet exclusively for eToro investors. Now, as part of the product development team, Sommer and Ramalho Carlos will help integrate the software into eToro’s platform. A calendar feature is already live and a tool that gives traders a way to monitor their portfolios outside of market hours is due to launch soon. Additional features include a personalized news feed linked to the assets in a user’s portfolio.

“It’s the wisdom of the crowd in action,” said Yoni Assia, eToro’s co-founder and CEO, in a statement. “We believe there is a power in shared knowledge and that by transforming investing into a group effort we yield better results and become more successful together. João and Filipe share this ethos.”

With headquarters in Tel Aviv, Israel, eToro has been around since 2007, and today counts more than 30 million registered users on its platform.

The company looked set to go public last year, amid the Special Purpose Acquisition Company (SPAC) frenzy, through a merger with Fintech Acquisition Corp. V at a $10.4 billion valuation. But as the market for SPACs cooled, so too did the eToro deal, and it was eventually abandoned in the summer of this year.

© 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.

Lending platforms continue to scrutinize low-liquidity tokens amid concerns of heightened risks.

In terms of precautions Euler takes to mitigate attacks against tokens with low liquidity, “I would say it’s mostly putting them into non-collateral tier and signaling, on the UI, the oracle risk,” Euler Labs head of risk Seraphim Czecker told The Block. 

Lenders have been uneasy in the context of a $114 million Mango Market exploit, where known actor Avraham Eisenberg used millions in collateral to manipulate price oracles and subsequently borrow huge sums of otherwise unobtainable digital assets.

Although Mango and Eisenburg came to an agreement over the hacked funds, other lending platforms have since opted to review tokens with low liquidity. The STG token may offer a somewhat risky bounty for an attacker with at least $3 million in capital to wager on the endeavor, Eisenburg tweeted.

Czecker acknowledged Eisenburg’s analysis, adding that another potential attack might involve crashing the STG price oracle on Uniswap V3, and lending 1 ETH to borrow the sum of STG available on Euler, and then sell it off for a return. Although the attack isn’t alarming as it localized to STG, Czecker said, he warned users to avoid lending to pools with bad oracles, adding that indicators for this exist in Euler’s user interface.

“Only certain assets are collateral on Euler so the crappy tokens won’t present systemic risk,” Czecker said.

Protocol platform builders at Chaos Labs also cited Eisenberg’s methods when they posted a warning in Aave’s governance forum about markets that could become attack vectors should an actor deploy sufficient starting capital, estimated to be around $100 million. Citing the risk, the firm recommended Aave immediately halt the use of ren (REN) and 0x protocol (ZRX) for collateral.

For crypto lender Compound, the community voted to halt the use of 0x (ZRX), basic attention token (BAT), maker (MKR) and yearn finance (YFI) tokens as lending collateral over fears of market manipulation.

As other crypto lenders explore governance based initiatives, Euler also maintains conservative default lending parameters that are upgraded via governance, according to Czecker.

© 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

• On October 17, 2022, ARK Investment reported its Q3’22 13F portfolio filing 
• As of this writing, ARK manages ~$24.8bn in assets under management (AUM)
• Per the latest 13F filing, ARK has ~$14.5bn in equity assets or deployed capital

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Stone Ridge, a multi-billion-dollar asset manager, has launched a startup accelerator focused on the Bitcoin Lightning network.

The accelerator program, called Wolf, is taking applications for its first cohort. Each participating team will receive $250,000 in funding, as well as advisory services from employees at Stone Ridge and its subsidiary company NYDIG, which is focused on institutional bitcoin services. 

Additionally, other venture capitalists and Bitcoin-focused companies will be looking to make potential investments and provide advisory services for cohort members. Only companies building on Lightning and Taro, which enable new digital assets like tokens or collectibles to be created on Bitcoin, will be allowed into the program.

The Lightning network originated in 2015 and its goal is to create a scalable payment network and smart contract ecosystem on top of Bitcoin. Taro and the Lightning Network function similarly to Ethereum by having multiple layers to solve scalability bottlenecks.

Up to this point, the Lightning Network has seen steady adoption, but it has faced several challenges in which business opportunities and directions make the most sense for long-term growth, according to Volt Capital venture partner Mohamed Fouda.

Applications coming out of this incubator could include liquidity hubs to collect routing fees, integrations and user services to expand Lightning Network’s reach, and payment rails using it as the underlying infrastructure.

© 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.

Abiding by regulatory guidance, 63% of all transaction blocks on the Ethereum blockchain are compliant with OFAC sanctions, according to MEV Watch.

The greatest driver is the broad use of maximal extracted value relays, services that reorder blocks of transactions to maximize rewards. Still, the metric is all but assured to drive a continued debate over the use of MEV relays and the specter of transaction censorship on the openly accessible Ethereum network. 

The most widely used among those relays — accounting for nearly 49% of the total MEV block market — is Flashbots, which said it would ignore transactions from the transaction mixing service, Tornado Cash, which was sanctioned earlier this year by the U.S. government. 

Since The Merge, a growing number of proof of stake participants opted to use service providers to access validation rewards. The resulting consolidation from this trend, coupled with the dominance of Flashbots, has resulted in a growing number of OFAC-compliant blocks. 

In the last month, the number of blocks proposed via the Flashbots relay nearly doubled, from 2,210 on Sept. 25 to just over 4,000 by Oct. 25, according to data from The Block Research.

Flashbots isn’t ignoring the issue. The company offered suggestions on how it might mitigate transaction censorship and announced a forthcoming protocol that aims to open source and progressively decentralize MEV code development.

The announcements came in the wake of the departure of co-founder Stephane Gosselin, who stepped down over disagreements with the team on the question of network censorship.

As many network participants look to Flashbots as a source of censorship, strategy lead Hasu recently said a lack of neutral relays and the reliance on vertical relays that also operate as builders who may favor their own blocks over others is a “failure of the ecosystem.”

Although the team’s remaining founder Phil Daian doesn’t see an outcome where Flashbots creates a fully censored Ethereum network by proposing 100% of blocks on Ethereum, the use of Flashbots continues in its upwards trend.

Over the month of October, the percentage of blocks proposed by Flashbots MEV-Boost Relay rose from 12% on Oct. 1 to 56% at the time of writing, according to Flashbots’ Transparency Dashboard.

© 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.