FreeCryptoCurrency.Me

Quick Take

• The borrowing and lending space in DeFi has been dominated by over-collateralized lending, but under-collateralized lending has been gaining traction over the past year.
• Maple Finance and TrueFi are currently the largest protocols in the space in terms of lender deposits and loans originated.
• Various protocols are being built to set the foundations of how under-collateralized loans are executed so that the sector can continue to expand from a position of strength.

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

Speaking during ETHSeoul on Friday evening, Ethereum co-founder Vitalik Buterin predicted that ZK-Rollups will beat Optimistic Rollups in Ethereum’s Layer 2 scaling wars.

At the event, Buterin stressed that while Optimistic Rollups are more mature, the fundamentals of the Zero-knowledge Rollup technology will allow it to supersede Optimistic Rollups in the long run. 

Optimistic and ZK-Rollups are the most widely adopted Layer 2 solutions designed to scale Ethereum with off-chain computation while still retaining the security of the main blockchain. There are differences, though, in the architecture of these solutions and the level of security they provide.

Buterin noted that ZK-Rollups are faster when moving funds to and from the mainnet, which may lead to wider adoption of them.

“My opinion is that in the longer term, ZK-Rollups are eventually going to beat Optimistic Rollups because they have these fundamental advantages like you don’t need to have a seven-day withdrawal period,” Buterin said. “In more than 10 years from now or even more, I expect the Rollups to basically be all ZK.”

Buterin acknowledged, however, that ZK-Rollups have yet to mature and are currently hard to build on. “So at the same time, the ZK technology is just hard to build. There are a lot of mental challenges especially in doing all of this stuff safely and making sure all of the circuits are correct. Optimistic rollup technology is just more mature,” he said.

While ZK-Rollups are faster, one thing that ZK-Rollups lack is an Ethereum Virtual Machine (EVM), making them hard to run decentralized applications like DeFi protocols. The EVM is the main processing unit on the Ethereum blockchain for decentralized applications. 

But this may change soon since EVM compatibility for ZK-Rollups is in the works. Layer 2 projects like Scroll, zkSync and Polygon have announced plans to introduce a compute environment called zk-EVM that will allow ZK-Rollups to independently run all types of general-purpose smart contracts.

Buterin added, “We’ve actually been starting to see zk-EVM implementations that are almost ready to scale with Ethereum transactions, which is amazing.”

© 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 US Treasury is sanctioning Tornado Cash, a cryptocurrency mixing service that allows users to obscure the details of transactions. 

The regulator has added Tornado Cash and 44 associated ether and USDC wallets to its Specially Designated Nationals List, according to an August 8 announcement from the Treasury’s Office of Foreign Asset Control.

The SDN list bars US persons and firms looking to operate in the US from financial interactions with designated entities. In May, OFAC added Blender.io, its first designation of a crypto mixer. 

Despite barring SDN-designated crypto wallets from its front end in April, Tornado Cash’s association with high-profile hacks like Ronin and Harmony continued to draw the Treasury’s ire, particularly given that the Treasury has identified several as going to profit North Korea’s Lazarus Group. 

© 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.

Galaxy Digital is looking at acquisitions to add new areas to its core businesses.

Founder and CEO Michael Novogratz noted the firm has $1 billion in cash to spend and that it continues to raise capital with an eye toward dealmaking.

“I want to be offensive and we’re looking,” the Galaxy Digital founder and CEO said in a call with analysts after the company posted a $554 million loss in the second quarter.

Galaxy Digital would be following in the footsteps of Sam Bankman-Fried, who has been on a buying spree of late, scooping up lender BlockFi, clearing firm Embed and Bitvo, a Canadian crypto asset trading platform.

“Tokenization, that space appeals to me personally,” Novogratz. “That’s on my radar but it’s something I think we can be a little patient with.”

Galaxy Digital is still waiting to close on its purchase of Bitgo, which was announced in May 2021 and was expected to close by the end of last year. 

Novogratz said he expects traditional finance companies to step up later this year and get involved in crypto M&A. “We don’t have a mountain of capital coming in this year but I still feel like there’s a put almost in terms of time and capital marching towards our space,” he said.

Novogratz pointed to mining as a sector that needs more capital investment. “We think we’ve got a role to play in both the lending and potentially consolidation in that space,” he said.

Galaxy also said that it is cutting expenses, including 20% of vendor costs, and has also eliminated some positions. Still, it expects to end the year with about 400 employees, up from around 300 at the start of the 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.

Robinhood announced the addition of Avalanche’ AVAX token and Steller Lumen’s XLM on Monday. Following the news, both tokens saw initial spikes in price — although Avalanche’s gains were swiftly erased.

The tokens are in the green today, as the wider crypto market has risen. At the time of writing, AVAX was trading at $29.93, up 8.2% over the past 24 hours, while XLM was at $0.13, having jumped over 6% during the same period, according to CoinGecko. Monday’s gains see both tokens outperforming market leaders bitcoin and ether, which clocked gains of 4% and 5.4% respectively in the past day.

Today’s announcement comes less than a week after the Robinhood’s crypto division was hit with a $30 million fine by the New York State Department of Financial Services (NYDFS) for allegedly violating anti-money laundering and cybersecurity regulations.

Later in the day on August 2 the company announced it was laying off 23% of its staff and dropped its Q2 earnings – which showed improvement versus the first quarter of 2022 – earlier than scheduled. 

During last week’s earnings call Robinhood CEO Vlad Tenev noted the firm prides itself on the addition of new cryptocurrencies to the platform. Tenev went on to say that some platforms might be inadvertently offering securities to users – alluding to Coinbase’s troubles with the SEC – who unknowingly invest in them assuming they are decentralized assets.  

Robinhood users now have their pick of 15 different cryptocurrencies on the platform, including bitcoin, ether, litecoin, solana and dogecoin, among 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.

Danny Greene, general manager of the MeebitsDAO that oversees the popular Meebits collection of non-fungible tokens (NFTs), is stepping down to become brand lead for Meebits at NFT studio Yuga Labs. 

He will take on the task of building community and utility for Meebit holders — a continuation of his role at the DAO over the last eight months — while also serving as a liaison for the community and developing strategic partnerships, Yuga Labs told The Block. 

Based in Santa Monica, California, Greene was previously VP, global marketing for Curio NFT and a consultant to Activision Blizzard surrounding the launch of Call of Duty: Black Ops III. 

During his stint at the MeebitsDAO he worked on a variety of community-based projects. These include launching NFT wearable Meekicks, creating a Meebits Snapchat augmented reality filter and introducing the Meebot Mascot at NFT.NYC. He also hosts the Crypto Changemakers podcast.

Greene told The Block that he considered Meebits “so much more” than just images. “It’s an avatar for the immersive metaverse. It was always clear to me that Meebits were way ahead of their time and that the historic nature of them as a creation of Larva Labs, the value and utility that will be created by Yuga Labs, and the strength of the passionate Meebits community was going to make Meebits a valuable asset for the long-term,” he said.

The announcement comes ahead of news that on August 15 Meebits and CryptoPunk soldiers will be granted intellectual property (IP) rights. Holders’ rights will allow them to use their NFTs in personal and commercial projects, putting them on par with the IP rights granted to the Bored Ape Yacht Club community.

Last month, Yuga Labs began charging a 5% royalty fee on secondary sales of Meebits. The firm takes a 2.5% royalty on Bored Ape sales. 

Greene added he was excited about Meebits being integrated into Yuga’s upcoming metaverse, Otherside.

“But there is so much on the horizon, I can’t get into the specifics yet, but you’ll be hearing from us more soon,” Greene said.

© 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 potential upcoming Ethereum proof-of-work fork is unlikely to have substantial long-term adoption, according to Ethereum co-founder Vitalik Buterin.

The idea of a fork gained traction over the past two weeks after popular Chinese crypto miner Chandler Guo — who was involved in the 2016 fork that resulted in Ethereum and Ethereum Classic — said he would fork the Ethereum blockchain, dubbing the new network “ETH POW.” The idea is that when the blockchain undergoes “the merge” and transitions to a proof-of-stake network, these miners would create a fork of the network that ignores the update and remains focused on mining.

Appearing at ETHSeoul on Friday evening, Buterin answered questions from journalists during a Q&A session, during which he addressed the potential impact of this kind of a hard fork on the Ethereum network. 

In response to a question about this plan, Buterin said he doesn’t see an organic aspect to it and claimed it’s just a “couple of outsiders that basically have exchanges, and mostly just want to make a quick buck.”

“I’m not expecting it to have substantial, long-term adoption,” Buterin said.

Buterin acknowledged that there may be “a couple of splats on some markets in the meantime,” before adding “I hope that whatever happens, doesn’t lead to people losing money.” This may refer to exchanges launching IOU products, enabling traders to take punts on what the value of the forked tokens will be, assuming they go ahead. Three exchanges are now offering such products.

The Ethereum co-founder – who stepped back from core Ethereum development a few years ago – also spoke about Ethereum Classic, adding that it has a “superior community and a superior product” for people who support proof-of-work values and preferences.

© 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.

Galaxy Digital reported a loss of more than $554 million for the second quarter, compared to a $182.9 million loss in the prior year period amid a tumble in crypto asset prices.

The digital asset-focused financial services firm said the wider loss was related to unrealized declines on digital assets and on investments in its trading and principal investments businesses. It was partially offset by profitability in mining. 

Partners’ Capital decreased 27% quarter-over-quarter to $1.8 billion, from $2.5 billion, as the total cryptocurrency market capitalization dropped about 56% during the quarter.

The company maintained a liquidity position of $1.5 billion, including $1 billion in cash and a net digital asset position of $474.3 million, with $256.2 million of that net digital asset position held in non-algorithmic stablecoins.

As of June 30, net digital assets3 were $474 million, compared to $910 million as of March 31. The decrease in net digital asset3 position was primarily driven by selling-out of certain liquid positions to increase its cash position, and overall decreases in digital asset prices.

“We remain in [a] strong position to weather prolonged volatility, and to take advantage of strategic opportunities to grow Galaxy in a sustainable manner,” said Michael Novogratz, Founder and CEO of Galaxy Digital.

Galaxy Digital Asset Management reported preliminary assets under management of nearly $1.7 billion as of June 30, a 40% decrease from the quarter ended March 31, 2022.

© 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.

Three cyptocurrency exchanges are supporting the trading of tokens representing a future proof-of-work fork of Ethereum.

Last weekend, Poloniex and MEXC became the first spot exchanges to list such tokens. Today, BitMEX joined the two by launching a futures product based on the tokens, called ETHPoW.

ETHPoW Futures will support the trading of ETHPoW in the form of a derivative trading contract. The futures contract will use the Tether (USDT) stablecoin as margin collateral and it will open for trading under the ETHPOWZ22 ticker on Tuesday. 

The idea of an miner-led Ethereum fork gained momentum after Chandler Guo, an influential Chinese crypto miner, declared on Twitter last week that he would fork the Ethereum blockchain to what he called “ETH POW.” The fork, he claimed, would allow miners to continue operations after Ethereum’s transition from proof-of-work (PoW) consensus to proof-of-stake (PoS), which is planned in the coming months. 

Both Poloniex and MEXC are letting ether holders swap ETH into ETHPoS (IOU) and ETHPoW (IOU) in a 1:1 ratio.  IOU tokens function like derivatives, while allowing users to trade the native asset of a blockchain that has not been launched yet. On these two exchanges, the ETHPoS (IOU) token is trading roughly the same price as ETH whereas the ETHPoW (IOU) is changing hands at a much lower price between $125-$130, per data from CoinMarketCap.

If Ethereum’s proof-of-stake upgrade is completed without a fork, Poloniex and MEXC said they would suspend and delist the IOU tokens and their associated markets. These listings are highly speculative as they allow the trading of an asset that is yet to come into existence — and may not do so.

Other crypto exchanges — Huobi, Gate, Digifinex, and OKX — have started coalescing around the fork and have offered support to listing the forked versions of ether. However, those exchanges have not yet provided details on their respective plans related to listing ether forks. Last Saturday, Huobi was still evaluating the idea, saying it would list any hard forks of Ethereum so long as they meet certain requirements.

© 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 lending platform Hodlnaut has halted withdrawals in an apparent liquidity crisis. The firm cited recent market conditions for the move and said that it needs to “focus on stabilising our liquidity and preserving assets.”

According to a statement today, the platform has also stopped token swaps and deposits. In light of this, it is working with Singapore law firm Damodara Ong LLC on a recovery plan.

“Halting withdrawals and token swaps was a necessary step for us to stabilise our liquidity, and give us the time to work closely with our legal advisors to come up with the best possible restructuring and recovery plan for our users,” said the platform.

Hodlnaut has also withdrawn its license application with the Monetary Authority of Singapore. Without this application, it’s unable to support token swaps, which are a regulated service.

Hodlnaut said that it will continue to pay out interest to its customers until further notice.

© 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.