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Liquid staking giant Lido Finance has submitted a revamped proposal for the sale of Lido DAO (LDO) tokens to Dragonfly Capital, after the community voted against the previous plan.

The new proposal still calls for selling 10 million LDO tokens to Dragonfly. However, this sale will come with a one-year lockup. The lack of a vesting requirement in the previous arrangement was a major issue for the Lido DAO community.

The introduction of a vesting arrangement also means the tokens would be bought by Dragonfly Ventures, rather than Dragonfly Liquid. Both are entities under the Dragonfly Capital umbrella but the former has lock-ups and vesting requirements as part of its investment strategy.

Another change in this new proposal is the sale price. The previous plan was a flat rate of $1.45 per LDO. There is now a second pricing alternative that will be based on the seven-day average LDO price at the time the voting process ends, plus a 5% premium. Dragonfly will choose the higher of the two unless that price is above $2.25, at which point the venture capital firm can withdraw from the deal.

This new proposal will go to a vote today, July 27 at 06:00 p.m. EDT. There will be only two options for voters this time around: yay or nay.

The previous vote had three choices: agree to the proposal without lock-up, agree but with lock-up requirement, or disagree with the plan entirely. 

The token sale to Dragonfly is half of a treasury diversification plan for Lido. The liquid staking giant wants to sell 20 million LDO tokens from its treasury to DAI stablecoin. Lido says the sale is to provide a two-year runway for the project amid the current bear market.

Whale backer revealed to be Dragonfly

The previous vote failed to pass, as reported by The Block. This was despite the presence of a whale wallet backer that initially committed 15 million LDO tokens to support the proposal.

Dragonfly has come out to state that it was the entity behind the vote. Commenting in the Lido forum, Tom Schmidt, partner at Dragonfly stated that the VC firm did not have any malicious intent in backing the vote to sell tokens to its own firm.

“After conversations with the Lido team, at their suggestion, the Liquid team used their existing LDO to vote on the proposal out of the address “0x641c,”” Schmidt stated in the governance forum.

“While obvious in retrospect, at the time, the perception among us and the Lido team was – well, you guys bought these tokens on the open market, you’re not so big as to dictate the entire vote, so of course, you get to vote with them — they’re governance tokens after all, and owning tokens means you get to be a voice within the DAO. Lesson learned.” 

© 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.

Several creditors of troubled Asian crypto lender Vauld, which abruptly halted client withdrawals earlier this month, have taken “hostile” action against the firm, a new affidavit obtained by The Block shows.

Vauld owes a total of $402 million to its creditors. Of that sum, $363 million — or 90% — comes from individual retail investors’ deposits.

The new affidavit, filed today by Vauld co-founder and CEO Darshan Bathija in the High Court of Singapore, reveals that four individual creditors of Vauld have commenced originating claims and issued demand letters to the firm.

Originating a claim means a party (the claimant) has started a civil claim against another party (the defendant). Vauld has received two originating claims and two demand letters from the four creditors, per the new affidavit.

Claim amounts of the creditors aren’t mentioned in the affidavit except for one creditor who has claimed around $340,000 plus interest through a demand letter.

Notably, Vauld’s first affidavit did not mention that creditors were taking “hostile” action against the firm, as The Block reported at the time. Vauld had received several, separate letters of claims at the time from select creditors, claiming a total of more than $2 million.

Vauld issues 

Vauld halted client withdrawals on July 4 after facing financial difficulties caused by TerraUSD’s (UST’s) implosion and the broader crypto market downturn.

On July 8, Vauld applied for a moratorium in the Singapore High Court on new or in process legal proceedings against the company while it explores its restructuring options, including a potential Nexo deal.

The creditors who have taken hostile action against Vauld do not support the moratorium extension, Hagen Rooke, a partner at Singapore-based law firm Reed Smith, told The Block.

Vauld is seeking a moratorium extension for six months. A hearing in that regard is scheduled for August 1 in which the court will decide whether to grant Vauld the extension or not.

Creditor support is one factor that would determine the court’s decision and Vauld seems to have received that support, according to the new affidavit. The firm requested creditor support via a Google form and the deadline to submit the form was today, 6 pm Singapore time.

According to data until July 26 at noon Singapore time, 2,910 creditors submitted their forms out of the total of around 147,000 Vauld creditors, per the affidavit.

Out of the 2,910 respondents, 2,280 (approximately 78.3%) indicated that they are in support of the moratorium extension, per the affidavit. Around 15% or 442 respondents did not take a position and about 6.5% or 188 creditors objected to the moratorium, per the affidavit.

Vauld’s seventh largest creditor, an individual with a claim amount of approximately US$3.5 million, has also shown support, according to a separate affidavit filed by them in the court and obtained by The Block. 

The moratorium extension would provide Vauld “with the time necessary to assess various restructuring strategies that would result in the best possibility of the creditors recovering their respective investments,” notes the creditor in their affidavit. 

Nexo deal?

Vauld rival Nexo is still doing its due diligence on Vauld for a potential acquisition. Nexo started the due diligence process on July 5 by signing a term sheet that granted it a 60-day exclusive exploratory period to conduct the procedure.

Vauld’s seventh largest creditor who supports the moratorium extension remains hopeful of the Nexo deal, noting in their affidavit that “the presence of Nexo Inc. and its complete acquisition of the Vauld Group would result in the satisfaction of all liabilities owed by the Applicant to its unsecured creditors”.

The creditor also believes that even if an investment agreement with Nexo does not materialize, Vauld’s business “remains attractive to other competing businesses of Nexo Inc and the Applicant would receive further offers for acquisition.”

Vauld did not respond to The Block’s request for comment by press time.

© 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.

SushiSwap, the popular decentralized exchange, has proposed that the community should hire Jonathan Howard as Head Chef, an official title given to the project’s chief executive officer. According to DeFiLlama, SushiSwap is the seventh largest decentralized exchange, holding over $660 million in locked deposits.

The nomination was announced in a governance post written by Sushi contributor JiroOno on Tuesday. “We’ve sourced the candidate we believe represents the best option for Sushi and are now looking to present this candidate to the Sushi community,” the proposal stated.

Currently there is a heat check poll, which has 40 votes so far and is currently 65% in favor of the hire. If the poll remains positive and a forum call goes well, then there will be a snapshot vote for SUSHI holders to decide whether to hire Howard.

If brought on, Howard would be looking after day to day management of operations and leading efforts on delivering both pending and new products at Sushi. 

According to his Linkedin bio, Howard is currently the co-founder and chief technology officer at an NFT-focused firm called BigHeadClub and previously founded tech startups. In a Twitter post, Howard wrote he was “excited and beyond honored that the SushiSwap team is nominating me as Head Chef.”

The search to find the next Sushi Head Chef has been going on since the departure of former Sushi head Maki in September 2021. 

Community’s response

The governance post that announced Howard’s nomination has largely positive feedback from community members, matching the heat check poll.

Many are enthused with Sushi’s prospects if Howard came onboard. In the governance discussion, Matthew Lilley, a core Sushi developer who goes by the pseudonym ImSoftware wrote: “Have spoken to Jon a handful of times and have been impressed. I think having a head chef with a background in technology & art is perfect for where we’re at now and where we’re going.”

While the majority comments have been in favor of Howard’s nomination, there were many who still disapproved of Howard being chosen as the new Head Chef. These members expressed Howard’s lack of DeFi experience as one of the main issues.

Pegbit, Sushi core contributor, who was part of the team who interviewed Howard, said, in a detailed response, “During the interview with Jon, he struck me as someone nice with skills. Still, I did not see him as a head chef at that moment because he had no relevant experience in DeFi and didn’t bring up anything extraordinary on the roadmap he presented.”

Other members disapproved of the proposed salary of the Head Chef being too high for Sushi’s treasury to afford. As per the details provided in the governance post, if hired, Howard would earn a base annual salary of $800,000 in the USDC stablecoin. SushiSwap’s treasury is worth $19.4 million, per DeepDAO.

In terms of token incentives, the Head Chef gets 600,000 SUSHI tokens vested for four years with a six month cliff. Currently, each SUSHI token is worth $1.29.

The Head Chef will also receive a one-time bonus of 350,000 SUSHI tokens. Beyond this, 1.2 million SUSHI incentives will be paid to the Head Chef when the SUSHI token hits certain price targets between $3-$11.

Furthermore, if the community decided to terminate Howard due to some reason, he will be entitled to a 24 month-long severance package equal to the base salary plus the above token incentives. Depending on the SUSHI price, the incentive and severance package could be worth millions of dollars each 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.

Stablecoin issuer Tether said today that it holds no Chinese commercial paper, seemingly the first time it has made this statement.

In a statement, Tether outlined that it has reduced its commercial paper exposure by $4.7 billion since the start of this month. It currently holds $3.7 billion of commercial paper in its reserves, down 88% from $30 billion in July 2021.

Tether also took aim at critics. “With that in mind, Tether would like to again reiterate to naysayers who continue to spread falsities about its commercial paper holdings, that you are wrong,” it said.

The mystery of Tether’s commercial paper

This may relate to questions around Tether’s commercial paper holdings. When Tether first revealed a breakdown of the reserves backing the tether stablecoin, it showed that just under 50% of the reserves were made up of commercial paper. From this point on, critics then questioned that its significant exposure might be mostly made up of Chinese commercial paper — something that could put the stablecoin at risk.

For a long time, Tether never explicity denied that it had exposure to Chinese commercial paper. In September 2021, it denied that it had any exposure to commercial paper issued by troubled Chinese real estate giant Evergrande. At the time, it acknowledged that it held international commercial paper but would not specify if it had any exposure to Chinese commercial paper.

Yet in October 2021, Bloomberg reported that Wall Street traders were unaware of any new entrant buying up large amounts of commercial paper (Tether’s holdings would have made it the seventh-largest holder of commercial paper). This suggested that the commercial paper was from oversees. The same report claimed that a document of Tether’s reserves showed that it had made billions of dollars’ worth of short-term loans to large Chinese companies.

In June 2022, Tether denied rumors that the majority of its commercial paper was Chinese or Asian but it did not specify whether it had any exposure in general. It kept reiterating that it was focused on reducing its commercial paper holdings, something that it had been working on over the last year.

Today’s notice appears to be the first time it has clarified its exposure to Chinese commercial paper in general. When asked whether Tether previously owned Chinese commercial paper and has now sold all of its holdings, Tether did not answer the question directly but stated any commercial paper it previously had was rated A2 or better.

© 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.

Ark Invest’s Cathie Wood appears to have gone cold on Coinbase as the exchange’s share price plunges.  

According to its latest trade filing, Ark Invest sold over 1.4 million Coinbase shares – more than 1.1 million from its flagship Ark Innovation ETF and the remainder from its fintech innovation and next generation internet ETFs. The shares were worth almost $75 million, based on the price at close on Tuesday.

Wood had been bullish on Coinbase, snapping up almost 4.5 million shares following the exchange’s public listing in April 2021.  

Coinbase has faced negative headwinds this week after a report from Bloomberg revealed the Securities and Exchange Commission, the regulator, is investigating the exchange operator for improperly allowing trading in tokens that should have been registered as securities. The firm’s chief legal officer refuted the claims on Twitter last week.

Shares in the crypto exchange closed down just over 21% on Tuesday at $52.93, although they were up a little over 3.5% in pre-market trading on Wednesday.  

Ark Invest’s funds have also shed considerable amounts this year amid a choppy macroeconomic background and growing recession fears. The Ark innovation ETF is down 57.74% year-to-date, while the next generation internet and fintech innovation products lost 58.7% and 62.14% respectively. 

Wood’s fund also offloaded shares in the retail investing platform Robinhood worth over $500,000, based on Tuesday’s closing price of $8.43. 

© 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 Fantom community has voted in support of a governance proposal to create an Ecosystem Support Vault to fund projects from a percentage of transaction fees currently being burned.

The vote, which began on July 5, passed with almost unanimous approval from participants. Details from the voting page showed that 99.75% of all votes cast were in support of the plan. The vote was to end on October 3 but there was a provision for early closure of the polls if the vote crossed the 55% quorum requirement.

Fantom will fund the vault with 10% of its transaction fees. This 10% is a third of the network’s 30% burn fee. Fee burning in crypto is where transaction fees are destroyed rather than being used to reward validators. This process can contribute to reducing a token’s total supply since a portion of its supply is constantly being burned. 

By funding the ecosystem vault, Fantom’s burn rate will reduce to 20%. This lower fee burn reduces the amount of FTM that’s destroyed each year.

Fantom’s Special Fee Contract, which distributes rewards to Fantom stakers and delegators, will be responsible for providing custody of the vault’s funds.

With the vote passed, projects looking to secure grants can now apply for funding. These applications will proceed via proposals submitted on the Fantom governance portal after which the community will vote on whether or not to fund the project.

© 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 blockchain gaming brand behind web3 game Gods Unchained has cut its staff by “more than 20” employees, two people familiar with the matter told The Block. 

The cuts amount to around 8% of developer Immutable’s workforce, according to its employee headcount of 310 on LinkedIn. The reorganization is focused on Gods Unchained, Immutable Games’ flagship strategy non-fungible token (NFT) card game, three sources said. Other job losses were concentrated in Immutable’s talent acquisition team. 

The layoffs were carried out earlier this week following an impromptu 15-minute all hands meeting, according to one person, who was granted anonymity due to the sensitivity of the story. 

Immutable did not respond to The Block’s requests for comment before press time, but told gaming publication Kotaku, which first reported the cuts earlier this morning, that the “small reorganization” would “better enable [it] to achieve [the] goal of creating the next generation of web3 games.”

“We hate to lose members of our team and will ensure a smooth transition for those affected by the reorganization,” it said, adding that it would “continue to grow at pace” and is on track to reach 360 total headcount in the next five months. 

The cuts are the latest example of a web3 or crypto-first organisation shedding employees. Earlier this month, NFT marketplace OpenSea laid off around 20% of its staff in one fell swoop. Coinbase, Gemini, BlockFi and BitMEX have all also announced significant cuts in their headcount — reversing initial targets to double or even triple staffing by the end of the year. 

The Australia-based gaming studio had built a reputation for being one of the pioneers of blockchain and NFT gaming, attracting bumper funding rounds and high valuations. The news follows an announcement in June that the company is launching a $500 million fund for web3 game adoption.

It also raised $200 million in Series C funding on March 7, reaching a $2.5 billion valuation and has previously received backing from big-named players such as Coinbase Ventures, Animoca Brands, Tencent and Temasek. 

© 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.

Unstoppable Domains, a firm building out digital identity markers as non-fungible tokens (NFTs), announced Wednesday that it raised $65 million in Series A funding. 

Pantera Capital led the funding round, with additional investments from Mayfield, Gaingels, Alchemy Ventures, Redbeard Ventures, Spartan Group, OKG Investments, Polygon, CoinDCX, CoinGecko and others. Prior investors in Unstoppable Domains, also participated in this newest funding round, according to a release shared with The Block. 

Unstoppable Domains, which now has a $1 billion valuation, intends to use the funds to reduce friction of crypto payments between applications and build out infrastructure for a loyalty reward program within the crypto ecosystem based on a user’s reputation. This new funding round also gives Unstoppable Domains more than three years of runway to build out its product, it said.

“We are on a mission to create user owned and controlled identity for everybody on the planet, we actually think that NFT domains are going to be the technology that makes this happen,” Unstoppable Domains co-founder and CEO Matthew Gould told The Block in an interview.

Unstoppable Domains allows users to register domain names for a one-time fee. These domains can then act as a personal identifier for a user among different crypto applications, helping users maintain a consistent online reputation using web3 technology. 

To verify that a user is who they say they are, Gould explains that Unstoppable Domains asks users to provide hundreds, if not thousands, of pieces of additional information about themselves so that “your identity is emergent.” 

Digital worlds miss a personal reputation element experienced in every life, Gould said. He explains in a hypothetical example that if a person were to sell fake items on Amazon and get caught, they could then move to a different platform such as eBay and commit the same scam. “But if you have a consistent reputation across these places, you can’t do that.”

“We think that having a consistent name across the internet will be a way for you to plant your flag in the digital world and say who you are, and then also help you build a consistent reputation across all the different applications that you interact with.” 

“​Our vision is for the three billion people who have a cell phone to also have an NFT domain in the future,” Gould said. “Regardless of the short term hiccups in the space, that’s ultimately what we’re trying to get to.”

Pantera had set out its plan to raise a $200 million fund earlier this year, dubbed the Pantera Select Fund. At the time it said it had invested in an “unnamed company which produces NFT domain names.”

© 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.

US Senator Pat Toomey, R-Pa., is asking Securities and Exchange Commission Chair Gary Gensler for clarity on the way the agency regulates cryptocurrency firms, arguing that the current set of standards has resulted in billions in losses for American investors and is stifling financial innovation.

Toomey, the top Republican on the Senate Banking, Housing and Urban Affairs Committee, in a July 26 letter argued lenders that have recently sought bankruptcy protection — like Celsius and Voyager — fell under the SEC’s purview. If the SEC had given regulatory clarity to crypto firms, things might have been different, Toomey said in his letter.

“Companies could have adjusted product offerings accordingly, preventing investor losses today, and the SEC would have been free to focus enforcement efforts on the worst actors,” the letter said.

The SEC had already taken lender BlockFi to task three months before any other crypto lender froze accounts. Toomey argued the SEC could have shared its view on how crypto lending products fit into securities laws since it had already made determinations in the BlockFi action. The securities regulator also was reportedly investigating Celsius’ and Voyager’s compliance and did not act before state regulators began filing enforcement actions against the lenders. 

“Regardless of the merit to any specific SEC or state-based enforcement action, the SEC’s
continued refusal to give regulatory clarity to the crypto community, combined with a haphazard
and an apparently sluggish enforcement pace harms not only investors, but also innovation,” Toomey said in the letter.

Instead, the SEC is choosing to generally regulate by enforcement, Toomey said, citing a recent insider trading suit filed by the SEC that could have unintended consequences for token projects. The filing claimed nine tokens constituted digital asset securities, effectively branding them and the exchanges they list on as noncompliant without lodging an enforcement action against them or clarifying the position. 

“In this circumstance and elsewhere, the SEC ostensibly had a clear opinion on why it thinks these digital assets are securities, yet it did not disclose that view publicly before launching an
enforcement action,” Toomey said. “There are many reasons to be skeptical of the SEC’s view that most digital assets are securities.”

To better understand the SEC’s thought process, Toomey submitted eight questions to the regulator. They probe at the internal discussions related to crypto lenders, asking if the SEC had determined other lenders were offering securities after the BlockFi action and if there were planned enforcement actions. They also concern the dialogue between crypto firms and the SEC, asking if lenders ever asked the SEC for guidance and how the conversation played out. Toomey also asked about the recent insider trading complaint against a former Coinbase employee and his associates, requesting clarity on what makes the nine assets securities and what guidance the SEC plans to give to the other tokens not named in the complaint. 

Toomey pressed Gensler on concerns of regulation-by-enforcement tactics in September of last year during a Senate Banking Committee hearing. At that time, he also asked Gensler to give the public clarity on crypto regulation. 

© 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 69 of Season 4 of The Scoop was recorded remotely with The Block’s Frank Chaparro and The Block Research Mining Research Analyst Wolfie Zhao.

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

Following the crypto market crash in May and June, several institutional bitcoin mining companies have liquidated large portions of their bitcoin reserves, adding more fuel to the selling pressure.

In this episode, we discussed the impact of the shrinking hash price and the profitability of bitcoin mining at the moment. The network’s hash price has reached the lowest point since late 2020 due to bitcoin’s price decline and only moderate difficulty correction. Even though the network has had three difficulty declines in a row over the past month, the competition level is still up by about 10% year-to-date.

Meanwhile, the global energy price surge and inflation are pushing mining firms’ production costs even higher – not to mention that a lot of them also have growing interest expenses on outstanding loans they took since last year. If bitcoin’s price drops below the critical $15,000 level, we may start to see miner capitulation. Listen to more of our discussions below.

In this episode of The Scoop Mining Report, The Block Research’s mining analyst Wolfie Zhao and host Frank Chaparro take a further look at the pressures facing miners in today’s market environment and how recent heatwaves have affected mining operations today.

This episode is brought to you by our sponsors Chainalysis & IWC Schauffhausen

About Chainalysis
Chainalysis is the leading blockchain data platform. We provide data, software, services, and research to government agencies, exchanges, financial institutions, and insurance and cybersecurity companies in over 60 countries. Backed by Accel, Addition, Benchmark, Coatue, Paradigm, Ribbit, and other leading firms in venture capital, Chainalysis builds trust in blockchains to promote more financial freedom with less risk. For more information, visit www.chainalysis.com.

About IWC Schaffhausen
IWC Schaffhausen is a Swiss luxury watch manufacturer based in Schaffhausen, Switzerland. Known for its unique engineering approach to watchmaking, IWC combines the best of human craftsmanship and creativity with cutting-edge technology and processes. With collections like the Portugieser and the Pilot’s Watches, the brand covers the whole spectrum from elegant timepieces to sports watches. For more information, visit IWC.com

© 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.