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Sommelier Finance, an on-chain investment protocol, has launched its first-ever community-governed product called Cellar. 

On a technical level, Cellar is a smart contract representing a community-governed investment strategy. It’s operated by Sommelier, an on-chain investment protocol that runs as its own application-specific blockchain on the Cosmos network.

On Thursday, Sommelier activated the first Cellar on Aave, a popular lending protocol on Ethereum. With Cellar, users can deposit funds and the protocol will automatically allocate to different DeFi platforms. 

The Cellar is programmed to automatically rotate capital across stablecoin lending pools, like USDC or DAI, whichever offers the maximum yields.

Cellars have been programmed to leverage off-chain computation. So they can take in various data feeds to dynamically adjust investment strategies based on changing market conditions. They will also leverage machine learning, a form of artificial intelligence that continuously trains itself using a stream of data to improve prediction outcomes. 

The team claims that this automation makes Sommelier an improvement over other protocols, such as Yearn Finance, that allow users to optimize yields on their crypto assets through lending and trading services.

“Vault-style portfolio managers like you find on Yearn have static algorithms, and when you visit those platforms you can see that there are many strategies that have simply stopped working because they were unable to adapt to changing conditions,” Sommelier co-founder Zaki Manian told The Block.

In October 2021, Manian, who is a former lead developer for Cosmos and Tendermint, raised $23 million for Sommelier in a Series A funding round led by Polychain Capital.

Given Sommelier is originally based on Cosmos, it relies on a cross-chain bridge called Gravity to manage the Cellar on Ethereum (in this case Aave).

The Aave Cellar is the first among future Cellars planned by the community. Besides Aave’s stablecoin strategy, the team says there will be many Cellars on various DeFi protocols, both in the Ethereum ecosystem and on other blockchains. 

As more Cellars launch on Sommelier, the protocol — with its broad array of strategies — is hoping to attract a lot of capital.

“We are targeting 500m in TVL [total value locked] in the coming year and it is quite achievable given the product pipeline we have is superior to current offerings in the market around ETH deposits, stablecoin lending which have massive amounts of liquidity across many of the platforms,” said Manian.

Sommelier’s focus on decentralization

The Sommelier community will govern Cellars using its independent blockchain on the Cosmos network. 

Operating as an independent chain, Sommelier claims to be more decentralized than other on-chain investment funds in the crypto space that may have centralized operations.

Usually, on-chain investment funds rely on multi-signature contracts to execute the investment strategy. The private keys to multi-signature wallets can be controlled by a central group of developers, which may prove to be a single point of failure.

In contrast, on Sommelier, there are network validators who oversee the Cellar strategies. This eliminates the need to rely on manual actions taken by the team via a centrally-managed smart contract. In exchange for their contributions, validators are rewarded with SOMM tokens.

“Many on-chain investment platforms that allow for off-chain computation rely on multi-sigs to execute the investment strategy. In contrast, the Sommelier validator set is what executes Cellar strategies with the security guarantees of Tendermint consensus. As a result, Sommelier is more decentralized than many other on-chain investment projects,” Manian said.

Anyone will be able to propose new Cellar strategies and become “Cellar strategy providers” if the strategy is approved by Sommelier’s governance. This is because it’s designed to be non-custodial, and the capital supplied is not dependent on a centralized team.

There may be risks, however, originating from a flawed strategy or algorithm. In June, a Korean firm called Uprise lost 99% of its client funds due to an automated trading strategy that failed to work amid an extremely volatile market.

In response, the Sommelier team said the project plans to avoid such situations due to checks and balances built into its decentralized setup. In the event of misbehaving strategies, the team said, Sommelier validates will remove a strategy provider’s access to the Cellar smart contract.

© 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.

Blockchain.com has become the latest crypto company to cut staff, according to a report published by Coindesk on Thursday.

The exchange will cut 25% of its staff, approximately 150 people, bringing the firm’s staffing levels back that of January 2022. Executive salaries and CEO compensation will also be reduced.

The company said the decision was based on harsh bear market conditions and the need to absorb financial losses relating to the fallout of Three Arrows Capital’s (3AC) collapse. The exchange has a $270 million shortfall due to lending to the fund.

As part of the cutbacks, Blockchain.com is additionally rolling back expansion plans, particularly in South America, which last year CEO Peter Smith heralded as one of the “largest growth opportunities in crypto over the coming decade.” To that end, the company acquired Argentinian crypto investment platform SeSocio in late last year and announced plans to launch a physical presence in Argentina, Brazil, Chile, Colombia and Mexico.

But now the company says that most active demand is coming from Europe, the US and Africa. It will close its Argentina-based offices and cancel expansion plans in several countries. Almost half of the layoffs are of Argentina-based employees. A further 26% are US-based and 16% UK-based.

It will also shrink its institutional lending business, halt all M&A activity, slow work on its non-fungible token (NFT) marketplace and pause its forays into gaming. 

The crypto firm joined the ranks of the decacorns — a term for a company valued at more than $10 billion — in March this year following a Series D funding round at a $14 billion valuation that generated an undisclosed amount of funds. At least some of the proceeds from this round will now be used to cover the 3AC-induced shortfall. In April, there were also reports that the company planned to go public this year.

Other large crypto companies are continuing to cut staffing levels as well, many following significant hiring drives over the past 12 months. Last month, Coinbase admitted it had “over-hired” and laid off more than 18% of its staff. Last week, OpenSea also laid off 20% of its staff. Layoffs have also been seen at Gemini, Bitso, Bybit, Rain Financial, and Brazil-based 2TM, 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.

Franklin Caldwell, or “franklinisbored” as he is known on Twitter, lost 100 ETH ($150,000) in an Ethereum Name Service (ENS) domain name transaction on Wednesday.

Caldwell is the seventh-largest holder of Bored Ape Yacht Club non-fungible tokens (NFTs) and is regarded as an influencer in the NFT space.

It all started when Caldwell created the ENS domain “stop-doing-fake-bids-its-honestly-lame-my-guy.eth” on Tuesday. Caldwell then placed a 100 wrapped ETH (WETH) bid on the ENS domain.

This was done to draw attention to the fact that people routinely create ENS with comical phrases and place fake bids on them. This is done to get attention from a listing bot that’s shares such bids on Twitter — and can often see a large number of retweets if the names are particularly humorous.

Another NFT collector who goes by “8892” on Twitter placed a 1.89 WETH ($2800) offer on the x2y2 marketplace. Caldwell accepted the offer, forgetting that he had previously placed the 100 WETH “joke bid” on the same item. 8892 was then able to accept the existing 100 WETH offer since it was still there. This automatically triggered the sale of the ENS name back to Caldwell for 100 WETH.

In all, 8892 made a 97.5 WETH in profit off Caldwell’s mistake. The Bored Ape whale realized the error and contacted 8892 by sending an on-chain message to 8892. Caldwell also refunded the 1.89 WETH in the hope of getting 8892 to reverse the transaction. Yet the latter wasn’t moved by the gesture.

“I ripped this guy off for 100 ETH and he just sent me another 1.9?” 8892 tweeted in response.

The problem with uncancelled NFT listings

Caldwell is not the first to suffer such a loss due to a failure to cancel previous NFT listings. You have to pay transaction fees to cancel an existing listing and NFT owners have been known to forget to do so. Even when a sale happens, it does not cancel previous offers and the new owner can choose to accept any one of them.

Sometimes, NFT owners move their items to a different wallet, forgetting to cancel existing listings. When these items are moved back to the original wallet, the old listing becomes activated. This listing bug problem has been exploited in the past on OpenSea leading to high-value NFTs being sold for significantly lower prices.

Caldwell’s mistake is also part of a growing interest in ENS domain names. One ENS collector recently bought sony.eth for $72,000 while amazon.eth has also saw a $1 million offer — although it wasn’t accepted.

ENS belongs to the class of web3 usernames. They are a type of human-readable crypto address that are easier to read than  blockchain wallet addresses that consist of long alphanumeric text strings. ENS names are minted as NFTs and can be transferred on sold on platforms like OpenSea, x2y2, and LooksRare.

© 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.

Starling Bank has reported its first full year of profitability, according to annual financial results released Thursday. 

The UK-based startup bank posted a £32.1 million pre-tax profit for the 12 months up to March 31, 2022, compared to a £31.5 million pre-tax loss for the previous period ending March 31. The result was primarily driven by annual revenue of £188 million, a 93% increase. Previously, the company had only broken even on a monthly basis, making a profit of £800,000 in October 2020.  

This makes the neobank the first among its contemporaries — such as Monzo, Revolut and N26 — to be profitable across a full financial year. 

The bank also says that it has reduced its reliance on a UK government loan scheme created to help SMEs weather the pandemic. After acquiring Fleet Mortgages, the neobank now has more than £1.1 billion worth of mortgages on its balance sheet. However, loans to SMEs still constitutes a large majority of its lending, with more than £2 billion lent and £1.8 billion of that guaranteed through the government scheme as of March 31 2022. 

Former UK government minister Lord Agnew previously criticized the neobank for using the scheme as a “cost-free marketing exercise” and not taking its anti-fraud responsibilities seriously enough. 

In April, The Block reported that the neobank had raised £130.5 million at a £2.5 billion valuation. The funding came from existing investors Fidelity Management and Research Company, RPMI Railpen, Qatar Investment Authority, Goldman Sachs and billionaire Harald McPike. 

At the time, the company said the money would enable it to continue growing and for an acquisition spree. 

“We have made no secret of our M&A ambitions and expect targeted acquisitions to play a key role in the year ahead,” said CEO Anne Boden in a statement in the results. 

© 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.

Zipmex said it’s exploring all available options and plans to resume withdrawals from some wallets, a day after the Southeast Asian crypto exchange froze all client funds.

“Zipmex is exploring all available channels including fundraising, legal action, and restructuring,” the exchange said in a Facebook post on Thursday. 

In a separate tweet, the company said it plans to resume withdrawals and deposits for its Trade Wallets at 11am GMT today — although transfers from its Z Wallets to Trade Wallets won’t be available. ZipUp accounts are also still suspended. 

“Zipmex has retrieved the majority of our funds and assets that were historically deposited with our deployment partners and have been actively working to resolve the situation for the remaining outstanding assets,” the company said. “There were no materially adverse impacts to our operations.”

A recent sell-off in crypto markets has pushed several crypto firms to halt client withdrawals, including Celsius and Babel Finance. At the end of June, crypto exchange CoinFLEX announced it was pausing all withdrawals due to “extreme market conditions and continued uncertainty involving a counterparty.” Shortly after, Singapore-based lending platform Vauld made the same decision. The firm said it was struggling due to market conditions as well as the financial difficulties of certain business partners. 

Zipmex said it has a $48 million exposure to Babel Finance and $5 million to Celsius. 

© 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

• Today Tesla announced it had sold off ~83% of its digital assets
• Elon Musk cited the COVID shutdowns in China as the catalyst behind the sale
• Tesla clarified/revealed that it has not sold any of its Dogecoin on today’s earnings call

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Video game company Square Enix is launching a non-fungible token (NFT) project related to its Final Fantasy franchise.

With the help of NFT infrastructure firm Enjin, Square Enix plans to launch a collection of Final Fantasy VII 25th Anniversary cards and figures on Enjin’s Efinity blockchain. Consumers will be able to purchase a commemorative action figure that comes with a code to redeem an NFT version of the figure. Pre-orders for the figures are available today, while trading card preorders will be available later this year. 

It’s unclear how the project will play with fans of the franchise given other decisions to include NFTs in games have been met with significant backlash. GSC Game World, a Ukrainian game development company behind the S.T.A.L.K.E.R franchise, cancelled its plans to include NFTs in its S.T.A.L.K.E.R. 2 release when fans pushed back on the decision. 

Square Enix President Yosuke Matsuda previously has teased that the firm would allocate more to blockchain technology in 2022. In a January 1 letter, he said the firm was looking into issuing its own tokens, but tempered those comments by saying it was seeing examples of overheated trading in the NFT space.

“This, obviously, is not an ideal situation, but I expect to see an eventual right-sizing in digital goods deals as they become more commonplace among the general public, with the value of each available content corrected to their true estimated worth, and I look for them to become as familiar as dealings in physical good,” Matsuda said in the letter.

Since then, the firm has delved deeper into blockchain, selling $300 million in intellectual property and studios to invest in the technology along with artificial intelligence and cloud investments.

© 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 mining stocks were up on Wednesday, some by double digits, as the coin’s value temporarily surpassed $24,000.

At the time of market close, bitcoin’s price was around $23,7000, according to TradingView.

Hive Blockchain’s stock rose by 7.73%  on Nasdaq, after the company announced earlier in the day that it hit a “record net income” of $79.6 million in the year ending March 2022.

Stronghold Digital Mining saw its stock rise by 50%, followed by Mawson Infrastructure Group (21.53%), Iris Energy (+14.90%) and Argo (+13.89%).

Here’s how crypto mining companies performed on Wednesday, July 20:

© 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.

Anthony Scaramucci’s investment firm SkyBridge Capital will roll out a fund for web3 and crypto startups starting September, Business Insider reported on Wednesday. 

The fund, which is a mix between traditional venture and growth equity, will be open to accredited investors. It will be mainly invested in privately held web3 fintechs as well as in growth and late-stage crypto companies, according to the report, which cited unidentified sources familiar with the matter. SkyBridge is planning to announce the fund at its annual Salt conference on September 12. 

Sources cited by Business Insider said the fund was in line with Scaramucci’s aim to be at the forefront of decentralized finance. The investing firm will focus on companies that are trading at discounts on the secondary market and firms that continue raising primary rounds. 

The Block reached out to Scaramucci’s camp but they declined to comment. 

The plan to roll out the new fund emerged a day after reports that SkyBridge suspended withdrawals from the Legion Strategies fund. The suspension was reportedly caused by the fund’s performance drop due to heavy exposure to crypto. The Legion Strategies Fund was invested to several private companies, including crypto exchange FTX. It is also exposed to cryptocurrencies through funds managed by SkyBridge, including bitcoin.

SkyBridge previously sought Securities and Exchange Commission’s approval for a spot bitcoin exchange-traded fund in March last year. The SEC ultimately rejected the proposal. 

The investment firm also began investing in bitcoin at the end of 2020, according to Scaramucci in an interview with The Block in May. An investor deck obtained by The Block at that time showed Scaramucci put as much as $182 million in the cryptocurrency. 

© 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.

Grayscale Chief Legal Officer Craig Salm says the firm and its counsel are “laser-focused” in writing their brief to present to the appellate court in their case against the US Securities and Exchange Commission (SEC).

The firm brought a case against the SEC last month after the securities regulator denied its most recent attempt to convert its Grayscale Bitcoin Trust (GBTC) to a spot bitcoin exchange-traded fund (ETF) to market. The SEC has yet to allow a spot bitcoin product to reach the market, with repeated denials citing a lack of sufficient protection against market manipulation.

In the lead up to its denials, during which time the SEC rejected multiple similar products, Grayscale pushed back on the regulator’s arguments. It sent a letter to the agency arguing that the repeated rejections could violate the Administrative Procedure Act (APA), since the SEC has approved multiple bitcoin futures ETFs. According to spot bitcoin ETF supporters, any manipulation found in the spot market would affect the futures market, making the SEC’s willingness to approve a futures product but not a spot offering inconsistent.

Now Grayscale is locked in a legal battle with the SEC to hammer out that argument. In an interview at Bloomberg’s crypto event eon July 19, Salm said that because the issuer is challenging a decision from a federal agency, its complaint bypasses district courts and goes straight to the appellate level, which will save time in a possibly lengthy legal battle. 

“Based on discussions with our counsel, we’re hearing at the appellate level anywhere from 9 to 12 months — could be shorter, could be longer,” Salm said. “Litigation is inherently uncertain in terms of timing.”

The case is at the start of the process, and Grayscale is primarily focused on putting together its legal arguments to present before the court. Salm said the argument is “straightforward and simple.”

“You have futures ETFs. You have spot ETFs. They both draw their pricing based on the underlying markets, so if you’re okay with one, you should also be okay with the other.”

© 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.