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Quick Take

• LooksRare has very quickly taken a large portion of the NFT market in both trading volumes and protocol revenue.
• Yet this is largely due to the way it incentivizes traders to use the platform.
• The Block spoke to the LooksRare team to find out who created it and how they’re planning to solve the rampant amount of wash trading.

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Another spot bitcoin ETF proposal — this time from investment giant Fidelity — has been sidelined by the Securities and Exchange Commission.

The SEC handed down its disapproval Thursday morning, according to a newly released filing. As has been the case in recent months, the SEC raised concerns about fraud, manipulation and investor protection. Such concerns have been floated by the SEC for years, dating back to its rejection of a bitcoin ETF proposal put forward by Cameron and Tyler Winkelvoss, owners of the Gemini exchange. 

“This order disapproves the proposed rule change. The Commission concludes that BZX has not met its burden under the Exchange Act and the Commission’s Rules of Practice to demonstrate that its proposal is consistent with the requirements of Exchange Act Section 6(b)(5), and in particular, the requirement that the rules of a national securities exchange be “designed to prevent fraudulent and manipulative acts and practices” and “to protect investors and the public interest,” the SEC said.

Last week, the SEC shot down a proposed spot ETF focused on bitcoin from First Trust and Skybridge Capital on identical grounds. A decision on an ETF submission from Stone Ridge and NYDIG is expected by mid-March. 

© 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.

Californian bank Silvergate Capital has swooped to buy Meta-backed crypto project Diem’s technology assets for $200 million, according to the Wall Street Journal. 

The bank had agreed last year to partner with Diem to launch a US stablecoin pegged to the dollar. The offering was meant to be user-friendly, and to revive the project first coined Libra in 2019, when Meta was still called Facebook. The stablecoin never launched, however.

Citing people familiar, Bloomberg reported earlier in the week that Meta was weighing a sale of Diem’s assets as a way to return capital to its investor members. Investment bankers had been brought in to evaluate how best to sell its IP and try to find employment for its engineers.

Diem had faced stern opposition from regulators from the outset and was forced to rein in its ambitions. Instead of a stablecoin backed by a basket of global fiat currencies, the vision morphed into individual tokens backed by single national currencies.

But the setbacks kept coming. In August last year, The Block reported that Meta’s crypto subsidiary Novi was planning to work with a stablecoin issuer other than Diem. 

Meta’s crypto lead David Marcus — a co-founder of Diem — resigned from the social media company in November.

The Block contacted Meta for comment but had not heard back by the time of publication. 

© 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.

Bud Light maker Anheuser-Busch is launching an NFT project which will feature 12,722 unique tokens.

The project, called “Bud Light N3XT Collection” will be available to consumers 21 and over. The NFTs are part of a larger launch of the company’s first zero-carb beer.

With the purchase of an NFT, consumers will have the opportunity to vote on Bud Light NEXT merchandise, have access to Bud Light NEXT brand and partner events, and more. 

“So there will probably a lot more than that won’t be disclosed at the announcement time. But there’s a roadmap to come,” Corey Brown, senior digital director for Bud Light, told The Block. 

Increasingly, consumer and luxury brands have been moving into utility NFTs, which offer both a digital experience and tangible value through product offerings and other perks. Just this month, The Block has reported on brands like Gap, Crocs, and Prada moving into the NFT space.

This isn’t Anheuser-Busch’s first move into NFTs. The brewery company, which has a family of brands including Bud Light, Shock Top, and Hoegaarden, launched its first NFT sale featuring 1,936 unique Budweiser digital beer can designs in November. The collection sold out in an hour.

Despite the success, NFTs are still new and experimental for the company.

“It’s new for us, for Bud Light. I think the most important thing is making sure that we are keeping our consumers in mind. That this isn’t a marketing stunt. We’ve done a lot so far to make sure that we have the right partners in the space and we’re doing things as authentically to the community as we can,” said Brown.

Brown says the company is taking a long-term approach with more things brewing in the coming months. 

© 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.

Just four months since its public beta launch, the derivatives DEX is driving unprecedented growth by giving traders the freedom to list any trading pair. 

As both retail and institutional traders get more involved in DeFi, crypto derivatives trading is also seeing increased interest. According to The Block Research, the combined trading volume of bitcoin (BTC) and ether (ETH) options increased 443% from 2020 to 2021. Other notable events, including Coinbase’s recent purchase of crypto futures exchange FairX, have further cemented the future of derivatives in crypto trading and investing. 

In the TradFi world, the derivatives market is estimated to be in the trillions, though some analysts estimate as high as $1 quadrillion, a figure that far surpasses spot markets. There are similar market dynamics across the largest centralized crypto exchanges, with derivatives trading volume outpacing spot volume. When it comes to decentralized exchanges, however, spot markets still dominant the trading charts—but that’s now beginning to change.  

With the rise of decentralized derivatives exchanges over the past two years, derivatives trading volume is starting to catch up to its centralized counterparts. But while the market opportunities for decentralized derivatives are huge, there are still some barriers to entry in a market largely catering to a small subset of advanced traders. SynFutures is aiming to change that by making decentralized derivatives products more accessible to both novice and veteran traders. 

“For us, the real benefit of decentralization is democratization,” said Rachel Lin, CEO and co-founder of SynFutures. “We’re bringing a seamless, Uniswap-like experience to decentralized derivatives, enabling anyone to list any asset with a price feed at any time.” 

Offering Token Pair Variety  

For SynFutures, “anything” can be large-cap cryptocurrencies, altcoins, equities, gold, indices, or any other asset they desire, a unique offering among decentralized derivatives platforms which typically only offer set trading pairs and products. Users can take leveraged long or short positions pairing assets like BTC, gold, hash rate, and other real-world assets. By allowing anyone to list any pairs with a single asset in just two clicks, SynFutures aims to democratize how derivatives are listed and traded. SynFutures already offers more than 150 underlying pairs, which is currently the largest offering in the decentralized derivatives space. 

SynFutures also employs a rigid risk management system that introduces the best practices of TradFi to the DeFi space, an important feature for Lin, who previously worked on derivatives products at Deutsche Bank before helping to found “neobank” Matrixport. 

Hitting $3 Billion in Total Trading Volume

Despite having launched its public beta less than four months ago, SynFutures is already seeing significant user growth and engagement. The exchange recently passed $3 billion in cumulative trading volume and 55,000 users. In comparison, the current market incumbent dYdX has about 62,000, as of January 2022.  

“Our internal data reveals that our trading volume is spread across tens of thousands of users and not concentrated among a few addresses, which is often the case with other exchanges,” added Lin. “This is a good sign of organic retail growth, which puts us in an ideal position as we prepare for our V2 launch in the coming months.” 

The Road Ahead for SynFutures  

In the coming months, SynFutures will officially launch out of public beta with V2, an upgraded version of its platform with an enhanced UI/UX experience and one-click trading. In addition to other features and product launches, the exchange—which is currently deployed on Ethereum, Polygon, Abritrum and BSC—will expand support for Avalanche, Near, and Fantom in the coming months, as well as non-EVM compatible chains later in the year.  

For more information, visit synfutures.com and follow SynFutures on Twitter (@SynFuturesDeFi). 

© 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

• In this weekly series, we dive into some of the most interesting data and developments across the Layer 1 blockchain landscape, from DeFi and bridges to network activity and funding
• Facing elevated user demand from ongoing growth and recent market volatility, L1 blockchains are continuing to confront the difficulties of scaling
• As new chains begin to emerge at an accelerated pace, deliberate strategies for concentrating liquidity are showing effectiveness in bootstrapping early ecosystem growth
• This week, we will take a look at Avalanche, Cosmos, Osmosis, Terra, and Polkadot, along with a brief update on Fantom and Solana

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NFT marketplace OpenSea is trying to fix an issue that has led to the loss of multiple expensive NFTs, at rock bottom prices. Only one of its attempts to solve the problem has somehow made things worse.

The issue in question is that some NFTs are getting sold at old offer prices that were made when the NFTs were much less valuable. A typical example is that someone offered a Bored Ape for only a few thousand dollars, but instead of cancelling the offer, they move it to a different wallet. This appears to cancel it on the OpenSea website. However, if they move the NFT back to that wallet, users are often unaware that the original offer is still valid. And if the NFT has gone up significantly in price, then the original offer could be an absolute bargain.

OpenSea is trying multiple ways to solve this problem, including by providing more information to users about the state of their NFTs and any offers on them. Today it has started sending out emails informing users that have such older listings that have not been cancelled. The email encouraged the user in question to cancel them.

Yet while this advice made sense, it has actually led to the loss of yet more NFTs.

On the Ethereum blockchain, there is a persistent issue of frontrunning. This is where someone watches transactions being broadcast to the network and identifies ones they would like to either frontrun (either by making a different trade beforehand or by copying what they see is a highly profitable trade and doing it first). In order to make sure their transaction is processed first, frontrunners will typically bribe Ethereum miners and pay them a portion of the proceeds.

In this case, when users went to cancel their NFT listings, it actually exposed that the old offer was still there — and these aren’t always that easy to find. According to an NFT collector known as Dingaling, this happened to a user called Swolfchan. This user submitted a transaction to cancel their listing of a Mutant Ape for 6 ETH. But someone else saw this transaction and then used a frontrunning service, such as Flashbots, to buy the NFT before the listing was cancelled. They acquired it for a roughly 70% discount to the collection’s floor price.

“So Opensea basically just told everyone to go and cancel their old listings, but in turn actually got everyone to give the ‘exploiters’ the exact info needed to buy their NFTs at the original low price,” said Dingaling. 

Dingaling added that users should transfer their NFTs out of addresses that have inactive listings before cancelling them, in order to avoid having them poached in this way.

© 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.

A number of tokens linked to the DeFi protocol Wonderland sold off on Thursday, following allegations that the project was co-founded by Michael Patryn, the surviving co-founder of the now-defunct Canadian crypto exchange QuadrigaCX.

Wonderland was launched in September 2021 by Daniele Sestagalli and 0xSifu as a fork of the Olympus protocol on the Avalanche blockchain. Participants in the Wonderland community refer to themselves as “frogs” or as a “frog nation.” Frog Nation also encompasses Abracadabra, Popsicle Finance and now Sushi (the community behind the SushiSwap decentralized exchange).

Wonderland’s token (TIME) has seen its market cap drop from $511.8 million to $352.6 million in the last 24 hours, according to data provider CoinGecko. 

Abracadabra Money (SPELL) also saw its market cap tank, falling from $645.2 million to $495.4 million over the last 24 hours. 

Meanwhile, Popsicle Finance’s (ICE) market cap fell from $98.9 million to $57.4 million. 

When it comes to tokens like these that are based on the OlympusDAO protocol, it’s more relevant to talk about market cap than the prices of the tokens because of how they work. This is due to a rebasing system that increases the amount of tokens on an ongoing basis and hands them to token holders.

The moves follow a post by a crypto sleuth, who goes by Zach on Twitter, about their conversation with Sestagalli — the other co-founder of Wonderland. Screenshots revealed that they had identified Wonderland’s other co-founder OxSifu as Patryn.

At the time, Sestagalli confirmed his conversation with Zach about 0xSifu but did not directly say that 0xSifu is Patryn. This was followed by a blog post by Sestagalli, which stated Patryn would be asked to step down from his position until a vote of confirmation. “I am of the opinion of giving second chances, as I have mentioned on Twitter,” he 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.

Russia’s President Vladimir Putin is reportedly backing plans for regulating crypto mining in the country, Bloomberg reported on Thursday.

According to unnamed sources familiar with the matter, President Putin’s plan will see crypto mining restricted to regions in the country with excess electricity supply. The plan will also involve levying taxes on approved cryptocurrency mining establishments in the country.

On Wednesday, Putin countered calls by the central bank for a blanket ban on cryptocurrencies. At the time, the Russian President stated that the country could gain “competitive advantages” from allowing crypto mining activities.

Putin has since asked the central bank to work in tandem with the government on a path forward for allowing regulated crypto-related activities. Russia legalized ownership of virtual currencies back in 2020 but they are not allowed as a medium of exchange in the country.

Russia ranks third on the list of crypto mining countries based on hash rate distribution, according to data from the Cambridge Bitcoin Electricity Consumption Index (CBECI) website. The United States and Kazakhstan occupy the first and second positions but the latter’s energy shortage could lead to further migration of hash power to other countries.

© 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.

CoinTracker, a crypto startup that helps users report and file taxes, has raised $100 million in a Series A funding round.

Venture capital firm Accel led the round, with Coinbase Ventures, Kraken Ventures, Intuit Ventures, General Catalyst, Initialized Capital, Y Combinator Continuity, and Seven Seven Six Ventures also participating.

Angel investors, including Coinbase board member Gokul Rajaram, former Stripe COO Claire Hughes Johnson, Affirm and Snapchat investor Jeremy Liew, and Deel CEO Alex Bouaziz, also backed the round.

As part of the deal, Sagar Sanghvi, partner at Accel, has joined the board of CoinTracker.

With fresh capital in hand, CoinTracker looks to expand its team, enhance its platform, work with more crypto exchanges as its partners, and expand globally, the firm’s co-founder and CEO Jon Lerner told The Block in an interview.

CoinTracker’s current headcount is around 40 and is looking to nearly double the headcount this year. The firm has also recently hired former Google and Uber employee Gaurav Garg as its head of engineering and former Robinhood Crypto product head Zack Reneau-Weeden as its product lead.

As for its global expansion plans, Lerner said CoinTracker currently supports users from the US, the UK, Canada, and Australia on its platform and is looking to support European countries in the near future.

CoinTracker recently partnered with Coinbase to help its customers easily file crypto taxes. Its other partners include Intuit’s TurboTax and OpenSea. Lerner said more such partnerships are in the pipeline. The US recently passed an infrastructure bill that requires crypto exchanges and brokers to report all of their users’ transactions to the IRS.

As for enhancing CoinTracker’s platform, Lerner said more blockchains and protocols will be supported to help users file taxes across crypto assets.

The Series A round brings CoinTracker’s total funding to date $102 million. It raised $2 million in seed funding in 2018. Lerner said the firm has been profitable since its first year of operation.

© 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.