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Quick Take

• Aurory is a play-to-earn game with ‘pets,’ known as Nefties. The default human character in the game, also known as Sam, an Aurorian. You can then change the character’s skin once you own an Aurorian NFT. 
• Players will be given free Nefties in the player versus environment (PvE) to help them get started. However, the free Nefties are not transferable or sellable.
• The Aurory team plans to release the game’s private alpha in Q4 2021 and open beta in Q1 2022.
• The project has raised over $113 million through its seed rounds, token sales and NFT sales. 

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Osmosis, a decentralized exchange in the Cosmos ecosystem, is working on a way to prevent front running and the extraction of MEV. The solution is expected to go live in the first half of 2022, according to Osmosis co-founder Sunny Aggarwal.

But to really understand the solution, we need to first take a look at the problem.

What is front running and MEV?

Front running is a particular problem when it comes to decentralized exchanges. 

Since blockchain transactions are broadcast publicly, those keeping watch can see large trades about to happen and then submit their own trades to take advantage of the situation. All they need to do is operate quickly and bid high gas fees to have their trades processed more quickly. 

Another issue is called MEV. This refers to when a miner (usually on behalf of another user) deliberately organises transactions in a block for their own benefit. Since transactions in each block are processed linearly, this gives priority to the first transactions — and can lead to advantages such as front running trades or getting in early on NFT drops.

It’s a big issue. According to the MEV Explore dashboard, $743 million has been extracted in this way on Ethereum — the clear majority of which was for making arbitrage transactions (taking advantage of inefficiencies in the market). 

There are some ways to avoid getting front-run when performing transactions. 

One example is the Eden Network, which incentivizes miners to prioritise the network’s transactions. There are ways to submit transactions directly to miners to have them included in blocks without being broadcast to the network first.

While the majority of MEV extraction is happening on Ethereum, the practice is beginning to spread to other chains, including ones within the Cosmos ecosystem. 

“On Osmosis we’ve recently started to see it. Volumes have got to the point where it’s profitable now,” Aggarwal said.

As a result, Osmosis is trying to get ahead of what could be a worsening headache.

Solving the problem of front running

Osmosis has a different approach to solving these issues, one that’s possible because it’s built within the Cosmos ecosystem and is therefore able to dictate how its own blockchain works.

For context: Cosmos is a set of blockchains that are able to talk to one another. Its approach leans toward each application running its own blockchain, enabling greater customization and the ability to manage throughput. Blockchains can choose which consensus mechanism to run, but most use a version of proof of stake (which is fast and provides cheap transactions).

Osmosis’s key idea is to encrypt all transactions until they are finalized on the network. 

This means the miners and other blockchain observers won’t be able to see what the transactions do until they have been made. If it is successful, it could eliminate front running on its blockchain.

The strategy works by encrypting the transactions when they are broadcast to the network. They are decrypted when a block is produced on the network. The decryption key is provided by the two-thirds of validators that are needed to approve the block.

So when the block has been finalized, the transactions will be publicly available but it will be too late for anyone to try and front-run the trades.

Protecting against time bandit attacks

The way that Osmosis works also enables it to protect against front running being done retroactively, something known as a time bandit attack.

This type of attack can work on blockchains that have probabilistic finality, referring to how the end of the blockchain is constantly changing as it looks to find the longest chain. For these blockchains, sometimes a block can appear to be in the chain only to be replaced by another one. 

During a time bandit attack, the last few blocks in a chain are replaced by a longer chain. This allows the miner doing this to front-run any of the transactions in those blocks. It’s a difficult attack to do because it requires a lot of computing power but if the rewards are big enough, then it might be worth attempting.

This attack can affect some proof-of-stake blockchains. For example, while validators may take it in turns to submit blocks, they are not considered final until a certain number of blocks have been approved. Theoretically, some of the blocks could be replaced if a longer chain appeared.

Unlike this approach, Osmosis uses safety-favouring proof of stake, through which all the validators vote on a block and if two-thirds of validators approve it, then the block is considered final. As a result, blocks can’t be reorganized.

This is relevant to MEV because while Osmosis will hide transactions until they’re included in a block — it could have been possible for someone to rewrite the chain for the previous few blocks and front-run the transaction retroactively. 

But since such rewrites are not possible on its blockchain, that option won’t be available either.

© 2021 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 Federal Bureau of Investigation (FBI) is warning there has been a rise in fraudulent schemes using cryptocurrency automated teller machines (ATM) and quick response (QR) codes to facilitate payments.

• The FBI said it has seen an increase in scammers directing victims to use physical crypto ATMs and QR codes to complete payment transactions.
• Scammers will request payment from the victim and then direct the victim to withdraw money from the victim’s financial accounts, such as investment or retirement accounts.
• The FBI warns they will also provide a QR code associated with the scammer’s cryptocurrency wallet for the victim to use during the transaction.
• The scammer will then direct the victim to a physical cryptocurrency ATM to insert their money, purchase cryptocurrency and use the provided QR code to auto-populate the recipient address. Often the scammer is in constant online communication with the victim and provides step-by-step instructions until the payment is completed, said the FBI.
• “It is important to remain vigilant and not make payments to someone you have only spoken to online, even if you believe you have a relationship with the individual,” advised the FBI.

Read more: Federal Officials Recover Bitcoin Ransom From Colonial Pipeline Attack

Decentralized finance (DeFi) lending protocol bZx was compromised for $55 million today, in what is becoming a recurring theme.

According to a tweet from the protocol today, the private key controlling the project’s deployment on Polygon and Binance Smart Chain (BSC) was compromised earlier in the day.

Blockchain security outfit SlowMist issued an alert stating that over $55 million was siphoned from the project by suspected attackers.

As of the time of writing, these funds are domiciled in seven separate addresses believed to be controlled by the hacker. According to the breakdown by SlowMist, the address with the most funds holds about $18.4 million, with other addresses having balances of $6 million, $13.8 million, $15.5 million, and $697.

The bZx team has advised yield farmers who have interacted with the protocol on the Polygon and BSC chains to revoke such approvals as quickly as possible.

The DeFi lending protocol also stated that the bZx’s smart contract was not affected by the private key leak. Also, with the project’s Ethereum deployment under the governance of a decentralized autonomous organization (DAO), funds on that particular chain are also reportedly safe from the incident.

bZx has suffered attacks on three other occasions, losing over $8 million in the most recent exploit, which took place in September 2020.

© 2021 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.

Meten EdtechX, a China-based and Nasdaq-listed English language training firm, has ventured into the Bitcoin mining space as China cracks down on the private tutoring business.

Meten, which went public in March 2020 through a SPAC deal, first said in September that it plans to get into cryptocurrency mining to expand its business lines and soon raised nearly $60 million in a new round of equity issuance.

In its prospectus for the September raise, Meten indicated that it was “contemplating” buying both mining machines and NFT assets with plans to build its own mining farm. “We are currently searching for low-cost natural gas, oil mines, and other suitable sites in Canada,” Meten said at the time.

Now it appears the firm has made its first step to test the waters last week by buying 1,500 units of new generation Bitcoin mining machines for a cost of $12 million from AGM Holdings, a new Bitcoin ASIC mining chip manufacturer that has recently announced several bulk pre-orders.

Meten’s transition move comes about two months after China formally banned for-profit tutoring – both online and offline – in subjects on Chinese school curriculum, which includes the English language. 

It is the latest example of how a small-to-mid size public company, with an initial market capitalization of nearly $3 billion, is trying to use Bitcoin mining to salvage its declining business that has also been – perhaps unexpectedly – worsened by China’s regulatory environment.

98% off

Meten was founded in 2006 in Shenzhen and as of December last year owned over 100 self-operated learning centers across some 30 Chinese cities.

It provides online and offline English training lessons for both adults and juniors. For the first half of this year, Meten incurred a net loss of $26 million on a revenue of $67 million. About 20% of the revenue came from online and offline tutoring for juniors. 

When Meten was listed in March 2020, its stock price went up to as much as $27 and had since then maintained around $15 until August that year when it disclosed a net loss of $30 million for the first half of 2020.

Its stock performance kept declining since then and dropped below $1 in May this year, which was worsened by a Reuters exclusive report that China was poised to ban K-12 private tutoring businesses on school curriculum subjects – particularly math and English – in two months.

China’s competitive education system has bolstered the growth of for-profit tutoring businesses over the past decades but the government is now aiming to reduce the educational pressure on both children and parents in its bid to encourage the country’s birthrate.

The official crackdown notice was released in July and a wider market sell-off at the time caused Meten’s stock price to reach as low as $0.28. But it has since then bounced back to $0.55, although is still 98% off its listing high.

Meten said in its 2021 interim earnings report that the July ban may “materially and adversely affect” its business operations, financial condition and prospects. 

Lack of experience

Over the past four years, there have been both success and failure stories of struggling Chinese public companies tapping into Bitcoin mining to bolster its original business lines. 

For instance, BIT Mining, previously known as the sports lottery firm 500.com, started its Bitcoin mining pivot in early 2019 and has grown into a serious operation. It has avoided much of the limelight until early this year when it formally announced the pivot and the acquisition over mining pool BTC.com.

Others, like China-listed mobile app developer Wholeasy, were not so lucky. Its $80 million investment in Bitcoin mining equipment in 2018 and subsequent infrastructure build-out in the U.S. went wrong eventually and led to almost negligible returns.

For its part, Meten admitted that it has no prior experience and has “no assurance” that its Bitcoin mining effort will succeed.

“With respect to our plan to develop our blockchain and cryptocurrency business, we may not be able to acquire cryptocurrency mining machines at a reasonable cost, or at all,” the firm said in the September prospectus. “Due to our limited experience with blockchain and cryptocurrency activities, we also face challenges and uncertainties relating to the possibility of success of our new business.”

It appears Meten’s mining equipment purchase from AGM was already at a higher cost than the market rate.

In an announcement on Wednesday, AGM said it sold 10,000 units of its new generation of Bitcoin miners to another U.S-listed Chinese mining firm CCNC for $65 million, which is about 18% cheaper per unit than what Meten paid for.

© 2021 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.

• Digital asset platform Bakkt Holdings (NYSE: BKKT) will soon allow its customers to trade ether, the second-largest cryptocurrency, in addition to bitcoin, the company said in a statement Friday.
• Bakkt also said institutional clients can opt to use the Bakkt Warehouse for custody of ether.
• Shares of the Alpharetta, Georgia-based company, which started trading Oct. 18, rose about 4% Friday. The stock soared last month after Bakkt signed pacts with Mastercard and Fiserv for crypto payments.

UPDATE (Nov. 5, 15:28 UTC): Changes photo for something more recent.

Crypto-tracking firm Solidus Labs has raised $15 million in strategic funding led by Liberty City Ventures with participation from GSR and Exor Seeds. The investment brought the firm’s total funding close to $40 million. Solidus last raised $20 million in a Series A round in May.

The New York-based firm offers machine learning–powered trade surveillance and transaction monitoring for digital assets that can detect, address and report suspicious behavior. Solidus was founded in 2018 by former Goldman Sachs bankers with a belief that compliance tools would help drive mainstream crypto adoption, including the launch of crypto exchange-traded funds (ETFs).

Crypto platforms were the initial customer base for Solidus Labs, but the company also has a growing segment among banks and traditional financial institutions. Solidus plans to expand into new use cases around decentralized finance (DeFi) platforms and law enforcement.

Read more: Solidus Labs Raises $20M From VCs, Ex-Regulators to Fight Crypto Market Manipulation

Solidus has become popular with former regulators. The Series A round in May included participation from Commodity Futures Trading Commission (CFTC) alums Chris Giancarlo and Daniel Gorfine and former Securities and Exchange Commission (SEC) Commissioner Troy Paredes. The company recently hired former Consumer Financial Protection Bureau (CFPB) Director Kathy Kraninger as vice president of regulatory affairs.

“The additional funding will help us shortcut some of the development roadmap to meet the demand we’re being hammered with in the DeFi space,” Solidus Labs CEO Asaf Meir told CoinDesk.

“Solidus stands out as a unique suite of high-quality infrastructure that’s highly needed by the market at this point in time,” Richard Rosenblum, GSR co-founder and president, said to CoinDesk.

The American depositary shares of Argo Blockchain, the London based crypto miner, fell as much as 5% in early U.S. trading, after the company said in a filing that some employees had inadvertently disclosed potentially material non-public information in a conversation. Shares subsequently recovered some and were down about 1% as of the time of publishing.

“During the meeting, these representatives intended to review and explain previously published or publicly available information regarding Argo, but inadvertently disclosed certain information that could be viewed as material non-public information under U.S. securities laws or inside information under UK securities laws,” the company said in the filing.

Argo’s employees held a conversation with a person named Anthony Coyle that Coyle subsequently published on Twitter. The discussion contained non-public information, including the potential increase in the company’s hashrate and the expected cost to build its planned facility in Texas, according to the filing.

Argo didn’t disclose which employees held the conversation, nor which Anthony Coyle published them on Twitter. CoinDesk couldn’t immediately identify the referenced tweets.

According to the filing, Coyle wrote in his tweet that the miner increased its hashrate by 25% by using immersion cooling, while Argo now says it doesn’t have sufficient data to make these claims. However, the technology is expected to make the mining machines more efficient and extend the lives of the older computers, the company said.

Moreover, the unnamed Argo employees also said that the total cost to build its 800 megawatt mining facility in Texas could be $1.5 billion to $2 billion. The miner said the range was based on several assumptions, which could change, making the cost range potentially “differ materially” from what its employees shared.

Argo listed its American depositary shares on Nasdaq in September, and its stock is now up roughly 3% since then, while the price of bitcoin has climbed about 37% over the same time period. Recently, the miner reported its third quarter earnings, where it achieved record revenue and EBITDA, while mining 597 bitcoin during the quarter.

On Oct. 18, a slew of investment firms kicked off coverage, hitting the London-based cryptocurrency mining company with “buy” ratings, saying the company’s Texas facility should propel shares higher.

“We’re not art investors. We’re investing in things that have communities”

On this episode of The Scoop, Adam Goldberg co-founder of Standard Crypto joined host Frank Chaparro to discuss his work as a crypto VC and how his company is looking at the DeFi market in an unconventional way.

Standard Crypto is $1 billion in size, according to a source familiar with the fund.

Today, their investment team is primarily focused on projects in three areas: infrastructure, networks and apps. Thus far, Standard Crypto has made investments in major companies like OpenSea, Axie Infinity, Matrixport, Aave and Telegram, among others. The firm also has stakes in projects such as Audius, BitClout/Deso and Instadapp.

Goldberg framed Standard Crypto’s focus on the types of investments that have an ability to execute on and build a community.

“When you have a network that’s owned by its participants, the rules can’t change without the community being on board. And that’s what makes us feel like crypto networks are the hardest thing to disrupt that we’ve ever seen in humanity, in that they evolve with their communities as things change and shift over time,” said Goldberg.

Gaming and the Metaverse in focus

Goldberg told Chaparro that Standard Crypto is actively looking at companies advancing social and gaming projects in crypto. He sees the metaverse convergence of games and in-game economies as a new kind of development that’s different from gameplay itself. 

“I think with the metaverse, something that’s really, really interesting is we’ve seen this trend where now game economies and in-game assets, and this is now extending beyond gaming, is quite separate from game mechanics. ” Said Goldberg. “You know, Axie is not just a game, it’s a new movement. It’s sort of like a new generation of Pokemon or of of Angry Birds. And it’s possible that we’ll see, you know, movies or other types of experiences built around that IP.”

NFTs

Standard Crypto is also looking closely at NFT’s, of which Goldberg said he sees a lot of opportunities to capture value as “new types of productive assets”. Standard Crypto are current investors in NFT marketplaces OpenSea and Foundation.

Goldberg likened the opportunities of the metaverse to how traditional holding companies hold businesses for cash flow. “We think there will be opportunities that look like holding companies, you know, a Berkshire Hathaway of the Metaverse, if you will, that are cash flow generating and hold a number of these productive assets. In the old world it used to be businesses, but now assets themselves can be productive. And I think when you sort of think about NFTs, they really can be so many things, right? It started as art and became art and culture and, you know, gaming economy assets. And we’re seeing that rapidly expand to even more things.“

© 2021 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.

Fabio Panetta, a member of the European Central Bank’s (ECB) executive board, detailed the roadmap for the successful inclusion of a “digital euro” on Friday.

• The ECB is examining whether to introduce a central bank digital currency (CBDC) for retail payments, Panetta said in a speech at the Elcano Royal Institute, Madrid.
• If payment trends in the European Union (EU) continue, cash could quickly lose its central role and become a redundant way of settling bills.
• “Just as the postage stamp lost much of its usefulness with the arrival of the internet and email, so too could cash lose relevance in an economy that is becoming increasingly digital,” Panetta said.
• The ECB, which had been discussing a CBDC since the start of the year, in July said it was moving to a more investigative phase that will last 24 months. A decision on whether to issue one would be made at a later stage, and that it was not envisaged to replace cash, Panetta said at the time.
• Having a digital euro would allow people to continue using central bank money as a means of exchange in the digital era. The CBDC would have to be designed in a way that is attractive enough to become a widely used payment mechanism.
• It should not, however, be viewed as a competitor to private payment services, he said. The digital euro should expand payment solutions without crowding out private payment services.
• He said the ECB might issue a digital currency in order to safeguard consumer access to central bank money.