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Silicon Valley Bank plunges 60% before halt, Signature trading stopped shortly after open

Trading in Silicon Valley Bank is halted for pending news, but not before after shares plunged 63% in pre-market trading. Signature Bank was halted for volatility after plunging 25% at the open.

Silicon Valley Bank was trading around $39.22 by 8:35 a.m. EST, down 63% from the close, according to TradingView data.  

The tumult for the regional banks woes come just days after crypto-friendly bank Silvergate announced plans to wind down operations. Signature Bank had been seen as a potential alternative to Silvergate for crypto companies.

Fears of further Fed interest rate hikes have driven markets lower throughout the week. Hotter-than-expected jobs data today has worsened sentiment. The U.S. added 311,000 jobs in February, above consensus estimates of around 225,000.

© 2023 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.

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Author: Adam Morgan McCarthy

DegenZoo used AI to create Logan Paul’s NFT game without him

It started with an angry tweet.

“It takes 30 days to build CryptoZoo. To prove that I will build: CryptoPoo $POO in less,” tweeted Chris Zaknun, the CEO of crypto fundraising platform DAO Maker, in January.

His outburst was in reaction to Logan Paul’s NFT project CryptoZoo, a game that Paul promised would be “really fun” but one that was never fully developed — and turned into a real mess for everyone involved. Paul blamed the developers for running off with the code, while the developers claimed Paul never paid them. It ended in a back-and-forth with another YouTuber called Coffeezilla, culminating in a recent apology by Paul and a promise to pay everyone back (which hasn’t happened yet, according to Coffeezilla).

Zaknun’s original tweet suggested that he wanted to build a parody version of the CryptoZoo game, purely to make a point that — regardless of the issues with the game’s developers — Paul could have managed to build it anyway.

Two months later and Zaknun is almost ready to release his version of the game, which was built in a month and has gone through a month of testing. He’s hoping to put it live next week. Only, it’s no longer a parody, it’s been renamed DegenZoo and he reckons it actually has potential to gain traction.

“I hope that the animals will become a major NFT collection, that people play the game until level 3 is all played out,” said Zaknun in an interview.

DegenZoo is raising funds through Zaknun’s main project DAO Maker. Here, anyone can fork over a few hundred dollars of the project’s native DAO token and chosen parties can swap their DAO tokens for DegenZoo’s native token DZOO. Parties will be judged and selected based on their on-chain histories. Those who bought into the original CryptoZoo project are receiving a higher priority in the token sale.

How does DegenZoo work?

In many ways, the game is similar to Paul’s idea: You buy eggs, which hatch into random animals. Then you can combine these animals and hope to make money through doing so.

But there are a few differences. Instead of matching two animals and having their features combine into one bizarre hybrid — something Zaknun says is a bad idea because the number of possible combinations would be incredibly high — the game has one animal eat the other (smaller) one. 

This design was built to reflect what happens in real life, with actual predators. When this happens, the bigger animal is leveled up, and this can be done twice. The owner can choose to burn the NFT and will receive more tokens, depending on how high it has been leveled up to and how rare it is.

The overall idea is that players can choose to either level up their NFTs and eventually burn them, to try to generate larger token multipliers, or to sell the NFTs on a marketplace. Whichever they think is the most profitable strategy.

“The game is to make the most money,” said Zaknun. “Every crypto game is about making money.”

Still, Zaknun sees a greater purpose here. When the NFTs are burned, “you get this horrifying blood splash to reflect the idea that one more animal died to human greed,” he said. This is designed to represent the impact of capitalism on animals; the more NFTs are burned, the more it will reflect how many species have been pushed to extinction.

With that stance in mind, he said all profits from the project — through a 2.5% royalty fee — will go to charity.

Taking advantage of AI

Zaknun said the team of six who built DegenZoo in 30 days was highly experienced, including the DAO Maker CTO and a former senior developer at MakerDAO (a different project). He also said that it wouldn’t have been possible to build the game in its current form so quickly without the use of AI.

“The AI; it’s crazy,” Zaknun said, when asked about the biggest learning experience from the project. “I really think people who do not embed AI into everything they do are not going to be competitive.”

He said AI was used to generate the images. He created a rough template to give the images the same look and feel and then handed the process of generating the 1,200 images (that make up the 40,000-strong NFT collection) over to the community. For this, he used Midjourney, but he said he didn’t look into whether there would be any issues with commercial use of images generated through it.

An example of the AI-generated animals used in the game. Image: DegenZoo.

Beyond this, Zaknun said he used AI in spreadsheets to quickly translate messages into multiple languages. These would then go out to the community forums focused on different countries. He said the community used AI to generate tweets and content used to promote the project.

The only thing AI wasn’t used for was the code itself. He said it may have been used for code review, but it wasn’t used for any of the code related to the project’s smart contracts.

Concerned with randomness

The biggest challenge with building this project wasn’t the time pressure but creating a way to generate on-chain randomness, Zaknun said. 

Randomness is important for the project because when someone turns an egg into an NFT, they need to end up with a random NFT. But if all the data was on-chain, it would be possible to work out which NFT would be generated with each egg and someone could choose to only buy the eggs that would produce the rarest NFTs.

One option to solve this would be to use the Chainlink oracle service, which can provide a random number generator. Still, Zaknun said this would have too expensive for the project because it’s built on the Ethereum mainnet and the transaction fees would add up.

Instead, he said, the project has its own randomness function that’s based on data produced by the wallet claiming the NFT. This should go some way in thwarting those trying to game the system, as wallets can’t really compete with each other since they would have different results.  

That said, he acknowledged that it’s possible big Ethereum validators might find an edge here. He said it might be possible they would be able to work out which eggs to hatch that would give them the greatest rewards. But he dismissed the notion. 

“I think the Ethereum validators have better things to do than play my game,” he said.

© 2023 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.

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Author: Tim Copeland

Uniswap v3 protocol will become free to use after business license expires on April 1

The underlying protocol of the biggest decentralized exchange, Uniswap version 3 (v3), is set to become completely free for use as open source software after the current Business Source License (BSL) expires on April 1, according to official documentation.

Uniswap v3, developed by Uniswap Labs, is a decentralized exchange protocol that enables users to trade cryptocurrencies without relying on a centralized authority. The BSL license for Uniswap v3 was released in 2021, allowing free non-commercial and non-production use of the code. Still, its production use requires an Additional Use Grant designed to balance the interests of open-source developers and commercial users.

The BSL license will expire two years after its launch, on April 1, after which the code will become fully open source and available for anyone to use without restrictions.

Uniswap’s v3 protocol allows users to deposit tokens into a liquidity pool and receive pool tokens that represent their share of that pool. The pool tokens can then be used to redeem a proportional share of the pool’s liquidity in the future.

The main difference between Uniswap v3 and previous version v2 was the introduction of concentrated liquidity. This means that liquidity providers can now specify a price range within which they are willing to trade, improving capital efficiency and reducing trading slippage. The v3 powers Uniswap’s largest DEX by trading volume, processing more than $1.5 billion in trading volume over the last 24 hours, according to CoinGecko data. 

The expiration of the BSL license for Uniswap v3 is a notable event in the broader DeFi ecosystem for developers inside and outside the Ethereum ecosystem because it allows them to use the code to deploy their own DEXs. When Uniswap v3 becomes available for free use, developers will be able to use its code and deploy their own exchanges free of cost.

For example, PancakeSwap, the biggest exchange on the BNB Chain, has already announced that it will release v3 in the first week of April, which is speculated to have been developed using Uniswap’s v3 protocol. It is expected that making Uniswap v3 free may enable it to become the next-generation foundational primitive for the DEX niche, much like its widely adopted predecessor, Uniswap v2.

It’s important to note that although unlikely, it is theoretically possible Uniswap could modify the license to extend the BSL or take other actions that it might deem appropriate.

© 2023 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.

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Author: Vishal Chawla

Lost and found: Aave begins first phase of token recovery rescue mission

DeFi lending protocol Aave is set to rescue lost tokens for its users after the DAO voted unanimously in favor of commencing phase one of the asset recovery process.

The first phase will focus on tokens mistakenly sent to smart contracts for AAVE, LEND, and staked AAVE tokens. These include tokens like AAVE, LEND, and stkAAVE, as well as UNI and USDT.

The value of rescued tokens is about $2.18 million, according to figures provided by Aave developer Bored Ghosts Developing Lab. AAVE tokens form the bulk of the recovery in this phase with more than 29,188 AAVE and 107 staked AAVE tokens worth a total of $2.16 million. The LEND tokens recovered will be transformed to AAVE at a ratio of 100 LEND to 1 AAVE token.

Bored Ghosts Developing Labs said the rescue process is in response to calls from community members. The team said that the recovery mission will help many affected users.

However, not all lost tokens will be recovered during the process. Only tokens worth at least $500 will be included. This is because the cost of recovery would outweigh the value of the tokens. The recovery plan does not also include lost tokens sent from the wallets of centralized exchanges.

The recovered tokens will be sent to a distributor smart contract. Users will then be able to retrieve their lost tokens from the contract. To do so, they will have to use the same wallet address from which they initially lost them.

The recovery plan involves upgradable smart contracts within its ecosystem. Upgradable smart contracts allow project teams to run upgrades, fix bugs and generally improve upon smart contracts even after they are deployed on the blockchain. These changes only affect certain logic elements within the contract, without interfering with its state.

© 2023 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.

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Author: Osato Avan-Nomayo

Blockchain.com to wind down its asset management arm

Blockchain.com is winding down its asset management arm, which launched last April.

The crypto startup has applied to strike the asset management subsidiary off the UK register and dissolve the company, according to a filing on Companies House.

Bloomberg reported earlier that the asset management arm, which was launched in partnership with Altis Partners, would be shutting down.

“Blockchain.com Asset Management launched in April 2022, shortly before macroeconomic conditions deteriorated rapidly,” a spokesperson said in an email to Bloomberg. “With crypto winter now approaching the one year mark, we made the business decision to pause operating this institutional product.”

The asset management service catered to institutional investors, family offices and high-net-worth individuals, according to a Bloomberg interview.

Blockchain.com had cut costs by laying off 28% of staff early this year, which came only months after it had raised an undisclosed amount of funding from UK-based investment firm Kingsway Capital. Its one of several crypto platforms taking cost-cutting measures, including Kraken and Coinbase.

© 2023 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.

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Author: Kari McMahon

Ark loads up on Coinbase stock, adds more than $20 million across two funds

Cathie Wood’s Ark Invest continues to add Coinbase shares to its funds, following up Wednesday’s additions with another estimated $20.5 million purchase yesterday. 

Ark Invest added 301,437 Coinbase shares to its Ark Innovation ETF and 52,525 shares to Ark Next Generation Internet, according to its latest trade filing. Shares in the crypto exchange closed down 7.8% to $58.09 on Thursday. Based on the price at the close, Ark’s most recent purchase cost around $20.5 million.

Wood’s fund purchased over $30 million in Coinbase shares in February and continued its spending into March — despite increasing headwinds in the crypto space.

The collapse of crypto-friendly bank Silvergate and the risk of prolonged interest rate increases in the U.S. to combat inflation has driven down market sentiment this week.

Ark Invest also purchased over 265,000 shares in the social trading platform Robinhood. The shares were added solely to the Ark Next Generation Internet ETF and came to about $2.5 million. 

© 2023 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.

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Author: Adam Morgan McCarthy

US DoJ appeals billion-dollar Binance.US acquisition of Voyager assets

Though New York’s bankruptcy court signed off on Binance.US’ plan to purchase Voyager’s distressed assets, the United States government is making an effort to block the billion-dollar deal. 

The U.S. Department of Justice’s Trustee Office filed an appeal against Binance.US’ acquisition of bankrupt crypto lender Voyager Digital’s assets roughly one day after New York bankruptcy judge Michael Wiles approved it.

“Things have to be done,” Judge Wiles said during the hearing. “We have creditors who are waiting and who in the midst of all of this uncertainty have no access to property in which they’ve invested, in some cases, their life savings, so we have to take some kind of action,” he added.

The DoJ’s appeal follows similar opposition from other regulators — including the Securities and Exchange Commission, which filed an objection to the deal last month, citing a potential violation of federal securities laws through the unregistered operation of a securities exchange.

© 2023 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.

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Author: Adam James

Crypto VCs urge portfolio companies to pull funds from Silicon Valley Bank

Crypto-focused venture capital investors have advised their portfolio companies to withdraw funds from Silicon Valley Bank, which is struggling to reassure clients after moves to shore up its balance sheet spooked investors. The warnings come even as startups in the sector scramble for viable banking options.

Spokespeople for Mechanism Capital and Eden Block confirmed they have advised portfolio companies to withdraw funds held at SVB. Pantera Capital, the hedge fund and venture investor, is telling portfolio firms to explore multiple accounts, a spokesperson confirmed. Two additional venture capital investors in crypto have issued similar advice to startups they’ve backed, but asked not to be named due to commercial sensitivities.

SVB did not immediately respond to a request for comment.

The news comes after a precipitous decline in the shares of SVB Financial Group, the bank’s parent company, which fell more than 60% on Thursday. The sell-off came after the company announced a $1.75 billion stock offering earlier this week, in addition to a separate $500 million common stock purchase by private equity firm General Atlantic, in an effort to shore up its balance sheet.  

Peter Thiel’s Founders Fund had already advised portfolio companies to withdraw funds from the ailing lender, according to a Bloomberg report earlier today.

SVB’s struggles come with crypto startups already seeking banking options, after the demise of crypto-friendly Silvergate Bank earlier this week. 

Technical issues

Some of the people spoken to by The Block also cited technical difficulties relating to SVB accounts.

A web3 startup founder, who requested anonymity to speak candidly, told The Block he struggled to log into his account. Another crypto venture capitalist, who declined to be named, reported a similar issue. Multiple Twitter users have also flagged this issue. 

SVB is the bank of choice for a vast swath of venture-backed tech startups in the U.S. It has more than 2,600 fintech clients alone, according to its website. But a souring in the venture capital market over the past year has proven challenging for the bank. SVB’s CEO Greg Becker urged clients to “stay calm” on a conference call earlier today, Bloomberg reported.

© 2023 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.

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Author: Ryan Weeks

BTC reaches lowest point in 7 weeks, crypto market slides after Silvergate announcement

Cryptocurrency prices fell sharply throughout the afternoon, as investor sentiment was shaken following crypto-friendly bank Silvergate announcing it is liquidating. 

Bitcoin was trading around $20,325 by 5:15 p.m. EST, down about 6.4%, according to TradingView data — its lowest point in around seven weeks. Ether followed suit, dropping 6.2% to $1,437.

 
Altcoins also plunged, with the exception of stablecoins. After Silvergate’s announcement, stablecoins are now being framed by investors as the primary on and off ramps for crypto trading.
 
Binance’s BNB slipped 6.4%, Ripple’s XRP was down 7.4%, and Polygon’s MATIC shed 8.8%. 
 
Dog-themed meme coins were also down, with Shina Inu and Doge Coin down 11.3% and 10.3% respectively.

Crypto stocks & structured products

Silvergate shares fell rapidly throughout the day, tumbling 42.1% by market close to $2.84.

Silvergate announced its intention to wind down operations and voluntarily liquidate the bank on Wednesday, bringing an end to one of crypto’s most prominent banks.


Crypto firms in the U.S. are down to one bank, Signature, said Brian Rudick, senior strategist at GSR.

“It’s likely that only larger, existing crypto companies will have access to the banking system in the U.S., Rudick said, “while startups will struggle to access banking services.”

In response, shares in smaller crypto banks fell sharply. Signature Bank dropped around 12% by market close, while Silicon Valley Bank lost around 60% of its value on the day.

Crypto stocks were also down significantly, with Microstrategy down 9.4%, Coinbase down 7.8% and Jack Dorsey’s Block down 5.3% by market close.

“It was a rough afternoon for risk stocks in general,” said Matt Kunke, junior strategist at GSR, with the S&P 500 falling about 2% in the last 3 and half hours of trading.

Part of the decline may be related to waning risk sentiment, he said, with investors reducing their risk ahead of tomorrow’s release of U.S. nonfarm payroll numbers. 

Another factor may be the lawsuit initiated today against KuCoin by the New York Attorney General’s office, Kunke said. The suit alleged that ETH is a security, “heightening regulatory tensions that have been in focus all month.” ETH’s value began sliding shortly after the news broke. 

Grayscale’s GBTC was also down significantly on the day, dropping 10.8% by market close.

Grayscale bounced back earlier in the week after it met the Securities and Exchange Commission in court on Tuesday. The asset manager brought the case against the SEC for rejecting its proposal to convert its flagship fund, GBTC, into a spot bitcoin ETF in June of last year.

© 2023 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.

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Author: Sam Venis

Bakkt’s Q4 earnings dragged down by goodwill impairment charge of $272 million

Bakkt reported an increase in revenue and expenses in the fourth quarter, driven by another large impairment charge.

Revenue came in at $15.6 million, below FactSet estimates of $16 million, but still an increase of 14% year-over-year. Adjusted earnings before interest, tax, depreciation and amortization came in worse than expected at negative $30.5 million, or 30.3% higher than last year. Estimates had anticipated a figure of negative $28 million.

Operating expenses rose to $341 million from $86 million, or an increase of almost 300% from the fourth quarter of 2022. Expenses were driven by non-cash goodwill and intangible assets impairment charges of around $272 million. 

Bakkt reported a net loss of $1.5 billion for the third quarter, driven mainly by its previously announced goodwill impairment charge.

The firm revealed plans to invest in custody to meet its goals in 2023. It will also look to complete its acquisition of Apex Crypto and expedite the integration. Another goal is driving utility through earning, reward and pay features, including utilizing Layer 2 protocols like Bitcoin’s Lightning Network.

Bakkt recently announced plans to nix its consumer app to focus on its business-to-business technology solutions. “The discontinuation of the app ensures we are supporting the relationship our partners and clients have with their customers,” CEO Gavin Michael said. “We are focusing our investment on our core solutions that have product-market fit and are positioned to scale quickly.”

© 2023 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.

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Author: Adam Morgan McCarthy


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