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Coinshares reported a fourth consecutive week of digital asset investment product inflows, totaling $76 million last week.

Year-to-date inflows reached $230 million, “highlighting a decisive change in investor sentiment for the beginning of 2023,” the firm said in its weekly report.

Bitcoin dominates demand with inflows of $69 million, representing 90% of the total flows for the week.

“Despite the improving clarity around unstaking, Ethereum saw only US$0.7m of inflows,” the firm 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.

Bitcoin miner Riot said there will be a delay in meeting its first quarter hashrate guidance of 12.5 EH/s due to damage from the winter storm that hit the U.S. in December and knocked miners offline.

In January, it mined 740 bitcoins, 12% more than in the previous month when it curtailed power due to the storm.

Of the 2.5 EH/s affected by damage to piping in two buildings, a total of 0.6 EH/s has been brought back online with 1.9 EH/s remaining.

“The company is evaluating its repair options and will provide additional information on deployment timelines as it becomes available,” Riot said in a statement.

The miner sold 700 BTC in January as the coin rallied, bringing in $13.7 million. Rival Marathon, which typically holds all of its bitcoin, sold 1,500 last month.

Riot had a hash rate capacity of 9.3 EH/s as of Jan. 31, with 82,656 miners deployed.

© 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.

Decentralized exchange Trader Joe has partnered with interoperability protocol LayerZero to convert its native ERC-20 token “joe” into an omni-chain fungible token (OFT). The integration will enable joe tokens to be easily transferred from its native chain, Avalanche, to two other blockchains where Trader Joe operates, Arbitrum and BNB Chain.

LayerZero relies on a unified “omni-chain” communication protocol that can be used to move assets back and forth between blockchains. Such tokens are moved through LayerZero’s decentralized communication protocol rather of relying on wrapping — a process where tokens have to be minted and burned continually. LayerZero’s approach is considered more secure than wrapping, the Trader Joe team noted in a blog post.

The partnership between Trader Joe and LayerZero is expected to reduce or eliminate the security risks associated with traditional wrapping methods when transferring joe tokens across different blockchains.

Trader Joe, with over $110 million in total assets staked on its platform, is a decentralized platform that allows users to swap crypto tokens and NFTs. It also caters to lending and borrowing requirements of crypto users.

© 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.

Ethereum scaling development firm StarkWare has teamed up with blockchain oracle tool Chainlink Labs to expand app development on its decentralized Layer 2 zk-Rollup network, StarkNet.

The collaboration sees StarkWare join the Chainlink SCALE program — focused on accelerating the growth of blockchain and Layer 2 ecosystems — making Chainlink’s price feeds available on the StarkNet testnet. The partnership was announced in a statement on Monday. 

StarkWare’s products have generated more than 300 million transactions, settling over $800 billion and minting more than 95 million NFTs. With around 725,000 active users, Chainlink’s oracle network is the most widely used in DeFi, enabling over $7 trillion in transaction volume.

StarkNet’s native STRK token, announced in November but not yet tradeable, will cover certain operating costs for Chainlink oracle nodes. This provides developers building on StarkNet a low-cost way to connect their applications to Chainlink’s decentralized network of real-world data feeds, expanding smart contract capabilities.

“We’re excited to be joining the Chainlink SCALE program to provide our ecosystem of developers with access to the industry standard for oracle services, enabling a next-generation of globally scalable web3 applications to be built on StarkNet,” StarkWare co-founder Eli Ben-Sasson said in the statement. “We look forward to continuing our collaboration and welcome the passionate Chainlink community into the StarkNet ecosystem.” 

Scalable dapps

Chainlink data fees are now live on the StarkNet testnet and are expected to launch on its mainnet in the near future, something the StarkWare team said will help accelerate the adoption of StarkNet and the growth of its ecosystem.

“We’re thrilled to have StarkNet joining the Chainlink SCALE program, further supporting the upcoming deployment of Chainlink oracle services on StarkNet mainnet,” said co-founder of Chainlink Labs Sergey Nazarov. “By reducing the operating costs of oracle nodes, StarkNet is able to accelerate its ecosystem’s growth and become a more attractive environment for building scalable dapps in the web3 ecosystem.”

Over the weekend, StarkWare open-sourced a crucial component of StarkNet, the StarkNet Prover, increasing the transparency of its code. That move marked the completion of open-sourcing the full StarkNet software stack, having already done so with its Cairo programming language in November and after rolling out the Papyrus open-source client last month.

Chainlink Labs announced SCALE in September, the same day that interbank messaging service SWIFT linked up with the oracle provider on a cross-chain interoperability proof-of-concept project.

© 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.

Lightning Network, a Layer 2 payment network built on top of the Bitcoin blockchain, has reached an all-time high in terms of capacity, or the amount of bitcoin (BTC) locked in payment channels.

The payment channel capacity on the Lightning Network has grown 63% since the beginning of last year, according to data from The Block Research. Currently, the network has over 5,490 BTC ($125 million) in capacity, up from 3,350 BTC on Jan. 1, 2022. This is being seen as a positive sign for the adoption of Bitcoin transactions.

The Lightning Network is a second-layer payment protocol built on top of the Bitcoin blockchain, designed to enable fast and cheap micropayments by allowing participants to transact directly without the need for immediate settlement on the blockchain. It operates as a network of bi-directional payment channels between participants, allowing for off-chain transactions that are eventually settled on the Bitcoin blockchain.

It was designed to mitigate the issues seen on the Bitcoin mainnet, such as slow transaction speeds and high fees. The network achieves this by enabling users to open payment channels between themselves, which allows it to handle high amounts of low-value transfers without having to broadcast every transaction to the Bitcoin main network.

The network’s ability to mitigate the issues seen on the Bitcoin mainnet has made it an attractive option for both businesses and individuals. For example, the integration of Bitcoin payments in El Salvador was made possible by Strike, a payment service based on the Lightning Network. Similarly, Twitter adopted the Lightning Network to enable Bitcoin tips on its platform in 2021.

The growth of the Lightning Network’s capacity coincides with a short-term rally in Bitcoin’s price. The cryptocurrency has increased by 38% since January 1, 2023, rising from $16,500 to $22,800 at the time of writing, per CoinGecko data. The price is still down 66% from an all-time high of $69,000 recorded in November 2021.

© 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.

South Korea’s regulator has widened the definition of what type of blockchain-based token is considered a security with implications for issuers and crypto exchanges.

The Financial Services Commission said Monday that tokens with matching characteristics to securities as defined by South Korea’s Capital Markets Act will be regulated as such.

Digital assets that likely meet the definition of a security include those that give a stake in business operations, dividend rights or share of corporate profits, Forkast reported, citing the Korean language statement.

South Korea is expected to issue new crypto regulations in the coming months, making it the latest country to move forward with a regulatory regime in response to last year’s collapse of big name operators including the country’s own Terraform Labs, the company behind the Terra blockchain.

Digital asset service providers, including crypto exchanges, will be responsible for evaluating whether tokens are securities, the FSC said. Firms that don’t follow procedures for issuing securities would be violating the law and face sanctions, the statement 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.

BNB Chain is aiming to be competitive in 2023, following a tumultuous year for crypto markets, Messari said. 

The blockchain network will focus on growth strategies and new tech developments, including scaling solutions and boosting throughput, along with implementing Ethereum Virtual Machine execution, according to a Messari report.

“The team plans to expand the network with L2-like solutions, such as ZK-rollups and sidechains, and to increase decentralization by open-sourcing the validator set,” the report said. “Despite several challenges along the way, BNB Chain successfully executed its 2022 roadmap … After a dramatic year with many challenges, BNB Chain looks to remain competitive heading into 2023.”

Daily active addresses on the blockchain network rose in 2022, while average daily transactions remained steady at approximately 3.4 million per day. Staking and decentralization on the network also improved.

BNB Chain did face challenges in the fourth quarter, though, including an October exploit. A hacker minted and took 2 million BNB, worth nearly $570 million at the time. Although no users were affected by the hack, roughly $100 million was moved off-chain and was not recovered. 

© 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.

Troubled crypto exchange FTX is asking political figures and groups to return donations linked to former CEO Sam Bankman-Fried and other FTX executives by the end of February.

FTX is sending confidential notices to political figures, political action groups and other recipients of contributions and payments, the exchange said. The crypto exchange filed for bankruptcy protection in November.

The FTX debtors are reviewing $93 million in political donations made between March 2020 and November 2022, according to court documents filed in January. Bankman-Fried has pleaded not guilty to breaking campaign finance laws, among other charges, in a separate criminal case. 

Some political groups who received FTX-linked funds have already taken steps to return the money. The Democratic National Committee, along with the party’s key Senate and House campaign committees, said in December that they would set aside more than $1 million in cash linked to FTX and return it at the direction of bankruptcy lawyers. 

Some individual lawmakers who received donations linked to FTX took steps to symbolically distance themselves from the exchange by donating the money to charity. That won’t stop bankruptcy lawyers from seeking to claw back the funds, FTX warned. 

“Recipients are cautioned that making a payment or donation to a third party (including a charity) in the amount of any payment received from a FTX contributor does not prevent the FTX debtors from seeking recovery from the recipient or any subsequent transferee,” FTX said.

Disclaimer: Beginning in 2021, Michael McCaffrey, the former CEO and majority owner of The Block, took a series of loans from founder and former FTX and Alameda CEO Sam Bankman-Fried. McCaffrey resigned from the company in December 2022 after failing to disclose those transactions.

© 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.

Proposal politics and earnings releases are coming down the line this week. Here’s what to watch out for:

Uniswap V3 proposal vote

The latest version of the decentralized exchange Uniswap may soon be deployed on BNB Chain. It passed an early temperature check, then the full governance vote on the Uniswap DAO brought the heavy hitters up to bat and will conclude on Friday, Feb. 10.

OxPlasma Labs put forward the proposal to deploy Uniswap V3 on BNB Chain, using the Wormhole bridge for the deployment. A16z then put its considerable UNI holdings to use by voting against it.

Perhaps this is unsurprising for some, as the fund invests in LayerZero, which earlier missed out on becoming the bridge for the deployment to Jump Crypto-backed Wormhole. 

Earnings season

Major tech firms shared fourth-quarter results last week, and now earnings season is slowly tapering off. Still, some crypto-adjacent firms will be delivering earnings this week. 

PayPal will share its financials for October through December on Thursday. During the quarter, the firm teamed up with Metamask to offer a crypto onramp to select users and expand its crypto services across Europe.

Also on the docket is Japan’s SoftBank, sharing its third-quarter results on Feb. 7. The fund wrote down its investment in FTX last year after the exchange’s collapse. 

CME Group will share its fourth-quarter results on Feb. 8. Derivatives on the exchange reached new highs last month. Robinhood will post its earnings on the same day. 

© 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.

A proposal to deploy the latest version of decentralized exchange Uniswap on the BNB Chain passed an early temperature check, and a full governance vote on the Uniswap DAO is bringing the heavy hitters out to bat.

OxPlasma Labs put forward the proposal to deploy Uniswap V3 on BNB Chain, using the Wormhole bridge for the deployment. A16z put its considerable UNI holdings to use by voting against it. The VC firm has significant skin in the game, as does Jump Crypto — pitting two of the space’s most active VCs against each another. Voting will conclude on Feb. 10. 

Andreessen Horowitz’s crypto arm, a16z, backs LayerZero as a bridge, while Jump is invested in Wormhole. A16z could not vote in last week’s temperature check, but partners noted their intention to back LayerZero.

“To be totally unambiguous, we at a16z would have voted 15 million tokens toward LayerZero if we were technically able to. And we will be able in future Snapshot votes,” Eddie Lazzarin, partner at a16z, wrote in a forum post.

The fund could not participate in the temperature check due to the custodial set-up of its tokens, a source with knowledge of the process told The Block.

While the debate about these bridges is partly about security  — cross-chain bridges have been the target of numerous attacks, including last year’s $325 million attack on Wormhole — the fact that two massive VC firms will vote in favor of their own portfolio companies also played a significant role. 

Wormhole proponents were hoping to avoid this scenario, with one person close to the project telling The Block: “If a16z goes against community vote and tries to tank it, I’d be shocked. That would be truly abhorrent, and I don’t think they would go that far.”

© 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.