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GitPOAP, a protocol that allows users to record contributions to the software development platform GitHub on-chain, has raised a $4 million round led by Inflection.xyz and Libertus Capital, the company said on Thursday. The valuation was not disclosed. 

Avalanche VC, Protocol Labs and Proof of Attendance Protocol (POAP) itself participated in the round, along with angel investors such as former Coinbase CTO Balaji Srinivasan. 

Built on top of POAP – a piece of code which produces a specific type of NFT that shows you attended an event or experience – GitPOAP operates by issuing non-fungible token (NFT)-based POAP badges to indicate meaningful contributions to GitHub projects. Founder Colfax Selby says this has helped to incentivize work on projects that may have gone overlooked. 

A former Bloomberg engineering team leader, Selby founded the company with CTO Jay Puntham-Baker, an ex-Vimeo engineer in January 2022. 

“When I worked at Bloomberg, we had an internal accomplishment system but those sort of things stay with you internally in the company and nobody really understands them outside of them,” he explained in an interview with The Block. “There’s an opportunity to use NFTs like POAPs to recognize contributions and accomplishments in a self-sovereign way.”

Patricio Palladino of the Nomic Foundation, a non-profit dedicated to Ethereum’s development platform, said in the funding release that since issuing GitPOAPs, there have been “more meaningful contributions” to its developer tool Hardhat. 

Along with announcing the round, the startup is also opening up onboarding to any open source project from today. It previously launched in April of this year but was only available for certain projects. 

© 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.

HUSD, a stablecoin issued by Stable Universal, has lost its peg to the US dollar, falling as low as $0.88 on Thursday, according to CoinGecko.

The stablecoin is trading at $0.90 as of the time of publishing. The first leg down in the price gave way to a recovery to 97 cents. This leg up was, however, short-lived as the stablecoin plunged again.

The depegging event has also led to a reduction in the liquidity available for trading HUSD. This shrinking liquidity is likely due to traders exiting their HUSD positions.

HUSD’s liquidity on the Curve 3pool (3Crv) — the largest liquidity pool on the decentralized exchange Curve — has become unbalanced. The currency reserve breakdown for the pool is now at a ratio of 92% HUSD to 7.35% 3Crv which is the most unbalanced this pool has ever been. An unbalanced pool means that there is not enough liquidity to honor swaps for one token in the pool.

In this case, HUSD is becoming more illiquid as there are not enough 3Crv tokens to swap in exchange for the depegged stablecoin. 3Crv is a stablecoin pool that contains deposits of the three largest stablecoins USDT, USDC, and DAI.

The Huobi-backed Stable Universal has stated in previous attestations that HUSD was wholly backed by cash reserves. Stablecoin issuer Paxos was the original custodian upon HUSD’s launch. This arrangement ended in June 2021 with Huobi Trust taking over the role as custodian.

“We are aware of the current liquidity issues associated with the HUSD stablecoin, which is issued by Stable Universal Limited and built on the Ethereum network,” Huobi said today on Twitter.

© 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.

Cybersecurity company DWallet Labs announced a $5 million raise to build on the Odsy network, a decentralized access control layer. 

Digital Currency Group (DCG) and Node Capital led the investment, according to a press release on Thursday. Other investors include Amplify Partners, Lemniscap and Lightshift Capital. 

The Odsy network emerges from stealth with plans to offer a more decentralized approach to web3 access control compared to existing solutions, according to the release. 

“What I’ve seen in in the last five to 10 years is that the crypto community are basically using centralized solutions to solve the access control,” Omer Sadika, founder and CEO of DWallet Labs, told The Block. “And I think it defeats the purpose of being decentralized in the first place.” 

What is the Odsy network?

Co-founded by Sadika, David Lachmish, Sean Lee and Yehonatan Cohen Scaly, the Odsy network features a primitive, which is a segment of code on the blockchain, known as dynamic decentralized wallets (DWallets).

A DWallet offers decentralized transaction signing through pairing with a public key and being constrained by dynamic access control environment within a purpose-built blockchain, according to the release. 

DWallets themselves are blockchain agnostic and can sign certain transactions using universally accepted algorithms. The primitive aims to help move away from the more centralized process of holding a private key directly, according to the release. 

The DWallets are also bound to a wallet contract, a smart contract that manages access, according to the litepaper.

“We run the risk of potentially misconceptions because we call it DWallet but DWallet is not an app … it’s a primitive, it’s a concept that lives on the blockchain,” said Lee, an executive director of the Odsy Foundation and the former CEO of the Algorand Foundation. 

“That makes it very, very different because that gives you the optionality to use any app that you want,” he added. 

DWallet Labs will build on the network

Switzerland-based Odsy Foundation will support the wider Odsy ecosystem, while DWallet Labs will provide professional services to the Odsy foundation and support organizations building on the network, according to the release. 

The foundation was incorporated in August and the litepaper for the network is released today. 

The Isarel-based DWallet Labs is focused on building SingleWallet, which will be the first app to interact with DWallets on the Odsy network. 

The labs will be focused on using the pre-seed funds to find the best talent and build out the network, Sadika said. 

The team is currently more than 10 people strong, with plans to grow to between 20 and 25 by the end of the year. 

The Block Research’s July funding report highlighted that while infrastructure deals decreased by 22% from June to July, funding levels grew 178% from $297 million to nearly $827 million. 

The report notes that in previous market cycles of digital assets, during market turmoil, infrastructure plays have often proven a favored investment choice.

Blockchain infrastructure venture funding by month from The Block Research

© 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.

Stablecoin issuer Tether announced Thursday that it has partnered with BDO Italia, the Italian arm of the world’s fifth largest accounting firm, to issue assurance and attestation reports of its reserves.

Tether has previously worked with two Cayman Islands-based accounting firms, Moore Cayman and MHA Cayman. Tether’s BDO Italia partnership means it will no longer work with Moore and MHA, the company told The Block. The Block could not immediately reach out to BDO Italia for a comment.

When asked if it approached any of the “Big Four” accounting firms, i.e., Deloitte, Ernst & Young (EY), KPMG and PricewaterhouseCoopers (PwC), Tether said: “We have publicly commented on the fact that no stablecoin has to date been successful in engaging a Big 4 accounting firm.”

Tether began working with BDO Italia in July for its quarterly attestations, it said, adding that it plans to move towards monthly attestations. When asked for the timeline, the company said it hopes to issue monthly reports “very soon.”

Tether also aims to go through “a complete audit” in the future. “An audit is a priority for us,” the company said, adding that it is “committed to obtaining one as quickly as possible.”

Launched in 2014, Tether’s USDT stablecoin has the largest market share in the world, with its current total supply at over 66 billion, according to The Block’s data dashboard. But Tether began providing a breakdown of USDT’s reserves only last year, after settling with the New York Attorney General’s office with an $18.5 million fine.

Tether’s information on its reserves has caused much controversy to date. When USDT launched, Tether claimed each stablecoin was backed 1:1 with US dollars. In March 2019, it updated its website to state that “all Tether tokens are backed 100% by Tether’s reserves.” It later created a transparency page on its website outlining the company’s assets and liabilities measured in three currencies and gold. And last year, when the company started providing quarterly attestation reports, it was criticized for not disclosing specific information about its holdings, such as corporate debt ratings.

Tether had also been criticized for its significant exposure to commercial papers, which may have included Chinese commercial paper. Last month, the company said at that time it was not holding any Chinese commercial paper and that its total commercial paper exposure has been reduced to around $3.7 billion, with plans to reduce it to zero by October or early November.

Tether’s rival Circle gets attestation reports from Grant Thornton LLP for its USDC stablecoin. According to its latest attestation report, Circle holds an equal amount of “US dollar denominated assets” for its USDC circulation.

© 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.

Robinhood has written down its acquisition offer for UK fintech Ziglu, slashing the originally proposed deal size from $170 million to $72.5 million, amid a turbulent time for crypto startups.

Ziglu CEO Mark Henderson told The Block the new deal has been signed and approved by the board, and the company’s shareholders. He described this as “the best deal for all stakeholders, especially customers.”

Following previous reports, he also confirmed the details in documents sent to the company’s investors on the crowdfunding platform Seedrs, that the US fintech giant had written down the deal size.

© 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.

Fewer people than ever are falling prey to crypto scams, while hacks and stolen funds are trending upwards, new data show.

Crypto analytics firm Chainalysis released its midyear report yesterday, showing an overall decline in illicit activity despite some outliers. Price downturns appear to have had an effect, with both illicit and legitimate volumes trending lower compared with this time last year. Still, Chainalysis noted that illicit activity appears to be more resilient, since volumes are down only 15% from last year compared to 36% for legitimate activity.

Scam revenue for this year is 65% lower compared with July of 2021, clocking in at $1.6 billion. Chainalysis proposes that this is linked to price declines, since scam revenue has fallen relatively in line with the price of bitcoin since the start of this year. The number of transfers to scams at this point in the year is also the lowest seen in four years. Still, the report noted that scam revenue is also driven by high-profile schemes, which 2022 has yet to see.

“Those numbers suggest that fewer people than ever are falling for cryptocurrency scams,” the firm said in its report. “One reason for this could be that with asset prices falling, cryptocurrency scams — which typically present themselves as passive crypto investing opportunities with enormous promised returns — are less enticing to potential victims.”

Additionally, a price downturn means less hype, which tends to be a factor in drawing in inexperienced users, according to Chainalysis. 

Darknet market revenue charted a different path. The activity was tracking higher than the previous year in April, but saw a drop off past that point. Chainalysis pointed to the shut down and sanction of the Hydra marketplace, which drew substantial dark market activity. However, activity returned, which Chainalysis hypothesizes is due to Hydra users migrating to new markets in the wake of the crackdown.

“Nevertheless, the decline in darknet market revenue — and indeed, cryptocurrency value received by all criminal categories — following Hydra’s shutdown shows the tangible impact of law enforcement’s growing ability to fight cryptocurrency-based crime,” Chainalysis said.

Meanwhile, hacks and the amount of stolen funds are up compared to last year. According to Chainalysis, $1.9 billion worth of crypto has been stolen as of July, compared with $1.2 billion in July of 2021. Indeed, this year has already seen a number of high-profile hacks.

“Additionally, we shouldn’t expect theft to drop based on cryptocurrency market movements the way scamming does — as long as crypto assets held in DeFi protocol pools and other services have value and are vulnerable, bad actors will try to steal them,” Chainalysis said. “The only way to stop them is for the industry to shore up security and educate consumers on how to find safe projects to invest in.”

© 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

• Venture capitalists invested $2 billion in crypto startups in July — nearly the same amount as in June.
• Over 20 new VC funds also launched in July, including from Sequoia China, Lightspeed and Qiming.

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Ronin, an Ethereum-linked sidechain that hosts the Axie Infinity play-to-earn game, has added three new validators as it aims to boost security following the $600 million hack in March.

The Ronin development team, funded by Axie Infinity creator Sky Mavis, said in a blog post that the number of validators securing its chain has now grown from 14 to 17. Adding new validators means the number of parties verifying transactions on the sidechain has grown.  

The three entities that have been added as Ronin validators include Efficient Frontier, Community Gaming and Nansen, the Ronin team said. Furthermore, it added that it is moving closer to the target of establishing 21 independent validators. 

“We are thrilled to introduce three new Ronin network validators, bringing our total to 17, making progress towards achieving our initial goal of 21 independent validators collectively securing the network.”

Ronin is still recovering from one of the largest crypto hacks ever in March of this year. During the exploit, hackers, later identified as the North Korean group Lazarus, took control over five out of the nine validator nodes on Ronin. This allowed them to steal 173,600 ETH and 25.5 million USDC from the bridge, which amounted to a theft of more than $600 million.

The team raised $150 million from a group of investors, including crypto exchange Binance and VC firms a16z and Paradigm, as part of its efforts to reimburse affected users.

As a post-hack security measure, the team announced in April that it would expand the number of validators. On a proof-of-stake blockchain such as Ronin, validators verify transactions on the basis of majority consensus or agreement of validators. As such, having more validators usually leads to an improvement in security.

© 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.

Flashbots says it will accelerate the release of the relay code for its MEV-Boost as open source code, the project announced on Wednesday.

“Open sourcing our relay code will encourage competition and eschew monopoly and single points of failure,” the announcement stated.

Flashbots is a research project that provides MEV solutions to Ethereum users. MEV stands for maximal extractable value and it refers to the premium that block producers can charge for specially reordering or censoring transaction blocks. This premium is in excess of the normal transaction fee. Arbitrageurs use MEV to bribe miners or validators to place their transactions in specific blocks for significant financial gains. When used nefariously, MEV can lead to front-running and sandwich attacks.

The MEV-Boost is Flashbots’ latest offering for fair and transparent MEV extraction. By “open sourcing” its code, Flashbots says it is making the Ethereum transaction block market even more competitive.

Flashbots also stated that the open source relay code for MEV-Boost is licensed under an aggressive coy-left license, also known as AGPL. This type of license prescribes open source development of derivatives from the parent code.

“We encourage all teams to develop their relays in the open, and for community members to trust relays only if they act consistent with AGPL norms of transparency and free software, Flashbots advised.”

The project’s decision to open source its relay code comes amid fears that relay providers for crypto services could come under regulatory pressure. These fears stem from the recent sanctions imposed on crypto mixer Tornado Cash.

© 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 leader at the Federal Reserve is pumping the brakes on speculation surrounding crypto engagement from the regulator.

In an August 17 speech, Federal Reserve Governor Michelle Bowman took issue with many key areas of the Fed’s work and its crossover with fintech and crypto industry concerns. 

Key among them is the push for a US central bank digital dollar, or CBDC, also known as a digital dollar. The subject of much political speculation, a digital dollar has grown increasingly contentious over the past year.

Bowman said that the Fed’s plans for FedNow will fill the niche many envision for a US CBDC. 

“The FedNow Service will enable financial institutions of every size, and in every community across America, to provide safe and efficient instant payment services. It is intended to be a flexible, neutral platform that will support a broad variety of instant payments,” Bowman said. “My expectation is that FedNow addresses the issues that some have raised about the need for a CBDC.”

Bowman also took an oblique potshot at the crypto industry’s hope for banks working with crypto assets.

“I am hearing more discussions involving banks’ interest in offering services involving crypto-assets. The chatter seems to originate more from those outside the banking industry, but I’ll put that aside for now,” she said.

Turning to recent guidelines on requests for Fed “master accounts,” Bowman also struck a tentative tone.

She said:

“Publishing the guidelines is an important step to providing transparency and consistency across the Federal Reserve System. However, more work remains to be completed before a process is established to fully implement the guidelines. In the meantime, there is a risk that the guidelines could establish false expectations regarding the timeline for evaluating and acting on these requests.”

Effectively, Bowman is warning that the backlog of requests for master accounts won’t disappear any time soon. 

© 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.