Industry Insiders Edition 6

Mandala Exchange

Mandala Exchange

Aug 22. 13 min read

Hello everyone! We are back with ‘Industry Insiders’, a dedicated biweekly newsletter that scours the internet to inform and educate people about what’s happening in the crypto world in an engaging and entertaining manner.

In this edition of the newsletter, we’re going to talk about:

👉 Latin America’s largest e-com company enters web3 👀

👉 Cryptopunks flipped BAYC as their floor price drops to an 8-month low

👉 Tornado Cash crackdown

👉 Ethereum Foundation’s Mythbusters blogpost

Latin America’s largest eCommerce company enters web3 

Mercado Libre, Latin America’s largest eCommerce company by market capitalization, is rolling out Mercado Coin to 80 million users in Brazil. The ERC20 token can be used for purchases and cashback rewards. Mercado Libre is like the Amazon of Latin America

Previously, they tested their new crypto wallet, MercadoPago, in Brazil and got a million users within 2 months. Now, they’re expanding to other countries. They were the first publicly traded company in Latin America to add crypto to its treasury. They bought ~$7.8m worth of BTC earlier this year. There are 2 goals with the release of Mercado Coin:

1/ Drive more users to their crypto wallet, Mercado Pago

2/ Boost their loyalty program by introducing a token that dishes out rewards the more people use it to buy stuff online

Cryptopunks flipped BAYC as their floor price drops to an 8-month low

For a brief moment this Sunday, the CryptoPunks flipped the Bored Ape Yacht Club for the first time in 5 months. As with the last short-lived flip, the Bored Apes quickly regained the top spot, which they’ve effectively held all year. The Ethereum floor price of the BAYC NFT collection has dropped to its lowest level since the start of the year, amid a continued NFT market slump and a wider crypto market crash. According to data from CoinGecko, it has been on a downtrend since reaching an all-time high of 153.7 ETH on May 1. 

Adding to the BAYC woes is the risk of liquidation on BendDAO. BendDAO is a P2P lending service that allows customers to borrow ETH in exchange for NFTs, and enables users to take out loans up to 40% of an NFT’s floor price. Should the floor price of the NFT drop to a point where the NFT-backed loan’s “health factor” is below 1, the NFT is placed in a 48-hour auction and sold to the highest bidder if the loan isn’t repaid. $5.3 million worth of Bored Ape Yacht Club (BAYC) NFTs are at risk of being liquidated. 45 of the 272 BAYC that have been loaned out are at risk of being liquidated.

Tornado Cash crackdown

The US Treasury Department’s Office of Foreign Asset Control (OFAC) sanctioned Tornado Cash and 40-something Ethereum and USDC wallets associated with the privacy mixer.  Tornado Cash became the second-ever mixer and first-ever DeFi protocol to be sanctioned by OFAC. Tornado Cash is a cryptocurrency mixing service that has been accused of being used to launder over $7 billion of cryptocurrency since 2019. Circle immediately froze about $70,000 worth of its USDC stablecoin on Tornado, crypto exchange dYdX blocked accounts that may have once interacted with Tornado, GitHub suspended contributors to Tornado’s open-source codebase and now everyone’s trying to determine what constitutes an interaction with a sanctioned address. Soon after the sanction, crypto Twitter was ablaze with reports of celebrities, industry notables, and others being sent small transactions from Tornado Cash, each of which could theoretically be an OFAC violation. It was presumably done to troll and to try and demonstrate that sanctioning a protocol would not be as effective.

Blockchain developer Alexey Pertsev involved in Tornado Cash was arrested in the Netherlands, just days after the US announced sanctions against the open-source protocol. The 29-year-old was held just two days after the U.S Treasury froze Tornado.  After A closed-door hearing, an examining judge agreed to keep him in custody for two weeks. A press release issued by the Dutch financial crime authority FIOD said the arrest was on suspicion of “involvement in concealing criminal financial flows and facilitating money laundering” through the service, which can obfuscate the source and destination of funds that pass through it.

Crypto think tank Coin Center is challenging the U.S. Tornado sanctions in court.  

Ethereum Foundation’s Mythbusters blogpost

Ethereum Foundation debunked eight major misconceptions about the Merge in a recent blog post. Here are a few:

  • The upgrade will not reduce gas fees. The Merge is a change of consensus mechanism, not an expansion of network capacity, and will not result in lower gas fees.
  • Transactions will not become faster. Though some slight changes exist, transaction speed will mostly remain the same on Layer 1.
  • Staking APR is will not triple after The Merge. More up-to-date estimations predict closer to a 50% increase in APR post-merge, not a 200% increase.

You can read more about it here.

Nuggets from the cryptoverse📊

  • Ethereum’s final merge to a proof of stake consensus mechanism has been scheduled for Block XYZ, which is expected to occur on September 15 or 16th. The announcement comes after a significant testnet merge of the Beacon Chain was completed earlier this month.
  • Circle said its USDC stablecoin would support the Ethereum proof of stake chain after the Merge. Tether announced the same for USDT.
  • Binance Recovers 83% of Stolen Funds in Curve Finance DNS Attack. According to CZ, Binance will return the recovered $450,000 to the victims. The exchange is currently working with law enforcement to make that happen.
  • Blockchain oracle Chainlink announced it would support the Ethereum merge and not the PoW hard-fork.
  • Buenos Aires will deploy Ethereum validator nodes in 2023, becoming the first government to officially run infrastructure for the cryptocurrency. Argentina has been a huge proponent of crypto and already allows citizens to pay their taxes with it.
  • The SEC and CFTC are proposing that hedge funds managing more than $500 million must disclose cryptocurrency exposure through confidential filings. 
  • Reddit is migrating its community points to the Arbitrum Nova blockchain. Points are used to reward subreddit activity and by moving them on-chain, Reddit is hoping developers can build more robust tooling around its rewards program.
  • Blackrock, the asset manager with over $10 trillion of AUM, launched a spot Bitcoin private trust to give its institutional clients direct access to the cryptocurrency.
  • Curve Finance, one of the largest DEX’s in terms of total value locked (TVL), was hacked this week. A hacker cloned the Curve website and redirected its DNS point to the hacker’s IP address. Approximately $570,000 was stolen.
  • BTC and other cryptocurrencies erased three weeks of gains as investor concerns about inflation and interest rate hikes led to a sell-off of riskier assets. 
  • Last month’s Federal Reserve minutes mentioned digital assets and stablecoin concerns: “Declining risk appetite has also led to sharp declines in the price of some digital assets. The staff noted that digital assets tended to be volatile. The staff also highlighted the financial stability considerations associated with rapid growth in stablecoins, including their vulnerability to runs and the opacity of many aspects of their operations.” 
  • Hedge fund billionaire Steve Cohen is launching a crypto-specific asset manager. The company will focus on spot trades, crypto derivatives, and providing capital to other crypto-focused hedge funds.
  • Stablecoin issuer Tether reduced its commercial paper holdings by 58% in Q2 and expects to have no exposure by year-end. As of 6/30 it still held $8.5B of commercial paper in its reserves, but almost all those loans are maturing in under 90 days.
  • $210 million of Bitcoin long positions were liquidated as prices fell, the biggest liquidation event since the 3AC collapse.
  • Digital Currency Group is registering to lobby for the first time.
  • 2 bills in the US Congress would set a mandate for the CFTC to be the agency that sets crypto regulations. It would have “exclusive jurisdiction” to regulate crypto trades that fall under commodities laws such as crypto spot markets, but it would not have oversight over anything that may be considered a security.
  • Crypto custodian BitGo plans to sue Galaxy Digital for $100m in damages for calling off their $1.2 billion merger agreement.
  • Tribe DAO has submitted a proposal to wind down and distribute assets to token holders. The DAO has been struggling since April when stablecoin issuer Fei Labs overturned a DAO vote to use its reserves to reimburse victims of an $80 million hack of Rari’s pools. Fei and Rari merged in late 2021 to form Tribe, in what is the largest DeFi merger of all time.
  • CoinFund is launching a new $300m Web3 fund. The goal is to make larger bets into early-stage web3 companies.
  • Chainalysis’s mid-year report shows fewer people are falling for crypto scams, but stolen funds and hacks are rising. 
  • GitPOAP, a project that issues POAPs to Github contributors, raised $4 million in seed funding.
  • Interlay, a DeFi platform on Polkadot, launched a decentralized version of wBTC called iBTC. Using the MakerDAO vault model, iBTC can be redeemed for BTC without a centralized 3rd party.
  • $30,000 is the new annual buy limit for most cryptocurrencies on Canadian-based exchanges. Ethereum, Bitcoin, Litecoin, and Bitcoin Cash are the only exceptions. All other cryptocurrencies have a cap.

From the World of Web3, NFTs & the Metaverse🔮

  • Yuga Labs released the IP rights for the CryptoPunks and Meebits collections it bought earlier this year.
  • Dapper Labs opened NFL All Day, its football version of NBA Top Shot, to the public.
  • Over 2 million ENS (.eth) names have been created. 
  • OpenSea will now require a police report to be submitted within seven days of flagging an NFT as stolen. If a report isn’t filed in time, OpenSea will unblock the asset and it will be freely tradable on the platform. Previously, OpenSea would keep assets blocked while it investigated each case.
  • Layer 2 solution Optimism crashed 10% just minutes after false rumors spread that it had been hacked for $450 million.
  • Multi-sig provider Gnosis Safe is airdropping 5% of its SAFE token to 21,935 Safe users. The project secures $38 billion worth of assets and recently raised a $100 million strategic round.
  • New Fed guidelines give crypto banks a path to tapping into the central banking system, eliminating the need for intermediary banks.
  • Magic Eden submitted a proposal this week to ApeCoin DAO to build a dedicated NFT marketplace for ApeCoin. The marketplace is launching in September at no cost to the DAO and will offer reduced fees for transactions in $APE and for NFTs in the Bored Ape Yacht Club ecosystem. Rarible submitted a proposal this week, following submissions from Magic Eden and Snag Solutions last week.
  • A gold Bored Ape NFT sold for 777 ETH ($1.5 million). 
  • Fractional, a protocol that powers fractional ownership of NFTs, is rebranding to Tessera. It also announced a $20 million investment round led by Paradigm.
  • Lil Miquela, a virtual influencer, has inked a partnership deal to become the new face of PacSun. It’s the first big deal for a virtual influencer, a VR character.

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