The Defiant

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đŸ˜€ Skeptics Decry Crypto Bill and SBF’s ‘Industry Norms Manual’ as Bad for DeFi

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Crypto Regulation

đŸ˜€ Skeptics Decry Crypto Bill and SBF’s ‘Industry Norms Manual’ as Bad for DeFi

Critics Push Back Against Potential Legislation that Would ‘Kill DeFi’

By Aleksandar Gilbert

DEBATE As the cryptoverse debated a U.S. bill Wednesday that would “kill DeFi,” crypto mogul Sam Bankman-Fried floated a set of self-imposed industry standards to “create clarity and protect customers.”

👉READ THE FULL STORY IN THE DEFIANT.IO👈

Exploits

👀 Mango Markets Exploiter Says Aave Could Be Vulnerable To A Similar Attack

Proposed ‘Trading Strategy’ Would Require Hundreds Of Millions In Capital

By Tarang Khaitan

RESPONSIBILITY Avraham Eisenberg, the trader who has claimed responsibility for the recent $116M Mango Markets exploit, has publicly revealed a potential way for highly capitalized entities to exploit the REN market on Aave V2.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

Sponsored Post

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* Reflects annualized return on investment, net of all fees and expenses. Past performance is not indicative of future results. See important Regulation A disclosures. 

NFT Roundup

🃏 Bored Ape Dealt Marketing Jackpot by Bicycle Playing Cards

New Marketplace Airdrops ‘Care Packages’ to Collectors in Busy Week for NFTs

By yyctrader

DECK If you’ve ever played a game of poker or Go Fish, chances are you were dealt Bicycle playing cards. The century-old brand that’s a mainstay of Las Vegas casinos and used by professional magicians like David Copperfield is expanding its web3 presence with a new physical deck that will showcase the Bored Ape Yacht Club (BAYC) NFT that the company purchased in June.

👉READ THE FULL STORY IN THE DEFIANT.IO👈

TradFi + DeFi

👀 Fintech Giant Plaid Jumps into Web3

Wallet Onboard Supports Over 300 Crypto Wallets

By: Aleksandar Gilbert

CREDIT CARDS Plaid, a leading provider of software that allows users to link their bank accounts and credit cards with applications like Venmo, has jumped into Web3 with the introduction of technology that streamlines the integration of decentralized apps (dApps) and self-custody crypto wallets. 

👉READ THE FULL STORY IN THE DEFIANT.IO👈

Defiant Video

đŸ“ș Quick Take: ‘Solana Killer’ Aptos (APT) is Crypto’s New Controversial Chain

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DeFi Explainers

đŸ€” What Is Bitcoin?

A Step-by-Step Guide to the No. 1 Cryptocurrency

By Rahul Nambiampurath

INNOVATION Bitcoin is the world’s first peer-to-peer (P2P) digital payment network, producing a restricted supply of BTC cryptocurrency. Its greatest innovation is the ability to transfer assets — digital tokens — from one party to another without the need of intermediaries such as banks or payment services.  

👉READ THE FULL STORY IN THE DEFIANT.IO👈

Elsewhere

🔗 Inside a Social DAO: How an Online Community Becomes a Digital City: Coindesk

If I was part of any DAO, I would want it to be “Friends With Benefits.” It is just so darn cool.

🔗 Possible Digital Asset Industry Standards: FTX

This document contains a draft of a set of standards that we as an industry could enact to create clarity and protect customers while waiting for full federal regulatory regimes. 

Trending in The Defiant

đŸ§‘â€đŸ’» ✍ Stories in The Defiant are written by Owen Fernau, Aleksandar Gilbert, Samuel Haig, and yyctrader, and edited by Edward Robinson, yyctrader and Camila Russo. Videos were produced by Alp Gasimov. Podcast was led by Camila, edited by Alp.

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DeFi Premium: Ethereum 2.0

đŸ”„ Ether Issuance Goes Negative as Merge Delivers on Deflationary Promise

Shrinking Supply is Attracting Institutional Investors

By: Samuel Haig

PROMISE It was one of the great promises of The Merge — the Ethereum network would become deflationary. 

REALITY Now six weeks after Ethereum shifted to Proof of Stake it looks like that promise is becoming reality. The network is producing negative issuance over the past 30 days, according to data from Ultra Sound Money.

To read the full story subscribe to The Defiant newsletter.

TradFi giants have noticed. This month Fidelity Investments and European fintech N26 are just two of the institutions jumping into post-Merge Ethereum and offering their customers new ways to invest in its cryprocurrency.

“Coins with deflationary attributes are attractive to demand from traditional finance investors,” Toby Chapple, the head of trading at ZeroCap, told The Defiant.

Burn Rate

Ethereum’s burn rate has exceeded the number of new coins entering supply since Oct. 8, permanently destroying roughly 10,000 ETH. As a result, Ether’s supply is now at its lowest level since Sept. 19.

“The first ever month of negative ETH issuance,” tweeted Evan Van Ness of Starbloom Ventures.

“At current rate of burn, ETH [is] tracking to have been net deflationary since merge in three days,” chimed in 0xSisyphus, a popular crypto influencer. 

Demand Side

“With the reduction in supply coming over the next year for ETH, especially after the Shanghai fork, to be hit by demand side flow will mean that it is very hard from a purely trading perspective not to see price rise,” said Chapple. 

Ethereum’s Proof of Work execution layer merged with the Proof of Stake Beacon Chain consensus layer on Sept. 15, booting miners from the network in favor of stakers. The move dropped the network’s energy consumption by more than 99.8% and reduced new Ether issuance by 88%. 

Staked ETH

While 13,500 new ETH entered circulation every day under Proof of Work, just 1,720 Ether are issued daily to stakers based on the current number of staked ETH. Only 3,074 ETH or about $4M worth of Ether has been added to Ether’s supply since The Merge. For comparison, 429,044 ETH worth $552M would have entered circulation under Proof of Work.

Ethereum began burning base transaction fees in August 2021 alongside the EIP-1559 upgrade. With transaction fees white hot at the time, many analysts had predicted that post-merge Ethereum would be deflationary — meaning that more ETH is destroyed through the burning of base transactions fees than is issued to validators. 

However, the slump in on-chain activity amid the depths of the mid-2022 bear market suggested Ethereum’s burn rate would not keep pace with supply inflation. Just 603.4 ETH was destroyed on Aug. 21 as transaction fees reached their lowest level since April 2020.

Network Activity

But network activity picked up during October, with average gas fees now up 74% from August’s lows, according to YCharts. The spike in gas fees was initially attributed to XEN, an experimental farming project launched by former Google engineer, Jack Levin. XEN drove 40% of the gas fees expended by the network on Oct. 10.

Network activity has since picked up across the board, with XEN now ranking as the fifth-most gas-intensive Ethereum protocol and representing less than 3% of the daily ETH burn. Uniswap v3 tops the list with 581.5 ETH, followed by Uniswap v2 with 287.8 ETH — equating to more than a quarter of Ethereum’s 24-hour burn combined.

NFT Activity

“This is mostly happening because of a small amount of activity surrounding memecoins,” said 0xSisyphus. “Degen FOMO make ETH again deflationary, chimed in Odin_free of StarkWare.

NFT activity is also picking up, with OpenSea, Degenheim, and GemSwap all ranking among the top 8 protocols by burn rate. 

However, Van Ness criticized XEN’s role in pushing Ethereum deflationary in recent weeks. “It’s important to remember that this ‘deflationary’ month was caused by some HEX-variant ponzi,” he said. 

“While it’s fantastic that 1559 increases Ethereum’s security when ponzis spam the chain… it also highlights that as a community we have a long way to go to produce real value.”

ETH Trading

The Merge and its impact on Ether’s supply is attracting greater interest from major financial institutions. 

The digital asset subsidiary of Fidelity Investments, a TradFi goliath managing $4.5T worth of assets, will launch ETH trading and custody services for institutional investors on Oct. 28. The move came less than a month after the firm launched an ETH index fund.

Also on Oct. 20, N26, a German bank valued at roughly $9B, announced it will launch trading services for ETH among 100 crypto assets for its Austrian customers in the coming weeks. The bank will roll out digital asset services in other markets over the coming six months.

Institutional Adoption

On Oct. 11, BNY Mellon, the oldest bank in the United States, launched Ethereum and Bitcoin custody services for its institutional clients.

Mark Monfort of web3 venture studio NotCentralised told The Defiant that Fidelity’s Ethereum embrace continues the recent trend of institutional Ethereum adoption.

“It signals the view amongst institutions (and their armies of analysts) that this evolution of the world’s second largest blockchain fits in with typical factors they would look at such as stability, size, ability to offer yield to customers and security,” Monfort said. “Expect more news like this to come from other well-known institutions.”

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