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🚀Ethereum’s Merge To Kick Off With Bellatrix Upgrade On Sept. 6

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The Merge
Trending in The Defiant

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Developer Detained

🚨 Tornado Cash Developer Pertsev Remanded For 90 Days

Dutch Judge Denies Bail Request

By: Jason Levin

NEWS Following an August 10 arrest, a Dutch judge has ruled that Alexey Pertsev, a coder tied to crypto mixing service Tornado Cash, must remain in prison for 90 days pending his trial.

SANCTIONS On August 8, Tornado Cash was added to the US sanctions list by the Office of Foreign Asset Control (OFAC). The US Treasury accuses Tornado of having been used to launder over $7B of crypto assets — much of that by North Korean hackers — since its creation in 2019. 

INVESTIGATION Pertsev’s case does not appear to be related to U.S. sanctions. Rather, Dutch officials suggested it was the culmination of an investigation that began in June.  “He is suspected of involvement in concealment of criminal financial flows and facilitating money laundering through the mixing of cryptocurrencies through the decentralized Ethereum mixing service Tornado Cash,” the Fiscal Information and Investigation Service said in a statement


Ether Issuance

🔥Record Low Burn Rate Threatens Ethereum’s Deflationary Narrative

By: Samuel Haig

RECORD LOW BURN Ethereum’s burn rate has slumped to historic lows this week, calling the prevailing deflationary narrative into question. Ethereum’s base transaction fees have been destroyed since the EIP-1559 upgrade introduced the burn mechanism to the network last August.

With more than 13.34M Ether already staked in the Beacon Chain, about 1,661 ETH are set to enter supply daily under proof-of-stake consensus. While this equates to a nearly 88% reduction in issuance compared to the current proof-of-work model, it significantly exceeds the 1,069 ETH that was burned daily on average over the past week.


Staking Derivative

👀 Coinbase Launches cbETH Liquid Staking Token

Crypto Exchange Is The Second Largest Staker In The Beacon Chain

By: Owen Fernau

NEWS A new token representing staked Ether just hit the blockchain.

CENTRALIZED Coinbase is launching a new liquid staking derivative (LSD) of ETH called cbETH. The move marks the crypto exchange’s entry into a space dominated by decentralized players like Lido Finance and Rocketpool.

LIQUID Like Lido’s stETH and RocketPool’s rETH, cbETH can be freely traded, borrowed against, and used like any other asset on the Ethereum blockchain. 

STAKED The basic advantage of ETH LSDs is that investors don’t lose access to their liquidity when staking their tokens to validate the network — they get all the benefits of staking ETH, while also being able to use the LSD in the broader DeFi ecosystem. 


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Tether On Tornado

🌪Tether Will Not Preemptively Freeze Sanctioned Addresses

USDT Issuer Will Act On Specific Requests From Law Enforcement

By: Owen Fernau

DEFIANT One of the least trusted stablecoin behemoths has the pro-decentralization crowd cheering.

NEWS Tether, the company behind the USDT stablecoin, said on Aug. 24 that it will not freeze any addresses which hold its dollar-pegged asset until specifically asked to do so by law enforcement. 

FROZEN Tether stands in stark contrast to USDC issuer Centre, which froze 38 addresses on Aug. 8. This means that the USDC in those wallets, cannot be transferred. Centre’s move outraged the crypto community, which holds permissionless transactions — the ability to send money to anyone, anywhere, with any application — as one of its core values. 

LAW ENFORCEMENT Tether said in its post that the company is in contact with key law enforcement officers almost daily and has not been asked to freeze any assets. The crypto community is generally applauding Tether for not, as many see it, preemptively taking a knee to U.S. law enforcement. 


The Merge

🚦Ethereum’s Merge To Kick Off With Bellatrix Upgrade On Sept. 6 

Series B Led By a16z’s $600M Games Fund One

By: Aleksandar Gilbert

NEWS The first stage of The Merge, Ethereum’s two-part transition to ESG-friendly technology, will take place on Sept. 6.

UPGRADE This initial step will be an update to Ethereum’s consensus layer, dubbed Bellatrix, according to the Ethereum Foundation, an independent nonprofit dedicated to maintaining and scaling Ethereum. 

EXECUTION The second update, dubbed “Paris,” will update the execution layer and complete the transition to proof-of-stake. The exact timing of Paris depends on the network’s hash rate, or the amount of computing power committed to securing the network. The greater the hash rate, the sooner the network will hit “terminal total difficulty,” triggering the Merge. 

ROADMAP This final step is still scheduled for Sept. 14 or 15, according to independent estimates.  



🔗 NFTs worth $100 million stolen in past year, Elliptic says: Reuters

Thieves stole over $100 million worth of non-fungible tokens in the year to July, blockchain research firm Elliptic said on Wednesday, as the fast-emerging digital asset became a new front in crypto’s hacking problem.

🔗 Crypto ATM Firm Bitcoin Depot Strikes $885 Million SPAC Deal to Go Public: Wall Street Journal

Bitcoin Depot has reached a deal with a special-purpose acquisition company that values the cryptocurrency ATM firm at roughly $885 million and would take it public, company officials said. The merger comes during market downturns for cryptocurrencies and SPACs and is expected to test investor appetite for bitcoin ATMs.

🔗 Afghan Authorities Shut Down 16 Crypto Exchanges in One Week: CoinDesk

The Afghanistan police force shut down 16 cryptocurrency exchanges in the country’s western Herat province over the past week, independent local media outlet Ariana News reported on Wednesday. This move came after the country’s central bank, Da Afghanistan Bank, stated in a letter that digital currency trading had caused “lots of problems and is scamming people.”

Trending in The Defiant

Traders Shun On-Chain Leverage In Volatile Market

DeFi money markets have liquidated tens of millions in crypto collateral following each nosedive in the crypto markets this year. But traders are unscathed in the wake of last week’s industry-wide selloff. Aave and Compound, two of the three largest lending protocols with a combined $14.6B in total value locked, liquidated just $850,000 of collateral in the past week, according to data from The Defiant Terminal.

BendDAO Passes Emergency Changes Amid Liquidations

Last week, it came to light that four Bored Ape Yacht Club (BAYC) NFTs were up for liquidation in a major stress test for the digital assets that were once worth over $400,000 a pop earlier this year. Now, the  BendDAO community has passed a proposal to tweak the levels at which underwater loans will be liquidated. It passed with 97% of voters in favor. 

Aura Capitalizes On Race for Balancer Liquidity

Curve Finance, the largest decentralized exchange (DEX) with $5.84B in total value locked (TVL), has been the most well-known battlefield for liquidity. Now, Balancer, another automated market maker (AMM) that started as a research project in 2018, is gaining enough steam to attract its own protocol geared towards optimizing native token rewards. Enter Aura Finance, whose AURA token has quietly jumped 18.9% in the past week to $3.65.

🧑‍💻 ✍️ Stories in The Defiant are written by Owen Fernau, Aleksandar Gilbert, Claire Gu, Samuel Haig, Jason Levin, and yyctrader, and edited by Edward Robinson, yyctrader and Camila Russo. Videos were produced by Robin Schmidt and Alp Gasimov. Podcast was led by Camila, edited by Alp.

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