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🦄 Recap: DeFi Week of Oct. 30

Hello Defiers! Happy weekend!

Errors and opportunities. The duality of DeFi was on vivid display this week, or as Gala Games’ Jason Brink put it, web3’s capacity to be both “a blessing and a curse.” 

That line was from Sam Haig’s eye-opening story on a mistaken $1B hack of Gala’s token after pNetwork, a cross-chain bridge provider, erred in handling some code on its platform. Likewise, Multichain, another bridging protocol The Defiant covered last week, responded to concerns it was mismanaging users’ funds. Aleks Gilbert, who broke the news on L2BEAT’s scrutiny of Multichain, wrote a followup reporting on the venture’s response. 

There was plenty of more inspirational action in DeFi, too, this week. Count us among those surprised to see JPMorgan Chase getting down with DeFi in a pilot project for trading tokenized currencies. Yyctrader reported on how the move flew in the face of CEO Jamie Dimon’s denigration of crypto as fraud, but if you can’t beat em join em, right? Jack Dunham at The Daily Defiant also produced a segment on this deal for our YouTube channel

Owen Fernau reported on another new DeFi initiative — chicken bonds. After writing about the new offering from Liquity in October, Owen reported how investors have plowed $28M into the venture. Owen also penned a thoughtful analysis of how DeFi may be affected by something it’s never encountered before: a high rate period. DeFi offerings will now have to compete with TradFi products like boring old savings accounts as the Fed raises rates to quell inflation.

One of DeFi trailblazers — Yearn Finance founder Andre Cronje — isn’t deterred. After quitting DeFi earlier this year, Cronje is back at Fantom, as Tarang Khaitan reported. And be sure to read Sam Haig’s great ‘what if’ story on Michael Saylor — Sam ran the numbers of how the Bitcoin maxi would have fared if he’d acquired Ether instead… Talk about eye-opening!

Rounding out the week is Cami Russo’s podcast with Offchain Labs’ A.J. Warner; they unpack the latest goings-on at Arbitrum. Cami also introduced listeners/viewers to Tegan Cline, the co-founder of Edge Node, who will be sharing podcast hosting duties with Cami going forward.

Exciting stuff! Enjoy!


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Podcast

🎙 Offchain Labs’ A.J. Warner on Making Arbitrum the Leading Layer 2 Scaling Solution for Ethereum

This week on The Defiant Podcast we speak with A.J. Warner, the Chief Strategy Officer at Offchain Labs, the builders of Arbitrum, one of the leading scaling solutions for Ethereum using Optimistic Rollups. We also welcome Tegan Kline, the co-founder of Edge Node, the initial team behind The Graph. 

The Defiant’s Camila Russo and Tegan are co-hosting the podcast for the first time. Going forward, they will record shows together, and Tegan will also have her own Defiant podcast episodes.

Scaling is now a hot topic on Ethereum and throughout the blockchain ecosystem, as all of our listeners are likely aware. According to L2Beat, Arbitrum has nearly $2.7B in total value locked. AJ goes on to explain the dApps and protocols building on Arbitrum and how they’ve managed to make Arbitrum the leading destination among Layer 2s.

Arbitrum is one of the few scaling solutions that doesn’t nod to the underlying technology it uses in its name. As AJ mentioned, their goal is to scale Ethereum without being a proponent of any scaling technology. Does this mean Arbitrum will have a zero-knowledge (ZK) component in the future?

Finally, we discuss the growing rivalries in a Layer 2 space that’s getting more crowded and whether there’s any noticeable hostility between competitors.

Defiant Video

📺 JPMorgan Uses Polygon For First DeFi Trade

📺 DeFi 2.0 makes a comeback with “Chicken Bonds”

📺 PayPal’s Misinformation Fine Shows Why We Need An Alternative To Fintechs

📺 Binance Stablecoin (BUSD) is Taking on the Top Dogs

📺 Weekly Recap: zkSync Goes Live, Multichain Questioned, MakerDAO Roadmap, Apple NFT Rules,, SBF Responds

ETH v. BTC

😲 Microstrategy Could Have Pocketed $1.3B if Saylor Had Bought ETH

Defiant Data Crunch Shows Ether Would Have Paid Off Nicely for Software Maker

In which Samuel Haig indulged in a ‘what if?’ scenario…

What if Michael Saylor had bought Ethereum instead of Bitcoin? During the bull market of 2020-21, Saylor, the Bitcoin-loving CEO of Microstrategy, made one of the most famous crypto bets ever — he directed the business intelligence software maker to invest $4B in the No. 1 cryptocurrency, according to data from Bitcoin Treasuries.

Now, with crypto tumbling in a punishing bear market, Saylor’s decision has left Microstrategy with a paper loss of $1.3B. If only he’d bought Ether. 

👉READ THE FULL STORY IN THE DEFIANT.IO👈


Weekend Read

🔥 Mistaken $1B Hack Exposes ‘Blessing and Curse’ of Web3

pNetwork ‘s ‘Misconfiguration’ of Code Pressures Gala Games Token

Samuel Haig reports on the ‘miconfiguration’ that triggered exploit panic in DeFi…

The cross-chain bridge provider, pNetwork, swung into damage control after its attempt to address a “misconfiguration” in its code gave the appearance of a $1B hack.

👉READ THE FULL STORY IN THE DEFIANT.IO👈


Macro Analysis

📈 Rising Rate Environment Tests DeFi’s Stickiness

U.S. Treasuries Now Yield More Than DeFi Money Markets

Owen Fernau explores how DeFi protocols will have to navigate uncharted territory…

With benchmark DeFi yielding less than low-risk assets like U.S. Treasuries, blockchain-based finance has entered unfamiliar territory. After the Federal Reserve’s fourth consecutive 0.75% hike on Nov. 2, the benchmark U.S. interest rate stands at 4%, the highest it’s been since January 2008.

👉READ THE FULL STORY IN THE DEFIANT.IO👈


NFT Roundup

👹 Art Gobblers’ Floor Price Drops 50% After Splashy Debut

Arweave, Polygon Rally After Meta’s NFT Announcement

yyctrader reports on the dramatic turn of events at one of the hottest new NFT collections…

Art Gobblers, a highly anticipated NFT collection designed by Rick and Morty creator Justin Roiland and backed by Paradigm, the web3 venture capital fund, saw its floor price cut in half on Nov. 3.

👉READ THE FULL STORY IN THE DEFIANT.IO👈


Exploits Report

🦹🏻‍♂️ Record $760M Stolen in Exploits During ‘Hacktober’

Bad Month for DeFi Security Highlights Pitfalls of Freewheeling Practices

In which Owen Fernau reports on the downside of DeFi freewheeling practices…

Call it Hacktober.The crypto market suffered a record $760M in exploits in October, according to PeckShield, a blockchain security company which lists MakerDAO, DeFi’s largest protocol, as a customer.

Despite an exploiter’s move to return $50M to users last month, the total value of stolen funds in 2022 surged to almost $3B. That’s nearly double the $1.5B hackers took in 2021 and nearly 12 times the 2020 total.

👉READ THE FULL STORY IN THE DEFIANT.IO👈


Opinion

🤨 SBF’s Industry Standards Would Be Onerous for DeFi

DeFi Startups Don’t Have the Resources to Meet Proposed Norms

Guest writer Sameep Singhania rebuts Bankman-Fried’s proposals in response to regulatory pressure.

Sam Bankman-Fried’s proposal to set crypto industry standards undermines DeFi’s entrepreneurial spirit and presents an existential threat to the space’s leading DeFi teams and platforms.

On October 19, Sam Bankman-Fried, the CEO of crypto exchange juggernaut FTX, delivered one of the most provocative and controversial documents to hit the industry: a detailed blueprint for regulatory oversight and industry standards in the digital asset space. 

👉READ THE FULL STORY IN THE DEFIANT.IO👈


Friday

News
Market Analysis
NFT Roundup
DeFi Explainers
  • What Is dYdX? DYdX is a decentralized exchange (DEX) hosted on Ethereum that enables the swap of at least 36 cryptocurrencies without know-your-customer (KYC) identity verification.

Thursday

News
DeFi Explainers
  • What Is DeFi Lending? Decentralized finance (DeFi) is essentially borrowing on a peer-to-peer system without a bank. 

Wednesday

News
DeFi Explainers
  • What Is a dApp? A decentralized application (dApp) is software program  hosted on a blockchain network and run by a smart contract. Unlike regular apps one uses on a mobile phone or a laptop, dApps are powered by multiple servers.

Tuesday

News
Regulation Debate
👀 Defiant Premium Story for Paid Subscribers
Markets
  • Crypto Markets Look To Finish Strong After Sideways October After trading sideways through much of October, crypto markets had their best week since August with the top three digital assets leading the way — Bitcoin is up 8.9%, Ether is up 22.1%, and Binance’s BNB is up 12.5% in the past week, according to The Defiant Terminal. 
DeFi Explainers
  • What Was Terra? Terra was one of the blockchains based on the scalable and open-source Cosmos framework. Because Cosmos architecture allows far greater transaction speed and scalability than Ethereum, Terra became a top contender as an “Ethereum killer”.

💜Community Love💜

Thanking all the amazing Defiers for the support and love this week (and always)!


🧑‍💻 ✍️ 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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