Hello Defiers! Happy weekend!
Errors and opportunities. The duality of DeFi was on vivid display this week, or as Gala Gamesā Jason Brink put it, web3ās capacity to be both āa blessing and a curse.ā
That line was from Sam Haigās eye-opening story on a mistaken $1B hack of Galaās 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 usersā funds. Aleks Gilbert, who broke the news on L2BEATās scrutiny of Multichain, wrote a followup reporting on the ventureās 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 Dimonās denigration of crypto as fraud, but if you canāt 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 ā 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 itās 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 ā Yearn Finance founder Andre Cronje ā isnāt deterred. After quitting DeFi earlier this year, Cronje is back at Fantom, as Tarang Khaitan reported. And be sure to read Sam Haigās great āwhat ifā story on Michael Saylor ā Sam ran the numbers of how the Bitcoin maxi would have fared if heād acquired Ether insteadā¦ Talk about eye-opening!
Rounding out the week is Cami Russoās podcast with Offchain Labsā 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!
āŗ DeFi Alpha Newsletter
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Podcast
š 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 Defiantās 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 theyāve 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 thatās getting more crowded and whether thereās any noticeable hostility between competitors.
Defiant Video
šŗ JPMorgan Uses Polygon For First DeFi Trade
šŗ DeFi 2.0 makes a comeback with “Chicken Bonds”
šŗ PayPal’s Misinformation Fine Shows Why We Need An Alternative To Fintechs
šŗ Binance Stablecoin (BUSD) is Taking on the Top Dogs
šŗ Weekly Recap: zkSync Goes Live, Multichain Questioned, MakerDAO Roadmap, Apple NFT Rules,, SBF Responds
ETH v. BTC
š² 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 āwhat if?ā scenarioā¦
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 ā 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, Saylorās decision has left Microstrategy with a paper loss of $1.3B. If only heād bought Ether.
šREAD THE FULL STORY IN THE DEFIANT.IOš
Weekend Read
š„ Mistaken $1B Hack Exposes āBlessing and Curseā of Web3
pNetwork ās āMisconfigurationā of Code Pressures Gala Games Token
Samuel Haig reports on the āmiconfigurationā that triggered exploit panic in DeFiā¦
The cross-chain bridge provider, pNetwork, swung into damage control after its attempt to address a āmisconfigurationā in its code gave the appearance of a $1B hack.
šREAD THE FULL STORY IN THE DEFIANT.IOš
Macro Analysis
š Rising Rate Environment Tests DeFiās Stickiness
U.S. Treasuries Now Yield More Than DeFi Money Markets
Owen Fernau explores how DeFi protocols will have to navigate uncharted territoryā¦
With benchmark DeFi yielding less than low-risk assets like U.S. Treasuries, blockchain-based finance has entered unfamiliar territory. After the Federal Reserveās fourth consecutive 0.75% hike on Nov. 2, the benchmark U.S. interest rate stands at 4%, the highest itās been since January 2008.
šREAD THE FULL STORY IN THE DEFIANT.IOš
NFT Roundup
š¹ Art Gobblersā Floor Price Drops 50% After Splashy Debut
Arweave, Polygon Rally After Metaās NFT Announcement
yyctrader reports on the dramatic turn of events at one of the hottest new NFT collectionsā¦
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.
šREAD THE FULL STORY IN THE DEFIANT.IOš
Exploits Report
š¦¹š»āāļø Record $760M Stolen in Exploits During āHacktoberā
Bad Month for DeFi Security Highlights Pitfalls of Freewheeling Practices
In which Owen Fernau reports on the downside of DeFi freewheeling practicesā¦
Call it Hacktober.The crypto market suffered a record $760M in exploits in October, according to PeckShield, a blockchain security company which lists MakerDAO, DeFiās largest protocol, as a customer.
Despite an exploiterās move to return $50M to users last month, the total value of stolen funds in 2022 surged to almost $3B. Thatās nearly double the $1.5B hackers took in 2021 and nearly 12 times the 2020 total.
šREAD THE FULL STORY IN THE DEFIANT.IOš
Opinion
š¤Ø SBFās Industry Standards Would Be Onerous for DeFi
DeFi Startups Donāt Have the Resources to Meet Proposed Norms
Guest writer Sameep Singhania rebuts Bankman-Friedās proposals in response to regulatory pressure.
Sam Bankman-Friedās proposal to set crypto industry standards undermines DeFiās entrepreneurial spirit and presents an existential threat to the spaceās 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.
šREAD THE FULL STORY IN THE DEFIANT.IOš
Friday
News
- Mistaken $1B Hack Exposes āBlessing and Curseā of Web3 The cross-chain bridge provider, pNetwork, swung into damage control after its attempt to address a āmisconfigurationā in its code gave the appearance of a $1B hack.
- Cronje Rejoins Fantom and DeFi After Posting Essay on Crypto Winter Andre Cronje just canāt stay away. Conje, a gifted dev and founder of Yearn Finance, has also proven to be a serial defector from DeFi. On Thursday, Conje tweeted that heās making a comeback, again.
- Your Diploma is an NFT ā Mongolian Students to Receive Honors on a Polygon Chain In an unusual move into higher education, the team behind Polygon, the Layer 2 blockchain, is planning to let students at the National University of Mongolia (NUM) receive their diplomas as Soulbound Tokens on-chain, the project said on Thursday.
- FTX Ventures Bets on Decentralized Social Media with Lens Investment Lens Protocol, which bills itself as a decentralized social graph, has received an investment from FTX Ventures, the venture capital arm of crypto exchange FTX.
Market Analysis
- Rising Rate Environment Tests DeFiās Stickiness With benchmark DeFi yielding less than low-risk assets like U.S. Treasuries, blockchain-based finance has entered unfamiliar territory.
NFT Roundup
- Art Gobblersā Floor Price Drops 50% After Splashy Debut 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.
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
- Microstrategy Could Have Pocketed $1.3B if Saylor Had Bought ETH What if Michael Saylor had bought Ethereum instead of Bitcoin?
- JPMorgan Dives into DeFi After CEO Trashed Crypto as āPonziā JPMorgan Chase & Co., the No. 1 U.S. bank and a charter member of Wall Streetās financial establishment, has gone DeFi. Or at least, one of its blockchain-focused units has.
- Polygon Scores Deal with Instagram to Support NFT Creators Meta may be cratering in the stock market but that wonāt Polygonās eye-opening deal with the social media giant any less sweeter.
- Multichain Says User Funds Safe in Response to Questions One week after The Defiant reported on questions about the management of user funds in Multichain, the bridging platform pointed toward a blog post published on Sept. 29. Its main message: user funds are safe.
DeFi Explainers
- What Is DeFi Lending? Decentralized finance (DeFi) is essentially borrowing on a peer-to-peer system without a bank.
Wednesday
News
- Investors Plow $28M Into LUSD Chicken Bonds As yields across DeFi continue to slide lower, the use of a recently-launched novel mechanism is going up. Enter Chicken Bonds, a new product from Liquity that offers users an enhanced yield over a period of time in exchange for bonding the LUSD stablecoin.
- Coinbaseās 1.5% APY is Half the Savings Rate Offered by Banks Coinbase, the largest crypto exchange in the US, has announced that its users residing in the US, the U.K. and the European Union, excluding Germany and Italy, can now earn up to 1.5% APY on their USDC stablecoins.
- Deribit Freezes Withdrawals and Deposits After $28M Exploit Deribit, a cryptocurrency derivatives exchange, has lost $28M in an exploit, the firm said Wednesday in a Twitter thread. The exploiter managed to compromise Deribitās BTC, ETH, and USDC hot wallets shortly before midnight, Nov. 1, the exchange said.
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
- Aave Rolls Up its Sleeves With Only 5% of Goals Met A v3 deployment on Ethereum, a stablecoin, and a debit card. Aave, the trailblazing DeFi lending protocol, has a lot of work to do.
- HUSD Stablecoin Delisted After Losing its Dollar Peg In a flashback to the dark days of May, HUSD, a stablecoin with a $62M market cap, lost its peg to the U.S. dollar and was delisted from the Huobi exchange on Oct. 28.
- Sushi To Set Up Shop In the Cayman Islands and Panama On Oct.26, the Sushi DAO approved a restructuring plan which will see the formation of three entities in the Cayman Islands and Panama, with each overseeing a core function of the protocol.
Regulation Debate
- Vitalik Urges DeFi to Slow Down Integration with Traditional Finance After weeks of keeping his own counsel amid regulatory action in crypto, Vitalik Buterin, Ethereumās co-founder and chief scientist, finally shared his thoughts on the subject over the weekend.
- SBF Defends Regulation Proposals in Two-Hour Debate Regulation is coming, and before it does, the crypto industry must know what itās willing to sacrifice, FTX CEO Sam Bankman-Fried (SBF) argued in a live debate with ShapeShift CEO Erik Voorhees Friday.
š Defiant Premium Story for Paid Subscribers
- Art Gobblers Spikes to 5,000 ETH in Volume as NFT Collectors Pile In That didnāt take long. Art Gobblers, an NFT project from Rick and Morty co-creator Justin Roiland, began minting on Monday and immediately became one of the of the month.
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 ā Bitcoin is up 8.9%, Ether is up 22.1%, and Binanceās 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 āEthereum killerā.
šCommunity Loveš
Thanking all the amazing Defiers for the support and love this week (and always)!
š§āš» āļø 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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