Hello Defiers! Happy weekend!
Sometimes it’s nice to get back to basics, and this week that’s exactly what DeFi did on a number of fronts. For starters, there was Gnosis’ transition to a Proof of Stake consensus mechanism. As Sam Haig reported, the Layer 1 executed its own merge of a PoS chain and its mainnet, just as Ethereum did a couple of months ago to great fanfare. As the first blockchain network to make the jump after The Merge, Gnosis is showing the way for similar networks, and that will mean a boon for staking.
Ethereum itself also made headlines this week in Merge-related news. Sam covered how Ethereum devs opted to postpone The Surge in favor of prioritizing staked ETH withdrawals from the Beacon chain. And Vitalik Buterin weighed in with a post urging DeFi to embrace real world assets.
Meanwhile, Owen Fernau unearthed an important trend — DeFi’s OGs are joining forces in the wake of the calamities this year. Reporting on MakerDAO’s proposal to supply $5M in DAI to Compound, Owen found that a number of protocols are reaching out to one another for partnerships. The push could mark an important step in strengthening DeFi and differentiating it from the madness that has consumed so much of CeFi crypto.
Sticking with that theme, guest writer Cathy Yoon contributed an oped on the takeaway lesson from the FTX fiasco — the power of self custody. For anyone who wants a one-stop primer on what went wrong at FTX, check out Rahul Nambiampurath’s superb explainer. And Aleks Gilbert covered the search for a $30M yacht in the Three Arrows bankruptcy. Aleks also presented the second part of his FTX Contagion series on The Defiant YouTube channel.
In this week’s podcast, the indomitable Tegan Kline, co-founder of Edge & Node, interviewed Sam Williams, the co-founder and CEO of Arweave, which stores data and applications forever.
Enjoy!
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This Week: Earn 54% APR as a Staked ETH LP on Balancer
Podcast
Sam Williams On Storing Files On-Chain For Eternity
Store Data Forever
By Tegan Kline
Today we have Sam Williams, the co-founder and CEO of Arweave. Arweave enables you to store data, applications, and documents forever. We dive into the profound use cases on Arweave, what Sam says to those that say Arweave might be too expensive to store certain files, how Arweave is used to store NFTs so that they can live forever, and how you can earn money with Arweave.
Defiant Video
Looks Like SBF Incriminated Himself
Mapping the FTX Contagion: Part 2
Vitalik’s Top 5 Crypto Use-Cases
Will Maple recover from this?
Best of the Week
Merge Sequels
Gnosis Executes Its Own Merge in Shift to PoS in Boost for Staking
Layer 1 Will Be the First Blockchain After Ethereum to Adopt New Consensus Mechanism
By Samuel Haig
Gnosis Chain, a Layer 1 network, became the second blockchain to transition to Proof of Stake consensus via a chain merge. The upgrade, which went live on Thursday, will unify Gnosis Chain’s Proof of Stake Beacon Chain with its Proof of Authority (PoA) mainnet, abandoning PoA consensus in the process.
Read the full story in The Defiant
Ethereum’s Next Steps
Vitalik Urges DeFi to Embrace Real World Assets
Ethereum’s Chief Scientist Predicts Stablecoins Will Split Into Three Groups
By Samuel Haig
Embracing one of the thorniest and most promising projects in decentralized finance, Vitalik Buterin, the chief scientist and co-founder of Ethereum, is bullish on the integration of real-world assets into DeFi and stablecoins.
Buterin encouraged devs to explore blockchain-based assets tracking traditional financial instruments in a Dec. 5 blog post entitled What in the Ethereum application ecosystem excites me.
Read the full story in The Defiant
DAO Debate
DeFi Debates DAO Governance After Vitalik’s Critique
Ethereum’s Chief Scientist Said Governance Tokens Benefit Whales at Expense of Users
By Samuel Haig
In a critique that may throw the future of token-based governance into flux, Vitalik Buterin, the influential co-founder and chief scientist of Ethereum, said decentralized voting systems are benefitting whales at the expense of tokenholders.
Read the full story in The Defiant
NFT Surge
Mints Double at Music NFT Platform as Collectors Shrug Off Bear Market
Sound Records Heavy Minting Action in Last Two Months
By Owen Fernau
In the latest sign that NFTs remain popular with collectors, Sound, a platform for music tokens is singing a very catchy tune. The number of mints on Sound have doubled in each of the last two months. At 12,080, according to a Dune Analytics query, over a third of the platform’s total of 30,562 mints came in November.
Read the full story in The Defiant
Bankruptcy Follies
Three Arrows Liquidators Target $30M Yacht in Hunt for Assets
Teneo Says Hedge Fund Founders Are Uncooperative as It Corrals Assets for Creditors
How much for Much Wow?
$30M.
That’s the amount liquidators are seeking for the yacht purchased by Zhu Su and Kyle Davies, the founders of defunct crypto hedge fund Three Arrows Capital.
Read the full story in The Defiant
Opinion
Power of Self-Custody is the Takeaway from FTX
Pitfalls of CeFi Intermediaries on Vivid Display in SBF’s Fiasco
Guest writer Cathy Yoon makes a case for the key lesson in the calamity…
The FTX implosion is a watershed moment in crypto. The upshot is reaffirming the core value in cryptocurrencies — keeping control over your own finances. With every passing day, more and more details on FTX’s management emerge and everyone is asking, “How did we get here?”
Read the full column in The Defiant
Opinion
Forget the Snickering… Here’s Why the Metaverse Will Prevail
The Internet, Broadband, Mobile Computing… Sweeping Change Takes Time and the Metaverse Will be No Different
Drawing on tech history, guest writer Stephen Fromkin makes a provocative case for the metaverse.
“Most things that succeed don’t require retraining 250 million people.”
Wired magazine published this line in 1995, in reference to the Internet.
You could apply the same thought to the metaverse. There is a lot of skepticism about this digital ecosystem in the market, and many critics have dismissed the innovation as little more than hype or retrofitted virtual reality, which never took off. Yet the skeptics are wrong. They often start with a flawed premise — that the metaverse is being built from the ground up.
Read the full column in The Defiant
DeFi Explainer
What Happened at FTX?
A Step-by-Step Guide to the Collapse of the Crypto Exchange
Before its demise in November 2022, FTX was the No. 2 cryptocurrency worldwide.
Founded by Sam Bankman-Fried, a self-styled evangelist for cryptocurrency with strong ties to TradFi investors, FTX sported a valuation of $32B following a funding round in January 2022. Yet after doubts arose about the exchange’s balance sheet and symbiosis with Alameda Research, a crypto investment fund also controlled by Bankman-Fried, FTX lost the confidence of investors and rapidly unraveled.
Read the full explainer in The Defiant
Friday
News
- Bad Debt Piles up at DeFi Lending Protocols In a year when a bear market pummeled crypto investors and bankruptcies spread contagion through the DeFi sector, it was only a matter of time before the bill would come due.
- Coinbase Offers Free Trades from USDT to USDC One of crypto’s largest centralized exchanges is shaking up the battle for stablecoin supremacy. Coinbase, the second largest exchange by volume, which processed over $1B of trades on Dec. 8, is encouraging its users to swap from USDT to USDC with fee-less trades.
- SBF Spars with CZ And Denies ‘Hunting’ Three Arrows In a flurry of tweets early Friday, former FTX CEO Sam Bankman-Fried sparred with archrival Changpeng Zhao of Binance, denied allegations he had orchestrated the downfall of crypto hedge fund Three Arrows Capital in June, and committed to testifying before a Congressional Committee next week.
DeFi Explainers
- What is DeFi Borrowing? Financial freedom and inclusivity have been hot issues for many years. Nonetheless, it took Bitcoin to popularize the weird concept that a decentralized computer network can produce sound money.
Thursday
News
- Ethereum Devs Opt to Delay Surge and Prioritize Staked ETH Withdrawals The Surge will have to wait. Ethereum’s developers are prioritizing Beacon Chain withdrawals for the network’s next major upgrade, Shanghai, delaying the implementation of The Surge, the network’s sequel to The Merge, according to the latest Ethereum Consensus Layer call. This marks the first time devs have provided a set window for withdrawals.
- Gnosis to Execute Its Own Merge in Shift to PoS Gnosis Chain, a Layer 1 network, is poised to become the second blockchain to transition to Proof of Stake consensus via a chain merge.
- Circle Abandons IPO Plans Circle, the issuer of the USDC stablecoin, has terminated its plan to merge with Concord Acquisition Corp, a publicly traded SPAC, by mutual consent. The company had planned to go public in the fourth quarter through a SPAC deal.
DeFi Explainers
- What is Solend? Solend a decentralized application that enables users to borrow or lend crypto funds. Just like in TradFi, lenders earn interest on their deposits from borrowers. Yet Solend has been the subject of criticism that it isn’t complying with the spirit of DeFi.
Wednesday
News
- Amber Group Denies Allegations Of Insolvency The contagion from FTX’s collapse may still be spreading. Lookonchain, an on-chain analyst, claims that Amber Group, a crypto trading and asset management firm, appears to be on the brink of bankruptcy.
- Vitalik Urges DeFi to Embrace Real World Assets Embracing one of the thorniest and most promising projects in decentralized finance, Vitalik Buterin, the chief scientist and co-founder of Ethereum, is bullish on the integration of real-world assets into DeFi and stablecoins.
- DeFi and Web3 Startups Attract $3B in Funding in Third Quarter No surprise, DeFi and web3 fundraising has taken a hit in a year roiled by a bear market and a series of crypto scandals. Yet what is eye opening is how much investment continues to flow into the burgeoning sector.
- Chainlink Launches Staking Service as LINK Rallies 32% Chainlink, the leading web3 data oracle provider, launched support for the beta version of its staking service on Dec. 6, allowing holders of its LINK token to earn a native yield for the first time.
NFT Roundup
- ApeCoin Holders Pre-stake $34M Ahead Of Rewards Launch Crypto markets might be fretting over Fed meetings and FTX contagion, but that didn’t stop NFT degens from having a good time.
DeFi Explainers
- What Happened at FTX? Before its demise in November 2022, FTX was the No. 2 cryptocurrency worldwide. Yet after doubts arose about the exchange’s balance sheet and symbiosis with Alameda Research, a crypto investment fund also controlled by Bankman-Fried, FTX lost the confidence of investors and rapidly unraveled.
Tuesday
News
- DeFi Debates DAO Governance After Vitalik’s Critique In a critique that may throw the future of token-based governance into flux, Vitalik Buterin, the influential co-founder and chief scientist of Ethereum, said decentralized voting systems are benefitting whales at the expense of tokenholders.
- Polkadot Projects Forge Alliance to Protect Blockchain From Bad Actors Seven of Polkadot’s leading projects have joined forces to establish standards and ethics for open-source development, the new collective said on Nov. 30.
- Orthogonal Trading Misses $10M Loan Payment The dominoes continue to fall after FTX’s collapse. Orthogonal Trading, a crypto trading firm, is said to be insolvent after it missed a loan payment of $10M on Maple Finance, a DeFi protocol that facilitates uncollateralized borrowing.
- Three Arrows Liquidators Target $30M Yacht in Hunt for Assets How much for Much Wow? $30M.That’s the amount liquidators are seeking for the yacht purchased by Zhu Su and Kyle Davies, the founders of defunct crypto hedge fund Three Arrows Capital.
- UNI Surges After ‘Fee Switch’ Vote is Proposed Uniswap’s UNI token jumped over 7% on Dec. 2 after a governance proposal calling for a vote to reserve a portion of trading fees was posted.
NFT Markets
- Mints Double at Music NFT Platform as Collectors Shrug Off Bear Market In the latest sign that NFTs remain popular with collectors, Sound, a platform for music tokens is singing a very catchy tune. The number of mints on Sound have doubled in each of the last two months.
Market Action
- Markets Rally After Powell Hints At Smaller Interest Rate Hikes Crypto markets rallied this week after US Federal Reserve Chairman Jerome Powell hinted that the next rate hike would be smaller than the mega-hikes of recent months.
Community Love
Thanking all the amazing Defiers for the support and love this week (and always)!