All Been Crypto — Week 3 Dec 2021
A mixed week with BTC down -5%, ETH flat but other L1s like SOL +10% and Terra a whopping +50%. No wonder dominance further dropped to 39% despite Microstrategy buying another 7k bitcoin. Shiba also had a short spike on Kraken listing but gave back most of the gains. And just to remind us how silly pockets of the market are someone created an ERC20 token called Omicron (OMIC) that of course spiked 6x last Friday (albeit on no volumes). In the headlines we had Jack Dorsey showing colours stepping down as Twitter CEO while also rebranding Square to Block (both stocks down post announcement), Vitalik revealing a proposal that should alleviate some of the high gas cost on L2 and another hack reminding us how fragile Web 3.0 still is. As a bonus I also add this link to an NFT adoption survey revealing some interesting insights of where different countries are on the adoption scale. Enjoy reading and have a good weekend ahead!
We watched Jack on Twitter (where else) announcing stepping down as the CEO of Twitter this week. Something that was rumored for a while but nevertheless caused widespread reactions. He was CEO of both Twitter and Square (now renamed Block) and its no secret he’s more on the BTC maxi side of things. There were voices calling this him moving from Web 2.0 to Web 3.0 and also quite many arguing this is bullish ETH. In fact we saw shortly after some ETH tipping function enabled, but at the same time concerns were on censorship and the future of Twitter. Even saw a group calling for a DAO to buy enough shares to get a seat on the board — guess that’s the flavor of the time. I want to focus more on what’s ahead for Jack though given he’s got a vision and the rebranding of his other baby Square to Block can tell us where he’s going. I like the analogy of 2D to 3D. Square to block get it? They also had recently released a whitepaper aiming at nothing less than bringing DeFi to bitcoin. The aim is to make it easy to fund a non-custodial wallet anywhere in the world through a platform to build on- and off-ramps into bitcoin. You can think about it as a decentralize exchange for fiat too. We can clearly see how Block will go down the BTC route while Twitter is embracing ETH.
ETH proposal to reduce L2 gas fees: EIP-4488
Speaking about Ethereum, the network has come under high profile critique recently for high transaction fees with Three Arrows Su Zhu announcing he has abandoned the network only to shortly after back trace his comments. Now the bulls will say that high transaction fees are just an indicator of the value of block space market is subscribing to the Ethereum Network and while I generally agree with that argument we all know that crypto ecosystems live of innovation and high gas fees are one if not the significant diver for new projects to choose other L1s over ETH. This is well understood by the ETH community and so I’m happy to see that there are proposals to improve L2 efficiency. In my view L2s are by far the best response to the scaling problem we know and even if it’s a temporary fix would help keep the Ethereum ecosystem more attractive to builders. The proposal is quite technical but in a nutshell EIP-4488 seeks to further decrease Layer 2 gas fees in two ways: by decreasing transaction calldata cost, which is a primary mechanism for both Optimistic Rollups and ZK-Rollups, as well as by adding a ceiling for total transaction calldata that can be in a block. According to Vitalik increasing the amount of data space available to rollups is doable today, as block sizes are nowhere near sizes that would threaten network stability.
BadgerDAO Hacker stole $120m
Just as a reminder of the risks and how early we are. On Wednesday night, someone drained funds from multiple cryptocurrency wallets connected to the decentralized finance platform BadgerDAO. According to the blockchain security and data analytics Peckshield, which is working with Badger to investigate the heist, the various tokens stolen in the attack are worth about $120 million. From BadgerDao discord “All [the] blockchain / smart contract audits in the world, and people lose 120m to a Cloudflare API leak by a sloppy team where a dude passes a new approval to his contract in the site header — GG — we still have a long way to go”. What funds can be recovered and how those affected will be made whole is still unknown. But for anyone living in the world of crypto, blockchain, and Web3 apps, it may ultimately be on them to learn how approvals, signing, and transactions really work and keep an eye on them. Particularly when millions of dollars in holdings can disappear in an instant even while managed by “one of the most security minded teams in DeFi,” as Badger refers to itself. Badger has retained data forensics experts Chainalysis to explore the full scale of the incident & authorities in both the US & Canada have been informed
The benefits of EVM and Solana are that you can start building new applications on Solidity, running any VM that cannot take leverage and participate in the broader Solana ecosystem, people leaving Ethereum is just never going to happen.
Solana’s Co-Founder Anatoly Yakovenko
We are going to see this battle between grassroots internet communities and the large corporations that are trying to basically buy the soul of the internet
Axie Infinity co-founder Jeff Zirlin
It is not backed by anything, the volatility is colossal, so the risks are very high. We also believe that we need to listen to those who talk about those big risks