🔮 Crypto Markets Surge, SocialFi Competition, Uniswap Fee Controversy, Stablecoins Coming to Bitcoin

Special Brew: Good Morning Market, How Was Your Slumber

Bitcoin (BTC) has surged by 12.6% in a single day, surpassing the $34,000 mark, marking its highest value since May last year, with over $310 million in liquidated short positions in the past 24 hours. Ethereum (ETH) has also experienced a significant uptick, reaching its highest point since August, trading at $1,830, up 10% for the day. This surge in the two largest cryptocurrencies has contributed to a total market capitalization increase of more than $100 billion, surpassing the $1.3 trillion mark, the highest since April, as optimism grows around the potential launch of a spot Bitcoin ETF, with Grayscale's Bitcoin Trust (GBTC) and BlackRock's iShares Bitcoin Trust making significant moves in this regard. (See below for: BTC MC vs total MC ex btc)

Token Specific News

A Friendly Battle in SocialFi

In the emerging category of SocialFi, Friend.tech, which allows influencers to sell shares of themselves for access to private chat rooms, faces competition from two new entrants. Stars Arena, built on the Avalanche Contract Chain, enables users to trade profile tokens and monetize their audiences, although it experienced a minor security exploit. Lens, founded by the creator of DeFi liquidity market Aave, offers a social media experience with user profiles and follower relationships represented by NFTs for monetization. Friend.tech initially experienced rapid growth but faced challenges due to SIM-swaps and security issues, leading to a decrease in user confidence. While they have introduced security features, some users are concerned about password confirmation and resetting.

Uniswap's New Fee Sparks 'Swap-er' Controversy as KYC Debate Adds a Splash of Drama

Uniswap Labs, a key company building atop decentralized crypto exchange Uniswap, introduced a 0.15% interface fee on specific token swaps involving ETH, USDC and other tokens. Only swaps that execute through Uniswap Labs’ front end will be taxed. Despite some controversy among decentralized exchange (DEX) competitors and aggregators regarding the user experience, Uniswap generated $177,970 in interface fees in just six days following the fee's introduction. The platform also features a 0.3% liquidity pool fee that benefits liquidity providers, and there's potential for a 0.05% protocol fee in the future through governance voting. Uniswap faced further controversy when a proposed Know-Your-Customer (KYC) feature for Uniswap v4 sparked a debate over the use of KYC in DeFi platforms. The fee is different from Uniswap’s existing “protocol fee” that’s managed by governance voters. It’s being levied by Uniswap Labs in an effort to “sustainably fund our operations,” a blog post said." See similar: Hayden Adams, the founder of Uniswap, faced a $650 billion windfall from the price surge of his token HayCoin and chose to send his holdings to a "burn address," causing a surge in the price of the remaining HayCoins not owned by him.

Source: The Block

Bitcoin Gears Up to 'Bitcoinize the Dollar' - Lightning Strikes for Fast

Lightning Labs, a prominent contributor to Bitcoin's layer-2 Lightning Network, has launched "Taproot Assets," a set of developer tools enabling the issuance of stablecoins and other financial assets on the Bitcoin blockchain. This innovation aims to "Bitcoinize the dollar" by expanding Bitcoin into a multi-asset network. The primary beneficiaries are anticipated to be people in emerging markets, given their demand for digital dollars, particularly stablecoins for fast and low-cost USD transactions. The combination of Lightning's speed, global reach, and low fees with Bitcoin's security and decentralization is expected to have a significant impact, attracting liquidity and increasing transactional throughput. This development could further accelerate the growth of the Lightning Network, which has already seen a substantial increase in transactions and tokenization of various financial assets during testing.

It's Nice to Have Options

The crypto options market is experiencing growth despite a decline in overall derivatives trading volumes. Notably, Deribit, the largest crypto options exchange, saw a 17% rise in total volumes in August, while global crypto derivatives volume declined by 12%. Deribit attributes its resilience to the options segment. CME Group, a leading derivatives exchange, achieved a record peak in Bitcoin options volume in March, with volumes remaining strong throughout the year. Additionally, the DeFi options market has set all-time volume records in September and October 2023. The crypto options market is primarily focused on Bitcoin and Ethereum, with little demand for altcoin options. Professional market makers play a crucial role in the liquidity of options markets.

Source: DefiLlama

Ah Dam, BTC Feeling Renewable

The Itaipu Dam is a massive hydroelectric dam situated on the Brazil-Paraguay border, costing $27 billion to construct and holding the Guinness World Record for being the most expensive object on Earth. Notably, it's now providing energy for Bitcoin mining. Sazmining, a Bitcoin company, has established a 100% renewable energy facility in Paraguay, powered by surplus energy from the Itaipu Dam. This repurposing of surplus energy is economically efficient, preventing wastage and losses.

Regulation

Japanese Consortium to Launch Digital Yen in 2024 as BOJ Delays Decision to 2026

A consortium of Japanese companies, including major financial institutions, plans to launch a yen-backed digital currency called DCJPY in July 2024. This digital currency, operated on the DCJPY Network by DeCurret Holdings, aims to simplify financial transactions and reduce costs. It will be compatible with both Web3 and existing financial systems, facilitating business collaborations. The system, backed by bank deposits, emphasizes security through established know your customer and anti-money laundering practices. While the Bank of Japan is still contemplating a digital yen and delaying a final decision until 2026, this private initiative could set the stage for the future of digital currency in Japan.

New York Attorney General Files Lawsuit Against Crypto Firms Gemini, Genesis, and DCG for Alleged $1 Billion Fraud

New York Attorney General Letitia James has filed a lawsuit against cryptocurrency firms Gemini Trust Company, Genesis Global Capital, and Digital Currency Group (DCG), alleging that they defrauded over 230,000 investors, including 29,000 New Yorkers, of more than $1 billion. The lawsuit claims that Gemini was aware of Genesis' undersecured loans, particularly with Sam Bankman-Fried's trading firm Alameda, but failed to disclose this information to investors. There has been no immediate response from the spokespersons of DCG, Gemini, or Genesis. It's worth noting that Genesis and CoinDesk are both owned by Digital Currency Group.

Binance Always Battles

Binance renewed its push to fend off charges from U.S. commodity regulators on Monday, as the world’s biggest crypto exchange faces increasing heat from enforcers. The exchange says the Commodity Futures Trading Commission (CFTC) is trying to police the world by taking action against a company, which on paper has sought to avoid U.S. business. “The CFTC relies on new and broad arguments that would allow it to regulate any activity in cryptocurrency (or other assets) related to a derivatives product anywhere on the globe,” said a filing made by Binance in an Illinois court late Monday.

UK's $252B in Crypto Activity Dominated by DEX Trading, NFT Swapping

The United Kingdom has emerged as a leading force in the cryptocurrency space in Central, Northern, and Western Europe (CNWE), with a report by Chainalysis indicating it leads the region in crypto activity, boasting $252.1 billion in transaction volume over the past year, ranking third in the world behind the United States and India. The report highlights the significant role of decentralized finance (DeFi) in driving crypto adoption, with DeFi services constituting 54.8% of the total cryptocurrency value received in the region. Notably, non-fungible token (NFT) trading is included within the DeFi category, with platforms like Opensea and Sorare being the most utilized in the UK, contributing to the remarkable growth of crypto adoption in the region.

Source: Chainalysis

SEC Smooths Ripples Over

The U.S. Securities and Exchange Commission (SEC) has decided to drop claims against Ripple's CEO, Brad Garlinghouse, and Executive Chairman, Chris Larsen, alleging that they aided and abetted the company in violating federal securities laws in its XRP transactions. This move cancels a trial scheduled for next year and provides Ripple with a legal victory, while the SEC will continue pursuing its claims against the company. The charges against the two executives have been dismissed with prejudice, meaning they cannot be filed again.

Other Domestic Regulation Updates

• Gov. Newsom Signs California Crypto Licensing Bill
• SEC Ordered to Review Grayscale’s Bitcoin ETF Application
• What to expect with the final Grayscale-SEC court mandate imminent
• U.S. SEC Will Not Appeal Grayscale ETF Application Review Order
• Chinese Court Ruling Affirms: No Legal Protection for Crypto Lending 
• Sen. Elizabeth Warren joins more than 100 lawmakers to ask Biden about plans to prevent crypto-financed terrorism

Other International Regulation Updates

• FTX general counsel quit after he learned of massive hole in balance sheet

• Lots of internal documents and photos have come out during the trial of FTX founder Sam Bankman-Fried—including some that his defense didn't want us to see
• EU DeFi Regulator ESMA Releases Report on Risks

Pain & Gain

Pain

• Google and BlackRock Considered Investing in FTX as It Crumbled
• OSL parent denies $128M sale of its digital assets trading platform
• Fantom’s ‘Foundation Wallets’ drained for $550K
• Reddit is sunsetting its “Community Points” reward token

Gain

• dYdX Releases Cosmos-Based Chain Source Code Ahead of Mainnet Launch
• Maker Annualized Revenue Soars Past $200M to New All-Time High
• BitGo Buys Asset Manager HeightZero to Offer Secure Custody for RIAs
• Eligible Coinbase retail customers outside the US can now trade perpetuals
• Immutable Offers Studios Up to $100K to Build Games with Amazon
• Elixir Protocol secures $7.5 million Series A funding at $100 million valuation
• Mastercard Announces Successful Wrapped CBDC Trial
• Bitcoin ETF Could Boost Crypto Market by $1 Trillion, Analysts Say