🔮 Security Breach, TON of Adoption, The Liquidity Fragmentation Narrative, Germany and GOX

Top Stories

Having a Blast

The recent airdrop of the optimistic rollup, Blast, has significantly boosted interest and activity on the platform. Since its mainnet launch in February 2024, Blast has rapidly climbed to become the seventh largest network by total value locked, amassing nearly $1.5 billion in assets. This growth is fueled by the platform's unique yield offerings on stablecoins and ether, alongside substantial backing from notable investors. The anticipation of an airdrop, signaled by the distribution of “Blast points” during its early access phase, further drove user engagement. Following the release of 17 billion BLAST tokens in Phase 1 of its airdrop, Blast's metrics have continued to rise, with a stable 7-day moving average of 798,000 transactions and 134,000 active addresses daily. Despite a typical post-airdrop selloff reducing BLAST's market cap from $493 million to $367 million, the platform's unique features and continued airdrop promises suggest sustained user interest and growth.

Source: The Block

Bittensor Halts Blockchain After $8 Million Security Breach

Core developers at Bittensor, a decentralized AI project, have deliberately halted its blockchain network following a suspected security exploit targeting user wallets. The breach was first reported by onchain analyst ZachXBT. According to a community Discord administrator, transactions were paused to prevent further unauthorized access and to allow time for investigation. Bittensor's block explorer confirms the last transaction occurred several hours ago. ZachXBT revealed that approximately $8 million worth of Bittensor's native TAO tokens were stolen, likely due to private key leakage. This incident caused a 15% drop in TAO's value, now at around $231. The TAO Foundation has not yet issued a detailed statement as the investigation is ongoing.

Toncoin Flips the Script on Blockchain Adoption

Toncoin, a blockchain ecosystem that includes storage, services, and a native token (TON), is achieving wide-scale adoption and product market fit, surpassing many more prominent competitors. Despite not generating much buzz on crypto Twitter, lacking significant VC backing, and not being listed on major exchanges, Toncoin has shown impressive growth. The network processes $5B to $10B in daily transaction volume, even surpassing Ethereum in active addresses. TON's value has surged 232.9% year to date, with a market cap of $18.8B, placing it among the top 10 digital assets. A key factor in its success is its integration with the social messaging app Telegram, which has 930 million global users and automatically includes an in-app Toncoin wallet in many jurisdictions. This unique distribution model, along with Telegram's alignment with crypto community values and opportunities in ad revenue sharing and play-to-earn games, positions Toncoin for continued growth and success.

Source: Messari

Rising Dominance of Arbitrum and Base Defies Liquidity Fragmentation Narrative

Despite concerns about liquidity fragmentation across Ethereum’s Layer 2 ecosystem, Arbitrum and Base are emerging as dominant forces. Data from L2beat reveals Arbitrum holds 39.6% of total value locked (TVL) on Layer 2s with $16.9 billion, while Base accounts for 17% with $7.22 billion, giving them a combined dominance of 56.6%. OP Mainnet follows with 14.9% dominance. Transaction data from GrowThePie shows Arbitrum and Base represent 59% of transaction volume across 23 Layer 2 networks. Base leads with 3.16 million transactions in 24 hours (36.8%), followed by Arbitrum with 1.99 million (22.2%). Both networks also account for 48.4% of decentralized exchange activity on the top 25 Layer 2 networks. This data challenges the narrative of a fragmented ecosystem, showing consolidation around a few key networks. Nonetheless, challenges like cross-chain bridge inefficiency persist, prompting projects like ZKsync, Optimism, and Polygon to pursue interconnected Layer 2 chains for better capital efficiency and user experience.

Source: GrowThePie (Layer 2 transaction count — Blast = dark blue, Arbitrum = teal)

Regulation

Circle Becomes First Stablecoin Issuer Licensed Under Europe's MiCA Regulations

Circle has become the first global stablecoin issuer to receive licensing and approval under Europe's new Markets in Crypto Assets (MiCA) regulations, allowing it to issue USDC and EURC stablecoins under this stringent framework. Announced by CEO Jeremy Allaire at a Paris press conference, effective July 1, Circle's MiCA-compliant stablecoins will be launched in Europe through its French entity. This milestone follows Circle's December acquisition of a digital asset regulatory license in France. USDC, the second-largest USD-pegged stablecoin, holds 20% of the total stablecoin supply as of June 28. MiCA, approved by the European Parliament in April 2023, seeks to standardize crypto regulations across the EU, with implementation in stages. From June 30, stablecoin issuers must adhere to enhanced regulatory requirements, with full compliance expected by year's end. Meanwhile, rival issuer Tether has expressed concerns about MiCA's application, and some crypto exchanges have restricted access to non-compliant stablecoins in the region.

Auf Wiedersehen BTC

The German government transferred 3,000 BTC, valued at approximately $175 million, to various addresses. These transfers included 500 BTC ($29 million) to Bitstamp, 400 BTC ($23 million) each to Coinbase and Kraken, and 1,700 BTC ($99 million) to an unidentified address labeled "139Po." This follows a pattern of transfers to crypto exchanges that began last month after the government seized 50,000 BTC from the film piracy site Movie2k in January. So far, around $269 million of the seized bitcoin has been sent to exchange-linked addresses, with an additional $350 million sent to the "139Po" address, which we are yet to identify but suspects may also be associated with an exchange. See similar: Update on Mt. Gox - repayments begin in Bitcoin and Bitcoin Cash, with up to 99% of its $8.2B Bitcoin potentially being sold, while creditors may have to wait up to three months to receive their Bitcoin

Source: Arkham

Hong Kong's Regulatory Push for Web3 and Digital Assets

As part of its bid to lead in Web3 and digital assets, Hong Kong is rapidly publishing white papers, with the latest from the Hong Kong Institute for Monetary and Financial Research (HKIMR) shedding light on decentralized finance (DeFi) and the metaverse. The report on DeFi highlights significant interest in expanding into areas like liquid staking and automated market makers, suggesting a need for strict regulations akin to those for traditional finance, which could impact infrastructure and workforce development. The metaverse report indicates that over 90% of financial institutions are knowledgeable about the metaverse, with 65% involved in discussions or planning, yet they face challenges such as privacy concerns, high costs, and integration issues.

Court Dismisses SEC Claims on BNB Secondary Sales, Crypto Celebrates

The crypto community is celebrating a significant legal victory as a court dismissed the SEC's claims that secondary sales of Binance’s BNB token and BUSD stablecoin constitute unregistered securities. On June 28, Judge Amy Berman Jackson ruled that the SEC’s allegations muddied the issues, differentiating tokens from investment contracts. This ruling follows an October 2023 decision regarding Ripple’s XRP, reinforcing that digital tokens themselves do not inherently comprise securities. While the court allowed other SEC charges against Binance to proceed, including issues related to its initial coin offering and staking services, the dismissal of secondary sales claims is seen as a major win for the web3 sector. Legal experts praised the decision, viewing it as a validation of previous rulings that challenge the SEC's broad classification of cryptocurrencies as securities. Binance still faces several charges, including failure to restrict U.S. investors and not registering as an exchange or broker. See similar: SEC Targets Ethereum Liquid Staking

Other Domestic Regulation Updates

• Robinhood plans to launch CME-based Bitcoin and Ether futures in the U.S.
• Coinbase wants access to Gensler's emails
• Ethereum ETF Approval Delayed Until July 8
• SEC Targets Liquid Staking With New Suit Against Consensys
• U.S. Federal Court Sentences Hydro Founders, Ruling That Its Crypto is a Security

Other International Regulation Updates

• Research Puts Crypto Money Laundering In Context
• Nubank to Bring Bitcoin Lightning Network to 100MM LATAM Customers
• Sony to Restart Whalefin Exchange in Japan

Pain & Gain

Pain

• Ethereum products see highest outflows since 2022
• Polkadot Community Unhappy With Heavy Treasury Spend

Gain

• HashKey plans to distribute token via tap-to-earn Telegram game
• Aave Launches GHO Stablecoin On Arbitrum
• EigenLayer competitor Symbiotic crosses $1 billion in deposits
• Dormant address containing $6.8 million in bitcoin wakes up after more than 12 years