🔮 Mainnet Launches, MakerDAO Rebrand, OpenSea Nears Boiling, A TON of Trouble, Musk Wins

The Week In Markets

The latest economic signals are a mixed bag that should make anyone keeping an eye on the markets just a bit uneasy. US manufacturing activity shrunk for a fifth straight month, with the ISM PMI printing 46.8 in July signaling continued weakness in the manufacturing sector. New orders are down, inventories are piling up — all signs of sagging demand and a hint that goods disinflation might stick around for a while. Yet, the "prices paid" index threw a curveball with an unexpected rise, signaling potential stagflation, where sluggish growth meets stubborn inflation. The ISM tends to be a leading indicator relative to unemployment, which tends to rise during business cycle recoveries after ISM drops like the one we saw last year. Amidst this backdrop of mixed economic signals, all eyes will be on the Fed as it gears up for a possible round of rate cuts at the end of the year.

Markets are bracing for what could be a bumpy September, with a lot of potential market movers on the calendar, from jobs data to a presidential debate, and that much-anticipated Fed decision. Right now, the odds are on a modest 25 basis point rate cut, but there’s still a chance for something more aggressive, which could whip up some real volatility. Some analysts are already speculating that if the Fed goes bigger with a 50 basis point cut, we might see a short-term pop in Bitcoin prices, only to have it crash back down when the inevitable recession chatter kicks in. Historically, September hasn’t been kind to Bitcoin, but October often brings brighter days — and there’s plenty of optimism that this fall will be no different, especially with institutional players starting to warm up to crypto.

In the digital asset space, the regulatory environment remains a critical concern. The SEC's latest objections to FTX’s repayment plans via stablecoins illustrate the ongoing friction between regulators and the crypto industry. While the SEC isn’t throwing out accusations just yet, it’s clear they’re keeping a close watch on how crypto transactions are handled under securities laws. At the same time, more traditional financial giants like Deutsche Bank and State Street are dipping their toes into crypto custody and tokenization services, signaling a slow but steady shift towards broader acceptance. With regulatory clarity improving in places like the EU and UAE, the path forward for digital assets might start looking a little less foggy.

In short, both traditional and digital markets are entering a stretch where uncertainty rules the day. How they navigate through these rough waters — balancing economic slowdowns, inflation concerns, and regulatory headwinds — will set the stage for what’s next. Buckle up; it’s going to be an interesting ride.

Top Stories

Kaia Blockchain Launches Mainnet to Revolutionize Web3 Integration in Messaging Apps

Kaia, the Layer-1 blockchain developed by Kakao and LINE, has launched its mainnet, setting a new benchmark as the world’s fastest EVM blockchain with one-second finality and ultra-low gas fees. This blockchain emerged from the merger of Kakao’s Klaytn and LINE’s Finschia, leveraging the combined user base of over 250 million from Kakao’s messenger, used by 96% of South Koreans, and LINE, the leading platform in Japan, Taiwan, and Thailand. Kaia aims to enhance the web3 user experience by deeply integrating with these popular messaging apps, supporting applications in DeFi, gaming, real-world assets, and web3-based messaging. Additionally, Kaia is inviting developers to build Telegram-style mini dApps on LINE through its NEXT WEB SDK, offering extensive support through its Kaia Wave program, including $1.2 million in resources per team. The launch is also supported by the listing of Kaia's new token on HashKey Global, allowing user engagement from August 29 with opportunities to win additional tokens.

August Sees Surge in Crypto Trading Volume, Second-Highest Month in 2024

August 2024 has marked the second-highest month for USD support exchange volume, with $193 billion in trades, potentially signaling robust market confidence. This surge follows only March's $276 billion, hinting at a potential resurgence in trading activity. Notably, Crypto.com has overtaken Coinbase in volume and market share, now commanding 49% of the USD support exchange market. Despite no major catalysts like an ETF launch, the growing intersection of crypto and politics, especially with the U.S. presidential election approaching, may be driving increased interest. This rise in trading volume has significant implications: it may indicate strong market confidence, suggesting shifting dynamics among exchanges, and could attract heightened regulatory scrutiny. As we enter the final quarter of 2024, the sustained high volumes may signal the early stages of the next major crypto rally, setting the stage for an exciting and potentially volatile end to the year.

Source: The Block

Chains Profit from Memecoins, But Creators and Traders See Limited Gains

Memecoins have become the top-performing sector in 2024, with a market cap exceeding $43 billion, accounting for about 20% of the total crypto market. Platforms like pump.fun have fueled this growth, especially on Solana, and inspired competitors on other chains like Sui and Tron. Despite the booming market, a new report reveals that only 3% of pump.fun users have made more than $1,000, with just seventy users earning over $1 million. The influx of tokens, often linked to memeable events, has led to frustration among some traders, as only a small fraction of tokens succeed. For example, out of over 15,000 tokens launched on August 12, just thirty-eight met the $60,000 threshold to trade on Raydium, yet pump.fun still generated $6.3 million in revenue that week. Meanwhile, competition is heating up, with Tron's SunPump quickly surpassing pump.fun in revenue and token launches, even helping Tron outpace Ethereum and Solana in daily fees for a brief period. While pump.fun has introduced new incentives for creators, making the platform more attractive, the financial rewards for most traders remain elusive, highlighting a growing divide between the profitability of chains and the limited gains for individual creators and traders.

Source: Binance Research

MakerDAO Rebrands to Sky, Introduces Upgradeable Stablecoin and Governance Tokens

MakerDAO, the decentralized organization behind the DAI stablecoin, has rebranded to Sky and announced the rollout of new upgradeable tokens, set to launch on September 18. As part of this transition, DAI holders will have the option to upgrade their tokens to Sky Dollar (USDS) at a 1:1 ratio, while holders of the governance token MKR can convert to the new SKY token at a 1:24,000 ratio. This rebranding is a key element of MakerDAO’s "Endgame" plan, aiming to broaden participation in governance and introduce new features, such as native token rewards for USDS holders. However, these changes have raised concerns within the community, especially regarding USDS’s centralized features like wallet freezing, which some argue contradict Gnosis Chain’s decentralized principles. Despite these concerns, the existing DAI and MKR tokens will remain active, allowing users to choose between the original tokens and their new counterparts as MakerDAO, now Sky, moves forward with its ambitious plans.

Sony Launches Soneium Layer 2 Testnet and Incubator to Boost Web3 Development

Sony has officially launched the "Minato" testnet for Soneium, its forthcoming Ethereum Layer 2 network, developed by Sony Block Solutions Labs (Sony BSL). This public testnet allows developers and users to explore the network and provide feedback before its mainnet launch. Alongside Minato, Sony unveiled the Spark incubator program, offering up to $100,000 in support for projects focused on DeFi, NFTs, gaming, and social applications. Spark aims to onboard 30 projects into its first cohort, starting mid-October, with backing from major partners like Astar Network, Circle, and Chainlink, as well as leading venture capital firms. This initiative marks another significant step in Sony's growing involvement in the Web3 space, following investments in Epic Games and various NFT ventures, and further cements its commitment to bridging the gap between Web2 and Web3 technologies.

Regulation

Elon Musk and Tesla Win Dismissal of Dogecoin Market Manipulation Lawsuit

Elon Musk and Tesla successfully won the dismissal of a class action lawsuit that accused Musk of manipulating the Dogecoin market through his public comments. U.S. District Judge Alvin Hellerstein permanently dismissed the lawsuit, ruling that Musk’s statements about Dogecoin, including claims about becoming its CEO and launching it to the moon via SpaceX, were aspirational and not factual. The judge emphasized that no reasonable investor could have relied on these statements as a basis for market manipulation claims. Filed in June 2022, the lawsuit alleged that Musk’s actions had defrauded investors, but the court found insufficient grounds to support allegations of market manipulation, a “pump and dump” scheme, or insider trading. This ruling marks a significant victory for Musk and Tesla, reaffirming that his comments were more akin to promotional rhetoric than actionable financial advice.

Telegram CEO In a TON of Trouble

The UAE is closely monitoring the arrest of Telegram CEO Pavel Durov by French authorities, expressing concern and requesting urgent consular support. Durov, a Russian-born entrepreneur and Emirati citizen, was detained at Paris-Le Bourget Airport on Saturday as part of an investigation involving 12 alleged criminal violations, including complicity in illegal transactions and refusal to cooperate with law enforcement. The arrest has sparked outrage within the crypto community and among privacy advocates, including Edward Snowden. Despite the backlash, French President Emmanuel Macron asserted that Durov's detainment was not politically motivated, reaffirming France's commitment to freedom of expression. Telegram, which recently surpassed 950 million users, has defended Durov, calling the accusations against him absurd. Durov’s detention has already impacted the market, with the price of Toncoin (TON), associated with Telegram’s blockchain project. Durov can be held for questioning under French law for up to four days before a decision is made on whether to charge him.
See similar: TON Goes Offline For Seven Hours Amid DOGS Airdrop

Hong Kong's New Crypto Regulations Narrow the Field of Applicants

Since Hong Kong's new regulatory regime took effect on June 1, 2024, twenty-four firms initially applied for licenses, but seven quickly withdrew, with others following suit due to the high costs of compliance and the ban on mainland Chinese customers. Currently, eleven firms, including Crypto.com, Bullish, and Matrixport HK, have been conditionally approved but face strict scrutiny from the Securities and Futures Commission (SFC). These firms can operate while under review but cannot onboard new clients, and some may not meet compliance by the end of 2024. The SFC's "same activity, same risks, same regulation" approach subjects crypto firms to the same stringent regulations as traditional financial institutions, revealing issues like inadequate executive oversight and cybercrime protections. While OSL and Hashkey met these requirements and were licensed in 2023, others may exit the market as they weigh the cost of compliance against potential benefits. However, firms that successfully navigate the regulatory landscape could inspire increased confidence among investors.

SEC Warns FTX Against Repaying Creditors with Stablecoins Amid Bankruptcy Proceedings

A recent SEC filing has warned the FTX estate that it may oppose any efforts to repay creditors using stablecoins or other digital assets, as well as objected to a provision limiting the future legal liabilities of FTX debtors. Various methods to maximize creditor recovery have been proposed, including tokenizing FTX claims for trading on decentralized platforms, though FTX's leadership has dismissed the idea of relaunching the exchange. While some creditors have pushed for in-kind distributions in crypto, FTX plans to repay creditors in cash or stablecoins. The SEC has reserved the right to challenge the legality of such transactions involving digital assets but did not outright declare them illegal. Additionally, both the SEC and the U.S. Trustee overseeing the case objected to the inclusion of a discharge provision that would shield FTX debtors from future lawsuits. The cost of FTX's bankruptcy has escalated, with administrative fees now exceeding $800 million.

Source: Mr. Purple on X (formerly Twitter)

OpenSea Braces for SEC Lawsuit Over NFTs Being Classified as Securities

OpenSea, the leading NFT marketplace, is preparing for a potential lawsuit from the U.S. Securities and Exchange Commission (SEC), which alleges that NFTs on the platform might be classified as securities, according to co-founder and CEO Devin Finzer. The SEC has issued a Wells Notice to OpenSea, signaling its intent to pursue enforcement action—a move that could have broad implications for the NFT industry. OpenSea has pledged $5 million to support legal defenses for NFT artists and developers who might face similar scrutiny. This development represents an escalation in the SEC’s scrutiny of NFTs, which have traditionally been viewed as digital art or collectibles, rather than securities. The potential lawsuit could challenge the regulatory boundaries between NFTs and traditional art markets, raising questions about how digital assets should be classified and regulated. Legal experts argue that if the SEC begins regulating NFTs as securities, it could disrupt the NFT market and impact the broader art and collectibles industries. See similar: Democratic Congressman Slams SEC's 'Heavy-Handed Approach' Over OpenSea Threats

Other Domestic Regulation Updates

• BlackRock's IBIT logs first daily net outflows since May
• Crypto Firms Made 48% of Corporate Donations to 2024 U.S. Elections
• Nasdaq Applies to Trade BTC Options, Following NYSE’s Lead

Other International Regulation Updates

• OKX becomes fully licensed in Singapore, hires former MAS official as local CEO
• Thailand Raids Illegal Bitcoin Mine After Frequent Power Outages
• India’s CBDC Pilot Hits 5MM Users, 20 Months Post-Launch
• Buenos Aires High Schools to Offer Ethereum Classes

Pain & Gain

Pain

• Ethereum Community Rattled by Foundation’s ETH Sales and Vitalik’s “DeFi Hate”
• Excess Supply of Bitcoin Could Keep Pushing BTC Down
• Polymarket Bettors Argue: Did RFK Jr. Drop Out or Suspend?

Gain

• IREN posts record $184.1 million annual bitcoin mining revenue as capacity nearly doubles
• Tokenized Treasury Funds Pass $2B in Combined Market Cap

• Microsoft-backed AI, blockchain startup Space and Time raises another $20 million
• Aave Labs proposes integrating GHO stability module with BlackRock's BUIDL
• MakerDAO rebrands to Sky, DAI stablecoin optionally upgradeable to USDS