🔮Poly Want a Market, FTX Auctions, Whale Hunting, Stable(coin) Future

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The Complexities of DAO Governance Highlight Vulnerabilities to “Whale” Influence

DAOs, or decentralized autonomous organizations, aim for democratic governance using blockchain and smart contracts, but low participation often concentrates voting power among large token holders, or "whales." This centralization allows a few individuals to sway decisions, as seen in July when a whale named Humpy attempted to allocate $25 million from Compound Finance’s DAO to a protocol linked to his group, eventually succeeding in low-turnout voting. Similar issues have affected DAOs like MakerDAO and Nouns DAO, with activist whales and opportunistic "raiders" manipulating governance. To counteract these challenges, some DAOs are exploring solutions such as delegating votes to active members, implementing quadratic voting, and locking token transfers to prevent last-minute whale dominance. However, finding the right balance for genuinely democratic governance remains a work in progress for DAOs.

The Election's Real Winner

Polymarket is seeing record-breaking engagement, with over 90,000 active traders contributing to $533 million in volume for September, marking a 41% month-over-month (MoM) increase in active users and a 12% MoM growth in trading volume. Open interest also surged to $140 million, up 38% from last month. The platform launched over 2,100 new markets—a 26% MoM rise—as traders bet on the outcome of the upcoming US presidential election. As election day nears, the platform’s growing popularity raises questions about post-election sustainability. Skeptics anticipate a decline, while optimists believe Polymarket will continue thriving as a venue for speculation on real-world events.

Stablecoins Dominate Crypto Transactions in Sub-Saharan Africa Amid Currency Woes

Stablecoins now represent about 43% of Sub-Saharan Africa’s crypto transaction volume, driven by currency devaluation, as reported by Chainalysis. Nigeria, a top crypto adopter, received $59 billion in transactions from July 2023 to June 2024, with most transfers under $1 million. With the naira depreciating, stablecoins like USDT and USDC offer a dollar alternative, becoming essential for both retail users and businesses involved in international trade. Ethiopia also saw a 180% surge in stablecoin usage, spurred by the birr’s 30% drop in value. Chainalysis notes that stablecoins have overtaken Bitcoin as the leading crypto asset in countries like South Africa, underscoring Africa’s potential as a global crypto leader.

Solana Dominates New Token Launches, Driven by Memecoin Frenzy

As of September 30, 2024, Solana led the token creation landscape, accounting for 96,010 of the 110,180 new tokens launched across tracked chains—an impressive 87% share. This surge is part of a broader trend that saw Solana rise from nearly zero new tokens in early 2024 to over 100,000 monthly by mid-year. Base has also been competitive, with the two networks responsible for more than 80% of all new tokens, reflecting their duopoly in the space. The proliferation of memecoins, facilitated by platforms like pump.fun, has been a key driver behind this growth, fueling speculative trading activity. However, cautionary tales like MOODENG's faltering performance on Solana reveal the volatility of this market.

Regulation

BlackRock and Franklin Templeton Await Approval to Use Tokenized Money-Market Shares as Collateral

BlackRock and Franklin Templeton may soon be able to trade tokenized shares of their money-market funds as collateral, potentially by year-end. A CFTC subcommittee recently advanced recommendations on this topic to the full Global Markets Advisory Committee. While specific guidelines are not yet public, this move is seen as a significant step toward regulatory approval. If adopted, BlackRock's USD Institutional Digital Liquidity Fund (BUIDL), which quickly grew into the largest tokenized Treasury fund, could lead the way in integrating blockchain-based tokens of traditional investments into mainstream markets.

FTX Estate Auctions 22.3 Million Locked Worldcoin Tokens at Discount to Recoup Funds for Creditors

The FTX estate is auctioning its 22.3 million locked Worldcoin (WLD) tokens, valued at approximately $37.7 million, as part of its ongoing effort to recover funds for creditors. Sources report that the tokens are being offered at significant discounts, ranging from 40% to 75% below the current market price of $1.69 per WLD token. Interested parties have until Wednesday at 8 p.m. ET to submit bids, with winners notified by Thursday. The locked tokens will gradually unlock daily through 2028, starting with 20,539 WLD per day from December 2024 through July 2026, and then 13,689 WLD per day until July 2028. This auction follows a similar sale of Solana tokens earlier this year, where Figure Markets participated, potentially indicating interest in this Worldcoin sale as well. See similar: FTX Creditors Expect Only 10% to 25% of Crypto Holdings to Be Recovered

SEC Appeals Ripple Ruling, Claims Decision Conflicts with Precedent

The U.S. Securities and Exchange Commission (SEC) announced on Wednesday that it is appealing the recent court ruling in its case against Ripple, arguing that the district court’s decision contradicts Supreme Court precedent on securities laws. The SEC originally sued Ripple in 2020, alleging that the firm raised over $1.3 billion through unregistered securities sales. In August, District Judge Analisa Torres ordered Ripple to pay a $125 million civil penalty, a significant reduction from the SEC's initial $2 billion demand. In a prior ruling, Judge Torres found that while Ripple's direct sales of XRP to institutional investors were securities, its secondary market sales were not. Ripple CEO Brad Garlinghouse criticized the appeal, stating that XRP's status as a non-security remains clear despite the SEC's actions. Meanwhile, SEC Enforcement Director Gurbir S. Grewal announced his resignation from the agency after three years, coinciding with the appeal.

Swift to Begin Live Trials of Digital Asset Transactions on Global Network in 2025

Swift has announced that starting next year, banks across North America, Europe, and Asia will participate in live trials for digital asset and currency transactions over its established global messaging network. While Swift has previously engaged in blockchain experiments—including collaborating with Chainlink to connect to the Ethereum Sepolia test network—this initiative marks a significant shift toward real-world application. The trials will assess Swift's capacity to facilitate seamless access to multiple blockchain networks, supporting both private and public infrastructure. The project aims to help banks explore the practicalities of tokenized assets and central bank digital currencies, moving beyond testing environments into operational settings for the first time.

SEC Considers Digital Asset-Specific S-1 Form for Crypto Securities

As of June 2024, the U.S. SEC has classified sixty-nine cryptocurrencies as securities, which legally requires companies to register with the SEC using an S-1 form under the Securities Act of 1933. While few crypto projects have registered, the SEC continues to enforce these requirements, resulting in numerous enforcement actions. SEC Commissioner Mark Uyeda has proposed creating a new S-1 form tailored for digital assets, recognizing that the current form, designed for industrial firms, is ill-suited to crypto. A digital asset-specific S-1 would allow disclosures on coding, token distribution, security audits, and governance, which are crucial in the crypto space. However, the costs associated with registration could be prohibitive for crypto firms, though potentially less than fighting SEC enforcement. Despite its potential to bridge regulatory gaps, implementing this new framework could take up to two years and face legal challenges. Many argue that legislative action would provide a more direct and enduring solution for digital asset regulation.

Other Domestic Regulation Updates

• Bitwise files a registration statement with the SEC for a spot XRP ET
• SEC Director Who Helped Lead Crypto Crackdown Is Departing
• Robinhood Chief Legal Officer Dan Gallagher could be tapped to lead SEC if Trump wins presidency
• Donald Trump Vows to Use Crypto to "Make America Great Again"
• Grayscale launches new Aave fund

Other International Regulation Updates

• South Korean crypto exchange Bithumb considers Nasdaq listing
• Binance Founder CZ Set for Prison Release
• Australia's 'Operation Kraken' seizes over $6 million in crypto after deciphering seed phrases from organized crime wallets
• UK Parliament to Consider Bill Defining Crypto as Personal Property
• USDC Stablecoin Now Offered by Central Bank Payment Systems in Brazil, Mexico
• EToro Settles With SEC for $1.5MM, Agrees to Stop Trading Most Cryptos 

Pain & Gain

Pain

• Zilliqa blockchain malfunctions again, with a permanent fix underway
• Visa Launches Tokenization Platform for Institutions
• Cathedra Will Stop Mining, Start Buying BTC
• Bitcoin mining profitability fell for third straight month in September

Gain

• Ethereum Foundation has sold over $10 million worth of ether this year
• EIGEN Token Debuts at $7 Billion Valuation
• Aerodrome tops $1 billion in deposits
• Binance Labs invests in ZKsync 'elastic chain'