Snapshot Web3

December 15, 2023

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Regulatory and Legal News

Financial Regulators Reiterate Call for Legislation to Address Crypto Risks

The Financial Stability Oversight Council (FSOC), comprising major U.S. financial regulators, has reiterated its call for Congress to pass legislation addressing crypto risks. FSOC recommends legislation defining and addressing crypto spot markets and stablecoins, stressing the need for federal financial regulators to have explicit rulemaking authority over non-securities crypto-assets. The report also highlights vulnerabilities, including price volatility, leverage, cybersecurity risks, and potential market integrity issues. FSOC remains prepared to take regulatory steps if comprehensive legislation is not enacted. Two crypto-related bills are awaiting consideration in the House of Representatives.

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Innovation and Launches

Japan's web3 ecosystem aims to attract 5,000 international firms

The Asia Web3 Alliance Japan (AWAJ) plans to integrate over 5,000 global web3 companies into Japan and Asia's web3 ecosystem. The initiative aims to foster international collaboration and technological advancement. AWAJ's strategies include launching a Stablecoin Subcommittee, promoting stablecoin use, global expansion targeting web3 companies from 48 countries, and a Student Exchange Program focusing on IT and blockchain education. The alliance comprises 56 members and 16 subcommittees, with international members holding a 70% stake, ensuring diverse global perspectives. Key figures from the global web3 community have expressed support for AWAJ's initiatives.

Crypto custody firm Copper launches custodian-agnostic settlement network for institutional clients

Copper, a crypto custody firm, has launched the Copper Network, a custodian-agnostic settlement platform for institutional clients trading and holding digital assets. The network enables institutional clients to settle OTC trades with various counterparties, regardless of their custodian. Copper aims to become the primary gateway for institutional investors in the digital asset space. The Copper Network consolidates post-trade communications and workflows into a unified settlement solution, enhancing efficiency for institutional clients. This move follows Copper's recent introduction of a digital assets brokerage platform for institutional trading in the United Arab Emirates.

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NFT, Gaming and Metaverse

'Bitcoin NFT' Hysteria Comes to Sotheby's as Super-Mario-Style Mushroom Character Tops $200K

In Sotheby's first-ever sale of "inscriptions" created using the Bitcoin blockchain's Ordinals protocol, a collection known as "BitcoinShrooms" drew about $450,000. The auction featured three pixelated images, with a mushroom-themed design from the BitcoinShrooms collection selling for over $240,000. The results indicate mainstream interest in tradable digital images referred to as "NFTs on Bitcoin." The successful auction and plans for more highlight the potential for NFTs on the Bitcoin blockchain, challenging Ethereum's dominance in the space.

Web3 firm sees future where gamers rent out their in-game assets for crypto

Polemos co-founder Richard McLaren envisions a future where gamers rent in-game items and NFTs for a fee using blockchain technology. McLaren believes that allowing players to rent NFTs for a few days without upfront collateral will make blockchain games more accessible to newcomers. Polemos' non-collateralized NFT lending protocol, "The Armory," enables players to rent in-game assets without putting down collateral. McLaren anticipates that game asset lending could make up 30-40% of the approximately $2.3 billion invested in NFT gaming in 2023, providing an additional revenue stream for game studios and players alike.

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Scams and Hacks

‘Wallet drainer’ code added to Ledger library has crypto on edge

Users of crypto web apps, particularly those interacting with Ledger's ConnectKit library, are being warned to avoid these platforms due to a potential cybersecurity incident. Notices of malicious code were shared on social media, prompting decentralized exchange SushiSwap to take its front-end web app offline. Revoke.cash, another service, also took its front-end offline as a precaution. Users are advised to refrain from using front-end apps for crypto platforms connected to Ledger's ConnectKit library until investigations are completed. The incident may involve the injection of malicious code affecting various decentralized applications (dApps).

Hacker pleads guilty to $12M Solana DeFi hacks in first smart contract fraud conviction

Shakeeb Ahmed, a security engineer, has pleaded guilty to the first-ever smart contract fraud conviction for exploiting two Solana DeFi apps, stealing over $12 million. His sentencing is scheduled for March 2024, with a potential maximum sentence of five years in prison, and he has agreed to pay $5 million in restitution to his victims.

Yearn Finance’s Treasury Misstep: Unveiling the Multisig Script Incident

In a recent GitHub disclosure, Yearn Finance revealed a multisig script incident resulting in a 63% loss of its treasury. The mishap led to an unintended transfer of the entire treasury balance to a trading multisig. Yearn Finance responded by implementing measures to prevent future occurrences, including funds segregation, script enhancement, and stricter thresholds during trades. The protocol appealed to the community for the return of profits made from arbitraging the mistake. Despite the setback, Yearn Finance's proactive response demonstrates a commitment to transparency, accountability, and community engagement in the evolving decentralized finance space.

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Funding and Acquisitions

Farcana Raises $10 Million for NFT Esports Shooter That Pays Out Bitcoin

Farcana, a blockchain-based third-person multiplayer shooter game, has secured $10 million in seed funding from investors including Animoca Brands, Polygon Ventures, Fenbushi Capital, and others. Farcana plans to leverage blockchain elements, offering a play-to-earn tournament feature that rewards the top 10% of players with Bitcoin. The game will use Ethereum scaling network Polygon, with a free mint for "Mars Enigma Vault" NFTs scheduled for December 19. Farcana aims to become an iconic blockchain game, utilizing NFTs for in-game items and transactions through its FAR token.

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Interesting Reads

Ethereum Will Outperform Bitcoin In 2024, Says JPMorgan

JPMorgan analysts predict Ethereum (ETH) will outperform Bitcoin (BTC) in 2024 due to Ethereum's "Protodanksharding" upgrade, enhancing its network capabilities. The report suggests optimism about Bitcoin ETFs and the upcoming halving is overrated. JPMorgan expects capital to shift from existing Bitcoin investment vehicles and considers the 2024 Bitcoin halving to be already priced in based on production costs. The analysts anticipate Ethereum's outperformance next year, driven by its network upgrade.

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Resource of the Day

BRC-201: Revolutionizing Scalability for BRC-20 Tokens

BRC-201, a new token standard developed by MAP Protocol, aims to enhance scalability and interoperability for BRC-20 tokens. It addresses scalability limitations on the Ethereum network by providing an extension layer that optimizes the performance of BRC-20 apps and tokens, enabling them to handle a larger transaction volume more efficiently. BRC-201 also facilitates interoperability across non-Ethereum Virtual Machine (EVM) chains, allowing BRC-20 tokens to interact seamlessly with blockchains outside the Ethereum ecosystem. The integration with MAP Protocol enhances security and opens up possibilities for cross-chain functionality. The BRC-201 extension has entered the testing phase, marking progress toward practical implementation.

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Miscellaneous

Sales of Solana Phone Surge as Traders Chase BONK Arbitrage

Sales of the Solana-based Saga smartphone have surged as traders chase a 30 million BONK token airdrop. Saga's sales have reportedly increased over tenfold in the past 48 hours, with the device now on track to sell out before the new year. The BONK airdrop is available to every owner of the Saga phone and is valued at nearly $700 at current prices, exceeding the phone's cost of $599. The enthusiasm around BONK, Solana's dog-themed meme coin, has led to a notable turnaround for Saga, which faced dimming prospects just a week ago.

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The information provided in this newsletter is for informational purposes only and should not be interpreted as investment advice, endorsement, or recommendation. Cryptocurrency investments carry significant risk due to their volatility. You should consider your financial situation, investment goals, and risk tolerance before making any investments. We strongly recommend consulting a qualified financial advisor before making any investment decisions. Past performance is not indicative of future results.