MARKET WRAP

1. Ethereum’s “Merge” Delayed

CoinDesk – Apr 14, 2022 at 4:36am

Tim Beiko, a core developer of the Ethereum network, tweeted on Wednesday that the long-expected Ethereum “Merge” has been delayed from its original go-live date in June to a “few months after.” According to Beiko’s tweet, Ethereum is in its “final chapter of PoW”, but it represents yet another delay for Ethereum’s transition to PoS, which was originally planned for completion in 2019.

 

The “Merge” is the nickname attributed to Ethereum’s ongoing shift from a proof-of-work (PoW) consensus algorithm to a proof-of-stake (PoS) mechanism. By design, this change is intended to reduce the heavy resource requirements currently needed from miners in the network, who utilize a decentralized collection of powerful computers to validate transactions, similar to Bitcoin.

The move to PoS is expected to reduce energy consumption by 99%, but it is yet to be seen whether the Merge will transpire without a hitch. The tricky implementation of new game theory mechanics designed to dissuade pernicious acts from network validators and a variety of engineering challenges may put billions of dollars at risk.

Even after the Merge, it is likely that Ethereum’s notoriously high gas fees and slow speeds won’t be going anywhere. These particular improvements would instead result from the addition of network sharding to partition and process data more efficiently, which is on the roadmap for “Ethereum 2.0.”

For now, however, the focus remains on the Merge. As such, it is evident that many Layer 2 scaling solutions will maintain significant attention from developers eager to bring speed and scalability to their Ethereum applications.

2. OlympusDAO Co-Founder Allegedly Doxxed in New Lawsuit

CoinDesk – April 15, 2022 at 6:42am

Australia-based investor Jason Liang has filed a lawsuit against Ethereum-based OlympusDAO, one of the most controversial DeFi projects of the past year. Filed on Thursday in the US District Court for Connecticut, the lawsuit alleges that the pseudonymously-known co-founders of OlympusDAO cheated him of nearly $4 million in OHM tokens, now worth at least a combined $20 million.

OlympusDAO gained traction upon its launch last year due to its promise of wildly lucrative returns as high as 10,000% annual percentage yield (APY). To reap that reward, participants in the DAO were encouraged to purchase, stake, and “hodl” the OHM token; selling, on the other hand, was heavily discouraged. Naturally, many critics of the project decried it as a Ponzi scheme, but that did not stop it from skyrocketing in value.

Now, Liang alleges that he was promised compensation of 4 million pOHM, a precursor to OHM, for promoting OlympusDAO in its early stages and providing $50,000 in the DAI stablecoin to fund the project. This investment occurred with the expectation that Liang would be able to mint 1 OHM in exchange for 1 DAI and 1 pOHM.

However, according to Liang, after selling some of his pOHM, the OlympusDAO creators rendered the smart contracts that enabled his promised OHM redemption inoperable. Per Liang, the fact that the smart contracts could be altered undermines the notion that the DAO was decentralized.

Along with this accusation, Liang posits that the pseudonymity of the founders was a way for them to escape liability rather than preserve the privacy of their identities. He claims that a token purchase agreement (TPA) between him and OlympusDAO stated that the private funding round he took part in raised money for a fake company, thus rendering legal action incredibly difficult.

Liang’s legal team, however, alleges to have identified one of the two co-founders, dubbed Apollo, from a phone call between the two individuals. The name that emerged from a reverse lookup of the phone number matched that which was signed on the TPA that Liang originally considered bogus.

This case represents a watershed moment in the DeFi world, where pseudonymity and anonymity may not merely function to preserve meritocracy in a decentralized community but to facilitate pernicious activity. The OHM Token now sits at a meager $28, compared to its $1300 peak in October.

3. US Officials Attribute $625M Ronin Hack to North Korea

CoinDesk - April 18, 2022 at 11:17 p.m.

In March, the Ronin sidechain responsible for scaling transactions and data processing for wildly popular Axie Infinity was exploited, resulting in $625M from the Axie Infinity-linked Ronin bridge. It is among the greatest thefts in crypto history.

This Thursday, however, the US Treasury Department named a culprit responsible for the cryptocurrency hack that resulted in a loss of 173,000 ETH and 25.5M USDC, and the suspect will certainly surprise you.

The Office of Foreign Assets Control, responsible for enacting sanctions for the US Treasury, named the North Korean hacker collective Lazarus Group as its primary suspect, adding it to the“Specially Designated Nationals” List. This was also reflected in Ronin’s blog post, who actively collaborated with the FBI to uncover this association. This sanction is the first blacklisting of an alleged Lazarus-held crypto wallet.

Multiple crypto analytical firms like Chainalysis and Elliptic have estimated that 14% of all stolen funds had already been laundered by Thursday. Moving forward, it is essential that anti-money laundering and financial counter-terrorism efforts develop new safeguards within the crypto industry, said a spokesperson from the Treasury Department.

 

4. BlackRock CEO Announces Firm’s New Direction Into Crypto

Crypto Potato - April 14, 2022 at 13:59

BlackRock, one of the most reputable names in the investment world with $10 trillion worth of assets under management, announced that it has seen great interest in cryptocurrencies among its client base. As such, they now intend to actively study digital assets and their various use cases.

The news was released by Larry Fink, the CEO of BlackRock. Fink was known for his skepticism towards crypto-assets and once publicly denounced Bitcoin as an “index for money laundering” back in 2017. 

The CEO’s stance on Bitcoin certainly appears to have flipped 180 degrees over recent years. Earlier this week, BlackRock announced its involvement in the latest funding round of Circle, the issuer of $USDC stablecoins.

5. The Dollar vs. The Coin

Delphi Digital - April 14, 2022

The team at Delphi Digital believes that the bleak weather currently cast over the cryptocurrency market is due in part to the rise of the greenback.

DXY, the US dollar index, has been soaring recently in comparison to a basket of different foreign currencies (70% of which is comprised of EUR and JPY). This sharp uptick follows the end of the Quantitative Easing program and a potential rate hike from the FED in order to combat inflation. DXY just broke past an index of 100 for the first time in almost two years and is still experiencing an increase according to technical analysts from Delphi.

The movement of the dollar price is historically known to be negatively correlated with the BTC price for the last 10 years. In other words, when the dollar struggles, we typically expect to see BTC’s price experience an upturn (and vice versa).

Many narratives can explain this phenomenon, one of which is the competitive nature between BTC and the US Dollar as a potential global reserve asset.

7. AVAX Seeking to Raise $350M at $5.25B Valuation

Bloomberg - April 14, 2022 at 7:55 AM GMT+7

Ava Labs Inc, the lead developer of the Avalanche blockchain has announced its ambition to become one of the world's most highly valued blockchains with its recent funding round. The round would value Avalanche blockchain at $5.25B and add $350M into the Ava Labs’ coffer.

In its last funding round in September 2021, AVAX completed a $230M raise, led by Polychain Capital and Three Arrows Capital. Since then, the chain has become the fourth-largest blockchain on the market by total value locked (TVL) with more than $10B in assets locked in its ecosystem, only behind Ethereum, Terra, and BSC.

The Avalanche blockchain has witnessed significant traction with both users and developers. Currently, there are more than 250 apps that utilize the chain to facilitate their operations.

8. Elon Musk Offers to Purchase and Privatize Twitter for $43 Billion

CNBC - April 14 2022 at 8:58 PM EDT

This Thursday, Elon Musk offered to buy the entirety of Twitter for $54.20 a share, confirming speculations of his ambitions to transform the social media giant into a private company.

Musk originally “invested in Twitter” because he “believes in its potential to be the platform for free speech around the globe” – a “social imperative for a functioning democracy”, as he delineated in a letter to Twitter Chairman Bret Taylor. Now, he believes that Twitter can “neither thrive nor serve” this goal in its current state, and indicates his hope to augment the platform to align with this goal.

Musk’s offer is 54% higher than the price of a single Twitter share at the time he began investing in Twitter and 38% higher than its current price. The Twitter Board of Directors has since responded, outlining that they will carefully evaluate Musk’s proposal to determine what course of action best suits the interests of the company and its current shareholders.

9. Ethereum Developers Testing ETH 2.0 Upgrade on 'Shadow Fork'

Decrypt - April 12, 2022

This past week, Ethereum developers began testing the deployment of Ethereum 2.0 through the use of “shadow forks” – the replication of data from the Ethereum mainnet to a testnet for experimentation and quality assurance purposes.

This shadow fork is the third being conducted on the Goerli testnet, according to a tweet from Ethereum DevOps engineer Parathi Jayanathi. The purpose of the shadow fork is to test whether validators from both the PoW chain and the PoS chain of Ethereum can work together once their data has been “merged.” Jayanathi has indicated that the shadow fork is able to evaluate validator interoperability using real ETH validators like Nethermind, Besu, Geth, and Erigon.

The new fork network has demonstrated the ability to handle 1.8 million transactions with an average block time of 13.8 seconds, amassing over 1 billion transactions per day. According to software developer Marius Van Der Wijden, the mainnet shadow fork represents a significant milestone in the transition from PoW to PoS.