Author: Jana Serfontein

Jana has keen interest in what cryptocurrencies have to offer in regards to NGO’s, governments and the financial system. And is also intrigued with the psychological effect that cryptocurrencies have on society.

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Ethereum Hackers Uniswap

Uniswap Users Lose $8 Million in ETH in Phishing Attack

A phishing scam offering a fraudulent airdrop has this week managed to rob Uniswap users of almost US$8 million in ETH. The scam, instigated on July 11, was promising a free airdrop of 400 UNI tokens (worth about US$2,200):

The scam involved asking users to connect their crypto wallets and make the transaction to claim the fraudulent airdrop. On connection, the hacker nabbed users’ funds via a malicious smart contract.

According to data from Etherscan, more than 74,000 wallets have interacted with the phishing scam’s smart contract. A notable aspect of the attack was that the code was not verified for the smart contract deployed on Etherscan, which is something most legitimate projects do.

How the Attack Unfolded

After deployment of the smart contract, in order to collect the airdropped tokens, the hacker tricked users into signing a transaction. The transaction instead served as an approval transaction, which granted the hacker access to all the Uniswap Liquidity Pool (LP) tokens held by the user.

Uniswap creator Hayden Adams took to Twitter to reassure the community that the hack was indeed a phishing attack and was totally separate from the protocol:

Bad Timing for Uniswap

News of the attack does not come at the best time for Uniswap. The decentralised exchanged (DEX) only recently announced the acquisition of the NFT marketplace aggregator Genie and plans to integrate NFTs into its products, starting with the Uniswap web application.

While the platform is making strides in terms of expanding its reach within the Web3 space, the DEX was hit by a class-action lawsuit in April for promoting “scam coins”. The plaintiff in the case claims to have purchased around US$10,000 worth of “fraudulent” ERC-20 tokens via Uniswap between May and June of 2021.

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Crypto News Hackers

Yam Finance Successfully Thwarts $3.1 Million Governance Attack

The team at DeFi protocol Yam Finance has successfully blocked an attempt to wipe out the project’s treasury, worth US$3.1 million. The would-be attacker had introduced a governance proposal that would have transferred control of Yam Finance’s reserves to the hacker’s wallet.

According to a preliminary report issued by Yam DAO, the attack was launched on July 7 but was only detected two days later:

The attacker submitted a governance proposal via internal transactions, thus making it difficult for community members to notice it. The malicious proposal included an unverified contract designed to transfer control of the platform’s reserves to a wallet address controlled by the attacker. If the exploit had succeeded, the attacker would have been able to drain Yam’s treasury.

Attacker Puts Up Native Tokens to Reach Quorum

Shortly after the proposal was created, the attacker voted on the proposal using 224,739 YAM (native tokens) – a number sufficient to reach a quorum. However, the team at Yam was able to cancel the proposal using their privileges, thus blocking the attack.

After the native token took a tumble, the YAM community voted on a “Redemption Proposal” that would have allowed token holders to redeem YAM tokens from the treasury for about US$0.25 each. The proposal was passed on July 8, with 54.14 percent of voters supporting it. Three days later, the team at Yam suggested a re-vote be taken to allow more time for discussion:

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Crypto News Cryptocurrency Law Solana

Solana Labs Hit With Class-Action Lawsuit Alleging SOL is an Unregistered Security

A class-action lawsuit has been filed against Solana Labs by an investor who claims the layer-1 blockchain is an unregistered centralised security.

According to the July 1 filing in a California district court, Solana investor Mark Young alleges that Solana cannot fit the definition of “decentralised” when nearly half of its supply is retained by people close to the project.

As of May 2021, insiders held 48 percent of the total SOL supply, supporting the argument that the network is highly centralised:

The suit represents Young and all investors who bought SOL tokens from March 24, 2020, forward. It accuses Solana Labs, Solana Foundation co-founder and CEO Anatoly Yakovenko, Multicoin Capital Management, Kyle Samani, and FalconX of selling the unregistered tokens.

Defendants made enormous profits through the sale of SOL securities to retail investors in the US in violation of the registration provisions of federal and state securities laws, and the investors have suffered enormous losses.

Class-action lawsuit filed against Solana Labs

Suit Invokes Howey Test

The lawsuit mentions that Solana is in violation of US law pertaining to the sale of unregistered securities and invokes the Howey Test – a four-part metric established to determine whether a transaction qualifies as an investment contract.

The suit outlines: “The sale of SOL securities constituted the sale of unregistered securities under controlling federal law. SOL securities exhibit the following particular hallmarks of a security under the Howey Test:

  • in order to receive any SOL securities, an investment of money was required;
  • the investment of money was made into the common enterprise that is Solana; and
  • the success of the investment and any potential returns were entirely reliant on Solana and [Anatoly] Yakovenko’s ability to create the promised network.”

Crypto Market Plagued by Class Actions

As regulations remain deficient, many digital platforms are finding themselves in hot water. Earlier this year, one of the world’s leading digital exchanges, Coinbase, was named in a class-action lawsuit that claimed the platform sold 79 different digital assets that constituted “unregistered securities”. US-based decentralised exchange Uniswap was also hit by a lawsuit claiming it too was selling “unregistered securities”.

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Blockchain Crypto News Ethereum

ETH Devs Activate ‘Sepolia’ on Testnet, Inching Closer to ‘The Merge’

Ethereum is officially one step closer to “The Merge”, a long-awaited move to a proof-of-stake blockchain from its current proof-of-work consensus mechanism.

On July 6, Ethereum test network Sepolia moved over to proof of stake, leaving only one step remaining before the entire network completes the transition, expected to happen later this year:

Two Testnets Down, One to Go

Developers have now tested the merge on two public testnets: Ropsten, which successfully merged with the original proof-of-work mechanism on June 8, and now Sepolia. The next step in the process will be for a test to take place on the Goerli testnet. When that is completed, the entire network will securely use a proof-of-stake blockchain:

Ethereum developers also agreed to delay the Ethereum ‘difficulty bomb’, which is designed to intentionally increase block difficulty exponentially over time. After a certain period, it becomes almost impossible for validators to mine a new block, thereby discouraging miners from remaining in the proof-of-work consensus.  

Ethereum’s journey to a proof of stake has been a long time coming, with the process suffering many delays. The Merge is expected to be completed by the end of 2022.

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Market Analysis Markets NFTs

NFTs Hammered by Crypto Market Downturn, Sales Down 92% Since January High

NFT sales have hit a 12-month low amid the turmoil of the cryptocurrency market crash. Sales of NFTs totalled just over US$1 billion in June, compared to a market peak of US$12.6 billion in January.

Has the Bubble Finally Burst?

June sales of NFTs amounted to their worst performance since the same month last year when sales were US$684 million, according to data from research firm Chainalysis. The cryptocurrency market, which was worth US$3 trillion in November 2021, has dropped below US$1 trillion and the decline in NFTs is linked to crypto’s broader malaise:

It is important to note that dollar volumes were so high given that prices of altcoins had been on the rise. In June, when the market crash occurred, the dollar value of traded NFTs plummeted along with the prices of the coins.

According to Chainalysis economist Ethan McMahon, “Times like this inevitably lead to consolidation within the affected markets, and for NFTs we will likely see a pullback in terms of the collections and types of NFTs that reach prominence.”

New Collections Launched Despite Downturn

In the period between May and June, 18,000 new NFT collections were launched despite declining interest:

Numbers of NFT collections launched since 2018. Source: IntoTheBlock

OpenSea continues to dominate the space when it comes to NFT trading and remains highly favoured among investors. While other networks such as Solana have also fuelled the network, contenders such as LooksRare – which was only launched this year – stole market share from OpenSea, but only momentarily. OpenSea maintains more than 55 percent of all NFT volume recorded for June, while LooksRare accounts for 32.45 percent:

2022 NFT marketplace monthly volume decline. Source: The Block
Categories
Crypto News Numeraire Tokens

Crypto Hedge Fund ‘Numeraire’ (NMR) Defies Market Downturn, Pumps 100% in a Week

Numeraire (NMR), the native token for Numerai, a San Francisco-based hedge fund built by a network of data scientists, has outperformed the ailing crypto market by skyrocketing over 100 percent in just over a week.

At the time of writing, NMR was ranked the 173rd crypto according to data from CoinMarketCap and was trading at US$17.93, up from US$9.22 just seven days ago. The token remains down more than 77 percent from its all-time high of US$93.15, which it hit in May 2021.

NMR 7-day price action. Source: CoinMarketCap

The NMR token is built atop the Ethereum blockchain and can be staked to power the Numerai Tournament, in which entrants compete to build machine learning models based on abstract financial data to predict the stock market.

According to the project website, the models also determine the hedge fund’s bets: “The staked models of Numerai are combined to form the Meta Model which controls the capital of the Numerai hedge fund across the global stock market.”

Reasons for Surge Remain Unclear

Numeraire also powers the staking protocol Erasure, which aims to increase trust in online information by requiring information sources to stake their offerings, as inaccurate information causes the stakes to be destroyed. It remains unclear what caused the token to surge to such heights, but developers did announce last week that the project had almost one million NMR stakes across the tournaments:

Obscure Projects Defy Crypto Odds

A couple of crypto projects have come out of nowhere to take the market by storm and have shown some serious growth. Earlier this week, Ethereum-based, decentralised blockchain platform Stratis witnessed its native token STRAX rocket 103 percent in a 24-hour period, cooling off from a rally that at one point had reached 160 percent. And last month it was reported that NuCypher (NU) token had soared 87 percent amid its merger with the Keep Network.

Categories
Football NFTs Sorare Sports

Sorare Football NFT Surge 795% After Signing Superstar Kylian Mbappe

Sales of Sorare NFTs have surged 795 percent in the 24 hours since adding French football superstar Kylian Mbappé as an investor and ambassador.

Mbappé is the latest athlete to join the NFT space, and this also marks the first time Sorare has signed a player as an ambassador. Sorare has also pledged to support Mbappé’s charity, Inspired by KM, as part of the deal.

Sorare NFT Sales Soar by $6.6m

According to data from CryptoSlam, Sorare NFTs saw a significant surge in the secondary market. In the 24 hours following the announcement, Sorare registered over US$6.6 million worth of NFT sales, an increase of almost 800 percent.

Sorare founder Nicolas Julia tweeted: “Kylian is becoming our exclusive, long-term ambassador as well as a major investor. Together, we’ll bring Sorare to millions of fans. Kylian will accelerate our mission to unite sports fans across the globe around a player-owned gaming experience.”

Nicolas added: “Kylian is more than a football player. He’s a global icon who carries strong values on and off the pitch. Together, we’ll [also] help underprivileged groups start their businesses and learn about Web3.”

Sorare has signed more than 250 international football teams and claims to have over two million users. The company claims it has brought in more than US$346 million in all-time sales, and in September last year raised US$680 million in a Series B funding round to help turn it into the next sports entertainment giant.

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Bitcoin Crypto News Terra

$10 Billion Crypto Venture Capital Fund ‘3AC’ Reportedly Liquidated by BVI Court

Troubled crypto hedge fund Three Arrows Capital (3AC) has been ordered into liquidation by a court in the British Virgin Islands, according to a news report published amid the 2022 crypto crisis.

The order came on June 29, the same date that crypto asset broker Voyager Digital issued a notice of default to 3AC for its failure to pay its 15,250 Bitcoin and 350 million USDC loan. Voyager’s shares had plunged after it disclosed its exposure to 3AC.

3AC Liquidation Marks ‘Significant Moment’ in Sector

Singaporean-based crypto hedge fund 3AC, which was set up in 2012 by partners Su Zhu and Kyle Davies, has been plunged into liquidation amid current crypto market turmoil.

The fund suffered heavy losses as Bitcoin dropped below US$20,000 for the first time in two years and the possibility of insolvency was reported in mid-June after the firm incurred at least US$400 million in liquidations.

Crypto insiders have described the liquidation as “a significant moment in the current unravelling of the cryptocurrency sector, which [had] grown at breakneck speed in recent years”.

3AC’s troubles can be attributed to its significant exposure to Terra’s LUNC token. Reportedly, 3AC’s position of roughly US$200 million in locked Luna Classic evaporated to less than a thousand dollars, with Davies telling The Wall Street Journal that “the Terra Luna situation caught us very much off guard”.

Like many in the space, Twitter user LomahCrypto is of the opinion that 3AC could have acted earlier, tweeting: “I try not to shit on 3AC but ffs I don’t understand how you could tweet some shit like this in May, while your firm is severely underwater and probably at risk of liquidation. Either the self-awareness is nonexistent or this was an actual hint into their operations.”

3AC co-founder tweeted this in May. Source: MoonOverLord via Twitter

Nothing to See Here: Founders

As reports run rampant regarding 3AC’s insolvency, the company’s founders continue to assure customers that they are doing their best to find an equitable solution to the current situation. As such, the firm has hired legal and financial advisers to explore assets sales and a possible rescue package by another firm.

Categories
Crypto News KPMG Metaverse

KPMG Enters Metaverse, Investing $30 Million in Web3 Employee Training

KPMG, one of the ‘Big Four’ accounting firms in Canada and the US, is opening its first metaverse collaboration hub to help employees and clients pursue new opportunities in the digital space.

The company’s stated long-term objective is to examine other potential metaverse use cases such as healthcare, retail, media, and consumer and financial services.

Of a total of US$30 million in investments this year in Web3 pursuits, KPMG cites the metaverse hub as its “signature piece”, focusing on education, training, events, and workshops.

Speaking about the metaverse generally, Laura Newinski, deputy chair and chief operating officer of KPMG US, said:

It’s a market opportunity, a way to re-engage talent, and a path to connect people across the globe through a new collaborative experience …The unique experience provided by our collaboration hub will tap the creativity and passion of our people and clients to accelerate innovation.

Laura Newinski, deputy chair and chief operating officer, KPMG US

Next Step on KPMG’s Digital Journey

The launch of the collaboration hub follows KPMG North America adding BTC and ETH to its balance sheet. The firm announced in February that it had completed its first allocation of digital assets to its corporate treasury. The following month, KPMG Canada announced it had purchased an NFT from the World of Women collection.

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Crypto News DAO

1% of Holders Control 90% of Voting Rights in DAOs: Report

According to data from research firm Chainalysis, a user must hold somewhere between 0.1 and one percent of the total token supply of a decentralised autonomous organisation (DAO) to create a proposal, and somewhere between one and 4 percent to pass such a proposal.

DAOs are organisations originally set up without a centralised hierarchy and intended to work in a bottom-up manner so that a community can collectively own and contribute to the decision-making process. However, recent data suggests they are not working in as decentralised a manner as they were intended to be.

Chainalysis conducted research on the workings of 10 major DAO projects and found that, on average, less than one percent of all holders had about 90 percent of the voting power:

Share of users holding 90% of all governance tokens by DAO. Source: Chainalysis

The report highlighted that although all governance token holders had voting rights, the right to make a new proposal for the community and to pass it was not as easy for everyone, as each token corresponded to a set amount of voting power within the organisation. Chainalysis estimates that between one in 1,000 and one in 10,000 governance token holders had enough tokens to create a proposal. Passing a proposal was even more difficult, with only between one in 10,000 and one in 30,000 holders having enough to do so.

DAOs All the Rage

As DAOs become increasingly popular in the ever-expanding crypto ecosystem, they are often seen as the future of decentralised corporate governance. As such, regulating them is just a matter of time, as Australian pro-crypto Senator for NSW Andrew Bragg argues. Bragg has said that DAOs pose an “existential threat to the tax base” since they are recognised as partnerships and as such are not liable to pay company tax.