Category: Ethereum

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Bitcoin DeFi Ethereum Wrapped Bitcoin

Wrapped BTC Inflows Stall Amid Slowdown in Ethereum-Based DeFi

In further evidence of a cooling crypto market, flows of wrapped Bitcoin (wBTC) into Ethereum have flatlined since December 2021. 

While wBTC circulation has grown rapidly since its launch in late 2018, it has stagnated so far this year due to weakened interest in DeFi.

Wrapped BTC Reflects HODLers’ Demand for DeFi

In essence, wBTC is an ERC-20 token used to represent BTC on the Ethereum network, which allows BTC holders to take advantage of decentralised finance (DeFi) opportunities on Ethereum without having to sell their BTC. Currently, 66 percent of all wBTC supply is held by smart contracts.

Similar to dollar-backed stablecoins like USDC, wBTC is backed 1:1 with actual BTC. The process of minting new wBTC involves real BTC being sent by the purchaser to a merchant, who in turn sends the BTC to a custodian (in this case, BitGo). The BTC is then held in a multi-sig by the custodian and a corresponding amount of wBTC is minted on the Ethereum network.

Calm After the Storm

Since its launch and until late last year, wBTC circulation grew rapidly, more than doubling between January and December 2021, eventually peaking at just over 260,000 tokens – approximately 1.4 percent of the total Bitcoin supply. 

wBTC supply. Source: Coin Metrics

In the months since though, wBTC circulation has stagnated at around the 260,000 mark, reflecting a general weakening trend across the DeFi space. This is reflected in data from DeFiLlama, which shows the total value locked in DeFi protocols has declined to below US$200 billion, having peaked at over US$250 billion in late December.

The flattening of DeFi markets partially reflects the state of the broader market, with the total crypto market cap down some 40 percent since it peaked at nearly US$3 trillion in November 2021. It may also reflect a flight to safety after a series of high profile DeFi hacks and rugpulls, such as the US$326 million Wormhole hack and the ‘polite’ rugpull on the Avalanche network.

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Blockchain Crypto News Crypto Wallets Ethereum

Opera Web Browser Launches ETH Layer 2 Web Wallet Powered by Starkware

StarkWare has launched the latest version of its Ethereum Layer 2 scaling solution StarkNet and announced it is now fully ready for building decentralised apps (dApps).

The company tweeted that Opera will be integrating the DeversiFi exchange, powered by StarkWare, into its browser as a built-in wallet to offer users faster, easier and cheaper ETH P2P transactions:

Ethereum’s high gas fees and slow transaction times have made room for other blockchains to try to solve these inefficiencies. Other Layer 1 blockchains such as Solana have been somewhat successful in doing this, but there are still security issues to be worked out. StarkNet, as a Layer 2 solution, could be the answer to these problems.

Introducing ZK Rollups

StarkNet uses zero-knowledge (ZK) rollup technology to solve the scaling problems plaguing the Ethereum network. ZK rollups offer a low-cost solution for transacting on Ethereum, compacting hundreds of transactions into one, off-chain, thereby reducing the amount of transactions written to the blockchain. This significantly reduces gas fees and makes it much cheaper to use.

At present, StarkNet’s speed is similar to Ethereum’s 7 TPS, but the plan is to reach 70 to 700 TPS as StarkNet is scaled out over the next few months.

With the growing popularity of DeFi and NFTs in the crypto space, scaling solutions for the Ethereum blockchain have been in high demand, and the race is on for who can best serve the industry. Argent X is a Layer 2 solution also built on StarkNet, and there are many others. Crypto News Australia has made a list of the best 10+ Ethereum Layer 2 projects and sidechains for you to learn more about.

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Crypto News Crypto Wallets DeFi Ethereum Hackers

Journalist Reveals How She Identified 2016 DAO Hacker Who Stole 3.6 Million ETH

American crypto journalist Laura Shin, backed by research from blockchain surveillance firm Chainalysis, claims to know the identity of the hacker who drained millions of dollars’ worth of ETH from The DAO in June 2016.

Shin accuses Austrian programmer and former TenX CEO Toby Hoenisch of masterminding the US$60 million hack that precipitated the loss of 3.6 million ETH, worth close to US$10 billion on today’s exchange rate.

Hoenisch Denies the Allegations

Hoenisch has already denied Shin’s allegations, reportedly telling the former Forbes senior editor that her “statement and conclusion [are] factually inaccurate”.

The DAO was one of the world’s first decentralised autonomous organisations, serving as an open-source venture fund platform for crypto projects. It had raised 12.7 million ETH, worth around US$150 million at the time, from crowdfunding.

When it was hacked in 2016, nearly a third of The DAO’s funds were drained. Shin and Chainalysis tracked the movement of the stolen funds, which she says led her to Hoenisch.

“We identify the apparent hacker – he denies it – by following a complicated trail of crypto transactions and using a previously undisclosed privacy-cracking forensics tool,” Shin writes, revealing the tool as having been supplied by Chainalysis.

How the Hack Was Engineered

Shin says that whoever hacked The DAO swapped the stolen ETH for BTC and then sent the latter to a Wasabi wallet, which was used to scramble BTC transactions in a process called “mixing”. But Chainalysis was able to “de-mix” the transactions and trace them to four different exchanges.

Evidence revealed someone had exchanged the BTC for the privacy coin Grin, which was withdrawn to a non-custodial Grin node called “grin.toby.ai”. The name “toby.ai” had been used by Hoenisch on various social media accounts and was one of his email addresses, Shin wrote. The IP address hosting that node also hosted another node called “TenX” – the name of Hoenisch’s former company.

According to Shin, Hoenisch was aware of The DAO’s code and had written blog posts warning of potential hacks. Shin breaks down the 2016 exploit in forensic detail in her new book, The Cryptopians: Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency Craze, published this week.

In December, BadgerDAO became the latest DeFi protocol to be hit by hackers, who siphoned US$120 million worth of cryptocurrencies.

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Crypto News DeFi Ethereum NFTs

New Decentralised Video Platform ‘Shibuya’ Set to Launch on Ethereum Next Month

Digital artist Pplpleasr has announced she is helping to launch a decentralised video platform called Shibuya.

Pplpleasr, aka Emily Yang, is the artist responsible for last year’s Fortune NFT cover as well as the decentralised art collection platform PleasrDAO, which to date has raised US$69 million to assist in the launch of the Shibuya platform, set for March 1.

A ‘Mix of Vimeo and Netflix’

According to Pplpleasr, the project will be a mix of Netflix, Vimeo and the crowdfunding platform Kickstarter, but with a decentralised twist. Shibuya will enable its users to directly influence the platform’s content through the use of NFTs and cryptos.

Speaking at the Ethereum-focused ETHDenver conference last week, Pplpleasr said: “Shibuya is a decentralised Hollywood, where cultures and ideas meet in one eclectic and inspiring place.”

The complete version of the New York-based artist’s YouTube interview can be viewed below:

The first piece of media Shibuya will launch is “White Rabbit”, which the artist has described as containing elements of anime, the British television drama Black Mirror, and Web3. A short preview of the piece can be seen in the video above.

For users to be able to view the episodes, they must mint NFTs on Shibuya that can be staked to cast a vote on the episode’s direction. Voters will thereafter be rewarded with a White Rabbit token, which also serves as fractionalised ownership of the web series. The project has not yet accepted any outside funding but is also working with popular Polish-born NFT artist Maciej Kuciara.

More Decentralised Projects Pop Up

Last week, Crypto News Australia reported that Aave had launched its “Lens Protocol” to power decentralised social media platforms. And in January, the decentralised blogging platform “Mirror” started offering its writers a way to monetise their articles.

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Blockchain DeFi Ethereum

Morgan Stanley Report Claims ETH May Lose Dominance to Competitors

In a report issued by Morgan Stanley’s wealth management global investment office, the financial services giant warns that Ethereum could lose its position as the dominant smart-contract platform as more efficient competitors emerge.

The report, entitled “Cryptocurrency 201: What is Ethereum?”, provides an in-depth analysis of the Ethereum blockchain ecosystem and summarises its relative strengths and weaknesses compared to Bitcoin.

Dominance Challenged by Faster, Cheaper Alternatives

Several vulnerabilities were identified in the report, the most significant of which was the sheer number of competitors Ethereum now faces in the smart-contract space – many of which are currently cheaper and faster. The report found that:

Ethereum faces more competition in the smart-contract market than Bitcoin faces in the store-of-value market. Ethereum may lose smart-contract platform market share to faster or cheaper alternatives.

Morgan Stanley report

Some high-profile alternatives looking to wrest market share away from Ethereum include Solana (SOL), Cardano (ADA), Algorand (ALGO) and Hedera (HBAR).

Ethereum Scalability Questioned

The second major concern identified in the report was scalability, with concerns being raised that the Ethereum network may start to buckle under the weight of its own success. If it doesn’t find ways to use its resources more efficiently, the report warns, the demands on the network may outstrip its resources:

“Ethereum’s blockchain, measured in gigabytes, is growing faster than Bitcoin’s, and its memory requirements have surpassed Bitcoin’s in half the time. Over time, Ethereum’s storage demand, unless changed, will likely outstrip its resources.”

Coming Regulation, Centralisation Raise Concerns

Additional concerns included the potential for Ethereum to be hobbled by regulation as governments around the world look to police the smart-contract and DeFi sectors and Ethereum’s relative centralisation: the top 100 Ethereum addresses currently own 39 percent of Ether (for Bitcoin that figure is just 14 percent).

This report is by no means Morgan Stanley’s first foray into crypto, having last year started offering Bitcoin to some of its wealthier investors and encouraging investors to pay attention to the metaverse, declaring it the next big trend in investing.

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Crypto News Ethereum Gas Markets NFTs

Ethereum Gas Prices Have Significantly Decreased from January Peak

Ethereum (ETH) gas prices have decreased by a significant 72 percent since their peak in January. This decrease in demand stems from the price dropping below US$3,000 yet again.

At the beginning of January, gas prices jumped due to the surging volume for NFTs but have since decreased following a bearish price drop below US$3,000. The movement can be mainly attributed to the overall crypto market downturn, following negative macro sentiments, but most of all due to the threat of war in Ukraine. Although ETH has seen significant price drops, there is no lack of positive development surrounding the ecosystem.

Earlier this year, high ETH gas prices and rising network congestion forced developers to build on layer 2 solutions.

Gas trends. Source: Delphi Digital

The TVL (total locked value) in DeFi (decentralised finance) remains above US$200 billion, despite recent market downturns from US$250 billion in November 2021. Levels correlate with ETH’s all-time high market value of US$4,878 on November 10.

As previously mentioned, sentiments surrounding the ETH ecosystem have not dissipated. That KPMG in Canada has added ETH to its balance sheet shows there is a clear recognition of ETH as an investment asset, even for risk-averse enterprises.

Small Ether Holders Increasing

Adding to ETH’s success is the fact that Ethereum adoption is not only limited to crypto whales and big players. According to data, the number of addresses holding between 0.1 and 1 ETH is at an all-time high. In the span of a year, the number of these addresses increased by 98 percent and at the moment they hold 1.78 million ETH collectively – up 4.54 percent in one month.

At the other end of the argument, the NFT market has slowed down since reaching its peak levels in January 2022. Although this year has seen record-breaking NFT market activity, market data suggests that the number of sales is down from almost 64,000 sales per day in mid-January to 24,000 by the end of last week.

Since the price of ether dipped below US$3,000, the demand to make transactions on the ETH blockchain has remained relatively low. And as the demand for transactions declines, so too the market price of blockspace. According to data, transaction fees are officially at their lowest since July 28, 2021.

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Crypto News Ethereum Social media

Twitter Adds Feature Enabling Ethereum Tipping

Social media giant Twitter officially enabled Ethereum tipping this week, extending payment options for its “virtual tip jar” feature that enables users to support their favourite accounts and creators.

Twitter first launched its tipping feature in September 2021. At launch it allowed users to send tips to other Twitter users via a variety of payment methods including Venmo, CashApp and Bitcoin.

No Hacking Skills Required

In November, a Hong Kong-based ethical hacker discovered that Twitter had plans to support Ethereum tipping and described a way to access the then officially unsupported feature. But with this latest announcement, the feature is now available to all users and requires no hacking skills:

Ether Tips Available Only on Mobile App

The addition of Ethereum tipping allows mobile app users to send tips using Ether and ERC-20 tokens, including Ethereum-based stablecoins. The feature is only available via mobile apps and is not currently supported through the Twitter website.

This development indicates that since former CEO and famous Bitcoin maximalist Jack Dorsey left Twitter last year, the company has taken a more open-minded stance towards altcoins. The addition of Ethereum-based tips to Twitter marks a further milestone in the mainstream adoption of cryptocurrencies and suggests that Twitter may add support for further altcoins in the future.

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Crypto Exchange Crypto News Ethereum NFTs

LooksRare Team Cashes Out $30M in WETH, Faces Community Backlash

LooksRare has cashed out US$30 million in wrapped Ethereum (WETH), sparking outrage from its community. The price of its native token LOOK tumbled by 15 percent after news of the cash-out was made public.

LOOKs Can Get You So Far

LooksRare, the newest NFT marketplace that only launched in January, and which touts itself to be the OpenSea killer, has become the talk of the crypto town. This is particularly so after the team behind the project cashed out million in WETH.

LooksRare has confirmed that its core team cashed out around 10,500 WETH from the unattributed staked LOOKs. According to the company, the native token was used for paying fees on the platform but was also awarded to users when they sold NFTs on the LooksRare platform. The unattributed native tokens were cashed for ETH on the popular coin mixing protocol Tornado Cash.

Twitter Backlash as Token Tumbles

Following the news going public, the team at LooksRare suffered severe backlash from the community on Twitter and the price of LOOK tumbled almost 15 percent in the aftermath.

Look token tumbles on the news. Source: Coinmarketcap

One of the team members took to Twitter to defend the withdrawal and claimed that the team earning rewards in WETH was never kept secret from the community. The platform has also previously been involved in a report that suggests the majority of LooksRare NFT transactions may be ‘wash trading’.

One of the team’s core members, Zodd, added that the LooksRare team had been working on the platform for more than six months without any monetary compensation. He also said that the team fronted the seven-figure cost before launch.

Zodd also responded to a tweet that claimed nearly US$73 million had been cashed out, by providing the correct figure. Team members dismissed speculation regarding a probable rug pull and added that the platform was going nowhere and had big plans for the future.

Although the team member did provide clarification on the matter, the LooksRare community seemed unimpressed and suggested the team buy back the LOOKs instead of cashing out in WETH.

One user wrote in response to Zodd’s tweet:

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Crypto News DeFi Ethereum Hackers Tokens

White Hat Hacker Chooses $2 Million Bug Bounty over ‘Printing Unlimited ETH’

A white hat hacker recently discovered a critical security bug on Optimism – a layer-2 scaling solution on Ethereum – that could have allowed him to exploit a set of smart contracts to print an unlimited amount of Ether (ETH). Instead, the hacker reported the issue to the Optimism team, who rewarded him with US$2 million for discovering the bug.

Jay Freeman, a software engineer who goes by the online handle of Saurik, discovered the bug on the project’s fork of Geth (Go Ethereum) – a popular standalone implementation for Ethereum-based protocols.

The Optimism team admitted in a blog post that the bug had been previously triggered by an Etherscan employee, and that it had gone unnoticed.

Analysis of Optimism’s chain history showed that the bug was not exploited. A fix for the issue was tested and deployed to Optimism’s Kovan and Mainnet networks (including all infrastructure providers) within hours of confirmation.

Optimism blog post

Freeman provided an in-depth insight into the discovery in a separate blog. “Exploiting this bug enables the attacker to have access to an effectively unbounded number of tokens” he said.

White Hat Hacker Saves the Day

White hat hacker is the term for ethical hackers who use their skills for identifying security issues in hardware or software networks instead of exploiting them.

The Optimism community praised Freeman’s detective work instead of taking advantage of such a situation, which could have spelled disaster for the platform:

While the DeFi community is filled with malicious actors waiting for their opportunity to attack, there are also numerous examples of white hat hackers working towards the greater good of the community.

Decentralised exchange SushiSwap, for example, almost went dark if it were not for the collective effort of a group of white hat hackers that prevented a potential US$350 million heist.

In December, popular Ethereum-based layer 2 scaling solution Polygon rescued all of its MATIC tokens – worth around US$24 billion – thanks to a white hat hacker who had discovered a security bug on the protocol, leading to a hard fork on the Polygon sidechain.

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Bitcoin Crypto News Ethereum NFTs Polygon

Uber and WWF Show That ‘Environmental Concerns’ Hamper Crypto Adoption

Recent statements by the ride-sharing and delivery app Uber and wildlife conservation organisation World Wildlife Fund (WWF) have further highlighted the environmental hurdles crypto faces to achieve widespread mainstream adoption.

Speaking to Bloomberg last week, Uber CEO Dara Khosrowshahi was clear the company would  accept Bitcoin and other cryptos as payment at some stage, but that now was not the time:

Is Uber going to accept crypto in the future? Absolutely, at some point.

Dara Khosrowshahi, Uber CEO

Khosrowshahi said that as it currently stands, Bitcoin is too expensive to use and too energy-intensive to justify Uber adopting it for payments. “As the exchange mechanism becomes less expensive, becomes more environmentally friendly, I think you will see us lean into crypto a little bit more,” he explained.

WWF NFTs Stymied by Backlash

WWF has also shown it’s enthusiastic about using crypto, but is being held back by environmental concerns. 

WWF recently started selling NFTs minted on the proof-of-stake Polygon network. The organisation claimed to have chosen to use the Polygon network due to its low carbon emissions compared to proof-of-work blockchains such as Ethereum, tweeting that each of its NFTs would generate the same carbon emissions as a glass of tap water. Sounds great so far. 

However, WWF has since stopped sales of its NFTs due to widespread backlash after it was pointed out by Alex de Vries of Digiconomist that because Polygon relies on several Ethereum-based smart contracts to function, its actual energy use is significantly higher than WWF initially stated – roughly 2,100 times higher.

Crypto’s Low Energy Future 

Is it all bad news as far as crypto and the environment go? When heavyweight crypto influencers like Elon Musk and Michael Saylor can’t agree on this question, you could be forgiven for thinking there’s genuine cause for concern. 

However, given statements such as those from Uber and the work being done by both Bitcoin and Ethereum to bring about a lower energy future – not to mention the existence of extremely efficient, carbon-negative alternative layer 1s such as Hedera Hashgraph and Algorand – it looks like the industry as a whole may well overcome the issue of energy use.