Category: Markets

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Dogecoin Markets Regulation Scams

Dogecoin Copycat ‘TeddyDoge’ Drops 99.95% in $4.5 Million Rug Pull

The Dogecoin copycat, TeddyDoge (TEDDY), has lost over 99.95 percent of its value over the past few days after suffering what crypto security firm PeckShield described as a “soft rug pull” last weekend:

PeckShield said wallets connected to the coin’s developers acquired and then swapped over 30 billion TEDDY tokens – valued at approximately US$4.5 million – for wrapped Binance Coin (wBNB).

The wrapped BNB was then converted to BNB and Binance USD (BUSD) and gradually transferred to Binance, sending investor confidence and the price of TEDDY plummeting.

Rogue Developers Plunder Liquidity Pools

The TeddyDoge developers were able to easily steal such a large amount of assets because they controlled the TeddyDoge liquidity pools, meaning they had total access to the token pairs held in their smart contracts.

Regulators are slowly starting to wake up to the risk rogue crypto developers pose to investors. In April, new legislation was filed in New York state to specifically outlaw crypto rug pulls.

Rug pulls in crypto refer to projects that often initially appear legitimate but eventually, when the price has pumped sufficiently, the developers abandon the project and make off with investors’ assets, figuratively pulling the rug out from under them. In the case of TeddyDoge, investigators have labelled it a “soft rug pull” as they’re not yet certain the developers have totally abandoned the project.

Project’s Telegram Admins Not Sure What Happened

The administrators of the TeddyDoge Telegram channel also remain uncertain as to exactly what caused the loss of funds and price crash, saying it could have been either “a bug in our cross-chain bridge or a leaked developer wallet”. 

The admins warned users not to buy any more TEDDY tokens for now, saying they had closed the cross-chain bridge and were “in the process of fixing it”. They also said that TEDDY holders would soon receive a new token called DRAC, as the project was rebranding from TeddyDoge to the DRAC Network.

TeddyDoge is the latest in a long line of crypto projects to have defrauded investors. In November 2021, the founders of the curiously named Monkey Jizz DeFi project made off with approximately US$300,000 of investors’ funds after having gone to great lengths to appear legitimate and assure investors.

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Bored Ape Yacht Club GameFi Markets Metaverse

ApeCoin Pumps Almost 50% on Release of ‘Otherside’ Metaverse Demo

A thrilling “first trip” into the gamified metaverse associated with the Bored Ape Yacht Club (BAYC) has boosted the price of ApeCoin (APE) by around 50 percent.

Data from CoinGecko shows APE rallied in the days following a demo of the Otherside metaverse, and it is up more than 43 percent over the past week. 

APE has been on an upward trend since reaching its all-time low of US$3.10 in June this year – but it’s still down more than 77 percent from its all-time high of US$26.70 in April. 

First Voyage into ‘Otherside’ Metaverse Stirs Excitement

The Otherside metaverse was co-created by metaverse tech company Improbable and Yuga Labs. Yuga Labs flagged its metaverse project and the sale of virtual land in March as a means to expand its Bored Ape ecosystem – one of the most expensive and successful NFT collections launched – guaranteeing strong interest.

Around 4,500 people explored the immersive virtual world via a demo held on July 17, which sparked genuine excitement and helped hike the value of $APE:

The demo was exclusively open to owners (known as Voyagers) of an Otherdeed non-fungible token (NFT). Otherdeed NFTs went on sale earlier in 2022 and essentially represent a plot of land and associated resources in the Otherside world. 

Gameplay Central to Otherside Experience

ApeDAO launched $APE in March to a mixed market reaction, while stating its purpose was to “drive culture forward into the metaverse”. That now seems to be being realised given that $APE is required to access Otherside and purchase game-related assets. 

According to the Otherside project’s litepaper, initially users (aka Voyagers) will engage with the virtual world through a narrative-based gameplay.

All Voyagers are invited to take part in Voyager’s Journey, an 11-part storyline surrounding a mysterious Obelisk that has appeared in the Otherside universe. Team up with other Voyagers, develop your own experiences on your slice of the Otherside, and discover and shape what can be harvested, crafted, traded, bought and sold.

Otherside litepaper

Tech demos like the one that triggered the price increase for $APE are the first stage of the Voyager’s Journey. Future “trips” inside Otherside are planned to accomodate more Voyagers, with dates to be announced via Otherside’s social media.

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Ethereum Investing Markets

ETH Surges Close to 50% in a Week Amid Bullish Merge Announcement

The price of Ethereum (ETH) has surged almost 50 percent in the past week on the back of an announcement that the long-awaited Merge is tentatively scheduled to take place in September.

According to data from CoinGecko, at the time of writing ETH was trading at US$1,535.71, up 49.5 percent from its recent low of US$1,027.42 on July 13.

Merge Hype Primary Driver of ETH Price Growth

On July 14, Ethereum Foundation member Tim Beiko tweeted a soft timeline for the much-anticipated Ethereum Merge, suggesting it could take place on September 19: 

Despite Beiko’s caveats that this timeline was tentative and subject to change, the market reacted very enthusiastically to the news, with the price of ETH jumping almost 25 percent in the two days following the tweet.

What is the Merge?

The Merge refers to Ethereum’s transition from a proof-of-work (PoW) consensus mechanism to a proof-of-stake (PoS) consensus mechanism. This transition will mean the end of mining on the Ethereum network, with miners replaced by validators. Validators will need to stake a minimum of 32 ETH on the network and will then have the chance to be randomly selected to add the next block to the chain, in the process earning ETH.

The primary benefit of switching to PoS is enormously improved energy efficiency. Some estimates put the reduction in energy use at around 99.95 percent. However, the Merge in itself is not expected to result in lower gas fees or increased transaction speeds.

Bullish Indicators for ETH

Beyond the spike in its price, several other indicators also suggest sentiment towards ETH is turning positive. The number of whales – accounts holding between 1000 and 100,000 ETH – has grown by 131 since early May, while the number of accounts holding over 100 ETH hit a 15-month high of 45,081 on July 13:

Additionally, the total value locked in the Ethereum 2.0 deposit contract hit a one-month high of US$17,957,275,144.37 on July 18, just days after the announcement of the Merge timeline:

Categories
Bitcoin Crypto News Market Analysis Markets

Bitcoin HODL Activity Suggests the Bottom Could Be In: Glassnode

According to on-chain analysts Glassnode, there are growing signals that the bottom may be in. Most recently, the firm revealed that over 80 percent of US dollar-denominated investments have not moved in three months, suggesting that holders are increasingly unwilling to sell any lower:

Bear Markets Look Alike

Glassnode argues that its “Realised Cap HODL Wave” metric clearly shows similar patterns to the bear markets of 2012, 2015 and 2018.

In brief, the metric intends to illustrate the relative economic weight stored by bitcoins of various holding times, and changes arising from holding and spending behaviour. For a more complete explanation, this useful overview is instructive.

BTC Realised Cap HODL Waves. Source: Glassnode

Bottom In?

Concurring with an earlier Glassnode assessment, Coinbase’s head of institutional research noted in its report that on-chain data revealed recent selling was “almost exclusively” short-term speculators. Long-term holders (in excess of six months), by contrast, were not found to be selling.

In fact, these HODLers were found to represent 77 percent of coins in circulation, which although down from 80 percent earlier this year, was viewed as a “positive sentiment” suggesting that holders were less likely to sell.

BTC HODLing. Source: Coinbase Analytics

Amid ongoing pressure of a negative macro and crypto environment, bitcoin’s price has remain subdued, recently slipping below US$19,000 on news of the US’ highest inflation print in 40 years.

Bitcoin has since somewhat recovered, and at the time of writing was trading at US23,300, above its 200-week moving average (MA) of US$22,600. Notwithstanding, technical analysts suggest that a definitive and sustained breakout above the 200-week MA is necessary to reverse the bearish trend.

Of course, we’ll only know in hindsight whether bitcoin bottomed out at US$17,500. However, from a Bitcoiner’s perspective, the fundamentals remain unchanged and if anything it’s offered a priceless opportunity to stack more sats for less.

Categories
Bitcoin Economics Investing Markets

Bitcoin Dips Below $19,000 Amid Highest US Inflation Print in 40 Years

Bitcoin briefly dipped below US$19,000 on July 13 following the announcement of a higher than expected Consumer Price Index figure in the US. 

Economists were tipping a June year-on-year inflation number of 8.8 percent, but the announced rate came in at 9.1 percent – the highest figure in over 40 years – leading to an immediate and sudden dip in BTC’s price.

Recovery Follows 4.5% Dip

According to data from CoinMarketCap, in the hour following the CPI announcement BTC’s price dropped more than 4.5 percent, from US$19,989 to US$18,999. The price has since recovered and at the time of writing BTC was changing hands at US$20,234.

Prior to the current crypto bear market and skyrocketing inflation in the broader economy, BTC had been widely considered an inflation hedge. In January, despite rising inflation, BTC appeared to find support at around US$43,000, but as inflation has continued to surge and the crypto market has hit significant turbulence, its price has tumbled.

Since January, BTC’s price has dropped by almost 60 percent leaving many questioning whether Bitcoin truly is an effective hedge against inflation:

Where To From Here?

The record high inflation numbers will likely see central banks around the world, including in the US, continue to hike rates in an attempt to restore price stability at the expense of short-term economic growth.

Speaking at a recent European Central Bank forum, US Federal Reserve chair Jerome Powell affirmed the importance of getting on top of rising inflation:

Is there a risk we would go too far? Certainly there’s a risk … The bigger mistake to make – let’s put it that way – would be to fail to restore price stability.

Jerome Powell, chair, US Federal Reserve

Generally speaking, higher interest rates mean less money circulating in the economy resulting in downward pressure on consumer spending and inflation, which may also translate into less money in the pockets of crypto investors and further falls for crypto prices.

This picture is further complicated by the unique factors causing the current wave of inflation – the war in Ukraine and ongoing complications from the Covid pandemic – which aren’t easily addressed with interest rate rises, resulting in significant economic uncertainty in the medium term.

Categories
Australia GMT Token Markets Solana

Adelaide-Based STEPN Announces $122 Million in Q2 Profits, Plans Buyback and Burn

On July 12, Adelaide-based move-to-earn platform STEPN announced a Q2 profit of US$122.5 million, which it says was generated through its platform fees.

In keeping with the economic plan outlined in the project’s whitepaper, STEPN plans to allocate 5 percent of this profit to its Q2 buyback-and-burn program. The Solana-based move-to-earn leader also revealed that a portion of the profit would be spent addressing security and cheating issues that have plagued the platform recently.

Details of Token Burn

According to STEPN, its buyback-and-burn program is designed to ensure its users are “best supported”. Generally, token burning is seen as a way to increase the scarcity of a token and therefore increase its price – STEPN uses this mechanism to increase its token’s value over time and make its platform more attractive to users. 

Based on the 5 percent figure cited in the announcement, the Q2 buyback-and-burn program should see just over US$6 million worth of tokens burnt. STEPN explained that the program may “take a few weeks to complete in order to avoid causing sudden price volatility”.

Security, Integrity Top Spending Priorities

After a string of DDoS attacks targeting the platform in the first half of 2022, the STEPN team says it has decided to spend more resources increasing server capacity and enhancing the security of the platform.

We are committed to delivering the best possible service to our users and have been working to amplify the platform’s security and server capacity to prevent future DDoS attacks. With the profits realised during Q2, we will be able to double down in our commitment to this and devote more resources to our efforts.

STEPN team

While the platform has always had an anti-cheat system, the team said part of the Q2 profit would be used to enhance this system:

We have heavily invested in this mechanism since day one and we will continue to do so [to] ensure the fairness of the STEPN game landscape. We are set to improve upon our AI’s ability to detect anomalies, prevent accounts from using bots for mining, accounts faking movement to gain additional rewards, and more.

STEPN team

Other areas of the business that will receive spending boosts heading into Q3 include team expansion, partnerships, and marketing.

STEPN Leads Emerging Move-To-Earn Sector

STEPN is one of the leaders in the emerging sector of move-to-earn platform: crypto-based apps that allow users to earn rewards by exercising. The platform has seen significant growth since launching in December 2021. By April of 2022, STEPN had soared in value 217x. 

Like most crypto projects, though, it has recently seen its value drop dramatically, partly due to factors affecting the whole market and partly due to a spate of DDoS attacks and cheating scandals that have rocked confidence in the project.

Currently, STEPN’s governance token GMT is changing hands at US$0.85, down around 78 percent from its all-time high of US$3.83, which it hit in April.

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DeFi Hackers Markets Solana

‘Crema Finance’ Hacker Returns Funds, Receives $1.7 Million in SOL as Bounty

Solana-based liquidity protocol Crema Finance claims it has recovered most of the roughly US$9 million worth of assets stolen by a hacker on July 3:

Crema Finance negotiated an agreement with the hacker, whose identity remains unknown, which allowed the hacker to keep a portion of the stolen assets as a bug bounty in exchange for returning the remaining assets.

No Criminal Charges Likely

The hack on Crema Finance resulted in the theft of 69,422.9 SOL and 6,497,738 USDC – a combined total value of just over US$8.78 million.

Following what Crema Finance described as a “long negotiation”, the hacker agreed to return most funds but retained 45,455 SOL, currently valued at approximately US$1.7 million. The hacker was also referred to as “white-hat” and “ethical” in tweets by Crema Finance, suggesting the DeFi platform won’t be pursuing criminal charges.

Following the hack, the total value locked on Crema Finance fell dramatically, dropping as low as US$3 million on July 4, having sat at over US$12 million on the Saturday prior to the hack.

Crema Finance shared the transaction details proving the hacker had indeed returned 6,064 ETH and 23,967 SOL to its accounts:

Smart Contract Suspended Pending Audit

Since the hack, Crema Finance’s smart contract has been suspended while its new smart contract code is being audited by blockchain security firm SlowMist. Crema Finance says the protocol will go live again once that audit is complete and its security can be assured:

It’s becoming increasingly common for hackers in the crypto space to agree to return most of the stolen assets in return for a bounty. In June, a high-profile case saw the the Ethereum rollup-solution Optimism hacked to the tune of US$17 million, with the hacker agreeing to return US$15 million worth of the stolen assets in return for a US$2 million bug bounty.

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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
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Banking FTX Investing Markets

FTX Finalises Deal with BlockFi, Option to Buy for Up to $240 Million

Embattled crypto lender BlockFi has signed a deal with FTX US, the American arm of Sam Bankman-Fried’s crypto exchange, which will see FTX increase its credit facility to BlockFi with an option for FTX to acquire the struggling lender.

In an extensive Twitter thread, BlockFi co-founder Zac Prince explained the deal was valued at up to US$680 million, including a US$400 million revolving credit facility and the option for FTX to acquire BlockFi for up to US$240 million. According to Prince, as of July 2 the deal was still subject to shareholder approval.

BlockFi Hits Choppy Financial Waters 

BlockFi started to experience financial strain following the May collapse of the Terra blockchain and the subsequent bankruptcy of the highly LUNA-exposed Three Arrows Capital, to whom BlockFi had made sizeable loans.

These events – combined with the recent aversion to centralised lenders sparked by Celsius’ liquidity crisis, and the general market decline – have tested BlockFi’s resilience and forced the lender to shed around 20 percent of its workforce, approximately 170 employees.

In June, FTX extended a US$250 million line of credit to BlockFi to help the lender secure client funds. With this new deal, the credit facility has been extended to US$400 million.

According to Prince, BlockFi has not yet had to draw on the available credit, and the CEO insists the lender is still financially strong despite securing an increased line of credit and agreeing to a sale price far lower than its most recent valuation of US$1 billion:

We have not drawn on this credit facility to date and have continued to operate all our products and services normally. In fact, we raised interest rates, effective today. 

Zac Prince, co-founder and CEO, BlockFi

Deal Protects Client Funds

Prince said the deal was primarily about ensuring BlockFi could protect client funds and that FTX was the ideal partner as it shares the same client-first values:

“As a matter of principle, we fundamentally believe in protecting client funds,” Prince tweeted. “Not only because it’s absolutely the right thing to do, but this also benefits the ongoing health and adoption of crypto financial services worldwide. Therefore, it was important to add capital to our balance sheet to bolster liquidity and protect client funds.”

We were presented with various unattractive options where client funds would take a haircut or be behind a lender in the capital stack … Ultimately, we found a great partner in @FTX_US, who shares our commitment to clients. This represents the best path forward for all @BlockFi stakeholders and the crypto ecosystem as a whole.

Zac Prince, co-founder and CEO, BlockFi

According to Prince, the terms of the deal make repayments to FTX subordinate to protecting client funds, which means if the worst were to happen, and BlockFi couldn’t pay all its bills, priority would be given to cashing out clients.

Not Everyone Is Convinced

BlockFi’s claims of financial strength have been widely questioned on Twitter, with many users wondering why a company in a supposedly strong position would seek an increased line of credit and accept an option to acquire it for a fraction of its valuation:

Categories
Crypto Exchange FTX Markets Terra Tether

FTX Founder ‘SBF’ Warns Some Crypto Exchanges Are ‘Already Insolvent’

One of the richest men in crypto, 30-year-old FTX founder and CEO Sam Bankman-Fried (also known as SBF), has warned that some “third-tier” crypto exchanges are already secretly insolvent.

Among his recent comments to Forbes, SBF declined to name which exchanges he believes are currently broke. However, his warning comes as the fallout from the May collapse of the Terra blockchain continues to wreak havoc across the crypto market, with the highly Terra LUNA-exposed Singapore-based venture capital firm Three Arrows Capital (3AC) recently announcing it’s nearing insolvency.

SBF Bails Out Struggling Firms

As a result of 3AC’s insolvency issues, fellow crypto-focused firms BlockFi and Voyager Capital – which had each given 3AC sizeable loans – also found themselves in treacherous financial waters. 

Fortunately for these firms, SBF swooped in, through his exchange FTX and trading firm Alameda Capital, to provide US$250 million in credit to prop them up and protect their customers’ funds.

Speaking to Forbes about the credit infusion SBF said, “ … You know, we’re willing to do a somewhat bad deal here, if that’s what it takes to sort of stabilise things and protect customers.” 

Of course, stabilising the crypto market and seeing it grow is also very much in SBF’s interest – his US$20.5 billion fortune is closely tied to the performance of the crypto market.

It has also recently emerged that SBF may be looking to go beyond simply providing credit to BlockFi, with reports suggesting he is now in talks to acquire the New York-based firm.

SBF Expects to See Numerous Exchanges Fail

Despite his willingness to prop up some ailing crypto firms, SBF doesn’t anticipate this generosity being applied indiscriminately across the industry. Talking to Forbes, SBF said there were companies throughout the crypto industry that were beyond saving:

There are companies that are basically too far gone and it’s not practical to backstop them for reasons like a substantial hole in the balance sheet, regulatory issues, or that there is not much of a business left to be saved. 

Sam Bankman-Fried, founder, FTX 

Tether Won’t Collapse

One much-maligned digital asset SBF has no fears for is crypto’s largest stablecoin, Tether (USDT). While many consider the collapse of the US$70 billion stablecoin is inevitable due to its reportedly less than ideal collateral situation, SBF claims there’s no reason to worry, saying: “I think that the really bearish views on Tether are wrong … I don’t think there is any evidence to support them.”

In other SBF news, the crypto magnate declared on a podcast last month that he was willing to donate up to US$1 billion to the US Democratic Party to keep Donald Trump from returning to the White House.