12 October 2022
How application-specific rollups can solve programmability and scale computation, Polynya: Variable security data sharding, The mango markets exploit played out via oracle price manipulation
Opinions 🧠
Parallels in Web3 gaming with the first batch of F2P browser and mobile games (read more here)
Fundamentally people's perceptions of a "good game" as still rooted in the Web1 ("read-only") era and AAA. These ideas revolve around spectacle, deep skill-based mastery, compelling world's built by devs
Unpopular games were built around a strong social core and with a deep (often P2W) meta but not focused on core gameplay which was what the players loved
Both Clash of Clans and Candy Crush defy Web1 definitions of a "good game" but are extremely popular
What "good games" look like in Web3 will look very different what they looked like in Web1 and Web2, and that's just as it should be
How application-specific rollups can solve programmability and scale computation (read more here)
The scalability problem comprises two major aspects: data scalability and computation scalability. And computational scaling has been delegated to rollups
Application-specific rollups allow applications to have their own computational ability and asset settlement, dispute resolution can be delegated to a general-purpose applications
Having a base layer makes application-specific rollups possible for a 1-of-N security model, filling the demand of dapps and enjoying the advantage of not incurring the dangerous fragmentation of validation of sovereign application-specific chains
RISC-V architecture makes it possible to port Linux and other operating systems into rollups, solving the programmability problem
Polynya: Variable security data sharding (read more here)
With EIP-4844, we could have a new data layer. For example, data shard 0 (DS0) is mandatory to be secured by the full Ethereum validator set, DS1 is 55%, DS2 is 50%, etc
High-value financial transactions will opt to settle on DS0, while for zero value gaming applications even DS16 is probably overkill. Each application can choose their level of security as appropriate
It is also important to remember that this security spectrum is only for data availability. Validity proofs and fraud proofs are still verified with 100% security. So, even a DS16 semi-rollup/semi-validium has significantly higher security properties than a top alt-L1
The mango markets exploit played out via oracle price manipulation (read more here)
The attacker temporarily drove up the value of their collateral and then took out loans from the Mango treasury
at 6:19 PM ET, attacker funded acct A (CQvKS...) with 5mm USDC collateral; attacker then offered out 483mm units of MNGO perps on the order book
at 6:24 PM ET, attacker funded acct B (4ND8F...) with 5mm USDC collateral to buy those 483mm units of MNGO perps, at a price of $0.0382 per unit
at 6:26 PM ET, attacker started to move the price of MNGO spot mkt, it traded as high as $0.91
at MNGO/USD price of $0.91 per unit, account B was in the money by 483mm * ($0.91 - $0.03298) = $423mm
That was enough unrealized P&L to take out a loan of $116mm across a bunch of tokens, which then left mango and leaves the protocol at a deficit
Mainnet/L2 🌐
Scroll released an upgraded version of the Pre-Alpha Testnet (read more here)
Scroll is an EVM-equivalent zkRollup to scale Ethereum. The new testnet upgrade enables smart contract deployment on Scroll. This allows developers to write and deploy their own contracts on Scroll using the same Ethereum developer tools we all know and love
BSC released node client with urgent fixes that will take effect today (read more here)
This release is a temporary urgent patch to mitigate the cross-chain infrastructure between Beacon Chain and Smart Chain so that the cross-chain can be re-enabled back
The change is planned to take effect on 8 AM UTC Oct. 12, but there may be a last-minute change. The stuck cross-chain transferred fund should recover then, while the staking rewards will recover after the next 00:00 UTC
Makers of zkSync to launch Layer 3 testnet ‘Pathfinder’ in Q1 2023 (read more here)
Matter Labs will launch a public testnet for an Ethereum scaling prototype called ‘Pathfinder’ in Q1 2023
This is the first Layer 3 network to launch on top of Ethereum, which could add significant improvements in scaling
General 📝
BNY Mellon starts crypto custody service (read more here)
The world's largest custodian bank and the oldest lender in the U.S., Bank of New York Mellon (BK), has added cryptocurrencies to its custody services
BNY Mellon will now be able to provide those fund managers with storage of the keys necessary to access and move around their bitcoin (BTC) and ether (ETH), as well as the other traditional bookkeeping functions
Coinbase secures crypto payments license in Singapore (read more here)
Crypto exchange Coinbase has secured in-principle approval for a digital asset license from the central bank of Singapore, part of its journey to becoming fully-regulated in the country
Google selects Coinbase to take cloud payments with cryptocurrencies and will use its custody tool (read more here)
Google will start allowing a subset of customers to pay for cloud services with digital currencies early next year
In addition, Google said it would explore using Coinbase Prime, a service for storing and trading cryptocurrencies
Bloomberg: SEC probing Bored Ape Creator Yuga Labs over unregistered offerings (read more here)
The U.S. Securities and Exchange Commission is probing Yuga Labs, the creator of the Bored Ape Yacht Club NFT collection, over whether sales of its digital assets violate federal law, according to a report from Bloomberg, citing an unnamed source close to the matter
The key legal question at the center of the probe, according to Bloomberg, is whether NFTs are securities
A spokesperson for Yuga Labs confirmed that it was cooperating with the SEC's probe into the matter
Gemini expands into Europe, becomes first VASP in Ireland (read more here)
Gemini is now available to users in Ireland after obtaining approval for registration as a Virtual Asset Service Provider
The crypto exchange sent out emails to some users explaining that it recently received authorization as an Electronic Money Institution and registration as a Virtual Asset Service Provider (VASP) by the Central Bank of Ireland
Dapper Labs suspends Russian accounts after new EU sanctions (read more here)
Flow blockchain developer Dapper Labs has suspended Russian accounts after the European Union imposed new sanctions against Russia and its nationals
Gaming/NFT 🎮
OpenSea launches NFT marketplace on Avalanche (read more here)
Avalanche is officially live on OpenSea now, and all Avalanche-based NFT collections will be featured on OpenSea, and more will be rolled out over time
Decentraland horrified by report it only had 30 active users (read more here)
Decentraland only had 38 "active users" over a period of 24 hours, especially considering the company has a market cap of a whopping $1.2 billion
Decentraland pushed back, though, saying that "active users" are defined as unique blockchain wallet addresses that interact with its system
Decentraland's Twitter account also attempted to do some damage control, writing that the platform saw "1,074 users interacting with smart contracts" in all of September
DeFi 💱
Solana-based decentralized finance platform Mango hit by $100 million exploit (read more here)
The exploit was initially reported on Twitter by blockchain auditors OtterSec, who say “the attacker was able to manipulate their Mango collateral.”
Mango confirmed the exploit in a Tweet, stating that it was "investigating an incident where a hacker was able to drain funds from Mango via an oracle price manipulation."
Mango Markets Hacker Provides Ultimatum: ‘Repay Bad Debt’ (read more here)
Hacker proposes to send back stolen MSOL, SOL, and MNGO if Mango Markets promises to pay back bad debt using USDC available in its treasury
Hacker steals $2.3 million from TempleDAO (read more here)
TempleDAO suffered an exploit this morning for roughly $2.3 million worth of crypto tokens. The project claimed it would make “remediations” for all affected users
Push Protocol launches Push Chat, web3-native secure, wallet-to-wallet messaging (read more here)
Push Chat allows anyone with a wallet or an ENS to chat with others directly
The Push Chat alpha is going live with Polygon Wallet as their launch partner, setting the stage for developers to build new use cases like chatbots, improved DAO communications, wallet-to-wallet chats and much more
Curve DAO Votes To Enable Permissionless Rewards (read more here)
This means that projects that wish to incentivize Curve liquidity pools with their native tokens can now do so directly with Curve, rather than forcing users to stake their liquidity provider (LP) tokens through another website to earn rewards
Generally speaking, the proposal will save projects’ time.Projects have had to either go through governance for the rewards, which can be a lengthy process, or write their own staking contract to add rewards separately. A custom staking contract also requires users to take the extra step of staking their LP tokens elsewhere
So, today’s vote only means that projects can freely tack their rewards onto existing approved gauges
Funding 💵
Crypto.com backs discovery platform Magic Square amid fundraising flurry (read more here)
Crypto app store Magic Square keeps raising funds from strategic investors following its $3 million seed round in July
The latest investor to get involved is Crypto.com. To date, the startup has raised $4 million at a valuation of $75 million
Strike Raises $80 Million Funding Round to Revolutionize Payments for Merchants and Consumers Globally (read more here)
Strike, the world’s leading digital payment provider built on Bitcoin’s Lightning Network, today announced it has raised an $80 million funding round led by Ten31 and joined by Washington University in St. Louis, the University of Wyoming, and other investors, with participation from existing investors
The capital will be used to drive Strike’s efforts to revolutionize payments for the largest merchants, marketplaces, and financial institutions in the payments industry
Moon Mortgage has raised $3.5 million (read more here)
Moon Mortgage was created to help crypto investors buy owner-occupied and investment properties with digital assets. Coinfund, Cadenza Ventures are the investors
Web3 commerce startup Rye raised $14 million led by a16z (read more here)
Twitch cofounder Justin Kan will serve as head of sales for the new startup, which is led by CEO Arjun Bhargava, a former Reddit engineer turned repeat entrepreneur. The company is launching with $14 million in venture capital funding led by a16z crypto
Rye will offer a one-click application programming interface, or API, for merchants to display some or all of their products on Rye’s own marketplace
Step secures $300 million in debt funding, launches crypto investment service (read more here)
Step said it will expand into crypto investment services, and launched a financial literacy program to improve consumer education on banking and crypto
The company’s launch of a crypto investment platform aimed at minors and young adults, who with the consent of a parent or legal guardian, will be able to buy and sell bitcoin, with additional stocks and cryptocurrencies to join the platform soon
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