Last Week’s Top 5 in DeFi/NFT News — March 7, 2022

Weekly DeFi/NFT news is a collection of major weekly events/announcements brought from the most trustworthy data sources, such as The Defiant, Spencer Noon, Week in Ethereum News etc. with comments and extra insight from the Bulldax DeFi labs.

Andre Cronje — godfather of DeFi left the crypto space

• On March 6th, Anton Nell announced on Twitter that he and Andre Cronje are leaving Defi/crypto space and ‘closing’ 25 apps and services.

• Those services include yearn.fi (use http://yearn.finance) http://keep3r.network (use http://thekeep3r.network) http://multichain.xyz (use http://multichain.org)
  http://chainlist.org (lots of people replacing it)
  http://solidly.exchange
  http://bribe.crv.finance
• Fantom blockchain ecosystem tokens dumped on the news. FTM down 20% in 24 hours. Solidex (marketed as Convex of Fantom) down 86.9% in the past 7 days.

• Just few weeks ago Andre Cronje launched Solidly exchange with its SOLID token. The launch was plagued with bugs, confusion in the market, UI issues and whales dominating the game. After the launch Andre deleted his Twitter account.

• The reasons behind the quit were not openly communicated, but Andre has posted several blog posts that building in DeFi sucks: predatory community that only wants the upside without any real contribution, blaming the devs if ANYTHING goes wrong, real users are scarce and at the end, only the token price mattered to the community.

• The teams behind all the named protocols announced they will keep building.

Osmosis Launches Staking Service to Bolster Shared Security in Cosmos Ecosystem — The Defiant

• Osmosis, the first decentralized exchange servicing blockchains connected by Cosmos’s Inter-Blockchain Communication protocol, has launched a new staking service.

https://app.osmosis.zone/pool/1

• On March 1, Osmosis (OSMO), launched “superfluid staking,” which will allow liquidity providers to stake LP tokens representing their assets while continuing to earn a share of trading fees.
• The Osmosis team describes superfluid staking as pioneering “reverse liquid staking” by allowing Proof of Stake tokens that are used in DeFi to also be mobilized for validating transactions and securing networks.
• At launch, superfluid staking will only support ATOM/OSMO LP tokens being used to secure the Osmosis chain. Additional pairings are expected to go live in the coming weeks and will be determined by community governance.
• “In superfluid staking, when bonding LP shares, users can also choose a validator to stake to,” said Aggarwal. He also noted that superfluid stakers may be vulnerable to slashing events, cautioning that “if a validator misbehaves, the users’ LP shares are slashed.”

Source: https://thedefiant.io/osmosis-proof-of-stake-cosmos/

SEC Probing NFT Market — CoinDesk

• The Securities and Exchange Commission (SEC) is investigating whether certain non-fungible tokens qualify as securities and thus should be regulated, according to a report from Bloomberg, citing sources familiar with the matter.
• Over the last few months, SEC attorneys have sent subpoenas to NFT creators and various crypto exchanges requesting more information, according to the report.
• A particular focus of the probe are fractional NFTs, in which a token is broken down into many units that are sold separately, according to the sources.
• SEC Commissioner Hester Peirce, known affectionately as “Crypto Mom” for her pro-crypto views, told CoinDesk TV in December that the SEC might soon be taking a closer look at NFTs.
• “Given the breadth of the NFT landscape, certain pieces of it might fall within our jurisdiction,” Peirce said. “People need to be thinking about potential places where NFTs might run into the securities regulatory regime.”
• SEC chief Gary Gensler has previously said that he believes many crypto tokens are likely securities that should fall under the purview of the SEC.
• The SEC’s Howey test considers something a security if it involves investors putting money into an asset with the intention of making a profit.

Source: https://www.coindesk.com/policy/2022/03/02/sec-probing-nft-market-report/

Dragonfly Research claims Ethereum is the ‘MS-DOS’ of blockchains — Cointelegraph

• An experiment from Dragonfly Research that compared the performance of six blockchains by testing the capacity of automated market makers (AMMs) on each has found Solana’s Orca decentralized exchange (DEX) was the clear winner in trades per second.
• It managed 273.34 trades per second and created a new block every 590 milliseconds.
• BNB Smart Chain wasn’t too far behind with 194.6 trades per second on PancakeSwap, followed by Polygon, Avalanche, Celo (CELO) and, finally, Ethereum.

• A blog post by researcher “GM” argued that while there was a rich ecosystem built on Ethereum Virtual Machine- (EVM-) compatible chains, the results showed that “if you want really high performance now you have to look outside the EVM space.” A now-deleted line in an earlier version of the post suggested users will eventually need to “abandon the EVM.”
• Dragonfly Research is the research arm of Dragonfly Capital and its portfolio page shows that it has invested in Celo, Avalanche, Cosmos and Near, which is mentioned in the report. It has not invested in Solana.
• Uniswap v2 was used as the benchmark, given it is the dominant DEX with $1.6 billion in 7-day transaction volume. The benchmark was 18.38 transactions per second with 13.2 seconds per new block, according to the report. GM further noted that although it is not a perfect benchmark, it is “illustrative in getting a holistic view of performance.”

Source: https://cointelegraph.com/news/dragonfly-research-claims-ethereum-is-the-ms-dos-of-blockchains

7 Potential Impacts of Ukraine War on Crypto: Tacha labs

• According to Tascha who has PhD macroeconomics and is a founder of http://mysoundwise.com, here are the 7 potential impacts, sorted from short term to long term.

1. Collateral damage from liquidity squeeze

• Financial sanction means much of Russia’s $1.2 trillion foreign liabilities (half of it is portfolio debt/equity) needs to be written off the book of foreign creditors & investors.

• Creditors/exporters/investors linked to Russia need more liquidities from market. That combined with higher risk aversion, means financial conditions, already tighter than pre-Covid, will keep tightening.
• Similar factors also led to more dollar appreciation, which, if you read her post last week, means crypto price drop.

2. Diversion of funds to greener pastures

• Russia is big exporter in energy, grains & metals. Doesn’t take a genius to see that cutting it off of world mkts means commodity prices will have a field day.
• Investor $ will move from tech stocks & crypto to commodities. Though we saw 2-day pump of BTC past week, it was likely prompted by short-term capital flight from Russia & Ukraine.

https://twitter.com/TaschaLabs/status/1499945790399258630

3. Change in Fed response function

• US economy is red hot. But rise in commodity prices will add to inflation woe & if it triggers global recession later in the year partly through impact on commodity importers, e.g. Asia, Europe, it’ll in turn affect US.
• There’s still no reason for Fed not to hike rates, but if financial conditions keep tightening & recession risks grow, QT (quantitative tightening) may be increasingly hard to pull off.
• Instead of QT, some type of price control to directly target food & fuel cost increase may be in the cards. No QT this year would be bullish for crypto & equities in 2nd half. But too early to count on that yet.

4. Recession on the horizon

• If we get a war-induced recession in 6–12 months, it’d be bullish for crypto & other exponential growth assets, similar to Covid recession, not the least b/c it’d force the hands of Fed to revert tightening.

5. Free marketing for decentralization

• Media & financial sanctions against Russia have been fast & furious. Access to Metamask too has been blocked by Infura to Russian citizens.
• It’s complicated matter & situation-dependent. The crypto libertarian view about this is often naïve.
• But the fact that centralized entities like Infura & Circle have broadcasted susceptibility to censorship this past week certainly strengthens the rhetoric of their decentralized counterparts & showcases use case for the latter.

6. Adulting practice for exchanges

• Crypto struggled to shed its reputation as financial evasion tool for criminals & drug lords. Regardless of whether you think that perception is justified, it’s what it is & a deterrent to adoption.
• It doesn’t help that in the past many exchanges actively shunned regulatory scrutinizes.
• For crypto to gain mainstream acceptance, market operators need to grow up, act like responsible financial industry participants & cooperate with social political agendas of jurisdictions they’re in. Whether you like those agendas or not is beside the point.

7. Planting season for next wave of mass adoption

• It may not seem obvious but Ukraine using blockchain for war financing is a much more bullish event for crypto adoption than El Salvador using bitcoin as legal tender.

• El Salvador is a mismanaged predatory state & adopting an ultra volatile asset as official currency is a dubious policy choice at best. Both simply reenforce negative mainstream perception against crypto.
• In contrast, Ukraine is a much more legit regime to the west, its cause widely sympathized by the western public, & its usage of crypto for international fundraising helping to showcase superiority of blockchain for fast settlement & resilient transactions processing compared to tradFi.

Read full with Tascha’s advice on how to navigate here: https://taschalabs.com/7-potential-impacts-of-ukraine-war-on-crypto/