All Been Crypto — Week 1 Dec 2023

There it is 1st of Dec 3 weeks to Christmas so we are set for our santa claus rally? Well looking at CME OI and Grayscale GBTC discount we are pricing in an ETF VERY soon. We held 1.5tn market cap this week with BTC at 37k and ETH at 2k dominance right at the 50% level and could squeez higher as excitement continues into the holiday season but we might be in for a rough awakening if there’s no ETF by the beginning of next year. Major movers this week Pyth showing some weakness after token debut last week -25% while coins like Luna Classic (yes the old one) +60% on a revival and IOTA up 30% on registering foundation in Abu Dhabi giving a good indication where sentiment is. In the news MicroStrategy has bought another 16k BTC and looking for a 750mm share placement. You can guess what they’ll do with that money. In other news SEI announced they will add EVM support in V2 upgrade, Circle teaming up with SBI in Japan, Cosmos founder initiated ATOM fork, and a bit of popcorn from Kyberswap hacker and over at our friends from Bankless. Enjoy reading!

Bat Tai Chi — btc21@mail.com

HEADLINES:

CFTC going after Bybit?

Crypto exchange Coinbase has reportedly sent an email to select users, informing them of a subpoena it received from the CFTC demanding user account information and transaction history. The email has sparked speculation that the CFTC is targeting Coinbase users that have interacted with Bybit. This could be a way for regulators to proof that Bybit was serving US customers. However, the email stated that Coinbase may decide to counter the CFTC subpoena — and therefore user information will not yet be handed over. An interesting watch on how large non US exchanges are feeling regularly heat from US.

Cosmos founder forked ATOM

Cosmos co-founder Jae Kwon has long felt that the protocol’s community is conspiring against him. Now, he may be leaving it for good. After a proposal passed to crimp inflation on Cosmos’ ATOM token, Kwon announced AtomOne — a “minimal fork” of the Cosmos Hub application. Kwon and his opponents fundamentally diverge on how much inflation is needed to keep the Cosmos blockchain secure. The fundamental argument is about how much to be paid for security by giving out inflation to stakers. Which of course impacts economic activity on the chain. I don’t have a strong view on the right amount of inflation and security budget but I like the fact that this divergent opinions was solves in a traditional ‘crypto’ way — forking the project. We will see which one evolutionary will prevail. Although the problem with a lowered security budget is that the benefits are quick to show while the costs might only be visible later and irreversible.

Kyberswap hacker demands control

The Kyberswap hack that drained 47mm from the protocol last week is taking another bizarre turn of events. I’m covering this hack here with more airtime because of the extraordinary requests from the hacker, at a time when twitter debates emerged about the accepted norms to turn back hat into white hat hackers (i.e. 10% bounty for immunity). He/She however seems to aim for something different and demanded full control over the company behind the project. The plan is to replace the entire executive team and give the protocol a new direction. Hard for me to see how this would fly though since we are now talking about offchain property rights which need to be decided by the legal system the company is operating. It’s probably an negotiation tactic to get more eyes on the hack and increase the stakes would be my best guess. But this is crypto and although a hacker taking over control of a foundation wasn’t on my bingo card for 2023 we have seen even more bizarre things. If you got ideas for him he can be reached on TG under @Kyber_Director

Bankless Drama

Bankless is one of the best followed content platforms out there and over the past few years Ryan and David have built an incredible brand around their weekly podcasts and interviews. While they disclose themselves as ETH maxis they keep an open mind and bring in views from a range of different ecosystems and aspects. Short to say I’m a fan. They have started utilizing the brand bankless more extensively creating an Index with IndexCoop for example, a paid community with premium content and an investment DAO. Now the DAO leverages the brand Bankless and so it’s not hard to imagine that there could be some misalignment here. That became evident after massive backlash on Twitter about their ¬1.8mm grant request from Arbitrum Foundation. A good review of the whole story on Coindesk. It shows how difficult it is to manage a content brand with an investment arm as a DAO while keeping the brand image up. We are learning and as the story unfolds I believe David and Ryan have proposed to burn their entire stakes in the DAO.

QUOTES:

Wormhole itself is now completely separated from Jump

Wormhole Foundation COO — Dan Reecer

Staking v0.2 introduces important new security features and sets the system up for even further growth in the year to come

Chainlink co-founder — Sergey Nazarov

We now expect more price upside to materialize before the halving than we previously did, specifically via the earlier-than-expected introduction of U.S. spot ETFs. This suggests a risk that the USD 100,000 level could be reached before end-2024.

Standard Chartered Head of Crypto Strategy — Geoff Kendrick