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Impossible Finance, the decentralized finance (DeFi) incubator that raised $7 million in June, named OpenSwap as the first project to be featured on its DeFi launchpad.

• OpenSwap provides DeFi traders with a single location for accessing liquidity pools from multiple blockchains.
• Calvin Chu, Impossible Finance’s core builder, described the platform as a “godsend” thanks to its aggregation facilities.
• Impossible Finance’s seed funding round in June was led by institutional investors including CMS Holdings and Alameda Research.
• The protocol launched on Binance Smart Chain in May with the goals of building a network for staking, token swaps and access to liquidity pools as well as becoming an incubator for other projects.

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As new miners join the fray and the Bitcoin network continues to grow, so too does its energy usage.

It’s easy to read the headlines and assume that bitcoin, and indeed every other cryptocurrency, must be significantly contributing to climate change. In May, Tesla CEO Elon Musk tweeted his concerns that “cryptocurrency is a good idea on many levels … but this cannot come at great cost to the environment.” Shortly after, bitcoin’s value tumbled 15%. The growing global pressure on bitcoin miners to use more renewable energy has led to the creation of initiatives like the Bitcoin Mining Council and pushed mindful investors to seek out “greener” cryptocurrencies. 

As of mid-July, a single bitcoin transaction required 1719.51 kilowatt hours (kWh) – where a kWh is the amount of energy a 1,000-watt appliance uses in over an hour. To put that in perspective, that is about 59 days’ worth of power consumed by an average U.S. household. On an average day, 240,000 bitcoin transactions are sent over the network. 

How does bitcoin use power?

Related: Bitcoin Lightning Network Growth Passes New Milestones

Often referred to as the new gold rush, it can be hard to comprehend how something with no physical manifestation can be so resource-intensive. The Bitcoin network relies on thousands of miners running energy intensive machines 24/7 to verify and add transactions to the blockchain. This system is known as “proof-of-work.”

Bitcoin’s energy usage depends on how many miners are operating on its network at any given time. These miners must compete against each other to win the right to add the next block to the blockchain and earn rewards. The competitive structure results in a lot of wasted energy as only one miner can add a new block every 10 minutes. 

To maintain a competitive advantage over other miners, many larger operations are forced to scale up or upgrade their equipment. As a result, there are now dozens of mining facilities all over the world that have hundreds, if not thousands, of rigs running constantly. One of the byproducts of these industrial-scale operations is heat. Application-specific integrated circuit (ASIC) miners – the leading type of specialized computing equipment used for mining cryptocurrencies – produce a lot of heat when performing hashing functions and need to be kept cool to prevent them from becoming less efficient or burning out. Smaller operations might only need fans and a cool climate to keep temperatures in check, but large mining facilities require industrial-style cooling systems. That further increases the amount of energy consumed. 

Why is this energy consumption a problem?

While the mining industry’s steering toward cleaner energy, a large portion of the electricity consumed by the Bitcoin network is still generated from nonrenewable sources, like coal-burning power plants. It’s well understood that burning fossil fuels like coal releases huge amounts of carbon dioxide into the atmosphere – the main driver of climate change. That means that the more mining computers that join the network, the more demand there will be to create and consume energy.

Related: Bitcoin Holds Support Near $43K as Rally Pauses

Energy demands around bitcoin have long been a concern, especially now that we have seen the network quadruple since its last peak in 2017. And the network is still maturing. At its present level, Bitcoin consumes 81.51 terawatt hours (TWh) annually. If it were a country, it would rank as number 39 for annual electricity consumption, ahead of Austria and Venezuela. 

Understanding the environmental impact

It is important to note that there is a difference between electricity consumption and environmental/carbon footprint. There is no doubt that bitcoin’s miners require large amounts of electricity. But to understand the ecological impact, there needs to be information about where miners source their energy. Bitcoin itself does not inherently produce extra carbon emissions because any source of electricity can technically power the network. As of September 2020, researchers at the Cambridge Center of Alternative Finance (CCAF) found that 62% of global miners relied on hydropower, 38% used coal, and 39% used some combination of wind, solar or geothermal energy. But it is estimated that only 39% of bitcoin’s energy consumption is carbon neutral. 

While other industries need specific environments and conditions, bitcoin can capitalize on energy sources that are inaccessible to others. In the Chinese provinces of Yunnan and Sichuan, large quantities of excess hydropower were harvested to power the growing mining factories in China. During the rainy season, these provinces could be responsible for 50% of all mining operations worldwide. But in June, the Chinese government imposed restrictions on cryptocurrency mining. That has resulted in mining operations migrating to countries like Kazakhstan, which rely more heavily on fossil fuel-based electricity. 

How bitcoin compares to traditional banking

While Bitcoin’s electricity consumption may seem like a lot, it pales in comparison to the energy consumed by traditional banks. The entire bitcoin ecosystem is said to use less than half of the energy banking systems require. That is not too surprising when you take into account the sheer number of physical branches, printing facilities, ATMs, data centers, card machines and secure transport vehicles required to support the fiat currency system.

The future of bitcoin’s energy use

There’s been a notable push in 2021 to make bitcoin mining, and indeed other cryptocurrency mining, more sustainable and environmentally friendly. The Crypto Climate Accord advocates for the cryptocurrency industry to seek out new electricity sources and aims to provide crypto companies “an open-source toolbox of tech solutions” to help the industry achieve net-zero emissions by 2030. 

Finally, there may be less reason to worry than the alarming headlines proclaim. Bitcoin’s miners are unlikely to increase at the same scale as they did a few years back. That is in part due to bitcoin halving, which is built into the Bitcoin blockchain and reduces the block rewards miners get every four years. So unless bitcoin’s value continues to rise to compensate for the drop, miners will need to shift toward more efficient equipment and cheaper sources of energy in order to maintain margins and keep large-scale mining operations viable.

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Facebook said Wednesday that the global payments system is seriously flawed and that the social media giant can fix it.

• “Change is long overdue,” Facebook’s David Marcus wrote in a blog post.
• Marcus, the former PayPal chief hired in 2018 to lead Facebook’s blockchain efforts, said Novi, the digital wallet subsidiary he oversees, is “ready to come to market.”
• “We feel that it’s unreasonable to delay delivering the benefits of cheaper, interoperable, more accessible digital payments,” he wrote.
• The blog post follows reports of the increased obstacles that Facebook’s stablecoin project faces. After being introduced in June 2019, Libra ran into resistance from global regulators. The project, which was rebranded as Diem in December, has yet to launch.
• Only offering fiat currency within Novi would still provide value, Marcus wrote, though he added: “I strongly believe if there was ever a chance to create an open, interoperable protocol for money on the internet and truly change the game for people and businesses around the world, it is now.”
• Marcus noted that Facebook has secured licenses and approvals for Novi in nearly every state in the U.S., and said, “We will not launch anywhere we have not yet received such clearances.”

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The Dutch central bank joined the ranks of regulators issuing warnings about crypto exchange Binance operating without permission.

• De Nederlandsche Bank (DNB) said Wednesday that “Binance is providing crypto services in the Netherlands without the required legal registration.”
• Binance is not in compliance with the country’s anti-money laundering and anti-terror financing act, and is offering custodian wallets and services illegally, the DNB said.
• The warning pertains to Binance Holdings Ltd. as well as other Binance entities that offer crypto services in the Netherlands.
• DNB’s announcement follows similar warnings from financial overseers in a number of jurisdictions in recent months, including the U.K., Japan, Hong Kong and Malaysia.

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What if social interactions online – like bidding on non-fungible tokens (NFTs) or hosting an online auction – could earn you money? How do you make expressing yourself on the internet valuable?

Those are the questions the RARA.social app for is trying to answer.

RARA’s so-called “like-to-earn” model aims to reward active community members and participants with RARA’s native tokens in exchange for contributing to the platform, either through bidding on or curating NFT auctions. It comes as “play-to-earn” video games like “Axie Infinity” surge in popularity and decentralized projects experiment with ways to get people coming back for more.

Related: NFT Trading Surges 8X as Penguins, Apes Drive New Boom

For Lawson Baker, RARA’s founder, NFT auctions offer a way to build online crypto communities. 

“If you watch a hot NFT auction, you’ll see crypto influencers bidding early solely for the purpose of being seen bidding,” Baker told CoinDesk.

RARA is looking to add a decentralized curation element to the NFT sector that has so far been missing from marketplaces like OpenSea, Rarible and SuperRare.

“RA! tokens will be the initial tokens earned for being a high-quality curator,” Baker told CoinDesk in a Telegram message. “Do it well and you’ll earn more RA! tokens to have more influence tomorrow.”

Related: SuperRare Drops RARE Token to Decentralize NFT Marketplace

The idea is then to create a landing page that takes the pulse of what’s trending in the NFT market without relying on centralized approval.

RARA’s landing page will feature an infinite scroll of current and past auctions, sorted by the number of RA! tokens that were given by fans. Baker compared the resulting product to a Rotten Tomatoes – a movie review platform that aggregates critic and audience reviews – for NFTs. 

More than 40 online communities involving about 40,000 members now have access to RARA’s auction platform, including such groups as DAOrecords, MAiworld, TokenSmart and Skybravo.

Baker told CoinDesk that RARA expects to launch a protocol later this year.

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The desire to increase efficiency and create value is driving the move toward digitization across all industries. Distributed ledger technology (DLT) is among the technologies that support digitization.

Hyperithm, a Tokyo-based digital asset management firm, raised $11 million in a Series B funding round that was co-led by South Korea’s Hashed and Wemade Tree, a subsidiary of the gaming company behind the “Legend of Mir” series.

• Other participating investors in the round included Coinbase Ventures, Cocone, GS Futures and the Guardian Fund, Hyperithm said in an email.
• Founded in January 2018, Hyperithm operates in Tokyo and Seoul and specializes in automated trading and risk management through cryptographic algorithms.
• The firm said it is seeing growth in the institutional market for digital assets in East Asia.
• It serves institutional investors, publicly listed companies, family offices, venture capital companies, crypto exchanges and miners.
• Previous investors have included South Korea’s VIP Research & Management and the venture capital firms owned by South Korean internet companies Kakao and Naver.

Read more: South Korea’s Hashed Raises $120M Venture Fund for Crypto Deals

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Tomorrow, the first backward-incompatible upgrade for the Ethereum 2.0 Beacon Chain will be activated on the Pyrmont test network. The upgrade, dubbed “Altair,” will introduce a number of code changes, including increased penalties on validator misbehavior and improved functionality for lightweight versions of Eth 2.0 software. 

(More information about what to expect from Altair can be found in a previous issue of Valid Points.)

This article originally appeared in Valid Points, CoinDesk’s weekly newsletter breaking down Ethereum 2.0 and its sweeping impact on crypto markets. Subscribe to Valid Points here.

Related: UK Police Recover $22M in Stolen Crypto From Scammers

This week, in a guest post in New Frontiers, Alex Svanevik, the CEO of blockchain analytics firm Nansen, and Nansen’s Research team break down the data behind validator behavior and stake centralization on Eth 2.0 thus far. While Altair is expected to further improve network dynamics, the  authors highlight metrics suggesting that security and decentralization are already trending in a positive direction.  

Pulse check

The following is an overview of network activity on the Ethereum 2.0 Beacon Chain over the past week.

Disclaimer: All profits made from CoinDesk’s Eth 2.0 staking venture will be donated to a charity of the company’s choosing once transfers are enabled on the network.

New frontiers: Toward a decentralized Ethereum 2.0

Nansen is a blockchain analytics platform tracking over 90 million labeled Ethereum wallets and accounts. The following guest post authored by Nansen CEO Alex Svanevik and his team is an excerpt from a recently published blog post breaking down the data behind Ethereum 2.0. 

Related: Poly Network Hack Not Over as Attacker Prolongs Return of Funds

While centralized exchanges such as Kraken and Binance continue to command a significant share of total Ethereum 2.0 stake, they appear to be losing share to decentralized staking alternatives such as Lido Finance and Rocket Pool. 

The top four staking entities (Lido, Kraken, Binance, Staked.us) on Eth 2.0 make up 36.6% of total ETH deposits. Lido is the second largest by total ETH deposited next to Kraken, managing over 750,000 ETH on Eth 2.0 from 9,000 unique Ethereum accounts. 

Measuring decentralization

The Herfindahl–Hirschman Index (HHI) is a metric in traditional economics that measures market concentration and competition. It has been applied to blockchains to measure relative network decentralization. Nansen calculates HHI for Eth 2.0 by squaring the share of each source account that has staked on the network, and summing the resulting numbers.

Though it is clearly not the case that all deposit accounts are independent, the trend does indicate a gradual decrease of HHI over time. Still, it’s important to remind ourselves that centralization risks exist on every layer of the blockchain technology stack. According to data from Ethernodes, more than 21% of Ethereum nodes run on Amazon Web Services.

Profiling deposit activity

Deposit activity on Eth 2.0 is curiously irregular and does not correlate with ETH prices. 

The number of daily deposits to Eth 2.0 began falling from May 5 onward, just as Ethereum was inching toward its high of $4,000. The number of deposits then rose significantly from mid-May to mid-June as the value of Ethereum almost halved. 

Ethereum 2.0 represents a marked change in the security and economic model of Ethereum, with multiple ramifications including the transformation of ETH as an inherently yield-generating asset.

Validated takes

• Stani Kulechov, the founder of Aave, is working to create a decentralized alternative to Twitter. BACKGROUND: Top developers like Kulechov and co-founder of Ethereum Vitalik Buterin believe blockchain technology can be leveraged to create higher-quality social discourse.
• Ether is the most popular cryptocurrency in Singapore, according to a survey published Monday. BACKGROUND: The survey of over 4,000 adults, conducted June 29–July 9, also found that 67% of respondents with personal investments have crypto in their portfolio, and two-thirds of the crypto holders increased their digital asset holdings during the coronavirus pandemic.
• Aave Arc, the institutional arm of decentralized lending protocol Aave, will not offer tether (USDT) as an asset, even though it is the most utilized stablecoin on Aave. BACKGROUND: Regulatory concerns with the largest stablecoin by market capitalization have kept it from being listed on Aave’s institutional lending platform. Tether’s largest competitor, Circle, will have USDC listed as the stablecoin of choice in the new institutional lending pools.
• In efforts to develop zero-knowledge (ZK) blockchain scaling technology, Polygon, a layer two network on Ethereum, is merging with the Hermez Network. BACKGROUND: Hermez will be absorbed into the Polygon ecosystem under the name Polygon Hermez. The entire Hermez project – its employees, technology and native HEZ token (which holders will be able to exchange at a rate of 3.5 MATIC:1 HEZ) – will be integrated into Polygon’s platform.
• Ethereum data platform Dune Analytics raised $8 million in a Series A funding round led by Fred Wilson’s Union Square Ventures. BACKGROUND: Dune Analytics is best known for its do-it-yourself dashboarding functionality that allows anyone with a meager knowledge of blockchain metrics to easily piece together real-time data visualizations about on-chain activity and then share those creations with the world. The platform hosts at least 6,817 different user-built dashboards tracking everything from EIP 1559 burn rates to Uniswap trading pairs. 

Teddy Oosterbaan

Factoid of the week Open comms

Valid Points incorporates information and data about CoinDesk’s own Eth 2.0 validator in weekly analysis. All profits made from this staking venture will be donated to a charity of our choosing once transfers are enabled on the network. For a full overview of the project, check out our announcement post. 

You can verify the activity of the CoinDesk Eth 2.0 validator in real time through our public validator key, which is: 

0xad7fef3b2350d220de3ae360c70d7f488926b6117e5f785a8995487c46d323ddad0f574fdcc50eeefec34ed9d2039ecb. 

Search for it on any Eth 2.0 block explorer site.

New episodes of “Mapping Out Eth 2.0.” with Christine Kim and Consensys’ Ben Edgington air every Thursday. Listen and subscribe through the CoinDesk podcast feed on Apple Podcasts, Spotify, Pocketcasts, Google Podcasts, Castbox, Stitcher, RadioPublica, IHeartRadio or RSS.

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Bitcoin (BTC) held initial support above $43,000 during Asian trading hours as intraday charts appear to be oversold. The cryptocurrency was trading at around $45,300 at press time and is down 3% over the past 24 hours. Buyers are taking a breather after a near 13% rally month to date and will likely defend breakout support near $42,000.

• The relative strength index (RSI) on the four-hour chart is almost oversold, which suggests the current pullback could stabilize around support levels.
• Initial support is seen at the 100-period moving average on the four-hour chart near $43,000 and then at the $42,000 breakout level.
• Buyers will need to make a decisive move above $50,000 resistance to resume the uptrend.  

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MobileCoin, a privacy-oriented and mobile-first cryptocurrency project, has raised $66 million in venture capital to build out its payments technology. 

Sam Bankman-Fried’s Alameda Research, Coinbase Ventures, BlockTower Capital and other investors participated in the oversubscribed Series B funding round, said MobileCoin founder and CEO Joshua Goldbard. 

Best known as the project advised by Signal founder Moxie Marlinspike, MobileCoin’s MOB token is already integrated in beta with the private messaging app. Another integration, with China’s Mixin Messenger, has yielded over 1 million MobileCoin transactions, Goldbard said.

Related: Top South Korean Money Transfer Firm Joins RippleNet to Further Remittances to Thailand

With the Facebook-initiated libra (now diem) sputtering since its 2019 reveal and Telegram’s TON project sunk (officially, at least) by U.S. regulators, MobileCoin represents perhaps the last best hope of a crop of mobile-native payments projects conceived during crypto’s last bull run.

Goldbard told CoinDesk that MobileCoin is developing a cryptocurrency chatbot system, called MOBot, that will enable ecommerce payments within messaging apps.

Notably, it’s also in the process of developing a stablecoin, Goldbard said, which will likely be called MobileUSD, to reduce the risk of volatility during transactions. MOB was trading around $15.80 early Wednesday UTC with an unknown market cap, according to CoinGecko. Bankman-Fried’s FTX is one of the few exchanges to list the token.

Goldbard declined to comment on the timeframe for MobileCoin’s stablecoin release.

Related: AMC to Accept Bitcoin for Tickets and Concessions Later This Year

Goldbard told CoinDesk that MobileCoin is dedicating the funding round to Toby Segaran, MobileCoin’s founding engineering manager and second employee, who passed away suddenly earlier this month.

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Bitcoin is up over $500 on a 4-hour basis after testing lower supports near $44,000 during Asia’s late morning trading hours.

The rebound from 24-hour lows of $44,248 follows a period of profit-taking, seen Tuesday, on the back of short-term fatigue, as CoinDesk reported. Bitcoin is currently changing hands for around $45,000 and is down 2.9% from a 24-hour high of $47,157, CoinDesk data shows.

Bitcoin continues to cool upon multiple attempts at the $50,000 price tag, evoking moments of price action gone by, though that may be less of a concern now given demand from bigger players, according to some.

Related: Market Wrap: Bitcoin Buyers Could Take Profits as Volume Declines

“In comparison to the bull runs in 2017 and 2018, the current movement takes a more mature trend,” said Cynthia Wu, head of sales at Singapore-based digital asset services firm Matrixport. “The market landscape has become much more institutionalized – where now you have proprietary traders in crypto hedge funds, crypto-offerings from foreign exchange brokers and institutions … that are transacting on an institutional scale.”

The ongoing price trend for bitcoin and the fusion of retail and institutional interest are a sign that the search for yield by investors, big or small, has extended into crypto and “will be around for good,” Wu added.

Bitcoin’s daily price action remains relatively flat with the weight of the previously discussed 200-day moving average bearing down on prices near $45,500, a sign a further sell pressure could be lurking around the corner.

Though the altcoin market continues to hold firm with most in the top 20 by market cap remaining in the green when viewing over a 7-day period.

Related: Bitcoin Rangebound Near $50K Resistance; Support at $40K

“Overall, the markets have seen a positive trend continue this week; altcoins are up while bitcoin has coasted flat, said Byron Goldberg, Australian country manager at crypto exchange Luno.” “Interestingly, we are seeing ether slightly outperform bitcoin week-on-week.”

Over a 30-day period, ether is up 67.6% compared to bitcoin’s 46.3% over the same period, Messari data shows.

Goldberg points to Ethereum’s London hard fork as the likely catalyst for driving prices higher on the world’s second-largest crypto by market capitalization.

Indeed, futures premium on ether stands at 7.36% to bitcoin’s meagre 2.8%, meaning the crypto markets are likely anticipating ether to rise further than bitcoin over the next three months with a shift in institutional interest, Goldberg added.

All major cryptos in the top 20 posted results in the red over a 24-hour period by press time, with dogecoin having shed the most while uniswap, and chainlink followed close behind.

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Galaxy Digital, a U.S. financial services firm, has posted second quarterly losses in the tens of millions, resulting from fluctuating and volatile cryptocurrency prices.

According to a press release on Monday, Galaxy witnessed a net comprehensive income loss of around $175.8 million. Q2 results for the year prior posted a net comprehensive gain of $35.3 million.

The bank, co-founded by former hedge fund manager and billionaire Michael Novogratz, is attributing its losses to a 34% decline in crypto prices as well as a 41% decline in the price of bitcoin over April, May, and June.

Related: Galaxy Digital Files for US Bitcoin Futures ETF

Losses are reflected by the volatile swings of the crypto markets which saw the price of bitcoin fall 54% from April through to July.

The bleeding was stemmed by its core operating activities, the firm said, including liquidity provision and execution services, counterparty trading volume growth and the addition of blue-chip partnerships to the firm.

“While the second quarter included significant volatility and macro-related headwinds to near-term results, our core operating activities … delivered another quarter of rapid growth consistent with the pace of adoption of the crypto economy,” said Novogratz.

The firm also said its trading division saw continued growth in volumes with a 90% increase from the first quarter, and an increase of over 560% year-on-year, despite volatile digital asset prices.

Related: Galaxy Digital Hires SIX’s Tim Grant to Lead Europe Expansion

Gross counterparty loan originations were up over 130% since March 31 to approximately $1.56 billion. As of July 31, Galaxy Digital reported preliminary assets under management of over $1.6 billion, per the report.

Galaxy Digital is a merchant bank providing cryptocurrency-focused services for institutional investors. In May, the firm bought crypto custodian BitGo for a staggering $1.2 billion.

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The Union Bank of the Philippines (UnionBank), one of the country’s largest by total assets, is leaning on Asia’s crypto custodian Hex Trust to pilot a digital asset custody service.

Hex Trust will begin by providing an internal service for the bank’s employees as a pilot run. The bank said it is looking to tap into a maturing digital asset space as institutional and customer interest grow.

The next stage will involve rolling out a fully commercialized custody service for the bank’s customers, according to a press release shared with CoinDesk on Wednesday. The move will allow the bank to safeguard customers’ digital assets on their behalf within a regulated environment, the bank said.

Related: Why US Government Yanked BitGo’s Contract and Gave It to Anchorage

UnionBank, one of the island nation’s top 10 banks by total assets, also said it is fully compliant in its latest offering with the Philippines’ Bangko Sentral ng Pilipinas (BSP).

“We are excited to be the first Philippine bank to pilot a custody service for digital assets for our own employees, overseen by the BSP so that we can prepare the groundwork for a safe and protected system for customers’ digital assets,” said Henry Aguda, the bank’s chief technology and operations officer.

Hong Kong-based Hex Trust provides what it calls “bank-grade” custodial services for digital assets and has built its solutions targeting banks, financial institutions, asset managers, exchanges and corporations.

Last year, Hex Trust teamed with enterprise blockchain company R3 to offer banking clients another option for issuing security tokens using R3’s Corda software development kit. It also claimed to be working with one of Asia’s largest banks.

Related: Gemini to Serve as Custodian for Filecoin Fund of Australian Equities Manager

Hex Trust has offices in Hong Kong as well as Singapore and said it is expanding to the European market throughout the remainder of this year.

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The Federal Reserve official who famously reassured the U.S. public last year that the central bank could inject unlimited money into the economy has voiced some well-worn, oft-rebutted criticisms of bitcoin and cryptocurrency in general.

“I was more optimistic about crypto and bitcoin five or six years ago,” Neel Kashkari, president of the Federal Reserve Bank of Minneapolis, said Tuesday. “So far what I’ve seen is … 95% fraud, hype, noise and confusion.”

During an appearance at the Pacific NorthWest Economic Region annual summit in Big Sky, Mont., Kashkari contrasted the open nature of the crypto field with the U.S. government’s monopoly on issuance of dollars.

Related: US July Consumer Price Index Rose Slightly Faster Than Expected

“There is no barrier to you creating your own bitcoin, or me creating my own … I’ll call it Neelcoin,” he said. Pointing to his on-stage interlocutor, Larry Simkins, CEO of conglomerate The Washington Companies, Kashkari added, “and then Larry can create Larrycoin.”

Other Fed officials have expressed more nuanced and favorable assessments of digital assets. Vice chairman Randal Quarles, for example, said in June that the U.S. should find ways to “say yes” to stablecoins.

While it is true that anyone can spin up a digital asset easily, Kashkari did not mention the power of network effects, which make bitcoin more secure and valuable in the market’s eyes than its many competitors.

“There are thousands of these garbage coins that have been created,” the central banker went on. “Some of them are complete fraud Ponzi schemes. They dupe people into investing money and then the founders rip them off.”

Related: July Jobs Report: US Added 943,000, Beating Expectations

This is indeed true very often. But Kashkari then made a sweeping generalization.

“I always ask people what problem are you trying to solve and no one can articulate what the actual problem is,” he asserted.

 Kashkari scoffed at the idea that bitcoin could serve as a safe haven from inflation, particularly the kind seen in some developing countries. “I don’t see any evidence that the U.S. government or the United States of America is on a path to Venezuela,” he said.

Some bitcoin users may find that line galling given Kashkari’s interview on television’s “60 Minutes” in 2020, early in the pandemic, in which he boasted that “there is no end to our ability” at the Fed to pump money into the economy.

The Venezuela comment also elided the fact that bitcoin and other cryptocurrencies are global, and have been adopted by residents of countries suffering from more severe inflation than the U.S.

While he stopped short of saying crypto could never be useful (“it’s certainly possible”), Kashkari indicated Tuesday he was skeptical of the prospects.

“I’ve not seen any use case other than funding illicit activities like drugs and prostitution,” he said, apparently unaware that bitcoin has been used by politically disfavored publishers and dissident voices to survive government blacklisting in countries like Russia.

“I have not seen any use case that is legitimate so far that bitcoin solves,” Kashkari said.

He closed his brief remarks on the subject by circling back to an audience member’s question about the city of Miami’s recent foray into crypto.

“If you want to launch Montana Coin, don’t let me stop you,” Kashkari quipped.

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A group of people in the crypto community, led by crypto investment firm Paradigm’s research partner Sam Sun, may have just prevented SushiSwap’s token fundraising platform Miso from losing more than $350 million worth of ether, after discovering and fixing a bug on the platform in under just five hours.

Because of the collective efforts, SushiSwap says no funds have been lost.

According to a post published by SushiSwap on Monday, Sam Sun, and his colleagues Georgios Konstantopoulos and Daniel Robinson – all from San Francisco-based crypto investment firm Paradigm – reached out to the team at Sushi to alert them to “a vulnerability” on the “Dutch auction” contract on the Miso platform.

Related: SuperRare Drops RARE Token to Decentralize NFT Marketplace

In a Dutch auction, investors place bids reflecting the maximum amount that they are willing to pay. Once the bids are collected, the highest bid is declared the winner. After the auction is finalized, unsuccessful bids are returned to their owners.

The vulnerability

The SushiSwap team and Paradigm’s Sun, in separate posts, both identified that, essentially, the vulnerability was centered around the ability to batch multiple calls to commitEth and reuse a single msg.value across every commitment, allowing an attacker to bid in the auction for free.

“Combining batch with commitEth (a function on Miso Dutch Auction) creates a two-pronged issue where a user can both put up a commitment higher than ‘msg.value’ thereby draining any unsold tokens and additionally drain the raised funds on the contract as refunds if the auction has reached max commitment,” SushiSwap’s team wrote in the post.

“The bug was created when a convenience function for wallet addresses interacted with the refund mechanism of the auction contract,” explained Duncan Townsend, CTO at Immunefi, a bug bounty platform for DeFi that was also recruited to help solve the issue.

Related: Market Wrap: Bitcoin Buyers Could Take Profits as Volume Declines

“Users could over-bid and get a refund of the difference between the current bid and the amount they submitted, but the refund could be repeated to drain the auction contract,” Townsend added.

“All future planned auctions utilizing the specific Dutch auction contracts with ETH commitments have been paused until an updated version is redeployed,” SushiSwap’s team wrote.

The takeaway: Smart contracts are hard

At the conclusion of his blog post, Sun reflected that one of the most important lessons to be learned from this discovery is that even “safe components can come together to make something unsafe.”

The smart contracts that underpin DeFi are complex, combining “composable” Lego blocks to create new contracts and protocols. But the manner in which these blocks are combined can have inadvertent, disastrous consequences, even when programmers are using inherently safe individual components.

“This incident shows that even safe contract-level components can be mixed in a way that produces unsafe contract-level behavior. There’s no catch-all advice to apply here like ‘check-effect-interaction,’ so you just need to be cognizant of what additional interactions new components are introducing,” Sun said.

The event took place just after the biggest DeFi exploit to date took place last week: Cross-chain DeFi site Poly Network was attacked, losing more than $600 million worth of cryptocurrencies, due to a bug.

In the case of the SushiSwap vulnerability, however, many in the crypto community have taken to social media to praise the five-hourlong collective rescue efforts led by the research arm at Paradigm.

“Chad af,” Twitter user @KadenZipfel wrote (a “chad” usually refers to an “alpha male” in the common parlance of internet slang).

“Absolute King,” another Twitter user, @BanhbaoCrypto, wrote. “The Defi super hero we all need but don’t deserve!”

Related Stories

• The Poly Hack and Crypto’s Trust Issues
• DeFi’s 1inch Network Launches on Ethereum Scaling Platform Optimism

Trading in non-fungible tokens, or NFTs, is soaring to multiples of the levels seen earlier this year when the phenomenon burst into public consciousness with breathless headlines in mainstream media and gasps among art dealers.

The number of sales on OpenSea, the largest NFT marketplace, reached more than 60,000 per day over the past week, nearly eight times the peak in March, according to a report by crypto intelligence firm Coin Metrics. According to another data tracker, DappRadar, OpenSea’s trading volume over the past 30 days was $1.22 billion, up 933% from the previous 30 days.

Such growth suggests that the hysteria epitomized by the artist Beeple’s $69 million sale of his work, “Everydays: The First 5000 Days,” at Christie’s may have merely represented a glimpse of the industry’s potential.

Related: SuperRare Drops RARE Token to Decentralize NFT Marketplace

“If NFTs start gaining as much outside attention as they did earlier this year, there may be an even bigger boom yet to come,” wrote Coin Metrics.

The latest boom was partly driven by the sale of NFT collections such as CryptoPunk, Bored Ape Yacht Club and Pudgy Penguins. 

Google search activity globally still ranks lower than in March: 

A tricky question for cryptocurrency traders is how to play the trend. There’s a chicken-and-egg dilemma over how the NFT market affects the price of ether (ETH), the native cryptocurrency of the Ethereum blockchain, where much of the NFT ecosystem resides.

Related: Market Wrap: Bitcoin Buyers Could Take Profits as Volume Declines

As NFTs are usually priced in ETH, a sudden rise in ETH price may deter new entrants to the NFT markets, the report noted. However, higher NFT sales may help attract new users to Ethereum.

In March and during the recent NFT boom, OpenSea sales and ether increased in tandem, according to Coin Metrics. During other times, such as in May, the ETH price peaked while NFT sales on OpenSea plummeted. 

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Non-fungible token (NFT) marketplace SuperRare launched a “Curation Token” on Tuesday to decentralize the project. At launch, 15% of the RARE token’s total supply was airdropped to past users of the platform. 

The announcement follows a wave of activity in the NFT space. August has been the largest month ever in terms of NFT volume, with competing marketplace OpenSea doing over $1 billion in volume for the month to date. If the market continues to stay hot, there could be another governance token launch from the largest NFT marketplace. 

SuperRare has done over $90 million in NFT art sales since 2018 and is backed by the likes of Mark Cuban, Velvet Sea Ventures, 1confirmation and others. The platform raised $9 million in a Series A in March. A portion of the governance token will be vested to investors over the next four years. 

Related: NFT Trading Surges 8X as Penguins, Apes Drive New Boom

It’s not the first NFT marketplace to launch its own governance token. The Rarible marketplace launched the RARI token in July 2020.

SuperRare’s newly formed DAO will vote on additional “Spaces” or galleries to inspire community-driven art and earn commissions on each sale. Commissions will go to the treasury and be used for further projects decided on by RARE token holders, aimed at creating a decentralized and sustainable marketplace.

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Cryptocurrencies were mostly lower on Tuesday as declining volume suggests a pullback is near. Bitcoin was trading around $45,418 at press time and is down about 1.6% over the past 24 hours. 

Some analysts are optimistic about the long-term recovery in crypto prices, although the pace of the upside will likely slow over the short term.  

“While many of the technical and on-chain indicators confirm this rebound’s strength, it may still be early to say we are out of the woods,” Nathan Cox, chief investment officer at digital asset management firm TwoPrime, wrote Tuesday in an email to investors.

Latest prices

Related: NFT Trading Surges 8X as Penguins, Apes Drive New Boom

Cryptocurrencies:

• Bitcoin (BTC) $45,418, -1.59%
• Ether (ETH) $3,103.5, -1.98%

Traditional markets:

• S&P 500: 4448, -0.7%
• Gold: $1,785.01, -0.08%
• 10-year Treasury yield closed at 1.263%, down from 1.268% on Monday.

Traders are also monitoring the ongoing regulatory crackdown in several nations, which could damp bullish sentiment. 

On Tuesday, the Shenzhen branch of the People’s Bank of China plans to “promptly clean up and rectify” 11 companies for providing illicit crypto trading activities, state-owned Shanghai Securities Journal reported. 

Related: US Mortgage Lender UWM Plans to Accept Bitcoin Payments

In Spain, the National Securities Market Commission issued a warning notice for 12 companies, including crypto exchanges Huobi and Bybit, for providing investment services without being registered with authorities, CoinDesk’s Eliza Gkritsi reported. 

And in South Korea, a crypto exchange subsidiary of Japanese tech giant LINE, is reportedly limiting its services next month, according to a report by Yonhap News.

For now, technical charts suggest bitcoin remains in breakout mode with support around $42,000. The loss of short-term momentum could trigger a brief period of profit taking. 

Bitcoin mining revenue rise

Miners are experiencing greater revenue as the Bitcoin blockchain’s hashrate recovers from July lows. This is a positive sign for the blockchain network and could point to further bitcoin accumulation by miners. 

“Over the course of the last two months, hashrate has increased by around 25% from the lows, suggesting hashrate equivalent to around 12.5% of the affected miners have come back online,” Glassnode analysts wrote in a blog post.

The hashrate refers to the total combined computational power that is being used to mine and process transactions. 

“In response, the Hash-Ribbons, which attempt to model where stress enters the mining market, have commenced another positive cross-over,” Glassnode wrote. “The Hash-Ribbons are formed by taking the 30-day and 60-day moving average of hashrate with the following signals,” as shown in the chart below. 

Decreasing volume

Bitcoin’s trading volume on leading spot exchanges declined over the past week as the short-squeeze rally stalls. 

“After the seven-day average real BTC trading volume pushed towards $7 billion last week, we’re now back to $5 billion,” Arcane Research wrote in a Tuesday report.

If bitcoin continues to trade higher on declining volume, “it can signify an exhausted market, and it will probably not be a sustainable move,” Arcane wrote. “We want to see a clear uptick in volume if the BTC price jumps up towards $50K again.”

Latest on Poly Network hack

The Poly Network cyberattack saga has dragged into its second week with the hacker or hackers yet to provide the key for the multi-signature wallet needed to complete the full return of the roughly $600 million that was stolen, with the exception of the $33 million worth of the stablecoin USDT that was frozen by Tether, reports CoinDesk’s Nelson Wang.

China-based Poly Network had previously offered $500,000 to the attacker or attackers as a reward for returning the money taken on the Binance Smart Chain (BSC), Ethereum and Polygon platforms in what is likely the largest-ever hack of a decentralized finance (DeFi) site. 

In a message posted to the Ethereum blockchain at 1:45 p.m. UTC on Monday, the attacker, who the Poly Network is calling “Mr. White Hat” but who some others doubt is a true white-hat hacker, said that they were considering taking the bounty and using it to reward anyone else who can hack the cross-chain platform. A “white hat” attacker is one who tries to exploit vulnerabilities in a protocol to help expose and ultimately fix bugs or loopholes in the underlying code.

”MONEY MEANS LITTLE TO ME, SOME PEOPLE ARE PAID TO HACK, I WOULD RATHER PAY FOR THE FUN,” the attacker or attackers wrote.

Altcoin roundup

• AUDIO Market Cap Surges Past $1B: Prices for AUDIO, the governance token of decentralized music streaming protocol Audius, nearly doubled in the past 24 hours, pushing its market capitalization above $1 billion for the first time. The price surge comes after Audius announced its partnership with popular video-sharing app TikTok. Data from TradingView and FTX shows that AUDIO’s price started pumping around 16:00 UTC on Aug. 16 and reached a high at $4.04 at approximately 6:00 UTC on Aug. 17. News of the TikTok tie-up first emerged at 15:00 UTC on Aug. 16.
• Dfinity’s ICP Rebounds: The blockchain company Dfinity made headlines in May when its internet computer (ICP) tokens were officially released for public trading at a price of $630, giving the project a $45 billion market capitalization. The enthusiasm quickly evaporated as the token plunged 95% over the following month to as low as $27. Since then, the token’s price has doubled to more than $60, according to data from Messari, signaling renewed appetite from investors. Some traders are feeling fresh enthusiasm for the token thanks to a recent increase in developer activity taking place on the network. That’s despite lingering ill will among some investors and developers, including dissidents who have formed a splinter group as well as plaintiffs in a class-action lawsuit filed in a U.S. federal court. 
• 1inch Network Launches on Ethereum Optimism: 1inch Network, a platform that aims to find the best deals across multiple decentralized exchanges (DEXs), has expanded to the Optimistic Ethereum mainnet. The move to the layer 2 network makes 1inch Network the second decentralized finance (DeFi) app on Optimistic Ethereum, with the first being Uniswap, 1inch spokesperson Sergey Maslennikov told CoinDesk. 

Relevant news:

• US Mortgage Lender UWM Plans to Accept Bitcoin Payments
• Galaxy Digital Files for US Bitcoin Futures ETF
• Crypto Exchange Bitpanda Raises $263M at $4.1B Valuation
• Eqonex Launches Peer-to-Peer Crypto Lending Marketplace for Institutions

Other markets

Notable winners of 21:00 UTC (4:00 p.m. ET):

the graph (GRT) +4.69%

Notable losers:

eos (EOS) -6.86%

stellar (XLM) -6.56%

ethereum classic (ETC) -6.12%

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Fungibility has been a consistent theme of 2021, following the meteoric rise of NFTs. But what’s the deal with “semi-fungible” tokens and how do they work?

The interest surrounding non-fungible tokens (NFTs) reached astounding levels in the first half of this year. Data from NonFungible showed NFT sales surged to over $2.4 billion in the first quarter – 20 times more than the previous three months. That momentum has showed no signs of slowing so far in the second half of the year, with the leading Ethereum-based NFT marketplace, OpenSea, experiencing a record high trading volume of $49 million on Aug. 1, up from its average daily average trading volume of $8.3 million. The average price of CryptoPunks – one of the first collections of NFTs to make their debut on Ethereum’s blockchain – also set a record during the same month of 66.919 ETH per NFT (about $220,000 at press time).

The explosive growth has kickstarted a new wave of innovation around non-fungible assets, including the emergence of a new type of “semi-fungible” token (SFT) that starts off fungible and becomes non-fungible. Let’s break down these terms.

Fungible tokens

Related: NFT Trading Surges 8X as Penguins, Apes Drive New Boom

The majority of crypto assets investors monitor and trade on a regular basis are fungible, i.e. they are easily interchangeable. For example, if two people exchanged one ether for another, there would be no loss of value and neither party would be better off than the other. That is because there is no value distinction between any two ether or any two bitcoin for that matter (excluding “tainted coins” – coins that had been previously stolen or used in illicit activities).

Fiat money like U.S dollars are also fungible. In other words, fungibility is the ability of a token (or currency) to be exchanged or replaced with other tokens of the same type resulting in no change in value.

Non-fungible tokens

NFTs are blockchain-based tokens that can be used to represent digital ownership of something unique and scarce such as artwork, collectibles, in-game times, soundtracks or virtual real estate. Because each item has a distinct value based on inherent characteristics like who created it or how rare it is, it means NFTs cannot be mutually exchanged like ether or U.S dollars.

For example, a digital baseball card couldn’t be exchanged 1:1 with a plot of virtual land. The two are completely different assets. Not to mention, the digital baseball card might be part of an exceptionally rare collection, and the plot of virtual land could be in an undesirable location.

Because NFTs are stored on a blockchain, it means each token has the following characteristics:

• Indivisible: It’s not possible to purchase fractions of NFTs
• Indestructible: Cannot be destroyed or removed
• Immutable: Impossible to change the underlying information once it’s stored
• Verifiable: Because NFTs are stored on public blockchains, authenticity and ownership can be easily verified by anyone at any time

What are semi-fungible tokens?

Related: What Does Liquidation Mean and How to Avoid It?

SFTs are a relatively new group of tokens that can be both fungible and non-fungible during their lifecycle. Initially, SFTs act like regular fungible tokens in that they can be traded like-for-like with other identical SFTs. 

For example, a token that represents a valid $10 Amazon voucher would have the same value as an identical voucher with the same expiration date and would therefore be interchangeable. 

The distinguishing factor that makes these special types of tokens “semi-fungible” is that once they’re redeemed, the fungible tokens lose their face value. That loss of exchangeable value makes the expired tokens non-fungible.

Another way to understand this is to imagine owning a token that represented a concert ticket to see The Beatles’ last-ever performance. The ticket would have a face value and could be exchanged for another identical concert ticket, provided it was the same band on the same date and in the same seating area. Once the concert ended, the token representing the ticket would then become collectible memorabilia and have an entirely new value. It would also mean that the token could no longer be exchanged for a valid concert ticket of the same initial face value to see a different band. 

That process of transforming from a fungible to a non-fungible token upon redemption is where semi-fungible tokens get their name.

How to create semi-fungible tokens

Today, it’s possible to mint SFTs using Ethereum’s ERC-1155 standard. That is one of several Ethereum token standards – blueprints for creating tokens on the Ethereum blockchain that are compatible with all other ERC-based projects.

The ERC-1155 standard was developed by blockchain game developers Enjin, Horizon Games and The Sandbox in 2017, and is essentially a combination of the ERC-20 (fungible token) and ERC-721 (non-fungible token) standards. This makes it possible to create and manage both fungible and non-fungible tokens using a single smart contract – a computer program that self-executes when certain conditions arise.

SFTs are particularly useful in the gaming industry where there are fungible elements such as in-game currency like gold bars or V-Bucks, as well as non-fungible items like collectibles and weapons. This means gaming companies can create both types of tokens and ensure they’re interoperable so that gamers can easily trade things like weapons for gold bars and vice versa.

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The Dogecoin Foundation, a nonprofit organization that aims to support the development of the memecoin through advocacy, governance and trademark protection, has been re-established.

• The foundation boasts some well-known board members and advisers, including Ethereum co-founder Vitalik Buterin, who is serving as the foundation’s “blockchain and crypto adviser.” 
• Jared Birchall, a representative who was appointed by Tesla co-founder and influential dogecoin supporter Elon Musk and who is the head of Musk’s family office, joins as the foundation’s legal and financial adviser, while dogecoin core developer Max Keller will serve as a technical adviser. Dogecoin founder Shibetoshi Nakamoto will be the community and memes adviser.
• Board members include Dogecoin Foundation veteran Jens Wiechers and dogecoin core blockchain developers Michi Lumin and Ross Nicoll. 
• Originally launched in 2014, the foundation became inactive over time and eventually dissolved.
• The foundation is now hoping to secure a three-year budget so that it can hire a small staff to work on dogecoin full-time. 
• It also said that in the coming weeks the foundation “will be announcing new projects that will complement the current Core Wallet to enable faster integration and easier APIs (application programming interfaces) for financial, social and charitable projects wishing to use dogecoin.”

UPDATE (Aug. 17, 20:31 UTC): Updated with additional information about Jared Birchall’s background in the second bullet point.

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