A South Korean crypto exchange has been raided by police, Bitcoinâs Lightning Network hit a new high and mining revenues are climbing.
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Full stack
Sushi/Uni
There is a battle for dominance to become the top decentralized exchange in the DeFi space. Uniswap, a venture capital backed project, meant to create a more open and customizable crypto exchange, is being challenged by an upstart unaudited adaption called SushiSwap.
Related: First Mover: Bitcoin Tumbles, Bithumb Reportedly Raided, Uniswap Challenges Coinbase
Part of a trend of âWeird DeFiâ projects â frequently food-themed â SushiSwapâs emergence last week is doing bizarre things to the market.
Uniswap was already on a tare. The automated money market (AMM) platform saw its trading volume climb to $953.59 million on Tuesday â a more than ten-fold gain over the past month. Further, its 24-hour trading volume is now 50% higher than on Coinbase Pro, the largest U.S.-based centralized cryptocurrency exchange.Â
Uniswapâs usage has grown so rapidly that itâs taken over the top spot among fee payers on the Ethereum network. Traders on Uniswap have paid $5 million (10,805 ETH) in transaction fees in the past 24 hours.
Meanwhile, SushiSwap has already moved into the No. 3 spot of payers of Ethereum âgas,â the unit used to calculate fees on the Ethereum blockchain. It launched Aug. 28.
Related: DeFi Flippening Comes to Exchanges as Uniswap Topples Coinbase in Trading Volume
SushiSwap, which provides a near-identical function to Uniswap but rewards liquidity providers with sushi tokens and a share in trading fees, popularity comes from a unique marketing strategy: For roughly two weeks (100,000 blocks) ahead of launch, users who stake liquidity provider tokens from Uniswap to SushiSwap will get 10X the liquidity mining rewards.
Some speculate this incentive may be driving traffic to Uniswap. âDeFi degens can amass LP tokens, which they can dump immediately into Sushi and take advantage of this brief period of extremely generous SUSHI distribution,â CoinDeskâs Brady Dale elegantly said.Â
Top shelf
Mining revenues
Bitcoin miners enjoyed a 23% increase in revenue during August, driven by higher network fees from increased on-chain transaction volume. Miners generated an estimated $368 million in revenue in August, up from $300 million in July, and the third consecutive monthly increase in miner revenue, according to Coin Metrics. Network fees brought in $39 million in August, or 10.7% of total revenue, setting the highest percentage of fee-generated revenue in over 18 months. Revenue estimates assume miners sell their bitcoins immediately.
Predictions or bust
With the U.S. presidential election just months away, prediction markets should be booming but theyâre not, CoinDeskâs Benjamin Powers and Brady Dale report. Prediction markets harness the wisdom of the crowd and induce experts to put skin in the game to discover what people really predict â and reflect cryptoâs natural distrust of so-called authorities, the same ones that misjudged the last election. However, centralized markets like PredictIt are heavily regulated and charge high fees. Nascent decentralized prediction markets, which run on public blockchain networks, are sparsely used. And the ones that run on Ethereum, the second-largest blockchain, now face high âgasâ fees for users to run computations.Â
OneCoin fallout
The U.S. Department of Justice (DoJ) is seeking to confiscate nearly $400 million from the attorney who helped accused crypto Ponzi scheme OneCoin launder hundreds of millions of dollars. The U.S. Attorney for the Southern District called on the District Court judge responsible for sentencing Mark Scott â convicted last November â to impose a âforfeiture money judgment,â in a submission Monday. Between 2015 and 2018, Scott created a network of fake investment funds for OneCoin that laundered a total of $392,940,000 â the amount the DoJ is now seeking to reclaim. U.S. prosecutors have previously estimated that OneCoin took in more than $4 billion from investors through its cryptocurrency scheme â making it one of the most successful Ponzis ever.
Exchange raided
South Korean authorities have reportedly seized Bithumb, one of the countryâs biggest cryptocurrency exchanges by trading volume. The Seoul Newspaper reported Wednesday the police action was linked to a $25 million token sale hosted on Bithumb and a proposed acquisition by a Singapore platform, BTHMB, that never materialized. Some investors said they lost millions participating in the sale. Bithumbâs chairman, Lee Jung-hoon, has been accused of fraud and illicitly sending funds overseas. Last week, police seized Coinbit â the countryâs third-largest exchange â on allegations it had faked most of its trading volumes.
Lightning speed?
Bitcoinâs Lightning Network set a record high Monday as total capacity held in the protocolâs payment channels â sometimes referred to as âtotal value lockedâ (TVL) â reached $12.4 million. Two weeks ago, Lightning set the prior high of $12.37 million, surpassing the long-standing previous mark of $12.3 million that was reached in early July 2019 and lasted for 405 days. Further, the number of publicly broadcasting nodes has steadily increased to approximately 7,600 nodes, up 55% from January. The total number of bitcoins held on Lightning sits at 1,060, up 24% so far this year, but still remains below the record high of 1,105 BTC set in early May 2019, CoinDeskâs Zack Voell reports.
Quick bites
At stake
Exchange outages
A problem well-known to crypto traders, exchange outages, is now going mainstream. On Monday, following Apple and Tesla stock-splits, Robinhood, TD Ameritrade and Schwab experienced interruptions.Â
CoinDeskâs Muyao Shen looks at a few common causes and solutions hard won in the crypto industry.Â
Deribit, a popular derivatives exchange that went dark in late August, has installed redundant load balancers and is setting up a disaster recovery facility in Switzerland. This is to address a hardware issue.Â
More frequently, it isnât an issue with a masternode, but a simple code update that can trigger interruptions. Coinbase and Binance have both recently experienced this issue when a surge in trading volumes tested their limits.
Derivatives exchange FTXâs support team also told Shen that to reduce the risk of outages, their work has been concentrated on making sure enough spare capacity will be available to support the exchangeâs operation during busy periods.
Another solution, circuit breakers, are quasi-controversial in crypto. First implemented on stock exchanges after the âBlack Mondayâ crash in 1987, breakers automatically halt trading when prices fall below specified levels. They are designed to save the market from a complete meltdown.
Deribit has an index circuit breaker on its platform which is triggered at +/-1.5% index price move per second to âavoid massive sell-offs, and allow market participants to get up to speed with the market during highly volatile periods,â Luuk Strijers, chief commercial officer at Deribit, said. These were triggered several times in March, during an intense period of market volatility.
Though there is a cost to installing circuit breakers, as evidenced by Binanceâs outage that forced traders to competing platforms.Â
âThese make a lot less sense,â FTX representatives said. âRather than acting as a sanity check, they restrict usersâ ability to trade and enforce artificial pricing.â
Ultimately, there is a tension between security and speed that exchanges need to balance. But the ethos running though Silicon Valley and crypto â move fast and break things â means exchange operators will likely prioritize liquidity and transaction fees rather than reducing outages.
âIs an uptime requirement of 99.999% something that the same type of people who invented Robinhood are going to aspire to?â Dave Weisberger, co-founder and CEO of execution provider CoinRoutes, said. âThe answer is no. They say they aspire to it but thatâs very expensive. ⦠As a result, there are outages.â
Market intel
Bitcoin blues
Bitcoin is facing selling pressure at press time, having failed to move above a long-held resistance level on Tuesday. The leading cryptocurrency is currently trading near $11,390, representing a roughly 4% decline on the day, according to CoinDeskâs Bitcoin Price Index. Bulls failed to establish a foothold above the $12,000 mark on Tuesday, CoinDeskâs Omkar Godbole reports, the fourth time in the past five weeks. Immediate support is located at $11,170; a violation there would confirm a bearish head-and-shoulders breakdown.
Tech pod
CBDC wallet
The roll-out of Chinaâs central bank digital currency may include hardware wallets as well, CoinDeskâs Wolfie Zhou reports. Over the weekend, China Construction Bank (CCB), one of the countryâs big-four state-owned commercial banks, opened up a wallet service to public users within its mobile app for testing Chinaâs CBDC, also known as DC/EP. The walletâs Terms and Services showed that a hardware wallet â akin to an actual wallet for cash â may also be in the works. The DC/EP hardware wallets can be traceable and would strip off the anonymity feature of paper cash as users would need personal information such as IDs and phone numbers to activate the wallet in the first place.Â
Wallet malware
A new malware, called Anubis, can target cryptocurrency wallets and other sensitive data, according to a Microsoft Security Intelligence report. On sale on the darkweb since June, experts recommend not visiting sketchy websites or opening strange or suspicious attachments, links or emails, CoinDeskâs Benjamin Powers reports. Importantly, this malware is distinct from a family of Android banking malware also called Anubis. It joins a growing list of malwares that look for vulnerable cryptocurrency stashes.
Op-ed
Crypto shortages?
J.P. Koning, a CoinDesk columnist and author of Moneyness, thinks people who donât consider crypto to be money need to look at the coin shortage in the U.S., where money is failing to be money. âThere can never be shortages of digital versions of the dollar because tokens flow rapidly over the internet, not slowly via hand,â he writes.
Podcast corner
Month defining
In this recap and âbest ofâ episode, NLW looks at the big themes that defined August. Most notable was the discussion of inflation culminating in the Federal Reserveâs newly announced policy of average inflation targeting.Â
Who won #CryptoTwitter?
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