DeFi Frontier July 07, 2023

Welcome back to this week's edition of DeFi Frontier. Instead of zoning in on specific topics, we're casting a wider net to encompass general news. A lot is happening across various sectors of Web3 every week, so we'll touch on everything. Let's dive right in!

Heavy speculation on ETH ETF

Recent chatters have been happening in the Web3 space, hinting at a possible breakthrough for an ETH ETF. ProShares recently proposed an equal-weight Bitcoin and Ether ETF, being among several companies, including Bitwise and Grayscale Investments, making their pitch to the SEC. However, given the SEC's track record of not approving ETFs that track Ether Futures (unlike their Bitcoin counterparts since October 2021), the outcome remains uncertain. With ETH's price stably above $1,830 and regulatory ambiguities still in the air, the ETF race heats up. If approved, Ether ETFs might roll out 75 days after submission, spearheaded by Volatility Shares ETF come October 12. Read More

Huobi's Financial Stability Questioned Amid Sharp TVL Decline and Rumored Insolvencies

Huobi, a prominent cryptocurrency exchange, has experienced significant outflows, seeing its total value locked (TVL) drop from $3 billion to $2.5 billion in just a month. Fintech executive and crypto analyst Adam Cochran has spotlighted this decline, insinuating financial instability and linking it to rumors about Binance's large-scale sale of Tether (USDT) due to Huobi's supposed insolvency. Cochran even hinted at Huobi's links with Tron's personnel being questioned by the police and posted names of those allegedly detained, only to later remove the tweet. Despite Cochran's analysis showing Huobi's considerable financial discrepancies, the exchange's head of social media dismissed the claims as mere rumors. This controversy adds to Huobi's challenging year, which included staff layoffs and a halt in Malaysian operations.Read More

Coinbase Challenges SEC's Jurisdiction: Asserts No Trading of Unlicensed Securities

On Friday, Coinbase, America's largest cryptocurrency exchange, formally requested a judge to dismiss a lawsuit from the U.S. Securities and Exchange Commission (SEC) against them. In a federal filing, Coinbase argued that the SEC's claims are outside the agency's jurisdiction, asserting that none of the digital assets and services they provide qualify as securities. This comes after the SEC alleged in June that Coinbase had been operating as an unlicensed securities exchange for years. Coinbase Chief Legal Officer, Paul Grewal, took to Twitter to emphasize that they do not offer "investment contracts" as traditionally interpreted by legal precedent. Grewal criticized the SEC for deviating from its earlier securities law interpretations. Amidst this, the SEC continues to intensify its scrutiny of the crypto sector, having targeted other major exchanges, with Gary Gensler, SEC Chairman, maintaining that many exchanges are trading unregistered securities. Full article

Curve Finance Increases Bounty to Identify Exploiter of Stable Pools

In the previous DeFi Frontier edition, we covered the hack with Curve Finance, a leading decentralized finance (DeFi) protocol. Since then, Curve has raised a bug bounty reward to $1.85 million for anyone able to pinpoint the attacker responsible for the theft of over $61 million from its pools on July 30. Initially, a 10% bug bounty, which amounted to over $6 million, was extended to the hacker on Aug. 3. The hacker partially returned assets to some platforms, such as Alchemix and JPEGd, but withheld reimbursements to other affected pools. With the initial deadline expired, the protocol has decided to enhance its bounty offer. Prior to the partial return, the hacker had sent a message emphasizing that their intention to refund wasn't out of fear of being caught but rather to avoid harming the targeted projects. The exploit, which took advantage of the Vyper programming language's vulnerable versions, has exposed security gaps across various DeFi projects, prompting recovery efforts across the ecosystem. Read more

Elon Musk Denies Plans for Twitter or X Crypto Token, Leaving Room for Other Crypto Endeavors

Tech billionaire Elon Musk has quashed rumors of Twitter or X launching its own cryptocurrency. The clarification came in a response to a tweet warning about scam tokens claiming to be associated with Musk's companies. Musk's simple response, “And we never will,” ended speculation of Twitter-led cryptocurrencies. This denial does not constitute a complete rejection of cryptocurrency support or related features in future projects, and Musk's history with digital assets such as Dogecoin leaves room for potential crypto endeavors. His recent acquisition of Twitter and rebranding it to "X" continues to draw attention to his influence in the crypto space.Full article

Closing Note

What a whirlwind of a week in the DeFi world! From regulatory battles to potential ETF breakthroughs, and even intriguing tweets from tech giants - the crypto frontier continues to be a landscape of innovation, challenges, and limitless potential. As always, thank you for joining us for this edition of DeFi Frontier. Remember, amidst the fast-paced world of Web3, it's essential to stay informed and tread wisely. We'll be back next week with more updates.