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| The biggest crypto news and ideas of the day Jan. 3, 2022 If you were forwarded this newsletter and would like to receive it, sign up here. Sponsored by Welcome to The Node.
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Today’s must-reads Top Shelf A RECORD, AN ANNIVERSARY: Just ahead of Bitcoin’s 13th birthday (today!), the network’s hashrate hit a new high on Sunday night, according to data from Glassnode. Hashrate refers to the measure of energy dedicated to securing the decentralized monetary network, which took a severe hit in mid-2021 after China banned mining in the country. Bitcoin’s resilience all but ensures many birthdays to come.
TAX INVESTIGATION: India’s tax authorities are investigating some of the country’s most prominent cryptocurrency exchanges including CoinSwitch Kuber, CoinDCX, BuyUCoin and Unocoin for potential unpaid taxes. This comes after India’s largest crypto exchange, the Binance-owned WazirX was found to evade paying some Rs 40.5 crore (~$6 million) in taxes. The ongoing anti-tax evasion drive will cover all crypto exchanges in Mumbai zone.
UPS AND DOWNS: Convex Finance now has over $20 billion in total value locked (TVL) as of this Sunday, making the Ethereum-based protocol that “farms” yield for stablecoin exchange Curve Finance the second largest in decentralized finance (DeFi). As it happens, Curve is the largest DeFi protocol with some $24 billion in TVL. Meanwhile, Grayscale Investments says it holds $43.6 billion in crypto assets under management (AUM), down 28% from the $61 billion the digital asset manager held in early November. This comes amid a greater downturn for crypto prices. (Grayscale, like the editorially independent CoinDesk, is owned by Digital Currency Group.)
GO FOR THE BONE: Shiba inu (SHIB), the Ethereum-based “dog token” launched to give dogecoin a run for its money, has launched a beta version of a decentralized autonomous organization (DAO) to give users more authority to decide on crypto projects and pairs on the ShibaSwap platform, according to a blog post. SHIB’s Doggy Dao will launch in a “stage-by-stage” phased approach to oversee the introduction of new tools like BONE rewards and WOOF staking pools in phases.
A message from Nexo When it comes to buying, borrowing or earning on your crypto, you won’t find and easier, safer way to do it than Nexo.
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There’s no limit on the number of people you can refer, so invite as many friends as you’d like!
Overheard on CoinDesk TV... Sound Bites "Crypto is probably going to be an election issue, I think almost for certain."
–CoinDesk Managing Editor for global policy and regulation Nikhilesh De, discussing the 2022 U.S. election season, on CoinDesk TV's "First Mover."
What others are writing... Off-Chain Signals El Salvador President Nayib Bukele is tweeting out bitcoin price predictions; has his sights on $100K Square Enix plans to invest more in blockchain gaming in 2022 (The Block) Meta aims for ‘deep compatibility’ with blockchain, according to an internal post (NYTimes) Beyond the hype, crypto innovations have real-world benefits (South China Morning Post – Opinion)
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Putting the news in perspective The Takeaway Phishing for Bored Apes Last week, an NFT trader named Todd Kramer made a simple plea on Twitter.
“I been hacked,” he wrote. “All my apes gone. This just sold please help me.”
Kramer was referring to his cache of Bored Ape Yacht Club non-fungible tokenss – now the single most valuable franchise of crypto collectibles. They’ll run you about $276,000, at the cheapest, and Kramer had eight of them, along with seven from a spin-off collection called the Mutant Ape Yacht Club, before his tokens were siphoned away in a phishing scam.
Almost immediately, Kramer’s “apes gone” post went viral.
NFTs already have a terrible reputation among the non-crypto crowd (which is to say, most people), thanks to their fraught relationship with the concept of “digital property rights” and the environmental impact of proof-of-work blockchains like Ethereum. More than a few brands have reneged on planned NFT drops after facing intense backlash on social media.
That’s because the culture of crypto places an outsize emphasis on personal responsibility. One of the nice things about banks and other centralized financial institutions is that they’re required to take certain steps to protect your money. Those protections can come in the form of deposit insurance and fraud protection, but also little security features like “forgotten password” mechanisms.
So-called “unhosted” crypto wallets like MetaMask ask users to keep track of their own private keys; if you lose them, there’s no way of getting them back. “Not your keys, not your coins,” goes one longtime crypto mantra.
There’s something inherently silly about having a significant chunk of your net worth (Kramer claims it was around $2.2 million) tied up in illiquid JPEG files. But for me, the “apes gone” controversy mostly speaks to a kind of widespread hypocrisy in the NFT market.
The billionaire Mark Cuban, who spent the first half of last year breathlessly championing DeFi (“decentralized finance”) programs and pumping his crypto investments in appearances on major TV news networks, made a similar plea last summer after some of his holdings went to zero. In a statement to Bloomberg, Cuban explicitly called for greater regulation of the crypto space. He was a lot quieter in the second half of the year.
Consumer protection laws, though they’re never perfectly conceived or enforced, exist for a reason. Saturated, unregulated markets like crypto are natural targets for scammers, and even the savviest traders can lose millions with a stray click.
OpenSea, the largest NFT marketplace, was able to halt trading on the stolen assets and flag them as having been involved in a scam. But because OpenSea is mostly just a front-end trading interface, and Bored Ape Yacht Club NFTs are hosted on the Ethereum blockchain, the company couldn’t actually return any of the tokens.
He did get some of them back, though. And ironically, the Twitter users dunking on Kramer may have played a crucial role, amplifying Kramer’s plea and rallying members of the Bored Ape community to help retrieve the tokens.
Kramer isn’t the first trader to lose his Bored Apes to a phishing scam. Another NFT enthusiast, Calvin Becerra, made a similar splash on Twitter after losing three tokens in November. He even wrote a note to the apes’ captors, asking to work out a deal for their safe return (he also listed the note as an NFT, naturally).
Accepting decentralized infrastructure means accepting these risks. If you’re going to advocate for a new, independent financial system – one without regulation, fraud protections and many of the other safeguards that help people hang onto their money – then there’s no point in appealing to centralized mediators when the system starts to work against you.
The Chaser...
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