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Ether-Bitcoin Ratio Drops to New Low |
A closely watched ratio tracking the relative price strength of ether (ETH) against bitcoin (BTC) has dropped to its lowest level since April 2021, indicative of a fallout in investor demand for the worldâs second-largest token. The ether-bitcoin trading pair fell under 0.04 late Sunday to trade at 0.039 in European morning hours Monday, extending year-to-date losses to nearly 30%. Although colloquially called a ratio â ETH/BTC is simply the trading pair of ether against bitcoin on crypto exchanges, which attracts hundreds of millions in daily volumes. Over the past five years, the ETH/BTC ratio has risen from 0.02 to a peak of above 0.08 in early 2022 - meaning ETH had quadrupled in value relative to BTC at the time. Its value proposition has been on the decline ever since â bitcoin set fresh lifetime highs in April in U.S. dollars (before tumbling 20%), while ether is yet to break its highs from 2021 and is down 52% from its 2021 peak. Year-to-date, bitcoin has returned over 40% to investors while ether holders have gained just under 1%. |
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SEC Focuses Again on Binance |
The U.S. Securities and Exchange Commission (SEC) wants to take another whack at its lawsuit against crypto exchange Binance, filing a proposed amended complaint Thursday night a few months after the federal judge overseeing the case allowed most of the regulator's charges to survive a motion to dismiss. The SEC argued its proposed amended complaint addressed some of the judge's concerns in dismissing parts of its initial lawsuit â namely around ongoing BNB sales and Binance's Simple Earn product â and bolstered other charges that the judge did not fully address in her ruling, specifically around 10 digital assets the SEC used as examples of Binance operating as an unregistered securities purveyor. "The MTD Order dismissed these claims based on insufficient factual allegations to meet the Howey test, as opposed to a defective legal theory," the SEC filing said. The SEC first sued Binance in June 2023, alleging the exchange was operating as an unregistered broker, clearinghouse and trading venue, offered unregistered securities through BNB and the BUSD stablecoin, as well as its staking service. Binance, Binance.US (otherwise known as BAM Trading) and Binance executives moved to dismiss the lawsuit. Judge Amy Berman Jackson, in a June 2024 ruling, dismissed charges tied to Binance's Simple Earn product and secondary BNB sales, but allowed most of the SEC's charges to proceed. |
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Fed Rate Cut Decision Weighs on Markets |
Bitcoin (BTC) began the trading week down 3%, trading below $58,400, as the CoinDesk 20, a measure of the largest digital assets, was down 5%. BTC spent much of the weekend over $60,000 after favorable U.S. data fueled a rise late Friday. BTC exchange-traded funds (ETFs) listed in the U.S. recorded over $263 million in net inflows - the highest since July 22 - while ether ETFs recorded their second day of inflows since August 28 at $1.5 million. However, crypto markets slumped Monday as Asian exchanges opened for trading ahead of a key week where traders worldwide expect the Federal Reserve to make its first rate cuts in over four years. Polymarket bettors are giving it a 51% chance of a 50 basis points cut and a 48% chance of a 25 basis point cut, while only a 2% chance of no change. A pivot to lower borrowing costs has historically buoyed bullish sentiment among traders as cheap access to money spurts growth in riskier sectors. Ether (ETH) led losses among majors with a 5.5% drop over the past 24 hours, per CoinGecko data, to mark its worst one-day slide since early August. Cardanoâs ADA fell 5%, Solanaâs SOL lost 4%, while BNB Chainâs BNB emerged as the best performer with a 1.1% loss. |
DeltaPrime Drained by Attack |
Over $6 million worth of various tokens from wallets belonging to on-chain brokerage DeltaPrime were drained early Monday after an apparent private key leak, security researchers said on X. The project is offered on both Arbitrum and Avalanche blockchains. Mondayâs exploit impacted only the version on Arbitrum as of European morning hours - and users could not withdraw funds (on Arbitrum) due to how the utilization of borrowing and lending works on the platform. A hacker gained control of 0xx40e4ff9e018462ce71fa34abdfa27b8c5e2b1afb, which is the admin of proxies. Then, the hacker upgraded the proxies to point to malicious contract 0xD4CA224a176A59ed1a346FA86C3e921e01659E73, Fuzzland founder Chaofan Shou said on X. Proxy is a contract that interacts with users and other contracts. It contains minimal logic and serves as an intermediary, but it is a key part of any application, as a compromise can mean the entire protocol is impacted. |
The Takeaway: DAO Democracy |
By AndrĂ©s FĂĄbrega, Jay Yu, Amy Zhao, and Ari Juels: On July 28, 2024, the Compound community passed Proposal 289, empowering a group of five token holders to steal about $24 million from the CompoundDAO treasury. Of course the community didnât intend to authorize a big heist. And the âGolden Boys,â the group of token holders who advanced Proposal 289, probably werenât planning one. Proposal 289 sought to allocate 5% of the DAOâs treasury holdings for full-control by the Golden Boys in their yield-bearing vault. Many railed against the Golden Boysâ proposal as a prime example of a âgovernance attack,â manipulation of a DAOâs governance mechanisms with the goal of draining its treasury or consolidating control.
Whatever the Golden Boysâ intentions, how did this danger arise in Compound? Compound is one of the pioneers of decentralized token-voting, and has a Nakamoto coefficient of 17, making it more decentralized than many proof of stake networks. Yet the Golden Boysâ exploit exposes CompoundDAOâs chronic voter apathy. The Golden Boys were able to squeeze through Proposal 289 with less than 7% of the total COMP supply. Thatâs because many token holders simply chose not to vote â on average, only 51 out of Compoundâs almost 5000 members vote on on-chain proposals. But this isnât captured in existing metrics and notions of decentralization. Thatâs a big problem.
Popular metrics of decentralization today, such as the Nakamoto Coefficient or the Gini Coefficient, are token-centric. They focus on token distribution over addresses.
Consider two hypothetical DAOs, WhaleDAO and MinnowDAO. WhaleDAO has its tokens split evenly among 5 wallets. MinnowDAO, which has tokens evenly split among 100 wallets.
At first glance, we would assume that MinnowDAO is more decentralized than WhaleDAO. However, this conclusion doesnât consider who controls these wallets in the first place. Suppose, for example, that in MinnowDAO, 70 of those wallets are owned by one whale, i.e., the same person or group. Then MinnowDAO would actually be more centralized than WhaleDAO, with a single person controlling 70% of the voting power.
This is exactly what happened in the case of the Golden Boys. The groupâs âyesâ vote of around 700k COMP was split amongst dozens of wallets, with many of the individual wallets holding less than 25k COMP. Existing, token-centric metrics of decentralization, such as the Nakamoto coefficient, would lead us to falsely conclude that this vote was decentralized, since the âyesâ vote was split across multiple addresses.
Token-centric metrics miss other forms of centralization too. What if 80% of voters in a DAO have been bribed to vote for a proposal? Bribery doesnât affect token holdings, so a token-centric metric wonât capture it. The same is true for groupthink, collusion, and other ways in which control of a DAOâs governance may fall to a single or small number of groups.
To measure decentralization in a way that matches meaningful notions of the robustness of a DAOâs governance, thereâs a crying need for a new metric.
Read the rest. |
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