The Web3 Rewind

A handful of the most interesting and current stories in the blockchain/web3 world not published on DeCential this past week in case you missed them

Hello and welcome back to the Web3 Rewind! Per usual with the industry, lots has happened this past week so without further adieu, let’s dive into this week’s news.

The Latest

The desire to find patterns among dissimilar actions or unrelated events is a deeply-rooted human trait. So it was this week, as I looked over what we’re publishing in the newsletter. I wanted to find some kind of sense in the news, a signal through the noise, a beacon in this bear market that seems to only be deepening.

Here’s one — the continuing failure of protocols and legacy corporations that eschew the founding principles of decentralization and community-led initiatives that are the bedrock of crypto. Mark Zuckerberg can try all he wants to claim the metaverse as the newest plaything of his destructive Facebook behemoth. The glorious irony is that not even his own employees will use it, let alone anyone in the blockchain world with a shred of self-worth. Next is Binance, which shut off its blockchain to stop a hack. Read that again. It shut off its Binance Smart Chain. Blockchains aren’t meant to be shut off, of course, and Binance will never succeed in the long run against chains such as Ethereum that would rather go extinct than have someone flip the off switch.

We may be in a bad downturn with regulators seemingly up in everyone’s business. But staying true to crypto’s founding ethos — to offer an alternative to the centralized, top-down approach of finance, culture and commerce — should be seen as reward enough even if everyone’s bags are a bit light at the moment. — Matthew Leising, Editor in Chief, DeCential Media

No shit Sherlock dept.

It's hard to see what exactly is on the horizon for Zuck’s Horizon Worlds these days, as the Meta’s (formerly Facebook) virtual reality platform is off to a rough start. With the project being subject to many bugs, a cumbersome user experience, and a lack of internal use, Meta has moth-balled the project until the end of 2022, in order to thoroughly work out all of the kinks and fine-tune the product.

While Meta’s approach has been to spend and spend big on the Metaverse thus far, the fruits of that labor are not yet so clear. Many of the web3 industry veterans have mixed feelings about the corporate takeover of the metaverse and are dubious as to their effectiveness, especially in a space that is still so fledgling in its development. Ethereum’s Vitalik Buterin has even been quoted saying, “So anything Facebook creates now will misfire.” — Parker Dresdow

Quick Bits

BNB Chain Halts After 'Potential Exploit' Drained Estimated $100M in Crypto

• In what presents itself as a potential textbook example on how to deal with bad actors, the Binance Smart Chain (BSC) was paused last week after “irregular” activity.

• While the hacker was almost able to nab a little over $500M, the quick reaction of Binance to “halt” the BSC resulted in only $100M being taken. While this may be a “win” for Binance in terms of mitigating the loss, what it also appears to be is a red flag in terms of decentralization and the fact that the BSC was able to be stopped so quickly. The Binance community will still have to decide on what their response to the hack will be, and how they will treat the funds that have been stolen.

Bored-Ape Creator Yuga Labs Faces SEC Probe Over Unregistered Offerings

• The SEC is making waves yet again in the crypto space as they investigate Yuga Labs. The agency is exploring whether the company's prolific NFT offerings and recent ApeCoin issuance are similar in nature to stocks, and therefore need to follow U.S. securities laws.

• As of now the inquiry is broad and has not produced any assumptions of “wrongdoing,” but is yet another example of the SEC drilling down into areas in the crypto market that have gained media attention or celebrity endorsement. The guidelines for determining whether or not any of Yuga’s offerings can be classified as security offerings come from regulations originating in 1946, and begs the question as to whether or not these sorts of probes should be put on hold until newer and more timely regulations are put into place.

MakerDAO Votes To Allocate 500M DAI Into US Treasuries, Bonds

• As we all know by now, the crypto market is oftentimes subject to the same economic pressures and needs as traditional markets. Specifically, the need for diversification amongst stablecoin treasuries is becoming more apparent. MakerDao’s latest move is a prime example, demonstrating the need to diversify and hedge itself from the pending economic turmoil.

• Via executive proposal MIP65, the MakerDao community has voted to deploy 1 million DAI to purchase a variety of short-term Treasuries and investment-grade corporate bonds. According to Blockworks, Monetalis Clydesdale, a “Defi asset advisor” will be rolling out the 1 million DAI to Sygnum and BlackRock for the asset purchases.

$100M drained from Solana DeFi platform Mango Markets, token plunges 52%

• The greater Solana ecosystem has been struck by hackers again and the latest target is DeFi exchange Mango Markets. Cointelegraph reported that the hack attacked Mango Market’s lending protocols by “manipulating the value of the exchange’s price oracles and their Mango (MNGO) native token collateral, then taking out “massive loans” from Mango’s treasury.” The attack relied on counter-trading on other exchanges as well. This implies that “the issue was NOT with Solana oracles. Prices were directly manipulated on the exchanges themselves, and oracles simply reported the price as intended.” per a post on Twitter by OtterSec, which was investigating the matter.

• The hacker is currently in discussions with the community via proposal, and is negotiating the return of some of the funds. USDC, mSOL (a Solana staking token), and SOL accounted for the majority of the roughly $100 million that was drained, with USDC accounting for $50 million.

Latest Podcast

DeCent People Podcast With Ben Simon of FreeWill’s Crypto for Charity

In the latest DeCent People podcast, Ben Simon talks about his experience as Director of NFT and Crypto Community Giving for FreeWill, where he's trying to entice the web3 world to give billions to charity. He was an organizer for Greenpeace, though he never rammed any whaling boats, and worked for U.S. President Barack Obama where he was director of new media campaigns for the Democratic National Committee. He's also an ardent fan of crypto and generative art NFTs.

You can download and subscribe to the podcast here on Spotify, Apple Podcasts or Amazon Music and Audible.

Good Podcasts Outside DeCential

Charlie Shrem speaks with Derek Barrera, founder and CEO of Steer Protocol, a platform for cross-chain automated strategies with secure on-chain executions with minimal fees to users, providing maximal yield on earned fees for participating in the protocol.

And last but not least

U.S. Treasury fines crypto exchange Bittrex $29 million over years-long sanctions violations

According to The Block’s research, Bittrex has been accused by the US Treasury of aiding “$263,451,600.13 in sanctioned transactions between 2014 and 2017.” While Bittrex had prevented some individuals who had sanctions levied against them from trading, per the US Treasury, they did not properly notify the Financial Crimes Enforcement Network (FinCen) of activities that would typically be identified as part of standard risk prevention programs.

As part of the broader accusation, The Office of Foreign Asset Controls (OFAC) accused Bittrex of allowing transactions from the Crimea, Iran, and Cuba to go through. The total amount of fines between the US Treasury and OFAC is $54 million. Despite this massive sum being levied against Bittrex, the exchange will end up paying around $29 million as a settlement. To date, these are the largest fines against an exchange and demonstrate yet again the growing importance (especially in the eyes of financial regulators) of know your customer regulations. — PD

Out of the Ether: Special NFT Edition

Have you read the definitive history of Ethereum? No? Well then get your special edition of Out of the Ether while you can. There are only 1,000 that were printed and each copy is an NFT that can be registered on the Lukso blockchain’s Universal Profile protocol.