Weekly Report | FTX sues LayerZero Labs to recover $86 million; Paxos releases first PYUSD transparency report
ChainCatcher Exclusive Interview Token 2049 Title Sponsors: The market is maturing, and we are on the eve of Crypto Summer.Organizer: Cookies, ChainCatcher
"What Important Events Happened This Week (9.11-9.17)"
1. FTX Sues LayerZero Labs to Recover $86 Million Transferred on the Eve of Bankruptcy
According to The Block, FTX, led by CEO John Ray III, has sued LayerZero Labs to recover $86 million transferred just before its bankruptcy. The lawsuit primarily concerns a transaction made by Alameda Research's former CEO Caroline Ellison on November 7, 2022 (four days before filing for bankruptcy) with LayerZero Labs. As part of the deal, Alameda agreed to sell its 5% stake in LayerZero (valued at $150 million based on LayerZero's current valuation) in exchange for LayerZero waiving a $45 million loan to Alameda.
The lawsuit claims that at the time of the transfer, FTX was already insolvent, and thus these transactions constitute fraudulent behavior under bankruptcy law and should be voided. Alameda also agreed to sell 100 million Stargate (STG) tokens to LayerZero for $10 million. The company had paid $25 million earlier that year to acquire these tokens. The lawsuit states that despite LayerZero Labs' efforts to regain control of the tokens by reissuing them to a wallet controlled by the company, the transaction was never completed and was later halted due to the threat of FTX property litigation.
The lawsuit also seeks to recover the withdrawals made by LayerZero and its former COO Ari Litan from the FTX.com and FTX.US exchanges within 90 days before FTX.com and FTX.US filed for bankruptcy. During this period, LayerZero withdrew $21 million from its account on FTX.com, of which about $16 million was withdrawn by the end of October (before FTX's issues became widely known). The lawsuit points out that the remaining $5 million was withdrawn on November 7, the same day LayerZero made a repayment. Additionally, the lawsuit names Litan as a defendant and questions approximately $19.6 million withdrawn from the FTX.US account just days before FTX filed for bankruptcy, with these withdrawals made in Litan's name and that of his LLC Skip & Goose. (Source Link)
2. dYdX Releases 2023 Semi-Annual Ecosystem Report: v3 Trading Volume Totals Approximately $24.05 Billion, Cumulative Fees Reach $5.47 Million
According to ChainCatcher, the dYdX Foundation has released its 2023 semi-annual ecosystem report. As of August 29, the number of unique addresses holding DYDX tokens exceeded 46,100, with 70,700 unique addresses having earned DYDX at some point. As of August 29, the circulating supply of DYDX (including the community treasury) was 183,765,523 tokens, accounting for 18.38% of the total supply, with a cumulative balance of 65,806,458 DYDX in the community treasury. Currently, each Epoch accumulates an additional 3,595,890 DYDX.
Overall, the community voted to reduce the release of DYDX tokens and collectively increased the community treasury's 5-year allocation by 19.2%. Over the next five years, 24.2% of the token supply will be allocated to the community treasury and reward treasury. As of September 8, 2023, there have been 14 governance proposals for dYdX, including 10 off-chain snapshot votes and 4 on-chain votes, with the number of tokens used in each vote accounting for approximately 4.3% of the total supply. The dYdX Grants subDAO has approved 122 grants, with 98 grants completed, distributing over $4 million to 94 recipients.
So far in 2023, dYdX v3 has created 68,628 new accounts, with a total trading volume of approximately $24.05 billion and a daily trading volume of about $1 billion. Since 2022, the daily trading volume has been around $1.2 billion, with monthly trading volumes ranging from $20 billion to $43 billion. In 2023, there have been 61,624 active traders, with 4,300 weekly active users and weekly fees of about $1.5 million. Currently, the public testnet for dYdX v4 has a block time of 1.8 seconds, with over 2.9 million transactions and over 2.9 million bound tokens. (Source Link)
3. RootData Co-Founder: Currently, Web3 Trends Towards Four Areas: Social, Derivatives, RWA, and Intent
According to ChainCatcher, ChainCatcher and RootData held an offline exchange event today at 14:00 in Singapore themed "New Trends in Web3 and Changes in Investment and Financing." In the keynote speech, RootData co-founder QuanYu shared data on "Trends and Future of Web3 Primary Market."
According to QuanYu, in terms of financing, the number of financing rounds in the Web3 industry has been continuously declining, reaching a nearly three-year low. The frequency of financing in the social entertainment and DeFi sectors has significantly increased in recent months, while NFT, gaming, and CeFi sectors have hit a low point. In terms of project quantity, projects established after 2020 in the Web3 space are primarily from the United States, Singapore, mainland China, India, the United Kingdom, Hong Kong, and France. However, due to regulatory policies, the number and proportion of projects from mainland China have been declining since 2020, while the numbers and proportions from Singapore, India, the UK, and France have significantly increased. Additionally, in terms of sectors, Web3 currently trends towards four areas: social, derivatives, RWA, and intent.
It was introduced that RootData is becoming the most important channel for crypto enthusiasts to find quality early-stage projects, with over 9,000 crypto projects, 5,000 investors, and nearly 6,000 financing rounds recorded. It presents information visually and structurally through tags, ecosystems, and collections, covering basic project introductions, financing, teams, affiliated organizations, news, competitors, token prices, and models. In the future, RootData will integrate more on-chain and off-chain data types to further enhance data accuracy and readability, supporting users in querying, tracking, and managing various Web3 data, creating a data engine for the Web3 industry.
4. Arbitrum Community Proposes "Distributing 75 Million ARB Incentives to Ecological Protocols"
According to ChainCatcher, the Arbitrum community has proposed "Distributing 75 Million ARB Incentives to Ecological Protocols," aiming to meet short-term community needs by allocating ARB owned by the DAO to incentivized projects while ensuring a transparent consensus and distribution method. This plan spans two rounds of voting and provides incentives for eligible projects, aiming to fund incentives before January 31, 2024.
Additionally, Arbitrum has launched an ecosystem funding program, now open for applications, planning to allocate over 100 million ARB to builders in the Arbitrum ecosystem. Applicants can apply across four tracks: gaming, developer tools, new protocol ideas, education, community development, and events. Applications will close by 20:00 on September 19, 2023. (Source Link)
5. Paxos Releases First PYUSD Transparency Report: All Transactions Over-Collateralized
According to ChainCatcher, Paxos has released its first PYUSD transparency report, disclosing relevant unaudited data as of August 31, Eastern Time, including: total outstanding tokens of approximately $44.37 million; the current market value of collateral in U.S. Treasury repurchase agreements at $43.86 million, with a nominal position value of $43 million; the current market value of collateral in other cash deposits held by custodial institutions at approximately $1.5 million; and the current market value of collateral in total net assets at $45.36 million, with a nominal position value of $44.5 million.
Paxos stated that U.S. Treasury repurchase agreements are contractual arrangements between two parties, where one party agrees to sell securities to the other at a specified price and promises to buy back the securities later at another (usually higher) specified price. If the counterparty defaults, Paxos can liquidate the U.S. Treasury collateral to cover losses, and since all transactions are over-collateralized, the risk of loss is not considered significant. (Source Link)
6. Matrixport: Crypto VCs Face Huge Pressure to Return Funds to Investors, Potential Major Sellers of Altcoins Aside from FTX
According to ChainCatcher, Matrixport stated in a report that FTX plans to sell at least $3.4 billion worth of cryptocurrencies, which will put pressure on altcoins for the remainder of the year. FTX has expressed a desire to sell $200 million worth of crypto assets weekly, meaning FTX will continue to sell assets until the end of 2023.
Moreover, FTX is not the only major seller in the market. The report indicates that VCs are also under significant pressure to return funds to investors. Research director Markus Thielen stated, "These venture capital funds may still be significant sellers of altcoins." (Source Link)
7. Vitalik: The Future of Ethereum is to Truly Create an Independent Open Technology Stack
Vitalik Buterin stated at the Permissionless conference that crypto-based solutions have the potential to be more decentralized, privacy-protecting, and secure than the current Web2. He cited building blocks like ENS and POAP (or next-generation versions), or using zero-knowledge technology would be better (e.g., Gitcoin Passport).
Vitalik envisions a gradual process where new Web3 users create an Ethereum address initially controlled by familiar services like Gmail, but using account abstraction allows people to gain ownership as they are ready to use more crypto-native methods. (Source Link)
8. Ethereum Holesky Testnet Fails to Launch Due to Network Configuration Error, Will Restart on September 22 or 28
On September 15, the Ethereum Holesky testnet officially launched, intended to replace the current Goerli testnet. It aims to provide a larger-scale testing platform for client teams than the mainnet and allows home stakers to test their setups without risk. Previously, in the latest Ethereum core developer execution meeting, the Holesky plan included approximately 1.5 million validators.
On September 16, Galaxy's VP of Research Christine Kim stated on social media that the Ethereum Holesky testnet failed to launch due to a network configuration error, and developers plan to restart it soon.
Blockchain tools and infrastructure developer Nethermind stated on social media that developers plan to re-launch Holesky within a week, with a planned time of September 22. Additionally, Ethereum developer Michael Sproul revealed in a GitHub pull request that the expected re-launch time is September 28.
9. Hong Kong Media: Hong Kong Police are Investigating Whether JPEX Involves Criminal Elements
The Hong Kong Securities and Futures Commission clarified that no entities under the JPEX group have been licensed by the SFC, and they have not applied for a license to operate a virtual asset trading platform in Hong Kong.
According to Hong Kong media am730, the Hong Kong police have confirmed to the media that they have received notification from the SFC, and the Commercial Crime Bureau is following up and investigating whether the crypto exchange JPEX involves criminal elements. The media also reported that some users online have reflected that JPEX has limited withdrawal amounts to a maximum of 1,000 USDT stablecoins, and the withdrawal fee has been changed to 999 USDT, meaning retail investors can only withdraw a maximum of $1.
10. Data
- FTX (including FTX.com, FTX.US, Alameda) holds approximately $3.4 billion worth of crypto assets.
- MakerDAO has increased RWA assets by another $100 million, bringing total RWA assets to $2.713 billion.
- Friend Tech protocol fees have surpassed 5,000 ETH, ranking second in protocol fees.
- 74 addresses suspected to be associated with Grayscale have transferred approximately $962 million in ETH to new addresses.
- Four Chainlink non-circulating supply addresses have transferred out 18.75 million LINK (worth approximately $119 million).
"What Interesting Articles Are Worth Reading This Week (9.11-9.17)"
Another year of Token2049 has concluded. Compared to last year's collective disappointment of "Web3 Jews," this year's summit seems more peaceful and joyful. The industry has matured, and everyone in this ecosystem has less FOMO and impatience. Additionally, in industry narratives, ZK remains highly regarded, and RWA has almost become everyone's catchphrase…
2. "Friend.Tech In-Depth Report: Outbreak Journey, Airdrop Expectations, Death Spiral, and Top Ten Risks"
Folius Ventures released an analysis report on Friend Tech, pointing out that it currently refuses to engage with all VCs except Paradigm, and mining is the only way to gain exposure to the company, with an expected final FDV of around $1.5 billion; a continuous payment mechanism must be introduced, or a two-way death spiral will form; it is expected that, assuming sufficient execution capability, there will be at least two more peaks in DAU, and strong airdrop expectations will keep the heat up until January-February 2024; KEY faces a significant risk of being defined as a security and may ultimately not issue tokens.
With the cross-chain communication protocol Connext launching its token and initiating a large-scale airdrop, the latest landscape shifts and potential opportunities in this sector have garnered attention.
According to crypto data platform RootData, cross-chain communication projects have been among the most searched projects in the past week, and there has been no shortage of well-known investment institutions betting on this sector recently. It is particularly important to emphasize that cross-chain communication protocols have broader use cases and more composability than simple cross-chain bridge applications. Therefore, they have gained greater narrative space in the crypto market.
The cross-chain sector has always been highly competitive. In such a competitive environment, which cross-chain projects have gained favor from investors this year? What are their latest developments and airdrop plans? This article provides a brief overview.
Recently, the former chain game king Gala Games has once again attracted public attention due to a drama between its founders. Last Thursday, blockchain game developer Gala Games was reported that its two co-founders, current CEO Eric Schiermeyer and co-founder Write Thurston, have filed lawsuits against each other.
"But what I want to say is that people should try to create greater ideas rather than repeat existing ones. The best analogy I've heard is that when people discovered cement, everyone focused on building bricks with cement, and then one person thought, I can build skyscrapers. They came up with a way to combine reinforced concrete and architecture, which no one had thought of. The new tool is cement. You just need to figure out what a skyscraper is and then go build it."
In this episode, a16z crypto talks with Anatoly Yakovenko, co-founder and CEO of Solana Labs, who previously worked at Qualcomm as a senior engineer and engineering manager.
6. "How Much Debt Can FTX, Holding $3.4 Billion in Crypto Assets, Repay?"
According to the latest court documents dated September 10, as of August 31, FTX holds a total of $3.4 billion in crypto assets, mainly including $1.16 billion in SOL, $560 million in BTC, $192 million in ETH, $137 million in APT, $120 million in USDT, $119 million in XRP, $49 million in BIT, $46 million in STG, $41 million in WBTC, and $37 million in WETH. These ten major assets account for 72% of the crypto assets sorted by FTX.
Today, BitMEX co-founder and former CEO Arthur Hayes delivered a speech titled "Money Printing, AI, and Crypto: Fueling an Epic Bull Market Mania" at Token2049 in Singapore.
Arthur Hayes discussed debt and AI from a macro perspective, then narrowed down to a micro perspective, briefly explaining why he is very fond of Filecoin. He believes the next bull market may start in early 2024, which will be the largest bull market in both the cryptocurrency and risk asset sectors since World War II and the Great Depression.
Pantera Capital published an article explaining its practice of assessing the crypto market through fundamentals and the macro environment, stating that several major background catalysts are about to arrive, which may have a significant impact on the digital asset market, the most important being the potential approval of a spot Bitcoin ETF.
9. "Can Binance Launchpad, Dominating for Over Four Years, Continue to Shine?"
Since its launch, Binance Launchpad has become the most accessible platform for generating potential hundredfold or even thousandfold coins. As of September this year, the Launchpad section has launched 31 cryptocurrency projects, and "grasping the Launchpad" has gradually become a guiding principle for users. Binance's LPD products have always led with high-quality projects and stable wealth creation effects. What strategic intentions lie behind its wealth effects in this bear market? ChainCatcher will explore the implications and dilemmas behind Binance Launchpad's wealth effects and the optimization and improvement of future systems.
10. "LD Capital: Exploring the Interconnection Between Web2 and Web3 with TON Backed by Telegram"
The TON chain is derived from the Telegram Open Network blockchain platform. The Telegram Open Network was initiated by Telegram in 2017 but had to cease operations due to SEC allegations. This article is LD Capital's interpretation of the framework, data, and ecological projects of the TON chain.
