https://blockworks.co/news/jito-airdrop-value

Jito, the Solana-based liquid staking protocol, opened an airdrop for users to claim 90 million of its JTO governance tokens starting Thursday morning — an amount worth around $165 million at the time of publication. 

Jito sent tokens based on how much of its JitoSOL liquid staking token the addresses held and lent to DeFi protocols, alongside rewards for validators and MEV searchers. According to the protocol’s developers, the JTO tokens will be used to govern the DAO and treasury for the staking platform. 

Jito lets users stake their Solana (SOL) in exchange for the protocol’s JitoSOL token, which can then be traded or used as collateral — similar to how Lido’s staked ether (stETH) product works. 

Jito and a protocol named Marinade are essentially tied as Solana’s largest liquid staking providers, with around $425 million each in total value locked (TVL) according to DeFiLlama. For context, Lido boasts a TVL of $21.45 billion. 

Read more: Jito’s JTO soars hours into airdrop, analysts say altcoin rally has steam left 

Thanks to the airdrop, Jito’s DAO now has a governance token — and $490 million Jito (JTO) in its treasury. 

Based on Jito’s “points” system for allocating the airdrop, Dan Smith from Blockworks research wrote on X that moving $40 of JitoSOL around could have netted users nearly $10,000 in JTO. 

On the whole, the Jito team followed on a well-trodden path of upstart protocols airdropping governance tokens to their users. 

Other examples include the blue-chip DeFi protocol Uniswap’s airdrop of 150 million of its UNI governance token to users in September 2020, worth over $900 million at today’s prices. A large majority of the UNI airdrop recipients ultimately sold their tokens, but the wealth effect may have still fueled Uniswap development. Syncracy Capital’s Ryan Watkins likened the UNI airdrop to a stimulus check at the time. 

The JTO drop is drawing similar comparisons as potential fuel for a recent resurgence in activity on Solana. The token recovered from its association with FTX to more than quadruple in price over the past year. Solana’s NFT market has seen positive signs, and Solana decentralized exchanges churned $7.3 billion in volume in November, by far their busiest month ever. 

Wallet owners have 18 months in which to claim the JTO airdrop. This would allow users to defer their claims — and any accompanying tax implications — into 2024, Ryan West from Blockworks Research wrote about the airdrop. 

Despite the long claim window, 54 million out of 90 million of the newly available tokens, or 60%, were claimed within four hours of the airdrop, according to a Flipside Crypto dashboard. 

JTO whales appeared to stay put in the wake of the airdrop — the same dashboard shows only three of the 20 largest recipients sold their tokens. 

Another Solana DeFi protocol named Jupiter announced a token last month, saying 40% of the supply would be airdropped to the community.

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https://blockworks.co/news/bitcoin-staking-protocol-babylon

Babylon has raised $18 million to develop a protocol that lets users put up bitcoin to secure proof-of-stake blockchains.

Polychain Capital and Hack VC led the round, which also drew participation from Framework Ventures, Polygon Ventures, and OKX Ventures.

Bitcoin’s continued price run has coincided with growing dry powder deployment in mining companies. But Babylon’s raise points to investor interest in something beyond funding GPUs: finding new use cases for bitcoin.

Babylon originated in a blockchain lab at Stanford. It spun up a novel way to stake bitcoin as an economic security token on blockchains that use proof-of-stake to reach consensus. Proof-of-stake chains typically use their native tokens for staking — ether secures the Ethereum network, for instance — which can compromise security on chains where the native token isn’t sought-after. 

Read more: Let’s talk Bitcoin staking: Babylon’s litepaper

Babylon’s staking service joins bitcoin ordinals as an attempt to put bitcoin to use aside from its being a store of value. A vocal segment of bitcoin’s community contest novel use cases for bitcoin, but Babylon founder David Tse believes there is demand for his product among the asset’s holders.

“I think a good number of them do want to participate in a yield-generating opportunity, and those are the ones we are targeting. So for those folks who really believe bitcoin is just gold, then we just have to, you know, leave them with that belief,” Tse said.

Tse said Babylon will hit testnet in January 2024. The protocol would ideally like to go to mainnet by the time of bitcoin’s “halving,” when bitcoin rewards given to miners are cut in half, in April. Tse noted the mainnet deployment depends largely on the outcome of security audits on Babylon’s testnet. 

“Several” bitcoin miners participated in the funding round, Tse said, though he declined to disclose Babylon’s valuation.

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https://blockworks.co/news/a16z-2024-ideas-list

The tech-focused venture capital firm Andreessen Horowitz released its “big ideas” list for 2024. For the second year in a row, the list was capped off with insights from a16z’s crypto arm.

A16z crypto’s set of big ideas show multiple references to artificial intelligence (AI), gaming and digital security. The 2024 list contains no mentions of “zero knowledge” technology; a stark contrast to last year’s list, where it was the highlight of the first two points.

A group including general partner Ali Yahya wrote about the potential for crypto to “democratize” AI innovation. Decentralized markets can let anyone contribute and be compensated for working on artificial intelligence models, moving the training of the extremely powerful tools beyond the hands of just a few tech giants, they wrote. 

Read more: Crypto, please leave AI alone

Investing partner Carra Wu also wrote about AI, arguing that the advent of AI-generated video games will create a need for guarantees that game models are uncorrupted and neutral.

“The most important thing that crypto offers is such guarantees,” Wu said.

General partner Ariana Simpson said “play to earn” games are becoming “play-and-earn,” meaning users can play crypto-enabled games without financialization clouding the experience.

Read more: Play-to-earn as we know it is dead: Long live SocialFi

In the realm of security, chief technology officer Eddy Lazzarin said cryptographically-generated “passkeys” can make website and app sign-ins more secure. Furthermore, crypto projects are making formal verification, or the use of mathematical models to check a program’s security, easier for smart contract developers, writes research engineering partner Daniel Reynaud. 

Meanwhile, general counsel Miles Jennings made reference to his recent essay on how Machiavellian principles can improve DAOs. 

Read more: DAOs should learn from Machiavelli, says a16z crypto’s Jennings

Andreessen Horowitz has made sizable investments in several crypto projects including Yuga Labs, Solana and Uniswap. However, its exuberance in crypto investing seems to have cooled this year. The firm’s thirty largest crypto-related fundraises all came before 2023, according to funding aggregator CryptoRank.

Some crypto fans were rankled when Marc Andreessen’s “Techno-Optimist Manifesto” from October contained zero references to crypto.

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https://blockworks.co/news/iran-crypto-donations-regime-change

“Iran Unchained” released a streamlined version of its platform, built for sending crypto to anti-government activists in Iran where compliance laws make donations difficult.  

The NGO’s “V2” site is a fork of crypto fundraising platform Gitcoin that lets donors outside the US sidestep fundraising limits and send money directly to activists’ wallets. The site’s founder is trying to keep the funds obscured from Iran’s Islamic Republic while also proving to the US Treasury that its crypto donations aren’t funding illicit causes.

Iran Unchained was started in January 2023, a few months after a young woman’s death in police custody sparked protests against Iran’s Islamic Republic. The NGO organizes requests for grants from Iranians with the overarching goal of overthrowing the Islamic Republic and installing a secular government in its place. 

Soleimani’s fundraising platform combats what he calls “overcompliance” in the fiat realm, where banks and funding platforms shut down compliant donations to Iran to avoid liability altogether in dealing with the OFAC-sanctioned state. An anti-censorship group called Free Internet for Iran was yanked from GoFundMe for opaque reasons before turning to Iran Unchained, Soleimani said.

Read more: Maui wildfire recovery gets the spotlight thanks to charitable NFT collection

The NGO still has to follow compliance laws itself though. Iran Unchained is registered as a nonprofit in Wyoming and files quarterly OFAC reports giving assurance it’s on the right side of sanctions laws.

“The logistical challenge for Iran Unchained is how to send money securely to grantees and beneficiaries inside of Iran while protecting them from the Islamic Republic and while providing enough documentation to the United States Treasury to convince them that we’re not sending money to terrorists,” Soleimani said. 

Funds have gone towards internet provision, humanitarian aid, NFTs from Iranian artists and sending Iranian developers to Ethereum conferences. 

Iran Unchained grants are voted on by a decentralized autonomous organization (DAO) made up of Iranian friends of Soleimani. Grants that pass governance are listed on the NGO’s homepage alongside crypto wallet addresses where donors can send funds directly. 

Cross-border aid is a popular use case for crypto. Ether poured into Ukraine’s crypto wallet following Russia’s 2022 invasion, and Crypto Aid Israel raised $185,000 in a little over a week following attacks on Oct. 7.

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https://blockworks.co/news/jack-harlow-mith-fan-engagement

Jack Harlow concert-goers scanned QR codes on their phones before entering the multi-platinum rapper’s show on Monday in Lexington, KY. 

What they may not have known was how their entry had been facilitated by blockchain tech.

MITH is a Polygon-based fan engagement startup that partnered with Harlow to offer on-chain VIP tickets for the rapper’s recent mini-tour in Kentucky. The company created on-chain records of attendance at the shows, but its founders told Blockworks they are taking a “mullet” approach to get users on board — Web2 in the front, Web3 in the back. 

In the future, MITH will launch platforms for creatives to monetize fan interactions and for fans to accrue rewards and collectibles — with the on-chain pieces happening behind the scenes. 

Incubated by Range Media Partners in 2022, MITH came out of stealth in late November after Jack Harlow debuted his MITH-powered website where fans could purchase premium experience tickets for his upcoming slate of shows. 

Read more: UK sports committee wants football to tackle fan tokens, NFTs

MITH validated the tickets on-chain with Tokenproof, an on-chain ticketing protocol, so fans had the option to add their ticket to a crypto wallet but only needed to scan a QR code to enter. 

MITH didn’t pay Harlow for his use of the platform, the company’s co-founders told Blockworks, saying he “wanted to advise on the future” of the product and “have upside.” 

Soon after Harlow’s website went up, Axios reported that MITH raised $3.5 million in seed funding with participation from Warner Music Group, Winklevoss Capital and the NEAR Foundation, among others. 

MITH initially built a more complex platform for Harlow before the rapper asked the company to scale back the “Private Garden” website to focus just on tickets, Sanchez said. 

A demo of the scrapped site, which is more in line with MITH’s broader vision for the platform, shows a place for Harlow or other creators to make membership tiers. Creators could gate live streams or chat rooms depending on how much fans pay, for instance. Purchasing behavior and fan engagements all go on-chain, but the platform otherwise bears a Web2 look.

“Jack is creating smart contracts back here without even knowing it,” Sanchez said of the tiered membership site. 

MITH has a post-FTX sensibility, co-founder Matty Ayers said, focusing on the technological possibilities unlocked by blockchain without letting lay perceptions of crypto scaring users off. 

Read more: Pro sports teams piling on to Chiliz fan token opportunities

“We create a wallet for you, and we don’t even tell you,” Ayers said. “If you focus on ‘wallet,’ that has a certain feeling. If you focus on ‘account,’ like this is my profile, it’s a completely different feeling.”

Emilia Clarke and Halle Berry are currently advisors to the project alongside Harlow, and Sanchez said MITH plans to open up “self-serve” to more creators in the first half of 2024. Ayers said MITH is also working on “co-creation” where fans can create derivative works started by popular creatives, and monetization and intellectual property rights are handled via blockchain. 

MITH’s founders believe the best uses of blockchain tech for fan engagement will ultimately emerge down the road.

“We’re meeting with some heavy hitters in the digital identity space that are tied to [layer-1s] and we’re saying, ‘are you guys going to jump into the future with us?’ It’s not gonna be about speculative assets. It’s gonna be about participation and playing in a playground and testing tools and assumptions,” Ayers said.

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https://blockworks.co/news/optimism-vc-backed-project-funding

As voting winds down on Optimism’s public goods funding, backlash is emerging against projects that are set to receive the public goods funding.

Critics argue that projects with solid financial backing should not receive these tokens. Instead, they are advocating for their distribution to contributors without financial backing.

The Optimism Collective is retroactively disbursing roughly $53 million in OP tokens to reward people and projects who have contributed “public goods” to the popular layer-2. Voting on applicants ends Dec. 7.

The ongoing squabble is the latest complaint about DAO treasury spending, and comes as the crypto market stares down another potential bull run. 

Read more: Crypto’s most hated rallies may have confirmed the bull market 

In crypto, public goods are services projects or individuals provide for free to chains or ecosystems — think Ethereum’s MEV relayers or protocols that allow forks of their code. 

The Optimism Collective is the governance and community arm of Optimism. It is giving out 30 million OP, worth around $53 million at current prices, to those behind public goods in the third round of its retroactive public goods funding (RPGF). 

Some Optimism community members want the layer-2’s RPGF to prop up those who work for free while excluding public goods providers who have other funding sources — particularly venture capital money. 

For example, Subli is the pseudonymous creator of the Optimist newsletter, which publishes Optimism-related news for 10,000 subscribers. Subli also said he has done “hundreds of hours” of unpaid business development on behalf of the Optimism Foundation, the company supporting the Optimism Collective. With a different full-time job and two young sons, Subli said to Blockworks in a Telegram message that Optimism takes up all of his free time. 

Subli’s newsletter received around 19,000 OP from the last round of RPGF, but this time, he doesn’t have enough votes.

“I think that projects that are VC funded should not qualify for RPGF funding. Once you accept VC dollars, with their implicit expectation of a financial return, you’re not a public good,” ENS lead developer Nick Johnson wrote on X. 

Among the most criticized RPGF applicants has been the Web3 development platform Alchemy. Alchemy has raised over $500 million over multiple funding rounds with participation from the likes of Andreessen Horowitz, Pantera Capital and Lightspeed Venture Partners. 

“Our application focuses on the public work we’ve done to bring the benefits of Account Abstraction to the OP Stack and the EVM ecosystem…the scope of the grant application does not extend to all of Alchemy, as some have suggested, and complies with all of Optimism’s application requirements on their stated principle of ‘impact = profit’,” Noam Hurwitz, the engineering lead at Alchemy, told Blockworks.

The Optimism Collective’s documentation affirms that VC-backed groups are eligible for funding, saying that voting should be solely based on potential impact to the collective.

A protocol designer at Eigenlayer pseudonymously named kydo said on X that asking Alchemy and other well-heeled projects to withdraw from RPGF is “​​anti-competitive and against the spirit of crypto.” They added that funds “should be allocated to the most promising ideas.”

As altcoin prices rise ahead of a possible bull run, requests for native token-denominated DAO funds have been scrutinized in general. 

Community backlash brought about the defeat of a proposal for Blockworks Research, Gauntlet, and Trail of Bits to receive over $2 million-worth of Arbitrum (ARB) tokens to manage governance on the Arbitrum DAO.

Two weeks later, the co-founders of Bankless burned their BANK tokens amid controversy over a 1.82 million ARB education and onboarding proposal made on Arbitrum by BanklessDAO.

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https://blockworks.co/news/binance-retains-sports-partnerships

Soccer star Cristiano Ronaldo faces a class action lawsuit in Florida for his allegedly “deceptive and unlawful” promotion of Binance, which recently settled with the US Department of Justice.

But Ronaldo appears unbothered, posting on X this week that he’s “cooking something up” with the exchange.

Ronaldo’s continued involvement highlights a larger trend: Binance’s long list of sports partnerships seem to remain intact despite the Department of Justice’s actions against the centralized exchange and its former CEO, Changpeng Zhao. 

Binance has had several sports partners, particularly in soccer, including as Argentina’s fan token provider during its World Cup run. Binance ended its partnership with Argentinian soccer this summer.

Pet Berisha, author of the “Sporting Crypto” newsletter, told Blockworks that Binance’s deals are likely safe because, unlike with FTX, the exchange remains solvent and can still meet its payment obligations. 

Because of the demographic overlap between sports fans and crypto users, Berisha said he expects crypto projects to continue their sports advertising spending, though he expects Binance “will refrain from spending until the noise dies down here and they’ve built up a cash reserve.”

‘Okay Bears’ go live at ZARA

The Solana NFT collection Okay Bears has a set of shirts with its branding available in 1,149 ZARA stores worldwide. 

The shirts are only listed in kids’ sizes on ZARA’s website. Okay Bears and ZARA did not return requests for comment about the specifics of the partnership. 

The partnership follows on Pudgy Penguins’ move to bring toy versions of its NFTs to 2,000 Walmart stores in September. 

Solana NFT volumes hit their highest point in over a year on Wednesday, according to @punk9059 on X.

One interesting stat:

• OpenSea, the embattled NFT marketplace, earned less than $2 million in fees in October, down from a high of $387 million in January 2022, according to a Dune dashboard. 

Also of note:

• Magic Eden is rolling out a wallet to pair with its cross-chain NFT platform. The wallet works with Bitcoin, Solana, Ethereum, and Polygon.
• On-chain collectible platform Zora introduced Notes, where users can mint bits of text, and is now allowing users to get started on the platform with just an email address rather than a crypto wallet.

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https://blockworks.co/news/bitcoin-miners-bag-cash

Bitcoin mining firms are deepening their financial war chests as speculation arises around potential spot bitcoin ETF decisions early next year.

Twitter co-founder and longtime bitcoin bull Jack Dorsey led a $6.2 million seed round in Mummolin, the company supporting the launch of a decentralized bitcoin mining pool called OCEAN. 

Meanwhile, the Canadian mining company Bitfarms closed a private $60 million share sale with US institutional investors. 

OCEAN is a non-custodial mining pool, meaning miners can lend computing power with ASIC interfaces and receive rewards directly from the bitcoin network without the company taking custody of the mined bitcoins. 

“It went back to the principle of protecting bitcoin,” Dorsey said at a live event this week promoting OCEAN. “We need the people to have more independent, sovereign options [to mine bitcoin].”

It is Dorsey’s second round of 2023, joining his seed investment in bitcoin “voucher” provider Azteco in May. 

Read more: Twitter co-founder Dorsey leads $6M investment in bitcoin voucher service

Bitfarms operates mining facilities in Quebec, the US state of Washington, Argentina, and Paraguay. The day before the private placement closed, the company announced the purchase of 35,888 T21 bitcoin miners and said the high-energy miners come at the most attractive price point the company has seen since 2020. 

November was a busy month for bitcoin miners on the funding side. Abu Dhabi-based Phoenix Group raised $370 million via an initial public offering ahead of its listing on the emirate’s ADX stock exchange. Northern Data Group secured a $623 million debt financing facility from Tether Group, the company behind USDT, partly to scale its bitcoin mining operations. 

Warner Music Group invests in Web3 fan engagement platform

Warner Music Group joined a group of investors including CMT Digital, Winklevoss Capital, and the NEAR Foundation to raise $3.5 million for a startup blockchain fan engagement platform named MITH, as Axios reported.

MITH allows creators to make tiered membership platforms for fans. MITH members can store collections and rewards on their profiles. The rapper Jack Harlow’s “Private Garden” membership platform launched earlier this month on the Polygon blockchain, according to Axios. 

MITH’s raise is the latest funding round for a platform using Web3 monetization tools to connect celebrities with their fans. Modhaus, a platform for K-pop fan engagement, raised $8 million in November. 

Other notable fundraises

• The cross-chain protocol Wormhole raised $225 million at a $2.5 billion valuation. Tier-1 investors in the round were Coinbase Ventures, Multicoin Capital and Arrington XRP Capital, per CryptoRank. 
• Coinchange raised $10 million for its platform that simplifies DeFi yield and compliance for financial businesses. 
• Decentralized physical infrastructure (DePIN) provider Grove raised $7.9 million with participation from Placeholder VC, Avon Ventures, and Druid Capital. DePIN refers to computing infrastructure, like wireless networks or file storage, that isn’t controlled by a centralized entity.

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https://blockworks.co/news/grayscale-hires-managing-director

Crypto asset manager Grayscale hired John Hoffman to be its managing director and head of distribution and partnerships. 

Hoffman spent the past several years at Invesco, where he most recently headed up the firm’s ETFs and Indexed Strategies division in the Americas. 

Hoffman joins the firm as some speculate that resolution in Grayscale’s yearslong attempt to offer a spot bitcoin ETF could come soon after the new year. 

Grayscale is one of several firms promising to offer a spot bitcoin ETF pending regulatory approval but is uniquely positioned in that its Grayscale Bitcoin Trust already holds $23 million assets under management.

Read more: Grayscale sees positive catalysts on the horizon for bitcoin

The traditional finance hire is par for the course at crypto-focused Grayscale. CEO Michael Sonnenshein was an analyst at J.P. Morgan before joining the firm a decade ago, and David LaValle, global head of ETFs, has Nasdaq and indexing firm Alerian on his resume.

In a Grayscale Q&A announcing his joining the company, Hoffman said he first bought bitcoin via Coinbase in 2013 but has been “emotionally invested in its innovation for much longer.”

New faces in the C-suite

Argo Blockchain and Bastion both tapped senior executives this week.

The crypto mining firm Argo named Thomas Chippas CEO. Chippas’ lengthy resume includes stints as CEO at CBOE Digital and Citadel Technology and managing director at Citigroup and Barclays. 

Caroline Friedman left her post as chief of staff at a16z Crypto to become chief operating officer of Bastion. Friedman joins the startup founded by fellow Andreessen alums and focused on easing the onboarding of businesses into crypto custody and trading.

Other notable hiring news

• Applications for crypto jobs are “only mildly picking up this year” especially compared to the increase in applications as the market took off in 2021, Raman Sha from Crypto Jobs List said.
• Former Coinbase chief compliance officer Mike Lempres joined the board of directors at MoonPay.
• Ben Caselin became chief marketing officer of South African crypto trading platform VALR. Caselin was most recently chief strategy officer at MaskEX.

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https://blockworks.co/news/dydx-unlocked-tokens-supply

The perpetuals trading platform and layer-1 blockchain, dYdX, is set for a significant event on Friday. Founders, investors, and other key figures involved with the project will gain access to about 150 million previously locked DYDX tokens, currently valued at around $490 million. This unlocking event will increase the circulating supply of DYDX by roughly 80%.

Traditional wisdom says unlocks are bearish, since supply suddenly rises while demand stays static — but DYDX’s price rose 30% this month and open interest grew after dYdX’s chain went to beta mainnet on Nov. 14. 

Ultimately, some of the unlocked tokens will be difficult to sell, and doing so may not be the most profitable strategy for investors, who can stake DYDX for USDC rewards and hedge their bets with short positions. 

A majority of the unlocked tokens will go to past investors in dYdX, which has raised $87 million over four funding rounds, according to Crunchbase. 

Read more: dYdX tokenomics scrutinized as staking goes live

The tokens to be unlocked are also partly allocated in an Ethereum-native version of the token (ethDYDX). There is a one-way bridge for ethDYDX to the dYdX chain, meaning that if investors bridge their tokens to dYdX, they cannot move the tokens back to Ethereum. 

Some of the unlocked tokens will also be native DYDX and wrapped ethDYDX, the dYdX foundation told Blockworks.

Native DYDX holders would have trouble selling their tokens en masse, as DYDX does not currently trade on centralized exchanges. The asset is listed on Osmosis, a decentralized exchange in the Cosmos ecosystem.

However, according to data from CoinGecko, a mere $1600 worth of DYDX sales would lead to a 2% drop in its price. Consequently, attempting to sell large tranches of DYDX tokens would likely result in considerable price slippage, adversely impacting the asset’s value.

Regardless of whether the tokens are sellable, Matt Fiebach from Blockworks Research pointed out that DYDX perpetual futures are actively traded. Locked token holders can already hedge their exposure to the token with short positions, which he says is likely a more profitable strategy than dumping the tokens post-unlock.

Native DYDX can also be staked on the dYdX chain for USDC rewards after trading was enabled earlier this month. 

Representatives from dYdX investors a16z and Electric Capital declined to comment on whether the firms would stake their unlocked tokens. Multiple other dYdX investors did not return requests for comment. 

Other layer-1s that underwent token unlocks this month saw mixed results. Sui’s (SUI) price rose following its Nov. 3 unlock, while Aptos (APT) and Avalanche’s (AVAX) tokens slid following unlocks on Nov. 12 and 24, respectively.

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https://blockworks.co/news/sofi-shutters-customers-migrate-holdings

SoFi, an online banking platform, has announced that it is discontinuing its cryptocurrency trading service. Customers were notified of this decision via an email sent on Wednesday morning.

The company’s existing crypto customers will have the opportunity to migrate their assets to Blockchain.com, known primarily for its digital wallet services.

SoFi, a high-yield savings account provider-cum-investing platform, first offered crypto trading in 2019. Until recently however, it has been managing its operations under a two-year conditional approval granted by the Federal Reserve.

The San Francisco-based bank appears to be the first domino to fall following the Fed’s “novel activities supervision program” introduced over the summer. This program imposes stringent requirements on how banks interact with emerging financial technologies, including cryptocurrencies. 

A SoFi spokesperson said the decision to end SoFi’s crypto services was spurred by the Federal Reserve’s regulatory guidance for its digital asset business following SoFi’s approval as a bank holding company. SoFi found it increasingly unlikely their crypto business would be fully approved after seeing the Fed’s crypto requirements grow more strict over time, the spokesperson said.

Read more: SoFi says ‘no assurance’ of meeting Federal Reserve crypto standards

SoFi customers have until Dec. 19 to shuttle funds to Blockchain.com, but state regulations will force some out of their crypto investments entirely. 

New York residents will be forced to sell all their SoFi crypto, while residents in a smattering of other states including Texas have to sell a set of tokens including DeFi-natives AAVE, COMP, MKR, and UNI. 

A spokesperson for Blockchain.com said the company saw “tens of thousands” of SoFi customers agree to migrate their crypto to the platform immediately following the announcement. Blockchain.com expects that the majority of SoFi’s crypto clients will choose to migrate, as selling their holdings could result in tax liabilities.

Blockchain.com announced a $110 million funding round, the fourth-largest crypto raise in 2023, earlier this month.

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https://blockworks.co/news/circle-moves-usdc-to-cosmos

Circle has moved its cross-chain transfer protocol (CCTP) to mainnet on Noble, allowing USDC to be natively minted within Cosmos’ inter-blockchain communication protocol (IBC).

By facilitating easier cross-chain transactions, Circle seeks to improve the utility of USDC, potentially helping to break a prolonged slump in its market capitalization.

Noble joins the likes of Arbitrum, Avalanche, Base, Ethereum and Optimism in allowing native USDC minting via the CCTP. The CCTP is on Solana’s testnet.

Circle’s cross-chain protocol lets users create Noble USDC that can be moved to other Cosmos apps like Osmosis or dYdX. The total supply of Noble USDC is already above $20 million, according to MintScan.

The CCTP employs a burn-and-mint mechanism to facilitate the native creation of USDC across different blockchains. In this process, USDC is removed from circulation on the source chain (burned) and then recreated (minted) on the destination chain, based on a verification (attestation) by Circle’s system.

This approach, focusing on direct asset transfer, stands in contrast to token bridging, where assets are locked on one chain in exchange for equivalent wrapped tokens on another. The direct burn-and-mint method has seemingly gained preference over time, particularly in light of multiple high-profile hacks associated with token bridging.

If users want to remove USDC from Cosmos through Circle’s protocol, they must go through Noble. Circle says trying to move funds to a Circle account from any other app in the IBC “could result in a loss of funds.”

USDC’s market cap is mired in over a year of decline since its $55 billion peak in mid-2022. USDC’s current market cap is $23.68 billion, according to DeFiLlama. Tether (USDT), the only stablecoin larger than USDC, has grown from $66 billion to $88 billion over the same time frame. 

As a centralized company, Circle’s investment in a permissionless cross-chain protocol joins a broader trend of centralized crypto projects bolstering their decentralized finance (DeFi) offerings. 

According to a recent report from Bloomberg, Circle is considering an initial public offering in early 2024.

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https://blockworks.co/news/cosmos-fork-jae-kwon

Cosmos co-founder Jae Kwon has long felt that the protocol’s community is conspiring against him. Now, he may be leaving it for good. 

After a proposal passed to crimp inflation on Cosmos’ ATOM token, Kwon announced AtomOne — a “minimal fork” of the Cosmos Hub application. 

Kwon and his opponents fundamentally diverge on how much inflation is needed to keep the Cosmos blockchain secure. 

Cosmos narrowly passed on Saturday Proposal 848 pledging to set ATOM’s inflation rate at 10%, down from 14%. The proposal’s proponents argue that Cosmos is overpaying for security by raising inflation rates to incentivize staking. 

Other layer-1s maintain high staking demand without inflation, which needlessly puts downward pressure on ATOM’s price, advocates say. 

Read more: Uniting the blockchain ecosystems: Q&A with Cosmos founder Ethan Buchman

ATOM’s price is down 9% in the past 24 hours as Cosmos’ founder announced his breakaway token. It is unclear how exactly AtomOne tokens will be distributed, though the token’s constitution says Proposal 848 voters will receive fewer tokens, and the fork would still support ATOM tokens. 

Kwon voiced opposition at the proposal’s outset and throughout the two week voting period. For some, the founder’s inability to sway the outcome is emblematic of Kwon’s waning influence in the Cosmos community. 

Kwon co-founded Cosmos in 2014, but has accused the community of conspiring against him multiple times in the years since. 

AtomOne’s GitHub page shows Kwon began working on the document two weeks ago, around the time that voting started on Proposal 848. 

At the center of Kwon’s critique is the argument that ATOM was never meant as money, and viewing the staking token for its financial prospects risks compromising the Cosmos Hub’s security. 

“In the long run this is [a] game of survival, and survival comes from strict adherence to first principles (of security especially),” Kwon wrote on X Monday. 

Activist minority factions forking crypto projects have generally seen limited success — from bitcoin cash to more recent “rage quits” from the Nouns and Floor DAOs. In each case, some forkers profited, but the forkers were ultimately unable to recapture the social capital of their predecessors.

Updated Nov. 27, 2023 at 5:10 pm ET: Clarified that the forkers, rather than forked chains, were unable to recapture the social capital of their predecessors.

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https://blockworks.co/news/google-cloud-participates-eigenlayer-testnet

Google Cloud has joined EigenLayer’s “Operator Working Group” alongside more than 65 other operators and solo stakers, a representative for EigenLabs, the developer behind EigenLayer, told Blockworks. 

Google Cloud Web3 now appears as a node operator on the Goerli testnet for EigenLayer — a restaking protocol that lets ether (ETH) be staked on multiple platforms at once. Google Cloud confirmed the cloud computing service’s participation in EigenLayer’s testnet in an email to Blockworks. 

Google Cloud declined to comment on whether it has plans to move to EigenLayer’s mainnet or if the protocol would be added to Google Cloud’s Blockchain Node Engine.

EigenLabs also couldn’t confirm whether Google Cloud would remain as a node operator once node operation goes to mainnet. Representatives said they expect Google Cloud’s support to continue, since the goal of testnet is to prepare for mainnet.

EigenLayer went live for stakers, who earn rewards by locking in their staked ether, in June. Operators, who enhance security and allow stakers to delegate assets, are still in testnet. 

EigenLayer has said it expects mainnet deployment to happen in the first half of 2024.

Google Cloud, the cloud computing service offered by Google, has been on a steady march into Web3 since Bloomberg first reported Google’s creation of a blockchain division in January 2022.

Later that year, Google Cloud released the Blockchain Node Engine, a service meant to let developers run blockchain network nodes more easily. Google Cloud launched a web3 startup program in April 2023.

Google Cloud showed an interest in staking before the EigenLayer integration, becoming a Polygon validator in September. The investment was minimal from the tech giant, though: Google Cloud has the second-smallest stake out of more than 100 validators. 

The cross-chain protocol LayerZero partnered with Google Cloud in September 2023, with the company becoming LayerZero’s default oracle to verify transactions across blockchains. 

Google Cloud’s move into Web3 has not been without controversy, with some seeing the behemoth cloud computing service’s presence as a strike against decentralization.

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https://blockworks.co/news/uniswap-dao-voting-proposal-power-boost

A group of seven Uniswap DAO delegates who vote over 80% of the time — but possess marginal voting power — moved closer to receiving a voting power boost after a Wednesday temperature check vote. 

The proposal would split 10 million uniswap, worth around $60 million at current prices, among “underrepresented” DAO delegates with less than 2.5 million uniswap. A DAO borne out of Georgia Tech’s blockchain club and the trading firm Wintermute were the two most popular delegates in the temp check. 

The proposal now faces an on-chain vote before delegates would receive uniswap (UNI) from the DAO’s treasury. To be clear, the UNI would not be funds the delegates could spend or trade, but would bump up their share of voting power on future governance matters. 

As with many DAOs, Uniswap’s DAO allows token holders to either vote themselves or delegate their voting power to another wallet address. There are more than 30 delegates with at least 2.5 million delegated votes, the line the proposal sets for “underrepresented.” Variant Fund general partner Jesse Walden is the second-largest delegate with around 8 million tokens.

Read more: Uniswap’s DAO poised to try its hand at venture capital

The governance service provider StableLab authored the delegation proposal and would also receive governance tokens were it to pass. StableLab also proposed and passed a delegation incentive program this week at Rari DAO.

Doo Wan Nam, chief operating officer of StableLab, told Blockworks that the experiment in recognition for active delegates is important for accountability, as delegates who failed to maintain 80% participation would lose the extra votes. 

Wan Nam acknowledged the difficulty in subjectively analyzing whether an active voter is a good voter, though. Are delegates voting flippantly or deeply researching both sides of a proposal? 

“We have to start with something that’s objective,” Wan Nam said. 

The move comes as Uniswap’s voting delegation has been slowly consolidating. A Dune Analytics dashboard shows that in 2023, the number of votes cast per governance proposal has stayed more or less constant while the number of voters participating has generally declined.

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https://blockworks.co/news/bitcoin-ordinals-nfts-taproot-wizards

Taproot Wizards, the bitcoin ordinals startup that announced a $7.5 million round led by Standard Crypto last week, is bringing on the pseudonymous developer Rijndael as its chief technology officer.

Co-founded by Udi Wertheimer and Eric Wall, Taproot Wizards is a generative art collection inscribed with bitcoin ordinals, a recent add-on to the network that lets data be inscribed as NFTs and other digital collectibles. 

Bitcoin ordinals have seen a November spike in popularity, spurring nearly $30 million in transaction fees since Nov. 4, per Blockworks Research. Largely due to blockspace demand created by ordinals, bitcoin transaction fees have become more expensive than Ethereum’s for the first time in three years.

Read more: Ethereum won’t flip Bitcoin anytime soon, but Ordinals could change that

Before coming to Taproot Wizards, Rijndael says he worked as the technical lead at Amazon’s NFT project and more recently on Bitkey’s self-custody wallet. 

In an X thread announcing the career move, Rijndael lamented the inability for “less-dogmatic Bitcoiners” to take part in the bitcoin community “without picking up a very particular set of puritan values.”

“The Ordinals ecosystem has a real opportunity to expand what we think of as Bitcoin culture, and give more kinds of people an opportunity to connect with a Bitcoin that they can relate to,” Rijndael wrote. 

Read more: Avalanche gets the ‘Ordinals’ bump, sets new transaction record

The incoming CTO also said he’s looking to hire a full-stack engineer.

Taproot Wizards plans to mint 2,121 of its NFTs, which are variations of a Microsoft Paint drawing of a wizard posted to Reddit to promote bitcoin a decade ago.

Generative NFT projects like Taproot Wizards have been among crypto’s most successful to date. Bored Apes and CryptoPunks are the second and third-highest selling NFT collections ever, according to CryptoSlam, with both being stored on the Ethereum blockchain.

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https://blockworks.co/news/institutions-regulatory-compliance-defi

Spool Finance has launched v2 of its DeFi middleware product in hopes of becoming a gateway for institutions to enter decentralized finance. 

Spool v2 was created with an eye to regulatory compliance following feedback from the traditional finance institutions Spool is courting with its DeFi product. Two major institutions could join the fray through Spool by the end of next year, the project’s lead contributor said, but declined to name them.

To assure regulatory compliance, Spool was advised by the white-shoe Swiss law firm Bär & Karrer. 

The Spool protocol launched in March 2022 as a “set it and forget it” solution for DeFi investment. The platform creates automated yield strategies from DeFi protocols based on an investor’s risk appetite.

Read more: The ‘next leg’ of DeFi users will be institutions, Blockchain Capital’s Larsen expects

Spool is organized as a DAO that hires employees with specific mandates to develop the business side of the protocol. It has no formal legal organization. 

Upon launching, Spool had trouble garnering interest from institutional investors, said Simon Schaber, Spool’s chief business development officer.

“When I went to them, I said, ‘Look, we’ll offer you fully transparent, everything in-house, compliant.’ They said, ‘Yeah but look, Simon, there’s this huge player called Celsius. They’ve got a shitload of funds under management. They’re too big to fail. Why don’t we just put it into Celsius?” Schaber said.

After Celsius crashed alongside a few other centralized yield-generating products in crypto, Spool started seeing more serious institutional interest in Q3 of 2022.

Now, alongside its more DeFi-native clients, Spool is working on deals with Fintech firms as well as small and regional banks, Schaber said, adding that the protocol was also in serious talks with one of the ten largest asset managers in the world as well as one of the largest banks, though he would not disclose which.

Vault creators can charge management fees in Spool v2.

Spool made smart contracts a large part of its pitch to investors, Schaber said. While traditional fund management software can go offline or change hands, leading to renegotiation of terms, Spool’s permissionless software functions indefinitely. 

In v2, vaults can now be “gated,” meaning addresses can only interact if they adhere to know-your-customer (KYC) or some other criteria, and “multi-asset,” where investors can combine assets in a vault. 

Schaber said on-chain and off-chain assets could be combined through its institutional partnerships, combining liquid staking tokens with dividend-focused real estate in a mutual fund, for instance.

Tokenization of so-called “real-world assets” is anticipated to be a major driving narrative in crypto over the coming years.

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https://blockworks.co/news/blackmail-thwarts-90k-dao-attack

Blackmail was all that stood between the remaining funds in Indexed Finance’s crypto treasury and a devastating governance token attack.

When a watcher of the neglected Indexed Finance DAO noticed a malicious proposal meant to drain the DAO’s remaining $90,000, they demanded a share of the proposer’s profits to avoid outing the exploiter.

The proposer apparently declined, leading the blackmailer to alert former Indexed contributor Laurence Day, who then told his 30,000 followers on social media platform X of the attack. 

Hours later, the governance proposal was narrowly defeated.

Indexed Finance launched in 2020 as an index fund for crypto but has seen activity mostly end in the time since a 2021 flash loan attack drained $15.8 million from the DAO’s coffers. 

Since the attack, Day and developer Dillon Kellar stopped working on the protocol, and before last week, Indexed governance hadn’t seen a vote since mid-2022 when the treasury was recouping investor losses and funding a class-action lawsuit.  

But in DeFi, protocols remain operational regardless of whether users exist. And as Indexed’s NDX governance token slid to a fraction of a cent, someone spied an opportunity.

400,000 NDX ($4,000 at the time) was needed to reach a governance quorum and pass a proposal. The exploiter made a nameless proposal with a two-day voting window containing code to drain Indexed’s depleted-but-still-existent treasury — containing some $92,000, per DeepDAO.

With the required NDX, the exploiter reached a quorum of votes in favor. 

In the proposal’s waning hours, Day, the former Indexed contributor, learned of the exploit and made a plea to his followers on X.

“In keeping with the principle of ‘no, you shouldn’t get to raid the protocols of inactively developed projects for profit by leveraging governance’, I’d appreciate it if anyone who still happens to hold NDX that is delegated to themselves or another wallet they control to vote Against,” Day wrote.

“Against” votes flowed in and the proposal was defeated by a margin of about $90 in NDX.

Day alleges the person who tipped him off to the attack had first blackmailed the exploiter asking for 40% of the funds. On-chain sleuth ZachXBT linked the wallet address of the attempted exploit to a second attack on an inactive crypto project earlier this month.

Attacks on the treasuries of decrepit DAOs are becoming more common as failed projects accumulate but immutable code keeps funds sitting on-chain. A Solana-based DAO was exploited for $230,000 last month when a malicious proposal went unnoticed.

“The unintended side effect of having code governed by token holders that executes forever is that there [are] typically no plans for end of life,” Jeremiah Smith, CEO of DeFi security service OpenCover, said in a Telegram message. “The ‘space trash’ problem of onchain applications has only begun.”

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https://blockworks.co/news/openai-sam-altman-ouster-chatgpt

Former OpenAI CEO Sam Altman is associated with crypto by virtue of his founding role in Worldcoin — but his departure from AI powerhouse OpenAI has implications of its own.

Altman was fired Friday after a boardroom coup caused by an alleged lack of candor with the board. Altman has already taken a job at Microsoft — and more than 500 OpenAI employees threatened to resign in a letter to the board.

OpenAI’s most advanced product, the ChatGPT large language model (LLM), is used by crypto developers and in crypto applications. But faith in the AI startup has been shaken by the past few turbulent days.

Elsewhere, crypto teams are seeking to create wholly decentralized AI products — though development of such products lags far behind the work of OpenAI. 

Read more: AI needs to be decentralized for the same reasons that money needs to be

ChatGPT is capable of writing and troubleshooting code written in Solidity, the programming language for Ethereum smart contracts, making it a potentially helpful tool for developers. A pseudonymous developer named CroissantETH made a ChatGPT-enabled app whereby ERC-20 tokens can be created with a one-sentence command. 

Antonio Viggiano, founder of smart contract testing firm Fuzzy, released an extension that uses ChatGPT to audit code for potential vulnerabilities. 

“I believe devs use ChatGPT a lot, probably every day or many times a week,” Viggiano said.

However, problems persist. Viggiano noted ChatGPT will often provide incorrect responses, causing developers to have to edit code manually. Fernando Rodriguez Hervias, CEO of Web3 developer studio PragmaLayer, said chatbots ultimately cannot be relied upon to keep smart contracts secure.

“What if [the] contract gets hacked? Will you blame AI?” Hervias said in a Telegram message.

Ritual founder Niraj Pant said that it’s partially because of those shortcomings that ChatGPT isn’t commonly used in mission-critical capacities. However, AI chatbot use cases are growing, like reading a protocol’s documents and being able to troubleshoot problems in a chat window with builders on the platform. 

Pant said OpenAI’s boardroom drama underscores a need for diversification in the field of LLMs, currently dominated by OpenAI. 

“Developers I know that are building on OpenAI stuff are not even sure if their apps will work on Friday after employees leave, at least allegedly from the reports,” Pant said.

Pant’s startup Ritual announced a $25 million raise earlier this month to help Web3 companies interact with AI.

If Altman’s dismissal from OpenAI spells stagnation for the AI company — which was reportedly seeking to raise funds at an $80 billion valuation in late October — crypto’s growing crop of AI projects could theoretically stand to gain. 

However, Pant said attempts at open-source answers to ChatGPT are still playing “catch-up” with the likes of OpenAI’s work. 

A pseudonymous developer named Moon Dev, who uses ChatGPT to build quantitative trading tools for crypto, said in a direct message that they remain unimpressed with crypto AI products as they exist today.

“[I] haven’t seen anything even close,” they told Blockworks.

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https://blockworks.co/news/binance-anti-crime-staffers-leave

It wasn’t a great week for Binance’s crime divisions.

Binance’s senior counter-terrorism official Jennifer Hicks left the company this week, according to an update on her LinkedIn. Hicks’ departure comes just two months after she was tapped to lead the crypto firm’s first-ever counter-terrorism finance advisory. 

Also this week, a former Binance financial crime investigator named Suleiman M. announced on LinkedIn that he had also left the exchange. 

Hicks and Suleiman could not be reached for comment, but the latter chalked the departure up to “recent redundancy” in his public LinkedIn post. Hicks both commented and re-shared Suleiman’s LinkedIn post, praising his skills and sharing that she had originally interviewed him for the Binance role.

The apparent layoffs come amid a larger trend of senior official departures from Binance. The company’s former head of product, head of Asia-Pacific and two high level officials for Binance’s operations in the UK, France, Eastern Europe and CIS all left in recent months.

Read more: Crypto hiring: Binance exit list gets longer as French general manager departs

Coinbase senior executive departing

Nana Murugesan, senior vice president of international and business development at Coinbase, announced he would be leaving the company in the first quarter of next year. 

Murugesan was part of an effort at Coinbase to find “forward-looking regulators” to help the US firm expand abroad. In September, the company said it was prioritizing expansion into Europe, Canada, Brazil, Singapore and Australia. 

Blockworks previously reported that Coinbase’s international expansion could be part of an effort to diversify revenue outside of spot trading. Earlier this month, Coinbase reported that the exchange exceeded expectations for its Q3 earnings.

The company recently posted new measures to improve its “talent density,” writing on its blog that Coinbase roles are “not for the faint of heart,” and “unremarkable performance gets a generous severance package.”

Prior to joining Coinbase, Murugesan worked on international markets and mobile partnerships at Snap, the company behind Snapchat. In a message to Blockworks, Murugesan said he would be sharing his next move after the new year. 

Other notable hiring news

• Henson Orser, the head of Dubai’s crypto regulator, left his position this week. Dubai’s Virtual Assets Regulatory Authority (VARA) launched in March 2022 and has been gradually granting crypto firms approval to operate in the emirate. 
• Sam Altman was ousted from his role as OpenAI CEO on Friday by the company’s board of directors. Altman is also the founder of controversial eye-scanning crypto project Worldcoin.

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https://blockworks.co/news/3-startups-90m-raises

Amid a funding dry spell, this week saw three of the largest crypto raises in recent months.

Crypto exchange and wallet service Blockchain.com raised $110 million in a Series E round led by Kingsway, the parent company of crypto exchange OSL raised $91 million via a share subscription, and tokenized currency firm Fnality announced a $95 million round led by Goldman Sachs and BNP Paribas. 

The raises came with crypto mired in a funding slump, seeing consecutive quarterly declines in venture capital dating back to the start of 2022. 

Blockchain.com’s $110 million round is the year’s fourth-largest fundraise, following Blockstream, LayerZero, and Worldcoin, according to DeFiLlama data. The company declined to disclose a valuation but Bloomberg reported a valuation of less than half of the $14 billion mark the platform secured last year. 

With the move, Manny Stotz, CEO of UK venture firm Kingsway and Nicolas Brand, partner at VC fund Lakestar, will join Blockchain.com’s board of directors.

Hong Kong-based BC Technology Group, which owns the crypto exchange OSL, acquired $91 million when crypto firm BGX purchased almost 30% of the company’s stock through a share subscription. 

In August, OSL joined HashKey as the first exchanges to acquire Hong Kong’s new license to facilitate retail crypto trading in the city. 

Fnality is a fintech firm focused in part on tokenizing securities — that is, making traditional financial assets like gold or Treasury bonds synthetic and storing them on the blockchain. 

The tokenization of real-world assets has been popular among financial institutions as of late. JPMorgan and HSBC both ramped up potential tokenization offerings in recent weeks.

The centralized finance platforms’ raises come amid a longer-term slide in centralized finance funding relative to decentralized platforms. 

Read more: JPMorgan tests tokenized portfolios with Avalanche blockchain tech

Tokenization’s big week continues

Tokenization company Superstate raised $14 million in a Series A led by CoinFund and Distributed Global, joining Fnality as the week’s other notable tokenization raise. 

Superstate is helmed by Robert Leshner, who founded the DeFi lending firm Compound before leaving to create Superstate. The raise comes less than five months after Superstate’s $4 million seed round was announced. The company filed an SEC prospectus at around the same time to let clients store tokenized government bonds on Ethereum. 

At Blockworks’ Permissionless conference in August, Leshner said DeFi’s onboarding of major institutions would require the space to compromise on crypto-native assets in favor of a focus on tokenization. 

“This is the big divide that is going to define the next ten years of DeFi,” Leshner said at the time.

Other notable fundraises

• K-Pop fan engagement startup Modhaus raised $8 million in a Series A round led by Sfermion. 
• CFX Labs raised $9.5 million in seed funding to grow its remittance-focused stablecoin payment product on Solana.
• Bitcoin ordinals project Taproot Wizards announced a $7.5 million seed round led by Standard Crypto.

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https://blockworks.co/news/web3-watch-nouns-dao-movie

The second installment of The Rise of Blus, an animated movie being funded in chunks by the Nouns DAO, released Wednesday. 

Produced by crypto-native animation studio Atrium, the movie’s $3 million budget is contingent on a string of governance proposals passing. In contrast to the film industry’s black box status quo, the studio’s founder Supriyo Roy periodically publishes on-chain updates regarding the film’s progress and how funds are being spent. Scripts have also been made public ahead of the releases. 

Several of the movie’s producers worked on Spider-Man: Into the Spider-Verse, Roy told Blockworks, giving the Nouns movie’s animation a similar flavor to the Marvel hit. 

The Rise of Blus has a crew of 45 people and an estimated final budget of $2.78 million, Roy said. For context, the recent Teenage Mutant Ninja Turtles animated movie cost $70 million to produce. 

Five of the movie’s eight chapters have been funded, and the next three episodes, running around 10 to 11 minutes each, will be released over the next eight months or so. If completed, the full movie will run around 80 minutes, Roy said. 

The Rise of Blus follows a boy named Gi who lives in the floating city of Blus and wants to be an adventuresome “rover” rather than follow his father in becoming a boring “recycler” when he grows up. The Nouns NFTs’ signature “Noggles” feature prominently in the movie. Roy said the movie’s main conceit is the glasses providing freedom of choice. 

While never mentioning NFTs or crypto, the movie seemingly pays homage to its origins. The second installment introduces viewers to an apparently important fictional substance named ether — which is also the name of the currency used to auction Nouns. 

Read more: Nouns DAO is forking again

But Maria Shen, general partner at Atrium investor Electric Capital, said crypto may not matter much to the animators being funded by the DAO’s treasury. 

“Frankly, alright, I don’t think any of them have a special affiliation with crypto,” Shen said. “They’re actually here because it’s an alternative way for them to have a revenue source and artistic freedom that they otherwise wouldn’t have…it’s really about what are the new use cases that crypto can enable? And this is very clearly one of them.”

Web3 games migrate networks in record numbers

65 Web3 games changed networks so far this year, up from 48 last year and 12 the year before, according to Game7’s “State of Web3 Gaming” report.

Leading destinations for games were layer-2s Polygon, Immutable and Arbitrum. 73% of games that changed networks this year chose an Ethereum virtual machine (EVM)-based chain, the report said.

The RPG “Champions Ascension” moved from Ethereum to Polygon in May, promising an end to “bloated gas fees.” 

One interesting stat:

• Bitcoin ordinals, a protocol that enables NFT storage on bitcoin, generated over $4 million in transaction fees Thursday, according to Blockworks Research. Daily ordinal fees were in the $10,000 to $20,000 range for much of October.

Also of note:

• Disney partnered with Dapper Labs to release collectible pins for Disney characters as NFTs. Notably, the product’s marketing shied away from using the term “NFT” to describe the pins.
• SocialFi platform Friend.tech released a global feed where users vote to rank posts. Votes are allocated to users based on key prices.
• Lens Protocol released V2 of its decentralized social infrastructure. It teased Smart Posts where content can be directly monetized — like a payment pop-up on blog posts, for instance.

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https://blockworks.co/news/cefi-making-defi-leap

The centralized finance sector received less than 7% of crypto venture funds every month from July to October. This is a far cry from 2021, where it would receive greater than half of all venture capital, according to data compiled by FalconX. 

As their share of venture funds stagnates, centralized exchanges are increasingly adopting features common to decentralized finance (DeFi). Industry watchers were split on whether CeFi’s pivot to DeFi stemmed from a need for liquidity or from real interest in DeFi technology. 

David Lawant, head of research at crypto prime brokerage FalconX, said the firm’s data appears to show a decline over time in CeFi fundraising relative to DeFi. He noted however that the funding slide could be a result of CeFi firms having acquired sufficient runway from venture rounds in 2021 and 2022.

But CeFi’s funding lull also comes alongside revenue disappointment.

On centralized exchanges specifically, trading has compressed greatly since 2021. The share of trading happening on decentralized exchanges has increased relative to centralized offerings over time. Riyad Carey, analyst at crypto research firm Kaiko, said he grasped the gravity of the CeFi decline when looking at minute by minute volumes for bitcoin. 

“It was pretty striking how fewer exchanges now have significant volumes when fees on volume are supposed to be an exchange’s main source of revenue,” Carey said.

As trading fees become less lucrative, centralized platforms are racing to build the “all-in-one crypto app,” Carey said, citing Coinbase as a prominent example. Coinbase debuted its Base layer-2 over the summer and launched an on-chain verification platform last week. 

OKX and Kraken are following Coinbase in developing Ethereum layer-2s while Binance released a custodial wallet, signaling a burgeoning trend among centralized exchanges, Blockworks previously reported. 

Read more: Will layer-2s become table stakes for exchanges?

Carey said the DeFi ventures stem largely from a search for liquidity on the part of CeFi platforms, but industry participants Blockworks spoke to had varying takes on the reasons behind the pivot. 

Brian Rudick, senior strategist at crypto financial service firm GSR, said one cause for CeFi’s interest in DeFi products could be a desire on the part of centralized firms to “introduce more hooks” and cross-selling. He noted that users of a centralized exchange’s layer-2 might also make use of its wallet offering, for example.

For Banafsheh Fathieh, co-founder of crypto venture fund Lightspeed Faction, CeFi helped establish crypto as an asset class, while DeFi centers on crypto’s place as a technological trend. 

“The core of the innovation in my view is probably going to continue to be on the DeFi side, so it’s not surprising I think that a lot of the CeFi players are increasingly looking to do more sort of on-chain,” Fathieh said.

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https://blockworks.co/news/sleek-raise-tokenized-knowledge-marketplace

The web3 social company Sleek announced a $5 million seed round — alongside plans for a platform where experts can tokenize their knowledge.

Sleek’s is at least the fourth crypto social startup fundraise announced this week, per CryptoRank. The raise saw participation from Binance Labs and Shima Capital among others.

Earlier this year, Sleek debuted business cards that can share Telegram contact info and display NFTs when put in proximity to a phone. The company has been on an apparent crypto conference tour in 2023, sharing its in-person networking tool.

With the fresh funding, Sleek says it is releasing a marketplace for domain experts in the first half of 2024.

The company told Blockworks that Sleek hopes to capitalize on the proliferation of online educational content by turning online creators’ knowledge into “liquid and accessible assets.”

Sleek’s platform will create bonding curves a la friend.tech for video content or calls with creators. The company believes its platform will be preferable for educational creators because of the high time investment involved in producing long-form content on other platforms.

The forthcoming platform represents another SocialFi attempt to more efficiently monetize the creator economy. Social apps Phaver and RepubliK recently closed seed rounds with similar ambitions.

“Knowledge-based businesses like research firms and expert networks generate $100B+ of revenue per year, along with a new wave of creators who monetize their time by converting knowledge into online courses, [YouTube] videos, expert calls and content through subscription platforms like Patreon. However, the market is fragmented and inefficient with a lack of discovery and distribution channels to people with domain expertise in tech, arts or business,” Sleek said.

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https://blockworks.co/news/dydx-staking-goes-live

Decentralized exchange dYdX entered beta mainnet for its layer-1 on Tuesday, enabling USDC staking rewards for the proof-of-stake blockchain. 

The move drew criticism from Crypto Twitter personalities who painted dYdX staking as too friendly to insiders. Staking rewards are being paid out two weeks before a large set of tokens will be unlocked for dYdX founders, investors, employees and consultants. And the supply of locked tokens vested for dYdX insiders can still be staked and earn rewards.

The project’s founder maintains that dYdX is a long-term actor and is not seeking short-term gains.

Once a layer-2 decentralized exchange (DEX) for perpetual swaps, dYdX is shifting to its own chain built with the Cosmos SDK. The move was motivated by the need for greater throughput to support the platform’s order book, Blockworks previously reported.

The dYdX Operations subDAO announced Monday that the chain was entering its beta stage, and trading fees would accumulate to the validators and stakers securing the platform. 

dYdX founder Antonio Juliano wrote on X that staking rewards would be paid out in “cold, hard, $USDC.”

When it was a layer-2, dYdX charged maker-taker fees which were not shared with users. Trading fees will be shared with stakers on the dYdX chain.

One X user took issue with the timing of the fee sharing activation. They argued it wasn’t a coincidence that fees were finally channeled to dYdX users as a Dec. 1 token unlock looms.

Dennis Liu, a crypto venture investor and YouTuber, noted that dYdX’s vesting schedule has been public for some time.

“The cliff has always been there, it’s their choice to choose to release this upgrade whenever, and the tokenomics has been the same since day one, it’s not like they changed it,” Liu said. 

But while dYdX widely marketed the fact that all trading fees would go to stakers, it was less forthcoming about investors being able to stake their tranche of locked tokens, Liu said.

In three recent dYdX Operations blog posts on the dYdX chain launch, the staking of locked tokens isn’t mentioned. DYdX’s docs say the locked tokens are subject to transfer restrictions but can be used for staking. 

“​​I wish they could have come up with this all together with the news so that people know what they’re getting into,” Liu said.

Responding to criticism of dYdX’s staking activation on X, Juliano noted that the team has been around for “6.5 years now.”

“We are not exiting, we’re building something larger. And we will work to earn your trust over time,” Juliano wrote.

dYdX’s price is up 35% on the week of dYdX’s beta mainnet launch. But token unlocks inflate supply and often cause sell pressure and price declines. dYdX’s Dec. 1 unlock will raise its circulating supply by almost 80%, from 190 million to 340 million, according to TokenUnlock.

https://blockworks.co/news/aave-forks-vulnerability

DeFi lending protocol Aave is a popular candidate for “forking,” whereby developers take open-source code and launch a spinoff. 

But when its bug bounty program unearthed a potential vulnerability in Aave’s code, the exploit route wasn’t made public. 

Aave’s council of community guardians froze certain assets and markets on Aave after learning of the bug on Nov. 4. 

Over the following week, Aave DAO’s service provider bgdlabs made proposals to disable stable rate borrowing and end the minting of stable debt where borrowers would pay fixed rates in the short term that could be rebalanced later.

Aave lending markets returned to normal on Nov. 13 after the proposals were executed. But what about the forks that inherited Aave’s apparently exploitable code?

Bgdlabs wrote in a forum post that it had reached out to every Aave fork to offer advice on protection measures after the vulnerability came to light. At least three dozen projects have launched as spinoffs of Aave V2 or V3’s public code, per DeFiLlama.

“This is something that you see in computer security a lot,” said Luke Youngblood, founding contributor at the Moonwell lending protocol. “Say Apple or Google needs to tell smartphone manufacturers or other vendors in the space about a vulnerability that impacts their software or their solutions. They have to do this in a confidential way so that they don’t alert the hackers to where the hole is before it can be patched.”

The two largest Aave forks by total value locked (TVL), Spark and Radiant, both worked with Aave to double-check code for vulnerabilities, Marc Zeller, the founder of delegate platform Aave Chan Initiative, told Blockworks. 

Of the other forks, several posted on X that the platforms weren’t at risk — including Moola, which paused twice and removed its stable borrow function as Aave dealt with the vulnerability.

Bgdlabs said on Aave’s forum that it was helping Aave forks patch their code in keeping with DeFi’s communitarian ethos. 

“Even if we don’t have any responsibility to them (we are not providing services), we think the Aave community should show good values, as leaders in the space,” bgdlabs said of the forks.

Shira Brezis, co-founder of the DeFi risk and security firm Redefine, said Aave’s cooperation is par for the course in DeFi, noting that she’s in a group chat with some of her own company’s competitors. 

And perhaps the goodwill trends both ways — last week, Maker, of which Spark is a subDAO, passed a proposal to share some of Spark’s revenue with Aave. 

Aave also stands to gain from not seeing forks succumb to exploits.

“When users lose funds, it’s a bad outcome for everyone in the DeFi space. It makes people think crypto is insecure and makes them think it’s a hotbed for hackers,” Youngblood said.

In a Telegram message, bgdlabs’ co-founder Ernesto Boado said an eventual public disclosure of Aave’s code weakness “depends on different factors” and that their team “tried our best to notify forks” about the vulnerability.

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https://blockworks.co/news/crypto-growth-uniswap-near-layoffs

Growth emerged as a major hiring priority this week.

The Uniswap Foundation, a non-profit aiming to grow the Uniswap protocol, hired Bita Abolfathi as a growth manager. The hire was greenlit as part of the proposal for the Uniswap Foundation’s $46 million grant from the Uniswap DAO. 

Abolfathi told Blockworks that as someone who dropped out of college, she appreciates the Uniswap Foundation’s willingness to disburse grants to deserving builders regardless of credentials.

“I was drawn to the Uniswap Foundation because they recognize that advancing DeFi’s impact on the world requires robust support — both intellectual and financial — for the most talented individuals and teams, irrespective of their backgrounds,” Abolfathi said.

Read more: Uniswap DAO grants $46.2M to Uniswap Foundation

Abolfathi previously worked at Gauntlet and SCRIB3. She becomes Uniswap Foundation’s second growth-focused employee, joining head of growth Raphaela Sapire. 

Elsewhere, the stablecoin project Ethena Labs hired former Lido business developer Seraphim Czecker as its head of growth. 

Ethena generates yield on its USDe stablecoin with collateral backing in Lido stETH and short ether futures. The company raised a $6.5 million seed round in June led by Dragonfly. Czecker expressed belief in the project’s ability to scale in a direct message to Blockworks.

Since Ethena “derives yield from staking and shorting perp futures,” Czecker said, “in a bull market we are talking 15-20% organic APY on a stablecoin with a very reasonable risk profile.”

Czecker will be part time until 2024, he said in a post announcing the role. This is Czecker’s third crypto role this year, after resigning from Euler Labs in April and from Lido Finance last week. His LinkedIn bio reads, “Head of Taking Risk.”

NEAR co-founder becomes foundation’s CEO

NEAR Protocol co-founder Illia Polosukhin was tapped as CEO of the NEAR Foundation, a non-profit tasked with growing the NEAR ecosystem.

Polosukhin follows Marieke Flament, who stepped down as NEAR Foundation’s CEO after two years at the helm. 

Chris Donovan, NEAR’s general counsel who was initially announced as Flament’s replacement, will become the foundation’s chief operating officer.

The move was announced on the first day of the protocol’s NEARCON convention in Lisbon. Polosukhin took up the role during an eventful week for NEAR as it announced the forthcoming launch of zero-knowledge proofs for WASM blockchains with Polygon.

Other notable hiring news

• UAE crypto exchange Bybit hired Sebastian Gawenda to lead its options business. Gawenda previously worked at Crypto.com and Kraken.
• Ava Labs, the company behind the Avalanche blockchain, laid off some of its staff, CEO Emin Gün Sirer announced. The exact number of layoffs were not disclosed, but Ava Labs’ VP of growth wrote that “many people” on the marketing team were let go.

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https://blockworks.co/news/web3-cryptopunks-nfts-socialfi

This article is part of Blockworks’ Web3 Watch, a weekly roundup of the highlights and lowlights from the culture side of crypto.

Friend.tech is either dead in the water or just getting started, depending on who you ask. 

Usage statistics for the SocialFi app show a plateau in dollar inflows and a drastic slowdown in new users. However, those already on the platform continue to project optimism while awaiting a monetization route for airdropped Friend.tech “points.”

After consecutive days of record outflows in late October, Friend.tech’s cumulative dollar inflows plateaued at around $35 million — meaning capital appears to be staying put amid a broader market rally. 

Friend.tech signed up fewer than 400 users every day this week, according to DeFiLlama. This drop off comes after regularly adding more than 5,000 users daily for much of October.

Thursday saw 189 new users, the lowest number since the platform launched in August.

This isn’t the first time Friend.tech has appeared to hit its ceiling. Attempts to clone the app’s features on other chains have mostly remained marginal. And Friend.tech’s cottage industry of X newsletter creators and data analysts is still around.

Cbb0fe is the creator behind the platform’s most expensive key after Vombatus’ departure for the upstart New Bitcoin City. This week, they let users “stake” Cbb0fe keys for rewards paid out in ether from the so-called CBBank. 

All 155 of the keys sold Wednesday for 1.5 ether (ETH) apiece.

Friend.tech announced an upgrade this week meant “to make data load up to 10x faster.”

Gamers can rent their NFTs

The gaming NFT rental platform LootRush released a listing mechanism for users to rent out their gaming NFTs. 

NFT owners can connect their wallets to the platform and receive payment when users play games with the NFTs for limited periods of time. Rented NFTs are sent to the company’s custodial wallet, LootRush CEO Anderson Ferminiano told Blockworks, and a LootRush proxy signs transactions needed to play games using the rented NFTs without transferring ownership.

Ferminiano said he expects the platform’s annualized rental volume to reach $6 million by the end of 2023. The founder foresees the company making Web3 gaming more accessible. 

Read more: ‘Much more appealing’ than just collectibles: Web3 gaming’s potential

“Imagine playing [FIFA] but you can never have Messi, and now you can. Users have more fun,” Ferminiano said.

One interesting stat:

• The popular NFT collection CryptoPunks’ price floor reached $125,000, a level not seen since August of 2022. 

Also of note:

• Roblox CEO David Baszucki said “there is a bit of a dream here” that objects from the popular online game could someday leave the platforms as NFTs. NFT volumes rose for a fifth consecutive week, per CryptoSlam!, but are still significantly below early 2023 levels.
• Several attendees of Bored Ape Yacht Club’s ApeFest suffered apparent eye injuries caused by bright lights at the event. Yuga Labs, the company behind Bored Apes, is “committed to supporting the recovery of anyone affected,” the company wrote in a Wednesday thread.

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https://blockworks.co/news/a16z-blockchain-infrastructure-ai

This week, venture fund a16z joined two crypto funding rounds. This follows recent reports from Axios indicating a delay in Andreessen’s upcoming crypto investment initiatives to 2025.

Both rounds centered on blockchain infrastructure ventures.

A16z led a $4.2 million seed round for Pimlico, an infrastructure product working to let wallet developers abstract away parts of the payment process. In a blog post announcing the raise, a16z general partner Sriram Krishnan said Pimlico CEO Kristof Gazso participated in the venture firm’s crypto startup school in Los Angeles. 

“By the end of Crypto Startup School, we were convinced that no one was better equipped to build the supporting infrastructure for account abstraction than Kristof,” Krishnan wrote.

The use of Pimlico’s form of account abstraction has increased for four straight months, according to data from 1confirmation general partner Richard Chen.

A16z also participated in a $5.5 million seed round for the developer tool Stackr. 

Stackr built a software development kit (SDK) to let developers build Web3 apps using general-programming languages — starting with JavaScript. Stackr lets developers create “micro-rollups,” the platform’s term for rollups that separate execution and proving. This design prioritizes ease of development over decentralization, adapting rollup technology to better suit developers’ needs.

Stackr also participated in a16z’s 2023 crypto startup school.

These two investments mark a16z crypto’s return to backing blockchain infrastructure startups. Their last similar move was in LayerZero’s $120 million round in April, according to CryptoRank. Meanwhile, Lightspeed Faction announced its $285 million crypto venture fund this week, telling Blockworks that Faction is primarily interested in infrastructure and protocol level projects.

A16z did not return a request for comment. Other notable recent ventures from the megafund include a restaurant rewards app and a Web3 gaming studio. 

Read more: A16z eyes $3.4B raise for next venture funds: Axios

Decentralized AI project lands $25 million

The decentralized AI project Ritual secured $25 million in seed funding, Blockworks previously reported. The round was led by Archetype with participation from Accomplice and Robot Ventures.

In a blog post announcing the fundraise and the company, Ritual highlighted that the crypto space is already working to address key challenges for AI startups, such as centralized APIs, closed-source code and high computational costs.

Ritual hopes to launch its platform in early 2024 with a focus on letting AI preserve transparency and privacy. The project is advised by the founders of NEAR Protocol and Eigenlayer.

Ritual’s raise comes the same week as OpenAI’s DevDay conference and shortly after X debuted its own chatbot, Grok. 

Other notable fundraises

• The governance tooling platform Llama raised $6 million from Founders Fund and Electric Capital to develop its full stack platform that lets governance permissions be doled out more precisely.

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