Popular decentralized exchange dYdX has released a post mortem report regarding a targeted assault on its v3 platform which occurred this past November that also resulted in a $9 million loss from its insurance fund, constituting approximately 40% of the total fund.

The post revealed that the attacker, whose identity has since been uncovered, engaged in extensive 5x leveraged long positions in USD across over 100 wallets. The native token for DeFi protocol Yearn Finance, YFI, experienced a 215% surge in price as the attacker, utilizing various addresses, acquired spot YFI tokens.

What Happened

The assailant leveraged their unrealized profits to establish additional YFI-USD positions, peaking at approximately $50 million. On November 17th, 2023, dYdX responded by reducing the base and incremental position sizes to constrain the attacker. The subsequent day witnessed a nearly 30% plunge in the price of YFI within an hour, yet the attacker failed to close their positions. As their holdings turned negative, the insurance fund automatically offset their losses.

Notably, a week before the YFI incident, the attacker executed a similar strategy targeting USD, withdrawing about $5 million in profits. However, this did not impact the v3 insurance fund, as dYdX had raised the initial margin requirement to 100%, preventing further earnings for the attacker.

Damage Control

The exchange has assured that customer funds remained unaffected and suggested the attacker did not profit from manipulating the YFI market. In response to potential future attacks using similar tactics, dYdX announced enhancements to the v3 trading platform, emphasizing improved open-interest monitoring and alerting capabilities.

Moreover, the forthcoming v4 chain is designed to mitigate risks like those witnessed in this incident. The upgrade incorporates a new software feature automatically adjusting the initial margin fraction in the event of abnormal price movements. As of now, the company has not responded to any requests for additional comments.

Binance, the biggest cryptocurrency exchange in the world, has expanded its Margin offerings by introducing NFPrompt (NFP) and Enzyme (MLN) as newly available assets for borrowing on both Cross and Isolated Margin.

Margin trading in crypto, like in traditional financial markets, involves borrowing funds to increase the size of a trading position. While it can offer potential advantages, it also comes with increased risks.

Multiple Pairs Added

The trading pairs on Cross and Isolated Margin have been broadened, presenting users with increased opportunities for diversified trading. Moreover, users on Binance Margin can now utilize NFPrompt and Enzyme as loanable assets, enhancing flexibility and choices for margin trading.

The newly listed trading pairs on Cross Margin include BNB/USDC, NFP/USDT, and SOL/ETH, while Isolated Margin features pairs like BNB/USDC, MLN/USDT, NFP/USDT, and SEI/TUSD. The proactive development approach of Binance Margin, evident in its continual addition of assets and trading pairs, underscores its dedication to enhancing the user experience and staying ahead in the dynamic cryptocurrency market.

Benefits Of Margin Trading

One of the main advantages of margin trading is the ability to leverage investments. By borrowing funds, traders can control a larger position size with a relatively smaller amount of capital. With leverage, potential profits can be magnified. If the market moves in a desirable direction, the return on initial investments can be higher as opposed to trading without leverage.

Margin trading also allows traders to go short, meaning they can profit via a decline in the price of an asset. This is particularly useful in bear markets or when a trader expects a specific cryptocurrency to decrease in value. Margin trading additionally, provides opportunities to implement more sophisticated trading strategies, such as hedging and arbitrage, which may not be as easily executed with traditional spot trading.

Finally, traders can make use of their capital more efficiently by borrowing funds and increasing their exposure to the market. This can potentially lead to higher returns compared to trading with just the available capital.

CBOE Digital President John Palmer expresses confidence that the approval of spot Bitcoin exchange traded funds (ETFs) will attract a fresh influx of institutional investors. The Chicago Board Options Exchange, which is the largest options exchange in the United States, believes that the green light for these ETFs will open doors for new institutional and, eventually, retail interest in Bitcoin derivatives.

Significant Expansion

According to Palmer, the approval is set to facilitate pension funds and RIA based funds to invest in assets within a spot Bitcoin ETF, providing a direct exposure that is currently unavailable to many funds. An RIA, registered with federal or state regulatory agencies, offers investment advice.

With the SEC facing a January 10th deadline for deciding on the ARK Invest 21 Shares Bitcoin ETF application, Palmer anticipates a significant expansion in Bitcoin derivatives products if the spot ETF gains approval. He foresees institutional players increasingly relying on derivatives to hedge risks. While the breakdown of investor interest remains uncertain, Palmer notes that institutions are likely to lead in accessing hedging tools, with retail investors following suit.

More Exposure Anticipated

In related news, CBOE Digital, the crypto division of the exchange offering crypto futures and options trading, is scheduled to launch margined Bitcoin and Ethereum derivatives trading on January 11th, allowing investors to trade contracts without providing full collateral. Simultaneously, mutual funds are contemplating strategies to gain more exposure to spot Bitcoin ETFs once approved.

On January 2nd, Advisors Preferred Trust, a mutual fund manager, adjusted its prospectus to potentially invest up to 15% of its total assets indirectly in Bitcoin, utilizing shares of Grayscale Bitcoin Trust, ProShares Bitcoin Strategy ETF, and Bitcoin futures contracts.

Bitcoin (BTC) surpassed the $45,000 mark on January 1st, 2024, a level not seen since April 2022. This mirrors the volatility of January that year when the value of the flagship cryptocurrency fluctuated above this threshold multiple times, interspersed with drops as low as $36,000. As of the time of this writing, BTC stands at just above $45,300.

BTC ETF Seemingly On The Horizon

The anticipation for the potential approval of a Bitcoin Spot ETF seems to be a major driving force behind the current upward trend. However, despite numerous deadlines passing without formal action on pending ETF applications, many are wondering if 2024 will indeed be the year which sees the ETF finally be approved or will it be more of the same with the SEC delaying everything once again.

Conversely, everyone is waiting to see what the approval of the ETF will mean for the price of BTC, including both short and long term consequences. Round figures like $45,000 therefore hold significance as psychological barriers for investors. Achieving such milestones tends to boost confidence, encouraging more trading and potentially triggering a positive feedback loop, a prospect eagerly awaited by BTC holders.

BTC Continues Its Domination

In the broader context, Bitcoin is nearing its previous high when it began just below $50,000. Although it remained mostly above $40,000 for a few months, a significant drop occurred after the collapse of the algorithmic stablecoin TerraUSD led to a wave of liquidations and bankruptcies. The infamous FTX fiasco did not help matters either.

Still, as the rally continues, the market capitalization of BTC continues to expand, surpassing $855 billion and even overtaking Tesla, which has a market capitalization below $750 billion, according to CompaniesMarketCap. Additionally, Bitcoin now also exceeds the market capitalization of Berkshire Hathaway Inc. at $774 billion and Meta Platforms (formerly Facebook) at $815 billion.

Between December 30th, 2022, and December 30th, 2023, the Bitcoin (BTC) mining scene underwent a transformative phase marked by notable achievements and industry leading participants.

Substantial Growth

A total of 54,002 BTC blocks were mined during this timeframe, with Foundry USA emerging as the top contributor, mining an impressive 16,492 blocks. The mining community faced 27 difficulty adjustments, mainly increases, resulting in a record setting hashrate on December 24th last year.

Unprecedented hashrates and advanced generation miners marked substantial growth compared to January 2016 when the hashrate of Bitcoin first reached one quintillion hashes per second. Key industry players, including Bitmain, Canaan, Microbt, and Auradine, played a pivotal role in this growth by introducing advanced generation miners in 2023. These cutting edge devices, boasting capabilities of over 375 terahash per second, demonstrated not only increased power but also superior efficiency, with ratings below 20 joules per terahash.

Adapting To The Times

Foundry, Antpool, and F2pool reported substantial increases in their hashrates in 2023, and as the year concluded, it became clear that last year marked a period of significant growth and innovation for the Bitcoin mining industry. The looming halving event in April 2024, set to reduce block rewards to 3.125 BTC, added an element of anticipation and signaled a significant shift for the sector.

However, the resilience and advancement shown by the crypto industry throughout 2023 positioned it well to navigate the changing landscape following the reduction in subsidies. The approach of the halving event adds a layer of intrigue, prompting a closer examination of how dominant mining pools will strategically navigate the evolving terrain. At any rate, the transformative year of 2023 in Bitcoin mining showcased increased hashrates, the introduction of advanced mining technology, and a concentration of mining power among key players.

On behalf of the Web3 community, we would like to extend our warmest congratulations to the companies that announced their success in fundraising between 26th December 2023 and 2nd January 2024. We are thrilled to see such tremendous support from all involved. Well done! 

Eclipse Fi raised $1.9M - Eclipse Fi is redefining the landscape of token launches, bringing the power back to the hands of early communities. A modular launch and liquidity protocol, revolutionising token launches, and supporting innovation across Cosmos and up-and-coming Layer2s.

Sleepless AI raised an undisclosed amount - Sleepless virtual companion game utilizing AIGC and LLMs to create rich story-based gameplay and organically evolving interactions with characters. The project is currently developing three games with its first title, HIM, a virtual boyfriend Otome game that features unique SBT characters that are immutable and on-chain.

BRC20.com raised $1.5M - The investment comes at a time of increased interest in the BRC-20 token standard, created in March 2023 to facilitate the creation and transfer of fungible tokens on Bitcoin through the Ordinals protocol.

CESS raised $8M - This funding will enable CESS to continue mission of providing the next-gen of global decentralized data services for Web3, which includes support for large-scale commercial use cases that require high-end security, performance, storage, CDN, high-frequency trading and millisecond data retrieval.

HIVE Blockchain raised 296.7M - HIVE is a partnership between Genesis Mining and Fiore Group to accelerate the development of the blockchain sector through traditional capital markets and develop the leading listed blockchain infrastructure company.

LeverFi raised $2M - Developer of decentralized leverage trading platform intended to provide users with the ability to trade with leverage permissionless and transparent platform. The company's platform is built on smart contracts, allowing users to maximize their trade size by using yield-bearing collateral as one.

To stay updated with news about future Web3 Funding Rounds, Follow CryptoWeekly
 

The proportion of extended ETH holders surged in 2023, surpassing Bitcoin for the second time in history. Based on insights via the on chain analytics platform IntoTheBlock, Ethereum has demonstrated notable progress in the percentage of investors maintaining their assets for over a year, marking a significant milestone for the blockchain, with the majority of current investors adopting a long term holding strategy.

ETH Long Term Holders Take Lead Over BTC

While the price performance of ETH lagged behind Bitcoin throughout 2023, this trend is expected, given the sheer dominance exhibited by BTC in bullish indicators and investor confidence. However, data indicates a growing number of Ethereum investors committing to holding ETH for an extended period, likely fueled by the anticipation of substantial future value appreciation.

Long term holders, characterized by their reluctance to sell during market volatility and price declines, play a crucial role in sustaining blockchain health, contributing to stability and mitigating price fluctuations.

History Repeats Itself

Ethereum has previously surpassed Bitcoin in this metric only once before, and it is noteworthy that during that instance, ETH went on to maintain leadership in this category over the subsequent months. Conversely, other metrics reveal that Bitcoin still maintains superiority over Ethereum in terms of profitability. Presently, nearly all BTC addresses show profitability at the current price, compared to ETH addresses which do show profitability albeit to a lesser extent.

In any case, the heightened profitability of Bitcoin is attributed to a significant number of early BTC assumed to be permanently lost. Consequently, the metric indicating holders who purchased at the current price places Ethereum ahead of Bitcoin.

The Cosmos community has given the green light for a substantial allocation of more than 975,000 ATOM tokens to create the ATOM Accelerator DAO (AADAO), representing a significant advancement in the development of the Cosmos ecosystem. This endeavor aims to establish a durable, community owned entity dedicated to fostering and progressing the Cosmos Hub and its intrinsic ATOM token.

Formation Of The ATOM Accelerator DAO

The ATOM Accelerator DAO is positioned as a cornerstone within the Cosmos ecosystem. Endowed with a substantial fund of 975,811 ATOM tokens, the AADAO is uniquely positioned to lead projects and initiatives that will fortify the Cosmos Hub. Its focus transcends immediate advancements, laying the foundation for sustainable, long term success.

The creation of the AADAO unequivocally signals the proactive stance of the community in shaping the future of the Cosmos network. By establishing a fully funded and community governed DAO, Cosmos takes significant steps towards a more inclusive and decentralized operational and decision making model.

Objectives And Impact of the AADAO

The primary goal of the AADAO is to stimulate innovation within the Cosmos ecosystem and drive the adoption of the ATOM token. This objective will be accomplished through strategic funding and resource allocation to projects and ideas aligning with the broader vision of the Cosmos Hub. The DAO aims not only to support existing projects within the ecosystem but also to attract fresh talent and ideas, cultivating an environment of continual innovation and development.

The anticipated impact of the AADAO is extensive. By providing a dedicated platform for funding and support, the DAO will play a pivotal role in expediting the growth of the Cosmos ecosystem. This includes augmenting the utility and market presence of the ATOM token, thereby fortifying its standing in the broader cryptocurrency market.

Finally, the long term vision for the AADAO is to forge a self sustaining and robust organization that not only supports the Cosmos ecosystem but also contributes to the broader blockchain and crypto industry. With a focus on innovation, adoption, and community governance, the AADAO is poised to become a pivotal player in advancing decentralized technologies and applications.

Decentraland (MANA), introduced in 2017, is an Ethereum (ETH) based virtual reality platform reshaping digital spaces through decentralization. Users not only interact with content but also influence and monetize it using unique digital assets, namely the LAND and MANA tokens. Decentraland was also among the first platforms to truly utilize the metaverse concept to its fullest potential.

The Evolution Of Decentraland

As such, Decentraland has had a very interesting journey thus far. It was a very simple Stone Age concept in 2015 but has now evolved to an envisioned Iron Age, demonstrating innovation and user empowerment. The technical infrastructure relies on blockchain for LAND ownership, decentralized storage systems, and a real time layer for immersive interactions.

Moreover, the economic model revolves around the LAND and MANA tokens, facilitating transactions and digital land acquisition. Within the virtual world, the economy encourages users to create, trade, and engage in various commercial activities, reflecting the overall vision of Decentraland which is the formation of a fully self sustaining virtual space.

Heading Into Web3

The Decentraland whitepaper outlines a vision of a decentralized virtual world where users are creators and entrepreneurs. Despite its evolution, Decentraland remains committed to its initial goal of establishing a decentralized virtual domain, showcasing dedication to cutting edge technology and community driven development.

However, the platform faces challenges in managing decentralized content distribution and scripting. Robust technology is crucial to address logistical complexities and ensure a seamless user experience. Still, with the world becoming increasingly digitized and pivoting toward a Web3 era, it could only be a matter of time before platforms like Decentraland are incredibly commonplace.

The Ethereum (ETH) team aims to address the intricacies and scalability challenges of its current signature method, to which end Vitalik Buterin has delineated three alternative strategies aimed at improving the overall efficiency and user experience within the Ethereum ecosystem.

The Solutions

Initially, Buterin advocates for a substantial reduction in validators by establishing a minimum deposit requirement of 4,096 ETH and capping validators at this number. Doing so would markedly decrease the computational load on the network and streamline the consensus mechanism.

Alternatively, Buterin proposes the implementation of a two tier staking system. Validators would be categorized into the heavy layer, requiring a minimum deposit of 4,096 ETH and responsible for core consensus mechanisms. The light layer, comprising validators with no minimum deposit, would contribute to overall network security without the same level of direct involvement in consensus.

Finally, Buterin suggests a rotating participation model, randomly selecting a subset of 4,096 validators for each slot to engage in consensus. This would ensure a diverse and dynamic validator set while upholding efficiency and scalability. Buterin contends that this particular approach strikes the optimal balance between accountability and decentralization. The rotating participation method could therefore establish a more decentralized staking system without compromising security.

Still Some Complications

Dramatically reducing validators might lead to a concentration of power among a smaller group. Moreover, despite noble intentions, the practicality and successful execution of these proposals remain uncertain and could encounter significant obstacles.

Still, while acknowledging that his proposal deviates significantly compared to what the current design of Ethereum is, Buterin insists that the benefits are too substantial to overlook. He firmly believes this restructuring would fortify overall network security, decentralization, and accessibility to new users.

In any case, the outlined changes have the potential to revolutionize Ethereum. Given its status as the second largest cryptocurrency by market capitalization, these alterations may redefine the Ethereum network itself and possibly reshape the broader crypto industry landscape going forward.

While Bitcoin saw a modest increase over the past 24 hours, nearing $44,000, various altcoins have outperformed it, causing a roughly half a percentage reduction in its market dominance within a day. BNB has experienced a significant surge of 12%, reaching $330 amid the recent altcoin resurgence.

The total crypto market cap has increased by over $40 billion daily, reaching close to $1.7 trillion on CoinGecko. Bitcoin, while up 1% on the day and trading slightly above $43,000, has seen a decline in market dominance by 0.5% in a day to just below 50%. However, its market capitalization has rebounded to above $840 billion after a recent retracement. 

Altcoins rally

Bitcoin SV stands out as the most notable gainer, alongside others like Arbitrum, Aave, Lido DAO, Optimism, and more. In the same timeframe, SOL has declined by over 6%, allowing BNB to reclaim its recently lost fourth place in market cap.

Elsewhere, ADA witnessed a 9% surge, trading above $0.65, while Ethereum rose by 6%, nearing $2,400. Notable gainers among larger-cap altcoins also included Chainlink (14%), Uniswap (10%), Bitcoin Cash (11%), and ICP (7%). Conversely, Avalanche, Polkadot, MATIC, and Toncoin are in the red.

Bitcoin SV has experienced a remarkable 60% surge, trading above $90, leading the top 100 alts. Other notable gainers include ARB, AAVE, LDO, OP, and XDC, with gains ranging between 15% to 20%.

Other markets

In the financial markets, European equity futures have edged higher as the year-end approaches, with global shares on track for their best annual performance since 2019. Treasuries remain steady, while contracts for the Euro Stoxx 50 rose 0.2% after modest declines in Asian stocks. US futures indicate gains, while the MSCI All Country World Index rallied by approximately 20% this year.

In other news, the United States Dollar (USD) is set for its worst year since the onset of the pandemic, down nearly 3% in a Bloomberg gauge, as Wall Street anticipates a Federal Reserve interest rate reduction after reining in inflation. Despite false starts suggesting the end of the rate-hiking regime, the USD has experienced its steepest annual drop since 2020.

Lastly, oil is on track for its most substantial annual drop since 2020, as war and production cuts fail to boost prices. Brent crude remains above $77 a barrel, facing weekly, monthly, and quarterly losses, while West Texas Intermediate hovers near $72 a barrel. The global benchmark has also declined by about 10% this year, and a broader Bloomberg commodities gauge has additionally dropped by a comparable margin over the past 12 months.

CatalX CTS Ltd., the operator overseeing the Canadian crypto trading platform Catalyx, recently disclosed a security breach resulting in the partial loss of crypto assets held on behalf of clients. The company suspects the involvement of an employee in the incident, prompting the Alberta Securities Commission to issue a cease trade order against the company and its CEO, Jae Ho Lee.

Damage control

In response to the security breach, CatalX has temporarily halted all withdrawals of crypto and fiat currencies through its platform, as well as suspended trading activities. This measure is aimed at containing potential further losses and safeguarding the interests of platform users. The company is actively investigating the matter and taking decisive action.

Canadian regulators swiftly responded to the Catalyx security breach, with the Alberta Securities Commission ordering the cessation of crypto contract trading and launching an investigation. CEO Jae Ho Lee agreed to the 15-day freeze order, set to expire on January 5th, 2024. CatalX is also conducting an internal investigation into the security breach and has enlisted Deloitte LLP for forensic and investigative support.

Stay tuned

The company has pledged to keep customers informed of significant findings or developments as the investigation progresses and anticipates providing updates upon the conclusion of the investigation. Users are advised to stay tuned for further communications regarding the resolution of the security breach and the resumption of normal trading and withdrawal activities.

The loss of crypto assets and the suspected employee involvement have triggered internal and regulatory investigations. CatalX is navigating this challenging situation by prioritizing transparency and collaboration with regulatory authorities to safeguard the interests of its clients.

The temporary freeze on trading activities is therefore a precautionary measure to prevent additional losses and ensure a comprehensive examination of the incident. As the investigation unfolds, stakeholders await further updates on the extent of the breach and the steps CatalX will take to enhance its security measures.