Did Ex-FTX Execs Just Build The Safest Exchange?
GM everyone!
Crypto continues to provide no shortage of excitement.
There’s a lot to talk about with news of a trustworthy new exchange, a potentially revived wreckage of an exchange, and a massively hacked exchange.
But, before we dive in and get the latest on all these storys and more, I want to share a little secret…
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Ok enough! Now let’s dive into today’s topics!
Here’s what’s in today’s issue:
- Sam shares his thoughts on ex-FTF execs launching a new exchange, FTT surging, Poloniex getting hacked, Roblox integrating NFTs & NEAR Protocol working with Eigen Labs and Polygon.
- This week on chain.
- This week’s trending coins by Rebecca.
Thanks to Phemex for sponsoring today’s newsletter.
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Ex-FTX Lawyer Leads Launch of Backpack
There’s a new crypto exchange incoming, it’s called Backpack Exchange (kind of an unusual name), and an interesting point is the involvement of Can Sun, who not so long ago was a lawyer at the car crash known as FTX.
Sun was general counsel there, and in fact testified against SBF at the latter’s trial (at which SBF was found guilty on all counts.)
The Backpack team is led by Sun, and also includes another former FTX employee, Claire Zhang, who was legal deputy to Sun at FTX, and who is married to Armani Ferrante, who himself is a founder at Backpack, and was a research engineer at the now-defunct FTX extension Alameda Research.
Backpack Exchange is tied in with the Backpack wallet, and it all comes from Coral, a crypto infrastructure company.
There’s also a relatively well known Solana NFT collection connected with the venture, called Mad Lads (that has surged in value recently), and the exchange is licensed in Dubai through an entity called Trek Labs.
Mad Lads PFPs
That might all sound a bit complicated, but the intention is straightforward: for users to avoid the kind of opacity that made FTX such a disaster and allowed SBF to rip off his customers. At Backpack, the plan is to allow users to verify funds whenever they like, make use of a self-custody solution called MPC (multi-party computation), and ensure regulatory compliance.
The exchange has now launched in Beta, with a full launch scheduled for Q1 2024, and plans for derivatives, margin and cross-collateral trading, and you can sign up for the waitlist now at the Backpack website.
But while you’re waiting, let us know what you think. How keen are you to try out a new exchange, and are funds verification and self-custody important to you, post-FTX? Drop us a reply to this email and tell what you think about Backpack’s prospects.
FTT Surges After Gensler Comments on FTX Reboot
And speaking of FTX, there’s speculation that the deceased exchange might be on course for a dramatic return from the crypto grave.
This possibility is becoming ever more real as potential buyers are said to be interested in taking over the remains left behind by SBF.
This was initially reported in October, during SBF’s trial, with investment banker Kevin Cofsky revealing–as part of the hearing–that there were several interested parties and that he was “optimistic that we will have either a plan for a reorganized exchange, a partnership agreement or a stalking horse for a sale, on or prior to the December 16 milestone date.”
Then, last week, SEC boss Gary Gensler commented–with regard to the possibility of NYSE ex-president Tom Farley taking over FTX–that, “if Tom or anybody else wanted to be in this field, I would say, ‘Do it within the law.’”
With crypto being in an excitable frame of mind right now, this set off a surge in the price of FTX native token FTT, which rose by around 150% last Friday, corrected back down by around 20%, but is still now up around 245% from a month ago.
FTT price
Remarkably, formerly dead-and-buried tokens LUNA and LUNC have also experienced big increases in price, gaining by 102% and 50% this month, respectively.
Strange things can happen when the crypto market flips bullish, and this partial revival of 2022’s car crash tokens is certainly a little unexpected.
Hacked Poloniex Offers Bounty
And in more exchange-related drama, Poloniex–in which Justin Sun has been a major investor since 2019–suffered a major hack last week, with the attacker draining $125.6 million worth of tokens.
According to blockchain security firm Peckshield, the losses were mainly on three chains, with $56 million lost on Ethereum, $48 million on Tron, and $18 million on Bitcoin.
Sun then tweeted that the exchange was offering a 5% bounty to the hacker, with a seven day deadline to return the stolen funds, and also stated via X that, “the Poloniex team has successfully identified and frozen a portion of the assets associated with the hacker’s addresses.
At present, the losses are within manageable limits, and Poloniex’s operating revenue can cover these losses.”
Roblox to Integrate NFTs?
After a rock bottom year, the NFT market is starting to pick up again, and there were positive long-term signals when it was revealed that the the founder and CEO of Roblox, David Baszucki, is interested in incorporating NFTs into the platform.
Roblox is a huge ecosystem for both playing and creating games, with over 214 million monthly active users and a net worth of over $213 billion.
It’s been around since 2006, and has social and commerce components, with an in-game currency and big brand involvement, and is distinctly metaverse-like (but with actual users.)
Last week, Baszucki spoke on CNBC and expressed a desire to allow items that are created in Roblox to be taken off-platform as NFTs, meaning they could then be freely traded. There are still no concrete plans, but it’s clear that the intent is there, and this is definitely one to watch as it would signal significant mainstream acceptance of NFTs.
NEAR Protocol Working With Eigen Labs and Polygon
NEAR Protocol has been making moves recently, with a couple of big announcements to take note of. First, there was news that NEAR Foundation would be working together with Polygon Labs to build a zkWASM Prover.
That sounds technical, but what it comes down to is improved blockchain interoperability through the use of ZK technology and WebAssembly appchains, with the aim being (according to Polygon), to “bridge the gap between Wasm-based chains and the Ethereum ecosystem.”
As Polygon co-founder Sandeep Nailwal explained, this “creates a trustless zk Bridge from Near to Ethereum”, while the “Polygon Ecosystem gets WASM appchains”, and he also noted that “Ethereum is fast becoming the defacto settlement layer for web3.”
After that, there was an announcement that NEAR Foundation will be collaborating with Eigen Labs (builder of Eigen Layer) to work on developing faster, cheaper transactions on Ethereum Layer 2s, through the creation of a “fast finality layer”, with a testnet expected in Q1 2024.
And if you were wondering whether all this means that NEAR will no longer function as a Layer 1, then don’t worry, as NEAR Protocol followed this all up with a post affirming that, “NEAR is an L1 and always will be.”
What a week it’s been for crypto, with real shifts taking place and bulls taking control. That said, if previous cycles are anything to go by, then it’s still early days, dips are likely, and there should be plenty more to come.
One very striking chart from this week is the stablecoin market cap, which has spiked sharply upwards, showing an increase of over $3 billion this month so far. And what does that mean? Liquidity, and funds entering the market.
And along with this increase in stablecoin liquidity, we’re seeing the BTC supply continue to become increasingly illiquid, as has been the ongoing trend for several months now.
Supply has been flowing to HODLers, who appear to be in a process of accumulation, and are not letting go of their coins (or using them to transact, which also gives us a hint as to what kind of asset BTC is currently regarded as.)
And when it comes to activity, if we look over and compare Ethereum, Polygon and Solana, we can see that Solana is enjoying an increase in Daily Active Addresses, and is now at a similar level to Ethereum and Polygon (even slightly overtaking Ethereum), and is still on what looks like an upward trajectory.
At the same time, we’re seeing a continued grind up in value locked across all L2s, with the figure currently at around $12.8 billion, while as for fees on those L2s, they’re currently, on the whole, looking cost-efficient, especially when lined up in comparison to Ethereum itself (note that data for Metis was not available.)
Solana has been on a very impressive run lately, is developing consistently, and looks well-positioned for the next couple of years and beyond.
This is all reflected in its DEX activity, where turnover has been growing and is now outpacing that of rival networks such as Arbitrum, zkSyncEra, and Polygon. The figure for DEX turnover on Solana is currently around 0.82 (which is calculated by dividing DEX volume by DEX TVL.)
When it comes to centralized exchanges, there was a significant uptick in trading volume moving into Q4, with a 45% increase month on month from September to October, taking it to levels last seen in April.
It’s also noticeable that CEXes are taking a larger share of overall trading than DEXes, compared with earlier in the year
As DEXes tend to be used more by relatively experienced crypto users, while CEXes have a broader user base, this might indicate participants entering the market from the mainstream.
Different kinds of coins and protocols do well at different stages of the cycle, and when the market was chopping sideways in the previous quarter, Friend.tech emerged as a potentially profitable diversion for anyone still sticking around in the crypto space.
However, now that the market is moving again, and with all eyes on BTC and various alts, it’s looking like Friend.tech is back on the fringes, with transactions way back down from their peak.
Finally, taking a look over at NFTs, there’s been a spate of buying, with CryptoPunks in particular being snapped up rapidly, overall daily volumes up 5X from the lows in September/October, and top tier PFPs moving upwards.
There’s also a lesson to be learned about how we can sometimes use the mainstream media as a counter-signal.
Remember about a month ago when there were headlines and tweets declaring that it was all over for NFTs? Well, it turns out that was a hint to pull the trigger on some PFPs, which is often the way in crypto, it seems.
Here are my key takeaways from the trends this week and the altcoins have put in another strong week!
- Seedifyfund is a blockchain gaming-focused incubator and launchpad that’s teasing the signing of a new Web3 trading card game. Seedify has also partnered with the gaming community, The Chills Room.
- GAMEE is the gaming token and subsidiary owned by Animoca Brands that’s launched its first-ever gaming event on Arc8. The event will take place from November 16-30.
- Bitrock is a Layer-2 EVM sidechain that’s surpassed 5 million blocks validated on the network and is getting closer to 100K transactions—currently at 84,500.
- XDEFI is a non-custodial wallet that’s reached a new all-time high of $49.2M for in-wallet swap volume. Volumes have been increasing since the integration of USDC across CCTP-supported chains.
- Dione is a Layer-1 blockchain that’s launched the 45-day public testing phase of its Odyssey Chain Testnet. The DIONE token has broken out of its trading range and is moving towards its next price target.
- RabbitX is a DeFi derivatives exchange that’s announced it will be launching a referral program later this month. The RBX token also skyrocketed 50% in one day and is approaching its all-time high.
- Celestia is a modular data availability network that’s gained a new competitor as Near Foundation has announced it will join the data availability race for Ethereum rollups.
- Kujira is a Layer-1 platform on Cosmos that’s hit a new all-time high after skyrocketing from $0.62 in October to $4 on November 11. This is due to the last batch of vested KUJI tokens being unlocked on November 9.
- Arbitrum is an Ethereum Layer-2 scaling solution that’s launched its short-term incentives program (STIP). GMX received the biggest allocation of ARB tokens leading to a jump in annualized yields to 75% on SOL, XRP, and DOGE.
- Avalanche is a Layer-1 blockchain that’s seen its AVAX token break out of its trading range and clear its 500-day resistance. Traders are now targeting $30. Ava Labs has also announced 12% job cuts to reallocate resources toward an expansion.
- THORChain is a cross-chain, decentralized liquidity protocol that’s become the second-largest DEX in daily trading volume after reaching $334.3 million. RUNE has also jumped 50% in a week.
- Solana is a Layer-1 blockchain that’s seen its SOL token erase its losses over the past 18 months and overtake USDC in market cap to become the 6th largest cryptocurrency.
- Polygon is an Ethereum sidechain that’s announced a partnership with Near protocol to build a zk prover for WASM blockchains. MATIC has also seen a 3,800% surge in whale activity and launched an $85M grant program to expand its ecosystem.
- Bonk is a Solana-based meme token that’s gained over 200% in just a few days as it piggybacks off the SOL momentum.
- Cosmos Hub (ATOM) powers the Cosmos ecosystem and it’s been announced that Eden will be the v0.5 upgrade to the Cosmos SDK. The Cosmos IBC has also been upgraded to Eden in its v8 release.
Thank you so much for your support, and I truly hope that today’s issue will give you insights needed to help you master your wealth.
If you are reading this it means you are on the free version of the Wealth Mastery Investor Report, which is great for news and tips on the crypto markets.
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See you next time!
Lark and the Wealth Mastery Team
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Wealth Mastery (Lark Davis, and the Wealth Mastery writing team) are not providing you individually tailored investment advice. Nor is Wealth Mastery registered to provide investment advice, is not a financial adviser, and is not a broker-dealer. The material provided is for educational purposes only. Wealth Mastery is not responsible for any gains or losses that result from your cryptocurrency investments. Investing in cryptocurrency involves a high degree of risk and should be considered only by persons who can afford to sustain a loss of their entire investment. Investors should consult their financial adviser before investing in cryptocurrency.
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