How Centralized Is Binance Chain?

Date:

October 7, 2022       /       Unchained Daily       /       Laura Shin

Daily Bits✍️✍️✍️

  • South Korean authorities made the first arrest related to the Terra case. Later, it was reported that a judge had dismissed the arrest warrant.
  • Top bankrupt lender Celsius executives withdrew $17 million in crypto weeks before the collapse of the company.
  • Grayscale is building an investment vehicle to take advantage of the low prices of bitcoin mining firms.
  • The European Union banned all crypto services to Russian entities as part of its new sanctions package against the country.
  • The CME Group will launch reference rates for the native tokens of the Avalanche, Tezos and Filecoin blockchains.
  • Analysts say that privacy-focused blockchain Zcash has been undergoing a spam attack.

Today in Crypto Adoption…

  • Dapper Labs announced a date for the beta launch of LaLiga Golazos, an NFT marketplace based on the Spanish soccer league.

The $$$ Corner…

  • Bitcoin mining firm Marathon had investments worth over $31 million in bankrupt blockchain provider Compute North.
  • Web3 startup Blackbird closed an $11 million seed funding round.
  • Xalts, an institutional-grade digital asset management startup, raised $6 million led by Citi Ventures and venture capital firm Accel.
  • Scale3 Labs, founded by two former Coinbase engineers, garnered $5.3 million in a seed funding round.
  • Coolkicks sneaker chain raised $6 million for MynaSwap, a trading platform for collectibles.
  • Toronto-based crypto lending firm Ledn agreed to acquire Canadian asset manager Arxnovum for an undisclosed amount.

What Do You Meme?


What’s Poppin’?

by Juan Aranovich

Thursday night, in response to rumors about a potential hack on the Binance Chain worth ~$600 million, Binance decided to halt the chain.

“An exploit on a cross-chain bridge, BSC Token Hub, resulted in extra BNB. We have asked all validators to temporarily suspend BSC,” Binance CEO Changpeng Zhao wrote on Twitter.

Binance Chain, previously known as Binance Smart Chain, is the smart contract platform of crypto exchange Binance.

Rumors started spreading about some unusual transactions on the Binance Chain. At first, it was believed that the transactions had to do with a crypto whale moving funds.

However, as the minutes passed, some started pointing out that these movements might be related to an exploit, especially after Tether blacklisted the address involved.

The potential hacker obtained 2 million BNB tokens from the BSC token hub, and started swapping, borrowing and bridging the tokens. On-chain data shows that the address now holds approximately $520 million in assets, diversified in different chains. However, the majority is still in the Binance Chain.

The decision to halt the blockchain didn’t go unnoticed on Crypto Twitter, with many pointing out the lack of decentralization that this action showed. Additionally, there is some talk about the possibility of a chain rollback, which means that the blockchain could go back to the state prior to the exploit occurring.

by Juan Aranovich

Decentralized finance protocol MakerDAO has made a decision to invest $500 million in US Treasuries and bonds.

Maker is the project behind DAI, which is the largest decentralized stablecoin with $6.7 billion in market capitalization.

The funds will come from Maker’s Peg Stability Module (PSM), which is the protocol’s mechanism to mint DAI at a given rate. The PSM is composed mainly of USDC, a token that produces no yield.

The plan, then, is to use the non-revenue-generating USDC to create a real-world asset vault and invest it into bonds and Treasuries. Of the $500 million, 80% will be allocated to US Short-Term Treasuries and 20% will go to Investment-Grade corporate bonds, as was previously voted by the DAO.

DeFi asset advisor Monetalis will be the entity overseeing the conversion of DAI to US dollars. Sygnum, a digital asset bank, will be in charge of converting half of the funds, while investment management firm Baillie Gifford will handle the remaining $250 million.

“Deploying capital, steady lads,” tweeted Mariano DiPietra, head of Growth at Maker, imitating Terra’s Do Kwon’s infamous tweet.

In August, following the US Treasury sanctions on Tornado Cash, Maker’s founder Rune Christensen proposed to reduce exposure to real-world centralized assets. However, this move seems to go in the other direction.

Maker’s plan got some criticism on Twitter, especially from the Bitcoin community. “Loaning money to a murderous empire ain’t a good look for a crypto project,” said Erik Voorhees.


Recommended Reads

  1. Paradigm researchers on why Ethereum is not a security
  2. Colin Johnson on asset ownership
  3. Rock Lobstah on Ethereum’s Shanghai upgrade

On The Pod…

Kristin Smith on Why Crypto Legislation Could Be Passed by Year's End - Ep. 404

Kristin Smith on Why Crypto Legislation Could Be Passed by Year's End - Ep. 404

Kristin Smith, Executive Director of the Blockchain Association, comes to talk about Tornado Cash, the lawsuit against Ooki DAO, the SEC charges against Kim Kardashian, and crypto legislation. Show highlights:

  • whether regulators did not understand the implications of sanctioning smart contracts
  • the necessity of having a conversation around financial privacy
  • whether the government wants sanctions compliance at the base layer
  • the reasons behind the CFTC lawsuit against Ooki DAO
  • why the SEC settled charges with Kim Kardashian and whether it was a publicity stunt
  • the chances of the different crypto bills becoming law
  • why Kristin thinks stablecoin legislation won’t come this year
  • whether the CFTC being the main regulator of crypto settles the question of crypto being securities or commodities

Book Update

My book, The Cryptopians: Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency Craze, which is all about Ethereum and the 2017 ICO mania, is now available!

You can purchase it here: http://bit.ly/cryptopians

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