Bitfinex offers ‘up to $400 million’ as reward for bitcoins stolen during 2016 exchange hack

Crypto exchange Bitfinex was hacked and subsequently robbed of nearly 120,000 bitcoins in 2016 — and now, it’s offering a big reward in its bid to get them back.

The company said Tuesday that it is “offering a reward to any persons that connect us with hackers responsible for the unauthorized transfer of almost 120,000 bitcoins from the exchange in August 2016. As part of the same initiative, Bitfinex is also offering a reward to the hackers themselves for the return of the stolen property.”

Bitfinex appears to be offering a 30% cut of recovered bitcoins as part of the initiative. “The aggregate rewards available under this programme could be worth up to approximately US$400 million at the current BTC price if all bitcoins are fully recovered. The bitcoins stolen minus recoveries in 2019 are worth $1.344 billion today, with 30 per cent of that amount equal to $403,288,427,” the firm said.

To date, Bitfinex has recovered roughly 27 BTC, which were obtained by the U.S. government during an investigation. At the time Bitfinex received those funds in early 2019, the exchange hinted at a financial reward for those with information leading to additional recoveries.

The hack took place on August 2, 2016, and ever since then, funds tied to the breach have moved through a series of traced wallets. Last week, more than $27 million in stolen bitcoin was transferred, as The Block reported at the time.

© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Avalanche Blockchain Protocol Raises $42M in 4.5-Hour During Public Sale

Blockchain project Avalanche raises $42 million in a public sale, with the mainnet launch now being expected to come by the end of August.

The Avalanche project, a blockchain protocol founded by Cornell’s Emin Gün Sirer, has completed a $42 million public token sale after raising $12 million in a private sale in June.

Avalanche blockchain developer AVA Labs said that the Avalanche network launch is expected to come by the end of August.

Public sale offered a total of 72 million AVAX tokens

The $42 million public sale took place on July 15, taking just a few hours to complete. Starting at 10:00 a.m. ET, the token sale offered up to 72 million AVAX tokens. At 2:33 p.m. ET, just four hours and 33 minutes after the start, the sale was completed with all token pools completely filled, AVA Labs said.

Originally, the public sale was expected to run for at least two weeks.

The token sale involved participants from 100 countries in line with previously announced rules. According to the firm, the sale even featured participation from Ethereum’s Genesis block — the first or origin block of a private network on the Ethereum blockchain.

A spokesperson at AVA Labs said, “It was initially flagged by our community actually as a sign that Avalanche is attracting support from early users and influential people in crypto (e.g. an anonymous Ethereum leader from its earliest days participated in the Avalanche sale).”

The public sale reportedly launched in compliance with the United States’ federal financial regulations.

As previously reported, the Avalanche token, or AVAX, is the native utility token of the Avalanche platform and is not pegged to any asset. By participating in the token sale, investors reserve the right to contribute to the growth and development of the Avalanche network. While not yet listed on any exchanges, AVAX tokens are scheduled to be distributed upon the mainnet launch in August.

The Avalanche Foundation’s $12 million private token sale featured major blockchain investors like Chinese mining giant Bitmain and Mike Novogratz’s Galaxy Digital. 

Referred to as the “Internet of blockchains,” the Avalanche protocol is designed to provide an open-source platform and a layer 1 protocol for launching decentralized finance applications and enterprise blockchain solutions.

Ethereum miners are making the network run 25% faster

Today, Ethereum miners have started increasing the network’s capacity to raise the number of transactions it can process per second by around 25%. This should typically make it run faster, when there are lots of transactions being made.

But this isn’t a network upgrade. Miners are able to gently nudge the network’s capacity up or down every time they produce a block. It requires a continued effort from a majority of miners to significantly increase capacity. And this appears to be happening. 

“The #Ethereum miners are voting to increase the Block Gas Limit from 10,000,000 to 12,500,000. In theory, this means that the Ethereum network now has the capabilities to handle ~44 transactions per second, instead of ~35. Another huge milestone for the community,” tweeted Bitfly, which owns Ethereum mining pool Ethermine.

Gas is an Ethereum-based token used to pay transaction fees on the network. The gas limit controls how many transactions can be made in a block. So, increasing the limit (block by block) expands the network capacity, making it faster.

So far, miners have increased the gas limit to 11.2 million gas over the past few hours. This is roughly 50% of the way to the 12.5 million mark.

Ethereum miners are making the network run 25% faster
Ethereum miners are increasing the gas limit in blocks. Image: Etherscan

As Decrypt reported previously, Ethereum’s blockchain capacity was similarly expanded by 25% last September.

Long-term consequences

On the other hand, not everyone is happy with the plan. Increasing the number of transactions per block makes the blockchain bigger—and more difficult and expensive to run. This could reduce the number of people who run Ethereum nodes and help to keep the network secure.

Ethereum core developer Péter Szilágyi argued that miners are pursuing only their own financial goals, not thinking about the long-term health of the network.

Chiming in, Ethereum co-founder Vitalik Buterin added that Sparkpool reached out to him and asked whether he supports the increase of the gas limit. He said he opposed it because Szilágyi did.

But he did understand the miners’ point of view. Raising the gas limit should reduce transaction fees, making the network cheaper to use. With Ethereum already a hotbed of Ponzi scheme activity, transaction fees have been rising considerably since March, now up to $0.55 per transaction.

“I’ve spent $40 […] recently just from transferring to three people,” Buterin added. But that’s nothing compared to the exchange that made two transactions—and spent $5.2 million in fees.

The sender of $5 million Ethereum transaction fees has revealed itself

A little-known South Korean peer-to-peer crypto exchange Good Cycle is behind the last week’s high-fee Ethereum transactions, according to blockchain analytics and security firm PeckShield.

PeckShield said Good Cycle appears to be a Ponzi project and could be easily hacked because of its security flaws – the exchange’s website uses HTTP protocol instead of HTTPS.

Notably, Good Cycle has also confirmed on its website that it suffered “repeated” hacks. Moreover, the exchange has now sent two transactions to Ethermine and SparkPool with a message that says: “I am the sender.”

Last week, two high-fee Ethereum transactions took place in which the sender spent around $5 million. Mining pools Ethermine and SparkPool facilitated each of the two transactions. They both first waited for the sender to reach out, later Ethermine distributed the fees to miners and SparkPool decided to do so on June 17 at 15:30 (GMT+8).

Since the sender contacted SparkPool, it remains unclear what the mining pool has decided now. The Block has reached out to both SparkPool and Ethermine and will update this story should we hear back. 

It remains unclear who hacked Good Cycle and might have also blackmailed the exchange. Last week, Ethereum creator Vitalik Buterin explained the blackmail theory: “Hackers captured partial access to exchange key; they can’t withdraw but can send no-effect txs with any gasprice. So they threaten to ‘burn’ all funds via txfees unless compensated.”

© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Six crypto firms to join Ethereum 2.0 staking pilot project

Six high-profile crypto startups will participate in an Ethereum 2.0 staking pilot project run by Codefi, a new product suite for commercial applications of decentralized finance (DeFi). It is administered by Ethereum-focused incubator, ConsenSys, which also funds an editorially independent Decrypt

Announced today, the program’s participants include cryptocurrency exchanges Binance and; digital investment fund DARMA Capital; Huobi Wallet; digital assets management platform, Matrixport, and custodial wallet provider Trustology

The coming upgrade is the most significant in the blockchain’s history to date; it will introduce a proof-of-stakeconsensus mechanism, moving the network away from its existing proof-of-work architecture.

The upgrade will introduce a network of validators who will guarantee compliance with the rules, by placing a security deposit of 32 ETH each (worth around $7,500). A minimum of 16,384 validators, staking 524,288 ETH, are needed for Ethereum 2.0 to go live. The minimum value is designed to ensure that the network will be secure enough for launch.

Staking rewards participants, and adds security to the network, but it can be complex for the average layperson, and risks include theft or loss of withdrawal keys or incorrect transfer of funds. Hence, Codefi is aiming to lower the barriers to participation in staking networks by enabling exchanges, custodians, funds, wallets and other potential customers to access the long-anticipated Ethereum 2.0 network, on behalf of their customers. 

“With staking on Binance, users can receive staking rewards without needing to set up nodes, or worrying about minimum staking amounts, time lengths, or any catches,” said said Binance CEO Changpeng Zhao. “With the eventual launch of Ethereum 2.0, we are excited to support staking for all.”

How much you might earn staking on Ethereum 2.0

The six firms will all gain early access to the Codefi Ethereum 2.0 staking solution. They can provide feedback and feature requests on the project’s new staking API, ahead of the first phase of the Ethereum 2.0 launch later this year.

ConsenSys wades into compliance for Ethereum tokens

ConsenSys has developed a service to help decentralized finance companies stay on the right side of guidelines that prevent money laundering and counter financing of terrorism. 

Codefi Compliance is part of ConsenSys’ existing Codefi product suite, which is focused on Ethereum-based commerce and finance applications. The tool is designed to help companies automatically follow know-your-customer (KYC) guidelines, which are used to ensure anti-money laundering (AML)/countering the finance of terrorism (CFT) compliance. 

“We offer multiple risk management and diligence tools, but this is the launch for a core compliance offering and the focus is on KYC, which is the type of analysis most need in Ethereum native finance and commerce,” Codefi Compliance head of business development Sumit Kishore told Decrypt.

(Disclosure: ConsenSys funds an editorially independent Decrypt.)

KYC requirements prevent financial institutions from being used for money laundering or channeling funds for illegal activity. In the United States, the Financial Crimes Enforcement Network is charged with overseeing the Customer Due Diligence Rule.

It applies to any institution dealing in cash, securities, commodities, mutual funds. Such institutions must identify their customers using a driver’s license, passport, or other government-issued photo ID. Financial institutions must also create “customer risk profiles” and “report suspicious transactions.”

Codefi Compliance goes one step beyond into know-your-transaction (KYT), which preserves a degree of anonymity by analyzing address behavior rather than customer behavior.

There are other companies within the cryptocurrency space focusing on compliance, including CipherTrace and Chainalysis. Other blockchain companies manage compliance internally, with varying degrees of success. Still others ignore KYC altogether, though it’s a dwindling group, as companies can face fines and business restrictions for not conducting due diligence. 

Codefi Compliance believes its competitive advantage is its focus on Ethereum and Ethereum-based assets, including stablecoins like DAI and Tether. According to ConsenSys, Codefi Compliance can handle over 280,000 different digital assets that run on Ethereum—including ERC20-, ERC721-, ERC179-, and ERC777-compliant tokens.

“There are massive developments happening in DeFi and Web3, and the majority of them are being built on Ethereum blockchain,” Kishore said. “From an enterprise perspective, Ethereum continues to gain momentum as the programmable blockchain of choice, as the majority of the world’s largest companies using blockchain are building on Ethereum.”

According to John Jefferies, Chief Financial Analyst at CipherTrace, there’s definitely a “vibrant market for compliance solutions” as regulations proliferate. There’s the European Union’s 5th Anti-Money Laundering Directive, which is currently in effect, plus full implementation of the Financial Action Task Force’s “travel rule” is around the corner. The travel rule represents an agreement among the FATF’s 37 member nations to require crypto businesses, including exchanges, to share information with each other when their customers move money between these companies.

ConsenSys announces Codefi for commercial DeFi

“That said,” Jefferies told Decrypt, “cryptocurrency analytics is a tough market to break into amid the fast-moving nature of cryptocurrencies and shifting regulations.” 

To Jefferies, it all comes down to the data: “Incomplete or poor-quality data can have serious consequences—including the failure of AML compliance programs.” 

ConsenSys is betting that it has the data needed, and Kishore says it has the track record: “ConsenSys has developed various DeFi and enterprise applications and our software powers millions of users of the Ethereum blockchain.”

And now it has a way of tracking users’ millions.

The Compound token model: how it can expand beyond governance

Quick Take

  • The Compound team has recently removed admin privileges to their smart contracts and the protocol is governed fully by COMP token holders.
  • 42% of COMP supply will be distributed to Compound’s users (borrowers and lenders on the platform) gradually over the next four years.
  • Initially, COMP token holders will have governance rights over Compound’s smart contracts but no financial rights (to token burns or dividends). These rights can be modified by COMP token holders.

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Blockchain journalism startup Civil is no more

Decentralized, blockchain-driven journalism marketplace Civil closed its doors today, with the website replaced by a blog post from CEO Matthew Iles about the decision.

The team and technology behind Civil has been folded into ConsenSys, the New York-based Ethereum incubator which backed Civil (and, for disclosure, also funds an editorially independent Decrypt.) The team will now work on Ethereum-based identity solutions going forward.

“Although the journey for Civil is over, our new team continues to develop cutting-edge technology that I believe will contribute to building a better internet,” reads the post from Iles. “This isn’t the outcome we had envisioned, but nevertheless, we’re proud of what we accomplished.”

Understanding Civil

Civil was founded in 2016 as one of the first companies to explore the potential for blockchain and cryptocurrency in the media space. The startup’s goal was to allow publishers to establish a trusted newsroom by staking its CVL token, and then users could also spend CVL to reward publishers or stake it to have a say in the governance of the platform.

The buzzy startup’s initial coin offering (ICO) in late 2018 fell short of its goals, leading Civil to rework its approach and try again in March 2019 by offering user memberships. Civil also awarded $1 million in what Poynter characterizes as “no-strings-attached grants” between 14 newsrooms.

According to the site’s post-mortem interview, Civil has been on the path to closure for at least six months now. Along with key personnel departures, Civil also lost its primary funding from ConsenSys, the site reports, and couldn’t replace that funding.

The startup stopped directly funding newsrooms earlier this year, while potential partnerships with established news organizations didn’t pan out. With that, Civil’s grand experiment of a decentralized, self-governed journalism marketplace ultimately came to an end.

“We developed compelling technology,” Iles told Poynter, “but in the end, tried to do something that was not ready for prime time.”

It’s a layer 2 world, and Ethereum is almost living in it

When Ethereum scaling? According to Vitalik Buterin, it might already be here. 

The nomadic creator of Ethereum tweeted today that the blockchain network’s “layer 2 strategy has basically succeeded.” 

The Ethereum network’s lead developers have had an eye on increasing throughput for the network since before the dawn of CryptoKitties, ERC20-based digital collectibles whose popularity clogged the network in late 2017.

A January 2018 Ethereum Foundation blog post from Buterin identified the problem: “Blockchain scalability is difficult primarily because a typical blockchain design requires every node in the network to process every transaction, which limits the transaction processing capacity of the entire system to the capacity of a single node.”

In that same post, he identified two strategies for scaling: sharding, which allows transactions to go through without every node process each whole transaction, and so-called “layer 2 protocols” in which transactions are made off chain. The foundation was willing to put money toward the efforts, in the form of $50,000 to $1 million grants to people who were either working on existing layer 2 strategies or looking into new ones.

At the time, plasma and state channels were two of the most promising systems. Within the last year, however, new solutions, such as optimistic rollups and their cousin, ZK rollups, have taken off.

Buterin’s tweet thread today came in response to Philippe Castonguay, a Montreal-based blockchain developer with Horizon Games, who noted the sheer volume of layer 2 scaling projects coming to fruition within the last week and in the coming month. 

One curious addition was the inclusion of Tether’s announcement that it would be processing transactions on OmiseGo’s network, which on the surface looks like proof that network scalability is still a problem. “The Ethereum blockchain is a valuable but limited resource, which, under heavy traffic, is vulnerable to severe network congestion,” the announcement read. “When transaction demand exceeds 12 TPS, settlement times increase and gas costs can rise significantly.”

OmiseGo (OMG) price surges following Tether integration

Castonguay told Decrypt that working on the main Ethereum layer is currently easier and has the most liquidity, but that it’s not always necessary given the strengths of layer 2 technologies. In the long term, however, he says it should be reserved mostly for things like high-security projects, complex transactions, and for bridging and validating layer 2 chains. 

Tether’s move to OMG, which uses a More Viable Plasma method to batch transactions, makes sense in this view. Exchange transactions don’t have to be on the main chain and therefore shouldn’t be, goes the thinking behind this.

As to which layer 2 tech to use instead, that’s a harder question. “Some L2s (most that are live today) only support a subset of what Ethereum can do, such as exchanging tokens or transferring assets,” Castonguay said. “Other L2 solutions (e.g. optimistic rollup) would allow any application, just like Ethereum L1 (main chain), but these aren’t live yet. Each L2 solution and implementation also has its own security risk profile that needs to be considered.”

According to Buterin, token transfers must continue moving to layer 2 solutions as these take up a large chunk of network activity.

To him, the remaining hurdles aren’t technical in nature—they’re about getting them out and onboarding users. Referring to the need for users to have plasma- or rollup-based wallets, he said, “This is an adoption challenge, not a technical challenge. Though part of that adoption challenge is tightening the guarantees so users will feel comfortable ‘living’ inside and L2 system.”

Placeholder Ventures leads $4 million investment into Fortmatic

Fortmatic, the blockchain company that makes it easy to sign into decentralized applications (dapps), today announced a major rebrand, new features and that it’s raised $4 million in a seed round.

Fortmatic, founded in June 2018 in San Francisco, will henceforth be known as Magic. The product remains the same: a Web3 alternative to OAuth (the software that lets you sign into Web2 apps, like Google or Facebook, using your email address).

Fortmatic lets you sign into dapps
Fortmatic (now Magic) is a way of easily accessing a Web3 application. Image: Fortmatic.

Only now, it comes with billing and new pricing features, as well as a redesign: “The dashboard doesn’t look like something that’s built in a couple of weeks,” said Sean Li, CEO of Magic.

And the old Fortmatic was a widget, slapped with Fortmatic’s branding. “Truthfully, that’s pretty annoying for the end user,” said Li. Companies implementing Magic will “have the option to completely white label it away,” erasing Magic’s branding altogether. 

But Li is not concerned that scrubbing branding away will lose him customers. “I’m not too worried about acquiring developers because that’s our focus. That’s what I’m good at,” said Li. Though end users may no longer learn about Magic, he wants to start a “network effect” among developers similar to Stripe, the payment service. 

The pricing of Magic is the same as Fortmatic: starting with  $79 per month for developers with 1,000 monthly active users, with $0.45 per additional user up to 10,000 users; $327 for 2,500 monthly active users, with $0.09 per additional user up to 25,000 users; and a higher tier “that can potentially handle millions of users” and comes with a bulk discount and more support, said Li.

Since the launch of its product in February 2019, 6,500 developers now use Fortmatic, and Li estimates that the platform has 60-70,000 wallets. 

How Web 3 can use Google-like tactics to keep users

Magic’s $4 million seed round, also announced today, was led by Placeholder, and followed by investors such as Guillermo Rauch of Vercel and Roham Gharegozlou of Dapper Labs. Magic also announced several new partnerships. First, it will integrate with Vercel, a way to launch javascript websites, and second, the scientists at the Max Planck Society will use it to verify the authenticity of research data.

With Magic, Li also wants to “expand out of Ethereum” and apply his tools to Web2 products. Anybody can use Magic’s authentication system, he said. “It’s just under the hood, a wallet or key pair is created for each user.” He talks about ”progressive disclosure” of blockchain—its users might use blockchain without realizing it, then be less afraid when this is revealed. 

Ethereum Foundation’s Devcon to skip 2020, go to Colombia in 2021

The Ethereum Foundation today revealed that it will not be holding its annual event, Devcon, in 2020 and will instead hold Devcon VI in Bogotá, Colombia, at some point in 2021.

According to the blog announcement, the Ethereum Foundation explored 10 cities before settling on the Colombian capital. It says it chose Bogotá based on “a strong demand for an event in South America” and the city’s ability to provide a venue and accommodations for several thousand attendees.

According to a source with knowledge of the selection process, Buenos Aires was also heavily considered. Argentina’s history of economic crises has helped foster a vibrant crypto community there, with OpenZeppelin, Nomic Labs and Decentraland all based in the country. Plus, it already had experience hosting the ETH Buenos Aires hackathon in 2018 and community members had been actively pushing for Devcon to land there.

Devcon 5: Building a decentralized revolution at scale

Golem project advisor and ETHBerlin organizer María Paula Fernández told Decrypt that while she’s lived in Germany too long to represent the Ethereum community in her native Argentina, “I’m really happy that South America is getting representation.” She suggested that the inflationary aspects that make crypto appealing may have also made it difficult to find an appropriate venue in Buenos Aires. “Essentially, venues are very expensive and charge in USD, as with the crazy inflation, one cannot expect them to work in [Argentine pesos].”

For Ethereum community members, the fact that there will be a Devcon at all should be some relief. The event has grown from a small gathering in a Berlin office in 2014 to an affair that regularly gathers 3,000+ attendees and serves as a prized launching pad for the latest Ethereum protocol changes and products.

Previous Devcons were held in Osaka, Prague, Cancún, and London. Devcon 2021 will be the first to be held in South America. 

The Ethereum Foundation, which for the past several years has used the Ethereal Summit in May to announce Devcon’s location and build excitement for the event, had been mum about the event’s status since a March 30 blog post that noted event updates would be put on hold as a result of the global COVID-19 pandemic.

Other blockchain and crypto conferences moved online. New York Blockchain Week’s two biggest events—Consensus: Distributed and ConsenSys’ Ethereal Summit—replaced exhibition halls and glad-handing with Zoom rooms and green screens. Rather than moving Devcon online this year or delivering a “least bad contingency or substitute option” it will work to “super-size our ongoing efforts” toward Devcon VI in Bogotá.

You can now bet on Bitcoin or Ethereum with this new “priceless” token

DeFi is unlocking never-before-seen ways to do derivatives.

The Universal Market Access (UMA) Project announced Wednesday the launch of the ETHBTC synthetic token on the Ethereum mainnet, initially available via Uniswap V2. This “Ethereum-Bitcoin” token is the first real-world test of UMA’s “priceless” synthetic token smart-contract design and marks the beginning of a new era of derivative products made possible by blockchain technology.

The ETHBTC token tracks the price ratio between Ethereum and Bitcoin. If ETH rises faster (or falls slower) than BTC, the token value will increase, and vice versa if Bitcoin leads. The tokens are considered “priceless” because they don’t rely on data from oracles to price swaps, relying instead on a community-driven dispute mechanism.

How “priceless” tokens can limit oracle risk in DeFi liquidations

ETHBTC tokens can be exchanged with DAI on Uniswap V2 and initially cost about 0.02 DAI per token. Anyone can create and sell ETHBTC tokens using UMA’s open source command line tool by depositing DAI as collateral. Tokens expire August 1 and can be redeemed depending on the final ETH to BTC price ratio.

In the announcement, UMA co-founder Hart Lamber explained ETHBTC was chosen as the first mainnet priceless synthetic token because it’s related to DeFi while highlighting the friendly competition between the two leading cryptocurrencies. ETHBTC also offers exposure to large-scale success or adoption of one crypto over the other without actually holding either one, a novel product in the DeFi landscape.

Uniswap V2 launched just days ago with a host of new features, including direct ERC20 token swaps that allow ETHBTC tokens to be swapped directly for DAI. In the previous version of Uniswap, ERC20 token swaps were routed through ETH transactions, increasing fees and making pair trades less viable.

Lamber warned in the release that the ETHBTC priceless synthetic token is an experimental alpha product and should be approached with caution and small amounts of money to start. The smart contract code has been audited by OpenZepplin and an emergency shutdown can be initiated by UMA token holders.

The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.

Uniswap goes live with v2 of its non-custodial exchange protocol

The next-generation version of Uniswap, the non-custodial exchange protocol, has gone live.

The team behind the Open Finance protocol unveiled its plans for v2 in late March, as The Block reported at the time. The new version introduces features like ERC20 pairs, more manipulation-resilient price oracles and flash swaps, among others. Testing environments for v2 were previously available on the Ropsten, Rinkeby, Kovan and Görli testnets.

The Uniswap team announced v2’s deployment on the Ethereum mainnet in a Monday blog post, which highlighted the v2 audit report as well as details about the new version. The blog post also included links for the v1-to-v2 liquidity migration portal, v2 analytics and “an updated interface for swapping and liquidity provision on Uniswap V2.”

As noted by The Block’s Matteo Leibowitz, Uniswap saw its busiest quarter ever in Q1 2020, when its volumes surged more than 225% compared to the final quarter of 2019. Much of that volume was driven by activity spurred by market turbulence in mid-March – including the so-called “Black Thursday” event. And while volumes dipped comparatively in April, those metrics indicate that May will see around $100 million in volume. 

The team behind Uniswap raised a seed funding round last April, as The Block reported, drawing support from firms including VC company Paradigm. Coinbase also invested in the protocol directly via an infusion from its USDC Bootstrap Fund. 

© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Ethereum has More Bitcoin Locked up Through wBTC Compared to Bitcoin’s LN

There is an ongoing issuance of wrapped BTC – or wBTC – on the Ethereum blockchain. It appears that this token is in very high demand, as the recent issuance of Wrapped Bitcoin has a higher USD value compared to the entire Lightning Network. 

Issuing Bitcoin on the Ethereum blockchain has always been an interesting concept.

wBTC Issuance Keeps Increasing

In doing so, BTC holders can gain access to Ethereum’s DeFi ecosystem.

Particularly Wrapped Bitcoin, or wBTC, appears to be of great interest. 

So much even that an extra 1,000 Wrapped Bitcoin were minted on Ethereum a few days ago.

This is significant for many different reasons.

First of all, it shows that this token is viable and valuable to the right people.

Secondly, it shows that people are more willing to tokenize BTC on Ethereum compared to using it on the Lightning Network.

More specifically, there are 927 BTC available on the Lightning Network to provide liquidity.

In comparison, there are nearly 2,300 wBTC in circulation.

It seems unlikely that these statistics will shift in favor of LN in the near future. 

Something needs to change if the Lightning Network wants to take Bitcoin to a whole new level.

Right now, it seems more likely that Ethereum will achieve that goal.


The post Ethereum has More Bitcoin Locked up Through wBTC Compared to Bitcoin’s LN appeared first on NullTX.

Why Reddit is bringing crypto to two million people

Reddit is introducing cryptocurrency to reward engagement in two of its communities, which together have more than 2 million members.

So-called Community Points will be distributed in Reddit’s r/CryptoCurrency and r/FortNiteBR communities, also known as subreddits, which have about 1 million members each. Tokens are earned by contributing to these communities with quality posts and comments. So far, gamers have been more enthusiastic about the feature than cryptocurrency fans, as 3.8k addresses have been created for the Fortnite subreddit token, compared with 1k for the crypto one, according to Etherscan.


Community Points are Ethereum-based ERC20 tokens, and users store them in their own Ethereum address, which Reddit calls “Vaults.” Each user has control of their private keys, which means they have full ownership of the tokens they earn, and not even Reddit can take them away. Tokens will be used to redeem items within Reddit (badges, GIFs, emojis, etc.), and can be sent and transferred to any Ethereum address, even if the wallet owner isn’t on Reddit — they’re just like any other Ethereum token.

Reddit, which has over 400 million users, is on its way to become the first major social network to successfully introduce cryptocurrency tokens —the project is on Ethereum’s Rinkeby testnet and not actually on the mainnet yet. For context, Ethereum has a total of almost 100 million unique addresses.

Telegram scrapped its plan to distribute tokens among its 400 million users, after selling the coins for $1.7 billion in 2018. Facebook has delayed and watered down plans for Libra. Both efforts buckled under regulatory pressure.

Difference with TON and Libra

The difference here is that Reddit is giving instant use to its tokens, and isn’t selling them in exchange for money or crypto —which should ease regulators’ concern. Points are also specific to their different communities (the crypto subreddit’s tokens are called MOON, while the Fortnite ones are called BRICKS), and their value will move following activity in each group. This is different from Libra, a stablecoin, which when used by Facebook’s over 2 billion users for payments, regulators fear could threaten national currencies.

The other difference with Libra is that Reddit’s Community Points are tokens on the public Ethereum network, which US agencies have already deemed decentralized enough for ether to be considered a commodity. This compares with Facebook’s permissioned network, which regulators worried could be abused by the tech giant to collect even more data about its users.

Reddit also proved that a non-blockchain company can be more effective than most so-called Web3 apps in delivering the same message: the internet has been co-opted by large corporations which extract every bit of data and attention they can get from us in exchange for ad dollars. We’ve let them “spy, manipulate and censor” us. It’s time to create a free, interconnected, global community, where each user is in control. Its presentation is a lot clearer than pitches by most dapps, and doesn’t mention crypto once.

Why is Reddit Doing This

Reddit may be hoping to increase user engagement and to position itself as the forward thinking social network. It also stands to economically benefit from this tokenized model.

Initially, 50 million Points will be distributed based on so-called “karma,” or reputation, earned in the subreddit to date. Points will then be distributed every four weeks based on how much karma each user earned in that period. And here’s how Reddit benefits: it gets 20% of the tokens distributed each cycle.

The amount distributed will continue to decrease so that the total number of Points will approach a maximum cap of 250 million. Points are also burned every time they get used to redeem for items within Reddit. A portion of burned tokens are re-distributed when the cap is reached. This cap and “burning” mechanism should help push the token value up.

While dapps and blockchain-based projects have been experimenting with token-based business models for years, Reddit, with its millions of active users, may help prove whether the platform-specific, utility-token model works.

As for DeFi, developers will be able to incorporate Reddit’s tokens to their dapps as soon as they’re on the mainnet. Soon we’ll see Points being used as collateral for loans, added to a tokenized investment portfolio, and traded on Uniswap.

[This story was written and edited by our friends at The Defiant, and also appeared in its daily email. The content platform focuses on decentralized finance and the open economy, and is sharing stories we think will interest our readers.]

Reddit’s big cryptocurrency move is an exciting test

Reddit has finally made a move to tokenize its community points system, unveiling a beta test of two tokens based on the Ethereum network. The trial will initially roll out to two subreddits—r/cryptocurrency and r/FortniteBR—with more than two million subscribers between them.

Reddit using cryptocurrency in app
Reddit wants to help take back control of the Internet. Image: Reddit.

While Facebook and Telegram have either delayed or cancelled their cryptocurrency projects, Reddit is going full steam ahead. While smaller than Facebook, the app is a similar size to Telegram, and has 430 million users. Out of its users, 64% are aged between 18–24 and 69% of them are male—an audience known to be interested in cryptocurrency. If this trial is successful, it could send a clear message to other apps around the world that they should follow in its stead. And at the same time, it’s an exciting test for crypto in the real world.

Rumours of Reddit getting into cryptocurrency first spread in early April. Some users were able to access a wallet system which contained hints about the project. At the time, Reddit said it was working with one community on the offering. Yesterday, much more information was released.

The SEC killed Telegram’s $1.7B crypto project. Who’s next?

In a somewhat tongue-in-cheek slide presentation, the social media platform relayed its vision for a new frontier: a free and fair Internet. It claims the Internet has been ruined by advertising, censorship and “walled gardens” hoping that cryptocurrency might offer a way out.

The beta test is currently in operation through summer 2020. The new system will start with two communities—r/CryptoCurrency and r/FortniteBR—with tokens aptly named “Moon” and “Bricks,” respectively. Fortnite is a popular online video game.

As for what tools could achieve such an undertaking, Reddit offers up its “Community points.” Much in the same way as the existing karma, or Reddit gold systems, community points are used as a measure of reputation within the community—earned by submitting quality posts and comments. But unlike the current system, these tokens are running on a blockchain—and have some fancy features.

How do Community Points work?

The Community Points are ERC-20 tokens on the Ethereum blockchain, in the same way that many tokens were created during the ICO craze. They act as a way for Redditors to “own” a piece of their favorite communities. And no one—not even Reddit moderators—can seize ownership of them.

Community Points are also redeemable, allowing access to “special memberships” and premium features, including gifs, custom emojis, and badges. On top of this, Reddit plans to introduce a “weighted voting” system, bolstering the votes of users with the most Community Points.

Reddit explains how its Ethereum-based Points system will work

They’re also transferable via the Reddit Vault, which essentially acts as an Ethereum wallet. Same as with most cryptocurrencies, if you lose your private key to the vault, you lose your community points. As for who foots the bill for transaction fees, Reddit remarks that they’ll cover the costs, “for now.”

The Reddit presentation also mentions that “advanced users” can use other Ethereum tools if they so wish. Yet the success won’t be with the Ethereum diehards but with the thousands of new users just dipping their toes in the water.

Vitalik Buterin Debunks Rumor That Ethereum 2.0 Will Go Live In July 2020 – Herald Sheets

The co-founder of Ethereum, Vitalik Buterin has denied the rumor that says the much-awaited Ethereum 2.0 will go live officially in July 2020. This came about in a series of tweets generated via an article published by a major crypto news outlet, The Block, some hours ago, titled, “Vitalik Buterin says ETH 2.0 is still […]

Source: Vitalik Buterin Debunks Rumor That Ethereum 2.0 Will Go Live In July 2020 – Herald Sheets