Skip to content Sunday Review 28/04/2024

Last week, heavy rainfalls and strong winds in the Arabian Peninsula caused massive destruction in Saudi Arabia and killed twenty people in Oman; this week, East Africa was also affected by extreme weather events.

Apocalyptic rains have led to chaotic circumstances in Kenya, Tanzania, and Burundi. The capital city of Kenya, Nairobi, was one of the most affected areas as the intense waterfalls flooded its streets, displacing hundreds of people, especially those living in the slums.

World politicians and international organizations are upping their efforts to tackle climate change, the root cause of these disruptive weather momentums. In a move that would have been almost inconceivable half a decade ago, this week, ministers from several G20 economies signed a motion suggesting a 2% tax on the wealth of the world’s 3,000 wealthiest billionaires to finance international efforts against global heating and inequality.

Tax policy scares the rich and wanna-be rich - the categories where crypto investors usually fall. But while, like during this week, the price of Bitcoin trades mostly below $67,000 and ETH keeps under $3,300, the crypto-wealthy don’t have to worry about being affected by these measures.

There are those in the industry for whom taxation is not an issue, given that they look for enrichment outside the realms of legality. That is the case for ZKasino founders. Users who bridged Ether onto the website with the promise that the assets would be restituted after an airdrop are accusing the crypto casino of misleading them through false references and now-deleted token return policy clauses.

While small players lose money to scams, bigger ones have the luxury of forgetting about them. Blockchain analytics platform Arkham Intelligence has uncovered several instances of funds being forgotten in various bridge contracts from investors such as Ethereum co-founder Vitalik Buterin and Coinbase.

When they don’t forget about their fortunes, some whales in the crypto world spend it on luxury items and memorabilia. Just in the last seven days, the first Ordinal post halved sold by $2.1 million, and an item from the iconic collection CryptoPunk was sold by $12.4 million and more.

From misplaced assets to misplaced blame, Sam Bankman Fried is teaming up with a group of FTX customers to hold accountable celebrities who promoted the crypto exchange. If approved by a judge, the class action against SBF gets dropped in return for his help, partly freeing him from the responsibility of losing around $11 billion in user funds.

Another founder who has uncompromisingly changed his stance is Richard Heart. The founder of altcoin HEX, currently being investigated by the SEC, has issued contrary statements on X about which blockchain to keep the cryptocurrency, Ethereum or Pulse Chain, leaving investors confused and the community in chaos.

More disappointed than confused were investors of Renzo liquid restacking protocol left after the project announced its token economics earlier this week. The staking initiative built on top of the EigenLayer brief saw its token ezETH deppeged from ETH as users found out most of its tokens were allocated to investors and the team, with only a small portion going to liquidity providers.

New users wanting to stake might prefer to do it through Lido. Regardless of the pros and cons of the project, the Lido DAO community lifeguard initiative provides guidance and offers support to people unfamiliar with crypto. About to turn one year, the community-managed project that also organizes events such as workshops and hackathons has been instrumental to the growth of Lido.

Crypto newbies come in all forms and for all sorts of reasons. The free WLD tokens of the controversial proof-of-personhood (PoP) project Worldcoin is one of them. Sam Altman’s crypto initiative announced it is launching its own blockchain, citing a need to improve the scalability of the decision. Yet, given the legal challenges it faces, the apprehension by the crypto community, and growing market competition, the reasons to launch an L2 seem to be more a need for good publicity than an actual growing pain.

Other projects are too preparing to scale. Polkadot, for instance, has unveiled Jam. The upgrade will replace the Relay Chain with a more modular, lightweight design that enables on-chain processing and logic execution. 

Cardano, too, is scaling. At the blockchain developer conference in Paris, the people working to make the project competitive discussed scalability plans and simplifying the language of the chain’s smart contracts. As a celebration, on April 24, the network went through the Chang hard fork, which introduced community-run governance and improved decentralization.

While some projects plan for growth, others showcase how much the industry has evolved. After beginning to allow anybody to sign up on the network, the decentralized social media protocol Lens is showing positive signs of adoption through rising content creator fees.

Against the blossoming of the Web3 industry is, as always, the U.S. Securities and Exchange Commission. Yet, now the companies whom the agency has accused of wrongdoing are fighting back.

Ripple filed a lawsuit against the $2 billion fine on the company proposed by the SEC. It accused the regulatory body of overreaching its powers and stated that whatever the company is accused of doing wrong, penalties should never exceed $10 million.

The company behind the MetaMask wallet, Consensys, has also filed a lawsuit against the SEC, claiming that the agency’s stance towards ETH is an “unlawful power grab.” While the agency is trying to write the token down in law as a security, the Ethereum-based enterprise wants the asset regulated as a commodity.

It is not just companies that are showing their teeth to the authorities. The advocacy group Stand with Crypto Alliance has recently reached 400,000 sign-ups and is welcoming about 1000 supporters every day. The movement has gathered about $86 million which is used to pay to lobby politicians who promote the legislation of crypto.

Rather than defiance, Tether is betting on compliance. The stablecoin issuer has noted that it will act in accordance with the best geopolitical interests of the U.S. after Venezuela’s state-run oil company announced it will begin to use USDT to curb the sanctions imposed on the country by the United States government.

Tether’s position strengthens the competition. Ethena stablecoin USDe launched on the premise that, unlike USDT, it wouldn’t have a “kill-switch.” While being available for anyone at any time is a pro, there are several risks to the currency arising from its offer of a 10% annual yield to investors and how it handles its collateral.

Since entering the market, Ethena has been stealing the spotlight of less used stablecoins such as PYUSD - Paypal and Paxos stablecoin. Despite being announced recently that it is now possible to use the currency to transact between almost 160 countries and despite PayPal being trusted by U.S authorities, PYUSD has yet to gain significant traction, and it is only the 11th largest stablecoin by market cap.

Finally, in the world of central and private banking, we have observed noteworthy developments this week: European CBDC developers are concerned about competition from Apple Pay. The IMF is reviewing CBDC projects in the Middle East and Central Asia. Stripe's bid to acquire USDC highlights its growing importance. And, Franklin Templeton has reached a milestone of $360 million with its pioneering tokenized fund.

The climate was overall unchanged in the crypto in the first week post halving.