The Blockchain Newsletter #7

Solend Whale Account Takeover Explained

The Solend team was concerned that the selloff would quickly dilute the price of SOL on the platform, jeopardizing other users’ assets on Solend. Not to mention, the traffic caused by the impact of the multi-million dollar liquidation on the Solana network could jam the network, putting the $2.6 billion dollar Solana ecosystem, which is already infamous for its frequent downtime, at risk.

The decentralized platform acted quickly to face the impending doom. Solend tried to reach out to the Whale, who was active on the platform’s discord with a pseudonym of Bloodstone. In addition to this, they put a governance proposal titled “SKND1” to “Grant emergency power to Solend Labs to temporarily take over the whale’s account so the liquidation can be executed OTC and avoid pushing Solana to its limits.” This would be done via a smart contract upgrade. “Emergency powers will be revoked once the whale’s account reaches a safe level.” This proposal was taken by storm by the crypto-natives of Twitter, who raised concern about the way the platform was handling the situation. According to many, this was a clear diversion from the ideals of decentralization, given that the whale was a legitimate individual who had been active on the platform both in terms of on-chain activity and on the platform’s discord. Many showed concern at how the votes were dominated by one single whale account, again putting the platform’s decentralization into question. In their defense, the platform stated that the team had not participated in the voting.

Early on Tuesday, Solend informed us that the whale had moved $25M worth of debt to Mango Markets, which is a competitor of Solend, reducing the risk faced by the protocol. The community has taken steps to prevent similar situations from happening in the future. No user can borrow more than $50M. They have also changed the liquidation percentage from 20% in the first liquidation step to 1%.

The bare market is testing the edge cases of many DeFi protocols. Platforms that are designed skillfully will come out unharmed from this phase of the market. The rest will face the fate they deserve. What’s unfortunate is that the users of platforms with half-baked functionality will have to pay the price. This is the bounty the crypto ecosystem pays for remaining brutally democratic and open to build.

eBay Acquires ‘Known Origin’ NFT Marketplace

Global eCom leader eBay acquires Known Origin, an NFT marketplace that provides artists a place to create unique, authentic, and digital collectibles in the form of NFTs. “eBay is the first stop for people across the globe who are searching for that perfect, hard-to-find, or unique addition to their collection, and, with this acquisition, we will remain a leading site as our community is increasingly adding digital collectibles,” said Jamie Iannone, CEO of eBay. The cost of acquisition is not disclosed as of now. The acquisition will mark the entry of the web2 giant into the web3 territory. Are you excited about selling your precious monkey tokens on eBay?

German Crypto Tax?Update

Germany has declared gains from crypto tax-free if not sold within one year of holding. One has to pay tax only if he sells the asset within one year of acquisition and if the profit is more than €600. Taxation will apply to traders (including stablecoin trading), in-exchange, crypto-salaries, NFTs, and so on. The crypto tax rate is based on the ordinary individual income tax rate. This is between 14% and 45%. The solidarity surcharge, which everyone must pay, is 5.5% of the tax rate. Do you think it is beneficial for a nation to be progressive in their crypto regulation laws?

Nansen Launches a Messaging App for Web3 Communities

Popular crypto analytics platform Nansen recently unveiled Nansen Connect, a messaging app that enables users to connect to groups based on their crypto holdings and the NFTs they can prove they actually own. Users can log in with their crypto wallets using Nansen Connect. According to the firm, the app is a “crypto-native communications hub” for communities on the Web. The platform will use on-chain data to provide users and communities with the relevant data. The company intends to reduce phishing and social engineering scams that are prevalent on popular messaging platforms like telegram and discord, currently used by the web3 communities. Would you prefer such a platform over the good old discord server?

Crypto and NFTs are “100% Based on Greater Fool Theory” — Bill?Gates

The billionaire co-founder of Microsoft has dismissed investments in cryptocurrencies and NFTs, arguing that the market is dominated by speculation. “As an asset class, it’s 100% based on the greater fool theory — that somebody’s going to pay more for it than I do,” Gates said during the TechCrunch Sessions: Climate 2022 conference on Tuesday. Bored Ape Yacht Club (BAYC) NFT collections that attracted billions of dollars and celebrity endorsements “will surely improve the world immensely,” Gates joked sarcastically. Gates stressed that he’s not involved in cryptocurrencies in any way. The tech billionaire has in his past interviews stated that he is neutral when it comes to crypto and does not own any bitcoin as he is not able to predict how the market will behave. Do you think Mr. Gates is right?

Withdrawals at CoinFLEX Suspended Citing “Extreme Market Conditions

Crypto exchange CoinFLEX announced today it’s pausing all withdrawals due to “extreme market conditions and continued uncertainty involving a counterparty.” The company added, “We are confident that this situation can be repaired fully with a restoration of all functionality, namely withdrawals.” The company hopes to provide an update on the situation by June 27th and start processing withdrawals by June 30th. However, firm officials said the dates are based on their current understanding of the situation, and they plan on providing more details as soon as possible. “We fully expect to resume withdrawals in a better position as soon as possible,” said the post. First Three Arrows Capital, then Celsius, and now CoinFlex, Where do you think the DeFi market is heading?