?? Cracks in the Binance Empire

Namaste, this is the doodhwala. The crypto newsletter that’s the Robin to your Batman, the Dwight Schrute to your Michael Scott, the Circuit to your Munna Bhai. ??

Yeah…we are always the sidekick to YOUR main story arc. ??

Here’s the SCOOP for today:

• Cracks in the Binance Empire
• Something wishy-washy happenin’ with NFT data
• It’s hard to TRUMP Polygon NFTs! ??
• The ONLY guide to go viral on LinkedIn

Binance’s problems just got worse

If the 2022 crypto market were a meme right now, this would be it:

And that’s because there are BIG cracks appearing in the Binance empire. ??

So BIG that we might consider ditching our morning ?? for some ??,?yeah it’s bad.

From crypto withdrawals to falling revenue, and from regulatory problems to faulty proof of reserves, things are looking ???for CZ.

Here are the top 4 cracks in the Binance empire.

1?? Heavy spending

We’ve seen from FTX , if an exchange is in trouble it goes around buying everything.

FTX wanted to buy BlockFi , Voyager , and even drop $3 billion on Elon’s Twitter deal.

And Binance is doing the same.

Here’s a bunch of acquisitions Binance made:

• $500 million for Elon’s?Twitter deal
• $1.02 billion for Voyager Digital’s assets,
• 3 big name investments in —?nGrave?(cold wallets maker), Tokocrypto (?????crypto exchange), and Sakura (???? crypto exchange)

Btw ?????= Indonesia ?????= Japan,?you’re welcome.

Acquisitions ain’t a bad thang. In fact, in a bear market, the market leader tends to go on a buying spree like a South Delhi girl at Sarojini.

But does it have the dough? ??

2?? No Reserves + audits

If FTX taught us one thing, it’s to look at an exchange’s customer funds,?and never trust curly-haired vegans.

And tbf Binance was prompt in revealing their proof of reserves.

But over the past few weeks, it’s been falling.

???November 10 [post-FTX] — $70 billion

???December 20 [TO—fricking—DAY] — $55 billion

Is this due to the falling price of BTC, ETH, and BNB (top-3 non stablecoins in their reserves)?

A BIG N-O.

These cryptos are down 3-10% in the same time as the reserves have gone ???by 21% ??

Not to mention:

• Outflows?of $12 billion in crypto over the past 10 days
• Possible payment of $2 billion to FTX in bankruptcy proceedings

You know you’re in bad shape when you?owe?FTX money.

That’s like when Don Draper tells you, “Bro, I think you’re smoking too much.”

3?? Volume game gone wrong!

Binance is a bunch of things:

• the exchange
• the issuer of BNB
• the validator(s) of BSC
• the one that runs CoinMarketCap
• the one that took down SBF and FTX

But over 90% of its revenue comes from — the exchange.

In case you missed it, exchanges are doing as badly as Ukraine this year.

And Binance and CZ are feeling it.

???2021 → $34 trillion in trading volumes

???2022 → $25 trillion in trading volumes?(estimated)

Last year, the exchange made ~$18 billion in revenue (from spot and derivatives fees).

This year, it’s estimated to make — $13.2 billion in revenue. That’s a 26% decline. ??

Oh don’t worry, like the Fast And Furious sequels, it gets worse!

In December 2022, Binance’s volumes fell below $20 billion a day, the lowest all year round. ??

4???CZ, can you be?please?straight with us!

Binance is about as transparent as any river in India. ??

So far, Binance is not clear about:

• its audits
• its headquarters
• its executive team
• its preferred doodh option?like wtf CZ!!

Reuters tried to hunt down 14 of Binance’s affiliates in various countries. Only 1 (the South African one) responded to the journalists.

The other units either — don’t have a website, an office, or even an office dog (that’s serious!!)

The Binance Spain office is an empty co-working space, and it has been empty for a month.

Even Binance’s audit partner 玛泽咨询 (not to be confused with Mars the chocolate, oh, and also the planet FFS)?said something like?‘see ya, you’re shady af!’

Doodhwala’s take:

We get a certain amount of shadiness is required, especially when govts are ???crypto companies.

But?like?Binance is giving us the heebie-jeebies. ??

Use Surf Excel Matic for a good data wash ??

NFTs have been around for a long time now.

Crypto Punks,?the NFT collection that I can probably never afford, started its free mint in 2017.

Axie Infinity ,?the play2earn game with digital NFT pets that look like idlis with faces, came out in 2018.

But NFTs only started to gain momentum in the last couple of years.

Especially since the 2021 bull run. ??????

• New projects and collections were being created single every day (like Crypto DickButts ??)
• Marketplaces and NFT infra projects were also sprang up
• And NFT trading volume went through the frickin’ roof

All these exciting things happened because the data showed that the NFT market is wild af!

But what if we told you that this data was based on a pretty BIG lie? ??

Wait…WHAAAT?? ??

Let’s talk about wash trading.

No, it's not a trading strategy where you wash away all your profits. (that’s just the default state for me, not a strategy???)

"Wash trading is basically trading an asset you already own between two wallets that are also controlled by…you. And you trade it for a pretty high value as well. But you never sell."

But why would anyone do that?? ??

Are they a little too cray cray in the head?

No. They do it for the dough. Plain and simple. ??

A lot of NFT platforms reward their users for continued activity on the platform and also to gain traction from new customers and edge past the competition.

Some of the NFT marketplaces that have done this are:

• X2Y2
• LooksRare
• Rarible

So obviously, people have found a way to game the system by wash trading and earning these rewards.

According to a Chainalysis report, 110 wallet addresses have collectively made around $9 million in rewards. ??

???Now…back to the data on the NFT market. ??

One of the key metrics we looked at while measuring the state of the market was the NFT trading volume.

And around $30B of the NFT trading volume has been?from wash trading! ??

That's close to 45% of the overall trading volume which is not legit transactions.

And when it comes to specific platforms, LooksRare and X2Y2 had a HUGE percentage of their volume dependent on wash trading. ??

This is because these platforms still incentivizes activity with native token rewards.

OpenSea has very little wash trading happening because there is no token incentive…at least not yet. ??

So, even though these reward mechanisms were designed with good intentions, people found a way to make the most of them. ??

And this resulted in a lot of fudged-up data which people use to make HUGE decisions.

Doodhwala’s take:?A teeny bit of regulation is needed to put an end to this and for us to see the actual reality of the market. ?? ♂?

Let’s just hope that regulation comes from the marketplaces themselves, rather than some weird central entity.

Chaach and Charts:?Polygon NFTs go brrrrrr ??

Seems like there ain’t no stoppin’ the NFT season in this bear market

First, it was Solana Labs NFTs, and now… Polygon Labs NFTs!

Over the past week, more than 3.3 lakh users have minted or traded NFTs on Polygon! ??

And there seems to be one YUUUUGE catalyst for this —— Trump NFTs. ??

Donald Trump launched his own NFT collection last week and the chain he picked was Polygon. (prolly cuz of the great relationship with India???)

The whole collection of 45k NFTs was sold out pretty quickly and our man, Trump, made around $4.5 million from it. ??

But from Trump NFTs to Reddit, Inc. NFTs, Polygon is CRUSHING it! ??

Taaza Tweet Of The Day

brb gonna try this and report back ??