What's Goin On In Web3? Issue #14 | August 10, 2022

GM here's a recap of the biggest headlines in web3 over the last few days and a bit of a breakdown for you. Please DM me or leave a comment if you have questions or ideas!

P.s. As mentioned in an earlier post, I'll be posting these anywhere from weekly to multiple times per week based on what's going on in web3 (it changes weekly).

P.p.s. If you have any recommendations for artist of the week, please send them my way!

Tornado Cash gets Sanctioned

Earlier this week, the US officially sanctioned Tornado Cash, a crypto-mixing service which has been a favorite for money launderers.

The sanctions come just days after several millions worth of Solana, USDC, and other coins were stolen after leveraging the compromised source code of Slope Wallet, a popular DeFi wallet created and maintained by Slope Finance . Just days before that 200 Million was stolen from Nomad, a cross-chain bridge. However, it was the actions of North Korean hacking collective, The Lazarus Group, which prompted the treasury to sanction the protocol.

Back in may 625 Million was stolen from Ronin Network and used Tornado Cash to launder around 450 Million. This is hard to prove though, and it's unclear as to how the US was able to prove their claims. The challenge comes due to the nature of how Tornado Cash, and other crypto mixers, work.

How Does Tornado Cash Work?

The platform allows users to input cryptocurrency and designate a destination for the currency to be deposited into once it's done mixing. During the mixing the platform moves the currency around and mixes it up like a blender, or a tornado, with other transactions, so that when the crypto comes out the other side, it's almost impossible to tell with 100% certainty where it originated.

While this is obviously something that is useful for launderers and thieves, it's also something that can be useful for people like Vitalik Buterin who used the platform to donate money to victims in Ukraine in order to avoid getting noticed by the Russian government.

How's The Crypto Community Taking It?

The crypto community is not taking it in stride, to say the least. Since the announcement crypto users have begun "dusting" accounts of celebrities and other notable individuals in the crypto space. Dusting, in this sense, is where individuals will declare the public addresses of these individuals as the recipients of money from Tornado Cash, effectively getting their wallets added to a government list of addresses that have interacted with sanctioned entities. This is setting a huge precedent to say the least, and this is far from over.

NFT Infrastructure Firm Raises $21.5 Million To Continue Expansion

Pinata , a company which provides crucial infrastructure to the NFT ecosystem, raised just wrapped up a $21.5 Million investment round which included OpenSea as one of the notable investors.

Launching and managing an NFT project, especially a several thousand piece collection, takes a lot of time and energy spent organizing media and Pinata makes it easy to do that with their suite of tools and services.

We interviewed the Pinata team last month, I'll be posting that interview soon so keep an eye out!

Curve Finance Gets Hijacked

Curve Finance is a giant liquidity pool which helps investors swap stablecoins and wrapped tokens across multiple chains with relatively low fees and yesterday their nameservers were hijacked, redirected users to a fake website and stealing over $570K USD in Ether (327.08 ETH). The attackers funneled their money through FixedFloat, a crypto exchange, who was able to freeze 112 ETH.

It only took a few hours for the issue to get fixed and more or less just goes to show how reliant on the existing internet, or rather how much of a threat the internet itself is to decentralized finance & computing.