Welcome to Around the Blockchain, Huobi Learn’s daily rundown of the crypto markets.
VC and trading firm Jump Trading (parent company of Wormhole developer Certus One) has stepped in to replenish ETH lost from the Wormhole bridge hack, possibly preventing widespread damage to Solana’s DeFi ecosystem. Jump tweeted that it “replaced 120k ETH to make community members whole and support Wormhole now as it continues to develop”. Wormhole subsequently confirmed the restoration of the funds, saying the bridge’s operations had resumed following the patching of the attack vector.
English Premier League (EPL) soccer club Manchester United will reportedly announce a multi-year training kit sponsorship by proof-of-stake (PoS) blockchain platform Tezos. The deal, which is said to be in excess of $27 million annually, will see Tezos’ logo on the club’s training uniform and may entail collaboration in the tech space (such as a Metaverse or another Web3 project). Ahead of the official partnership announcement, Manchester United has also reportedly finalized filming promotional material.
Crypto exchange Valr closed its crypto arbitrage service to new customers on 31 Jan in order to meet its banking partner’s requirements and will exit the market on 28 Feb, making it the latest South African crypto exchange to shut down its arbitrage business. Still, Valr has said this will not affect its other services and that its customers’ funds will “remain secure” as they will “continue to have access to Africa’s largest marketplace for crypto assets with the ability to buy, sell and store over 60 cryptos on Valr”. COO Gianluca Sacco also implied the exchange will now focus on its core business.
After almost two years of research, MIT’s Digital Currency Initiative and the Federal Reserve Bank of Boston have published a white paper as well as OpenCBDC, open-source research software to support a “theoretical” central bank digital currency (CBDC). The Boston Fed managed to develop a “core processing engine” for a general-purpose CBDC that could support nearly two million transactions per second (TPS), and the research effort, named Project Hamilton, is now open to public contributions. The white paper states that OpenCBDC’s development is only the project’s first phase; the second phase will test new features and designs, determine and assess any trade-offs that may arise from these different sets of features, and analyze issues such as interoperability and privacy.
Facebook’s parent company Meta Platforms saw a 26% share price drop yesterday after announcing disappointing earnings and a decline in daily active users, marking the greatest-ever single-day dip in market value for a US company. This dismal performance contrasts starkly with the double-digit percentage gains its decentralized competitors, Decentraland and The Sandbox have been seeing. According to Animoca Brands chairman and co-founder Yat Siu, this latest development may signal a wider trend of users growing increasingly skeptical of the centralized Web2 model, as it “does not share any meaningful part of the ownership or value of the network”. He added that Web3 and the open Metaverse represented “more than just another product cycle” but comprised “a movement” that would be “hard to fight…as a single corporation”.
A recent Chainalysis report details how some people sell themselves their own NFTs repeatedly in a bid to artificially inflate their prices. This practice, known as ‘wash trading’, has long been speculated as key to the rapid rise in NFT sales to an estimated $44 billion in 2021, but is difficult to prove beyond doubt. Still, the report says some cases are more blatant, involving NFTs having been sold back and forth at least 25 times by the same few crypto wallets. However, the strategy isn’t necessarily effective, as the “most prolific NFT wash trader” the report identified had made a profit of only $8,383 from 830 trades between their accounts. Furthermore, as every Ethereum transaction requires the trader to pay a gas fee, they would have to pay that fee with every NFT sale they make to themselves, eating into their own profit margins. In fact, the report found 152 washed NFTs that had been sold for a total loss of over $400,000.
Show me the money
While Bitcoin bulls have not had a great 2022 so far, other investors are not much better off, thanks to repeated hints from the US Federal Reserve regarding plans to increase interest rates this year. This is leading investors to turn to inflation-protection bonds, but while some crypto investors think BTC’s digital scarcity is tantamount to inflationary protection, it remains volatile and its asset price continues to move in tandem with risk markets. If the price falls below $36,000 on today’s options expiry, Bitcoin bulls could suffer a $120 million loss after placing heavy bets of $40,000 to $44,000, according to the options expiry open interest (OI).
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