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Weekly Attestations
February 23, 2024

🔮 Restaking Value Lock, BTC Difficulty Increases, Spamming for Airdrops, JPMC Raises Flags to Tether

Liquity's CDP, MetaMask Integrates Blockaid, South Korea Looks to ETFs, NFT M&A

🔮 Restaking Value Lock, BTC Difficulty Increases, Spamming for Airdrops, JPMC Raises Flags to Tether

Token Specific News

Stake It 'Till You Make It

Restaking platforms are gaining traction, offering users the opportunity to put their assets to work and secure multiple networks simultaneously. This concept, stemming from the idea of shared security, allows newer protocols to leverage Ethereum's robust security, avoiding the challenge of building their own validator networks. Eigenlayer, a leading restaking platform, facilitates this process by enabling both native ETH stakers and holders of liquid staking derivative tokens to utilize their assets for securing other blockchains. Liquid restaking, accompanied by staking derivative tokens, has also gained popularity, with platforms like Puffer Finance attracting significant Total Value Locked (TVL) and support from major players like Binance Labs. Even ClayStack, initially a liquid staking protocol, has shifted towards restaking, leveraging Eigenlayer's services. The allure of earning higher yields in the crypto space continues to drive interest in restaking platforms, marking a significant trend in the industry.

Source: The Block

Aptos Partners with Jambo to Introduce Affordable Crypto Smartphone

Aptos has collaborated with affordable smartphone manufacturer Jambo to introduce the JamboPhone, priced at $99, aimed at unlocking the digital economy for users in Africa, Southeast Asia, and Latin America. The device, launched in January and available in over 40 countries, comes with pre-installed applications including an Aptos-compatible wallet called Petra and a Jambo App offering educational resources on Web3 through JamboEarn and JamboAcademy. With features such as Android 13, a 4,900 mAh battery, a 6.5" LCD display, and a dual-lens camera setup, the JamboPhone targets emerging markets, promising income opportunities through its Quests feature. This move by Aptos enters the competitive realm of crypto smartphones, previously dominated by Samsung and HTC, with Solana's Saga and Chapter 2 smartphones also vying for market share in different price segments. See related (older): Helium Mobile Service That Lets Users Earn Crypto Expands Across US

Bitcoin Mining Difficulty Hits Record High as Hash Rate Surges

Bitcoin mining difficulty has soared to a new peak of 81.73 trillion, marking the complexity of adding new blocks to the blockchain, while the hash rate has reached 562.81 EH/s, showing steady growth since January 2023. The proof-of-work consensus mechanism demands heightened computational power as mining difficulty escalates, enabling miners to uncover the correct hash for new blocks. This milestone coincided with Bitcoin's price hitting $51,783.74 on February 16th, underscoring the significance of the event in the cryptocurrency ecosystem.

Source: BTC.com

Liquity Set to Introduce New Collateralized Debt Protocol in Late 2024

Liquity, the creator of the LUSD stablecoin, has announced plans to launch a new collateralized debt protocol later in 2024. This forthcoming protocol aims to address the shortcomings of its existing system by adding support for liquid staking tokens (LSTs) and allowing users to set their own interest rates. Liquity expressed concerns about the competitiveness of its current protocol in light of the growing popularity of LSTs and evolving macroeconomic conditions, noting that the market cap of LUSD has declined by 50% since September.

GitHub Repositories Targeted by Airdrop Farmers for Token Rewards

A new trend sees airdrop farmers targeting GitHub repositories with spam comments, aiming to qualify for potential future token airdrops. This tactic, inspired by similar strategies employed by other crypto projects, has led to frustration among repository maintainers like Scroll, who have been inundated with over 1,000 comments over the weekend. While airdrop farming traditionally focused on on-chain activities, recent projects like Celestia and Starknet have adjusted their criteria to reward GitHub contributors, resulting in significant token rewards for seemingly minor contributions such as simple spell checks. This shift highlights the evolving nature of token distribution methods in the crypto community.

Regulation

JPMorgan Raises Concerns Over Tether's Regulatory Risks and Market Dominance

JPMorgan has voiced regulatory concerns regarding Tether, highlighting the influence of American regulators like the Office of Foreign Assets Control (OFAC) on its offshore operations due to its association with Tornado Cash. Tether initially resisted OFAC's sanctions on Tornado Cash but later froze stablecoins in sanctioned wallets as a proactive measure, prompting discussion about its compliance. Tether's CTO dismissed JPMorgan's concerns as rooted in jealousy towards its market dominance, but JPMorgan criticized Tether's dominance and anticipated reduced usage amid impending stablecoin regulations in the U.S. and Europe. Additionally, JPMorgan analysts criticized Tether's disclosure practices, citing inadequate transparency and a weak rating from S&P Global regarding its dollar peg. Despite profitable interest rates, Tether faces price risks from assets beyond U.S. T-bills, raising questions about its ability to maintain stability.

MetaMask Integrates Blockaid Security Alerts Across Multiple Chains

MetaMask, a popular web3 wallet, has integrated Blockaid-powered security alerts across various blockchain networks including Ethereum, BNB Chain, Polygon, and Avalanche, among others. This integration, available on both MetaMask's extension and mobile app, aims to enhance user protection against potentially malicious transactions. With crypto security remaining a significant concern, MetaMask seeks to leverage these alerts to safeguard its more than 30 million monthly active users, estimating that it could prevent hundreds of millions of dollars' worth of assets from being stolen in the coming year.

FCA Targets Illegal Crypto Promotions to Protect UK Consumers

In its latest report, the Financial Conduct Authority (FCA) emphasized its efforts to combat illegal crypto promotions aimed at UK consumers. Over the past year, the FCA issued a total of 2,285 alerts to prevent individuals from falling victim to scams, with 450 alerts specifically addressing illegal crypto promotions in the fourth quarter of 2023 alone. The regulator disclosed that it took action against over 10,000 financial advertisements and promotions in 2023, representing a 17% increase compared to the previous year. Notable enforcement actions included penalizing a firm for offering qualifying digital assets without appropriately identifying financial promotion web pages.

South Korea's Ruling Party Eyes Spot Bitcoin ETF as Election Pledge

Ahead of South Korea's general election, the ruling People Power Party is considering election pledges to permit spot Bitcoin ETFs and other cryptocurrency investment products, aiming to appeal to younger voters. Reports suggest the party plans to reassess and potentially lift the ban on institutional investment in cryptocurrencies and initial exchange offerings. Additionally, there's contemplation of delaying crypto gains taxation until 2027, with a focus on attracting votes from the significant demographic of citizens in their 20s and 30s, who constitute the majority of cryptocurrency holders in the country. However, last month, the country's financial regulator restated its prohibition on financial institutions launching cryptocurrency ETFs. See similar: The British government is set to introduce new regulations for stablecoins and crypto staking services within the next six months, the UK Economic Secretary to the Treasury announced.

Yuga Labs Acquires Proof to Enhance NFT Presence

Yuga Labs, the creator of Bored Ape Yacht Club, has acquired Proof, a rival NFT creator known for its Moonbirds collection, aiming to strengthen its position in the industry. While the financial terms of the acquisition were not disclosed, Yuga Labs intends to integrate Moonbirds into its Otherside metaverse project to enrich art and community engagement efforts. The acquisition also grants Yuga Labs control over other Proof brands like Oddities, Mythics, and Grails. Proof founder Kevin Rose will transition to an advisory role post-acquisition. Despite a recent increase in NFT trading volumes, overall trading remains below the levels witnessed during the 2021-2022 bull run. See similar: NFT Insider Trading? Moonbirds Sales Spiked Before Yuga Deal Was Official

Crypto Money Laundering Declines by 30% in 2023

According to findings from Chainalysis's upcoming 2024 Crypto Crime Report, crypto money laundering decreased by 30% in 2023 compared to 2022, dropping from $31.5 billion to $22.2 billion. This decline, steeper than the corresponding transaction volume drop, suggests that anti-money laundering efforts are yielding results. However, the report indicates that while some criminals have been deterred by sanctions and other measures, more sophisticated actors have adapted their approaches. The report analyzes two dimensions of criminal activity: deposit addresses and off-ramping services. While deposit address activity became more diversified, indicating attempts to lower risk, the use of illicit off-ramping services became more concentrated. Despite advancements in crypto money laundering techniques, including the use of DeFi protocols, centralized exchanges, and P2P exchanges, efforts to combat illicit activity, including regulatory measures, are expected to continue denting money laundering activity in 2024 and beyond.

Source: Chainalysis

Other Domestic Regulation Updates

Other International Regulation Updates

Pain & Gain

Pain

Gain


Important Legal Notices

This reflects the views MJL Capital LLC (“MJL”), but it should in no way be construed to represent financial or investment advice. Nothing in this correspondence is intended to constitute or form part of, and should not be construed as, an issue for sale or subscription of, or solicitation of any offer or invitation to subscribe for, underwrite, or otherwise acquire or dispose of any security, including any interest in any private investment fund managed by MJL. Any such offer may only be made pursuant to a formal confidential private placement memorandum of any such fund, which may be furnished to potential investors upon request and which will contain important information to be considered in connection with any such investment, including risk factors associated with making any investment in any such fund. Further, nothing in this correspondence is, or is intended to be treated as, investment or tax advice. Each recipient should consult their own legal, tax and other professional advisors in connection with investment decisions.

Domenic Salvo
Domenic Salvo

Domenic Salvo is a Managing Partner at MJL Capital, helping lead Portfolio Research and Investor Relations.

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