💡 Bitcoin has fallen below $26k amid a bearish outlook on the cryptocurrency market. Additionally, Bitcoin mining difficulty has reached an all-time high. DeFi's total value locked (TVL) is currently lower than it was after FTX's collapse. SUI and HBAR are also experiencing a drop in value ahead of their latest token unlocks. In other news, Pepe has confirmed that former team members stole $15 million from a multisig wallet. Finally, Stargate has been deployed to Kava Chain, unifying Cosmos-Ethereum liquidity.
Bitcoin (BTC) experienced a dip below $26,000 during European morning hours on Monday. This was due to a generally bearish sentiment among crypto traders and the lack of new catalysts to rally markets. BTC fell as low as $25,886 on Binance before slightly recovering. Other major tokens, such as XRP, cardano's ADA, and solana's SOL, also experienced a downtrend since last week, falling as much as 2.2%. Ether (ETH) fell 1.1% despite trading aggregator protocol 1Inch investing over $10 million worth of stablecoins from its treasury to purchase 6,088 ETH late on Sunday, providing some buying pressure to an otherwise tepid market. Despite this, traditional markets buoyed on Monday, with Shanghai Composition and Nikkei 225 finishing more than 1%, Singapore adding 0.73%, and European indices opening up to 0.36% higher.
This week, Bitcoin's mining difficulty level reached an all-time high of 55.62 trillion hashes. The increase in mining difficulty suggests that miners believe the current BTC level is fairly valued, or perhaps slightly underpriced compared to its true value.
Charts show a steep increase in difficulty level since July 2021, when a Chinese crackdown took many operators offline. Metrics suggest that the next difficulty adjustment for the network is estimated to take place in early September, which will increase the level from 55.62 trillion hashes to 56.37 trillion hashes.
Just over a year ago, the DeFi ecosystem's many protocols held over $150 billion worth of crypto. As of today, that figure has fallen to approximately $38 billion, according to data from DeFiLlama. This amount is lower than it was immediately following FTX's collapse last fall, when the total value locked (TVL) was around $43 billion.
Industry sources suggest that changes in the market, such as a decline in trade volume, are primarily to blame for the decrease, as well as ongoing concerns about the safety of these assets due to the prevalence of hacks and exploits targeting vulnerable protocols.
Earlier this week, liquidity protocol Balancer received a critical vulnerability report about its v2 pools. At the end of July, automated market maker Curve suffered a $70 million exploit.
The token prices for Sui (SUI) and Hedera (HBAR) are currently falling due to an increase in their circulating supply later this week. Both projects have scheduled token unlocks, allowing early investors and project team members, who were previously prevented from selling, to finally do so. These unlocks are intended to reduce selling pressure on tokens.
In daily trading, Sui has experienced a 7% decline and is currently trading at $0.54, while HBAR is down 4% and currently trading at $0.05. By comparison, Ethereum's ether (ETH) has only experienced a 0.3% decrease.
Sui has announced plans to increase the allocation of tokens reserved for staking subsidies from 967,740 to 1 million SUI, which is worth approximately $540,000. At the same time, Hedera will allocate 1.15 billion HBAR, or $64.3 million, split between network governance, purchase agreements, and ecosystem development.
According to a team member, some rogue developers on the Pepecoin team were responsible for the unprecedented transfers out of the token's multisig wallet last week, resulting in the theft of millions of dollars worth of Pepe coin (PEPE). The illicit transfers sent over 16 trillion Pepe tokens ($15 million) to crypto exchanges OKX, Binance, Kucoin, and Bybit, which were then sold, contributing to a nearly 20% slide in the value of the frog-themed token.
On-chain sleuths had previously noted concerning changes to the oversight of how a developer-related wallet handled transaction approvals. Specifically, instead of requiring five of eight wallets to sign off on transactions, it had changed to only two out of eight, as reported.
These transactions were the first time the project's multisig wallet, which held 26 trillion tokens out of a 420 trillion total supply, had ever sent out the meme coin.
In other news, Stargate, the leading omnichain liquidity layer and native asset bridge with over $18 billion in lifetime transaction volume, has deployed on Kava Chain, the Cosmos-Ethereum interoperable Layer 1.
This integration will expand the reach of Tether's Cosmos-native USDt, issued exclusively on the Kava Chain, to the Ethereum ecosystem and beyond.
Stargate's success in connecting Ethereum networks is unmatched, with 300 times more TVL than the next most-used bridge. Deploying Stargate on the Kava Chain gives DeFi users the most secure and efficient way to move USDt between the Cosmos and Ethereum ecosystems.
The integration ensures that users from any of Stargate's chains have access to USDt on the Kava Chain and every app-chain on Cosmos's Internet of Blockchains. Features like single-click transfers and swaps, combined with unified liquidity and instant guaranteed finality, make traversing USDt capital efficient and simple. Stargate's native asset transaction capabilities ensure a more direct and efficient connection to the Cosmos ecosystem.
Explore the latest highlights in fundraising rounds within the industry. Notably, Anytype secured an impressive $13.4 million in their recent funding round, making it the largest capital injection of the week. Following closely in terms of funding were Maple and Raleon, further demonstrating the vibrant investment activity in our field.
Anytype is a local-first, end-to-end encrypted software designed to provide a secure place to create and store digital assets. With Anytype, you can create and connect your tasks, notes, ideas, documents, workflows, and more.
Thanks to this funding, the Anytype Team is well-positioned to uphold their commitment to democratizing digital sovereignty while offering an aesthetically pleasing product. They plan to achieve this by venturing into new horizons, such as multiplayer functionalities and advanced sharing options within Anytype. They're also extending an open invitation to a broader community of contributors, fostering collaborative efforts to enhance the product's capabilities. Moreover, they're intensifying their focus on creating an even more user-friendly and enjoyable user experience.
Blockchain-based credit marketplace Maple Finance has turned its attention to Asia and will expand into the region with a $5 million investment round, the firm said on Tuesday.The funding round was described as a significant milestone in their evolution by CEO Sidney Powell. He mentioned that they are initiating a strategic expansion into the APAC (Asia-Pacific) region as part of a comprehensive growth plan for Maple. Powell explained that the network is well-positioned to enhance its technology and establish partnerships that facilitate compliant and smooth lending and borrowing adoption throughout the APAC region, with a particular focus on Singapore, Japan, Hong Kong, and Korea.Maple's attention to Asia highlights the region's growing significance in the digital asset industry. Asian nations have been proactive in creating definitive guidelines for cryptocurrency firms to serve their clients, which stands in stark contrast to the regulatory ambiguity in the United States. Hong Kong has recently granted licenses to trading platforms under the new cryptocurrency regime, while last week, Singapore's central bank released a regulatory framework for stablecoins.
Raleon, a provider of web3 engagement platform based in Wilmington, North Carolina, has secured $3.8 million in seed funding. The company plans to use the funds to expand its team and further develop its engagement and retention platform for Web3, including its newest product, Embedded Quests.
Founded by experienced entrepreneurs Nathan Snell and Adam Larson in 2022, Raleon offers a web3 engagement platform that helps brands, games, and dApps engage and retain users. Its SaaS platform, which includes Growth Analytics, Web3 Marketing Automation, and Embedded Quests, makes use of both on-chain and off-chain data to optimize retention and conversion.
With Embedded Quests, decentralized applications (dApps) can create their own unique quests that are fully embedded in their dApp, with no coding required. This allows for easy targeting of specific users through personalized tasks backed by web2 and web3 data, delineating actions (ranging from in-app activities, on-chain actions, to ownership of specific NFTs), and providing rewards for quest completion. Embedded Quests provides a chat-like experience for brands to create a personalized journey in order to build relationships with their customers, all within their own websites.
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As of August 2023, Uniswap accounts for over 64% of the total trading volume on decentralized exchanges (DEX).
Like most other platforms, Uniswap employs an Automated Market Maker (AMM) algorithm and liquidity pools. This is a reliable and proven solution, but it is not well-suited for traditional players and poses certain risks when used on the platform.
To enhance user experience and facilitate swift and advantageous conversion of digital assets, the project team has introduced the UniswapX protocol, which amalgamates decentralized and centralized (via proxy) liquidity. Incrypted has delved into the concept of UniswapX, the benefits it offers to regular users, and its potential impact on DEX architecture.
UniswapX is an open-source routing protocol aimed at creating a superior experience within DEX usage by offering more favorable rates and rapid cryptocurrency conversion. To achieve these objectives, UniswapX leverages new liquidity sources, integrates an auction mechanism, and modifies the exchange format.
Essentially, it introduces a novel way of exchanging cryptocurrencies on Uniswap that differs from the traditional swaps through liquidity pools.
From a technical standpoint, the protocol comprises several interconnected smart contracts deployed on the Ethereum mainnet at the time of writing. Consequently, interacting with UniswapX doesn't require permission from Uniswap Labs, and the protocol itself cannot be blocked at the blockchain level.
The UniswapX architecture incorporates both new solutions and previously established developments from Uniswap Labs.
The diagram above illustrates the main modules of the protocol.
Permit2 - introduced in November 2022, is a solution for granting permissions to use ERC-20 tokens. It reduces gas costs through batch confirmations and enables token spending by other applications connected to the module.
Permit2 allows Uniswap smart contracts to use tokens from the user's wallet for exchanges and facilitates payment by the counterparty in the transaction.
Furthermore, the developers introduced a system for executing swaps through orders. While previously exchanges were executed through transactions with a set of parameters (balances, tokens exchanged and received, amounts, and others), now users create and sign orders.
For further execution, the order is placed in the network by the filling module.
UniswapX employs a new type of order based on a Dutch auction. Below, we will explain how it works. The key feature is that users can specify upper and lower price limits, as well as the pace of their change.
The filling module is a protocol participant that executes the user's order under specified conditions. It transmits the input parameters of the request to the network and provides liquidity for the exchange.
These modules can interact with UniswapX through their own smart contracts or by granting the protocol rights to use assets. More details can be found in the project documentation.
The Order Reactor is a smart contract that transforms exchange input parameters into a dynamic order and calculates it in real-time. The Order Reactor is responsible for gradually lowering the exchange rate and verifying whether the actual order execution conditions meet the user's requirements.
At the time of writing, the Order Reactor can create Dutch orders and exclusive Dutch orders for specific filling modules. In the future, it will support more types of orders, such as market or limit orders.
The Executor is a smart contract that interacts with the addresses of fillers and Uniswap liquidity pools. It serves two main functions:
During the beta testing period, the Uniswap Labs team controls the list of executors to ensure uninterrupted exchange. In the future, any user will be able to perform the functions of the filling module.
Thanks to the new architecture, the protocol has managed to address a range of issues typical to DEX and AMM, providing users with several advantages.
Dutch Auction Orders - a new type of orders based on a Dutch auction with a gradually decreasing exchange rate. Initially, the order enters the network at the most favorable price, but if no filler agrees to execute it within a specified timeframe, the price decreases.
For example, you decide to exchange 1 ETH with a market value of $2000 through UniswapX and create an order with a price range of $2050-$1900. Initially, it will be listed at a price of $2050. If no filler responds to the order within a certain time, the price will drop to $2000, then to $1950, and so on, until reaching the minimum specified value.
The time interval for price reduction and the minimum price level can be set when opening the order. Developers assure that the Dutch auction maintains a balance between liquidity provider benefits and the best exchange rate for the user.
Gasless Swaps - since the order is placed in the blockchain not directly by the user, but by a filler, the latter pays the transaction fee. These expenses are then included in the swap cost, meaning users do not need to hold network 'gas' tokens to conduct the exchange.
No Fee for Failed Transactions - if no filler accepts the order within the specified timeframe, the order will not be placed in the network, and thus no fee is charged for its creation.
External Liquidity - an order can be executed both using Uniswap liquidity pools and through the filler's funds. Interaction with the protocol can occur through a smart contract or External Owned Accounts (EOA), which means a regular non-custodial wallet, opening up new possibilities for traditional market makers.
Integrated MEV - UniswapX integrates MEV solutions that return the profit obtained from the order in the form of a more favorable exchange rate for the user. Additionally, developers have noted that orders are better protected against frontrunning compared to regular transactions.
The technical documentation of UniswapX also describes a mechanism for seamless integration of cross-chain exchange with EVM-compatible blockchains and rollups. However, currently, the protocol is only available for swaps on the Ethereum network. The team promises to implement the interoperability module later.
To better understand how the protocol operates, let's examine the listed architecture components in action. The exchange process through UniswapX is illustrated in the diagram below.
A swap using the protocol consists of the following steps:
If the order parameters and the executor match, the Executor Contract deducts assets from the user's and the filler's wallets and conducts settlement. Afterward, the swap is considered completed.
Uniswap Labs positions UniswapX as a way to offer users more advantageous exchange conditions. However, the protocol can also impact the overall liquidity structure of DEX. Specifically, it employs pools as a 'fallback option' in cases where fillers decline or cannot provide better execution terms for an order.
If the number of fillers increases and they can offer superior exchange terms, this might lead to reduced trading volume in Uniswap pools and, consequently, a decrease in liquidity providers' revenues.
As a result, market makers with sufficient assets and technical capabilities for interacting with UniswapX might opt for direct engagement with the protocol.
Another aspect is the flexible interaction with UniswapX. Market makers have the ability to provide liquidity to the protocol through complex smart contracts with integrated arbitrage strategies, enabling additional income.
Such an option is not available in Uniswap V3 pools. An expanded pool design is likely to be implemented in V4, but this solution is still in development.
This implies that if UniswapX gains popularity, users could indeed achieve more favorable exchange conditions and eliminate slippage and intermittent losses, but at the cost of reduced decentralization.
While Uniswap pools accumulated liquidity from thousands of individual providers, ensuring resilience against manipulation and no single point of failure, UniswapX paves the way for the dominance of major market makers, with all their advantages and disadvantages.
Conferences are a great opportunity to grab the attention of the whales in the crypto industry, spread the word about your project and win some funds! A quick line-up of the upcoming conferences below!
Korea Blockchain Week 2023👥 Conference🌐 Seoul, Korea📆 Date: 04 Sept 2023
Nordic Blockchain Conference 2023👥 Conference🌐 Langelinie, Denmark📆 Date: 06 Sept 2023
TradeTech FX 2023👥 Conference🌐 Paris, France📆 Date: 12 Sept 2023
MoneyLIVE Asia👥 Conference🌐 Singapore, Singapore📆 Date: 12 Sept 2023
Global InsurTech Summit USA👥 Conference🌐 New York, United States📆 Date: 26 Sept 2023
Global RegTech Summit USA👥 Conference🌐 New York, United States📆 Date: 28 Sept 2023
SmartCon 2023👥 Conference🌐 Barcelona, Spain📆 Date: 02 Oct 2023
CoinAgenda Global Conference👥 Conference🌐 Santa Monica📆 Date: 03 Oct 2023
Blockchain Economy Dubai Summit👥 Conference🌐 Dubai, United Arab Emirates📆 Date: 04 Oct 2023
