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    Bankless

    ROLLUP: Curve Exploit | BASE Memecoins | Richard Heart vs SEC

    Fri Aug 04 2023
    Binance fraud chargesDeFi exploitsBase mainnet launchSEC lawsuitsStaking protocolsMarket updatesUS debt ratingTether concernsCurve hack'Bald' token rug pullSuspicion of scamsUniswap delistingPotential charges against Richard HartCrypto scammersEther ETF futuresLayer 2 developments

    Description

    The episode covers a wide range of topics including fraud charges against Binance, DeFi exploits, the launch of Base mainnet, SEC lawsuits, staking protocols, market updates, US debt rating, Tether concerns, Curve hack, 'bald' token rug pull, suspicion of scams, Uniswap delisting, potential charges against Richard Hart, crypto scammers, Ether ETF futures, layer 2 developments, WorldCoin concerns, layer 2 security, DeFi maturation, crypto investing tips, Vitalik's perspective on crypto culture and infrastructure development. The episode provides insights into the current state of the crypto industry and highlights important news and events.

    Insights

    Binance Fraud Charges

    The Department of Justice is investigating Binance for fraud.

    DeFi Exploit

    A Curve exploit caused a cascade of events across all of DeFi.

    Base Mainnet Launch

    The base mainnet is set to launch on August 9th with exciting developments in the layer two space.

    SEC Lawsuit

    Richard Hart is sued by the SEC for fraud and issuing unregistered securities.

    Staking Protocols and Market Update

    Stater is a new staking protocol with low capital requirements. Bitcoin and Ethereum prices experienced slight declines. Total crypto market cap remains over $1.2 trillion. $25 million Ether staked.

    US Debt Rating and Tether Concerns

    Fitch downgraded US debt rating. Tether holds more T-bills than Australia.

    Curve Hack and 'Bald' Token Rug Pull

    Curve Finance was hacked, resulting in a loss of $70 million. 'Bald' token experienced a rug pull, dropping its valuation significantly.

    Suspicion of Scams and Base Launch

    Someone from Alameda Research is suspected to be involved in a scam. Base transactions surpass Arbutrum transactions. Richard Hart faces SEC lawsuit. Uniswap delists hex tokens.

    Potential Charges Against Richard Hart

    Richard Hart may face Department of Justice charges for misappropriation. Kyle Davies renounces US citizenship. Crypto scammers discussed.

    Ether ETF Futures and Layer 2 Developments

    Several companies submit Ether futures ETF proposals. Layer 2 developments aim to provide secure scaling solutions.

    Chapters

    1. Binance Fraud Charges and DeFi Exploit
    2. Base Launch and SEC Lawsuit
    3. Stater Staking Protocol and Market Update
    4. ETH Staking and US Debt Rating
    5. Government Wealth Shift and Tether Concerns
    6. Crypto News and Curve Hack
    7. Base Mainnet Launch and 'Bald' Token
    8. Suspicion of Scams and Base Launch
    9. Uniswap Delisting and SEC Actions
    10. Richard Hart's Potential Charges and Crypto Scammers
    11. Ether ETF Futures and Layer 2 Developments
    12. Ether ETF Futures and Layer 2 Developments
    13. Layer 2 Incentives and WorldCoin Concerns
    14. Base Mainnet Launch and Layer 2 Security
    15. Layer 2 Security and DeFi Maturation
    16. Crypto Investing Tips and Vitalik's Perspective
    17. Crypto Culture and Important Information
    Summary
    Transcript

    Binance Fraud Charges and DeFi Exploit

    00:00 - 06:03

    • The Department of Justice is investigating Binance for fraud
    • A Curve exploit caused a cascade of events across all of DeFi

    Base Launch and SEC Lawsuit

    00:00 - 06:03

    • The base launch date is announced, meme coin frenzy has already happened on base
    • Richard Hart is sued by the SEC for fraud and issuing unregistered securities

    Stater Staking Protocol and Market Update

    00:00 - 06:03

    • Stater is a new staking protocol with low capital requirements and a native token called SD
    • Bitcoin price started at $29,400 and ended at $29,330, down 0.3%
    • Ethereum price started at $1,875 and ended at $1,804, down 1.5%
    • Bitcoin ratio down about 1.5% to 0.062
    • Total crypto market cap over $1.2 trillion for seven months in a row
    • $25 million Ether staked with over $22.5 million actively staking

    ETH Staking and US Debt Rating

    05:47 - 12:29

    • 25 million Ether staked, with 22.5 million actively staking and 2.5 million in the queue
    • There is a 30 to 40 day wait time to join the staking club
    • More ETH staked leads to lower yield
    • US government has over $32 trillion in debt and will pay $1 trillion in interest this year
    • Fitch downgraded US debt rating due to fiscal deterioration, growing debt burden, and erosion of governance
    • US politicians lack understanding of their own budgeting process
    • The US cannot sustain its debt without negative real rates
    • Market has written off the Fed's pivot on interest rates
    • Ray Dalio explains why Fed tightening did not have catastrophic effects

    Government Wealth Shift and Tether Concerns

    12:14 - 18:47

    • Government engineering shift in wealth from the public sector to the private sector
    • Private sector relatively insensitive to rapid tightening of monetary policy
    • Household sector's balance sheets and income statements are in good shape
    • Unemployment is low, stock market is at an all-time high
    • Central banks took on more debt, causing inflation to rise
    • Bondholders took a haircut, government's balance sheet took the bullets
    • Next phase could involve helicopter money directly to the people
    • Increasing anger due to wealth inequality and lack of economic opportunities
    • 2024 US political scene expected to be rocky due to these issues
    • Tether holds more T-bills than Australia, suggesting it may be too big to fail
    • Bullish sentiment towards crypto assets due to reduced systemic risk of tether

    Crypto News and Curve Hack

    18:26 - 25:22

    • Kraken Pro is a popular crypto trading platform with advanced charting tools and real-time market data.
    • Polygon 2.0 is a value layer for the internet that aims to solve the limitations of blockchains and enable exchange, storage, and programming of value.
    • Curve Finance was hacked due to a vulnerability in the coding language Viper, resulting in $70 million being drained from four curve pools.
    • $20 million was recovered by White Hat hackers and MEV bots, but $5.1 million worth of Curve tokens were taken by the attacker.
    • The founder of Curve had borrowed $110 million against his Curve collateral, which puts his positions at risk if the price of Curve drops significantly.
    • The founder used some of the borrowed funds to purchase multi-million dollar mansions in Melbourne, Australia.
    • While the situation is not currently systemic beyond CRV token, DeFi protocol governors with CRV as collateral should pay attention.

    Base Mainnet Launch and 'Bald' Token

    25:06 - 31:48

    • The CRV token is currently facing some issues, but overall the DeFi protocols are fine.
    • There are exciting developments in the layer two space, with the base mainnet set to launch on August 9th.
    • Base has already seen activity from developers and the creation of meme coins like 'bald'.
    • 'Bald' token quickly reached a market cap of $50 million but experienced a rug pull, dropping its valuation to around $11-12 million.
    • The founder of 'bald' withdrew $32 million of ETH liquidity, leading to speculation about their identity and possible ties to Alameda Research or SBF.

    Suspicion of Scams and Base Launch

    31:20 - 38:06

    • Someone from Alameda Research is suspected to be involved in a scam.
    • Base transactions have surpassed Arbutrum transactions in daily volume.
    • Base sequencer has generated $700,000 profit in three days.
    • Coinbase may not consider the profit from base in their valuation.
    • The initial use case of base being a meme coin could be seen as bearish or bullish.
    • KYC is not required to access base on Ethereum layer one.
    • The official public launch of base is scheduled for August 9th.
    • Richard Hart has been sued by the SEC over Hex, Pulse Chain, and Pulse X.
    • Hex, Pulse Chain, and Pulse X have experienced significant drops in value.
    • Uniswap's user interface delisted hex tokens.

    Uniswap Delisting and SEC Actions

    37:39 - 44:16

    • Uniswap.com does not allow buying or selling of hex anymore, but hex is still trading on Uniswap Protocol.
    • Hex was a self-promotional mean coin for Richard Hart (Richard Skyler).
    • Hex was promoted as a pump and dump scam coin.
    • The SEC might make similar arguments against Hex as they did in the XRP case.
    • There are concerns about the precedent set by the SEC going after tokens like Hex.
    • XRP and Hex can be claimed to serve similar purposes of enriching the issuing entity, but there are differences in intent.
    • There are worries about the credibility and neutrality of the SEC's actions.
    • Martin Screlly speculates that Richard Hart might face severe sentencing if charged by the Department of Justice.

    Richard Hart's Potential Charges and Crypto Scammers

    43:53 - 50:05

    • Martin Scrally predicts that Richard Hart may face Department of Justice charges for misappropriation, with potential sentences ranging from 10 to 30 years in jail.
    • Kyle Davies renounces US citizenship in an attempt to evade US court jurisdiction, but this strategy is unlikely to work.
    • David and Martin discuss various individuals involved in scams and legal troubles within the crypto industry.
    • The accountability and punishment of scammers can act as a deterrent for future fraudsters entering the space.
    • A documentary about Richard Hart and Hex is being made, scheduled for release on August 4th and 5th.
    • Upcoming topics include an ETH futures ETF, potential fraud charges against Binance by the Department of Justice, protocol birthdays, the World Coin debate, and the mysterious appearance of $750 million in Bitcoin.

    Ether ETF Futures and Layer 2 Developments

    49:42 - 56:14

    • MetaMask Portfolio is a one-stop shop for managing crypto portfolios across multiple chains and addresses.
    • Arbitrum offers secure Ethereum scaling solutions for the Web3 landscape.
    • The Department of Justice is considering fraud charges against Binance but is concerned about the potential impact on consumers.
    • Binance's largest market is China, despite crypto being illegal there.
    • Ethereum celebrated its eighth birthday with significant achievements in secured value and annualized profits.
    • Several companies have submitted Ether futures ETF proposals.

    Ether ETF Futures and Layer 2 Developments

    55:47 - 1:02:51

    • Ether celebrates its eighth birthday with the submission of six ETF futures by companies like Bitwise, Van Eck, ProShares, Grayscale, and Volatility Shares.
    • The Canadians are ahead with their spot ETH ETF while Americans are still working on a futures ETF for Ether.
    • EIP 1559 is about to turn two years old, and $10 billion worth of Ether has been burned during this time.
    • If MEV burn is implemented in the future, Ether would become even more deflationary.
    • MetaMask now allows users to stake Matic tokens in their portfolio app, expanding beyond just staking Ether.
    • Layer 2 networks like Polygon, Arbitrum, Optimism, and zk-sync will eventually have a stake button in MetaMask portfolio once they become permissionlessly validated.
    • EIP 6968 enables ecosystem chains to earn sequencer fees when their contracts consume gas on layer two networks.

    Layer 2 Incentives and WorldCoin Concerns

    1:02:28 - 1:09:05

    • Layer two provides incentives for developers to create contracts and get paid sequencer fees.
    • Moving to layer two is being considered for the cello layer one.
    • Eric Wall's tweet thread provides insights into the strengths and weaknesses of WorldCoin.
    • WorldCoin addresses have been found to converge down to a few individuals, indicating civil attacks.
    • MicroStrategy plans to invest $750 million more in Bitcoin by minting micro-strategy shares.
    • DCG is close to reaching an agreement on its Genesis chapter 11 bankruptcy.

    Base Mainnet Launch and Layer 2 Security

    1:08:40 - 1:15:21

    • Base mainnet launch committed to being part of the OP collective and contributing sequencer fees towards retroactive public goods funding efforts
    • OP stack chains must abide by the law of chains to be part of the super chain and contribute a percentage (possibly 15%) of revenue to the optimism collective
    • Layer 2 tokens like OP accrue value through contributions to the optimism collective
    • Layer 2s with permissionless sequencers and trustless bridges will have similar security guarantees as Layer 1, although there may still be some smart contract risks
    • The Layer 2 roadmap aims to achieve scalability while maintaining security guarantees
    • Trustless bridge from Ethereum to Layer 2 introduces a dependency that can have bugs

    Layer 2 Security and DeFi Maturation

    1:15:00 - 1:21:36

    • Layer two has security guarantees similar to Layer 2 once we reach stage 2 level for roll-ups.
    • There are currently 29 Layer 2s, but predictions range from 100 to 900 when Ether breaks all-time highs.
    • DeFi protocols are maturing and focusing on quality and fees.
    • The industry is moving away from the shitcoin roller coaster.
    • The Fang of DeFi, consisting of smell (S), maker (M), and unknown (E), is emerging as the long-term incumbents in DeFi.
    • Some people debate whether Netflix belongs in the Fang group or not.
    • The bull market has started, with doubled market cap over the last seven months.
    • Setting up a battle station and getting wallets in order is recommended for making moves quickly during the bull market.

    Crypto Investing Tips and Vitalik's Perspective

    1:21:07 - 1:27:14

    • You need to be prepared and have your wallets in order for the DeFi landscape.
    • Setting up a battle station and being ready to make moves is important.
    • Dollar cost averaging is a less risky approach to playing the crypto game.
    • Boredom can lead to costly mistakes in crypto investing.
    • Partitioning your interests and accounts can help manage risk.
    • There are different games to play in crypto, such as buying early or optimizing staking.
    • Choosing your character class in crypto is important for success.
    • The podcast host is bullish on founders who stayed committed to their projects.
    • The potential for building the 'fangs of DeFi' will take multiple cycles.

    Crypto Culture and Important Information

    1:26:50 - 1:30:00

    • Early Maker Dao members have gone on to found other projects.
    • Vitalik believes that the focus on infrastructure in crypto is a success story compared to other sociopolitical systems.
    • Crypto culture is currently in a better place than before.
    • The abundance of infrastructure development in crypto is seen as bullish by Vitalik.
    • A meme depicts the chaos and constant activity in the crypto space.
    • Taking time off from crypto can result in missing out on significant developments.
    • The podcast hosts aim to absorb and relay important information to their listeners.
    • Disclaimer: Crypto is risky and not suitable for everyone.
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