January 19, 2022       /       Unchained Daily       /       Laura Shin

Daily Bits ✍️✍️✍️

  • A Thursday Congressional committee hearing on crypto mining looks like it could be open-minded.

  • The Bitcoin Mining Council estimates that 58.5% of global mining power comes from a sustainable energy source.

  • OpenSea officially acquires Dharma Labs, a crypto wallet firm; Dharma CEO Nadav Hollander becomes OpenSea CTO.

  • Digital asset investment products experienced a fifth week of outflows in a row.

  • BitMEX announced plans to purchase a 268-year-old German bank.

  • Russian authorities say they have dismantled REvil, the ransomware group tied to last year’s Colonial Pipeline attack.

  • Mythical Games acquired Polystream.

Today in Crypto Adoption…

  • Block officially announced that Cash App will support Lightning Network payments.

  • Coinbase and Mastercard are partnering to make NFT purchases a breeze.

  • Gucci is set to launch an NFT collection.

  • Ramp plans to add stablecoins to its balance sheet. (somehow missed this last week)

  • Intel is set to reveal an energy-efficient mining chip during a February conference.

  • AMC is giving out NFTs to more than 580,000 shareholders.

The $$$ Corner…

  • Microsoft purchased Activision Blizzard for $69 billion and is framing the purchase as a metaverse deal. 

  • Pantera is prepping to raise more than $1 billion for a new venture fund.

  • Animoca Brands, an NFT and metaverse investment firm, raised $360 million at a $5.5 billion valuation.

  • Crypto.com (disclosure: an Unchained sponsor) added$300 million to its venture arm.

  • Metaplex Foundation, the developer behind the Solana NFT protocol Metaplex, raised $46 million.

What Do You Meme?

What’s Poppin’?

MATIC Is Burning, But That’s a Good Thing

On January 18 at 2:48 a.m. UTC, Polygon, the fourteenth-largest cryptocurrency and largest Ethereum scaling solution by market capitalization, rolled out Ethereum Improvement Proposal 1559 to the Polygon blockchain. This upgrade will introduce a deflationary token mechanism to the Ethereum scaling solution, where a small portion of MATIC will be burned in every transaction.

Just like EIP-1559 on Ethereum, now on Polygon, “there is a discrete base fee for transactions to be included in the next block and a priority fee to speed up processing. The base fee, which fluctuates depending on network congestion, is then burned,” explained the team in a blog post. However, the tweak in MATIC tokenomics will not lower gas fees for normal transactions – EIP 1559 will only give users a better cost estimate per transaction, thereby reducing the number of times users overpay.

Based on prior calculations, the Polygon team estimates that the annualized MATIC burn would be .27% (so .27% of MATIC would be burned each year). Interestingly, where Ethereum implemented EIP 1559 into a network with a positive issuance rate, Polygon has capped its supply at 10 billion MATIC tokens – meaning that any reduction in the total supply of MATIC is automatically deflationary.

According to Polygon, deflationary tokenomics could be a good thing. “Deflationary pressure will benefit both validators and delegators, because their rewards for processing transactions are denominated in MATIC,” wrote the team, hinting that a decrease in supply could increase the MATIC price.

Polygon also believes that EIP 1559 could decrease the number of spam transactions on the network. “Because the base fee increases automatically if the block is full, the changes will result in fewer spam transactions and lead to less network congestion. Validators, who now receive the total amount of the fees, will be getting only the priority fee in the future.”

The launch of EIP 1559 on Polygon coincides with the first seven-day span of deflationary issuance, according to The Defiant (over 5,000 more ETH was burned than issued during the period between January 11-18). In total, over 1.5 million ETH have been burned since EIP 1559 was implemented on Ethereum last August.

Recommended Reads

  1. Pantera Capital on crypto in 2022:

  1. OurZora’s Jacob Horne on building long-lasting dapps:

  1. Abe Sutherland, a fellow at Coin Center and an adjunct professor at the University of Virginia School of Law, on tax code 6050i:

On The Pod…

Is Binance Smart Chain Being Run ‘Like the Project of a Stoned Teenager?’ Two BSC Execs Answer

Binance Smart Chain is the third-largest chain by TVL and its token, BNB, is the third-largest token by market capitalization. However, there are questions about hacks, centralization, lack of developer support, and sketch MEV transactions. On Unchained, Gwendolyn Regina, investment director of the Binance Smart Chain Growth Fund, and Samy Karim, ecosystem coordinator at Binance Smart Chain, give a candid interview discussing BSC, from its amazing growth in 2021 to some of the toughest questions surrounding the chain. Topics covered include:

  • how and why BSC grew from 50,000 daily active users to about 7 million over the course of 2021

  • what differentiates Binance Chain and Binance Smart Chain

  • why Binance Smart Chain decided to design its blockchain with only 21 validators

  • how Gwen and Samy envision BSC fitting into a multichain future

  • what plans BSC has to scale its throughput

  • why blockchain gaming is so important to BSC and how it will use its $1 billion growth fund to grow the gaming aspect of the chain

  • how BSC’s relationship between Binance and BNB works

In the second half of the show, Sam and Gwendolyn respond to a few critiques, such as:

  • is BSC really innovating, or is it just a copy and paste blockchain of Ethereum?

    • why are there so many failed transactions on BSC?

    • how is BSC addressing the numerous hacks on the blockchain?

    • why has BSC’s share of total value locked among smart contract blockchains fallen from 20% in May to 6%?

    • how is BSC attempting to help developers, who, according to some critical posts, are struggling to work with BSC?

    • why does it appear that some validators are front running without risk?

    • does BSC have a future if Ethereum scales?

    • what does BSC have planned for 2022?

Book Update

My book, The Cryptopians: Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency Craze, is now available for pre-order now.

The book, which is all about Ethereum and the 2017 ICO mania, comes out Feb. 22. Pre-order it today!

You can purchase it here: http://bit.ly/cryptopians