April 22, 2022       /       Unchained Daily       /       Laura Shin

Daily Bits ✍️✍️✍️

• Investors realized $162 billion in crypto gains during 2021.

• Lido now accounts for over 29% of Ethereum 2.0 staking.

• a16z launched a crypto research and coding unit.

• BitRiver’s CEO called the US sanctions on the mining firm “unfair.”

• A Compound governance proposal to end liquidity mining failed to pass.

• Aave users on Avalanche can now claim rewards in AVAX.

• Near largest DeFi protocol launched a token last night.

• The OCC found that Anchorage Digital failed to maintain proper AML rules.

Today in Crypto Adoption…

• Fidelity opened up a branch in the metaverse where users can learn about ETF investing.

• Google has partnered with Aptos Labs, the developer behind the Aptos layer 1 blockchain, to offer cloud support.

• Australia unveiled a set of crypto policy expectations.

• US House Democrats are calling for increased scrutiny on crypto mining’s environmental impact.

• The Bahamas is set to allow citizens to pay taxes with digital assets.

The $$$ Corner…

• Coinbase is in discussions with BtcTurk over a $3.2 billion acquisition of the Turkish exchange.

• Bitcoin mining company Crusoe Energy Systems raised$505 million in a Series C.

• Rario, an NFT platform, announced a $120 million funding round.

• Limewire raised $10.4 million in a private token sale.

• Scroll, an Ethereum scaling project, raised $30 million.

What Do You Meme?

What’s Poppin’?

TRX Is Popping

Yesterday, Tron founder Justin Sun unveiled plans to launch USDD, an algorithmic stablecoin, on Tron in May.

USDD will be pegged to the dollar and will use TRX, Tron’s native governance and gas token, to help maintain the peg. For example, when USDD’s price drops below $1, market participants can send 1 USDD to the system and receive $1 worth of TRX. When USDD is worth more than $1, users can send $1 in TRX in return for 1 USDD.

Calling it the “Stablecoin 3.0 era,” Tron will pool all of its resources together to create and control USDD via the Tron DAO. In addition to keeping the USDD peg, Tron DAO will also be charged with providing custody of $10 billion worth of “highly liquid assets” to act as a reserve system for USDD. While Sun did not disclose which assets would be used, he described them as coming from “initiators of the blockchain industry.”

If this sounds familiar, that’s because, well, it is almost the same gameplan that Terra has implemented. The mechanism for keeping USDD pegged to the dollar via TRX is exactly how UST keeps its peg via LUNA. Furthermore, the decision to back USDD with a reserve of cryptocurrencies comes just a few months after Terra decided to do the same thing (Terra has already purchased more than $1 billion in BTC). Furthermore, Sun says that Tron will offer a 30% interest rate for users who stake to the system – which is more than 10% higher than what Terra’s Anchor Protocol currently provides.

In response to Sun’s announcement, Terra co-founder Do Kwon appeared unsurprised that another L1 smart contract platform would make a similar move to Terra. “Decentralized economies deserve decentralized money – every blockchain will run on deck. stables soon,” he wrote. Tron is not the only L1 to make such a move, as Near Protocol confirmed plans for an algorithmic stablecoin, USN, in early April.

TRX is up 15% in the hours after the news broke – the highest climber among top 100 crypto assets by nearly 2x.

That being said, not all the reaction was positive for algorithmic stablecoins. For example, Compound founder Robert Leshner wrote on Twitter, “I did NOT have ‘every L1 becomes an algostable’ on my 2022 bingo card, but alas, here we go…Reduced to its barest economics, this creates a non-useful ‘staking’ yield for the native asset, with an extra layer of obfuscation.”

Nic Carter, the co-founder of Coin Metrics and general partner at Castle Island Ventures, was even more vociferous in expressing his opinion that algorithmic stablecoins will negatively impact the crypto industry. “Of all the bad ideas the crypto industry has come up with algo stables are among the worst,” he tweeted. “When these things inevitably fail, regulators will use the failure as a stick to bash the rest of the industry with, most likely causing reprisals against useful and functional stablecoins.”

Recommended Reads

1. Fidelity’s Jurrien Timmer on boring Bitcoin:

2. Cobie on the death of staking:

3. DeFi Edge on Near Protocol (disclosure: the Near Foundation is a previous sponsor of Unchained):

On The Pod…

The Chopping Block: How to Improve DeFi and Cross-Chain Bridge Security

Welcome to The Chopping Block! Crypto insiders Haseeb Qureshi, Tom Schmidt, and Tarun Chitra chop it up about the latest news in the digital asset industry. On this episode, Laura Shin, the host of Unchained and author of The Cryptopians, also joined the conversation. Show topics:

• how people have responded to The Cryptopians

• why traditional publishers were reticent to publish the story revealing the alleged DAO attacker’s identity

• what lessons can be learned from North Korea’s alleged involvement in the Ronin bridge exploit

• what zero-knowledge proofs work and how a miscalculation in a whitepaper almost caused major issues in the crypto world this week

• how math proofs and reporting specifications work in the crypto space

• why security engineers, like samczsun, are so hard to come by

• how an attacker was able to steal ~$80 million from Beanstalk in a governance attack

• @hosseeb vs. @haseeb

• the difference between being in crypto and covering it as a journalist – and why Laura sees herself as more a “referee” than a participant in the crypto space

• whether DeFi hackers can actually cash out of their positions

• why Tarun is worried about Ethereum’s security in the wake of the merge being delayed even further

• what staking derivatives are, and how tradfi companies are using Lido to lever up

• why traditional funds getting into crypto has Tarun worried about Anchor

• why the guys think Cosmos is more popular than Polkadot

Book Update

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