Welcome to our recap of the major stories in the crypto world! Here’s what has happened over the past week:
EFF ‘Saves’ Tornado Cash?
After Tornado Cash was sanctioned by the US Treasury last week, the Electronic Founder Foundation (EFF) raised its concerns over this ban.
EFF is deeply concerned that the U.S. Treasury Department has included an open source computer project, Tornado Cash, on its list of sanctioned individuals. Tornado Cash is an open source software project and website that published a decentralized cryptocurrency mixer.
— EFF (@EFF) August 15, 2022
The EFF is a non-profit digital rights group that aims to promote Internet civil liberties.
The statement mentions that code can be recognised as speech, and banning code could violate the First Amendment.
This sanction by the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC) has sparked a huge debate, as the entire code of Tornado Cash is sanctioned, and not just the wallet addresses of people who perform illegal activities on the platform.
What’s more, Tornado Cash creator Alexey Pertsev was arrested by Dutch authorities over allegations of money laundering.
Ksenia Malik, the wife of Tornado Cash creator Alexey Pertsev told Cointelegraph that she has not been allowed to contact him since his arrest last week https://t.co/fQ4JO1IOrn
— Cointelegraph (@Cointelegraph) August 19, 2022
More stablecoins depegging 😮
Stablecoin depegging seems to be a recurring trend, and Acala USD (aUSD) is the latest victim.
As the native stablecoin for the Polkadot and Kusama ecosystem, a misconfiguration in a liquidity pool allowed for 1.2 billion aUSD to be minted without the necessary collateral being deposited.
We have noticed a configuration issue of the Honzon protocol which affects aUSD. We are passing an urgent vote to pause operations on Acala, while we investigate and mitigate the issue. We will report back as we return to normal network operation.
— Acala (@AcalaNetwork) August 14, 2022
aUSD is collateralised over a variety of cryptocurrencies, including DOT, KSM, ACA, KAR, BTC, and ETH.
To cope with this depeg, Acala proposed to freeze its network and burn the aUSD that was minted without collateral.
The recently passed community governance referendum has now been executed.
1,292,860,248 total erroneously minted aUSD have been returned to the honzon protocol and burned.
Details in thread below ⤵
— Acala (@AcalaNetwork) August 16, 2022
As of the time of writing, aUSD has increased its price, but it has not restored its peg yet.
Since aUSD is backed by collateral, it is different from UST which was a pure algorithmic stablecoin.
You can find out why UST depegged in our article here.
Meanwhile HUSD is yet another stablecoin that depegged as well.
.@Stablecoin_HUSD has lost its peg to the U.S. dollar, dropping to $0.92. The stablecoin, which claims to be cash-backed, traded even lower on Curve Finance. Reporting by @oknightcrypto.https://t.co/DdiFxWNqgJ
— CoinDesk (@CoinDesk) August 18, 2022
This was due to a drop in liquidity in the Curve Finance pool between HUSD and the Curve 3 pool (consisting of DAI, USDC and USDT).
The HUSD Twitter page mentioned that this was due to a short-term liquidity crunch which was eventually resolved.
Recently, we had made the decision to close several accounts in specific regions to comply with legal requirements, which included some market maker accounts. Due to the time difference in banking hours, this resulted in a short-term liquidity problem but has since been resolved.
— HUSD (@Stablecoin_HUSD) August 19, 2022
This is interesting as HUSD is supposedly a stablecoin that is 100% backed by the US Dollar, without any cash equivalents.
You can find out why reserves of a fiat-backed stablecoin are so important in our breakdown of USDT’s reserves here.
Yet another hack 🤦♂️
Along with depegging of stablecoins, bridges are constantly being hacked.
Celer Network shut down its cBridge after a supposed DNS attack.
📢(1/n)A DNS cache poisoning attack on cBridge’s frontend UI appprox. during 08/17 07:45pm to 10:00 pm UTC caused some users to be redirected to malicious smart contracts that can drain all approved token amount. FIRST, PLEASE check&revoke any approval to the followings:
— CelerNetwork (@CelerNetwork) August 18, 2022
This is somewhat similar to the DNS attack on Curve Finance last week.
Approximately $240k worth of assets were stolen by this wallet address.
Such hacks are beyond the control of these decentralised apps (DApps), and Celer has recommended users to turn on the Secure DNS option on your web browser.
(3/n) Reminder: DNS poisoning can happen to any DeFi app frontend regardless of the protocol’s own security and we strongly suggest the entire blockchain community to turn on Secure DNS option in your web browser to reduce such possibility to get affected. https://t.co/5kfTTnYG4V
— CelerNetwork (@CelerNetwork) August 18, 2022
This is one safeguard to prevent yourself from interacting with malicious smart contracts!
Merge DOESN’T Reduce Gas Fees
With all the hype around The Merge, the Ethereum Foundation has issued a statement that this upgrade will not reduce the network’s high gas fees.
Ouch!
Gas fees won't go down after the Merge, according to a clarification issued by the Ethereum Foundation. https://t.co/XN2bNb56bh
— Cointelegraph (@Cointelegraph) August 18, 2022
The Merge does not increase the scalability of Ethereum. However, it paves the way for sharding, which will help to improve scalability, and hopefully, reduce gas fees along the way!
In a rollup-heavy ecosystem, on-chain gas fees would remain the same, and 465 gwei may even become the norm, but most transactions would be happening inside rollups, where actual fees paid by users would be hundreds of times lower.
— vitalik.eth (@VitalikButerin) September 2, 2020
You can find out more about The Merge in our detailed article here.
Scams down, but hacks are up?
A report by Chainalysis, a blockchain analytics platform, recently published a crypto crime update.
.@Kr00ney reports on our mid-year #crypto crime update on @CNBCTechCheck. Check out the full analysis on our blog: https://t.co/UyA2QVYvWJ https://t.co/onZTesnM54
— Chainalysis (@chainalysis) August 16, 2022
It noted that total scam activity was 65% lower as compared to last year, but $1.9 billion has been lost through hacks, up from $1.2 billion last year.
Despite this decrease in scam activity, we strongly urge you to keep your seed phrase and private keys secure!
Moreover, we’ve recently launched our scanner feature that allows you to transfer private keys without having to store them on a third-party app like Telegram!
Bridges seem to be the main target for hacks, as a lot of assets have been locked in the platform.
We’ve partnered with Multichain, which we believe is a secure option for all your cross-chain needs.
🤝 We are pleased to announce we have integrated the @MultichainOrg Cross-Chain Router on Krystal.
Start bridging your assets from 9️⃣ supported networks on Krystal mobile and desktop now!
Access here:
📌 https://t.co/ugWOqcrYjj1/#CryptoNews #Multichain pic.twitter.com/6ilckLoDgk
— Krystal DeFi (@KrystalDefi) July 25, 2022
New use cases for DOGE? 🤔
A new ‘Layer 2’ for the Dogecoin blockchain seems to have given new life into the DOGE economy.
Improvements ahoy! ⚙️🔧
🌪 Shibes, #Dogechain has been experiencing some crazy activity in the past few days. The Dogechain hype has taken the internet by storm.
The numbers have been simply incredible. In just 5 days, we gathered:
🔹 +58,000 wallets
🔹+480,000 tx pic.twitter.com/pNOmmScOjR— Dogechain💜 (Giving away a Tesla) (@DogechainFamily) August 16, 2022
The original Dogecoin was mainly used for payments. With Dogechain, it brings other use cases such as NFTs, Games and DeFi as it offers smart contracts.
However, Dogechain is not a ‘real’ Layer 2 that is built on top of the Dogecoin blockchain. Instead, it utilises Polygon Edge which offers EVM-compatibility.
On Krystal, you can interact with 9 different EVM-compatible blockchains, including Ethereum, BNB Smart Chain, Polygon, Avalanche, Fantom, Cronos, Arbitrum, Aurora and Klaytn.
Similar to other blockchains with smart contracts, you will be paying for gas fees with the native currency (in this case, DOGE).
Dogechain is not an official project by the Dogecoin Foundation, but it does provide some interesting use cases for DOGE.
Do you think that OFAC should have sanctioned Tornado Cash? Will you be trying out the new Dogechain? Tweet us or send us a message on Telegram to let us know!
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