News On The Block: How web3 is getting murdered
Sam Bankman Fraud, bankruptcies, dumps and a hell of a month.
Welcome to the ‘News on the block’. The first issue of our amazing Tuesday newsletter (Wednesday this week) where we will keep you posted with the latest events in the crypto space. We have everything in the store - from SBF memes to a pic of Drake’s Ledger.
As sad as it may sound,
Scams Bankman Fraud Sam Bankman Fried has been stealing the crypto show lately. Today’s episode will cover:
Our take on the FTX saga and the main reason for it.
The damage, done by the fiasco.
Are Consensys and Uniswap curious about you and your data?
The IRI (Industry Recovery Initiative) fund that Vitalik and CZ are working on to shed more light on the CEX industry.
Extra: Our friends at Ledger have something new in store that you might like.
Scroll to the end only if curious about the dopest jobs in web3 🎁
SBF STFU PLS
Unless you live in a cave, you should be aware that Sam Bankman Fried attempted to ‘summon Exodia’ (fist bump to all my Yu-Gi-Oh fam) on the entire crypto ecosystem with the bankruptcy of his companies (FTX and Alameda Research). Think of these two as Cersei and Jaime Lannister from Game of Thrones - two good siblings that share a father but also … a bed. The latter plays an immense part in what destroyed SBF’s company family. Simply put, Alameda had 1/3 of its assets in FTT - the token, minted and controlled by Sam’s other company, FTX. And this leads to some pretty hefty consequences for the entire market.
FTX: ingredients for market demise: 1. The flywheel scheme and 2. a s*&tload of poor company management.
The Flywheel scheme - FTX used it in order to keep pumping their native token (FTT) and induce FOMO.
TLDR: a piece of code is created (an ERC-20 token). Then, some trading volume is added by wash trading (an illegal method where a single trader buys and sells a financial instrument in order to generate misleading market information). The creator of the tokens keeps the majority of the supply for himself and enjoys the gains. What is left of the circulating tokens is now much easier for price manipulation. Then you ‘flex’ your newly created gains to prospective investors or use this artificial ‘credibility’ in order to take loans, collateralized by the token. Congrats - you are already rich enough to bail out companies, buy mansions, and much more.
As of November 19, the top 10 of the 24,508 FTT holders owned 93.76% of the total supply. Additionally, Messari points at only 191 addresses actively trading the token(data as of 20th-21st of October 2022, prior to the crash). Kinda strange for a multi-billion dollar company.
Pretty much a Ponzi. Why? Because as the price of the token is increasing, more and more money should be ‘invested’ on your side in order to keep that going … until you hear a big ‘pop’ across the entire market.
2. A s*&tload of poor company management
These are the words of John Ray III, the newly appointed overseer of FTX and one of the most experienced restructuring executives in the world. FTX's Chapter 11 First Day Affidavit also includes details about some of the companies’ policies:
no record or database of any kind for the employed staff. That includes the terms of their agreements and their status.
payment requests by employees were approved with emojis in an online chat.
FTX: Damage report
Genesis, Galaxy Digital, Crypto.com
are just some of the companies that took damage from this fiasco. Genesis, the institutional trading firm lost 175$ million, held in their FTX account. Galaxy Digital - 76.8$ million, Crypto.com - around 10$ million. All these companies have handled the storm so far.
Oh, and btw, BlockFi filed for bankruptcy. The culprit - a bailout loan from FTX to BlockFi in June 2022. More than 100 000 creditors are owed money. ”Until death do us part.” - they said.
Bonus: Apple is trying to pull the trigger on movie rights covering the FTX saga.
Consensys wants your shoe size and Uniswap charges extra fees if you don’t own a 14 Pro Max
… of course not. But it is true that both companies are now officially collecting data on their users.
Consensys - it now maps the IP address of your device to your wallet. The wallet address is taken from the Metamask extension/app and the IP is taken from Infura - the company’s node-as-a-service product (which is used by Metamask by default). Not that this happens only when you ‘write’ data to the blockchain and NOT when you ‘read’ one, a.k.a you are not being tracked if you query an account’s balance, for example. Consensys also stated in an email, that they aim to retain user data for no longer than a week.
N.B. All of the above does not apply if you use Metamask with a different node provider like Ankr.
But it is not all bankruptcies, dumps and scams.
Always remember that blockchain’s most indispensable trait has been decentralization. And while the mainstream opinion is negatively impacted by the atrocities caused by FTX, Celsius, Luna and other Ponzis, the technology is here to stay. Bitcoin outflows across all centralized exchanges rose to 742,401 for the period 9th - 15t of November. This means that people prefer to hold their BTC in their Ledger, Trezors or paper wallets. Everything but giving other people access to their funds. Self-custody and decentralization go hand in hand.
Vitalik and CZ responding to the call of duty
The two sigma chads started to work on creating a proof for on-chain reserves that would cover investors’ money in case of a centralized exchange default (CEX). The proposed idea implements the usage of zero-knowledge SNARKS together with Merkle trees. Math nerds, enjoy!
And the GIF above is the wallet address where the funds for the Industry Recovery Initiative launched by Binance will sit. It is created for web3 companies that are in need of money due to external (think of market turbulence due to FTX-type fiascos) circumstances. There are over 150 applications by various blockchain companies to date.
Solidity term of the week
Wei - the smallest denomination of ether. 1 ether = 1 000 000 000 000 000 000 Wei.
I know when that Ledger bling … that can only mean one thing…
But what even is Ledger?
It is a leader in the cold storage wallet game. It is a device that stores the private keys of your cryptocurrency wallets. Think of it as a 2-factor-authenticator when propagating transactions on the blockchain.
Why it matters?
Because it allows self-custody over your funds.
Ledger started rolling out their Crypto Life debit card in the UK and Europe. It allows its owner to get 1% cashback in BTC or USDT. Accepted in 90 million + stores.
This is financial advice 💰: Buy a Ledger hardware wallet. It keeps your tokens and coins safe + makes you look cool at family gatherings. 😎
That’s it for the news part, fren.
Jobs opportunities 🧑💼
In every issue of the Blockend Developer, we will present you with a curated list of job opportunities from the best companies in the sector.
Web3 Resources 🔗
⚡️ Polkadot Vs Ethereum - the full comparison https://vitto.cc/polkadot-vs-ethereum-the-full-comparison/
🏆 Best 6 decentralized cloud storage companies in 2022 https://vitto.cc/blockchain-development-tools-for-web3-developers/
🧠 Solana Development Roadmap https://vitto.cc/the-complete-solana-development-roadmap/
console.log(”See you in the next block. 🚀”);