Someone Feed Crypto, Please

A lawsuit has been filed against OpenSea, one of the leading Ethereum-based NFT marketplaces, after the company reportedly was the subject of an attack that resulted in millions of dollars worth of non-fungible tokens being stolen over the weekend. At least 17 OpenSea users noticed that their NFTs were missing, prompting panic to erupt on the platform.

According to blockchain security service PeckShield, 254 tokens were stolen over the course of the attack, including tokens from Decentraland and Bored Ape Yacht Club ($BAYC.NFT).  

Some speculated that the problem might have come from OpenSea’s smart contracts – the software that runs the platform. However, it appears the more likely reason behind the attacks is a phishing attack conducted by a malicious actor, which copied and sent an email blast informing users about a smart contract change. OpenSea confirmed the phishing attack – but did not acknowledge any potential exploits with the smart contract, contributing to some confusion and controversy among members of the NFT community.

OpenSea’s statement didn’t satisfy everyone, maybe most, namely Timothy McKimmy, a Texas resident who filed a lawsuit against the marketplace in federal court. He claimed that he was the owner of Bored Ape ($BAYC.NFT) #3475 and that his NFT was “stolen” for 0.01 $ETH.X or $26, and the so-called buyer sold it for 99 $ETH.X, or $250,000. He said that the platform was aware of a bug that could allow hackers to buy NFTs for a fraction of their market value.

With a valuation of $13.3 billion, OpenSea has become the biggest NFTmarketplace by volume. However, its numerous security-related issues have demoralized investors. In January 2022, an exploit affected the platform, which led to refunding users $1.8 million. It’s not good for its health as trading in non-fungible tokens has dropped in recent days, according to DappRadar. The data provider found that OpenSea’s seven-day trading volume had dropped by 37% as of Tuesday.

Tether Holdings Limited, which has operated below the regulatory radar for the last half-decade, has released its quarterly assurance opinion report. The report shows a dramatic decrease in its cash and cash equivalents, commercial paper holdings, and reserves exceeding its liabilities, which raises questions – why?

New York’s Attorney General requires Tether Holdings Limited to report its reserves on a quarterly basis since the company paid an $18.5 million fine in February 2021. As part of the settlement, the largest stablecoin issuer reported yesterday a total of $24.2 billion in commercial paper assets classified as “Cash & Cash Equivalents & Other Short-Term Deposits & Commercial Paper.” Cash equivalents are investments that mature within three months or less.

The attestation supervised by Cayman Islands-based Accountants MHA Cayman stated that it had reduced its commercial paper holdings by one-fifth between September and December last year, dropping from around $30.5 billion to $24.16 billion. Moreover, it decreased its cash assets from $7.2 billion to $4.2 billion in the last quarter. To maintain its reserve, the issuance company allocated most of its reserves to Treasury bills, almost doubling its assets in short-term government securities from $19.4 billion to $34.5 billion.

Tether took to Twitter to share the news, proudly announcing that its consolidated assets exceed its consolidated liabilities. However, the difference is relatively small, with assets totaling $78.67 billion and liabilities around $78.53 billion. Moreover, the latest figures show that less than 3% of Tether reserves are held in cash.

The latest attestation might help put to rest many years of skepticism about Tether, crypto investors’ USD stablecoin of choice. Tether’s tussle with regulators started in 2017 when Tether Holdings Limited was alleged to have misrepresented the specific amount of fiat backing Tether ($USDT.X). In short, they misrepresented their cash holdings against the amount of Tether issued – which could be bad.

Tether’s website revealed in June 2021 that its cash only makes up a small percentage of its reserves. Reserves were mostly invested in commercial paper, secured loans, and corporate bonds and metals. These assets are market-sensitive. Regulators had a problem with that because since these assets move, it makes for a “stablecoin,” which is not so stable – and has a great propensity to drop below its $1 peg. 

Tether is also facing a major class-action lawsuit accusing it of contributing to “the largest bubble in human history.” For many people, Tether is a joke because there is no way to have cash backing for the 79 billion $USDT.X currently in circulation. For comparison, retail giant Amazon has $73 billion cash on hand. 

USDT critics claim that it’s a way for insiders to artificially inflate the value of Bitcoin. It’s noteworthy that more than 75% of Bitcoin trading is done in $USDT.X and the third-most widely held coin by value facilitates transactions between various cryptocurrencies. 

Tether Holdings Limited’s latest figures do not indicate it is 100% funded by cash reserves. It will be interesting to see whether or not the report alleviates the regulator’s concern about Tether’s backing.

In recent months, you may have heard the term “Web3” or “Web 3.0.” To put it simply, it’s a new version of the internet. But what exactly is it, and why should crypto enthusiasts care?

For this to make sense, let’s go back and understand what web 1.0 and web 2.0 were. If you remember the internet of the 1990s, it was meant to read and publish basic content. If you wanted to read an article on the New York Times website, you were supposed to simply click on the link, read the article, and that was it. When web 2.0 came, it was a “read, write and interact” version of the internet. It allowed people to consume content, publish, and interact with the world. The birth of the social media platforms like Twitter, Facebook, and Instagram revolutionized how the internet operates.    

However, web 2.0 has a problem that is a burning issue these days — privacy. After years of interacting with people across the world on the internet, people realized that their personal data was being used by big tech companies like Google, Facebook, etc., for advertisement and other purposes. Facebook was fined $5 billion in 2019 by the Federal Trade Commission (FTC) for violating data privacy laws.

Web 3 comes into play here. It’s a “read, write, interact and own” phase of the internet. It involves an updated version of the World Wide Web-based on blockchain technology, with token-based economics and decentralization features. It is a major jump from the current generation of the internet (Web 2.0), in which data is largely centralized.

Tim Berners-Lee, the inventor of the World Wide Web, called it the Semantic Web in the beginning and envisioned it as a more open, autonomous, and intelligent internet. In Web 3.0, users will be able to sell the data generated from various sources, including mobile phones, tablets, desktops, and much more, through decentralized data networks, retaining ownership control. And since Web 3 applications will run on blockchain networks, such apps will be called decentralized applications or dApps.

This might sound familiar to you since there are several early-stage Web 3.0 applications available today. Not only can users write, read, interact with the world, but they can also own and monetize their content. That’s what we see right now on Decentraland, where users buy, sell, make and own digital plots. But what we’re seeing in the DeFi world or dApps is just the tip of the iceberg. 

However, there are some potential downsides.

Web 3 could have one potential downside, and that lies in its structure. The idea of decentralization poses a risk of legal and regulatory risks. The damage cybercrime, hate speech, and fake news have caused to society are well known. If there’s a complete lack of control, the idea of decentralization could backfire. The question of how to balance ownership and regulation will be interesting as there is a lot to be done in the web 3 space, as the token economy, decentralization, and technology will merge soon.

After surpassing the DAI in market cap and becoming the largest algorithmic stablecoin with a market cap of over $10 billion, Terra’s stablecoin UST is ready for more adventure. 

Luna Foundation Guard (LFG), a nonprofit organization supporting the growth of the Terra ecosystem in Singapore, has raised $1 billion by selling $LUNA.X, a native token of the Terra blockchain that will serve as UST’s bitcoin-denominated foreign-exchange reserve. By denominating the reserve in Bitcoin, LFG provides the “release valve” for UST redemptions into LUNA and diversifies the ecosystem away from Terra assets.

The positive news flow boosted $LUNA.X to become today’s best-performing major cryptocurrency. The crypto traded at $60, after a 13% jump.

Leading the funding round, which ranks among the largest in crypto history, were Jump Crypto and Three Arrows Capital, with participation from other participants including DeFiance Capital, Republic Capital, GSR Ventures, and Tribe Capital.

As per Luna Foundation Guard, the purpose of the UST Forex Reserve is to strengthen and protect the peg of the UST stablecoin, which is algorithmic, which means it relies on market incentives rather than being backed by fiat currencies. 

“Although the widespread adoption of UST as a consistently stable asset through market volatility should already refute this, a decentralized Reserve can provide an additional avenue to maintain the peg in contractionary cycles that reduces the reflexivity of the system,” Terra tweeted.

Terraform Labs created the algorithmic stablecoin TerraUSD or UST, which is directly related to Luna. With native token $LUNA.X, TerraUSD (UST) has a value of $1 USD, and it remains stable. As soon as UST drops below US$1, $LUNA.X supplements the supply of UST to keep its peg to the dollar.

Now that TerraUSD (UST)has received additional funding, if something goes wrong, Bitcoin reserve will step in and help TerraUSD maintain its peg with the dollar. Right now, TerraUSD (UST) is the number four stablecoin, right behind Tether ($USDT.X), USD Coin ($USD.X), and Binance USD ($BUSD.X). Unlike the top three, UST is not governed by central authorities, and there is no fear from the authorities so far — which is its biggest advantage.