TLDR Crypto Daily Update 2022-08-16

Crypto projects to watch ๐Ÿ‘€, USDC's power over Ethereum ๐Ÿช™, inside 3AC's collapse ๐Ÿ“‰

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Markets & Business

The Crypto Geniuses Who Vaporized a Trillion Dollars (32 minute read)

Three Arrows Capital filed for bankruptcy in July, a move that was meaningfully responsible for the crypto crash of 2022. Its creditors have come forward with more than $2.8 billion in claims. The true scale of the losses may never be known as many parties risk increased scrutiny from investors and regulators if they disclose their relationship with the firm. This article tells the story of 3AC and the firm's collapse.

Acala Community Debating Massive Token Burn to Recover From Exploit (2 minute read)

The Acala community may burn tokens to help its stablecoin recover after the network's recent attack. The proposal, which was published on August 15, has gained tentative support from the community. An attacker exploited Acala on August 15 and minted 1.3 billion aUSD, which they swapped for various cryptocurrencies. The event caused the value of aUSD to drop to zero. aUSD served as the de facto stablecoin for Polkadot and other related blockchains.
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Innovation & Launches

Interlay launches Bitcoin-backed stablecoin iBTC on Polkadot network (2 minute read)

Interlay has launched interBitcoin (iBTC), a wrapped Bitcoin asset, on the Polkadot chain. iBTC is currently available on Acala and Moonbeam and its developers have plans to launch on Ethereum, Cosmos, Solana, and Avalanche. The token can be minted by locking Bitcoin collateral into a vault. The locked BTC is insured and reimbursed if there is a vault failure. iBTC is different from other cross-chain bridged assets as users only need to trust Bitcoin and Polkadot.

What is Recursive Proving and how does it lead to better scaling, L3, and other improvements? (2 minute read)

Recursion is a method of generating proofs on blockchains that involves repeatedly compressing layer-2 transactions. It takes several compressed zero-knowledge proofs and compresses them over and over and faster speeds. Recursive proving is processed off-chain, which keeps costs low. The method promises to drive down gas fees and improve speed. Recursion is now live on the StarkNet layer 2 rollup and StarkEx-powered apps.
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Guides & Resources

The upcoming Merge has revealed that USDC has veto power over any breaking changes to ETH (2 minute read)

Any asset that involves the real world can't support forks. A fork essentially doubles the number of tokens available, but the assets backing the tokens in the real world remain the same. This means that companies that issue tokens backed by real-world assets will have to choose which chain to support after a fork. While there is little contention with the upcoming Ethereum fork, this issue will likely become more problematic in the future.

What to Watch in Crypto (24 minute read)

This article looks at what investors, operators, and founders should know about the most exciting crypto trends right now. It covers Cosmos, institutional lending, web3 authentication, crypto security, and web3 social media. Crypto moves fast as the sector is volatile, and predicting trends is tricky. Ethereum's upcoming Merge has the potential to vastly broaden the appeal of crypto and web3 to mainstream audiences.
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Miscellaneous

US Fed Opens Pathway for Crypto Banks to Tap Central Banking System (2 minute read)

The US Federal Reserve will publish its final guidance for novel financial institutions to access its master accounts. The changes will possibly allow Wyoming Special Purpose Depository Institutions to access these accounts and participate in the global payment system. They involve creating a multi tiered system with different levels of insurance and supervision by federal banking agencies.

Buenos Aires to Run Ethereum Nodes by 2023 (2 minute read)

Buenos Aires will deploy several Ethereum validator nodes in 2023 for exploratory and regulatory purposes. Running the nodes will help regulators develop a deeper understanding of the Ethereum chain. The nodes will be deployed in partnership with private companies. Buenos Aires started allowing its citizens to pay taxes with cryptocurrency last April and it is working on a blockchain-based identification system.

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Quick Links

Do Kwon goes public in his first interview since Terraโ€™s $45 billion collapse (3 minute read)

Do Kwon, the CEO of Terraform Labs, answers accusations of fraud in an interview with Zack Guzman from Coinage Media.

Canto Genesis (3 minute read)

Canto is a layer 1 blockchain that provides core DeFi primitives designed to support the Free Public Infrastructure that will be launching soon.

Crypto Lender Celsius On Pace to Run Out of Cash by October (4 minute read)

A new court filing says that Celsius holds $2.8 billion less in crypto than it owes to creditors and includes financial projections that show Celsius will run out of cash by October.

Crypto Venture Capital Firm Dragonfly Buys Hedge Fund (1 minute read)

Dragonfly has acquired MetaStable Capital, a crypto investment fund that started in 2014, for an undisclosed amount.

Galaxy Digital calls off its $1.2 billion acquisition of BitGo (2 minute read)

Galaxy Digital has terminated its plans to acquire BitGo after the startup failed to provide its audited financial statements for 2021.

Reimagining cross-chain bridges: Letโ€™s stop trying to be liquidity protocols (4 minute read)

Cross-chain bridges need to rethink their approach to liquidity aggregation.

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