✨ Blockchain weekly ProBit Bits — from August 26, 2022

We bring to your attention a digest of interesting events of the crypto industry in the world 🌍
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From updates on the Ethereum Merger to a brief overview of the 3AC saga and how much was stolen from DeFi protocols in 2022.

Ethereum’s effort to correct misconceptions about the upcoming update

Last week, Ethereum.org published some popular misconceptions about the upcoming Ethereum Merge update. The most pressing of these is how the upgrade won’t result in lower gas bills. According to them, this is a transition from proof-of-work (PoW) to proof-of-stake (PoS) consensus, but it will not directly affect network bandwidth.

While efforts are focused on scaling user activity at Layer 2 , another misconception that needs to be addressed is said to be that the update is unlikely to affect transaction speeds at Layer 1. Ending PoS may offer additional security guarantees, but it will not significantly speed up transactions. With PoS, blocks will be generated about 10% more often than with PoW, but users will hardly notice this change. A third opinion surrounds validators who have staked their ETH in the Beacon Chain since 2020 with the option to exit after the Merger. They say that this will not happen either, because the exit from the validator is limited, so stakers will not be able to exit at the same time.

According to other guesses, anyone can run their node for free to support the decentralization of the Ethereum network, as opposed to the idea that they need to stake 32 ETH to do so.

Proponents of the hard fork want ETH holders out of LP

Although not yet confirmed, last week the ETHW hub began recommending that every owner withdraw their ETH from their Liquidity Pools (LP). They claim that if and when the hard fork does happen, the ETH of owners in LPs like Uniswap, Sushiswap, and Compound “will be exchanged or given away by hackers and scientists using obsolete and worthless USDT, USDC, WBTC.”

The call came as the ETHW hub announced that it will implement LP (DEX and Lending Protocol) freezing technology to protect ETHW users’ tokens after the hard fork.

The ETHW team also released their first code. It includes the removal of EIP-1559, a proposal that introduced the burning of base fees in Ethereum transactions to split fees between miners.

When a community member discovered a loophole in the code that reverted all blocks to the London fork, a patch was quickly released that contained the vulnerability.

Messari says that nodes are not decentralized in the cloud

In an Ethereum-related development, crypto data provider Messari called for the need for node decentralization. It claims that the three major cloud providers are responsible for roughly two-thirds (69%) of the 65% of Ethereum nodes hosted in data centers. The same set of cloud providers also reportedly hosts 72% of Solana’s approximately 95% of data center nodes. More than 50% comes from Amazon Web Services (AWS), more than 15% from Hetzner and 4.1% from OVH.

Node service providers typically run distributed node clients behind the scenes to provide regular users with an API key to write to and read from the blockchain.

Ethereum remains the largest public blockchain with support for smart contracts. However, due to a significant drawback—high gas fees due to high demand—new blockchains like Solana are rapidly gaining popularity.

The largest ENS registrations were recorded in July

Meanwhile, the total number of Ethereum Name Service (ENS) registrations exceeded 2 million last week. ENS is an open source blockchain-based naming protocol that seeks to complement and extend the utility of DNS. It focuses on use cases that are not currently used with DNS, such as crypto payments and decentralized websites .

According to Dune, the number of ENS registrations exceeded 378,000 in July , the largest month ever with more than 525,000 addresses participating in the .eth domain name registration auction. Registration and renewal fees exceeded $6.86 million.

Risk management has not improved since the departure of two 3AC partners

Remember the 3AC saga? Well, a New York Magazine Intelligencer feature article published last week suggests that the departure of two Hong Kong partners may have been a contributing factor to the collapse of Three Arrow Capital .

Both partners, who “typically worked 80 to 100 hours a week managing much of 3AC’s operations,” retired at the same time. Their departure left the bulk of the work to Kyle Davis (co-founder of 3AC with Su Zhu) as chief risk officer.

A former friend believes that “their risk management was much better before Davis took over.” This friend says Zhu, on the other hand, was reluctant to hire new people, even though staff complained about long hours. Apart from Zhu’s worries that the new people would “reveal trade secrets”, he is said to have viewed the opportunity to work at 3AC as a favour.

Canadian exchanges set purchase limits for retail investors

To protect crypto investors, some crypto exchanges in Canada implemented new regulatory changes for their users last week. Retail investors now have an annual “buy limit” of CAD 30,000 for “restricted coins”, while only allowing purchases of Bitcoin (BTC), Ether (ETH), Litecoin (LTC) and Bitcoin- cash (BCH) as much as the user wants.

For the Newton platform, net purchase limits imposed on accounts do not apply to residents of British Columbia, Alberta, Manitoba or Quebec. The limit “counts all of your cryptocurrency purchases minus your sales (by average value) over a 12-month period (last 365 days),” according to Bitbuy , which also issued a similar message.

By July 2022, hackers have stolen $1.9 billion worth of cryptos

A Chainalysis report released last week revealed that up to $1.9 billion worth of cryptocurrencies were stolen in service breaches by July 2022. At the same time in 2021, that amount was less than $1.2 billion.

And there could be more. In the first week of August, the $190 million Nomad crosschain protocol and several $5 million Solana wallets were hacked . A blockchain analytics firm attributes the staggering rise in stolen funds through DeFi protocols to the unique vulnerability of their platforms to hacking. The analysis states that the open source of DeFi protocols and their willingness to market and develop quickly are factors that can lead to security failures. In 2022, groups linked to North Korea stole around $1 billion worth of cryptocurrency from DeFi protocols.

Top 40 corporations invest $6 billion in blockchain/crypto

After analyzing the top 100 banks investing in blockchain/crypto by assets under management (AUM), analytics firm Blockdata last week found that forty of the top corporations made blockchain investments between September 2021 and mid-June 2022.

Among them are Samsung, UOB, Citigroup and Goldman Sachs. The others are Alphabet, Blackrock, Morgan Stanley, BNY Mellon and PayPal. In total, 40 companies have invested about US$6 billion in blockchain startups.

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Alexandr Kerya

I'm has been actively developing my agency, INCRYPTICO, together with the team of marketing specialists, advertising and PR managers who have all been working together earlier.

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