WhiteboardCrypto Newsletter - Aug 3

Welcome back to this week's edition of our WhiteboardCrypto Newsletter!

Bitcoin blockchain explorer improvements

Mempool.space has launched an off-chain accelerator aimed at speeding up Bitcoin transactions by using a network of nodes to process transactions. This new system works off the main blockchain, and is intended to help users get their “stuck” transactions processed, of course with an extra miner fee and service charge. The fees can be paid in bitcoin via the Lightning network or fiat via Cash App, Apple Pay or Google Pay. However, this requires users to trust these off-chain nodes, which might not be as secure as the main Bitcoin network.

Learn more here.

Compound governance drama compounds the problem

A crypto whale (someone who holds a significant amount of an asset) named Humpy, who has been known to cause trouble, got a proposal passed on July 28 on Compound’s governance platform that would distribute a quarter of the COMP treasury (~$25m) into his group’s—the Golden Boys—vault for one year, with the intent to set up a protocol that would pay out yield to token holders. This would have given them essentially total control of Compound’s governance process. After significant backlash, the group agreed to stop that action and instead agreed to the introduction of a staking protocol controlled by the DAO writ-large. This shows how unsafe token-weighted governance can be - the people with the most capital can control it.

Learn more here.

US SEC changes their minds…maybe

In summer 2023, the US SEC filed a lawsuit against the Binance exchange that alleged they sold unregistered securities. This lawsuit categorized SOL, ADA, MATIC, FIL, ATOM, SAND, MANA, ALGO, AXS, and COTI as securities. The amendment proposed this week doesn’t indicate that the SEC is dropping the idea that crypto coins/tokens are securities, but that they recognize a judge separate from the commission needs to decide that. CZ, the exchanges ex-CEO, is serving a 4-month prison sentence for separate sanctions violation charges. We shouldn’t read this as the SEC going softer on crypto, because they are still charging other crypto projects of fraud and securities violations. Gary Gensler, the current chair of the SEC, has been unfriendly to crypto and his tenure is at risk given some recent discourse from both Trump and Harris.

Learn more here.

Is art a security?

Two artists are suing the US SEC to find out. Brian Frye is a law professor and filmmaker, and Jonathan Mann (aka Songadaymann) is a songwriter who has written a song a day for the past 16 years and lately has been uploading them to music NFT marketplaces. The lawsuit claims that an artist selling NFTs is similar to selling art in other forms, and therefore, NFTs shouldn’t be classified as investment contracts. The ruling could have significant impacts, offering clearer guidelines for NFT artists and potentially encouraging more creators to tokenize their work without fear of regulatory issues.

Learn more here.

AAVE and Lido collab

With Lido being the largest holder of ETH, AAVE’s announcement to launch a v3 deployment that only works with Lido’s stETH and wstETH tokens has some people concerned. The new system will give users rewards and encourage developers to come up with new use-cases. It has special features and allows borrowing up to 90%—higher than the 78.5% limit on the regular market for stETH. Aave says this makes it the best platform for borrowing stETH in web3. But some people are concerned it further centralizes the ecosystem.

Learn more here.

California DMV to use blockchain

In an attempt to prevent fraud, the California Department of Motor Vehicles is partnering with tech company Oxhead Alpha to upload 42 million car titles to the Avalanche blockchain. California residents will be able to claim and manage their titles through a mobile app, hopefully deterring people from going to the DMV and post office, and help stop crime. But of course the question is why this needs to be on the blockchain and how private will it be.

Learn more here.

Thanks for reading and I hope you learned something!

- Theodore