WhiteboardCrypto Newsletter - Mar 15

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

Cronos Labs’ governance proposal

Crypto.com’s subsidiary, Cronos Labs, manages the Cronos blockchain and the CRO token. They put up for vote a proposal that would allow them to reissue CRO tokens that had been burned years ago. Burning tokens means sending them to an unrecoverable address, essentially locking them up forever. Usually this is done to boost the price of a token; for instance if a token has a total market cap of $1m and they cut their supply in half, then the value of each token doubles. On the flip side, if a token suddenly has an increased supply of new tokens, then the value of each token goes down.

The proposal would reissue 70% of the original supply. Currently, the total circulating supply of CRO is 27 billion tokens; the reissue would bring them back to 100 billion tokens. That would be a huge hit to the value of each token. The reason they want to do this is to launch an exchange traded fund (ETF) for non-crypto-natives to purchase the asset, and so they need CRO in reserve to fund that.

Learn more here.

Hyperliquid is less liquid now

One of the risks of trading on margin is liquidation—when your assets are taken to cover a debt. Trading on margin means borrowing assets to make a larger bet on whether a price will go up or down (long or short trades). Exchanges that offer this do so through liquidity pools, where users provide tokens for others to borrow in exchange for fees. These liquidity providers take on risk because if a borrower’s position is liquidated, the pool can take a loss.

So what happened? A trader intentionally triggered the liquidation of a long position by making a very large ($200m) and risky long position, causing the liquidity pool to lose $4 million. In response, Hyperliquid increased the minimum collateral required to reduce the impact of such liquidations in the future.

Learn more here.

Sandwich attack or money laundering?

A sandwich attack is a type of front-running strategy where a malicious actor sees a pending large transaction and places an order before and/or after it to manipulate the price to their advantage. This often means the person making the trade loses out. Many exchanges/blockchains try to prevent these kinds of attacks using a variety of methods, but it doesn’t always work.

In this case, a trader on Uniswap was trying to exchange $733,000 USDC to USDT, but instead of getting 1:1, they only received $19,000 in USDT. Some people thought this might have been an attempt to launder the money - where the attack was actually planned - but so far there is no concrete evidence for this.

Learn more here.

Argentine’s LIBRA token fallout

A few weeks ago, the Argentinian president Javier Milei posted on X about a new token, LIBRA, that ultimately ended up losing a ton of money for the investors who bought after his post. Court cases are ongoing but it’s clear that the creator of the token, Hayden Davis, is cashing out. He purportedly moved $1.6m of stolen funds recently, including from LIBRA and MELANIA. Courts in Argentina are requesting an Interpol Red Notice for Davis, which means that he would be arrested and presumably sent to Argentina to undergo a trial.

Thanks for reading and I hope you learned something!

- Theodore