In this week’s edition, crypto continues to go mainstream while DeFi catches a break. Here are the top stories and how they were covered, along with Yap Global’s take:
[PayPal Releases USD Stablecoin💲]
FinTech giant PayPal released its own Ethereum-based stablecoin, PYUSD, which it says is “100% backed by U.S. dollar deposits, short-term U.S Treasuries and similar cash equivalents.” 🪙 The company says PYUSD will “reduce friction” for digital payments and help family and friends quickly send each other money, even internationally. 🌍
What Journalists Said 🔍:
I have some questions, said George Kaloudis (CoinDesk), such as: What’s the point? While a decentralised USD stablecoin provides a “borderless, (theoretically) uncensorable version of the world’s reserve currency that people excluded from traditional U.S. payment rails can use,” PYUSD is rolling out on… Venmo. 🛤️
While crypto stalwarts have plenty of criticisms of PYUSD (e.g. old code and centralisation), PayPal’s stablecoin foray is more about those who aren’t already using crypto. As Jeff John Roberts (Fortune) noted: PayPal “has a massive customer base of potential PYUSD users who don’t care a lick about decentralisation. And if the company can get even 10% of those using Paypal and Venmo (which the company also owns) to use PYUSD, it will enjoy a nice new high-margin income stream.” 🎏
This release, a long time in the making, could have been a Libra redux, opined Anna Irrera (Bloomberg). Instead, PayPal’s go-slow approach with regulators “could provide a roadmap for the crypto sector, which often opts for Silicon Valley’s M.O.” 🐌
PR Perspective 📢: Compared to Meta's release of "Diem," this announcement has been a strong win for PayPal. The former was pigeonholed as yet another corporation jumping on the crypto bandwagon, whereas Paypal's stablecoin has been well received by the community and even US regulators.
[Curve Recovers Bulk of Stolen Funds 🥷]
Curve, a decentralised exchange focused on stablecoins, has recovered most of the $61 million in tokens drained from its liquidity pools last week. Alchemix, which was hit by the same exploit, also recovered millions after issuing a joint ultimatum with Curve and Metronome. ❤️🩹
What Journalists Said 🧑💻:
One exploiter returned around $12.7 million in ETH and synthetic ETH in the most cheeky way possible, chronicled MK Manoylov (The Block). The exploiter suggested the amount taken wasn’t a lot to them, then added: “I'm smarter than all of you.”
The result is positive no matter how it happened, as last week’s exploit threatened “contagion” across DeFi,” reported Shaurya Malwa (CoinDesk). The return of funds by white-hats and attackers “has buoyed sentiment for Curve—which is often referred to as one of the most influential platforms in the DeFi ecosystem.” 👷
There’s work left to be done, said Tim Craig (DLNews). “The CRV-ETH pool exploiter, 🏊♀️ who currently holds around $18 million worth of CRV tokens,” is still holding out. Curve has issued a $1.85 million bounty to find the hacker.
PR Perspective: The whole hack has damaged Curve’s reputation. However, the recovery has definitely helped with the reputation management of the DeFi ecosystem. The successful recovery of a substantial portion of the stolen funds has been a bittersweet moment for DeFi, as it is prime DeFi in action. But with a portion of funds still missing, this event continues to present a learning ‘curve’ for institutional players in DeFi.
[$200M Into Huobi After USDT Outflows 📤]
Blockchain intelligence firms say a transfer of $200 million in Tether to Huobi came from Justin Sun, who reportedly owns a controlling stake in the exchange. The transfer shores up Huobi’s stablecoin balances, which dropped 33% in one week following reports that several executives had been arrested in China. 📉🇨🇳 An exchange spokesperson denied the arrests and said the transfer didn’t come from Sun.
What Journalists Said 🔎:
Investor Adam Cochran analysed onchain data and suggests the signs—the reported arrests, Sun’s launch of Staked Tether on Tron, and a Binance selloff of USDT—point to Huobi being insolvent. 👮♂️
Sun sent $200 million earlier this year, also when reserves were low, reported Sidhartha Shukla (Bloomberg). “Falling reserves can be an indication that traders are withdrawing funds on concerns about a platform’s viability, as happened when Sam Bankman-Fried’s FTX quickly unraveled in November last year.” ☀️
Say hello to “crypto’s next crisis,” 👋 sighed Jeff John Roberts (Fortune). Many of Huobi’s assets are tied to Justin Sun’s other token projects, including Tron—”a practice reminiscent of FTX, whose balance sheet was loaded with ‘Sam coins’ tied to its crooked founder. It doesn’t look good.” ⚖️😬
PR Perspective 📢: Justin Sun is a prominent figure in the industry, therefore he is prone to being heavily scrutinised. Sun’s reputation is already in choppy waters, having been sued by the SEC. If he denies involvement in this transfer and is found to be involved, his credibility will sink even lower. Additionally, this transfer reveals a potential crisis in Huobi who will need to be transparent and communicative to assure its users of the viability of the platform.
[Tweet of the week]
https://twitter.com/udiWertheimer/status/1689303385973874688?s=20
[DeFi Definitions]
A segment exploring one particular aspect of DeFi.
This week: “Danksharding” by Leila Stein
Danksharding is a new concept of sharding for Ethereum first introduced as EIP-4844.
It was created by Ethereum researcher Dankrad Feist to avoid the MEV (Maximal Extractable Value) concerns thereby increasing decentralisation and security.
Danksharding is a sharding design that implements the concept of a merged market fee. Unlike regular sharding, in which shards have both different block and block proposers, only one proposer exists in Danksharding. In Danksharding, the block builders have the duty of choosing the data and transactions that go into each slot of a block.
Danksharding and sharding are interrelated, but they are different. While sharding is the overall design for the splitting of networks in an effort to scale Ethereum, Danksharding is a step towards the realisation of this goal.
The usual disclaimer: This newsletter collates the main themes and headlines of the week in DeFi/crypto/metaverse/Web3/NFT land and tries to provide unbiased context. It's aimed at anyone who wants to keep an eye on the space. It's put together by a team at YAP and doesn't contain any promotion of our clients (if one is mentioned, we'll flag that).
The team: Founder Samantha Yap and consulting editor Jeff Benson, Sam O'Donohoe, Andrew Wickerson, Tiffany Mac Sherry, Becky Corbel and Delon Chan. Your feedback is, as always, welcome. Ping us at thecontext@yapglobal.com. Old newsletters can be found here.
This newsletter is prepared by YAP Global, an international P.R. Consultancy focusing on helping cryptocurrency, Decentralised Finance (DeFi) and Web3 brands through impactful storytelling. Find out more about us here.