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Market Meditations | December 3, 2021
A Powerful Crypto with Serious Potential
As the week draws to a close, we look back on lessons and forwards towards opportunities.
Hacking The Badger; Latest DeFi Hack
BTC, LUNA, MATIC & Metaverse Updates
Ethereum Fights Back; Will Bitcoin Stay on Top?
? Hacking The Badger
Users of BadgerDAO recently began complaining that after interacting with the protocol, their wallets were getting hit with additional permission requests.
Then their tokens began to go missing, and finally, a tweet from the Badger DAO Twitter account confirmed what users’ suspicions had already told them.
BadgerDAO’s mission to bring bitcoin to DeFi was in opposition to the hacker’s mission to take bitcoin from BadgerDAO.
On December 1st BadgerDAO suspended smart contracts pending further investigation.
Initial reports of $10 million being exploited turned into $120 million with reports that one user lost 900 bitcoin. One Twitter account speculates that Celsius Network was the owner of the 900-bitcoin stolen, but this is unconfirmed.
A Badger Core team member, Mitche50 has commented that the incident could have been caused by a compromised API key for Cloudflare, (a company that provides content delivery network and helps sites defend against DOS attacks) and not the protocol.
DeFi insurance has been a hot topic this year but Nexus Mutual states that if the exploitation happened on the frontend (Cloudflare) and not the protocol itself, ‘it would not be covered per section 9 of the Protocol Cover wording.’
In centralized finance, hacks are not as public so we are comparing apples to oranges.
Is the alternative stashing cash under your mattress?
Certainly not, you can refer back to our security guide to protect your investments, and this latest hack taught us that before investing in a protocol, we should verify they have an appropriate amount of insurance coverage.
Our Market Meditations are longer format educational segments. Each letter features a Market Meditation which will deep dive and analyse a relevant crypto event, theme or tool.
? Loony For LUNA
The crypto market leader remains range bound.
Bitcoin continues to trade in a familiar way as traditional markets bounce between a risk-off and risk-on sentiment.
The market is eyeing clues as to the severity of the Omicron virus as well as the rate at which inflation will pick up again (today’s U.S. employment data will be an important contributing factor.)
Whilst BTC makes up its mind, some altcoins have decided to go for a run.
Amongst the top performers recently is LUNA. The following quote from the co-founder of Nexo illustrates some of the potential of LUNA:
“Crypto is all about creating a buzz and there’s a lot of attention on the Terra ecosystem, be it for DeFi innovation, stablecoin products, a recent network upgrade or Luna staking. It’s the latest shiny thing in the crypto space, following in the footsteps of other blockchains like Solana and Avalanche, all which have witnessed explosive gains in the past year.”
The Nexo token has also been performing well recently, as the team pursues their $100 million buyback program.
MATIC has also climbed its way to the top performers. Polygon is a layer 2 product that aims to solve the scalability issues on the Ethereum network, which has suffered from congestion and high fees.
What about the Metaverse?
Compared to recent weeks, the Metaverse seems to have taken a bit of a back seat today. Is this cause to overlook the Metaverse? Probably not. Whilst the tokens might be taking a breather, development behind the scenes continues at an unprecedented pace.
Solana-based 3D metaverse Solice has successfully closed $4.36 million in a seed and private sale led by Three Arrows Capital, Animoca Brands and DeFiance Capital. Solice’s vision is to offer a deeply immersive metaverse in which users can play, build, own, socialize and monetize their virtual experiences across multiple platforms.
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?☠️dETH of Bitcoin?
While some cryptocurrencies derive their value from functionality, Bitcoin has been relegated to being known as a store of value as the space evolves.
Known by many as “digital gold”, BTC now faces a new challenger.
One source says Ethereum may be better suited to fill this role.
The argument for Bitcoin as a store of value comes from its limited supply. There will only be a maximum of 21 million coins ever produced.
Ethereum has no maximum supply. The only limitation for ETH is that a maximum of 18 million per year can be created.
With the introduction of EIP-1559 this August, Ethereum began burning coins. This effectively began to reduce the net total being produced.
With inflation concerns plaguing the United States recently, many investors find themselves weighing the strengths and weaknesses of Bitcoin against traditional assets like precious metals.
The main draw of major investors, such as Microstrategy, has been not only the finite number of total coins, but also the slow rate of inflation BTC enjoys. However, with the effects of EIP-1559 in full swing, Ethereum’s inflation rate is actually lower than Bitcoin’s when data is extrapolated to an annual time frame.
Want to watch the Eth world burn? Keep track of how much has been burned here.
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Not financial or tax advice. The content in this newsletter is for informational purposes only. Nothing in this email is intended to serve as financial advice. We are not financial advisors. Every investment and trading move involves risk. Do your own research when making a decision. See our important security disclaimers here.
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