Token Chronicle - Week 3 August 2024

Top cryptos

Meme of the week

Quick bites:

• Marathon Digital announces the purchase of 4,144 BTC.

• FLOKI becomes the official crypto partner of Premier League team Nottingham Forest.

• The SEC has approved the first leveraged long ETF on Microstrategy.

• The Dubai court ruled that salary payments in crypto are allowed.

• South Korea's National Pension Fund purchased $33.7 million worth of Microstrategy shares in the second half.

• Franklin Templeton files for a crypto index ETF based on ETH and BTC.

• Malaysians can now use Worldcoin technology to verify their humanity through iris scans. A memorandum of understanding was signed between the Worldcoin Foundation, Tools for Humanity, and the Malaysian government to launch Worldcoin operations in Malaysia.

• Polygon announced it will migrate its MATIC token to the new POL token on September 4th.

• Tether extends its USDT stablecoin to the Aptos blockchain.

• Italy’s second-oldest bank, Banca Sella, will start offering Bitcoin trading services to its 1.3 million customers.

• According to Bloomberg analyst Eric Balchunas, the chances of approving a Solana ETF in 2024 are zero, with almost no hope for 2025 if Kamala Harris wins the U.S. presidential election 🇺🇸.

• 💰 Mt. Gox transferred 12,000 Bitcoin, worth over $700 million, to an unknown wallet overnight.

• 🇧🇷 The Brazilian SEC approved the second Solana ETF, launched by Hashdex in partnership with BTG Pactual.

• 🇦🇪 Tether will launch a stablecoin pegged to the UAE currency.

• 🇺🇸 The U.S. economy created 818,000 fewer jobs in March this year than initially reported.

• McDonald’s Instagram account was reportedly hacked to promote the “Grimace” memecoin. The market cap surged to $25 million before collapsing 📉.

• Bitfarms (BITF) will acquire Stronghold Digital (SDIG) for $175 million in stock and debt! The deal includes $125 million in Bitfarms stock with a 71% premium. SDIG’s current stock price is $6.02, up from $2.93 at close. 📈 SDIG up 64% pre-market, BITF down 7%.

• Aave V3 is now live on the Era mainnet, powered by ZKsync, enhancing DeFi liquidity and scalability. Aave DAO approved the use of USDC, USDT, WETH, and wstETH, with ZKsync airdrops planned. The Lens protocol's migration from Polygon to ZKsync is scheduled for Q4.

Market update: A market oscillating within a BTC range of $58K to $63K; disappointing U.S. employment figures had little impact on the crypto market. Significant breakthroughs in the TON, TRON, and Polygon ecosystems, with ETH still lagging behind. We're seeing substantial institutional investments: major banks, companies like MicroStrategy and Marathon, and the launch of new products. Retail investors remain relatively passive, but there's ongoing downward pressure from entities like Grayscale and Mt. Gox. Everyone, including the traditional finance market, is closely watching Jerome Powell's upcoming speech this Friday and his potential strategy for lowering U.S. interest rates. Technical analysts estimate a new BTC all-time high between mid-September and late October, but this will depend on potential recession risks. Even though the crash two weeks ago was unjustified (just a panic move), the prolonged bullish market, inflated by AI and tech stocks, raises concerns about a possible upcoming decline (in traditional markets).

Main points this week:

Adoption:

• MetaMask officially launches its crypto card in partnership with Baanx and Mastercard:

  • The card will not be immediately accessible to everyone, with a phased rollout.

  • Currently, it's available for users in the UK and the European Union (EU).

  • Very bullish for crypto adoption.

• Soon, USDC payments via iPhone's tap-to-pay:

  • Under pressure from EU regulators, Apple allows third-party players to utilize "tap-to-pay."

  • Circle, the company behind USDC, will enable iPhone users to make purchases with its stablecoin.

  • Apple will soon allow third-party providers to offer transactions via near-field communication (NFC) through its tap-to-pay system.

Partnerships:

• Pyth Network partners with the TON blockchain to provide oracle services:

  • Pyth Network announced a partnership with The Open Network (TON) to offer oracle services on the blockchain.

  • Pyth Network now claims collaborations across more than 55 different blockchains.

• Tether (USDT) launches on the Aptos (APT) blockchain.

Traditional Finance:

• Morgan Stanley buys $185 million in Bitcoin spot ETFs, joining Goldman Sachs:

  • Q2 2024 results show the bank invested $185 million in Bitcoin spot ETFs.

  • Follows Goldman Sachs' purchase of $420 million in Bitcoin spot ETFs during the same period.

  • Morgan Stanley, the 6th largest bank in the U.S. with over $1 trillion in assets.

• BlackRock surpasses Grayscale in cryptocurrency holdings:

  • Becomes the largest asset manager in the crypto sector, marking a turning point in cryptocurrency investments and consolidating BlackRock's dominance in global markets.

• Swiss and Norwegian central banks hold 3,400 Bitcoins via MicroStrategy shares:

  • MicroStrategy’s Q2 2024 results reveal that the Swiss and Norwegian central banks bought MSTR shares, indirectly exposing themselves to Bitcoin.

International Overview:

• Binance returns to India after paying a $2.25 million fine.

• Iran encourages citizens to report BTC miners following power outages.

• North Korean developers allegedly earning $500,000 per month through cryptocurrencies (including the Lazarus Group), according to well-known crypto investigator ZachXBT.

• Dubai court approves partial salary payment in cryptocurrency (a historic first).

• Malaysian police destroy 985 Bitcoin mining machines:

  • After seizing more than $450,000 worth of Bitcoin mining equipment, Malaysian authorities ordered its destruction.

Technology & Innovation:

• Launch of BitVM2 to significantly improve the first version of BitVM (and Bitcoin scalability):

  • Introduces a more accessible challenging system and simplifies transaction verification.

  • BitVM2 paves the way for creating rollups on Bitcoin, enhancing scalability without compromising network security.

  • A major challenge for Bitcoin developers is creating scalable solutions that can confirm many transactions per second, allowing Bitcoin to compete with traditional payment networks and fast centralized blockchains like Solana or Ethereum's Layer 2 solutions.

IMF Proposal:

• IMF considers a targeted tax on Bitcoin miners and AI servers:

  • The IMF proposes a global tax targeting Bitcoin mining and AI data centers.

  • The measure aims to reduce CO2 emissions from these industries, which are expected to account for 3.5% of global electricity demand by 2027.

Discover a tool: Let’s talk about the on-chain analysis tool: Arkham Intelligence (Arkham (arkhamintelligence.com))

Arkham Intelligence is a powerful tool tailored for those seeking to track and analyze cryptocurrency transactions with precision and ease. It offers a range of features designed to enhance transparency and control over digital assets.

Key Features:

• Customizable Alerts:

  • Users can set personalized alerts to monitor when specific wallets send or receive funds.

  • Alerts can be tailored with volume or value caps, ensuring users only receive notifications that matter to them.

  • Notifications can be delivered via email, Telegram, and other preferred communication channels.

• Wallet Visualization:

  • The visualizer provides in-depth details of any wallet address, showcasing the coins held, deposits, withdrawals, and transaction history.

  • Users can apply this tool to their own portfolios, gaining a comprehensive view of their asset movements.

  • The interface includes bubble maps, offering a visual representation of the connections between addresses, making it easier to track the flow of funds.

• Bounty System:

  • Arkham features a bounty system that allows users to track and identify specific wallets.

  • This system is particularly useful for those looking to investigate or monitor suspicious activity in the crypto space.

Purpose:

Arkham Intelligence serves as an essential tool for both personal and professional use in the cryptocurrency world. Whether you’re an investor looking to monitor your portfolio, a researcher tracking market movements, or a security expert investigating suspicious transactions, Arkham provides the tools needed to navigate the complex world of digital assets with confidence and clarity.

Let’s talk about: The layer 2 scaling solution: rollups

1) What Are Rollups?

Rollups are a type of Layer 2 scaling solution designed to enhance the performance of blockchain networks, particularly those like Ethereum. Rollups work by aggregating or "rolling up" multiple transactions into a single batch, which is then processed off-chain. The key innovation here is that only the minimal necessary data, often a proof or a compressed transaction record, is posted to the Layer 1 blockchain. This approach significantly reduces the load on the main blockchain, leading to higher transaction throughput and lower costs.

Purpose:

• Scalability: Rollups aim to address the scalability limitations of blockchains, allowing for many more transactions to be processed per second.

• Cost Reduction: By bundling transactions and posting only a small amount of data on-chain, Rollups reduce the transaction fees for users.

• Security: Rollups maintain the security of the underlying Layer 1 blockchain while providing more efficient transaction processing.

2) ZK Rollups vs. Optimistic Rollups

Both ZK Rollups and Optimistic Rollups are popular types of rollups, each with its own approach to scaling and securing blockchain transactions.

ZK Rollups (Zero-Knowledge Rollups):

• Mechanism: ZK Rollups use zero-knowledge proofs (specifically zk-SNARKs) to verify the validity of every batch of transactions off-chain. These proofs are then submitted to the Layer 1 blockchain along with the transaction data, ensuring that all transactions in the batch are valid.

• Security: ZK Rollups are highly secure because the cryptographic proofs guarantee the validity of transactions without the need for external verification.

• Finality: Transactions in ZK Rollups are finalized almost instantly since there’s no need for a challenge period.

• Efficiency: Although generating zero-knowledge proofs is computationally intensive, this process occurs off-chain, minimizing the load on the Layer 1 blockchain.

• Use Cases: Examples of blockchains using ZK Rollups include zkSync and StarkEx.

Optimistic Rollups:

• Mechanism: Optimistic Rollups assume that all transactions are valid by default (hence "optimistic") and submit them to the Layer 1 blockchain without immediate verification. A "challenge period" is provided, during which anyone can contest the validity of a transaction. If a transaction is challenged and proven to be invalid, it is discarded.

• Security: Security relies on the community to detect and challenge invalid transactions during the challenge period.

• Finality: There is a delay in transaction finality due to the challenge period, typically lasting several days.

• Efficiency: Optimistic Rollups are less computationally intensive compared to ZK Rollups, as they do not require the generation of complex proofs for each transaction.

• Use Cases: Prominent examples include Arbitrum and Optimism.

Summary of Differences:

• Validation Method:

  • ZK Rollups: Transactions are validated through cryptographic proofs.

  • Optimistic Rollups: Transactions are assumed valid but can be challenged by the community.

• Finality Speed:

  • ZK Rollups: Near-instant finality, as transactions are proven valid before being submitted.

  • Optimistic Rollups: Delayed finality due to the challenge period.

• Security:

  • ZK Rollups: High security through zk-SNARKs, minimizing the risk of invalid transactions.

  • Optimistic Rollups: Relies on the challenge mechanism, which can be effective but introduces some risk.

• Computational Requirements:

  • ZK Rollups: More resource-intensive due to the need to generate zero-knowledge proofs.

  • Optimistic Rollups: Less resource-intensive but dependent on the community for security.

Both ZK Rollups and Optimistic Rollups offer unique advantages, with ZK Rollups providing stronger security and faster finality, while Optimistic Rollups are generally simpler and less resource-intensive. The choice between them often depends on the specific needs of a blockchain project, such as the desired balance between scalability, cost, and security.

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Disclaimer: The information disclosed here does not constitute an investment advice ; it is for informational purposes only and does not constitute investment advice. You should do your own research while investing in crypto and only invest money you are ready to lose.