Plus, how to prevent flash attacks.
It looks like Bitcoin is picking up. Bitcoin revenues on Cash App are increasing — to nearly half of its non-Bitcon revenue. Other tokens are a mixed bag — IOTA is in the midst of a long shut-down; Ripple pays Moneygram “market development fees” and a judge keeps alive the potential that XRP is a security.
Meanwhile, on Unchained, we have a great debate on the bZx attacks, with Maya Zehavi and Zubin Koticha making great points and counterpoints. And on Unconfirmed, Caitlin Long gives us the deets on the crypto bank she’s launching, Avanti.
This Week’s Crypto News…
Payments company Square reported fourth-quarter revenue results. On its Cash App, Bitcoin revenues totaled $178 million, while non-Bitcoin revenue came to $183 million. The amount of bitcoin sold was up about 20% from the previous quarter and almost two-and-a-half times what it was the previous year. The Block reported that on the earnings call, CEO Jack Dorsey said “bitcoin actives generating 2-3x annual revenue compared to other Cash customers.”
Haseeb Qureshi of Dragonfly Capital wrote a great piece on the significance of the bZx attacks, and how DeFi should live in a world where they exist. As he writes, “With flash loans, attackers no longer need to have any skin in the game. Flash loans materially change the risks for an attacker.” He says DeFi protocols could mitigate these attacks by using market-based price oracles that involve a weighted average over the previous X number of blocks; requiring that governance tokens be locked up for the voting period, to prevent flash attacks on governance; and implementing governance timelocks, meaning, instituting a delay on any governance decisions. Finally, he warns that all flash attacks could be stolen by miners, though he notes that would not be the case in Ethereum 2.0, since transaction finality is not possible in a proof of work system. Highly recommend this essay — I know people are still chewing on the lessons from the bZx attacks, and this is a good one.
Lending protocol Compound takes one step toward fully decentralizing itself by introducing a token called COMP. They’re not fundraising with the token, and at the moment it is not available to the public. For now, the way it will work in governance is that anyone with 1% of COMP can propose a governance action, and proposals are subject to a three-day voting period. If a majority of voters are for, then the proposal goes into a timelock, and can be implemented after two days.
IOTA has been turned off since February 12, and the market cap still ranks, at the time of writing, 24th among all coins. The three-part blog post from the IOTA Foundation is a bit difficult to follow, but basically, they can’t yet say for sure how the attack happened, the attack did obtain passwords and seeds, and the foundation is working on a way to migrate tokens to new seeds. Eric Wall tweeted, “This whole clusterfuck seems to have been overlooked because people are still processing the fact that IOTA shut down for >12 days, and that the founders are publicly fighting over tens of millions of dollars of the unclaimed funds they stole from the ICO … All I can say is that IOTA has now successfully become tangled up in so many outrageous messes simultaneously that it is apparently no longer possible for the public to follow along with each different part of this multiplexed train wreck. Each disaster distracts from the other.” Leigh Cuen of CoinDesk also had an entertaining story called, “IOTA Being Shut Off Is the Latest Chapter in an Absurdist History,” which covers some of the previous scandals.
MoneyGram received $11.3 million from Ripple during the last half of 2019. In an earnings call, Lawrence Angelilli, MoneyGram’s CFO, said, “as we’ve discussed in the past MoneyGram receives a market development fee based on the volume of foreign exchange that we transact on Ripple’s platform.” Ripple had previously also invested $50 million into MoneyGram. Speaking of Ripple, Compound general counsel Jake Chervinsky tweeted, “The judge in the XRP securities class action has granted in part and denied in part Ripple’s motion to dismiss the case. There’s a lot going on here, but overall it’s a victory for the plaintiffs. The securities claims survive. XRP stays in the crosshairs.”
Steve Lee of Square Crypto created a great presentation on Bitcoin that might be useful in using to explain these concepts to your non-crypto friends. It breaks down mining, Bitcoin’s monetary policy and ends by saying that there’s a small probability of a massive shift, which would be the complete re-invention of global finance, which would include “Bitcoin as a global currency and unit of account,” and a “savings-oriented economy vs. consumption-oriented.” Nicely done, and thought-provoking too.