Blockbytes Weekly - Week 7, 2024
Last week = BTC hitting old highs. This week = institutional inflows climb for the first time in 2 years. If we're not back yet, we're pretty close.
FixedFloat confirms $26M exploit in BTC and ETH
FixedFloat, a decentralized crypto exchange, suffered a significant security breach resulting in the loss of at least $26 million in Bitcoin and Ether. The incident was confirmed by the exchange's team shortly after the first reports surfaced on X (formerly Twitter), initially attributing the issue to "minor technical problems" which led them to put the service into maintenance mode.
The attack was first reported on X on February 18, with users noticing frozen transactions and missing funds.
FixedFloat does not require user registration or KYC verifications, potentially complicating efforts to track down the stolen funds.
Around 26% of FixedFloat's web traffic originates from the United States, highlighting its popularity among American crypto users.
The incident underscores the ongoing challenge of ensuring on-chain cybersecurity, with crypto ecosystems like Solana and institutions facing increased risk from sophisticated cyberattacks and ransomware schemes.
Attacks on Bitcoin and Ethereum now 'economically unfeasible'
According to a recent research report, the financial burden of launching successful attacks on the Bitcoin and Ethereum networks now surpasses any potential gains, effectively rendering them "economically unfeasible."
This conclusion is based on the prohibitive costs associated with carrying out a 51% attack on Bitcoin or a 34% attack on Ethereum—the amounts being in the billions of dollars—alongside the significant logistical challenges.
It would have cost an estimated $34.39 billion to launch a 34% attack on the Ethereum network as of December 31, 2023, with ether priced at $2,279 per coin.
For Bitcoin, an attacker would need to spend over $20 billion just to produce enough ASIC mining units to attempt a majority control of the network's hash rate, not accounting for the microprocessor supply limitation and the immense electricity costs involved.
In a hypothetical scenario wherein an attacker could overcome these monetary and logistical barriers, they would still have to face the challenge of controlling the necessary resources for an extended period (until at least June 14, 2024, for Ethereum) to achieve their goal.
The researchers concluded that the evolution in the security of both Bitcoin and Ethereum has made the cost and risks associated with attempting to compromise these networks far exceed any potential benefits, thereby enhancing their security integrity.
Crypto venture funding climbs for the first time in nearly 2 years
Venture funding for crypto-related companies saw its first increase in nearly two years, rising to $1.9 billion in the fourth quarter of 2023, which represented a 2.5% increase from the previous quarter, according to Coinshares.
Despite the increase in total funding, the number of deals in the fourth quarter declined by 2.4%, suggesting that investment is concentrated in fewer, presumably stronger startups.
The rebound in venture funding is partly attributed to the recovery of crypto asset prices, with Bitcoin's value more than doubling in the past 12 months.
Noteworthy fundraising efforts in the quarter include $165 million raised by Swan Bitcoin and $100 million by Blockchain.com, with Wormhole securing the quarter’s largest deal at $225 million for a $2.5 billion valuation.
The decline in the number of deals indicates a concentration of capital investment into fewer companies, signaling investors' preference for funding more established or promising crypto ventures.
Stablecoin Wars Heat Up As Circle Asks Congress To Rein In Tether
In a recent development that intensifies the ongoing stablecoin wars, representatives from Circle and Coinbase have made a formal plea to Congress, urging it to bestow the U.S. Treasury Department with enhanced powers to regulate Tether (USDT) and its banking partner in the U.S., Cantor Fitzgerald.
Representatives from Circle and Coinbase have accused Tether of enabling illicit activities, calling for enhanced regulatory intervention from the U.S. Treasury.
Tether's USDT leads the stablecoin market with a significant margin, boasting a $51 billion 24-hour volume compared to USDC's $7.1 billion, highlighting its popularity among investors and traders.
The call for regulation comes amidst criticisms of offshore stablecoins like Tether, which allegedly skirt stringent anti-money laundering (AML) rules, a stance that has attracted criticism from the crypto community and accusations of hypocrisy against Circle and Coinbase.
The controversy has sparked heated reactions on Crypto Twitter, with notable figures condemning Circle and Coinbase's approach, and warning of potential repercussions from lawmakers aiming to tighten regulations around the crypto industry.
Coinbase share price hits highest point in nearly 2 years
Coinbase's share price experienced a significant surge, reaching its highest point in nearly two years following the announcement of its fourth-quarter results, which exceeded analysts' expectations.
Coinbase's shares peaked at $193.64, marking the highest price since March 2022 according to data from Yahoo Finance.
The company achieved four quarters of positive adjusted EBITDA, totaling $964 million, highlighting a substantial improvement in its financial health.
Crypto equities specialist Alyssa Choo from Bitwise sees this quarter as a critical turning point for Coinbase, suggesting future positive outcomes due to not only these results but also emerging revenue streams including custody for bitcoin ETFs.
Despite the fourth-quarter profitability not accounting for the year-to-date positive crypto price action, the total crypto market capitalization has seen a nearly 20% increase since the start of 2024.
Bitcoin ETFs See Record $2.4B Weekly Inflows; BlackRock's IBIT Leads
Last week, the cryptocurrency investment landscape witnessed a remarkable surge in demand for Bitcoin exchange-traded funds (ETFs), with record inflows totaling $2.4 billion. This significant influx accounted for nearly all of the $2.45 billion channeled into digital asset investment products, as reported by CoinShares. The bulk of this investment was absorbed by newly approved U.S.-based spot Bitcoin ETFs, notably overshadowing the $623 million outflows from the older Grayscale's Bitcoin Trust.
BlackRock's IBIT and Fidelity's FBTC were the primary beneficiaries of these inflows, attracting $1.6 billion and $648 million, respectively, signaling robust confidence in these funds over traditional options like Grayscale's Bitcoin Trust.
The increased inflows into Bitcoin ETFs coincided with Bitcoin's price reaching $52,000 for the first time since December 2021, fuelling speculation among investors about potential new highs for the cryptocurrency later in the year.
While Bitcoin ETFs enjoyed unprecedented inflows, Ether (ETH) products also saw a notable influx of $21 million, whereas blockchain equity ETFs experienced a $167 million outflow, suggesting a shift in investor preference towards direct cryptocurrency exposure.
Crypto gaming platform PlayDapp loses $290 million worth of tokens in two exploits
The crypto gaming and NFT platform PlayDapp fell victim to a series of exploits on February 9 and February 12, 2024, leading to a significant loss of their native PLA tokens.
Elliptic, a blockchain analytics firm, reported that the February 9 exploit involved the unauthorized minting of 200 million PLA tokens valued at the time at $36.5 million, presumably by a compromised private key.
PlayDapp's initial outreach to the hacker included an offer of a $1 million "white hat" reward for the return of the stolen funds, which was ultimately rebuffed as the hacker proceeded to mint an additional 1.59 billion PLA tokens and launder them.
The circulating supply of PLA tokens was 577 million before the incidents, casting doubt on the exploiter's ability to sell the massive quantity of newly minted tokens without significantly impacting their market value.
In response to the hacks, smart contracts related to PLA tokens were paused on February 13, as announced by PlayDapp on Twitter, signaling significant steps taken towards securing the platform and protecting users' interests.