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2022-05-06

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Yellow Card Crypto Scoop

While we were off on the last holiday, the crypto space was abuzz with several activities and some drama. As we anticipate a bullish run this month, here are the highlights of this edition of the crypto scoop:

  • Price dips and more among top cryptocurrencies as SOL goes dark temporarily.
  • Uzbekistan pursues crypto regulation.
  • BAYC Creator launches much-anticipated metaverse project, Otherside
  • Luxury brand Gucci accepts crypto in payment.

BTC’s price plummets as SOL goes dark temporarily

Bitcoin's price has been declining in recent weeks, plunging below the $40,000 benchmark. The rally of bitcoin enthusiasts, on the other hand, saw it tilting towards $40k, occasionally hitting the $40k barrier before dipping considerably. BTC enthusiasts were stunned on Thursday when BTC plummeted to $36,640, its lowest point since February.

While BTC enthusiasts mourned the price drop, Solana struggled to maintain its price after going dark for almost 7 hours during the weekend. After a flood of data had overwhelmed SOL's proof-of-stake chain, validators lost consensus, and block production came to a halt. The  Bots had flooded Candy Machine, an NFT minting tool, with four million transaction requests and 100 gigabits of data per second considered a network record, according to one member at the Solana Foundation.

Anatoly Yakovenko, SOL co-founder who was away during the incident, praised the validator community for spearheading recovery. Unlike its previous hard fork, the restart did not give rise to new codes but rather started up where the network had crashed seven hours before.

Phantom wallet and the decentralised exchange Mango Markets, both part of the Solana ecosystem, struggled to recover in the aftermath. According to CoinGecko, Solana's native token hit a 24-hour low of $83.13 roughly three hours into the outage before rebounding above $89 again. Solana core developers have yet to pinpoint what went wrong or how the alleged botting attack bypassed established measures to block consensus.

Rari Capital and Fei Protocol, decentralised finance (DeFi) lending platforms, were also hacked for more than $80 million. According to a tweet from smart contract analysis firm Block Sec, the hacker took advantage of a reentrancy weakness in Rari's Fuse lending protocol. Fei Protocol, which merged with Rari last year, declared a $10 million reward if the funds were returned. Rari Capital noted that crypto lending had been paused globally, and no other funds were at risk.

Uzbekistan Announces Crypto Regulation Framework

President Shavkat Mirziyoyev of Uzbekistan established a regulatory framework for the country's crypto economy and charged the Perspective Projects Agency with overseeing it. According to the directive, cryptocurrency exchanges, mining pools, and crypto custodians functioning in the Central Asian country must be registered locally. Only properly recognised people will be allowed to trade crypto on national exchanges.

Residents of Uzbekistan will be permitted to buy and sell cryptocurrency only on local exchanges starting January 1, 2023. These exchanges will be required to authenticate customers' identities through a know-your-customer (KYC) process and store data about all transactions for five years. 

Mairead McGuinness, EU’s Commissioner for Financial Services, Financial Stability, and Capital Markets Union, has also asked global authorities to work together to address potential risks in the cryptocurrency sector. In an interview with political news outlet The Hill, McGuinness said the European Union and the United States could assist lead the world in a regulatory plan for cryptocurrencies that acknowledges the benefits of the revolutionary technology while addressing "major concerns."

McGuiness noted that regulating cryptocurrencies effectively requires global coordination and joint international principles. He explained, “A global agreement on crypto should first enshrine that no product remains unregulated. Second, supervisors should collect and exchange information globally. Third, any agreement must protect retail investors. Fourth, the crypto ecosystem should fully integrate environmental considerations.”

BAYC Creator, Yuga Labs launched Otherside resulting in a spike in fees

After much anticipation, Yuga Labs has launched its long-awaited digital land sale for its "Otherside" metaverse project. While the land sale earned the company $285 million, it also resulted in some of the most enormous gas fees ever seen on the Ethereum network: investors paid about $176 million in fees alone.

Following the fee-related misunderstanding, the firm apologised publicly via a tweet: “This has been the largest NFT mint in history by several multiples, yet the gas used during the mint shows that demand far exceeded anyone’s wildest expectations. We're sorry for turning off the lights on Ethereum for a while.”

Apecoin has integrated with the Polygon (MATIC) network, following apecoin transactions from the sale fuelled high Ethereum network fees. Yuga Labs, the designers of the Bored Ape Yacht Club (BAYC), claimed at first that it"looks abundantly evident" that Apecoin will need to migrate to its own chain in order to scale correctly. Rather than a distinct Apecoin network, the Ethereum-based currency is now integrated with Polygon. An Apecoin DAO board member has explained that a separate Apecoin blockchain may not be necessary.

While the crypto and NFT community speculate about how the integration will play out, Elon Musk has spored speculations that he may be investing in NFTs after changing his profile picture to a collage picture featuring multiple Bored Apes nonfungible tokens (NFTs). Although Musk is yet to speak on the speculations, DOGE enthusiasts may be able to realise their dream of integrating Twitter with DOGE after Musk’s bid for Twitter. American entrepreneur. 

Marc Andreessen, an American serial entrepreneur, shared an image of someone impersonating his name on Twitter to promote a "free crypto" giveaway. Andreessen queried, "What algorithm could possibly catch this type of content?" "Humans," Elon Musk responded, igniting a debate on how to best manage the platform's large volume of cryptocurrency frauds and spam adverts. Mark Cuban, a multibillionaire investor, proposed that the problem be remedied by implementing an "Optimistic Rollup," or layer-2 solution to Dogecoin (DOGE).

The luxury brand, Gucci announces its intention to accept crypto payment

Gucci, luxury Italian fashion brand, has announced that it will begin taking cryptocurrency payments in five of its US stores by the end of the month, with plans to expand the service to all 111 of its North American locations.

According to Vogue Business, Gucci will accept 12 cryptocurrencies: Bitcoin (BTC), Bitcoin Cash (BCH), Ether (ETH), Wrapped Bitcoin (wBTC), Litecoin (LTC), Shiba Inu (SHIB), Dogecoin (DOGE), and five US dollar stablecoins.

Gucci isn't the only company making the transition to cryptocurrency. , Goldman Sachs (GS) has announced its first bitcoin-backed loan, as reported by Bloomberg.  In an email to CoinDesk, a Goldman representative wrote, "We recently extended a secured lending facility where we lent fiat collateralized on BTC; BTC being owned by the borrower.  The structure and the 24-7-365 day risk management were interesting to us."