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GM, Tim Here.
Here’s what caught my DeFi-eye recently:
Ethereum has never been this cheap. The $63 million stablecoin AEUR was hit by a bank blow. Arbitrum DAO wants to solve its voter apathy woes.
Ethereum’s low fees
Ethereum’s transaction fees are the lowest they’ve ever been — and that has some unintended consequences.
Transactions on the Top Smart Contract network now cost less than $0.10, while token exchanges can be made for less than a dollar.
This is in stark contrast to the $100 plus fees that plagued consumers during the 2021 crypto bull run.
Fees for Etherscan are very low Ethereum Gas TrackerA popular way to check transaction costs is to start reporting fees in decimals.
The reason for the lower fees is the shift in activity Layer 2s – Special blockchains built on top of Ethereum make transactions much faster and cheaper.
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Ethereum’s March Denkun Upgrade 2 provides a layer of cost savings, accelerating their adoption.
But there’s a problem: low fees are breaking Ethereum’s economic model.
Ethereum will no longer destroy – or “burn” – more Ether tokens than it creates.
In other words, its economics are now inflationary — a dirty word among crypto users who often revile money printing rooted in the traditional economy.
“The Meme of ‘Ultra Sound Money’ Has Been Broken,” Ethereum Core Developer Preston Van Loon Says News.
AEUR in the problem
Anchored Coins AG, the Swiss company that issues the euro-pegged stablecoin AEUR, has paused withdrawals, leaving holders confused.
The reason? The bank that held some of the reserves backing Anchored Coins’ $63 million stablecoin — FlowBank — went bankrupt.
It is not yet clear whether stablecoin issuers will be able to recover the collateral.
But if that fails, under Swiss law, losses will be socialized among all AEUR holders, Anchored Coins said in a statement.
Anchored Coins did not respond to a request for comment.
For now, the funds are in limbo until authorities appoint a liquidator to oversee the return of deposits to creditors — a process that could take time.
FlowBank’s bankruptcy isn’t the only recent crisis that stablecoin issuers have faced.
Binance paused AEUR trading in December, four days after its initial listing on the exchange saw the token rise 200% to $3.25 – an unusual occurrence for a stablecoin.
The crypto exchange attributes the token’s upward depeg to factors such as “users not identifying as a stablecoin.”
DAO voter apathy
Arbitrum DAO members are voting on key changes to its native token, ARB, to protect its treasury from a hostile takeover.
Proposals are made to address voter apathy among DAO members.
They include making the ARB token stackable and redirecting a portion of blockchain profits to ARB holders.
According to Frisson, spokesperson for the pseudonymous Arbitrum DAO, the decline in DAO participation poses a very real risk.
“It is becoming economically attractive for a malicious actor to launch a governance attack on the DAO treasury,” he said in a post on the Arbitrum Governance Forum.
A governance attack is when a coordinated group buys the DAO’s token and votes to push for changes that benefit them – often at the expense of the protocol’s users.
Other DAOs have already been attacked in this way.
In July, Compound, an Ethereum-based lending protocol, was the target of a $25 million governance attack.
The DAO, which operates the Ethereum Name Service, a protocol that allows users to change the names and titles of their crypto addresses, is also facing attacks.
Weekly data
Tron is the only blockchain that has seen an increase in trading volume over the past seven days.
Sunpump.meme, a copy of the Solana-based memecoin generator pump.fun, recently launched on the blockchain.
This Week in DeFi Governance
Vote: COW DAO votes on Wintermute liquidity deal for its COW token
Temp Check: Arbitrum DAO has created new conflict of interest policies
Vote: Solana stablecoin protocol UXD is shutting down
Post of the week
Polygon’s Chief Information Security Officer Mudit Gupta lashed out at North Korea for hiring developers without knowledge of DeFi protocols.
Found the perfect location for the next Devcon. Most devs there have a short commute on average anyway. pic.twitter.com/kUAp9HZgYL
— Mudit Gupta (@Mudit__Gupta) August 16, 2024
Found the perfect location for the next Devcon. Most devs there have a short commute on average anyway. pic.twitter.com/kUAp9HZgYL
— Mudit Gupta (@Mudit__Gupta) August 16, 2024
What we see
Deepak Thapliyal, CEO of blockchain firm Chain, has sold a rare alien cryptopunk NFT that he bought in 2022 for $23.7 million.
Taplial did not disclose the sale price.
Wahhhh. Alien Punk #5822, which holds the record for the highest punk sale of all time in February 2022 (8,000 eth, $23.7M USD), changed hands just 30 minutes ago. Private deal, price not disclosed. pic.twitter.com/ldGUNhC6yP
— DGMD (@DGMD22) August 19, 2024
Wahhhh. Alien Punk #5822, which holds the record for the highest punk sale of all time in February 2022 (8,000 eth, $23.7M USD), changed hands just 30 minutes ago. Private deal, price not disclosed. pic.twitter.com/ldGUNhC6yP
— DGMD (@DGMD22) August 19, 2024
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