With volumes surging, the Associated Press will launch an NFT marketplace to showcase its library of historic photographs, and it will do so on a system built by blockchain provider Xooa. 

The move underscores the unflagging investment by mainstream media, entertainment, and sports interests in nonfungible tokens. Game publisher Konami, entrepreneur Mark Cuban, film director Quentin Tarantino, and K-Pop band BTS are making headlines with a raft of NFT moves. Trade volume on leading marketplace OpenSea setting new records in January even as ETH plunged more than 17%. 

NFTs Minted

The marketplace is set to launch on Jan. 31. AP’s initial collection will be released over several weeks, with NFTs minted on the Polygon blockchain to minimize transaction fees. Proceeds from NFTs sold will be used to fund AP journalism, with the photographers who created the images also receiving a share of the revenue. 

AP’s collection will host a selection of digitally enhanced images from across its 176-year history, including several photographs that have received the Pulitzer Prize. The NFTs tackle subjects ranging from war to space exploration to climate change, and highligh bodies of work from AP photographers.

“Pulitzer Drops” are expected to take place within fortnightly intervals.

The NFTs will feature unique metadata detailing the context surrounding each image, including time, date, and location information alongside the equipment and technical settings that were used to capture the photo.

Digital Artwork

The marketplace will allow collectors to both purchase NFTs and conduct secondary sales, supporting payments via credit card or third-party wallet providers including MetaMask, Fortmatic, and Coinbase. Reselling the NFTs will incur a 10% fee which is split between Xooa and AP.

AP is not the first journalism company to embrace NFTs, with Quartz claiming to have sold the first tokenized news article for $1,800 in March 2021. The New York Times and CNN similarly tested the NFT waters. 

AP sold its first nonfungible token in September for $180,000. The token is a one-of-a-kind and features a digital artwork depicting the electoral college result map from the 2020 U.S. presidential election. AP also published the election’s results to the Ethereum and EOS blockchains.

Chainlink also launched its own Chainlink oracle node in October 2021. The node makes AP’s economic, sports and race call data available to blockchain developers, “enabling smart contracts on any blockchain to securely interact with the AP’s real-world data.”

Read the original post on The Defiant.

Buterin’s comments come as low-cost EVM-compatible Layer 1 networks seek to capitalize on Ethereum’s sky-high gas fees. To prevent liquidity from becoming siloed within one particular network, myriad decentralized and centralized bridges have emerged to enable capital to flow freely between various networks. However, both the security and decentralization of many bridges have been called into question.

Multiple Exploits

And with good reason. While the burgeoning cross-chain ecosystem has allowed users to mitigate the expense of using Ethereum’s mainnet, cross-chain protocols were among those hit hardest by hackers in 2021. THORChain suffered multiple exploits, and Poly Network was hit by the largest DeFi hack on record worth $600M (although the funds were eventually returned). Chainswap and AnySwap were also successfully targeted by hackers.

Buterin emphasized “the fundamental security limits of bridges” as the basis of his skepticism regarding cross-chain applications in a comment posted to Reddit on Jan. 8.

Buterin argues that blockchains can “maintain many of their guarantees even after a 51% attack,” contradicting popular perceptions that “everything breaks” for a network in the event of a successful 51% attack.

“Suppose that you have 100 ETH on Ethereum, and Ethereum gets 51% attacked, so some transactions get censored and/or reverted,” wrote Buterin. “No matter what happens, you still have your 100 ETH. Even a 51% attacker cannot propose a block that takes away your ETH, because such a block would violate the protocol rules and so it would get rejected by the network.”

“Even if 99% of the hashpower or stake wants to take away your ETH, everyone running a node would just follow the chain with the remaining 1%, because only its blocks follow the protocol rules.” 

He added that in the case of Ethereum-based applications, while a 51% attack “could censor or revert” the protocol for some time, the incident would still result in “a consistent state” — meaning that account balances could not be lost. 

Layer 2s

“If you had 100 ETH, but sold it for 320000 DAI on Uniswap, […] at the end of the day you still have a sensible outcome – either you keep your 100 ETH or you get your 320000 DAI,” Vitalik said. “The outcome where you get neither [or both] violates protocol rules and so would not get accepted.”

Buterin noted that the same is true of Ethereum Layer 2s, asserting that “proper” L2s like Optimism and Arbitrum will revert alongside the mainnet in the event of an attack. There is no way to attack said networks separately to Ethereum’s L1.

Using Wrapped Ether (WETH) held on a Solana bridge as an example, Buterin warns that assets held in cross-chain bridges in the event of a 51% attack would not boast the same guarantees, posing:

“The attacker deposited a bunch of their own ETH into Solana-WETH and then reverted that transaction on the Ethereum side as soon as the Solana side confirmed it. The Solana-WETH contract is now no longer fully backed, and perhaps your 100 Solana-WETH is now only worth 60 ETH.”

Vitalik warns that this issue is exacerbated as the number of chains connected to a given bridge increases, warning that an attack targeting a protocol “with many interdependencies” between chains could cause “a system contagion that threatens the economy on that entire ecosystem.”

While acknowledging that his worst-case predictions are unlikely to materialize soon, Buterin warned that the systemic risks posed by cross-chain bridge security increase alongside their adoption.

Reddit-user “exactly_aquatic” supported Buterin’s comments, asserting that “every L1<->L1 bridge in production has a trusted node or network in the middle that can freeze the bridge deposits.”

Smart Contracts

However, on Twitter, popular commentator “ChainLinkGod” asserted that “the implementation and adoption of cross-chain smart contracts and token bridges are inevitable,” highlighting the $22B currently locked in bridges connecting Ethereum to other L1s.

“Given that it’s going to happen regardless, the goal shouldn’t be to avoid cross-chain, but have protections in place,” they added. 

Buterin emphasized his optimism for a “multi-chain blockchain future” despite criticizing cross-chain security. “There are fundamental limits to the security of bridges that hop across multiple ‘zones of sovereignty’,” he said.

Read the original post on The Defiant.

The new fork, called [REDACTED], is gaining momentum as it takes a different tack than its originator. Since the dapp went live on Dec. 15, BTRFLY, [REDACTED]’s token, has soared to a $468.8M market cap, according to CoinGecko. [REDACTED] is the second most valuable Olympus fork as of Jan. 10, trailing only its originator and Wonderland, whose TIME token has a $1.9B market cap, according to fohm.io.

[REDACTED] has the apparent support of DeFi influencers like Tetranode and DeFiGod, each of whom have more than 100,000 Twitter followers.  [REDACTED] has further differentiated itself as being a “complimentary subDAO for OlympusDAO,” as the protocol’s website states. Indeed, the project spawned from in the OlympusDAO forums whose governance would make [REDACTED] “the first official branch of OlympusDAO,” shortly afterwards.

Governance Tokens

Generally Olympus forks have become known for rug pulls, or simply not producing anything of value. “Forks sell a useless asset to capitalize a treasury,” tweeted Ryan Watkins in October. 

But [REDACTED]’s co-founder, 0xSami, is pushing for the protocol to move beyond Olympus forks’ bad reputation. “People look past what we are trying to do here and are quick to label us an ‘OHM fork,’” he told The Defiant over Discord. So what does [REDACTED] do? In a nutshell, the protocol aims to acquire governance tokens with voting power in an effort to make BTRFLY a “meta-token” tied to the value of the assets in the project’s treasury. 

“The goal is to promote governance participation through the BTRFLY token, positioning it as an ‘index’ of ‘veTokens’ in DeFi,” Che, who works on [REDACTED]’s policy team, told The Defiant. 

“Ve” or voting escrow tokenomics have been gaining steam as DeFi projects look for ways to imbue their assets with value. This can happen by allowing users to lock up their tokens for a set amount of time in exchange for perks like boosted rewards and increased voting rights.

“We are very bullish on conviction governance (longer lock = more voting power),” said Che. “We want to encourage participation in voting by continuing the ‘ve’ narrative.” 

[REDACTED] is focusing on tokens surrounding the Curve Finance ecosystem, which supports the automated market maker (AMM).  CRV, Curve’s token, and CVX, Convex Finance’s token have both become crucial assets in what’s become known as the Curve Wars — a dynamic where people and protocols fight over CRV emissions to liquidity providers. [REDACTED] is betting that’s a good place to start its foray into acquiring veTokens. 

The fight stems from the voting power CRV has. 

CRV Rewards

As an AMM, Curve depends on users to provide liquidity. And Curve rewards those liquidity providers with CRV tokens. And the more CRV rewards for a given pool the more users will deposit into that pool. And guess what dictates the CRV rewards? Voting-enabled CRV, or veCRV. 

Basically, CRV can be locked for a token called voting veCRV, granting its holders voting power over where rewards go. Curve is the largest protocol in DeFi in terms of total value locked (TVL) at $23B, according to DeFi Llama. 

It’s heady stuff, but CRV voting power, or veCRV, has proven valuable to other protocols, whose tokens users deposit in Curve — there’s even a site which accepts “bribes” for veCRV votes.

Likewise, CVX, Convex Finance’s token is also used to maximize CRV boosts. Like Olympus, [REDACTED] has a bonding program that gives users BTRFLY tokens in exchange for target assets. As of Jan. 11 [REDACTED] has bonding available for CRV, CVX token, and OlympusDAO’s OHM token. 

[REDACTED] has a set strategy for each of the three assets. “With the CRV, CVX, and gOHM liquidity that we’re building out, we want to ensure that as a protocol we are leveraging them for revenue while not being in the business of farming and dumping,” says the project’s documentation.

That’s the advantage of protocol-owned-liquidity, a key tenet of “DeFi 2.0,”.  Through Olympus’ bonding mechanics, [REDACTED] is able to do what it, as a DAO, wishes with its assets. 

That includes voting, generating revenue, and potentially voting in DeFi to optimize revenue. This may create a flywheel whereby the increased revenue leads to increased voting power, which leads to increased revenue.  At least, that’s the idea. 

TOKE Votes

[REDACTED] is already looking beyond the Curve wars to acquire other assets that protocols may soon be fighting for — the project announced an acquisition of Votemak on Jan. 6, which allows users to accept bribes for their TOKE tokens.

TOKE is the native token of Tokemak and is used to dictate where the liquidity of other governance tokens, like Synthetix’s SNX, should go (e.g. automated market maSushiSwap or Uniswap) and what it should be paired with (e.g. stablecoins USDC or DAI) 

[REDACTED] sees wars to control TOKE votes as “imminent” as the Olympus fork stated in their announcement of the acquisition. 

Underlying Assets

[REDACTED] has a treasury worth $121.4M as of Jan. 10, according to a Dune Analytics dashboard linked by the project’s website. That puts BTRFLY at a premium — if valuing the token against [REDACTED]’s assets in the treasury, BTRFLY should cost around $637 based on its 190,304 supply.

Instead, BTRFLY is worth $2,429, as of Jan. 10, making it more expensive than the underlying assets it represents. Realkinando, [REDACTED]’s other co-founder addressed the high ratio of BTRFLY market cap to the value of protocol’s treasury on Twitter.

Still, the project has the blessing of Olympus, making it a unique fork of the protocol-owned-liquidity innovator. For DeFi enthusiasts, it’ll be worth watching whether the project can sustain itself, and just how much a treasury of actively-used, voting tokens is worth. 

Read the original post on The Defiant.

LOOKSRARE is a new venue to buy and sell non-fungible tokens, aiming to take on the behemoth that is OpenSea. The leading marketplace for digital collectibles has already done $2B in volume in January, which puts it well on track to break its August record of $3.4B in volume, according to Dune Analytics. 

That’s a steep hill to climb. LOOKSRARE is driving attention right now with an airdrop of its LOOKS token. The airdrop has even crossed the milestone of facing an attempted DDoS attack. 

The team has set aside 75% of its token supply for different community initiatives, with 120M LOOKS tokens allocated to the airdrop. 

Airdrop Eligibility

In order to be able to claim LOOKS, a user needs to meet two criteria. 

First, they needed to have bought or sold at least 3 ETH worth of NFTs on OpenSea between 16 June and 16 December 2021. 

Second, they will need to list an NFT for sale on LOOKSRARE. 

The minimum airdrop per eligible wallet is 125 LOOKS tokens, with the most active traders receiving 10K tokens. LOOKS is trading at $2.60 on Monday afternoon in New York, making the airdrop worth between $325 and $26K.

The team has not said how long the airdrop will run, but it won’t be long, with users having 10 days to claim their airdrops.

Staking LOOKS

Users can also earn LOOKS by staking or trading on the site. 

LOOKSRARE charges a 2% fee on trades (0.5% lower than on OpenSea) and all of those fees go to LOOKS stakers, which means anyone can get in and earn a share of the marketplace’s revenue.  

LOOKSRARE is introducing new features that are useful for people in the NFT space. For example, a buyer can make an offer specific to a collection of NFTs ( one user recently offered to buy any Bored Ape Yacht Club NFT for 78 ETH). Making the same offer on OpenSea would require the user to place a separate bid on every item in the collection.

Other features should come soon. The team’s about page touts a modular design that should make it fast and safe to add new features.  

LOOKSRARE is not the only contender bidding to challenge OpenSea and capture a slice of the booming NFT market. We previously reported on Infinity, which also offered an airdrop to past OpenSea users. Other markets include Zora and The Open DAO. 

Read the original post on The Defiant.

No funds were lost, according to Arbitrum’s Twitter account, and the network is back online. 

Still, influential members of the crypto community underscored the importance of the outage. 

“If you didn’t tweet about Arbitrum turning off, you’re not allowed to sh*t on Solana network problems ever again – it’s only fair,” tweeted Do Kwon, co-founder of Terraform Labs. 

Solana, a rival to Arbitrum in terms of cheap and fast transactions, saw its network go down on Jan. 4 as well as having similar outages last year.

“I am confident the Ethereum people who criticized Solana will be equally fair and critical about this,” joked Cobie, a trader and host of popular crypto podcast UpOnly. 

Sequencer Problem

Offchain Labs, which develops Arbitrum, dropped a post to explain the outage, citing a hardware failure in Arbitrum’s Sequencer node. A Sequencer is a node that has special, albeit limited, power to order transactions on the network, according to Offchain Labs’ documentation.

Offchain Labs currently has control over the Sequencer, making transaction ordering a centralized process for the time being. The firm stated in their post-mortem of the outage that they have researched a credible path towards concurrently decentralizing the Sequencer and minimizing downtime for Arbitrum.

The firm said that the Sequencer had accepted 284 transactions when the network went down. These were logged upon rebooting before accepting new ones. 

Leading L2

Arbitrum is the leading Layer 2 solution for Ethereum in terms of value locked (TVL), according to L2BEAT. At $2.62B as of Jan. 10, the project has 47.7% of the total L2 market share. 

Daily transaction count on Arbitrum spiked to 267K on Sep. 12 as a lucrative yield farm called Arbinyan popped up on the L2. 

Since the spike, Arbitrum daily transactions have hovered around 30K, well short of Ethereum’s mainnet, which averaged over 1M daily transactions in 2021 according to Etherscan.

The stakes will only get higher if Arbitrum continues to grow — decentralizing the Sequencer, as well as developing a more resilient system, will be developments to watch as the L2 and alt-Layer 1 race continues to heat up.  

Read the original post on The Defiant.

Pudgy Penguin owners are revolting against the team of four that created the cute penguin profile picture (PFP) NFTs, known collectively as 309Labs. This weekend, Luca Netz of Netz Capital held a Twitter spaces event suggesting his team was very close to closing a deal to acquire the Pudgy Penguins project for 750 ETH, but official confirmation of that has not come out on an official penguin channel. 

Meanwhile, frustrated penguin owners (who refer to themselves collectively as “the huddle”) have an alternative course of action. With the help of the team at Metadrop, a startup that helps launch new NFTs, community members now have a smart contract on Ethereum that gives them an option to wrap their penguins in a way that allows owners to stay liquid but deny the project’s creators of royalties from trades. The idea here is that doing so would show the creators that they have lost the support of penguin owners and should turn the project over to the community.

NFTs started as a way for creative types to find new revenue streams but they have evolved into the seeds of community, most visibly in the profile picture (PFP) trend, and the penguins have been one the most recognizable such brands, alongside Bored Ape Yacht Club and Crypto Punks. 

But the question of accruing value to such collections has become a touchy one — explosive in the penguins’ case. It’s anyone’s guess how this coup will shake out right now, but it illuminates the expectation in crypto of an ownership society, one where people who have purchased pieces of a project should not only have a say in its direction but share in the wealth it generates.

Price Floor

Obviously, the most important thing in any NFT community is a fundamental reverence for the art, of course, but the core tension within Pudgy Penguins has been an ever diminishing price for the least valuable NFTs in the set (the “floor price”). It has had a floor as high as 2.875 ETH in late Sept., according to NFT Price Floor, but more recently the most common penguins have been trading at under 1 ETH since mid-December.

However, since the community started to get organized, the prices have started to rise. On Monday morning, Penguins are selling for a minimum of 1.88 ETH.

Meanwhile, Colin Platt, a penguin himself, estimated in a blog post on Thursday night that the creators of Pudgy Penguins have already earned over 1,000 ETH from the project, largely through royalties on secondary market sales. 

Metadrop co-founder Loomdart called the wrapped penguin tactic “a community run coup” during a Twitter Spaces on Thursday, where he explained the concept to penguin owners.

The smart contract Metadrop built should give pause to any instigator of an NFT community. It would theoretically be possible for the code to be used against any other set of NFTs where holders felt ill-used by the team. “It’s like wandering deep into the unknown and exploring what’s possible,” Loomdart said.

Netz’s bid hasn’t been the only one, but it seems to be the furthest along. The wrapping smart contract came out less than a day after Mintable founder Zack Burks tweeted a public offer of 750 ETH to take over Pudgy Penguins and deliver an aggressive licensing program for penguin IP and a Pudgy Peguins DAO. Friday morning Burks tweeted that he and the founding team were chatting.

But the Spaces with Netz was promoted in the announcements channel in the official Pudgy Penguins Discord, suggesting that it’s further along. During the conversation, Netz made it clear that some details still need to be worked out, while sounding confident that it was basically there. Netz Capital has not returned a request for comment from The Defiant as of press time.

#NewProfilePic pic.twitter.com/J3Y956tiSb

— Luca Netz (@LucaNetz) January 7, 2022

Yet Vincent Van Dough, one of the NFT whales supporting the Metadrop plan,  immediately opposed the offer. He tweeted back, “I am only interested in seeing a 100% community owned DAO take over at this point.”

309Labs has not responded to multiple requests for comment by The Defiant.

A very similar flap broke out in spring 2020 when Tron founder Justin Sun bought the company that developed the Steem blockchain and tried to sell off its developer fund. Steem is a content management blockchain created by Dan Larimer and Ned Scott. It lost the support of the community after the acquisition, so the users forked it and developed a new version called Hive. While neither is exactly a giant in the space, Hive now has a market cap of over $500M and Steem sits at around $154M.

In other words, we have already seen that, in this industry, a determined community can disrupt a very well resourced whale.

Early Days of the Penguins

Pudgy Penguins minted the entire series on July 22 and all 8,888 penguins were issued in 20 minutes, according to the project’s website.

Moose is a community member who rose to prominence in the penguin community through sheer enthusiasm, which came through clearly in a phone call with The Defiant in which he breathlessly recounted the early days of the penguins.

After the mint first happened, he skipped buying a penguin when they were cheap, even though friends of his had gotten in early, in part because his prior early picks hadn’t worked out. But as he saw the popularity and the prices of the penguins grow, he got hit hard by the FOMO and in early Aug. he decided he needed to get in, when the floor was around 0.5 ETH.

“I picked one that was a little above floor that I really liked, that I really resonated with,” he said. “I’d never felt this feeling before.”

Meanwhile, his friends in the group chat are buying penguins, flipping them and making all kinds of money. “It’s becoming madness,” Moose said.

He wasn’t alone. People were getting really excited about the super cute aesthetics of the penguins, in Moose’s telling, and all of that excitement was driving up the collection’s price, which meant the creators were making a lot of money. Everyone in the penguin community became fascinated by the 309Labs team, Moose said, particularly Cole and Mr. Tubby, because it seemed like they were printing money for themselves. So the creators started doing Twitter Spaces frequently and many members of the huddle would turn up. On one of them, Moose was permitted to take the floor and speak to the listeners, even though he was a new member of the community.

For his part, it wasn’t all about the gains for Moose. “I was going through a hard time and my penguin kind of helped me in a way, but I loved my Penguin and I felt great.”

Penguin Channels

So that’s the story he told in that Twitter Spaces.

“I ended up being a little too emotional,” Moose admitted. He was crying by the end of his live testimonial. But that emotion would be pivotal for him, because he ended up closing with the phrase that would become a meme throughout the penguin community, one that still pops up in penguin channels to this day (including a bot that just repeats it periodically). Moose said, “I am my penguin, and my penguin is me.”

Had an awesome meeting with the inspirational legend @joeymooooose (thanks for the shirt!) & nft tycoon @MauriceShalam. Really excited for the future of @Pudgy_Penguins and the convos being had on mental health issues. I AM MY PENGUIN AND MY PENGUIN IS ME @tubbyfat @ColeThereum pic.twitter.com/q4nVVGXEGn

— joco.eth (@nycbornnraised) August 20, 2021

Which makes it all that much harder for Moose now that he feels like all that’s happened (or hasn’t happened) with the penguins has started to weigh down on him as a person who is trying to make a name for himself in the world of NFT art.

“It’s kind of hard now to be associated with that brand,” Moose said. His penguin, a cute bird with cucumber slices over his eyes and a matching mohawk, is his profile picture on Twitter, and this is a key part of how he represents himself online. “I always said I’ll never change it, that I’ll give it to my grandchild, but I’m having an identity crisis.”

The penguin community wanted more than profile pictures, though. They wanted work that would drive value to the penguin IP.

It had a nice boost when The New York Times ran a story about the penguins on Aug. 12, but since then there hasn’t been a lot of market moving progress.

Cute Art

So far, Pudgy Penguins have had at least two roadmaps. The first came out in a Discord post from one of the cofounders, Cole, on July 26, which included promises of a radio station for the community, rarity tools to assess penguins with, charity auctions and monthly airdrops to penguin owners.

Then on Aug. 29 Cole posted, “We actually destroyed the roadmap for legal reasons. Pudgy Penguins are just cute art, they are not investments.”

But another roadmap came out around Sept. 20. The precise timing can’t be determined because the announcement is no longer up in the Pudgy Penguins Discord, though a couple pieces that were screenshotted are there and on Twitter.

The idea that got holders the most excited in that second roadmap was the idea of a game. The game was described as a fishing game, where users could collect different kinds of fish, but they would also need bait and a rod to entice fish.

Details were scant, but the community seemed to like this. On Aug 28, the Pudgy Penguin twitter announced that every penguin could claim an egg on Aug. 30. The eggs would open on Christmas. When they finally did, the eggs were found to contain fishing rods (now often referred to as “rogs”).

This may or may not have been for use in the game, but there has thus far been no game. The community started to believe that the team really wasn’t making any progress on the road map.

“I can tell you nothing has happened. I know for a fact,” Nick, a former community manager for the project who goes sometimes by 0xDarth and sometimes as ColdPizza, told The Defiant in a phone call.

Personal Wallets

He was fired from the project when he tried to negotiate a raise with the four creators. He also says he was trying to persuade the team to create a community wallet that would take in the royalties from secondary sales of penguin NFTs. Platt estimated that there has been 660 ETH in royalties on penguin NFTs.

As Twitter user Economist detailed in a thread,it looks like at least some revenues have been going to personal wallets rather than a community fund.

Additionally, 309Labs also minted a second series of penguins called Lil Pudgys, but those were not nearly so much of a hit. 

This is all thought provoking, because it’s not clear that the penguin creators ever committed to devoting all or most royalties to the penguins. However, there’s a growing mood in the NFT world that that is how projects like this should work, which is interesting because early in the NFT boom such royalties were touted as a way that artists could finally profit from their work.

From the Pudgy Penguins Discord

Most people in the crypto and Ethereum world probably thought that everything was largely going fine for the penguins.

Profile picture NFTs have been so hot this year that Twitter is talking about making them an official feature, and Penguins were leaders in that trend. But the huddle’s cute birds are now ranked #41 on NFT Floor Price, despite coming out strong with very good buzz when the profile picture fad took over Twitter last summer. 

Still, it’s likely that few who did not hold penguins had much of an idea that so much controversy was stirring up in the huddle. Moose, for his part, who met two of the penguin leaders, Cole and Mr. Tubby, during NFT NYC argued that it’s more a case of the 309Labs team being in over their heads than it is a case of them being truly malicious.

Others argue that Cole has been part of multiple projects where he has let those who were counting on him down. Whatever the case, a vote went up inside the Pudgy Penguins Discord asking whether or not Cole should stay or go, and it came out overwhelmingly against him, with 1,045 of the 1,210 penguin owners that voted expressing a desire for Cole to leave leadership of the project.

Screenshot shared with The Defiant by Moose.

A Twitter user going by 9x9x9, the founder of the SOS Foundation and an owner of hundreds of penguins, revealed in a Twitter thread that he had taken a stab at buying the penguins himself but didn’t like the terms Studio 309 proposed. He said the team asked 888 ETH to acquire control over the project and its smart contracts, while confirming to him that all the penguins profits have been dispersed among them and an acquisition would come with no financial assets.

Then on Thursday, the main Pudgy Penguins Twitter promised imminent news to resolve the controversy, but no further announcements were forthcoming as of late in the day Sunday.

Now 9x9x9, along with Vincent Van Dough, are two of the signers on the multisig wallet that controls the wrapped penguins smart contract built by Metadrop.

It’s time to migrate frens @WrappedPenguins pic.twitter.com/SHR5w1DpHz

— VincentVanDough (@Vince_Van_Dough) January 9, 2022

It remains to be seen how many people will actually use Metadrop, too. It appears that 203 people hold wrapped penguins right now.

Wrapping appears to be a way to both quietly protest but also threaten Studio 309 and any would be acquirers with completely losing access to royalty stream. The idea here seems to be to try to convince the creators to just hand over the keys and rights to the original smart contract to the penguin holders; however during the Twitter Spaces Saturday, Netz said he had no problem with wrapping and hoped that he could convince those who did so to unwrap later.

And not everyone in the community sees the advantage of wrapping or the need so far. “Ser with due respect. Most of us here won’t go ahead,” community member UpOnly wrote to Loomdart on Discord. “We’d find a way to remove the team by ourselves and there are brighter ones in here to take over and lead the dao and what community will want. Thanks but no thanks.”

But Hunter420 wrote in Discord of the power he was feeling in the penguin community, “If anything the last few days have shown, is that this project has the attention of almost everybody in Crypto and NFT’s. BOOLISH.”

Read the original post on The Defiant.

The spiking burn rate has come at a cost for Ethereum holders, with the asset losing 7% of its value to trade at its lowest level since September 2021. The heavy losses sustained by many leading DeFi tokens likely contributed to the burn rate too, as traders rushed to reduce exposure to many mid-cap crypto assets.

OpenSea was the largest source of burned ETH by far, with 15,507 destroyed for 18% of the network’s total. (OpenSea posted a new record for daily volume on Jan. 9 according to Dune Analytics, with $261M worth of NFTs changing hands).

OpenSea has already processed $2B worth of volume during the first nine days of January.  August 2021 posted the current all-time high for monthly volume on OpenSea with $3.4B. 

ETH transfers were the second-largest source of burn Ether this past week with 8,068 ETH or 9.3% of the total, followed by Uniswap v3 with 5,213 ETH or 6%, Tether with 3,405 ETH or 4%, and Uniswap v2 with 1,755 ETH or 2%.

Chainlink Rallies

In other DeFi market news, Chainlink (LINK) has rebounded this week, defying the bearish momentum that caused significant losses across most crypto markets from Jan. 3 to Jan. 10.

According to CoinGecko, Chainlink surged by nearly 29% during a week that saw the top 10 non-stablecoin cryptocurrencies post double-digit losses. According to CoinGecko, the move was driven by LINK’s strongest volume since May 2021.

LINK is the second-largest DeFi asset with a capitalization of $13B, ranking first by 24-hour trade volume with $3.08B. However, Chainlink is still down 47% from its all-time high of $52.7 posted in May last year, last changing hands for $28.14.

Coins associated with Dopex, a decentralized options exchange, were also on a tear this past week, with its rebate token RDPX and governance token DPX ranking as the first and third best-performing DeFi tokens with respective weekly gains of 103% and 26.2%.

Top Gainers

Just nine of DeFi’s top 100 tokens by market cap posted a gain of more than 1% for the week, signaling bearish momentum across the decentralized finance sector.

Dopex Rebate Token (RDPX) + 103%

Chainlink (LINK) + 29%

Dopex (DPX) + 26.2%

GMX (GMX) + 23.7%

Tokemak + 23%

Biggest Losers

More than 65 of leading DeFi assets suffered double-digit gains this week, with nearly one-quarter of the top 100 tokens shedding more than 20%.

Recently surging standouts from the Avalanche ecosystem Wonderland (TIME) and Abracadabra (SPELL) were among the tokens hardest hit, with both shedding more than 30% in just seven days.

Popsicle Finance (ICE) – 40%

Spell Token (SPELL) – 37.2%

Wonderland (TIME) – 31.7%

Bonfida (FIDA) – 29%

Curve DAO Token (CRV) – 25.3%

Leading Networks’ TVLs Plunge to New Lows

The combined total value locked (TVL) in DeFi protocols has pulled back 7.6% to $231B after retesting its previous all-time high last week, according to DeFi Llama. 

Ethereum’s TVL has slumped to its lowest level since October, with $144.7B currently locked across the network following an 8.5% retracement. Three-quarters of Ethereum’s 20-largest protocols experienced TVL drawdowns of between 4% and 17%, including each top seven.

Terra ranks second with $17B, riding a weekly draw-down of roughly 12%. Seventh-ranked Pylon Protocol was Terra’s sole top ten protocol to post TVL growth for the week, while 11th-ranked Loop Finance bucked the broader trend with a 60.6% gain.

Binance Smart Chain continues to shed market share, sitting at $15.1B after its TVL fell 7.9%. BSC. The sum locked in BSC has fallen to its lowest level since early August, with 15 of the network’s 20-largest protocols suffering losses for the week.

Avalanche remains the fourth-largest network by DeFi TVL with approximately $11B. While the network has partially recovered from its Jan. 3 dip to $10.2B, it is down 9.2% in six days. Three-quarters of its top 20 dapps are down for the week.

Solana’s TVL currently sits at $9.85B, with the network slipping below $10B for the first time since October on a weekly drawdown of 15.6%. Only three of Solana’s 20 biggest protocols enjoyed growth for the past seven days.

Fantom ranks seventh with a $5.4B TVL after posting bucking the trend with weekly growth of 5%.

Arbitrum Move

Leading Ethereum L2 network Arbitrum was among the few networks to post TVL growth this past week, sitting at $2.57B after gaining close to 7% in seven days, according to L2beat. Arbitrum currently represents 47% of Ethereum L2 value. Second-ranked L2 derivatives exchange dYdX also posted modest growth of 1.3% to close the week at $987.

Loopring ranks third with $448M after shedding 19% in seven days, followed by Boba Network with $432 following a 10% retracement. The gap between Optimism and Boba continues to close, with Optimism banking fifth with $402 after a modest 3.7% draw-down.

Metis Andromeda, ZKSwap, and Immutable X follow in the rankings after weekly pull-backs of 10.5%, 12%, and 23.5% respectively.

The combined TVL of L2s is down 7.2% at $5.46B.

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The lion’s share of developers  — 700 — are joining the Ethereum ecosystem every month, according to a report published by Electric Capital, a crypto research firm. Ethereum’s developer ecosystem is the largest in crypto by a significant margin, with 4,000 active devs clocking in every month.

And 500 new devs are also contributing code to a DeFi protocol for the first time each month. However, the report emphasizes that just 1,000 full-time devs are maintaining the entire DeFi sector, which currently represents a combined total value locked of more than $200B.

Web3 Protocols

Researchers analyzed almost 500,000 open-source code repositories and 160M individual code commits from across web3. With the study looking at unique open-source repositories only, Electric Capital notes its estimates are undercounted. The report estimates there are currently more than 18,400 developers contributing to web3 protocols every month. 

The 2021 Electric Capital Developer Report finds that the number of developers entering crypto has surged in the past two years, increasing by roughly 80% since the start of 2021.

A record 34,000 new developers committed code to crypto protocols during the year, with 65% of active devs having joined the space last year, including 45% of those who work full time. 

Understaffed

Ethereum’s dev count increased by 42%, to 4,000, for the year, while Bitcoin’s grew by 9% to 680. One in five new crypto developers join the Ethereum ecosystem, with 30% of the ecosystem’s devs working full-time.

Following Ethereum, Polkadot, Solana, Cosmos, and Bitcoin boast the largest developer ecosystems. Solana enjoyed the largest growth in 2021 with its monthly dev count growing by 4.9 times last year, followed by Near, Harmony, Fantom, Terra, and ICP with roughly 4x each.

The decentralized finance sector appears understaffed for its size, with 2,500 developers maintaining smart contracts that control a combined total value locked of more than $230B. Roughly 1,000 DeFi developers are believed to be working full-time. 

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That’s the upshot from a finding by Chainalysis, the blockchain forensic analysis firm. It said rogues stole $2.2B in digital assets from DeFi protocols last year, a 13-fold increase from 2020. That accounted for more than two-thirds of the $3.2B lost in all crypto.

Chainalysis also found surging instances of rug-pulls and money laundering in the DeFi sector last year, warning that DeFi may be “unlikely to realize its full potential if the same decentralization that makes it so dynamic also allows for widespread scamming and theft.” The firm published the findings in a preview of its 2022 crypto crime report. 

While Chainalysis suggests that better communication from industry leaders and regulators may help retail investors learn how to avoid dubious projects, the report forecasts that “more drastic steps” may be needed to “prevent tokens associated with potentially fraudulent or unsafe projects from being listed on major exchanges” in the future.

Oh &#%!@… Seriously!? Top DeFi Debacles of 2021

Chainalysis estimates that 72% of crypto assets stolen in 2021 were taken from DeFi protocols,

The report concludes that the majority of funds stolen from DeFi protocols “can be traced back to errors in the smart contract code governing those protocols, which hackers exploit to steal funds.” 

In August, Poly Network suffered the largest crypto hack on record to hackers, losing $610M to a hacker who ultimately returned the funds. DeFi protocols BXH, Vulcan Forged, Cream Finance, and BadgerDAO all suffered hacks worth between $100M and $170M in 2021 also.

The report found that DeFi was the digital asset sector that experienced the largest growth in value received from illicit sources, with the volume of funds laundered via DeFi protocols increasing by nearly 2,000%. 

The authors also highlighted the growing prevalence of rug-pulls plaguing DeFi, with rugging accounting for 36%, or $2.8B of the $7.8B total revenue from crypto scams for 2021.

However, 90% of the funds stolen through rug-pulls were attributed to a single event in which the centralized exchange Thodex suddenly suspended withdrawals before its CEO vanished with users’ funds. All other identified instances of rug-pulls involved DeFi protocols.

New Form of Scam

Rug-pulls are described as a relatively new form of scam in which developers build what ostensibly appears to be a legitimate project offering pooled investment or other services requiring users to deposit digital assets, before stealing investors’ funds and disappearing.

“Many investors could likely have avoided losing funds to rug pulls if they’d stuck to DeFi projects that have undergone a code audit – or if DEXes required code audits before listing tokens,” the report suggested. 

Chainalysis notes the $2.8B lost to rug-pulls only accounts for the value of funds stolen, and does not consider the impact to investors holding the governance token associated with a project after it suffers a rug-pull. 

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