The Crypto Whale Takeover 🐳
GM,
This is Cryptonite, your twice-a-week shot to stay updated about the crazy world of crypto. We hit you with what’s relevant, upcoming and funny — minus the FUD.
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The Solana - Solend takeover 🐳 🚩
Solend, a leading lending and borrowing platform built on the Solana blockchain, hijacked a “whale” account to stop their platform from sinking.
How it went down - A large whale/ account holder borrowed $108 million against their Solana investment from the platform a few months ago. With the crypto markets crashing, this collateral’s price started to fall.
Like every other staked collateral, the floor price had to stand at a certain value or else it stood at getting liquidated or sold. In this case, that floor price was $22.30 per token.
Worst case scenario - Up to 20% of the total value gets liquidated at that point, the Solana market goes into a frenzy, prices fall and Solend gets into massive debt.
So instead of doing what the contract says, the Solend team decided that it will take over the account of the whale, and sell/liquidate these coins manually themselves.
But it gets better. A proposal gets created specifically to hold a controversial vote, where a single large wallet votes yes to this proposal. This is ANYTHING other than decentralised.
However, later on, Monday, Solend backtracked and overturned this vote stating they were “working on a new proposal that does not involve emergency powers to take over an account”. Well, that funnily happened after the Solana price became stable. As of today, Solend has agreed with rival, Mango Markets, to share the debts of its largest user.
Why should we care? - Defi stands for decentralised finance, and it is hard to argue that taking over a user’s account is in keeping with the spirit of decentralisation. Perhaps, the multiple cracks in the crypto ecosystem are beginning to reveal themselves.
The Great Indian Crypto tax 🤯
The gov of India pushed out a Tax bill on crypto in February this year which kinda validated crypto in the Indian market…. Yes, we were all excited, but it came with a catch. What we last heard in Feb was a plan to implement a 30% income tax on crypto gains + 1% TDS with every transaction. Yesterday, the gov pushed out a circular explaining how the rules would be implemented from July 1st, 2022.
Let’s break this down - The gov has placed 1% TDS on EVERY transaction. Somewhat like a transaction fee. On top of that we have exchange charges from the platform + the 30% income tax. This is bad for the crypto community in India for a number of reasons. To explain further:
INR to Crypto - Let’s say you buy a token on an Indian exchange with INR, and then sell that token later, you pay 1% TDS on the sale value, even if you make a loss.
For example, You buy 1 Bitcoin (BTC) for INR. Sell BTC for INR. Pay 1% tax on the sale. This starts to add up if you’re making a large number of transactions every day.
Crypto to Crypto - 1% TDS will be deducted on both buy & sell transactions.
For example, if you exchange Bitcoin for Ethereum, then, 1% TDS will be deducted on the sale of BTC & 1% TDS will be deducted again when you sell that Ethereum. So both the buyer and seller pay 1% TDS.
Why care? The gov is also planning to put an additional 28% GST on crypto transactions. This might be the beginning of the end of some of the Indian CEXs.
Sam saves the day 🦸🏼♂️💵
FTX boss Sam Bankman-Fried, one of the youngest billionaires at 29, is slowly emerging as a saviour for the $900 billion crypto market with rising inflation and falling token prices.
Over the last few days, FTX has given out over $750 million to two companies that were set to crumble and drown the market into more misery.
Who are the lucky two?
BlockFi: A crypto exchange which recently laid off 20% of its workforce, showed losses of $285 million with fines up to also $100 million. They’ve received $250 million from FTX.
Voyager: A Crypto brokerage firm that lost over 650 million dollars so far and was on the verge of bankruptcy. They’ve received over $500 million from FTX.
Why is SBF being generous? SBF views himself as a guardian of the crypto industry and calls it his responsibility to save fellow peers even when FTX doesn’t have an interest in them. We think it's also a way to keep confidence in the market.
New York loves NFTs 🖼
NFT. NYC kicked off 3 days ago with the usual hype, fanfare and a lot of attention.
What is NFT?NYC? You can call it the Comic-Con, or Apple’s version of WWDC for NFTs. It’s where massive fans take over New York and transform it into their version of “the metaverse”. Notable Celebs attending Ape Fest include. Snoop Dogg, Beeple and Jimmy Fallon.
Crypto Bytes ₿
A month after launching its NFT collection, eBay has now acquired the London-based NFT marketplace KnownOrigin.
Tether is launching GBPT, a stable coin pegged to the British pound, expanding its stable coin offerings. FYI, Tether is the issuer of the largest stablecoin, USDT.
Binance has signed a multi-year deal with Cristiano Ronaldo to sell NFTs featuring him on its NFT platform.
Wechat to put a halt on Accounts From Providing NFT and Crypto Services
Time Magazine and The Sandbox to Rebuild NYC in Metaverse
Tweet of the week
Meme of the Week
1 DISCLAIMER:
None of this is financial advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. Please be careful and do your own research.