Bitcoin’s Taproot Upgrade Explained – Privacy, Security, Scalability And Truly Decentralized Application Protocols

With Taproot only a few hours from activation, it seems like a good time to expand on the Taproot part from a previous ELI5 from a few months ago explaining what makes Bitcoin valuable, Lightning Network, and Taproot.

Taproot is arguably the biggest upgrade to Bitcoin’s base-layer protocol, introducing a new signature algorithm and scripting language. It brings a set of protocols that enhance Bitcoin’s privacy, security, scalability, fungibility and unlocks the infrastructure that will allow for seamless integration of L2/sidechain application protocols on Bitcoin.

Taproot was activated through the “speedy trial” approach. Under the speedy trial, miners were given three months to signal support for Taproot after the code was shipped. This required 90% of the blocks in a difficulty epoch (2016 blocks) to signal for Taproot. Activation was achieved at block height 687284 back in June.

Although some of the ideas included in the upgrade have been discussed for many years, the final iteration of Taproot was proposed by Bitcoin developer Gregory Maxwell in 2018. The upgrade is named after one of the three Bitcoin Improvement Proposals (BIPs) included in the upgrade – Schnorr Signatures(BIP 340), Taproot (BIP 341), and Tapscript (BIP 342).

By combining the Schnorr signatures with MAST (Merklized Alternative Script Tree) and introducing a new, slightly modified scripting language called Tapscript, Taproot expands Bitcoin’s smart contract capabilities while offering more privacy and security by making multi-signature transactions and complex smart contracts indistinguishable from regular bitcoin transactions.

Schnorr Signatures (BIP 340)

This part of the upgrade is a change to Bitcoin’s cryptographic digital signature algorithm. In asymmetric cryptography (public-private key pairs), digital signature algorithms define the generation of digital signatures using a private key that proves the ownership of a corresponding public key.

The existing Elliptic Curve Digital Signature Algorithm (ECDSA) of Bitcoin will not be replaced, but Schnorr signatures will be implemented in addition to it.

The Schnorr digital signature algorithm allows for something called key and signature aggregation using a protocol known as MuSig – multiple signatures created using multiple private keys corresponding to multiple public keys are combined to produce a single cryptographic digital signature corresponding to a single public key recorded on the blockchain.

keyaggregation

Key and Signature Aggregation

In addition to Schnorr signatures and public keys being smaller than ECDSA signatures and public keys, aggregation further helps reduce the footprint of multi-signature transactions and complex smart contracts, which will take up the same space as regular single-signature transactions and as all transactions will look indistinguishable on the blockchain, the privacy benefits are fairly obvious. The privacy also extends to Lightning Network as on-chain transactions to open and close Lightning channels can no longer be identified from the keys and signatures in the channel or the script used.

Unlike ECDSA signatures, Schnorr signatures are provably secure and inherently non-malleable, meaning a third party cannot alter an existing valid signature under any circumstance. Segregated Witness (SegWit) addressed transaction malleability, Schnorr signatures address signature malleability.

There are also significant computational benefits for nodes, as key aggregation will allow nodes to verify signatures in batches, but these benefits can only be realized with time once Schnorr signatures become widely adopted.

Modifying the digital signature algorithm, per se, doesn’t affect anything on the blockchain. Schnorr is a different, more efficient way of generating digital signatures.

When Satoshi originally developed Bitcoin, Claus Peter Schnorr, the inventor of Schnorr signatures, had a patent on it. It is speculated that Satoshi may have otherwise opted for Schnorr signatures over ECDSA, which was a rigorously tested open-source alternative developed later, even if in a somewhat obligately inefficient manner as not to constitute an infringement of the patent, which expired in 2008.

There was a suggestion to use a different name, Discrete Logarithm Signatures was briefly mooted while adapting Schnorr signatures for Bitcoin as some people felt that Claus Peter Schnorr’s name shouldn’t be used in association with Bitcoin after he prevented the widespread use of such a powerful signature scheme for over 20 years.

Taproot (BIP 341)

This part of the upgrade leverages the Schnorr signature scheme to enable Merklized Alternative Script Trees (MAST) and defines the rules for a new output type based on SegWit known as Pay-to-Taproot (P2TR), which leverages the capabilities of Schnorr signatures.

MAST is a privacy solution that uses Merkle trees as part of the script’s structure to address some long-standing issues with transactions using Pay-to-Script Hash (P2SH) and Pay-to-Pubkey Hash (P2PKH) locking scripts where all possible spending conditions of a transaction are revealed.

Screenshot122

P2TR Significantly Optimizes for Block Space Economy

P2TR combines two separate locking scripts – P2SH and Pay to Pubkey (P2PK), which is a simpler version of P2PKH that locks an output to the public key rather than a hash of the public key.

This allows P2TR outputs to be spent by either a script (smart contract) or a public key, but by allowing different spending conditions of the output to be individually hashed, only the specific spending condition met is revealed, and thanks to Schnorr signatures, they’re all indistinguishable on the blockchain.

Tapscript (BIP 342)

This part of the upgrade modifies Bitcoin’s scripting language to enable the new transaction types introduced by the two proposals above using new opcodes (operation codes), which are commands in Bitcoin scripts with predefined functions.

The goal of Tapscript is to make Schnorr signatures, batch verification, and signature hash improvements available to spends that use the script path as well as the public key path. It enables nodes to create and validate P2TR outputs.

Existing signature opcodes for ECDSA are modified to verify Schnorr signatures. Two existing opcodes that define verification of multi-signature transactions are disabled and replaced with a new opcode (OP_CHECKSIGADD) to enable batch verification of signatures.

Tapscript also allows adding new signature validation rules through softforks and introduces another new opcode (OP_SUCCESS) to enable the seamless introduction of future opcodes to Tapscript.

Impact of Taproot

Bitcoin’s script is deliberately limited and intentionally non-Turing complete in order to retain simplicity, security, and efficiency. Linear optimization is one of the main considerations for upgrades to the script to ensure decentralization – that any individual can economically self-host a node and trustlessly validate the blockchain.

Taproot is a forward-compatible soft fork, meaning old non-upgraded nodes will recognize the new blocks as valid. At the time of writing, more than 53% of ~ 60,000 Bitcoin nodes support Taproot. Non-enforcing nodes will reject transactions spending from P2TR outputs until they upgrade node software but will accept blocks containing transactions spending from P2TR outputs.

The significance of Taproot cannot be measured merely by what the above proposals enable for Bitcoin but what they represent for the future of Bitcoin by introducing new tools to make future upgrades easier to implement, simpler, safer, and more private.

Such upgrades waiting in the wings include cross-input signature aggregation, channel factories, state chains, and covenants, which enable advanced application protocols to be built on top of Bitcoin without placing any undue burden on full-node users, thereby preserving Bitcoin’s inviolable security and decentralization.

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Author: Lamps T

Crypto Exchange ByBit’s BitDAO Raises $360 Million in Just 2 Hours on Sushi MISO

On Monday, BitDAO raised a whopping $360 million in a matter of two hours in a dutch auction on DeFi bluechip SushiSwap’s standardized, one-click launchpad MISO.

The BIT-ETH auction concluded with over 112,000 ETH raised from over 9200 participants; the BitDAO team shared on Twitter.

With this, BIT is now tradable on SushiSwap DEX.

“BitDAO is excited to collaborate with Sushi for the next phase of building decentralized organizations and coordinating on various community events,” said the team.

The BIT-SUSHI auction also airdropped bonuses to those who participated in the SUSHI-BIT auction.

“Sushi got 2.6%, they sell 1.8% for ETH + 0.2% for SUSHI. There is also an average bonus of 20%, which leaves them with 0.2% to add as liquidity. So they add 20M BIT + ~12.5k ETH, which leaves them with ~91k free ETH,” noted Yearn developer Banteg.

This puts BIT’s fully diluted value (FDV) at $19.1 billion, almost on par with the 10th largest cryptocurrency Solana (SOL), which has a market cap of $20.4 bln and is more valuable than the popular DEX Uniswap (UNI), which is a $15.6 billion coin.

As of writing, BIT is trading at $1.88, down over 18% from its all-time high of $2 on the day of auction but up from the $1.44 low that came to a couple of hours after the launch, according to CoinGecko.

BitDAO was able to raise capital this fast in the currently recovering public market, where private markets are still hot as ever, with sky-high valuations still coming in every other day.

Also, BitDAO was reportedly using influences to appeal to the Japanese investors, with their YouTube videos having thousands of views.

Just at the end of last month, Bybit had announced that it is an early supporter of the new decentralized autonomous organization BitDAO which has support from the likes of PayPal co-founder Peter Thiel, Founders Fund, Alan Howard, Amber, Pantera, Dragonfly, Spartan, SushiSwap, Synthetix founder Kain Warwick, mgnr, Fenbushi Capital, and more.

It also said that Bybit has pledged to contribute 2.5bps (0.025%) of futures trading volume to BitDAO’s treasury, equivalent to more than $1B per year.

BitDAO aims to allocate resources to support DeFi’s growth in the form of research and development, liquidity bootstrapping, and funding.

“This is really impressive. Bybit Official is launching its own DeFi initiative. Whereas CEXs like Binance or Huobi just build their own blockchains, Bybit chose to support and expand existing DeFi ecosystem,” said Fiskantes, a VC partner with Zee Prime Capital.

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Author: AnTy

A New Record: Over 1 Million Traders Liquidated for a Whopping $10.1 Billion

The liquidation in the past 24 hours beats the ones seen during March Crash, aka Black Thursday, and in late Feb. Propelled by Treasury rumors, high leverage, and hash rate taking a hit, BTC went down to $51,300, and Ether touched $2,000.

The cryptocurrency market crashed overnight, and the losses spilled into Sunday as well.

Losing as much as 30% of their value in the past 24 hours, about $300 billion have been wiped out from the market.

Bitcoin price went as low as $51,300, and Ether price touched $2,000 on Coinbase.

This crash could have been propelled by Treasury rumors. The market was spooked by the speculation that the US Treasury is looking to charge several financial institutions for money laundry using crypto.

Another potential reason could be the drop in the Bitcoin hash rate, which has now fully recovered while prices are in the process of it. As we reported, there has been a coal mine accident in Northwest China, leading to blackouts in the area and mining pools losing over 20% of their hashing power.

As Charles Edwards of Capriole Investments noted, “One province in China represents a significant share of the Bitcoin network,” hence the result.

Much like always, extreme leverage exacerbated the already bad situation. Setting a new record and beating the March 2020 crash, 1,063,216 traders were liquidated for an eye-watering $10.1 billion in the past 24 hours.

On March 12th, Black Thursday, the record was set just above $4 billion, while the market took another heavy beating on Feb. 21st was just under $6 billion. But now on the chart, they are just a blip.

Of course, more than half of this new record was thanks to Binance degen traders, accounting for nearly $5 billion of it.

In terms of cryptocurrency, Bitcoin longs suffered the most, followed by Ether, XRP, BNB, DOGE, and Litecoin, as per Bybt.

ETH -6.66% Ethereum / USD ETHUSD $ 2,242.92
-$149.38-6.66%
Volume 50.74 b Change -$149.38 Open $2,242.92 Circulating 115.52 m Market Cap 259.11 b
9 h Coinbase Starts Offering Eth2 Staking, Over 3.8 Million ETH Already Deposited in ETH 2.0 9 h A New Record: Over 1 Million Traders Liquidated for a Whopping $10.1 Billion 11 h BitMEX Co-Founder Arthur Hayes Puts Ether Moon Target Above $20,000
XRP -10.61% XRP / USD XRPUSD $ 1.43
-$0.15-10.61%
Volume 22.97 b Change -$0.15 Open $1.43 Circulating 45.4 b Market Cap 64.73 b
9 h A New Record: Over 1 Million Traders Liquidated for a Whopping $10.1 Billion 2 d Bitcoin Drops to the “Key Support,” Path to $75k is Cleared On the Upside 4 d Coinbase Is Now Live On Nasdaq, Valuation Soars Past $100 Billion with Shares Trading Above $400
BNB -9.43% Binance Coin / USD BNBUSD $ 481.40
-$45.40-9.43%
Volume 6.71 b Change -$45.40 Open $481.40 Circulating 153.43 m Market Cap 73.86 b
9 h A New Record: Over 1 Million Traders Liquidated for a Whopping $10.1 Billion 3 d One Reason Why Bitcoin (BTC) May Continue On Its Parabolic Trajectory 4 d Ripple Executives File for Lawsuit Dismissal On Back of Last Week’s Victory; XRP Jumps On the News
DOGE 5.98% Dogecoin / USD DOGEUSD $ 0.32
$0.025.98%
Volume 23.52 b Change $0.02 Open $0.32 Circulating 129.24 b Market Cap 41.7 b
9 h A New Record: Over 1 Million Traders Liquidated for a Whopping $10.1 Billion 2 d Meme Coin Rages On: Dogecoin Hits 5th On CoinMarketCap, DOGE Inducing FOMO at $.40 3 d Bitcoin Payment Network, BitPay, Joins Square-Led Crypto Open Patent Alliance (COPA)
LTC -13.07% Litecoin / USD LTCUSD $ 274.56
-$35.88-13.07%
Volume 13.14 b Change -$35.88 Open $274.56 Circulating 66.75 m Market Cap 18.33 b
9 h A New Record: Over 1 Million Traders Liquidated for a Whopping $10.1 Billion 2 d Miami-Dade County Task Force Is Looking at Ways for Residence to Pay Taxes Using Crypto 3 d Grayscale Bitcoin Trust (GBTC) Is Fast Approaching World’s Largest Commodity ETF, GLD with $57B AUM

image1

This wipeout normalized the funding, which went negative and still is after a long time, with the highest Bitcoin funding rate as of writing at 0.1347% on Bybit. During the whole ordeal, Bybit actually traded 4.20% below the spot.

Although it is yet to be seen, the market looks to be bottomed given that the leverage ratio is decreased, though still high. In fact, the market is not in fear but is still greedy, with the Kimchi premium hitting 26% today in the aftermath of this, as per Crypto Quant.

However, according to trader Wolf, bulls need to reclaim $56,900, or bears will be in control that could further take us down to $45,300 because “this would be the first time since September that we lose important support,” of daily MA50. Another trader Bitcoin Jack actually sees a second dump likely, which could either be “truncated or much deeper.”

Overall, with futures in backwardation, low liquidity on the weekend, massive arbitrage between exchanges, and spot bids stacked as Avi Sanyal, Head of Trading at BlockTower, says, instead of panic selling, this is time to buy the dip.

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Author: AnTy

8 Public Listed Companies are Holding Bitcoin in Treasury; Who Will Be Next?

Today, there is a lot of green in the crypto market.

In the past 24 hours, nearly $15 billion has been added to the overall crypto market cap.

And all of this has been because of a nice pop up in Bitcoin. Yesterday, the price of BTC jumped to nearly $11,000 and today it surpassed it.

This 5.6% jump in BTC price has been the result of Jack Dorsey’s payments company Square making a $50 million investment in Bitcoin, which represents 1% of its assets.

“Given the rapid evolution of cryptocurrency and unprecedented uncertainty from a macroeconomic and currency regime perspective, we believe now is the right time for us to expand our largely USD-denominated balance sheet and make a meaningful investment in bitcoin,” noted Square in its Bitcoin investment whitepaper.

These 4,709 BTC were purchased over-the-counter over a predetermined 24-hours period to maintain transaction privacy and price slippage. These BTC are stored in its “Subzero”, the open-source Hardware Security Module-backed solution.

Gaining Momentum

Though not much, Dorsey’s only bitcoin approach is to “start small and hold.”

The community is super stoked about this, seeing it as a big development that would bring others into the market.

“A big deal,” commented Galaxy’s Mike Novogratz. “It’s not the first guy dancing. It’s the second guy. This is now a movement. Corp balance sheets.”

Novogratz also revealed that Galaxy also “has a lot of BTC on our balance sheet.”

With this, now a total of six public companies viz. MicroStrategy (1st and 2nd), Riot Blockchain, Cypherpunk Holdings, and Grayscale Bitcoin Trust hold Bitcoin in their Treasuries.

image1
Source: Bitcoin Treasuries in Publicly Traded Companies

Amidst this market euphoria, other companies also revealed that they have also invested in Bitcoin.

eToro CEO divulged that they had BTC in their treasury since 2011 and are “still Hodling.”

Jesse Powell, the founder, and CEO of crypto exchange Kraken, also admitted to it in a roundabout way as he answered a crypto enthusiast asking about when his company would make it to this list.

“You think Kraken hasn’t been accumulating bitcoin over the last 9 years?” Powell said.

While corporations adding bitcoin to their balance sheet is bullish, it is also “overrated,” according to trader and economist Alex Kruger who said, “The function of a corporate treasury is not to *invest*. Corporate demand for gold as an inflation hedge is minimal. Thus the likelihood of a bitcoin domino effect among corporates is very low.”

But the interesting thing that could happen, if this becomes a trend is “major banks would be forced to have a crypto team on payroll to service corporate clients’ hedging needs,” he added.

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Author: AnTy

Bitcoin Trading Like a ‘High Beta’ But Social Sentiment Remains Subdued

After a somber start of the week, Bitcoin is all set to end it on a higher note.

In the late hours of Thursday, the leading digital currency started recovering and went above $10,800. Since then, we have been keeping around $10,700 in the green on the back of just over $1 billion ‘real’ trading volume.

Altcoins are also feeling the gains with YFI around $29,500 and more cryptos in green than red.

According to trader @SmartContracter, however, over the next few days, a decline from $11,200 will signal the start of a move down and “not the end of it.” “Will be looking to short 10.9k and only longing if 11.2k is taken out again although I suspect it wont,” he said.

Many still expect that a move below $10k might not come, given that during the last bull market, the flagship cryptocurrency kept holding its weekly 21 EMA.

What’s disappointing is BTC’s weighted social sentiment for Twitter, “which measures the positive/negative ratio of comments multiplied by the overall frequency of comments.”

It is currently sitting at a 2-year low, showing a clear pattern of non-believers in the community after the crypto market experienced an aggressive retracement over the past few days.

However, “this level of negativity can often lead to a positive rally, as we’re seeing thus far today. Markets most commonly follow the path of least expected,” noted crypto data provider Santiment.

Still, it’s worth mentioning that the upcoming US Presidential elections, in early November, spells uncertainty and volatility across the markets. All the markets are acting like the same, whether it’s stock, gold, bond, or crypto.

“It’s really all the same at the moment. Crypto is simply trading like a high beta, and Defi like the highest beta of them all,” said trader and economist Alex Kruger.

But bitcoin’s correlation with the equity market is short-term, which many believe will soon end. The number of bitcoin entities, which is organic growth as opposed to hedge funds and whale trades moving capital in and out of BTC as they trade and hedge positions, continues to grow that will make sure of it.

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Author: AnTy

Uniswap Tanks After SushiSwap Successfully Migrated with Over $1 Billion in Liquidity

SushiSwap is now live after the migration was completed in the wee hours of Thursday. And with the official launch of the Uniswap clone, SushiSwap has sucked out all the liquidity and volume from the project that has been up until today, leading the market.

The legal billion dollar-heist resulted in Uniswap’s TVL tanking from $1.8 billion — previously among the top four DeFi projects to fall to the 9th spot with a 75% reduction — to almost $350 million of total value locked in now, as per DeFi Pulse.

A fork of Uniswap, SushiSwap, migrated the liquidity into its own protocol, currently recording $1.32 billion with the volume on the DEX climbing to $120 million.

Wrapped Ether is contributing the most to the volume followed by SUSHI, USDT, USDC, and YFI, much like Uniswap.

Unlike Uniswap, SushiSwap had its own token, and it allowed traders to pour tokens representing deposits in Uniswap liquidity pools into SushiSwap to earn SUSHI rewards. Keeping them through migration also got them extra tokens.

The migration involved swapping Uniswap LP tokens for the underlying asset and putting those tokens on SushiSwap.

Uniswap is currently recording $530 million worth of liquidity, down from nearly $2 billion liquidity on Sept. 4th. Daily volume on the platform has also gone down under $400 million from over $950 million on Sept. 1st.

Uniswap’s figures had come back to where it was before SushiSwap entered DeFi but are still up 50% from $285 million before the copycat was launched.

“Liquidity has no loyalty,” said yEarn creator Andre Cronje, who is against the narrative that SushiSwap took TVL from Uniswap because “Uniswap TVL pre/post Sushiswap remains unchanged. Sushiswap simply took their liquidity locusts with them. Only the liquidity locusts win.”

SushiSwap DEX, which is just shy of a fortnight old, has already experienced years’ worth of drama. Just over this past weekend, the original creator of the project, an anonymous Chef Nomi, sold their dev shares and handed over the control of the protocol to FTX CEO Sam Bankman-Fried, who has been involved in farming SUSHI right from the start.

As expected, the liquidity fragmented, but still, it all turned out good for DeFi in the end. As analyst Ceteris Paribus said,

“Honestly thought Sushi would just make things worse for traders, but uniswap liquidity is 2x since this and sushi has >$1B. Quite impressive…”

SUSHI token is also enjoying market enthusiasm and bullishness as it rebounds from its $1.2 low to over $3. At the time of writing, SUSHI was trading at $2.69 as per CoinGecko.

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Author: AnTy

Argentina’s Immigration Office Faces A Ransomware Attack; Hackers Demand $4M In Bitcoin

  • Argentina’s immigration networks paralyzed for hours in a ransomware attack.
  • Hackers double their ransom payment to $4 million after the agency refuses to cooperate.
  • Ransom to be paid in Bitcoins (BTC).

Argentina’s official immigration ministry faces a ransomware attack, paralyzing checkpoints and getting into and out of the country for four hours. A criminal complaint filed by Argentina’s cybercrime agency, Unidad Fiscal Especializada en Ciberdelincuencia, shows that several checkpoints across the country could not function on Aug 27 from 7 AM local time.

The Newalker ransomware attack affected operations across the Argentine immigration networks forcing the federal government agency to shut down their systems. This was to prevent any more data from being compromised by hackers. The complaint reads,

“Being approximately 7 a.m. of the day indicated in the paragraph above, the Directorate of Technology and Communications under the Directorate General Information Systems and Technologies of this Organization received numerous calls from various checkpoints requesting technical support.”

This presents the first case of an Argentine federal agency facing a ransomware attack.

Attackers Demand $4 million in BTC as Ransom

The hackers left a note on the encrypted files providing a method for the immigration office to pay up a ransom to get the files decrypted. According to images shared by Bleeping Computer, the hackers dictated a payment of $2 million ransom in Bitcoins to their dark web crypto wallet.

The ransom note left by Argentina’s Immigration Office hackers (Source: Bleeping Computer)

However, the immigration ministry official has stood their ground, refusing to negotiate with the hackers. A government source said,

“they will not negotiate with hackers, and neither they are too concerned with getting that data back.”

Following the expiration of the first deadline, the encrypted data note automatically updated the ransom amount to double the price – about 355.871 BTC (~$4 million). No expiration date has been set on the second ransom payment.

Increasing cases of ransomware attacks?

As mentioned above, the hacking of federal agencies is rare. However, corporations and municipal governments suffer from ransomware attackers frequently. At the end of 2019, an Argentinian data firm, San Luis, faced a ransomware attack after 7,500 GB of data was encrypted with the hackers asking anywhere from $37,000 to $370,000 to decrypt the files.

In July this year, Argentina’s largest telco company, Telecom SA, was targeted by a ransomware attack with hackers demanding a $7.5 million payout in privacy-focused cryptocurrency, Monero (XMR). The data was withheld for three days before the company was able to bring back up operations for its customers.

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Author: Lujan Odera

YAM Lives After Price Crashed 99%, YAM 2.0 will be Coming

Yesterday, in less than 24 hours since its launch, YAM had $450 million locked in its unaudited protocol, which today surged to $604 million only to get more than halved. Currently, $280 million are left in this protocol.

But even more shocking is the price of YAM, which hit an all-time high at $167.66 yesterday only to crash more than 99% to its all-time low today at $0.574586, as per CoinGecko. Currently, YAM is trading at $1.15.

This has been all because of the 10% daily rebase.

The token came with no premine equitable distribution with Ampleforth like supply rebase. The rebase happens every 12 hours where the supply contracts and expands by trying to reach the $1 peg as such, affecting the actual number of tokens one owns.

YAM Rebase
Source: @KrugerMacro

Save YAM

This debacle happened today due to a rebase bug that had the team asking the YAM farmers to act. In its official announcement, the team shared that a bug was found in the rebasing function that mints too much, this excess mint stays in the YAM Reserves contract.

This makes it “impossible” to take governance actions as these excess YAMS exist but don’t vote as such, unable to reach a quorum. As a result, the funds ($500k) would have been lost as such YAM.Finance asked for help to save the project.

The team believed achieving quorum for a bug-fix proposal would help them save the protocol and asked the community to delegate their votes towards that. It said,

“We need ~1,600,000 YAM (160,000 pre-rebase YAM) delegated via yam.finance by 7am UTC on Thursday.”

They even proposed granting lost rewards combined with a bonus to those who acted to save the system. And “whales will vote to receive compensation for saving yam,” said analyst Ceteris Paribus.

YAM 2.0

In less than 48 hours, the project experienced a full cycle.

In these just two days of the launch of YAM.Finance, there are now more than 8,600 unique addresses holding YAM.

And this community came to help the project with “massive coordination.” Crypto derivatives exchange BitMEX co-founder, and CEO Arthur Hayes also did some saving.

“I’m sorry everyone. i’ve failed. thank you for the insane support today. i’m sick with grief,” tweeted YAM creator Brock Elmore.

According to the latest update, YAM will continue to live long but behave like other rebasing assets like Ampleforth (AMPL) as it can no longer be modified by governance.

The YAM/yCRV Uniswap V2 pool — yCRV is a basket of yield generating stablecoins on the Curve DEX where the main issue was and where people got hurt — will remain safe after getting the majority of the liquidity out of the pool before the second rebase.

Now, because “we believe this community deserves the chance to persist,” the team behind YAM is setting up a Gitcoin grant for a community-funded audit.

If this is successful, they plan to launch “YAM 2.0 via migration contract from YAM.”

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Author: AnTy

Yet Another Balancer Attack for ‘Unclaimed’ COMP; DeFi Liquidity Provider to Reimburse Hack Victims

It hasn’t been 24 hours since the news about a $500,000 hack on Balancer came that a new attack has claimed $2,300 worth of the hot Compound tokens (COMP).

Hao, a hacker and engineer at DeBank, a DeFi wallet took to Twitter to share how this time as well, someone used Andreessen-funded dYdX to flash loan and drained, yes again, unclaimed COMP stored in several pools of Balancer, an automatic market maker.

The hacker explained that the contract flash loaned some tokens from dYdX to mint cToken from these funds. Then they Uniswap v2 to flash loaned some COMP.

The contract joined COMP/cBAT/cUSDT pool to trigger Compound to send unclaimed COMP to this balancer pool. After syncing COMP balance, the contract withdrew from the balancer at an advantage and continued to do the same for other pools.

After getting all the extra COMP, it repaid Uniswap and dydx and made an exit and swapped COMP for ETH in a normal Uniswap V2 trade.

However, @FollowTheChain said the “unclaimed COMP” is just a tiny fraction of COMP that has accumulated since the last movement of each cToken that happened a few minutes before.

According to Balancer Labs, this attack wasn’t like the one from yesterday either.

Amidst this came the good news, that Balancer Labs will be reimbursing all the liquidity providers who lost funds in yesterday’s attack.

It will also pay out the “highest bug bounty available” to Hex capital, who alerted about this vulnerability to balancer Labs in May.

“This is a major issue in crypto today – creating bug bounty programs and then ignoring the results + refusing to pay out. We need to do better,” said Hex Capital.

Market Unaffected

Yesterday’s attack involved two pools of the Balancer that contained deflationary tokens STA and STONK, tokens with transfer fees, worth more than $500,000 getting drained by a hacker.

The attack happened in two separate transactions which were 30 minutes apart. And only the pools with a token with transfer fees were affected by the exploit.

DeFi aggregator 1inch in its official report said the attacker was a “very sophisticated smart contract engineer with extensive knowledge and understanding of the leading DeFi protocols.”

Not only was he organized and prepared in advance but also used Tornado Cash, a privacy-focused Ethereum mixer, to get initial funds that hid his source of Ether.

It reported that the attack on one of the Balancer Pools was caused by a complex transaction that the hacker sent to the Ethereum mainnet. Then, with another transaction, the hacker drained another Balancer Pool.

The address with the stolen funds currently has about 601 ETH worth about $133,823.

In its official report on the incident, Balancer Labs reported that it wasn’t aware that “his specific type of attack was possible” which now came to be untrue.

However, they have been warning about the unintended effects of ERC20s with transfer fees in the protocol. As such, STA wasn’t included in the recently put together mining whitelist of BAL.

Now, transfer fee tokens will be added to the blacklist and will continue to audit, the third planned audit is starting soon, and review the protocol.

However, the market seems unaffected for now, as the total value locked in Balancer is $115 million, down from the all-time high of $117 million just a day before, as per DeFi Pulse.

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Author: AnTy

Economist: BTC Needs Scaling to Have An ‘Impressive’ Price; Market Says That’s BCH, Not ETH

The price of Bitcoin is currently trading at $6,200, down 3.40% in the past 24 hours and almost -14% YTD.

In October 2017, it was the first time that Bitcoin price jumped to $6k, after 8 years. But for economist Jeffrey A Tucker, Bitcoin at $6,000 isn’t impressive. He argued that scalability would have done great things for the flagship cryptocurrency.

This tweet from Tucker came after last month, the AIER Editorial Director said, “Adoption hasn’t gone far enough and it hasn’t come into consumer use like it should and would have if it had been able to scale. Now we’re seeing what happens when Bitcoin was not properly scaled.”

Ether says Look at us

Tucker’s comment prompted a response from the second-largest network Ethereum co-creator Vitalik Buterin who asked him to look into Ethereum 2.0’s sharding, a scaling feature.

“High scalability but without the centralization that relying solely on increasing block sizes to a very high level would entail,” said Buterin.

But the community wasn’t really impressed with Buterin butting in with his scaling solution as Adamant Capital’s Tuur Demeester said, “I’ll believe it when I see it. Sharding is an unproven invention that has been promised by the Ethereum founders since 2014.”

Buterin’s Ethereum prompt not only got the bitcoin community calling out “LOLs” and “April Fool’s” but BSV’s Calvin Ayre saw this is as an opportunity to voice his opinion that “Eth is a waste of time as it does not scale and is evolving towards being an illegal security with proof of Stake” and promoting BSV with “Original Bitcoin BSV is the only one that scales and is legal. There is NO centralization from on-chain scaling.”

Scaling doesn’t matter for price

While Tucker is of the opinion that scaling would push the Bitcoin price higher, Bitcoin enthusiasts pointed out how that isn’t the case, at all.

Well, gold is a good example as on-chain analyst Willy Woo said, “Gold is $9T. How many transactions per second does gold do? I mean shipping the underlying between vaults. That’s BTC main chain. The swaps we do on ETFs and derivatives is Gold’s layer 2. That shit scales, so will BTC’s layer 2.”

When it comes to price, bitcoin is well on its way to new all-time highs as the stock-to-flow model depicts.

“Bitcoin has been scaling tremendously well, beyond my greatest expectations. I’m extremely fortunate to be alive to witness it, said Michael Goldstein, a bitcoin maximalist and President of the Nakamoto Institute.

Contrary to Tucker, Bitcoin core developer Luke Dashjr said, “Bitcoin may fail because we didn’t reduce block sizes sooner. The longer we wait, the greater the danger.”

According to him, the market is already flooded with “pyrite,” fool’s gold.

Also, not to forget that the second layer on the Bitcoin network, Lightning Network already enables cheaper and fast transactions. But per Tucker, “it’s just in practice hard to be “excited” for four years.”

Well, BCH has Scaling, look at it!

Well, Tucker doesn’t need to imagine it as the community pointed him towards Bitcoin Cash (BCH) which got scaling but its price is around $200.

As per Vijay Boyapati, “the market massively discounts what you consider ‘proper scaling’ and greatly values immutability, the most important property of Bitcoin.”

Also, “In 1 week, BCH block subsidy is going to be worth far less than BTC transaction fees (currently ~0.25 BTC). How does that make you feel?,” pointed out network engineer Melik Manukyan.

But according to Tucker Bitcoin cash never had the network that Bitcoin had and people need to “think dynamically not statically.”

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Author: AnTy