Aztec 2.0 Launches Ethereum Layer 2 Scaling Solution for Privacy Using zkSNARKs

Aztec, an Ethereum based protocol, has released its L2 scaling solution coupled with the project’s fundamental aspect of privacy. The startup announced this news in a Medium post earlier today, noting that Aztec 2.0 is now live on the Ropsten testnet. This comes as one of the many reliefs to an ailing Ethereum ecosystem due to network congestion and high gas costs.

According to the post, Aztec’s L2 scaling solution has been derived from the zero-knowledge (zk) rollup tech. This infrastructure is basically part of Ethereum’s zero-knowledge proofs that have come up to make transactions private. Based on the PLONK research, Aztec claims that its newly debuted L2 scaling network enables the protocol to leverage zkSNARKS tech in two distinct ways.

For starters, zkSNARKS is used to encode every transaction as part of protecting Aztec users’ data. It also plays a role in the ‘roll-up’ of these transactions, hence the batching into one proof that is, in turn, sent to Ethereum’s on-chain. Aztec has since said that this approach could scale its network throughput up to 300 TP/s and preserve on-chain data simultaneously.

“Using this technique, the network can scale on-demand up to a hard limit of ~300 TX/S, while preserving on-chain data availability.”

The firm further claims that gas costs will be slashed by 200x in Aztec 2.0 compared to prevailing costs within its 1.0 ecosystem. Other than scalability solutions, Aztec has also introduced an open-source scripting language dubbed ‘Noir.’ This will allow developers to easily compose the zkSNARKS transactions code compatible with the new L2 scaling solution by Aztec.

Aztec plans to upgrade this innovation in November to integrate DeFi access while maintaining scalability and privacy. The post reads,

“This upgrade allows users to anonymously access DeFi transactions at a fraction of the gas price. And, without having to port DeFi protocols to layer 2.”

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Author: Edwin Munyui

BitMEX Now Former CTO, Samuel Reed, Released On A $5 Million Unsecured Bond

Troubled BitMEX exchange executive Samuel Reed released on a $5 million bond paid to the district of Massachusetts court following his arrest on October 1. According to a document first shared by The Block, the court approved the unsecured bond payment on October 3rd on condition that Samuel Reed will show up to court and accept to serve a sentence if convicted.

The U.S Department of Justice (DoJ) charged BitMEX executives on October 1 due to allowing unlicensed trading to Americans and violating the anti-money laundering and know your customer rules and measures set in place. Founders of BitMEX, Arthur Hayes, Samuel Reed, and Benjamin Delo have all been charged with breaking the Banking Secrecy Act, carrying a maximum jail term of five years. Reed was arrested in Massachusetts earlier this month charged with

“willfully failing to establish, implement, and maintain an adequate anti-money laundering (‘AML’) program at the Bitcoin Mercantile Exchange or ‘BitMEX.’”

This was the second arrest amongst the company executives with the head of business development, Gregory Dwyer, also charged and arrested.

Reed’s $5 million bond payment will be secured with a $500,000 cash payment. Reed and his wife’s passports have also been confiscated by the authorities to mitigate flight risk.

The U.S Commodities and Futures Trading Commission (CTFC) has also filed a civil lawsuit against the three founders in the Southern District Court in New York on the AML/KYC breaches on the exchange.

In an attempt to please customers and halt the hammering exodus from the exchange, HDR Global, wholly owner of the BitMEX exchange, announced the three executives charged would step back from their respective roles. Arthur Hayes and Samuel Reed have stepped back from their respective roles as CEO and CTO, respectively.

Despite the charges, 100x Group chairman David Wong said, “it will be business as usual” for the exchange aiming to provide the best features and “maintain the highest standards of corporate governance.”

Also Read: ‌DOJ’s First-of-its-Kind Crypto Framework Targets Decentralized, P2P Platforms & Privacy

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Author: Lujan Odera

Coinbase Launches Staking Program For Cosmos, ATOM Holders Can Earn 5%

In a blog post released on Wednesday, Coinbase introduced staking on ATOM, promising up to 5% return per annum on the value staked. The Cosmos Staking Reward will be available to select customers across 48 states in the U.S and across Europe, including the U.K., Netherlands, Belgium, Spain, and France.

This is an automatic process generated by Coinbase. Users only need to deposit ATOM or buy the tokens directly on the exchange to start earning rewards. At launch, ATOM rewards will be distributed every seven days – Tezos (XTZ) rewards are distributed every three days.

‘Coinbase is always looking for ways to enable easy and secure participation in the crypto-economy,” the statement reads.

Cosmos is a proof-of-stake (PoS) blockchain that allows users to “stake” their tokens to participate in the governance of the network and receive rewards in the process. The blockchain provides interoperability across blockchain and their native tokens.

A spokesperson from Coinbase to The Block states ATOM staking will charge a commission of 25% is lower than that of XTZ. The latter offers a 15% annual return being the only staking platform on the exchange before ATOM joined. Since launching in Q4 2019, Tezos holders have received more than $2 million in rewards from Coinbase.

Coinbase stated they would be adding more tokens to its staking program in the future.

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Author: Lujan Odera

SEC Takes a ‘Big Step Forward’ Regarding Broker-Dealers Trading Digital Asset Securities

In a no-action letter dated Sept. 25 from the US Securities and Exchange Commission (SEC), the agency has released guidance on the settlement of digital asset securities at alternative systems, which “could end up being significant news for exchanges, including DEXs.”

The SEC proposes a “three-step process” for ATS trading that might replace the previous four-step process that FINRA and the SEC instructed broker-dealers to follow. Dating back to the July 2019 statement from the SEC, the letter outlined the factors to be considered to allow ATS operators to facilitate the trade of digital securities.

In the latest process, The broker-dealer custodian can inform the customer about the execution of trades after the fact as such, customers can submit the trade orders and confirmation at the same time, which “doesn’t change much for trading in the industry,” said Brian Farber.

According to the letter, this three-step process would “reduce operational and settlement risk.” Lewis Cohen, founder of blockchain-focused law firm DLxLaw tweeted,

“In the 3-step approach, customers are never exposed to a BD/ATS, so CPR doesn’t apply. It may sound obvious, but still a big step forward.”

Moreover, enforcement action won’t be taken if the broker-dealer operator maintains a minimum of $250,000 in net capital, all applicable securities laws are followed, and an agreement between the broker and their customers states that “broker-dealer operator does not guarantee or otherwise have responsibility for settling the trades.”

This means custodial broker-dealers like Coinbase can legally exchange digital securities without the SEC pursuing enforcement action against them, provided the above-mentioned steps are followed.

According to Farber, it raises new questions such as the undefined term “custodian,” which not every holder uses. The mandate for $250k in net capital would require amending a membership agreement with FINRA. At the same time, the 2019 joint statement clearly prohibits those broker-dealers from custodial functions.

Comptroller Brian Brooks of the Office of the Comptroller of the Currency praised the move.

Drew Hinkes, an attorney at US law firm Carlton Fields also tweeted that the big picture is “It got easier to trade digital asset securities. BDs have certainty as to how to trade digital asset securities (and) Custodians are even MORE important.”

But still, there is no clear way to determine which cryptos are security and legal to trade. As such, more clarity and guidance is needed from the SEC.

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Author: AnTy

KuCoin Hack: Exchange’s Insurance Fund to Cover User Loss “Completely,” Tether Freezes 33M USDT

The Singapore-based cryptocurrency exchange KuCoin released a statement regarding detecting large withdrawals on September 26, 2020, at 03:05:37 (UTC+8).

The exchange has reportedly lost $150 million worth of funds, although KuCoin hasn’t declared it yet but released “suspicious addresses,” which are constantly updated. As per the company’s internal security audit report, some BTC, Tether, ERC20 tokens, and other cryptos from KuCoin’s hot wallets were transferred out of the exchange.

Tether has already frozen all the stolen USDT, but the community isn’t supportive of the move. This isn’t even the first time they did so; one address in 2017, eight in 2018, seven in 2019, and 24 in 2020 so far has been frozen by the company.

“If you steal our Tether, we’ll steal it right back,” commented one trader on this move.

KuCoin assured that “the assets in our cold wallets are safe and unharmed, and hot wallets have been re-deployed.”

In a live stream, KuCoin CEO Johnny Lyu said one or more hackers “stole” the private keys to hot wallets but those cold wallets, that aren’t connected to the Internet as such considered more secure, were unaffected.

He also said the exchange is in contact with the police and that “all the loss will be covered by KuCoin risk provisions.”

The exchange has transferred the remaining crypto assets to the new hot wallets.

The Asian exchange that trades over 200 cryptocurrencies has a daily trading volume of about $100 million, as per CoinGecko. Following the security breach, its exchange token KCS fell by over 17% but has since recovered to above $0.90.

The trouble at the exchange first started when users complained about withdrawal issues. Initially, it was maintained that the platform was experiencing a system issue, and later, KuCoin’s admin team claimed that “transactions are simply pending,” and funds are SAFU.

While Liu said the amount lost is “small,” that might not be the case, many are pointing out that there could be over 1k BTC and tokens like ETH, LTC, Omni USDT, XRP, YFI, OMG, Maker, Ocean Token, Chroma, Gladius, Hawala, and others lost.

Currently, the investigation is going on, and a security review will also be conducted. Still, the exchange has said that any losses suffered by a user would be “covered completely” by KuCoin and its insurance fund.

As “The People’s Exchange,” we will take full responsibility and maintain transparency,” said the exchange in an official statement.

For now, the exchange has suspended the deposits and withdrawals service, which will be restored gradually once it ensures a safe state.

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Author: AnTy

Low Financial Literacy Investors Twice As Likely to Own Crypto vs Market Gurus: Bank of Canada

A new study released by the Bank of Canada has revealed that folks with lower financial literacy are more likely to own Bitcoin than those with higher literacy levels. The paper’s main point of the research was the use of ‘Cash Alternatives’ in Canada throughout 2019; some of the points highlighted include the adoption of cryptocurrencies and the possibility of a Central Bank Digital Currency (CBDC).

According to the report, cash payments in Canada decreased from 54% to 33% between 2017 and 2019 as more people opted for credit or debit cards instead. It highlights that this trend was mainly fueled by the rise of e-commerce, hence ease of making digital payments. Nonetheless, most Canadians are still using cash within the local Point-of-Sales (PoS).

Crypto Ownership Demographics

With cryptocurrencies getting more hype by the day, the survey revealed that at least 89% of Canadians have heard of Bitcoin. Out of these, 5% percent own BTC while another 1.6% have portfolios in other crypto assets such as Ether and Litecoin. As for the gender and age demographics, the groups which were mostly aware or own Bitcoin fall under young, male, university-educated, or high-income Canadians.

While those demographics may seem to favor financial literate folks, the research revealed that BTC ownership is more correlated to the less financially aware Canadians, ranking the sample into three where 47% had high financial literacy followed by the medium at 35% and finally low at 18%. Interestingly, 8% of the latter group said they own crypto assets compared to 4% of the highly financially aware.

However, awareness is still high among the more financially literate, with around 93% having heard of crypto assets instead of only 72% at the lower financial literacy group. While the digital payments space may be booming, the researchers noted that at least 86% of Canadians have no plans of shifting from cash.

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Author: Edwin Munyui

Parity Releases Substrate 2.0 to Build Custom, Scalable Blockchains Interoperable with Polkadot

Substrate has achieved a major milestone; the blockchain framework has released version 2.0, which is also compatible with Polkadot, which, along with Kusama, is already running the latest version.

Polkadot (DOT), built on Substrate, is currently the 6th largest cryptocurrency with a market cap of $3.74 billion, currently trading at $4.40.

Polkadot blockchain developer, Parity Technologies announced the launch of the second version of its blockchain building kit on Wednesday. This blockchain framework basically allows you to create and customize the blockchain “precisely” for your application or business. The new release provides the developers with additional tools to do just that.

With an aim to develop a Web 3.0, Substrate acts as a tooling kit for developers making their own blockchains that are interoperable with Ethereum’s co-founder Gavin Woods’ Polkadot.

The new release comes with 70 composable “modules” called “pallets” to play with various design ideas. These pallets, which can be developed using FRAME, help add basic and extended functionality.

“Substrate 2.0 comes with many new pallets that will help you quickly and easily build and deploy your blockchain runtime with the right properties for you and your network.”

Version 2.0 also includes modules for getting off-chain data on the blockchain. This new feature called off-chain workers communicates with the main chain to keep all network participants up to date and remove the massive data sets and intensive processes. Parity states,

“Substrate 2.0 comes with a suite of pallets to make data integration much more efficient for blockchains that depend on existing and/or real-world data.”

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Author: AnTy

Kenya Leads Crypto Adoption In P2P Exchange Volumes; Ukraine Tops Global Index: Chainalysis

Chainalysis, a cryptocurrency, and blockchain analysis firm, released it’s latest Global Crypto Adoption Index 2020, showing developing countries are witnessing greater adoption for crypto – Ukraine, Venezuela, and Kenya featured in the top five countries with Russia and China completing the list.

The interim report from Chainalysis focuses on four significant parameters to rank the 154 countries that took part in the survey. The metrics to measure crypto adoption include on-chain cryptocurrency received weighted against the purchasing power parity (PPP) per capita, on-chain crypto sent out (transferred) weighted against the PPP per capita, and several on-chain deposits weighted by the number of internet users.

Finally, the overall p2p exchange activity weighted by both the number of users and PPP per capita. The index ranks the countries using all the metrics with those closest to one with the most incredible crypto adoption.

Ukraine and Russia top crypto adoption rankings

A glance at the top 10 ranked countries shows a disparate difference in the levels of development across all countries except for Russia, which ranked highly in all four sectors. Ukraine, Russia, and Venezuela grab podium positions according to the Global Crypto Adoption Index by Chainalysis.

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Despite the three not leading in any of the factors mentioned above, the total index score favors the countries. Ukraine ranked fourth in both the on-chain crypto value received and retail value transfers, while China dominated the two factors. Vietnam (ranking tenth) also ranked highly on these metrics.

Kim Grauer, head of research at Chainalysis, Ukraine, and Russia, top the charts due to their underlying innovativeness and tech native population. The latter country also has a vast network of digital payments and e-payments already, which makes the transition to crypto a bit more seamless, she said.

Notwithstanding, the adoption growth in Ukraine and Russia can both be attributed to the current COVID-19 global pandemic that has shrunk both economies. In a bid to make additional sources of income, citizens in the country are turning to crypto for a solution.

Retail investors are pulling their weight in crypto

According to Michael Chobanyan, founder of Ukraine’s first crypto exchange, Kuna, retail investors (less than $10,000) are pushing the adoption rates in Ukraine in search of better investment tools. A lack of a stable stock market exchange, financial systems failure, and an expensive real estate investment – all collude in growing the retail crypto space, he said.

In a differing tone, Grauer said Venezuela adopted cryptocurrency as a need rather than it being a “cool technology.” The hyperinflation in the country is causing plenty of citizens from South American to turn to Bitcoin (BTC) as “a stable store of value.”

The three states, alongside Kenya, showed strong growth in retail crypto adoption while in China (in fourth) and the U.S. (in sixth), crypto adoption is led by big money players and institutions.

“Looking at the share of the transfers greater than $100,000, we noticed that over the past year, the share of the overall activity in North America that is professional has been growing.”

Kenya leads the P2P volumes metric

Another surprise on the list is East African powerhouse, Kenya, which emerged fifth on the Global Crypto Adoption Index ahead of heavyweight economies such as the U.S., Nigeria, and all of Western Europe. Despite performing poorly in three of the four categories, Kenya leads the world in peer-to-peer crypto exchanges trade volume weighted by its number of internet users and PPP per capita.

The East African state has seen rapid growth in P2P exchanges growth volume in 2020 as Paxful and LocalBitcoins pushed for Bitcoin adoption. P2P exchange volume ranking, however, overlooks the prevalence of regulated, centralized exchanges across other states, unfairly pacing more weight to developing countries. Kenya and Venezuela top the P2P rankings but did not manage to make the top ten on any other ranking metric.

Explaining the rankings, Grauer stated no one ranking metric catapulted any country to the top. The report concludes that cryptocurrency adoption is happening globally – only 12 of the 154 countries scored zero on the index. Additionally, developing countries have high numbers of retail investors as P2P exchanges play a crucial role in enhancing crypto adoption in these countries.

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Author: Lujan Odera

Miner Maker Canaan Q2 Report Reveals 160% Revenue Increase But The Still At a Net Loss

Canaan, one of the leading manufacturers of bitcoin mining machines, has released an unaudited financial report for the second quarter of 2020. The information that was released on August 31st suggested a profitable quarter and even a gross profit for a year over year. However, the firm is still at a net loss, despite two profitable quarters. The net loss stems from those incurred over 2019.

Canaan also conducted its IPO last year in November with a target fund of $400 million, out of which the bitcoin mining rig manufacturer raised 25% of the target amount. The outbreak of the pandemic had quite an adverse effect on the company’s share price, which is currently valued at $2.19, down by almost 75% from its public sale price of $9.

The unaudited report also revealed that the company sold about 2.6 million THash/s worth of computing power for the ASIC mining machine in the second quarter. The amount of hash-power sold by the company has nearly tripled from the first quarter’s figure of 0.90 million THash/s. As an added note, the sales figures for this quarter have dropped by 18% from the last year.

The revenue generated by the company in the second quarter stood at RMB 178.1 million ($25.2 million), which is also up by 160% compared to the first quarter, but declined by 25% when compared to the last year.

The gross profit generated by the company in this quarter stood at RMB 43.3 million, equivalent to $6.1 million, seeing an increase of almost 300% year on year, and over 1,700% when compared to Q1.

The gross margin has seen a significant bump in all parameters, where it was up by 25% when compared to last quarter against just 4.2% in 2019.

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Author: Hank Klinger

Ethereum Classic Labs Proposes New Security Plan To Prevent Future 51% Attacks

  • After suffering two major 51% attacks, Ethereum Classic (ETC) developers released a robust “Security Plan” to prevent future attacks.
  • The security plan will take three to six months to implement fully, the statement reads.
  • The plan short term changes, including tactics such as defensive mining and increased network monitoring
  • Plan also outlines long term changes, including changing the consensus algorithm and introduction of a treasury system.

In a published document on August 19, the ETC accelerator, Ethereum Classic Labs, released proposed solutions to further secure the network after two successive 51% attacks earlier in the month. The proposed plan, as mentioned before, will roll out in the next three to six months, with some of the security measures coming immediately.

Immediate changes to guard 51% attacks

The first immediate change to guard against these attacks is the implementation of ‘defensive mining.’ This will work through miners and mining pools cooperation to prevent attacks by raising the hash rate and maintain a consistent mining hash rate making it harder to pull off 51% attacks.

An enhanced monitoring service across the network will also harmonize the mining of ETC to prevent spikes in hash rate and keep in check prices across the mining pools. Monitoring the blockchain will further assist in quick identification of anomalies on the network. Notwithstanding, ETC Labs will closely work with exchanges in whitelisting services and work on implementing longer and safer confirmation times.

The ETC Core development team is also advocating for the immediate implementation of the ‘Permapoint’ finality arbitration system aiming “to inhibit chain reorganizations while maintaining consensus among nodes aggressively.”

The long term strategy

The long term security plan will be more community-driven as it will impact the core of the blockchain, the statement reads.

First option circles around increasing the resistance to 51% attacks with the Pirl Community proposing an introduction of ‘penalty blocks’ through ECIP 1092. This states that instead of the standard auto synchronizing of any offline pre-mined chain branch, “the new protocol should require peer proposing the longer and heavier chain to mine the penalty blocks.” This makes a 51% attack through chain reorganization more expensive and time-consuming. This could take up to 3 months to implement.

Secondly, a total change of current proof-of-work (PoW) system to either Keccak-256 or RandomX is proposed. Currently, ETC uses the same mining algorithm as Ethereum – Ethash – and a move to a new algorithm could help the blockchain “step out of the shade of the Ethereum network.” This is estimated to take up to 6 months to implement if the testnet works.

Also Read: OKEx Considers Delisting ETC After $5.6M Loss Due to a 51% Attack

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Author: Lujan Odera