I, Degen - E14: All Eyes On Ethereum - 9/11/2022

Listen at: idegen.fm

Contact us: @idegenfm

Full show notes with images on HackMD - https://hackmd.io/@idegen/E14-All-Eyes-On-Ethereum

Intro

Welcome to I, Degen - A podcast about crypto technology, security, and culture. With a healthy balance of enthusiasm and skepticism, we dig into a weekly look at crypto, cutting through the misinformation and hype in search of signal in the noise.

Episode Summary

All eyes are on Ethereum - we are now less than four days out from the merge. We’ll talk about some possible scenarios the merge might bring and what you can do to stay safe during the merge. We’ll also look into recent updates on the Tornado Cash sanctions, a new report on fraudulent crypto trading volume, and other crypto security-related news.

I,Degen - Weekly

Cryptosphere

1. From August 23rd, SudoRare, a LooksRare clone rugs 820K after just 6 hours of operation Rugged funds likely moved to a KYC’d address on Kraken.
2. SudoRare, an NFTplatform that forked from SudoSwap and LooksRare, is just the latest crypto project to run off with users’ funds. The project also deleted all of its social media accounts Tuesday morning. - 
3. Coinbase launches Liquid Staked derivative (LSD) cbETH ahead of the merge - [1][2][3]
4. Earn 1 MIL if you can find a good bug in Ethereum before the merge
5. August 26th, 2022 - Tailiban Outlaws Crypto in Afganistan and begins arresting sellers that refused to comply Bloomberg article
6. Password managment first LastPass had it’s developer systems hacked to steal source code
7. According to Forbes, more than 1/2 of all Bitcoin trades are ‘fake’

The U.S. Commodity Futures Trading Commission defines wash trading as “entering into, or purporting to enter into, transactions to give the appearance that purchases and sales have been made, without incurring market risk or changing the trader’s market position.” The reason why some traders engage in wash trading is to inflate the trading volume of an asset to give the appearance of rising popularity. In some cases trading bots execute these wash trades in tokens, increasing volume, while at the same time insiders reinforce the activity with bullish remarks, driving up the price in what is effectively a pump and dump scheme. Wash trading also benefits exchanges because it allows them to appear to have more volume than they actually do, potentially encouraging more legitimate trading.

“Fraudulent or non-economic”

The biggest problem areas regarding fake volume are firms that tout big volume but operate with little or no regulatory oversight that would make their figures more credible, notably Binance, MEXC Global and Bybit. Altogether, the lesser regulated exchanges in our study account for approximately $89 billion of the true volume (they claim $217 billion).

On Forbes method:

We apply volume discounts based on a proprietary methodology that relies on 10 factors such as an exchange’s home regulator if any and volume metrics based on an exchange’s web traffic and estimated workforce size.

So, private trading firms numbers are being grok’d by proprietary methodology.

Worth note, the Bitwise Study from early 2019 said 95% of BTC trading was fake… so it’s getting better.

In case you’re interested in this topic, here is another nice paper from 2019 that talks about fake BTC trading

1. spoiler! -New Netflix show on John Mcafee rasies questions about his death - supposedly he called his ex-gf after his ‘death’ to say he faked it.
2. Australia Establishes Federal Crypto Police 

Launched in August, the unit will help combat crypto criminals by targeting their assets and providing investigative tracing capability and insight to other AFP authoritiesThe new crypto unit will operate as part of its Criminal Assets Confiscation Taskforce (CACT), which has been seizing illicit crypto funds since 2018, but without a dedicated standalone teamThe Australian Federal Police have confiscated over AU$600 million (US$408 million) in illicit funds and property since 2020, and though the amount of crypto funds seized were small compared to “traditional” criminal assets, the additional focus helps provide intelligence insights

1. Solana didn’t go down this week - high TPS spike that might have caused a network outage before, didn’t cause one this time.
2. September 5th withdrawals frozen at crypto mining firm Poolin because of a lack of liquidity - From theBlock.

Poolin, one of the world’s biggest crypto mining pools, is suspending bitcoin and ether withdrawals from its wallet service due to “liquidity problems.”

And now, from September 9th Bitcoin hash rate cut in half as miners leave

This is significant because 1) Poolin is a China-based mining pool service, operating in China after the mining ban, and 2) the pool was estimated to have roughly 10% of the hash rate before withdrawals were suspended.

1. Flash Loan used against single NXUSD market on Nerus

At approximately 10:30PM UTC on September 6th, the Nereus team notified the community of an incident through the community discord; this was later picked up by CertiK and other on-chain analysis groups and reported broadly as a flash-loan exploit resulting in a $371k gain.An exploiter was able to deploy a custom smart contract and that leveraged a $51M flash loan to manipulate the AVAX/USDC Trader Joe LP pool price for a single block resulting in the ability for the exploiter to mint 998,000NXUSD against ~$508k worth of collateral.In the hours that followed, Nereus quickly consulted s...