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Lummis Says CLARITY Act Will End Crypto Developer Prosecution for Writing Code

13.04.2026 - 07:31

Update: 13.04.2026 - 07:31

As hacking incidents continue to increase in the cryptocurrency market, the latest news comes from Ethereum (ETH).

According to blockchain security firm PeckShield, a cyberattack occurred on the Ethereum (ETH) network in which a large amount of Polkadot (DOT) was minted without authorization.

Hackers reportedly minted approximately 1 billion Polkadot (DOT) tokens without authorization on the Ethereum network and sold them on the market.

Analyses suggest that a security vulnerability on the Polkadot Bridge may be the cause.

Analysts note that the losses experienced in DOT are relatively small due to the limited and low liquidity of the token.

According to the data, DOT continues to trade at $1.18, down approximately 3.6%, while South Korean exchanges Upbit and Bithumb have suspended DOT deposits and withdrawals.

Polkadot has not yet made an official statement.

*This is not investment advice.

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Nick Sawinyh on 18 Apr 2026

At 17:35 UTC on Saturday, April 18, 2026, someone minted 116,500 rsETH on Ethereum mainnet that had no backing behind it. That’s roughly 18% of KelpDAO’s entire circulating supply, worth about $292 million at the time the forged LayerZero packet cleared. Within minutes it was sitting as collateral on Aave, borrowing WETH against itself. Within an hour it had produced the largest single DeFi extraction of 2026 so far.

This piece was written in the first evening after the drain. KelpDAO and LayerZero have both promised post-mortems; final numbers on bad debt, compensation, and any supply migration will shift over the coming days. Treat the specific figures below as the best on-chain and analyst estimates available as of April 18–19, 2026.

The restaking contracts didn’t fail. The EigenLayer delegations are still intact. Mainnet rsETH is still backed by the legitimate user deposits sitting in KelpDAO’s node delegators. The core product was fine. What broke was the bridge — a LayerZero OFT adapter running on a one-of-one validator stack, which let a single forged signature instruct the adapter’s mainnet escrow to release tokens that shouldn’t have moved. Everything downstream is composability fallout.

Here is what happened, what broke, and who actually pays.

What KelpDAO Is, and Why the Bridge Mattered KelpDAO is one of the larger liquid restaking token (LRT) protocols built on EigenLayer. Users deposit ETH or a whitelisted LST, the protocol delegates to a set of EigenLayer operators, and users receive rsETH: a token representing a claim on the restaked position plus accrued yield. By April, rsETH had crossed $1 billion in TVL and was integrated as collateral across most of the major lending markets and yield venues in DeFi.

rsETH lives natively on Ethereum, where the restaking contracts sit. But its utility depends on being everywhere: Arbitrum, Base, Mantle, Unichain, Linea, and roughly a dozen other L2s and sidechains. KelpDAO uses a LayerZero OFT (Omnichain Fungible Token) adapter to move rsETH across chains. The adapter is the bridge. When rsETH leaves Ethereum, it’s locked in an escrow contract on mainnet, and a matching amount is minted on the destination chain. When a cross-chain message comes back, the escrow releases.

That escrow release is what got spoofed.

The Attack: A Single Forged lzReceive Call The entire drain happened in one transaction:

0x1ae232da212c45f35c1525f851e4c41d529bf18af862d9ce9fd40bf709db4222

The call landed on LayerZero’s EndpointV2 contract at 0x1a44076050125825900e736c501f859c50fE728c with a forged origin packet claiming to come from source Endpoint ID (EID) 30320. The endpoint passed the payload to KelpDAO’s rsETH OFT adapter at 0x85d456B2DfF1fd8245387C0BfB64Dfb700e98Ef3. The adapter, trusting the message, released 116,500 rsETH from escrow into attacker address 0x8B1b6c9A6DB1304000412dd21Ae6A70a82d60D3b. One Transfer, one OFTReceived, one PacketDelivered. Roughly $292 million.

The forgery worked because the adapter’s security stack was configured to accept the attestation of a single verifier. LayerZero’s OApp configuration model lets the application developer choose how many “DVNs” (Decentralized Verifier Networks) must sign off on an incoming message before it’s delivered, plus any optional verifiers. For the rsETH OFT, both sender-side and receiver-side configs read the same way:

requiredDVNs: [LayerZero Labs] requiredDVNCount: 1 optionalDVNs: [] optionalDVNCount: 0 The sender-side DVN contract (0x282b3386571f7f794450d5789911a9804fa346b4) and the receiver-side DVN (0x589dedbd617e0cbcb916a9223f4d1300c294236b) both ran a one-of-one validator stack operated by LayerZero Labs. One forged signature was enough to make any cross-chain message look real. An entirely legitimate rsETH transaction had settled through the exact same DVN two days earlier, so this wasn’t a dormant testnet artifact; it was the live production setup.

On-chain analyst @senamakel was the first to post the OApp config publicly, roughly three hours after the drain. A follow-up reply from researcher @BranchM in the same thread clarified something important: the compromise wasn’t Unichain-specific. The DVN contract and its signing keys sit on Ethereum, so the attacker could have spoofed any source chain the adapter trusted. Changing the source EID from Unichain to Arbitrum would have produced the same outcome. The DVN itself was the single point of failure; the source chain was cosmetic.

LayerZero’s protocol wasn’t broken. The configuration KelpDAO (and whoever advised them) deployed was. A multi-DVN stack, typically two-of-three or three-of-five in production deployments handling significant value, would have required the attacker to compromise multiple independent verifier networks simultaneously. They only had to compromise one.

The Cashout: Unbacked Collateral Meets a Ready Lending Market The attacker didn’t try to sell 116,500 rsETH into DEX liquidity. That would have crashed the price inside the first block and capped the extraction at whatever the curves could absorb. Instead, they did the thing every post-2024 exploit playbook describes: they used the tokens as collateral.

According to on-chain accounting compiled by Chaos Labs and cross-checked against the adapter events:

On Aave V3/V4 Ethereum, the attacker supplied rsETH and borrowed 52,834 WETH. On Aave V3/V4 Arbitrum, they bridged a portion of the stolen supply and borrowed 29,782 WETH plus 821 wstETH. Smaller positions were opened on Compound V3 and Euler before those markets were frozen, adding an undisclosed additional slice of WETH/ETH borrows on top of the Aave numbers. Total extracted value sits in the $200M–$236M range depending on exact execution prices and the wstETH mark. That’s the money that actually left the attacker’s address as borrowed liquidity. A portion of the borrowed funds was then routed through Tornado Cash (ZachXBT flagged the first mixer-bound hops within twenty minutes of the drain), while the rest sits in wallets on-chain sleuths are actively tracking.

KelpDAO’s operations multisig paused the rsETH contracts on Ethereum and every L2 where the adapter was deployed within 46 minutes of the initial mint. That pause stopped any follow-up forgery and prevented the attacker from minting a second tranche. It didn’t, and couldn’t, reverse the positions already opened on third-party lenders.

The Blast Radius: Who Actually Got Hit The exploit was tightly contained at the smart-contract layer. Core EigenLayer pools, rsETH’s underlying backing, and LayerZero’s non-Kelp traffic were untouched. But rsETH had been so thoroughly composed into DeFi that the forced pause rippled outward immediately.

Aave took the brunt. rsETH was an accepted collateral asset across V3 and V4 instances on both Ethereum and Arbitrum. Within hours, Aave’s risk team froze every rsETH market and pushed a public message urging WETH suppliers to pull their liquidity while the situation was being scoped. Marc Zeller and Chaos Labs both confirmed the exploit itself didn’t touch any Aave contract. The risk is purely that the collateral backing the attacker’s ~$200M in borrows is now known to be worthless. The AAVE governance token traded off roughly 10% in the hours after the news broke, reflecting market uncertainty about how much of the deficit lands on token holders versus Umbrella stakers.

SparkLend, Fluid, and Upshift froze or paused rsETH positions on the same timeline. Compound V3 and Euler paused new rsETH borrows after the first attacker positions were opened.

Yield venues and structured products cut exposure the moment the news hit X:

Ethena paused rsETH usage in its vaults. Yearn froze any vault with rsETH allocations. Pendle paused its rsETH PT/YT markets to stop mispriced trading during the chaos. Beefy froze rsETH-denominated strategies. Lombard Finance preemptively paused unrelated LayerZero LBTC routes “out of caution,” which tells you something about the current level of trust in OFT configurations industry-wide. The knock-on damage runs deepest on the roughly 20 L2s and sidechains where rsETH was bridged. Because the minted supply on Ethereum is now partially unbacked, every wrapped derivative downstream is structurally impaired. Holders of rsETH on Arbitrum, Base, Mantle, Linea, and the other bridged chains are sitting on tokens that can no longer be confidently redeemed against a 1:1 claim on Ethereum escrow. Withdrawals are paused, liquidity has evacuated DEX pools, and any lending market on those chains that accepted wrapped rsETH as collateral is running into the same bad-debt math Aave is running into on mainnet, just at smaller scale.

Untouched: stETH, wstETH, rETH, cbETH, and every other major LST/LRT outside of KelpDAO. There is no systemic restaking contagion here. The failure is specific to one adapter, one DVN, one trust model.

The $177M Bad Debt vs a $56M Umbrella The Aave bad debt number being quoted by every serious on-chain analyst is roughly $177 million, sitting in the WETH reserves across V3 and V4 on Ethereum and Arbitrum, plus a small wstETH slice on Arbitrum. The range from different sources runs $177M–$196M depending on exactly how partial liquidations and wstETH marks are accounted for. $177M is the median figure from Chaos Labs’ real-time reporting, and the one most post-mortems will anchor to.

That deficit is what Aave’s Umbrella module was built for. The awkward part is that Umbrella currently only runs on Ethereum mainnet.

Umbrella is the on-chain risk backstop that replaced the old Safety Module in mid-2025. The old Safety Module required a governance vote to slash stakers, which meant that in practice it had never actually been slashed. It was a theoretical insurance fund. Umbrella is different by design:

Per-asset, per-network isolation. Stakers deposit into a specific asset vault on a specific network. The WETH vault on Ethereum covers WETH deficits on Aave Ethereum and nothing else. USDC and GHO stakers are untouched. Ethereum-only, for now. Umbrella launched on mainnet in mid-2025 and has not yet been deployed to Arbitrum, Base, or any other network. Bad debt recorded on a non-Ethereum Aave instance falls back to legacy cover-of-last-resort: the DAO Collector first, then AAVE token issuance via governance, then pro-rata socialization onto suppliers if those prove insufficient. Automated slashing. UmbrellaCore monitors realized bad debt in the corresponding Aave reserve. When the recorded deficit crosses a configurable threshold (the “deficit offset,” currently 100,000 units of the base asset, absorbed by the DAO Collector first), UmbrellaCore permissionlessly calls slash() on the relevant StakeToken contract. No governance vote, no delay. Pro-rata dilution. Slashing burns a proportional share of the vault’s underlying assets and sends them to the Collector, which repays the pool. Every staker’s share value drops by the same percentage. 20-day cooldown. You can’t exit instantly. Once you request withdrawal, you remain fully exposed (and fully rewarded) for 20 days. This is the structural reason bank-run dynamics can’t short-circuit the backstop. Minimum assets floor. The contract refuses to drain the vault below a minimum level, and slashing is capped at the actual recorded deficit. The Ethereum WETH Umbrella vault was carrying roughly $56M in TVL heading into the weekend. The attacker’s borrows split roughly 52,834 WETH on Ethereum versus 29,782 WETH and 821 wstETH on Arbitrum, which maps the $177M deficit to something like ~$113M on Ethereum WETH, ~$64M on Arbitrum WETH, and a few million in Arbitrum wstETH. The Ethereum slice alone is roughly twice the size of the Umbrella vault standing against it.

The slash math is therefore brutal and simple. Umbrella gets fully drained — the entire $56M vault slashed down to its minimum-assets floor — and still leaves roughly $55M of residual WETH bad debt on Ethereum uncovered. The Arbitrum deficit, roughly $67M combined across WETH and wstETH, has no Umbrella backstop at all and flows directly to DAO-level mechanisms. Net shortfall against Aave’s existing Umbrella capacity lands somewhere around $120M even after the Ethereum vault is wiped to the floor.

The DAO’s $100K deficit offset is a rounding error at that scale. The Collector balance helps, but not enough. That leaves two real levers for the residual: governance-authorized AAVE issuance (minting tokens, selling them, and pushing the proceeds into the Collector — the classic MakerDAO-style dilution playbook), or direct haircuts on WETH suppliers on the affected instances. AAVE issuance is the politically easier path and the one governance chatter is converging on, but the dilution burden shrinks meaningfully only if KelpDAO socializes a portion of the loss on its side, most likely by haircutting wrapped rsETH on bridged chains rather than touching the mainnet token.

The Hierarchy of Pain Strip away the dashboards and there’s a clean ranking of who actually absorbs the $292M.

Tier 1: Aave Umbrella WETH stakers on Ethereum. They signed up to be the first-loss backstop in exchange for extra yield on top of the aWETH supply rate. That trade-off is now live, and not partially — the Ethereum WETH deficit is roughly twice the size of the vault, so the entire $56M gets slashed down to its minimum-assets floor. Loss is immediate, pro-rata, automatic, and close to total. Umbrella stakers in other assets (USDC, GHO) are untouched because of per-asset isolation.

Tier 2: AAVE token holders. Once Umbrella is exhausted, the ~$120M combined residual (Ethereum WETH remainder plus the entire Arbitrum deficit, which has no Umbrella backstop) has to come from somewhere. Governance is already discussing AAVE issuance as the primary cover mechanism, which dilutes existing holders. The ~10% AAVE drop in the hours after the exploit is the market pricing in exactly this scenario.

Tier 3: rsETH holders on bridged chains. An 18% supply inflation at the Ethereum layer translates to structurally impaired wrapped rsETH everywhere else. The recovery plan analysts are modeling, which KelpDAO has not yet officially committed to, is a selective socialization that haircuts the bridged-chain float while leaving Ethereum mainnet rsETH as close to whole as possible. The math and the legal optics both favor pushing losses onto the smaller, more diffuse holder base rather than the mainnet holders sitting on the largest pools and the loudest megaphones. Rough modeling puts a haircut on bridged positions somewhere around the 15–20% range, with the exact number depending on whether KelpDAO chooses to top up partial compensation from treasury.

Tier 4: Leveraged rsETH loopers. The standard LRT trade through April was borrowing WETH against rsETH on Aave or Spark to loop into more rsETH, earning the spread between staking yield (~2.5% blended) and ETH borrow rates. With rsETH frozen and ETH borrow rates spiking into the 8–9% range on the utilization crunch, these positions are burning equity by the hour and can’t be unwound without manual intervention. Some will end up undercollateralized during the unwind and generate secondary bad debt on whichever lender they sit on.

Tier 5: Aave WETH suppliers on Arbitrum. This is the tier Aave’s risk team was most worried about when they pushed the “withdraw” message on Friday. Arbitrum has no Umbrella backstop, so the DAO response determines whether suppliers there get made whole via AAVE issuance or forced to share the loss pro-rata. The longer governance takes, and the smaller KelpDAO’s socialization ends up being, the higher the probability that some portion of the Arbitrum hit lands on suppliers directly. Ethereum WETH suppliers face the same risk at a smaller scale only if AAVE issuance proves politically unworkable.

Tier 6: Everyone else. KelpDAO the DAO will likely spend treasury on partial compensation. LayerZero will eat reputational damage and is under obvious pressure to tighten its default DVN recommendations in the aftermath. Competing LRT protocols (Ether.fi, Renzo, Puffer) are not directly exposed, but the whole category is going to see users reassess bridge security, with an advantage to issuers already running multi-DVN or alternative messaging layers.

The Uncomfortable Questions Why was a $1B protocol running a 1-of-1 DVN? LayerZero’s own security model gives applications full control over their verifier stack precisely so they can match it to the value they’re securing, and multi-DVN setups have been standard recommendation for any OFT handling significant value. Somebody at KelpDAO, at an advising firm, or at an integrator signed off on a single-DVN production config for a token that had grown to over $1B in TVL. That decision is now the story, not LayerZero’s protocol design.

Were the DVN keys actually compromised, or was the attestation logic bypassed some other way? Both KelpDAO and LayerZero have promised a root-cause post-mortem. The forensic question that matters for every other OFT in production is whether the LayerZero Labs DVN key material leaked, a signer was socially engineered, or a signature-forging bug existed upstream. The answer determines whether every other 1-of-1 OFT on LayerZero is currently exposed. And there are many.

How did audits miss this? They probably didn’t. The bridge adapter code is standard LayerZero OFT boilerplate; there’s nothing wrong with the contract. The fault is in the deployment configuration, which sits outside the usual scope of a Solidity audit. Config reviews are a much newer discipline, and this exploit is going to accelerate that market considerably.

What does Aave do about LRTs as collateral going forward? This is the second time in 2026 that an LRT collateral accepted on Aave has produced a nine-figure incident downstream of a non-Aave failure. Risk parameters will tighten, loan-to-value ratios on restaking collateral will come down, and the debate over whether LRTs should be isolation-mode-only on every major lending market is going to get louder.

What does this mean for LayerZero’s institutional pitch? LayerZero has been positioning itself as the messaging layer for traditional finance’s tokenization rollout. A production failure at this scale, in a configuration that was always within the application developer’s control rather than an inherent protocol flaw, is a setback, but it’s also a case study. If the post-mortem is clean, defaults tighten, and existing OFTs migrate to multi-DVN stacks quickly, the damage is contained. If it drags out, the institutional counterparty diligence LayerZero has spent two years building up takes a real hit.

The Lesson That Keeps Repeating Every nine-figure DeFi incident of the last two years has the same structural shape. The core protocol does what it’s supposed to do. Some privileged component on the edge, whether that’s an off-chain signer, a bridge validator, an operator key, or a configuration that was supposed to be temporary, carries more trust than the rest of the stack was aware of. Somebody figures out where that concentration sits, and the full weight of the composed system falls through it.

The Resolv USR exploit in March was a single-signer SERVICE_ROLE that could mint arbitrary amounts of a stablecoin. The KelpDAO exploit is a single-verifier DVN that could authorize arbitrary cross-chain releases. Different protocol, different token class, identical architectural shape: one key, no meaningful check beyond it, and a downstream composability layer that had already assumed the thing behind the key was sound.

The LRT category in particular has spent the last year adding more layers (more chains, more wrappers, more lending integrations, more yield vaults that lend against vaults that lend against wrappers) on top of a base that is fundamentally a three-way trust assumption between the staker, the restaker, and the bridge. Each additional layer compounds yield by a handful of basis points. Each additional layer also compounds the attack surface in ways that are hard to price. The rsETH supply on the 20 bridged chains wasn’t a feature. It was a liability that grew quietly until one forged packet turned it all into bad debt.

The practical takeaway for anyone actually using this stuff is narrow and boring: before you treat a bridged LRT as interchangeable with its mainnet counterpart, look at the bridge’s verifier configuration. Lenders integrating LRTs as collateral have to reckon with a simple fact: the counterparty isn’t the LRT issuer alone. It’s the LRT issuer plus whatever messaging stack sits between mainnet and wherever the wrapped token shows up. At the ecosystem level, the boring parts of security (key management, config reviews, multi-party attestation) are where the next nine-figure incident is going to come from too. Until someone finally makes the boring parts the default.

Aave will recover. Umbrella stakers on Ethereum will take the full hit they volunteered for, the DAO will vote AAVE issuance to cover the residual the vault couldn’t absorb, and the event will accelerate Umbrella’s expansion to every network that wasn’t covered this weekend. rsETH will either migrate to a multi-DVN stack or lose meaningful share to the LRT competitors that already run one. LayerZero will quietly tighten its defaults. And the next exploit will come from whichever protocol hasn’t yet asked the question: “what single key is currently trusted to authorize nine figures on our system?”

That’s the question every DeFi product owner should be writing down today.

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On February 21st, Charlie Lee of Litecoin took to Twitter and made a cryptic tweet about WEG Bank’s exciting product pipeline. Needless to say, the promise of a traditional banking institution getting more heavily involved in cryptocurrency went down very well in the Crypto Twitterverse:

What exciting new products were Charlie Lee hinting about? A week later, it seems like we have the one of the answers and it appears that it involves WEG Bank’s new partners, Nimiq and Agora Trade.

The Blueprint For A New Crypto-to-Fiat BridgeNimiq, a disruptive crypto payment system, recently announced that the project has created the blueprint for making fiat currency (USD, EUR, etc) blockchain-compatible. Work on this new Crypto-to-Fiat bridge has been pursued in collaboration with both WEG Bank and Agora Trade.

In a nutshell, this innovation is focused on making fiat currencies, like the Euro, directly behave as if it were a token on the blockchain. This enables seamless value exchange between the crypto and traditional banking worlds.

The members of the partnership. Image via Weg-Bank

Furthermore, Nimiq has removed the need for a single centralized intermediary eg. payment processors and exchanges, to control the two assets being traded. Even better, this functions without a third party ever controlling the private keys of the crypto asset.

Now, this may sound like a word salad to many people. Put simply, all this means is that Nimiq has found a way for crypto holders to sell their coins directly to fiat bank account holders and vice versa, without entrusting crypto assets to a third party like an exchange.

Anyone who has actually bought or sold crypto assets for fiat currency, will know that it’s not as straight forward or seamless as it should be. Indeed, you could be waiting for a couple of days for your fiat deposit to hit Coinbase and then you have to transfer Bitcoin or Ethereum to a crypto-to-crypto exchange to buy that altcoin you want.

All this creates a chain of hoops to jump through and the truth is that many people just give up. That’s bad news for wider crypto adoption.

In addition, the Quadriga scandal, where a cryptocurrency exchange allegedly lost the private keys to $135 million of user funds, highlights the benefits of giving crypto holders an alternative way to sell their coins for fiat currency, without having to entrust private keys to an exchange.

Nimiq’s new approach is aiming to revolutionize how value is exchanged between the traditional banking system and the cryptocurrency universe, by removing many of the complications and barriers that exist.

Not only is this innovation disruptive for current cryptocurrency holders, but it has the potential to make cryptocurrency markets significantly more accessible and safer for new crypto supporters too.

Blockchain-Compatible Fiat: How Is It Disruptive?Nimiq’s new blueprint has the potential to eliminate unnecessary middlemen for crypto holders and merchants alike.

Online crypto payment processors:Smooth out the friction that exists between the cryptocurrency and traditional banking world, by enabling value to be exchanged between the two ecosystems. The problem is that these middlemen (like Simplex) typically charge up to 5% on transactions and add yet another layer that needs to be trusted by crypto holders.

Nimiq’s new crypto-to-fiat bridge could completely disrupt and remove the need for online crypto payment processors. By directly integrating with decentralized exchanges, it eliminates the need for third-party custodial processors like BitPay.

Over-the-Counter (OTC)According to TABB Group research, these markets are three times bigger than exchange markets and they simply match high-value crypto holders with high-value fiat buyers.

Needless to say, OTC operators charge significant fees for this service and if Nimiq’s new solution reaches scale, it could pose a significant challenge to these markets by offering a convenient and efficient solution to match and execute transfers between crypto and fiat.

StablecoinsThis market currently stands at ~$2.8 billion. One of the main uses of stable coins (which attempt to replicate the value of the dollar) is providing a convenient way for crypto owners to hedge against the volatility of crypto markets.

Nimiq’s new crypto-to-fiat bridge is set to give crypto owners a new and convenient way to move their funds to real fiat, whilst also removing the need to trust unaudited stable coins.

Hello Nimiq OASISNimiq, working with WEG Bank AG and the non-custodial cryptocurrency exchange Agora.Trade, is pioneering a totally new approach to how banks deal with crypto by building a crypto-to-fiat bridge.

If those names sound familiar, it is because Litecoin and TokenPay each hold a stake in WEG Bank and Reto Trinkler made the Forbes ‘30 Under 30’ list.

This is a revolutionary collaboration that could provide the disruption needed to usher in mass adoption of crypto by making it far easier to interface between fiat and crypto.

Image via Nimiq

The groundbreaking blueprint allows fiat currency, like the Euro itself, to behave as if it was a token on the blockchain. The tech is called the Nimiq OASIS (Open Asset Swap Interaction Scheme), which is the middle layer solution connecting Agora Trade to WEG Bank.

Because it enables fiat to crypto exchange, this functions without needing to issue or use stable-coins. More details of this innovative solution can be found on Nimiq’s official blog.

Nimiq OASIS could completely disrupt how crypto is bought and sold with fiat currency. The wider vision is to allow other exchanges, bank, fiat and cryptocurrencies to integrate and leverage Nimiq OASIS in the future. This would allow even more crypto users and financial institutions to eliminate middlemen like payment processors and enable convenient value transfers between the two ecosystems.

Nimiq’s current partners made the following statements on the collaboration. According to Matthias von Hauff, CEO of WEG Bank AG:

For the past 12 months, we have been looking at various ways to expand our core banking activities into the blockchain community. With Nimiq, we have been able to develop not only a landmark payment interface which has the potential to revolutionize the way we deal with cryptocurrencies, but also an innovative and powerful partnership

And, according to Reto Trinkler, the co-founder of Agora Trade:

Overregulation and lack of innovation lead to the development of custodial exchanges and financial intermediaries such as stablecoins. By combining an easy­-to-­use payment token, a non­custodial exchange and an innovative fiat bank we go back to the heart of what blockchain is all about; Self­-sovereignty and removing unnecessary middlemen

Agora Trade also took to Twitter after Nimiq’s official announcement was made. One thing is clear, Nimiq OASIS to closing the gap between the traditional banking system and cryptocurrency markets.

World watch out, blockchain-compatible fiat is coming!

Disclaimer: The author holds some NIM in their portfolio and is compensated in a long-term independent consulting capacity by Nimiq. This article must not be construed as investment advice. Always do your own research.

On the 2nd April 2019, Nimiq (NIM) announced that the crypto project had acquired a 9.9% stake in WEG Bank AG.

This move further reinforces Nimiq’s pre-existing strategic partnership with WEG Bank and Agora.Trade on a potentially revolutionary crypto-to-fiat bridge.

In this article, we’ll take a look at how all the pieces of the Nimiq puzzle fit together, how this acquisition and partnership could just be the beginning of wider disruption for both the cryptocurrency and fin-tech industries.

The Wider Impact On Crypto & Fin-techNimiq’s acquisition of a stake in WEG Bank means that the project is committed to dedicating their top developer talent to execute the blueprint for an innovate crypto-to-fiat bridge called Nimiq OASIS. This fin-tech solution is customer facing and aims to connect the traditional banking system, via WEG Bank, to the cryptocurrency markets using Agora.Trade.

  

At one end of the bridge, you have WEG Bank and Agora.Trade (a decentralized exchange) is at the other end. At the center of the bridge is Nimiq OASIS which is what connects the banking and cryptocurrency worlds together and enables value to be transferred between the two ecosystems. This is made possible by Nimiq OASIS making fiat currencies like the USD or EUR, blockchain compatible.

Now the value transfer problem between cryptocurrencies and banks has existed ever since Bitcoin was first introduced into the world.

This pain point has seen the emergence of cryptocurrency payment processors like Bitpay and Simplex, who step in as a middle man to bridge these two ecosystems. Indeed, Charles Hoskinson, the founder of Cardano (ADA) recently spoke about the current state of crypto markets and commented:

What we are seeing is a collection of standards being created [that] will inevitably converge over the next three to five years to create a situation where you can move information and value between all these different systems ー not just Bitcoin to Litecoin to Ethereum to Cardano ー but also your regular bank account

Nimiq OASIS aims to achieve the transfer of value between cryptocurrency and a normal bank account. Furthermore, the target date for release is Q4 2019 and the first iteration of Nimiq OASIS is looking to support Bitcoin, Ethereum and NIM. The potential of Nimiq OASIS is nearly endless with Team Nimiq stating that:

Nimiq’s vision is to further expand Nimiq OASIS reach to other fiat currencies like the USD and additional crypto assets as other banks and cryptocurrency platforms can also be enabled to interface with Nimiq OASIS and provide their customer bases with a convenient and cheap way to buy or sell different cryptocurrencies with a bank account

So, in a nutshell, the Nimiq OASIS blueprint aims to deliver an easier and cheaper way for people to buy and sell cryptocurrencies using their bank account. This eliminates the need for crypto payment processors and can remove an additional fee layer. Now, that’s very disruptive in itself, but there's more.

Nimiq OASIS can also enable transactions to be processed without a single, centralized intermediary (like an exchange or payment processor) controlling the two assets being exchanged, and without the private keys of the crypto asset ever being entrusted to a third party.

Maybe all that sounds like a word salad, but consider the QuadrigaCX situation earlier in 2019 and how $190 million in crypto assets became inaccessible to the exchange.

   

This issue demonstrates the benefit of a crypto owner never trusting their private keys to anyone else. Indeed, if all those QuadrigaCX users had held their own private keys then they would still have access to that $190 million worth of crypto.

WEG Bank’s part in the Nimiq OASIS blueprint is critical, for it is the way through which Nimiq OASIS can access the SEPA Instant network and enable the buying or selling of crypto with any bank part of that network.

This means that users wouldn’t have to have an account at WEG Bank to use Nimiq OASIS. Nimiq’s partnership and acquisition of a stake in WEG Bank demonstrate the commitment to making this fin-tech solution succeed.

More To Nimiq OASIS Then Meets The Eye?Currently, there are few banks looking to actively work with cryptocurrency projects or develop crypto-based solutions. Enabling retail banking customers to buy crypto doesn’t sound like that big a deal, however, the Financial Conduct Authority in the UK recently released a report and conducted a survey asking people why they were not buying cryptocurrencies.

An incredible 20% of people replied that lacked knowledge on how to buy cryptocurrencies. Nimiq OASIS could make buying crypto as simple as sending an online bank transfer and this highlights the benefits of making the buying and selling of crypto as simple as possible.

In the area of crypto payment processing, Nimiq OASIS could end up being a very disruptive force. The reason why is that many merchants don’t want to use a crypto payment processor like Simplex due to fees of up to 5%.

Now many online retailers operate off average net margins as low as 0.5% to 3.5%. That’s a huge disincentive for many merchants to accept cryptocurrencies and for some, accepting crypto payments could even result in the merchant making a loss.

Image via Nimiq

With Nimiq OASIS comes the potential for significantly lower fees by removing crypto payment processors as middlemen. The potential is there for Nimiq OASIS to actually spread the wider merchant adoption of cryptocurrencies by offering a cheaper alternative.

The stable-coin market could also be impacted. Today, these markets stand at around $2.8 billion, with the main use case of stable coins being to hedge against the volatility of crypto.

However, that hedge does come with some risks if people are using certain popular, unaudited stable-coins. Nimiq OASIS could offer crypto enthusiasts a different alternative to hedge against the markets with actual fiat.

No one really knows how large the crypto over-the-counter markets are. However, many agree that the volume on OTC desks is larger than that transacted over cryptocurrency exchanges. If you are not sure what OTC markets are, it’s just a complicated way of saying that crypto buyers, with fiat, are matched with crypto sellers wanting to sell for fiat currency.

Usually these markets are reserved for only high-value transactions and the OTC broker takes a cut of the transaction for making it all happen. If Nimiq OASIS gains high levels of liquidity, then it could offer current OTC buyers and sellers with an alternative option for their trades and enable Nimiq OASIS to eat into OTC market share.

From Nimiq’s recent stake acquisition, WEG Bank has further strengthened its partnership with Nimiq and this could make a lot of strategic sense when you know that the bank is focusing on expanding into the crypto niche. Matthias von Hauff, CEO of WEG Bank AG went on the record with the following comment.

For the past 12 months, we have been looking at various ways to expand our core banking activities into the blockchain community. With Nimiq, we have been able to develop not only a landmark payment interface which has the potential to revolutionize the way we deal with cryptocurrencies, but also an innovative and powerful partnership

Not only does WEG Bank play a critical role in the Nimiq OASIS solution, but the acquisition of a stake in the bank also opens up other opportunities for Nimiq. Prominent crypto projects like Litecoin and Tokenpay are already existing shareholders and twenty cryptocurrency projects are set to be selected for corporate accounts at WEG Bank, with Lisk already being confirmed.

The WEG Bank connection certainly brings with it the potential for Nimiq to grow even more meaningful partnerships and collaborative efforts.

A Brief Overview About NimiqThe thing to know is that Nimiq OASIS is just a single initiative that makes up the Nimiq project. Nimiq is a decentralized payment system, with an extensive ecosystem of apps, in which the NIM token is used as a store and transfer of value.

Sure, this sounds very similar to the the numerous other crypto payment systems out there like Dash.

However, Nimiq does differentiate with its cutting edge browser-based blockchain, which allows users to connect to it using only a web browser. This creates a installation-free experience, geared towards ease of use. Nimiq also compounds this approach by going to extraordinary lengths to make user interfaces simple and easy.

This approach and emphasis on simplicity have been inspired by Nimiq’s vision of making a cryptocurrency for the masses and not just the tech savvy. The focus on ease of use is probably a wise strategy given that companies like Apple have been able to achieve astonishing rates of product adoption by keeping things as simple as possible for users. Nimiq is built with a similar ethos in mind and this can be seen throughout the project.

Image via Nimiq

The Nimiq ecosystem is full of the teams and the best ideas from the Nimiq community.

Nimiq has created a frictionless, one-click pay webshop where you can get your hands on branded merchandise. However, one of the most promising components of the ecosystem is a new checkout flow, which is set to be released shortly to enable different e-commerce stores around the world to accept NIM as a payment method. This could be a critical part of Nimiq’s future if combined with Nimiq OASIS and this could provide merchants with a viable alternative to crypto payment processors.

If you scout around the Nimiq forum you’ll also be able to see that it appears that plans are already being hatched for Merchant adoption, with Nimiq publicly disclosing a list of merchant targets.

The Nimiq ecosystem also includes numerous tip bots for platforms like Reddit, Twitter, Twitch, Telegram, and Discord. It even has a browser-based Crypto-Tamagotchi game too.

Nimiq’s acquisition and strategic partnership with WEG Bank can be viewed as a smart springboard to further expand the project’s ecosystem, whilst enhancing its use-case as a payment system. Nimiq’s work is by no means done yet. However, there appears to be a lot of promise and potential there and it might be worth keeping a closer eye on project developments.

What is WEG Bank?WEG Bank is a German bank founded by CEO Matthias von Hauff. The bank has gained a reputation for being one of the best institutions in the German real estate banking sector and has set its sight on expansion into the corporate, crypto and retail sectors.

Image via WEG Bank

With Nimiq on board, it seems that the project could play a key role in helping WEG Bank expand into the cryptocurrency markets and get a head-start over other less progressive thinking banks.

Who are Agora Trade?Agora.Trade is a decentralized exchange under Swiss and Maltese ownership. They are led by Forbes 30 under 30 listmaker Reto Trinkler. The exchange has also partnered up with WEG Bank through their connection and involvement in Nimiq OASIS.

In addition, Reto is also collaborating on other cutting-edge blockchain research with Nimiq through his other company called Trinkler Software. This collaboration appears to be bearing fruit, with the proposed Albatross consensus algorithm being the first thing to out of this collaboration.

Albatross is a new proof-of-stake consensus algorithm and its believed that this is able to perform close to the theoretical maximum for a single chain. This research is currently being put to the test, however, it could provide a foundation for Nimiq to shift to proof-of-stake in the future.

ConclusionNimiq OASIS has the potential to play a big role in shaping the future landscape of the wider crypto and fin-tech sectors. The acquisition of a stake in WEG Bank further supports Nimiq’s commitment to delivering Nimiq OASIS and the strategic partnerships with both WEG Bank and Agora-Trade.

It also opens the door for Nimiq to forge additional partnerships with substance, with Litecoin and Tokenpay already being stakeholders, some of the twenty crypto projects set to be selected for corporate accounts might synergize well with Nimiq and lead to even more future collaborations.

However, it must be noted that Nimiq OASIS is only a blueprint right now and that the first Nimiq OASIS transaction isn’t expected till Q4 2019. Sometimes development work takes longer than anticipated and that target date is certainly not fixed.

What’s particularly interesting about Nimiq OASIS is that it has never been intended to be used exclusively for NIM. From the get-go, Bitcoin and Ethereum support are anticipated, with Nimiq already suggesting that the vision is to enable support for other cryptocurrencies. This means that the Nimiq OASIS effect could be felt out throughout the entire crypto market in the future.

If Nimiq OASIS succeeds with help from WEG Bank and Agora.Trade, it will certainly be interesting to see if this fin-tech solution starts to change the attitudes held by other banks towards cryptocurrencies. Maybe WEG Bank will be the first of many to embrace this new technology?

Only time will tell what the true impact of Nimiq will be…

However, given the scale of the possible disruption, it might be a good idea to keep closer tabs on the project and keep up to date with the project’s developments.

Disclaimer: The author holds some NIM in their portfolio and is compensated in a long-term independent consulting capacity by Nimiq. This article must not be construed as investment advice. Always do your own research.

When mass adoption? That’s the question on the minds of so many crypto fans. The short answer is that nobody knows ‘if’ or ‘when’ cryptocurrencies will be adopted by huge swathes of the general population.

What we do know is that although the 2017 bull market raised significant awareness about cryptocurrencies, the general adoption rates are still phenomenally low. The key question is why? The truth is that crypto still has a bit of a reputation problem.

We are sure many of you have experienced this yourself after telling family and friends that you have made that first Bitcoin purchase.

How many of you had an off-the-cuff comment about Bitcoin being the currency of criminals? We bet almost everyone reading this has had that experience at some point.

Severing Link Between Crypto & CriminalityYes, these attitudes to crypto can be annoying but they tell us something very important when it comes to growing the wider adoption of cryptocurrencies.

Namely, that crypto needs to break that association with criminality, which is still a hangover from the Silk Road incident way back in 2014.

Sadly, severing that link is no easy feat with news articles from the mainstream seemingly taking every opportunity to sensationalize cryptos links to crime.

Yes, it’s true that shady people use crypto for illicit purposes. However, what these article writers seem to be unaware of is that regular currencies like the USD are most used forms of money in the criminal underworld.

Is crypto really a hackers choice? Image via Fotolia

Also, how many ‘smart’ criminals really want to have their dodgy transactions stored immutably on a public blockchain for all to see?

Indeed, crypto seems an increasingly bad option for criminals when you consider that crypto-to-fiat on and off ramps require users to send in copies of their passport to execute trades or withdrawals. A bag full of $100 bills seems a much better way to obscure shady transactions, doesn’t it?

We cannot blame the general public for thinking that crypto is full of digital highwaymen up to no good. It’s a narrative they are constantly fed by the mainstream media and these are the types of people we need to embrace crypto for mass adoption to occur.

Now that’s a massive hurdle for crypto to overcome. However, one way of tackling it and changing opinion is a steady stream of articles highlighting the innovation and good things that are happening in the blockchain space.

Yes, there are many technical articles about the amazing innovations happening in the space. But does the average Joe really understand this? We think not.

Maybe the easiest way to plant the idea that ‘crypto is not so bad’ is to show people the progressive ethical companies embracing cryptocurrency as a method of payment and being able to tell people about the phenomenal amounts of crypto that was used to support these ethical businesses.

If the crypto community can pull together and make this happen, then maybe more people will change their tune when it comes to crypto and that could very well kick start the next wave of adoption.

Kindhumans is a new online store and education movement dedicated to making it easy for thoughtful consumers to buy the top eco-innovative, sustainability-focused products.

The store only lists brands that share the values of caring about the environment and making the world a kinder place. In short, Kindhumans aspires to be the home of eco-friendly products.

Some of the items in Kindhumans Store

Co-founder Justin Wilkenfeld explains the vision of Kindhumans:

We want to help streamline the efforts for conscious consumers to more easily identify, find and purchase quality products that are good for people and good for the planet.

Another key component of the initiative is education and inspiring people from around the world to see the value in ethically and responsibly sourced products. This includes raising awareness about product supply chains, the materials used and of course ensuring that consumers end up with great products. If that sounds interesting to you, then why not join the movement on Instagram or Facebook?

In the spirit of kindness, giving and making a difference, Kindhumans has also pledged to donate 1% of all Kindhumans store sales to support social and environmental causes

Why Buy Ethically Sourced Products?We’d like to think that the vast majority of people are good and care about the environment and our fellow humans. However, we do live increasingly busy lives and it’s hard to know the story behind behind the products we buy.

We are sure all of you own a smartphone and have not given the supply chain of that product much thought. The truth is that phone you have in your pocket has a story and a very complex supply chain.

Only Ethically Sourced. Image via YouTube

It will include a material called coltan, of which 60% of the world’s supply comes from the Democratic Republic of the Congo, with much of it mined by child labourers controlled by local strongmen or sourced from conflict zones.

Amnesty International have published reports in the past raising the concerns about Apple’s and Samsungs over-reliance on child labour in the DRC.

Now most of us are probably not okay with buying a product built with child slave labour and would rather support a company that has an ethically responsible supply chain. That’s why Kindhumans spend a lot of time reviewing products before they are listed in the Kindhumans store to ensure that they are:

Made by brands of high integrity and support transparencyAre cruelty-freeSupport communitiesShare the vision of environmental sustainabilityRefuse to use non-ethical materialsHave a mission of making the world a better placeThe Kindhumans vetting process considers everything from where the products come from, the different elements of the supply chain, the methods used to create the product and even how the product is disposed of at the end of its life.

This means that every item in the Kindhumans store has its seal of approval and ethically conscious consumers can shop there knowing that the Kindhumans team have thoroughly assessed eco-friendliness and sourcing of each product listed in the store.

All this makes it easier for consumers who care to ensure they are buying truly eco-friendly and ethical products.

Ethical Company Adopting CryptoPromoting transparency has been a core part of the Kindhumans identity from its inception and this is one area where the worlds of charity and blockchain tech can meet.

KindHumans and Nimiq Collaberation

Kindhumans have been exceptionally progressive and have chosen Nimiq (NIM) from a huge list of possible blockchains to record a hash of their annual transparency report on.

Kindhumans have also chosen to embrace cryptocurrency payments and accept Bitcoin, Ethereum, and NIM in their store via an integration with Nimiq Checkout.

The important thing to know is that Kindhumans could have chosen from a long list of crypto payment solutions to enable the store to accept cryptocurrency.

So, with the huge choice of solutions out there, why choose Nimiq to partner with? One of the key things for Kindhumans is that they like to partner with tech projects that share their ideals and values.

Nimiq Checkout Integrations

Nimiq is one of the few crypto projects that has had a strong focus on charity and supporting causes of high social and ecological impact upon its inception.

Indeed, 2% of the entire token supply was dedicated to the Nimiq Charity, which has the sole function of supporting eco-friendly causes and human development initiatives. This alignment in values is one of the core things powering forward the collaboration between Nimiq and Kindhumans.

However, values and ethos are not everything. Collaborations need to make business sense too and it seems that the Kindhumans team have understood the vast potential of future Nimiq Checkout updates to solve some of the key problems holding back crypto merchant adoption.

Nimiq OASIS Connects Banking & CryptoRight now, the Kindhumans store is powered by a crypto-only version of the Nimiq Checkout. From a merchant point of view, there is nothing really remarkable about this.

Potential Gateway Between Fiat & Crypto. Image via Nimiq

It simply allows crypto users like you and me to send BTC, ETH or NIM to merchants like Kindhumans in an integrated checkout process. Yes, you could argue that the interface is nicer and simpler than most of the other solutions out there, but the remarkable features of Nimiq Checkout are yet to come.

Kindhumans seem to be sold on the enhanced value propositions that will be opened up to merchants in future versions of Nimiq Checkout. The first ongoing research effort is Nimiq OASIS, which stands for the Open Asset Swap Interaction Scheme.

This is a blueprint for a crypto-to-fiat bridge, which makes fiat currencies like the Euro behave as if it were a token on the blockchain. In short, Nimiq OASIS aims to provide a new way of connecting the crypto world with the traditional banking network.

To give you an idea of the gravity of this technological solution, Cardano (ADA) Founder, Charles Hoskinson went on record in March 2019 to say:

What we are seeing is a collection of standards being created [that] will inevitably converge over the next three to five years to create a situation where you can move information and value between all these different systems ー not just Bitcoin to Litecoin to Ethereum to Cardano ー but also your regular bank account

Team Nimiq have already announced that they plan to integrate Nimiq OASIS into Nimiq Checkout and offer integrated merchants the ability to accept payments in Bitcoin, Ethereum and NIM in a completely non-custodial way.

Nimiq Checkout Overview

This will all be settled in Euros directly to their SEPA instant bank accounts. This means that Nimiq Checkout integrators like Kindhumans can benefit from:

Making new sales by accepting cryptocurrency through using the first non-custodial multi-crypto solution. The result is that merchants with no technical knowledge can accept crypto in their store and get Euros paid directly into their SEPA bank accounts quickly - all this without even touching any crypto.Cryptocurrencies are volatile and can swing wildly in price. Nimiq OASIS provides a solution to practically eliminates the volatility risks associated with merchants accepting crypto.In short, Nimiq OASIS aims to solve two of the main problems holding back merchant adoption: The volatility of crypto and making it much simpler for merchants to accept this new form of payment.

With Nimiq OASIS set to be rolled out in 2020, it much easier to see why Kindhumans opted for Nimiq Checkout integration today and pass on the numerous other crypto merchant solutions out there.

What's Backing Up Nimiq OASIS?Anyone who has been in crypto for a while will know that crypto projects tend to over-hype ‘technological innovations’ on the horizon and end up failing to deliver.

However, with Nimiq OASIS, there appears to be some serious substance behind the research effort. Nimiq announced in early 2019 that it had formed a strategic partnership with German owned WEG Bank.

This was given further weight by Nimiq acquiring a 9.9% stake in the bank and joining other stakeholders like Litecoin and TokenPay.

Nimiq & Ten31 Collaberation. Image via Ten31.com

The key thing to know here is that the WEG Bank and Nimiq relationship is focused on Nimiq OASIS. Via WEG Bank, Nimiq OASIS would be able to leverage the SEPA instant banking network and this would extend the reach of OASIS to over 2,000+ banks in 20 different countries.

WEG Bank also recently announced the launch of its crypto-focused banking unit called TEN31. Nimiq is heavily featured on the new site and this seems to indicate the vital role Nimiq will play in the future of TEN31 bank and the delivery of banking solutions to crypto-focussed businesses.

More Businesses Getting Involved?In October 2019, TEN31 Bank announced that Salamantex, a prominent crypto point of sale terminal provider, had also become a 9.9% stake stakeholder in the bank. The result is that TEN31 and WEG Bank are now 40% owned by crypto-focused businesses.

Tweet Announcing Collab With Salamantex. Image via Twitter

No official statement has yet been released. However, it would not be surprising to hear in the near future that Salamantex was planning to integrate Nimiq OASIS technology into its sales terminals and extend the reach of Nimiq OASIS to real world stores too.

So, when will Nimiq OASIS be ready?

The Nimiq team have already stated that the first test transactions should be complete by the end of 2019 and that the technology should be rolled out in 2020. These timeframes are also supported by information on the TEN31 website.

Addressing Scaling Issues With AlbatrossScaling is a massive problem faced by almost every crypto payment system and Nimiq is no different. However, Nimiq’s second major research effort is the Albatross proof-of-stake consensus algorithm which focuses on solving that very problem.

This is being pursued in collaboration with Trinkler Software and a technical paper has already been published. What’s astonishing is that the initial findings are that Albatross will achieve a performance close to the theoretical maximum of a single-chain protocol.

Albatross PoS Consensus Mechanism

The reason why this is important for Nimiq OASIS is that the process will use the Nimiq blockchain. This means that if Nimiq Checkout is adopted at scale, that the Nimiq blockchain will need to be capable of processing an ever increasing number of transactions, potentially causing a bottleneck.

Currently, the Nimiq blockchain is capable of processing 7 transactions per second (the same as Bitcoin).

However, with the testing of Albatross already in progress and its integration into Nimiq 2.0 scheduled for Q2 2020, it is expected that the Albatross improvements would see the Nimiq blockchain being capable of 1,000+ transactions per second. To place that into context, that’s an average five times more than PayPal has to manage.

The key thing to know here is that if Nimiq’s OASIS powered multi-crypto merchant solution really takes off, then Albatross is set to play a key role in ensuring that those crypto-to-fiat conversions remain quick for merchants.

Is Nimiq an Interesting Project?We consider Nimiq to be a hidden gem that’s flying under the radar of the crypto community. If you want to learn more, why not watch our deep dive video into the project?

ConclusionLike it or not, crypto still has a massive reputation problem amoungst a mainstream audience. Yes, that the link between crypto and criminality is likely to fade over time.

However, before crypto can truly be mass adopted, it needs to achieve mainstream acceptance. We believe that the key to changing that viewpoint is being able to show the doubters tangible examples where blockchain tech has been embraced and adopted to support good causes.

That’s where progressive ethical companies like Kindhumans can add tremendous value and help power forward crypto adoption.

It is also why you should consider supporting businesses like Kindhumans and show the mainstream the true spirit of the crypto community. If we can pull together and create that positive news-flow, then it will surely bring us one step closer to the mass adoption that so many in the crypto community wants.

The future and speed of wider adoption could very well be in your hands. Will you sit idly by or will you do your bit to help break the link between crypto and criminality?

That’s on you to decide.

Hytopia, a Minecraft-like sandbox game previously known as NFT Worlds, is set to roll out a closed beta test this month after raising millions of dollars through a node sale for its Ethereum layer-2 network, Hychain.

The Hychain sale raised 2,098 ETH in March, or more than $8 million worth at the time, as users purchased nodes that help secure the Arbitrum-based gaming network and also allow them to earn TOPIA tokens in the process.

In total, 250 million TOPIA—about $17.5 million worth at present—will be doled out to node operators, along with a 25% share of transaction fees. The Hychain nodes went live on Tuesday following last month’s sale.

Nearly 17,000 node keys have been sold to date out of 50,000 in total, and the sale will remain ongoing while Hychain nodes are still available. Hychain said that it paid out 254 ETH (about $1 million worth at the time) worth of incentives to content creators and influencers who helped promote the node sale via their respective creator codes.

"We are thrilled by the community's enthusiastic response to the Hychain node sale and are equally excited for players to explore the Hychain mainnet," said pseudonymous co-founder ArkDev, in a release. "These milestones are a clear indication of the community's desire for a new permissionless [layer-2] blockchain that enables seamless and frictionless publishing of Web3 games."

Hytopia, the flagship game that will kick off the Hychain rollout, will debut its closed beta test this month after amassing 1.25 million pre-registrations for the game.

Decrypt’s GG recently spoke with ArkDev about the game’s transition from the Minecraft-based NFT Worlds project to an original crypto game that mashes up elements of both Minecraft and Roblox, as well as the team’s plans to attract other game developers with Hychain.

Editor’s note: This article was written with the assistance of AI. Edited and fact-checked by Andrew Hayward.

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Binance to purge 14 tokens following ‘vote to delist’ process

The advent of Bitcoin, Ethereum, and other cryptocurrencies has introduced unprecedented ways to distribute new assets, creating complex tax situations. Here’s how to account for forks and airdrops, and a few strategies to minimize taxes.

There is little precedent when it comes to taxes around forks and airdrops.

“In the traditional world, nobody airdrops anything. The dollar doesn’t fork every Tuesday,” said Alon Muroch, CEO of crypto accounting platform Blox, in an interview with Crypto Briefing.

Ruling from other regulatory agencies adds to the complexity. By the letter of the law, many cryptocurrencies are not considered money, or commodities, but instead securities⁠—investments that represent a contract between a buyer and an enterprise.

“You should start with the assumption that you’re starting with a securities offering,” said SEC Chairman Jay Clayton. Failing this assumption, or misinterpreting the rule of tax law, has led to “a majority of companies filing incorrectly,” LukkaTax’s co-CEO, Robert Materazzi, told Crypto Briefing, who claims that most portfolio apps that link to a tax service are doing so incorrectly.

FinCEN has issued its own guidelines around money transmitter rules for cryptocurrency, treating crypto like cash for anti-money laundering purposes. Meanwhile, the Commodities Future Trading Commission treats Bitcoin as a commodity. The U.S. Internal Revenue Service treats it as property. Ethereum falls somewhere in the middle.

Between the regulators, it’s one confusing mess of three and four-letter acronyms giving mixed messages.

What Is a Blockchain Fork? A fork is a software change that creates two separate versions of the same blockchain. Most often, forks are used to introduce upgrades, where the old version of a blockchain is replaced by the new one as soon as the fork is executed.

Occasionally, however, forks are used to settle disagreements over technical features, like the block size debate that lead to Bitcoin Cash. Other times, it’s about governing philosophy, like in Ethereum Classic. Yet other times it’s about taking advantage of a brand name, like Bitcoin Diamond. They’re an integral part of what makes a decentralized blockchain, well, a blockchain.

Forks happen all the time. Since inception, Bitcoin alone has had over 50 forks.

To make matters worse, holders often aren’t aware that a fork has even taken place and many coins go unclaimed. Nevertheless, the IRS views forks as taxable events.

Understanding Token Airdrops Airdrops are another situation where money falls out of thin air. In an airdrop, coins are “carpet bombed” to thousands, or even hundreds of thousands of cryptocurrency addresses as part of marketing campaigns, said Muroch.

One example of a massive airdrop was the one executed by Stellar, a cryptocurrency created by XRP co-founder Jed McCaleb. In September of last year, the Stellar Foundation announced it would airdrop 2 billion XLM, worth over $120 million at the time. An unprecedented sum.

Again, like forks, the owner of a cryptocurrency address that benefits from an airdrop is often unaware of the windfall. Many times they do not even consent to receiving an airdrop.

“You’re not always aware that you receive assets from a fork. You can couple that with airdrops, not just forks,” said Muroch. “All those holders had taxable events because someone in the marketing department decided to use that as a marketing tool.”

Tax Implications of Forks and Airdrops Consent aside, the IRS has voiced its position on forks and airdrops⁠. “The receipt or transfer of virtual currency for free, including from an airdrop or following a hard fork,” needs to be reported for tax purposes, says the IRS.

The power to collect taxes from these events, even crypto, come from broad powers given to the government over a century ago. “The Congress shall have power to lay and collect taxes on incomes, from whatever source derived,” reads the 16th amendment.

The IRS has offered some clarity concerning the confusion. In October 2019, the agency issued a ruling on the issue.

Crypto holders recognize income when they “exercise dominion and control over the cryptocurrency” received through a fork or an airdrop, according to the rules. That is, when a holder gains the ability to transfer or sell the cryptocurrency.

Wendy Walker, a tax withholding and reporting expert at Sovos, a tax reporting software company, reaffirmed this position in a conversation with Crypto Briefing. Forks are treated as “ordinary income,” and the specific amount of tax liability would depend on the valuation scheme the taxpayer is using, she said.

By default, coins are valued using the FIFO, or “first in first out,” method of accounting, where the oldest units of cryptocurrency are used to determine the cost basis, said Jim Calvin, a tax partner at Deloitte.

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Though there are other valuation methods that may produce less tax liability, like LIFO or average cost, and these are viable so long as they are consistently applied. If this all seems confusing, an example might help illustrate the tax implications.

Using the Bitcoin Cash Fork as an Example Bitcoin Cash split from the Bitcoin network on Aug. 1, 2017, to settle a disagreement over the block size⁠⁠, which essentially determines the upper limit to how many transactions can be processed by the Bitcoin network in a roughly a 10 minute interval.

Those who held their private keys prior to the chain-split received a number of BCH equal to the number of BTC they held.

Bitcoin was trading at $2,800 the day of the fork. Immediately after the split, Bitcoin Cash opened on exchanges at $290. A taxpayer who had received BCH would recognize $290 in income, which would also determine the cost-basis of the BCH.

Later the next day, if the taxpayer sold their Bitcoin Cash when it was trading at $380, they would recognize capital gains of $90:

$380 - $290 = $90 Hypothetically, if the price of Bitcoin dropped as a result of the fork, it might be possible to offset some of the income from the fork, but the rules around this are unclear.

Tron’s Ethereum Airdrop as an Example Another example to demonstrate the recognition of income is when Tron airdropped 30 million TRX to Ethereum holders. Announced April 2018, Ethereum addresses with a balance of one or more ETH received between 10 and 100 TRX.

TRX was trading at $0.5 on the day of the airdrop, April 20, 2018. Assuming an address received 50 TRX, the Ethereum holder would recognize income of $25 on that day ($0.5 x 50).

To illustrate the impact of FIFO, if those coins were received over a series of days (from the 20th to the 22nd, for example), then the following accounting would take place:

April 20: 50 TRX at $0.5 each ($25) April 21: 50 TRX at $0.6 each ($30) April 22: 50 TRX at $0.7 each ($35) In all, the account holder received $90 worth of TRX, and would recognize this sum as revenue. Hypothetically, if they sold 60 TRX at $0.7, they would recognize gains from the oldest batches of coins first under FIFO.

The April 20 batch as the “first in” would get sold first, for reporting purposes. The 50 TRX with a cost basis of $0.5 each and sold for $0.7 each would register a gain of $10:

(50 x $0.7) - (50 x $0.5) = $10 Then, it would take 10 TRX from the batch from April 21, which were obtained at $0.6 each:

(10 x $0.7) - (10 * $0.6) =  $1 In total, the taxpayer would recognize capital gains of $11, in addition to the $90 of income from the three batches of airdrops.

In some circumstances, especially for those who trade often, it can be advantageous to use the LIFO method which takes the newest coins first, allowing some of the coins held for more of the year to get preferential long-term capital gains treatment.

Issues Raised by Airdrops Airdrops are an issue for holders of Ethereum and other smart contract blockchains. Even if the owner of the address did not consent to receiving the tokens they would still incur tax liability. Oftentimes, Ethereum holders receive hundreds of unsolicited tokens at no fault of their own.

Looking at Vitalik Buterin’s wallet address as an example, he has received over a hundred unsolicited airdrop coins worth thousands of dollars.

Vitalik Buterin’s main wallet address on Etherscan If the rules are to be followed by the book, each and every one of these airdrops would be recognized as revenue on the date of receipt. Further complicating the issue is that many of these coins are not traded on reputable exchanges, meaning their prices are unreliable.

In the end, this results in an accounting headache and an unwanted tax liability for holders of Ethereum, Tron, EOS, and other smart contract coins.

IRS Ramps Up Crypto Enforcement These tax agencies mean business. Regulators are well aware of cryptocurrency’s role in aiding tax evasion and money laundering. Those who think they can get away without paying taxes are at risk of an audit, along with steep penalties.

Transactions on the Bitcoin blockchain are public, for the most part. It’s only a matter of time before the IRS is able to trace these transactions back to taxpayers, Walker told Crypto Briefing.

More alarming is that more than 50% of CPAs expect that at least half of their clients will be audited for back taxes on their crypto holdings, according to a joint report by Blox and Sovos. Reputable exchanges report activity from crypto traders to the IRS. Coinbase, Kraken, Binance.US, and Gemini all disclose this information to tax agencies, making evasion difficult.

In June of last year, the IRS mass mailed targeted letters to taxpayers suspected of “misreporting” cryptocurrency transactions. British tax authority HM Revenue & Customs has issued similar warnings.

“Cryptoassets like Bitcoin have attracted a lot of interest from people who are new to investing and have probably never filed a tax return in their life. It’s really important for investors to start doing the maths now so they know how much profit they’ve made and the tax due,” said Iqbal Gandham, UK managing director of eToro.

These authorities are serious, and it’s likely they’ll continue to crackdown on those intentionally and unintentionally underpaying on their taxes.

Caveats and Strategies Around Cryptocurrency Income Recognition There are, however, some caveats. Exchanges don’t always immediately recognize forks as tradable assets, and many do not register airdrops at all. This can be used to the taxpayer’s advantage.

Coinbase, for example, did not offer support for BCH for a full four months after the fork. As a result, holders wouldn’t recognize income until they could “exercise control” over the asset. That is, until they could transfer and trade it.

So, for those trading on Coinbase, income wouldn’t be recognized until that date, when Bitcoin Cash was worth over $2,500 per coin (instead of $290 per coin).

This fact can be used as a tool to reduce tax liability. By storing coins on an exchange, a holder can avoid getting bombarded by airdrops, which would normally trigger taxable events.

To take advantage of this, an investor could store coins on an exchange and wait until their income drops⁠ to claim those coins (supposing they waited until they could offset their gains by selling some coins at a loss, or expected less income in a coming tax year⁠).

How to Report Forks and Airdrops on Your Taxes In sum, here’s how to report forks, airdrops, and capital gains on a tax return. The following exercise uses the Bitcoin Cash fork and Tron airdrop from the earlier examples. The entire process requires four different IRS forms.

These include the following: the 8949: Sales and Other Disposition of Capital Assets, the Schedule 1: Additional Income and Adjustments to Income, the 1040, Schedule D: Capital Gains and Losses, and the 1040: Individual Income Tax Return.

Assuming the taxpayer received 1.0 Bitcoin Cash from the fork and 50 Tron from the airdrop in the earlier example, first fill out the Schedule 1 as follows:

($290 x 1 BCH) + (50 TRX x $0.5) = $315 Then, for the capital gains associated with the sale of the Bitcoin Cash, itemize each sale and report it on form 8949. For those who trade regularly attaching a spreadsheet can greatly speed-up the process.

(Sale price: $380) - (Price at fork: $290) = $90 gain The sum of these cryptocurrency sales are then reported on Form 1040, Schedule D. Finally, input these figures on the 1040 form with all other sources of income:

(Capital Gains: $90) + (Fork and Airdrop Income: $315) = $405 total income Between the fork, the capital gain, and the airdrop, this taxpayer would have $405 in additional total income.

At first glance, it may seem that reporting tens and sometimes hundreds of cryptocurrency transactions would be daunting. It is, without the aid of spreadsheets or software.

But, with enough diligence, it’s possible to report these transactions yourself. Beyond that, those who plan in advance can even reduce how much they owe, allowing them to keep more of their hard-fought gains.

For more information on proper filing, refer to official guidance from the IRS and their frequently asked questions guide.

The information presented here does not represent tax advice. Please consult with a professional before making decisions about your taxes.

Disclosure: This article was edited by Mitchell Moos. For more information on how we create and review content, see our Editorial Policy.

The gaming universe is on the precipice of a significant shift. Aurory, a prominent name within the NFT-driven gaming scene, has divulged its plans to extend its realms beyond the Solana blockchain. This expansion focuses on incorporating the Ethereum scaling network, Arbitrum, into its ecosystem. The announcement not only solidifies the increasing momentum of cross-chain integration but underscores the flexibility and inclusiveness that the modern gaming industry is inching towards.

Expansion, Not Migration

While various Solana-rooted NFT and gaming projects have ventured into other blockchain territories, Aurory's trajectory seems unique. The brand consciously markets its move as an "expansion" rather than a full-blown migration. Jonathan Campeau, Aurory’s Executive Producer, clarifies the brand's stance, stating, “We’re not leaving Solana necessarily. For us, we need to branch out a little bit from a pure business point of view.”

Aurory’s SyncSpace technology is at the forefront of this strategic shift. It promises a smooth transition for assets between Solana and Arbitrum, enabling players to access their favorite games without a hitch.

Bridging the User Experience Gap

Solana's inherent incompatibility with the Ethereum Virtual Machine creates hurdles for users accustomed to the Ethereum ecosystem and specific wallets like MetaMask. Addressing this, Aurory offers a simplified sign-in experience where players can use their email addresses and opt to connect a crypto wallet later. By doing this, they are acknowledging and catering to diverse user experiences and preferences.

Campeau captures the essence of the move, “We just want to open more doors for players. Solana has a specific audience, and so does Arbitrum.”

SyncSpace: More Than Just a Bridge

SyncSpace, while functioning as a bridge between blockchains, has a more profound mission. Michael Natoli, Aurory’s Head of Marketing and Business Development, emphasizes that the main goal is to establish novel on-ramps into the game, tapping into diverse crypto communities. The objective is to enrich the player experience and promote a sense of community.

This bidirectional flow of assets ensures players have the flexibility they seek. Whether an NFT is on Solana or Arbitrum, its functional utility within the game remains consistent. “There is no 'upside' of moving them from one chain to the other. We ultimately want to expand our community and bring the Aurory experience to another growing and committed Web3 ecosystem in Arbitrum,” added Natoli.

Enhancing Gameplay with Blockchain Diversity

The cross-chain integration can also breathe new life into the gameplay. Campeau suggests that integrating more blockchains could introduce new experiences with NPCs, potentially tied to specific chains, paving the way for intriguing cross-chain explorations.

A Glimpse into Aurory's Gaming World

With two exciting games under its belt, Aurory Adventures (a PvE RPG) and Aurory Tactics (a PvP battle arena game), Aurory promises players an immersive experience. The inclusion of character NFTs known as Aurorians and Pokemon-esque animal NFTs labeled Nefties adds depth to the gameplay. Their past collaborations, like the one with TSM and the crypto exchange FTX, indicate their intent to innovate continually.

While Arbitrum is Aurory’s current focus, the brand is keeping its doors open. Campeau hinted at the possibility of exploring other ecosystems like Polygon, Avalanche, and BNB in the foreseeable future.

In conclusion, Aurory’s venture into the cross-chain domain signifies a pivotal moment for the gaming industry, setting a precedent for more inclusivity and interconnectedness in the crypto-gaming world.

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Ethereum price managed to hold the $2,200 support as the crypto market downturn intensified this week, on-chain signals highlight rising whale demand. 

On Jan. 22, the crypto market suffered significant bearish headwinds as Bitcoin (BTC) prices wobbled below $40,000 for the first time in 50 days. At press time on Jan. 25, the global crypto market capitalization has shrunk 7%, with $108.5 billion in valuation wiped out within the weekly timeframe. 

Ethereum (ETH) vs. Crypto Market Cap Performance | Source: TradingView Losing 5% in Ethereum (ETH) price has maintained a relatively more resilient performance than the industry average between Jan. 22 and Jan. 24.

Ethereum whale activity remains high despite downtrend  Ethereum price has managed to keep losses below the 5% threshold this week, while Bitcoin and the global crypto market cap shrunk by up to 7%, respectively, before making a mild rebound. On-chain data trends suggest that the rising level of whale trading activity recorded on the Ethereum network this week has been pivotal to ETH’s resilient price performance. 

Santiment’s Whale transaction count metric tracks the daily number of transactions involving a particular cryptocurrency that exceeds $100,000.

On Jan. 23, the Ethereum Whale Transaction Count surged above 1,190. A closer look at the chart below shows this was the highest recorded since the ETH price raced to a 20-month peak of $2,690 on Jan. 11. 

Ethereum (ETH) Price vs. Whale Transaction Count | Source: Santiment Corporate entities accumulate ETH at significantly high volumes despite the broader market retreat. This could be attributed to investors and fund sponsors looking to acquire Ethereum ahead of a looming ETH spot ETF verdict. 

During market downtrends, an increase in whale transactions impacts the price of a crypto asset positively in two major ways. Firstly, it provides market liquidity, enabling bearish panic sellers to execute their trades at favorable prices. It also reinforces confidence among small-scale retail traders. 

These factors have played a vital role as ETH battles to hold above the $2,200 support level amid market-wide sell-offs this week. 

Ethereum investors opt for long-term storage Furthermore, Ethereum has also recorded a steady decline in exchange reserves this week, which could be linked to the rise in whale activity. 

Corporate entities and whales are known to be value investors who tend to hold for longer periods. Unsurprisingly, the rising volumes of whale transactions on the Ethereum network in recent months have coincided with a rapid decline in supply deposited on exchanges. 

At the start of the week on Jan. 22, Ethereum supply on exchanges stood at 10.5 million ETH. But interestingly, that figure has dropped sharply to 10.4 ETH by Jan. 25. 

Effectively, this means that investors have shifted 150,000 ETH worth approximately $330 million from exchanges and trading platforms into long-term storage or staking contracts. 

Ethereum (ETH) Supply on Exchanges vs. Price | Source: Santiment Despite bearish headwinds, Ethereum Supply on Exchanges dropped by 150,000 ETH in the last four days, signaling a dominant preference for long-term holding and passive income staking among current holders. 

Notably, Ethereum exchange supply has been in a downtrend since the Proof of Stake (PoS) transition in May 2023, a move that has coincided with an extended period of price uptrend. 

ETH price prediction: Can Ethereum Price Stay Above $2,000?  As the downward trend in exchange supply persists, fewer ETH coins are readily available to be traded in spot markets. This appears to have decelerated the selling pressure on Ethereum this week relative to the broader altcoins market. Combined with the steady rise in whale transactions, Ethereum price is in a prime position to defend the $2,000 territory. 

IntoTheBlock’s in/out of the money around price data, which groups all existing ETH holders by their entry prices, also affirms this stance. 

It shows that 8.3 million addresses, the largest cluster of ETH holders, had acquired 46.5 million ETH at the maximum price of $2,078. If Ethereum price slides toward $2,100, many of these holders could make frantic covering purchases to defend their positions to avoid slipping into net-loss positions. This could effectively trigger an instant Ethereum price rebound. 

Ethereum (ETH) Price Forecast, Jan 2024 | Source: IntoTheBlock On the upside, Ethereum bulls could overturn the bearish pressure if it reclaims the $2,500 territory. But this looks unlikely within the current market dynamics. As seen above, a significant cluster of 3.7 million addresses had acquired 7.1 million ETH at an average price of $2,400. 

If they engage in mild profit-taking as prices hit their break-even point, Ethereum could slide into another correction phase.

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Trader Makes a Disastrous Swap on Ethereum, $50 Million Vanishes

A trader lost $50M after a swap faced 99% slippage on CoW Protocol. Despite warnings, the user confirmed the trade and received only about $36K. A crypto trader lost almost $50 million in a single transaction after executing a large token swap on the decentralized trading platform CoW Protocol in interaction with the assets linked to the Aave on the Ethereum Network.

What really happened Blockchain data shows that the trader tried to convert about $50.43 million worth of aEthUSDT into aEthAAVE tokens. Because the order was large, the swap was executed with more than 99% slippage. The trader received only 327 aEthAAVE tokens, which are worth around $36,000. 

Skippage was the main reason for this loss. This type of event occurs when a large trade changes the price of an asset while the transaction is being executed. In decentralized finance, trades are executed through liquidity pools. If a trader attempts to execute a very large order against a pool with limited liquidity, the price can shift dramatically.

Stani Kulechov says that the platform displayed several warnings before the trade was completed. He explained that the interface flagged the transaction as having extraordinary slippage risk due to its size. Kulechov said the platform’s trading systems functioned as intended and followed standard industry practices.

In decentralized finance, arbitrage bots constantly monitor blockchain transactions. When a large trade causes a sudden price imbalance, these bots immediately step in to profit from the difference. Aave said it plans to contact the affected user. The protocol intends to return about $600,000 in transaction fees generated from the trade. Even though the platform provided warnings, the user proceeded with the trade, resulting in one of the most dramatic single-transaction losses seen in decentralized finance.

Highlighted Crypto News:

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Rubio: US and Iran to continue technical consultations at the end of this month

Multiple foreign media outlets reported on the 24th that US Secretary of State Rubio said technical teams from the United States and Iran will hold further talks in Switzerland by the end of June. (Xinhua News Agency)

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Over the past 24 hours, total crypto market liquidations hit $606 million, with more than 130,000 traders liquidated.

According to Coinglass data, the global cryptocurrency market recorded $606 million in liquidations over the past 24 hours, including $542 million in long-position liquidations and $68.22 million in short-position liquidations. A total of 135,785 traders worldwide were liquidated in the same period, with the largest single liquidation order occurring on Binance’s BTCUSDT trading pair, valued at $12.0111 million.

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Bitcoin falls below $60,000

According to HTX market data, Bitcoin has fallen below $60,000, with a 4.3% drop in the past 24 hours.

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US Treasury Secretary: AI boom may boost productivity and help curb inflation.

US Treasury Secretary Bessent told CNBC in an interview that he hopes the Federal Reserve will remain "open-minded" about the inflation pattern after the reversal of Iran-related energy price hikes. Bessent noted that the U.S. could enter an economic environment marked by high GDP growth without a corresponding rise in traditional inflation. He cited that in the 1990s, Alan Greenspan foresaw that office modernization and the internet could drive non-inflationary growth, and allowed the economy to keep expanding. Bessent believes the U.S. has a strong chance of seeing a similar scenario again. When asked whether the Fed still needs to worry about potential inflation and whether interest rate cuts are possible this year or next, Bessent declined to comment. However, he argued that it is necessary to stay open-minded about the price or inflation impacts from the Iran conflict, and monitor inflation performance after those effects subside. Bessent also said an open mind is needed, as the AI boom could boost productivity and deliver disinflationary effects, helping inflation return to the Fed’s target level. He added that he believes Kevin Warsh will choose the optimal path that meets both the Fed’s inflation and growth mandates. Bessent also noted that Warsh previously took a hawkish stance on inflation.

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US stocks' intraday storage sector sees broad declines, with Western Digital and Seagate Technology both falling over 4%.

According to Bitget data, during U.S. stock trading hours, the storage sector saw broad declines: Western Digital (WDC) fell 4.47%, Seagate Technology (STX) dropped 4.17%, SanDisk (SNDK) declined 2.31%, and Micron Technology (MU) edged down 0.96%. Most optical communication concept stocks rose, with Corning (GLW) leading the gains at 9.75%, followed by Ciena (CIEN) up 3.24%, Coherent (COHR) rising 2.93%, Lumentum (LITE) gaining 2.61%, and Nokia (NOK) advancing 1.82%. Additionally, Marvell Technology (MRVL) fell 2.59% and Applied Optoelectronics (AAOI) declined 1.90%.

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During intraday trading in U.S. stocks, crypto-related concept stocks fell broadly, with MSTR dropping more than 7%.

According to Bitget market data, the three major U.S. stock indexes rose broadly: the Dow Jones Industrial Average gained 0.94%, the S&P 500 increased 0.60%, and the Nasdaq rose 0.63%. Crypto-related stocks fell across the board, with declines as follows: Strategy (MSTR) down 7.33%; Circle (CRCL) down 4.35%; Bitmine (BMNR) down 3.97%; Coinbase (COIN) down 3.73%; Robinhood (HOOD) down 3.70%; Gemini (GEMI) down 3.27%; Bullish (BLSH) down 3.25%; Sharplink (SBET) down 3.19%.

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On-chain data shows the Ethereum Market Value to Realized Value (MVRV) Ratio has just seen a signal that could prove to be bearish for ETH’s price.

Ethereum MVRV Momentum Has Witnessed A Bearish Crossover As pointed out by analyst Ali Martinez in a new post on X, the Ethereum MVRV Ratio has declined under its 160-day moving average (MA) recently. The “MVRV Ratio” refers to an on-chain indicator that keeps track of the ratio between the Ethereum market cap and the realized cap.

The realized cap here is a capitalization model that calculates ETH’s total valuation by assuming that the ‘real’ value of each token in circulation is equal to the spot price at which it was last transferred on the blockchain.

Since the last transaction of any coin is likely to correspond to the last point at which it changed hands, the Realized Cap essentially measures the sum of the cost basis of the circulating supply. This model could also be looked at as a representation of the amount of capital the investors as whole have put into Ethereum. In contrast, the market cap is the value that the holders are carrying right now.

When the value of the MVRV Ratio is greater than 1, it means the market cap is greater than the realized cap. Such a trend implies the investors as a whole are sitting on unrealized gains. On the other hand, the metric being under the mark suggests the holders are carrying a lower value than they initially put in, so the average investor could be considered underwater.

Now, here is the chart shared by the analyst that shows the trend in the Ethereum MVRV Ratio, as well as its 160-day MA, over the past year:

The two metrics appear to have crossed each other in recent days | Source: @ali_charts on X As is visible in the above graph, the Ethereum MVRV Ratio has registered a decline recently as ETH’s price has followed a bearish trajectory. The indicator is still above the 1 mark after this drawdown, suggesting the overall market remains in the green.

The metric’s fall, however, has meant that it has slipped under its 160-day MA. The combination of the indicator’s daily value and its 160-day is known as the MVRV Momentum. In the chart, Martinez has highlighted what happened the last time the MVRV Momentum showed a similar pattern as recently.

It would appear that the MVRV Ratio crossing under its 160-day MA led to a 40% price correction for Ethereum last year. It now remains to be seen whether the negative momentum in the indicator would also prove to be bearish for the cryptocurrency this time as well or not.

ETH Price At the time of writing, Ethereum is floating around $3,200, up more than 2% over the last seven days.

Looks like the price of the coin has seen a decline recently | Source: ETHUSDT on TradingView Featured image from Dall-E, Glassnode.com, chart from TradingView.com

Disclaimer: The information found on NewsBTC is for educational purposes only. It does not represent the opinions of NewsBTC on whether to buy, sell or hold any investments and naturally investing carries risks. You are advised to conduct your own research before making any investment decisions. Use information provided on this website entirely at your own risk.

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