His Name Was Changpeng Zhao

Blur S3 Airdrop | JUP Airdrop Mechanism

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Marco Manoppo & Karon Pangestu
November 22, 2023

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Good Morning. The big one finally dropped. Binance pleads guilty and CZ steps down. This entire issue won’t fit my thinking about the situation, so you can read it here. To me, CZ is the undisputed GOAT that advances crypto as an industry.

Rest easy now, CZ.

In Today's Email:

  • What Matters: DOJ Binance case ⚖️

  • Case Study: Blur S3 airdrop 🪂

  • Governance & Features: Blast L2 with yield 📈

Narratives: L2, Solana, and the imminent spot Bitcoin ETF.

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WHAT MATTERS

CZ Resigns & Binance Pleads Guilty

State of play: Changpeng Zhao steps down as Binance CEO as part of a plea deal with the US DOJ after CZ and Binance pleaded guilty to violating the Bank Secrecy Act and the International Emergency Economic Powers Act.

  • Binance said Tuesday that Richard Teng, Binance’s Global Head of Regional Markets, will replace Changpeng 'CZ' Zhao as CEO.

  • Binance Pleads Guilty to Money Laundering, Unlicensed Business, and Sanctions Violations.

  • Binance will pay a total of $4.3B in penalties and forfeiture.

  • $1.8B of fines to be paid within 15 months post-sentencing and $2.5B money judgment to be paid within specific timeframes post-sentencing.

  • As part of the plea deal, CZ agreed to pay a $50M fine.

  • CZ paid a $175M personal recognizance bond and has to appear in court in Seattle on February 23, 2024, for sentence hearings.

  • CZ will maintain his majority ownership of Binance.

According to Joe Carlasare, a commercial litigator and Bitcoin supporter:

  • CZ and Bibnance are prohibited from making any public statements contradicting his admission of guilt or the facts established in the case.

  • Binance has barred CZ from future involvement in its operations for three years from the date a monitor is appointed.

  • For three years, Binance must enhance its compliance program and appoint an independent monitor.

Why it matters: Binance is the largest crypto exchange in the world. The firm’s edge was being offshore and a relatively weaker KYC program from 2017-2021.

  • With the new monitoring regime in place, Binance might lose customers (like BitMEX), but we believe that the impact on Binance won’t be as significant, given that the KYC standard is much higher even amongst offshore exchanges these days.

For builders and investors: Binance can pay the fine just fine.

CASE STUDY

Blur Season 2 Airdrop Top Recipients

Credit to @CirrusNFT and @deranzxc for the original tweets.

State of play: On Monday, Blur’s season 2 airdrop ended and there are 300M of $BLUR available for traders to claim.

  • The top 3 farmers/traders on Blur were borrowing against NFTs for a total of 2326E or ~$4.6M in debt.

  • The top farmers mostly borrowed at 0% APR — but as farmers pulled their offers, the average APR spiked up to nearly 100%, forcing borrowers to pay ~7 ETH/day in interest to keep their position open.

According to @deranzxc, the top 10 recipients of $BLUR S2 airdrop account for 33.1% of all the $BLUR claimed.

  • @HanweChang is the top claimer and has claimed 8.8% (22.85M) of the total $BLUR claimed.

  • jaypegpowell.eth has 7.7% (19.93M) of the current claim.

  • The other 3 in the top recipients (0x77e, 0x8bc, and @machibigbrother) have their $BLUR staked.

What’s next: Yesterday Blur announced season 3 of the rewards and loyalty program powered by Blast, a new L2 with native yield, that will end in May 2024.

  • 50% of the S3 airdrop will be distributed to Blur community members.

Take a peek at our referral reward at the bottom of this issue. Share this newsletter and receive our list of 500 crypto VC individuals 👇

INSIGHTS

JUP Airdrop Mechanism Changes

Jupiter is wrapping up the community airdrop consultation and made changes from the first proposal according to @weremeow's announcement on X.

  • The allocation checker site is coming soon (end of the week or early next week).

  • Consistency Multiplier is added, and long-term activity will be rewarded.

  • Multipliers for the 2023 volume only apply to older users who stayed on.

Why it matters: @weremeow clarified that there will not be a sharp volume-based cutoff, but rather based on the top 2,000/10,000/50,000/150,000 users based on the volume-adjusted score.

FEATURES & GOVERNANCE UPDATE

Blast Goes Live

Ethereum L2 Blast goes live in early access mode following a $20M investment from Paradigm and Standard Crypto, among others.

  • Blast claims to be the only Ethereum L2 with native yield for ETH and stablecoins.

  • Blast was built by Tieshun Roquerre, the founder of the NFT marketplace Blur, also known as “Pacman.”

  • Blast is planning token airdrops for developers in January 2024 with its testnet launch and for community members in May, allocating half of the tokens to each group based on their points.

  • Blast offers users automatic compounding with a 4% yield on ether and 5% on stablecoins, plus rewards called "Blast Points."

  • Blast stakes ETH natively, passing the yield to its L2 users and dApps, allowing their balances to grow automatically over time.

  • Blast provides yields on stablecoins like USDC, USDT, and DAI, deposited in protocols like MakerDAO, with returns given as USDB, Blast's auto-rebasing stablecoin.

  • Early access members get more points based on how much they bridge and who they invite.

According to 21.co’s Dune Dashboard, Blast has reached $61.84 in TVL, surpassing Arbitrum Nova ($25.8M), Manta ($27M), and Scroll ($29M).

Why it matters: Blast has sucked liquidity from other corners of the markets suing its clever incentive schemes (dare I say MLM?), and receive numerous criticisms in return:

  • Members earn rewards for inviting others and a smaller portion from the invitees of their referrals, @Tytaninc compares this to a pyramid scheme.

  • Gabriel Shapiro suggests the arrangement could be legally dubious, particularly as it's managed by a 'multisig' system, likening it to a crypto hedge fund with potential regulatory and legal risks.

  • @wassielawyer describes Blast's offer as a 3-month loan with LIDO/MKR yields and potential future tokens, extendable at will by the borrower (i.e., Blast), plus a promotion fee in future tokens.

Other notable feature updates:

QUICK BITES

  • Blast L2 attracts $80M in TVL.

  • Tether freezes $225M in USDT.

  • HTX bridge exploited for $86M.

  • Bittrex Global winds down operations.

  • Mt. Gox begins repayment plan to creditors.

  • Binance pleads guilty, pays fines, and loses CZ.

  • Ex-NYSE President buys crypto news site CoinDesk.

  • Grayscale met with the SEC to discuss spot Bitcoin ETF.

  • Wintermute Asia executes first options block trade on CME.

  • Tether embroiled in $1B deposits battle in High Court battle.

  • Kraken accused by the SEC of operating an unregistered platform.

NOTEWORTHY READS & MEME

  • Coin Center’s read on the Bank Secrecy Act.

  • The New World’s read on ZKML and autonomous worlds.

  • Archetype’s read on MEV & the evolution of crypto exchanges: part I.

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.