OKX Token $1.5 Billion Flash Crash

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Happy humpday 🐪,

The crypto markets are rebounding with BTC and ETH stabilizing at the $40,000 and $2,250 level. Liquid restaking tokens (LRTs) hype continues with Pendle soaring, new protocols launching, and new protocols allocating airdrop to LRT protocols (altlayer). The (3,3) meme is indeed real.

In Today's Email:

• What Matters: OKX $1.5B flash crash 📉

• Case Study: Dissecting Tether’s growth 📈

• Governance & Features: ClayStack Ethereum restaking 🔐

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WHAT MATTERS

OKX Loses $1.5B in Flash Crash

State of play: OKX's token ($OKB) experienced a dramatic plunge, dropping around 51% from approximately $52 to around $25 within a mere 20-minute span.

• The drop erased $1.5B in market value, reducing OKB's worth to $2.5B.

• Affected users are eligible to receive full reimbursements within the next 72 hours, as per OKX's tweet.

• OKX attributed the decline to broader market trends causing a wave of liquidations, with COO Jason Lau stating that the issue is under investigation.

• Jason Lau added that all other markets are operating normally and there were no issues with their risk or liquidation systems.

• OKB has partially recovered, now trading at around $46, a level OKX describes as "back to normal."

Why it matters: In the volatile, leverage-heavy crypto market, liquidations are a common thing. But, OKX took an unusual step by committing to fully reimburse users and unveil a repayment plan within the next 72 hours.

For builders and investors: Having proper market operations and liquidity diversification for your tokens are key.

• If a token’s liquidity relies too much on select few venues, it’s more prone to flash crash and price manipulation.

CASE STUDY

Dissecting Tether’s Growth

Credit to Coin Metrics & Tanay Ved for the original piece.

State of play: Tether dominates over 75% of the $120B+ stablecoin market and has become pivotal in connecting traditional and digital finance, especially in emerging markets. However, its reserve transparency is a topic of debate.

Coin Metrics releases an analysis of Tether's significant growth, examining its adoption, usage patterns, and reserve composition.

Here are the key takeaways from the analysis:

• USDT Supply and Adoption: Tether's supply hit $95B, notably on Ethereum and Tron, reflecting its growing utility, especially in DeFi, establishing USDT as a central figure in trustless transactions amidst financial shifts.

• Usage Patterns and Reserves: USDT's widespread use for diverse financial activities is evident, especially in emerging markets. The composition and management of Tether's reserves, including a shift to Treasury bills and BTC, are critical to its credibility and market confidence.

• What Lies Ahead: Despite challenges around transparency, Tether's utility, especially in unstable economies, is undeniable. As the largest stablecoin and defacto incumbents, it will need to adapt to rising competitors.

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INSIGHTS

Avalanche’s Meme Coin Purchases Plan

Avalance has already started using its $100M Culture Catalyst program to deploy capital into community coins (i.e., meme coins).

Avalanche stated in an announcement that it plans to continue purchasing meme coins that meet its newly added eligibility criteria:

• Meme coins must be independent from creators and native to Avalanche to qualify.

• Avalanche Foundation won't look upon tokens hoarded by whales, those that have not been scrutinized by security companies, or those that launched without whitelists.

• The meme coins should have at least 2,000 holders, of whom the top 100 own less than 60% of supply.

• More than $200,000 in liquidity of the meme coin supplied by at least 50 providers.

• Minimum of $1M market cap.

• Minimum of $100,000 in daily average trading volume over two weeks.

• The meme coin needs to have existed for at least a month.

FEATURES & GOVERNANCE UPDATE

ClayStack Enters Ethereum Restaking

ClayStack is entering Ethereum restaking through EigenLayer and is offering users reward points ahead of its token launch at a 1:1 ratio.

• ClayStack is converting its Ethereum liquid staking token, csETH, into a liquid restaking token.

• ClayStack is utilizing EigenLayer's innovative Ethereum restaking protocol for its new service.

• The platform now supports direct restaking of native ETH on EigenLayer and plans to include tokens like stETH and rETH soon.

• ClayStack initially offered liquid staking for MATIC in 2022 and Ethereum in September. It's now shifting to Ethereum restaking.

• EigenLayer Restaked points will not be redeemable for CLAY tokens, as stated by ClayStack CEO, Mohak Agarwal.

Why it matters: Ethereum restaking has been growing since EigenLayer's launch in June. Renzo recently joined this space through EigenLayer, securing $3.2M in seed funding, and has reached over $116M TVL in its beta phase.

Other notable feature updates:

• Myso goes live on Evmos.

• MultiBit goes live on Solana.

• marginfi launches Flashloans.

• Drift launches points systems.

• Asymetrix launches Mini pools.

• Lido's wstETH goes live on zkSync Era.

• Frax Finance launches Frax Bonds (FXBs).

• Thales Protocol launches THALES tokenomics.

• Spark Finance launches the Lido Rewards Campaign.

• Splits launches Swapper on Optimism, Base, and Polygon.

• MetaMask launches Validator Staking (staking-as-a-service).

• Delphi Labs and Astroport Finance launch Asteroid Protocol.

QUICK BITES

• JPM downgrades Coinbase stock.

• Binance and SEC face off in court.

• FTX sold ~$1B of GBTC, explaining much of the outflow.

• Taiwan prosecutors seek detention of ACE exchange head.

• OKX loses $1.5B in a flash crash, pledges to compensate users.

• Figure seeks SEC approval to issue interest-bearing stablecoin.

• Coinbase urges the US Treasury to reconsider bulk data reporting.

• EigenLayer plans to adopt the ‘shared security’ model for dApps.

• Mt. Gox moves closer to Bitcoin repayments for 2014 hack victims.

• Cosmos Hub rejects the proposal to reduce ATOM inflation to zero.

• BIS confirms the tokenization project as part of six projects for 2024.

• FINRA says 70% of crypto communications it reviewed violated rules.

• Snowden supports the legal defense fund for Tornado Cash founder Roman Storm.

NOTEWORTHY READS & MEME

• Yu Hu’s read on CT narrative rotation.

• Matthew Ball’s read on the tremendous yet troubled state of gaming in 2024.

• Francesco, Mike, and Mikhail’s read on validator consolidation in EIP-7251.

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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.