SBF Jailed (Again)

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Good Morning,

Bitcoin ETF decision was unsurprisingly delayed. Coinbase started “on-chain summer” with the launch of its Base L2 network. Coca-Cola is already launching an NFT collection on it, while many others are criticizing the Base L2 chain for being extremely centralized, with Coinbase being the only node operator.

Let’s have a good start to the week!

In Today's Email:

• What Matters: SBF jailed ⛓️👮

• Products: Friend.tech mania 📱

• Charts: DAI DSR hits $1.25B, DeFi TVL goes down 📈

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WHAT MATTERS

SBF Jailed

State of play: FTX's founder SBF was jailed after a NY federal judge revoked his bail. The judge claimed SBF tried to tamper with witnesses that are set to testify against him in an upcoming trial.

• SBF was on house arrest at his parent's place in Palo Alto, CA.

• Judge Kaplan of Manhattan's Federal District Court ordered an end to the bail arrangement.

• SBF was transferred to Brooklyn's Metropolitan Detention Center.

• SBF's lawyer, Mark Cohen, mentioned that he planned to appeal.

• SBF’s trial is scheduled to begin on October 2nd.

Prosecutors alleged SBF had meddled twice with witnesses by sharing documents with reporters.

• Caroline Ellison was an executive in Alameda and SBF’s former partner. She pleaded guilty to fraud charges and is currently cooperating with SBF’s prosecutors.

• Prosecutors claimed SBF shared documents with the NYT to sway Ellison before the trial.

• The Prosecutors also noted his interactions with media, including author Michael Lewis, who's writing a book on FTX.

What’s next: Caroline Ellison's testimony is crucial for securing a conviction against SBF, given Alameda's central role in this case.

• Caroline Ellison and two former FTX executives, Nishad Singh, and Gary Wang, are cooperating with prosecutors in the SBF investigation. Rumors said that more former executives are coming to the table.

Our take: This alleged stunt by SBF could actually backfire, as the private writings might demonstrate that Caroline Ellison's involvement was manipulated by SBF.

• Caroline Ellison received far less generous compensation compared to other FTX and Alameda executives where she received $6M while Singh received $587M and Wang received $246M. 

For builders and investors: This is a lesson for both investors and builders to avoid a narcissistic and manipulative founder who runs a company as a one-man show.

A lot of VCs (e.g., Paradigm, SoftBank) are showing their regret by not doing enough due diligence towards SBF and FTX prior to the investment.

Credits to Matt for owning up to it.

Take a peek at our referral reward at the bottom of this issue. Share this newsletter and receive our list of 100 smart crypto investors' wallet addresses 👇

PRODUCTS OF THE WEEK

Friend.Tech Mania

A decentralized platform that named itself “the marketplace for your friends.” Friend.Tech is an app that allows its users to tokenize their digital presence.

• Friend.Tech is in beta.

• Friend.Tech is built on Base, Coinbase’s new L2 network by @0xRacerAlt.

• According to a Dune dashboard, Friend.Tech all-time trading volume has reached 6.7K ETH (~$12.4M) from 272K transactions.

The application experienced network outages, with users complaining about lags and crashing on its first day of launch.

There are also more red flags.

• Friend.Tech was initially “Stealcam”, a failing platform that allows users to mint images as NFTs founded by @0xRacerAlt.

• It also does not have a privacy policy yet.

Other cool products:

• TimeSeal, a platform that offers blockchain-based timestamps.

• Omnia Protocol, a high-performance RPC.

• Kunji Finance, a platform that connects asset managers with liquidity providers.

• Brewlabs, a complete suite of blockchain utilities and products.

• Obscuro, a Layer 2 rollup that hyper-scales and encrypts Ethereum.

CHARTS OF THE WEEK

DAI DSR Module Hit $1.25B

State of play: DAI stablecoin in the DSR module that’s achieving 8% APY has reached $1.25 billion.

• The module was started to bootstrap DAI liquidity. MakerDAO is currently proposing to reduce the yield to 5% APY given the massive interest from DAI holders.

Our take: Most participants of the DSR module are whales. To make this initiative sustainable, there should be a cap for a more equal distribution amongst interested market participants.

• Justin Sun has deposited more than $330M and minted $135M+ DAI to earn the 8% yield.

TVL Decline Across Major Chains

State of Play: DeFi protocol’s TVL has been on the decline since early 2023, from the $35-40 billion range to around the $30 billion range.

In the past month, Ethereum and Avalanche saw the most significant decline, whereas Solana and Optimism are bouncing back.

Our take: Part of the decline is caused by the Curve reentrancy exploit, which caused a cascading fear across the overall DeFi stablecoin ecosystems.

QUICK BITES

• SBF jailed ahead of trial for witness tampering.

• Visa tests ways to make ETH gas fee payments easier.

• Paradigm, a16z file brief supporting Coinbase in battle with SEC.

• Coca-Cola launches NFT collection on Coinbase L2 network.

• Curve recovered 70% of hacked funds.

• Genesis says the growth of crypto volume will be in derivatives.

• Uniswap fires employee after memecoin liquidity pull.

• Zunami Protocol suffers a $2.1M loss in an exploit.

• CFTC charges Fundsz, four individuals in crypto fraud.

• Justin Sun-linked wallet parks funds in MakerDAO after DAI yield hike.

MEME & NOTEWORTHY READS

• Visa’s read on paying on-chain gas fees with a Visa card.

• Overpriced JPEGs’ read on where data and art meet.

• Christine Kim’s read on Ethereum consensus call #115 writeup.

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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 advic