SBF's Dad 500% Salary Increase

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Good Morning,

Happy hump day! The crypto markets are extremely flat as the conference season continues with Mainnet 2023 happening in NYC. Expect more announcements to come from projects and companies during these events.

In other news, SBF parents are finally under the scrutiny that they deserve, especially after filings are out describing how they lobbied their own kids for a 500% bump in salary. What a joke.

In Today's Email:

• What Matters: FTX sues SBF’s parents 👨‍⚖️

• Case Study: Base momentum 📈

• Governance & Features: Arbitrum $60M incentive programs 💰

NOTEWORTHY READS

• Zee Prime Capital’s read on the future decentralized social.

• Decentralised’s read on retention in web3.

• Blocksmith’s read on improving airdrops.

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WHAT MATTERS

FTX Sues SBF’s Parents

State of play: The FTX estate has filed a lawsuit against the parents of Sam Bankman-Fried with the aim of recovering ~$26M that was allegedly misappropriated.

• FTX owed customers approximately $8.7B, while the liquidation process has thus far recovered approximately $7B.

• Bankman and Fried are distinguished legal scholars who have previously served as educators at Stanford Law School.

• Bankman possesses expertise in tax law, while Fried's specialization lies in the field of ethics.

• Despite FTX's financial woes, SBF’s parents discussed (and gave) a $10M cash gift and a $16.4M Bahamas property transfer and endorsed tens of millions in political and charitable donations.

• The filing outlines spending by Bankman, who joined FTX Philanthropy in 2021. He generously provided a former law student with a trip to France, complete with Formula 1 Grand Prix tickets.

Why it matters: SBF’s parents clearly had a much more significant involvement with the exchange. They deserve this level of scrutiny by the current FTX estate.

For builders and investors: Related parties transaction, whether that’s with a sister company or with family members, is a fine line to walk on.

• It’s okay to do so long as there are appropriate controls and a clear value add — but greed often gets in the way and things just become ludicrous.

CASE STUDY

Base’s Plan to Maintain the Momentum

State of play: In just a month, Coinbase's Base blockchain has skyrocketed, attracting nearly $400M in crypto assets and ranking eighth in DeFi ecosystem deposits.

However, the pending end of the rewards program that fueled this growth poses a crucial test for Base's momentum.

• Similar programs on rival blockchains (i.e., Arbitrum, Optimism) experienced a surge and subsequent decline in activity after concluding.

• Jesse Pollak, who spearheaded Base's development, is optimistic that the "Onchain Summer" program might yield different results.

• The “Onchain Summer” campaign encouraged users to move crypto to Base and mint commemorative NFTs or use certain applications. Coinbase reported that more than 268K crypto wallets produced about 700K NFTs as a result.

Patrick Scott, DeFi projects adviser, said the reason for Base’s resilience may be simpler: Friend Tech.

• Last Wednesday, almost 550K Base transactions originated from Friend Tech, according to OP Labs data analyst Michael Silberling.

• Last week, Friend Tech represented 27% of the blockchain transactions, and in the last 24 hours, it was nearly one-third.

• Patrick Scott noted that Base's success is closely linked to Friend Tech, which has not displayed any indications of slowing down.

Our take: A great dApp remains the most important aspect of maintaining a blockchain’s level of activity.

• Arbitrum had GMX and Base currently has Friend Tech.

• Encouraging developers to make more killer dApps is the key thing to solve.

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 👇

INSIGHTS

Eclipse: Ethereum’s Fastest L2

Yesterday, Eclipse launched the Eclipse Mainnet. It claims that Eclipse is Ethereum’s fastest L2.

Eclipse Mainnet combines key elements of the modular stack:

• Ethereum & ETH: Utilizes Ethereum settlement with ETH as Eclipse's gas token, employing RISC Zero ZK fault proofs.

• Solana VM (SVM): Achieves high-performance parallel execution.

• Celestia: Enhances scalability through data availability sampling.

Why it matters: This is the first iteration that combines Solana VM, a modular blockchain design, and Ethereum settlement.

• While all this is still extremely technical and the actual results are yet to be seen, it’s a step in the right direction.

• The lines between blockchains are blurring and it’s important to experiment with different infrastructure designs without being a maximalist.

FEATURES & GOVERNANCE UPDATE

Arbitrum Short-Term $60M Incentive Program

The Short-Term Incentive Program proposal outlines a one-time community program to distribute 75M ARB tokens or roughly $63M, funded by the DAO, to support active Arbitrum protocols.

• It aims to meet short-term community needs with transparent consensus and distribution methods, spanning two voting rounds.

• The program extends incentives to eligible projects until January 31, 2024.

• 65.7% of Snapshot voters voted to distribute “up to 50M ARB through January 31, 2024”.

• The voting round will begin on September 30, 2023.

• The second voting round will begin on October 28, 2023.

Why it matters: Arbitrum needs to maintain its lead as the dominant Ethereum L2. With Base gaining popularity, Arbitrum has started to lose significant market share.

Other notable feature updates:

• opBNB Mainnet goes live.

• Yearn yETH goes live.

• Synapse Interchain Network testnet goes live.

• Enjin blockchain goes live.

• Manta Mainnet goes live.

• Votium V2 goes live.

• Mountain protocol launches USDM.

• Know Nothing Labs launches noseedphrases.xyz.

• MetaMask launches Snaps.

• IndexCoop launches $ic21.

• Paypal supports both on- and off-ramps.

QUICK BITES & MEME

• Citi expands digital asset services.

• Nomura’s crypto arm launches a long-only Bitcoin fund.

• SEC fails to win inspection of Binance US software.

• SEC warns more charges coming to exchanges and DeFi protocols.

• NYDFS to require higher standards for coin listings and delistings.

• FTX sues SBF’s parents to claw back misappropriated funds.

• Blockchain Capital launches two new funds for a total of $580M.

• StanChart-Backed Zodia Custody to offer yield on crypto holdings.

• Stanford plans to return millions of dollars received from FTX.

• UK moves to finalize bill to seize illicit crypto.

• Hong Kong looks to release stablecoin regulations by mid-2024.

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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.