Minting

MakerDAO votes to keep USDC as primary collateral, rejects ‘diversification’ plan

The passed measure ends the 1% USDC-to-DAI minting fee that was previously implemented.

MakerDAO, the decentralized autonomous organization that governs the Dai (DAI) stablecoin, has voted overwhelmingly to keep USD Coin (USDC) as the primary collateral for Dai. An alternative proposal to “diversify” collateral into Gemini Dollar (GUSD) and Paxos Dollar (USDP) was rejected in a 20% to 79% vote, according to the proposal’s official page.

*Vote totals for the proposal to normalize PSM Parameters. Source: MakerDAO official website*

In the proposal posted on March 17, the MakerDAO Risk Core Unit suggested that the risk of a cascading bank run in the U.S. has been reduced, thanks to responses from the federal government. As a result, the risk of using USDC as collateral “has declined significantly since last week and further solvency concerns or depegs are not expected at this time.”

However, it also argued that some risks remain. USDC has “potentially more risky exposure to uninsured bank deposits” and “a weaker legal structure” when compared to its competitors, GUSD and USDP, the proposal stated.

The Risk Core Unit offered two options to “normalize” the rules for minting Dai now that the crisis has passed. The first option was to spread minting capacity limits across USDC, GUSD and USDP. If this option were chosen, the fee for converting USDC to DAI would be reduced from 1% to 0.05% immediately, but it would not be reduced all the way to zero until some later date.

The Risk Core Unit stated that this first option would “more evenly distribute Maker PSM stablecoin reserves across several assets,” reducing the risks from a USDC depeg.

The second option was to increase the USDC-to-DAI minting capacity from its current 250 million to 450 million and reduce the fee to 0%. In this case, the rules for minting Dai would be brought “more closely to their previous state,” which would make Dai “continue to have outsize exposure to USDC,” it said.

MKR holders overwhelmingly approved the second option, with 79.02% voting for it versus 20.69% for the first option. Less than 1% (0.29%) voted to reject both options, and 0.15 MKR in votes (around 0%) were used to abstain.

After a wave of bank failures, the USDC stablecoin lost its $1 peg on March 11, briefly falling below $0.90 per coin. In response, MakerDAO implemented extraordinary measures intended to prevent arbitrageurs from dumping their coins onto the protocol and causing Dai to become undercollateralized. The fee to mint Dai using USDC as collateral was raised from 0% to 1%, and the daily minting limit for this process was reduced from 950 million DAI to 250 million DAI.

But on March 13, USDC regained its $1 peg, rising as high as $0.9987. However, the extraordinary measures were still in place as of March 23, prior to the passage of this proposal.

Magazine: Unstablecoins: Depegging, bank runs and other risks loom

Circle clears ‘substantially all’ minting and redemption backlog for USDC

The stablecoin issuer says that from March 13 and March 15, it redeemed $3.8 billion USDC and minted $0.8 billion USDC.

Stablecoin issuer Circle says it has cleared “substantially all” of the redemption and minting requests for its stablecoin, USD Coin (USDC).

In a March 15 operational update, Circle said between the morning of March 13 to the close of banking business in the United States on March 15, it had redeemed $3.8 billion USDC and minted $0.8 billion USDC.

Update: As of close of U.S. banking operations Wednesday, March 15, we have cleared substantially all of the backlog of minting and redemption requests for USDC. Get the details: https://t.co/5WEAgPps0E

— Circle (@circle) March 16, 2023

Last week, Circle was hit with a bank run after disclosing it had $3.3 billion worth of stablecoin reserves in the now-collapsed Silicon Valley Bank which resulted in USDC losing its dollar peg.

“The events of the past week have impacted the liquidity operations for USDC,” Circle wrote in its update. It added it worked to “re-initiate services with alternative banking partners, particularly payment and USDC redemption services.”

Circle said it went live with a new banking partner for U.S. wires on March 14 and used the same partner “for international wires to and from 19 countries” on March 15. It expects “to bring more capabilities” online by March 16.

Cross River Bank, which also services Circle’s peer firm Coinbase, was disclosed as the firm’s new commercial banking partner for producing and redeeming USDC on March 13. Circle also expanded ties with its existing custodian, the Bank of New York Mellon (BNY Mellon).

The announcement comes after a turbulent period for USDC that caused many to lose funds amid a flight to perceived safety from what was, at the time, a rapidly declining asset.

One unfortunate crypto user paid over $2 million to receive $0.05 of USDT in their apparent panic to cash out of the crash. An analysis revealed they possibly forgot to set slippage on their transaction, allowing a bot to net a significant profit.

Update (March 16, 3:30 AM UTC): This article has been updated to include further information on recent USDC-related events.

Porsche NFT trading volume nears $5M despite launch woes, minting halt

Developers of the nonfungible tokens had halted minting on Jan. 25 in response to user complaints.

German luxury car manufacturer Porsche’s nonfungible token (NFT) collection reached 2,839 Ether (ETH) ($4.5 million) in total sales volume, according to data from NFTScan at the time of writing on Jan. 26. The collection had a floor price of 2.74 ETH and a high price of 9.18 ETH, with over 1,705 total sales.

Originally meant to have a total supply of 7,500 NFTs, Porsche abruptly halted the minting process on Jan. 25 after some users complained of high minting prices and lack of utility for NFT holders. The supply has since been reduced to 2,363. The NFTs originally had a minting price of 0.911 ETH — referencing the namesake “911” NFT collection — but many users complained that they wanted the price reduced to 0.0911 ETH instead.

After community feedback, Porsche announced that it would expand holder benefits to behind-the-scenes access to the world of Porsche, co-creation of ”Porsche’s future of Web3,” an exclusive physical capsule collection beginning Q2 2023, the opportunity to attend “money-can’t-buy Porsche experiences,” and a “private airdrop” in March 2023. First unveiled during Art Basel Miami in November 2022, the Porsche NFTs were created by Hamburg-based designer and 3D artist Patrick Vogel and his studio Alt/Shift. Lutz Meschke, Porsche’s deputy chairman and member of the executive board for finance and IT, wrote at the time:

“This project is an additional element of our digitalization strategy. We’ve made our commitment for the long haul and our Web3 team has the autonomy to develop innovations in this dimension as well. Innovation management at Porsche also sees potential in the purchasing experience, the metaverse and the supply chain. Vehicle and sustainability issues are also being considered.”

Ethereum inches even closer to total censorship due to OFAC compliance

The minting of OFAC-compliant Ethereum blocks on a daily basis has grown to 73%, adding to the community’s growing censorship concerns.

Considering that protocol-level censorship is deterrent to the crypto ecosystem’s goal of highly open and accessible finance, the community has been keeping track of Ethereum’s growing compliance with standards laid down by the Office of Foreign Assets Control (OFAC). Over the last 24 hours, the Ethereum network was found to enforce OFAC compliance on over 73% of its blocks.

*Ethereum sporting 73% OFAC-compliant blocks. Source: mevwatch.info*

In Oct. 2022, Cointelegraph reported on the rising censorship concerns after 51% of Ethereum blocks were found compliant with OFAC standards. However, data from mevWatch confirmed that the minting of OFAC-compliant blocks on a daily basis has grown to 73% as of Nov. 3.

*Ethereum’s PFAC compliance trend. Source: mevwatch.info*

Some MEV-Boost relays — that are regulated under OFAC — will censor certain transactions. As a result, to ensure the neutrality of Ethereum, the network needs to adopt a non-censoring MEV-Boost relay.

Ethereum validators can reduce OFAC compliance by discarding relays in their MEV-Boost configuration that censor transactions, such as BloXroute Max Profit, BloxRoute Ethical, Manifold and Relayooor.

Compliance with OFAC allows the United States government agency to enforce economic and trade sanctions. Previously, the agency sanctioned Tornado Cash and several Ethereum addresses.

As of today, 45% of all Ethereum blocks are considered compliant with OFAC.

The mainstream adoption of Bitcoin (BTC) and Ether (ETH) sped up after UnionBank, one of the largest universal banks in the Philippines, debuted cryptocurrency trading in partnership with the Swiss crypto firm Metaco.

“We are proud to continue UnionBank’s series of industry firsts, this time being the first regulated bank in the country allowing digital currency exchange features for clients,” said Henry Aguda, chief technology officer and chief transformation officer at UnionBank.

Tattoo industry expands into the NFT space amid digital culture shift

Nonfungible tokens may be an option for maximizing monetization and exposure for a tattoo artists’ work.

Tattoos have been a universal phenomenon throughout the world for thousands of years, transcending cultural transformations and technological shifts. As the art continues to evolve, it has now taken steps into the nonfungible token (NFT) space in a bid to maintain relevant in an increasingly digital world.

Known as Bang Bang in the tattoo industry, Keith McCurdy is one of the artists who hopes to merge the ethos of tattoo culture with disruptive technologies. He’s using a new type of rewriteable tattoo ink that appears and fades away under different lighting conditions.

Over the past five years, Bang Bang said that scientists at the University of Colorado have developed a tattoo ink made of photochromic microcapsules, a technology dubbed “tech tattoos” that leaves a color-changing mark that is activated by UV light, thus changing the tattooed image as it reacts to UV light. He sees the technology as a way to bridge tattoo culture’s desire for individuality with the provable uniqueness of NFTs. Back in June, he sold the first rewritable tattoo as a 1/1 NFT for 100 ether (ETH), or nearly $100,000 at the time.

McCurdy told Cointelegraph:

“Our digital identity will become very important in the future. It may already be more important than our physical identity today. Individualization in a digital world and defining one’s identity is what we do best, and in that exists endless parallels and opportunities.”

Another company working on bridging the tattoo community to Web3 is Indelible — which is allowing owners to use their IP rights by drawing new tattoos and adding i to existing profile pic (PFP) NFTs. Mike Amoia, founder of Indelible, told Cointelegraph:

“NFT holders are always looking to monetize or do different things with their IP. And we feel it’s a really interesting way to monetize or even have fun with your IP by putting like famous tattoo art on it.”

Created eight months ago, the startup had the idea that tattoo artists should be able to expand their work beyond their studios, and have access to unlimited ways to make money from their art. “We felt like it’s a really fascinating application for tattoo culture, and we wanted to do it in the opposite way, which would be tattooing characters on real people. We wanted to tattoo Web3.”

Amoia, who is also an angel investor, came up with the idea two years ago and decided to fund his own startup focused on the untapped potential of combining tattoos with NFTs. He said that the project’s first PFP characters collection will be signed by tattoo artists Mike Rubendall, Matt Skinny, and Bj Betts. Amoia stated:

“All communities should embrace projects like this and then vice versa because we’re all helping each other out. The more successful my project is, it helps out all the other ones because it’s just getting more people to understand what it is.”

NFTs are digital objects whose authenticity can be verified on a blockchain, holding features such as uniqueness and non-interchangeability. There are several categories in which they can be classified, but they are most notably appearing as art, music, and blockchain-based video games. During the pandemic, NFTs have taken over the art world, with digital tokens selling at major auction houses for tens of millions of dollars.

By 2030, Verified Market Research (VMR) predicts the NFT market will grow to $231 billion in value. In the next eight years, the sector is expected to grow by 33.7% compound annual rate. Music, films, and sports are among the many industries where NFTs are in high demand.

Acala community votes to burn 2.97 billion of erroneously minted aUSD stablecoin

A total of 3.022 billion aUSD were previously minted via a liquidity bridge glitch.

According to a new post by Acala Network co-founder Bette Chen, the community has voted to burn 2.97 billion worth of Acala USD (aUSD) stablecoin.

Acala is a decentralized finance platform built on the Polkadot (DOT) ecosystem. The week prior, the price of aUSD fell to less than $0.01 from its dollar peg after it was discovered that 3.022 billion aUSD had been erroneously minted through a misconfiguration of the iBTC/aUSD liquidity pool, which went live on August 14.

The misconfiguration has since been rectified, and wallet addresses that had received the erroneously minted aUSD have been identified via on-chain tracing. Over 99% of all newly minted aUSD remains on the Acala parachain. However, an estimated $9.69 million worth of funds were swapped from aUSD to DOT and sent to centralized exchanges.

Thirty-five accounts were also identified as having acquired an excess of 12.38 million erroneously minted aUSD.

aUSD is over-collateralized by a variety of digital assets in the Polkadot and Kusama ecosystem, with a deposit rate of 195% per aUSD minted. Yet, the stablecoin’s current price of $0.84 indicates that the erroneously minted coins are still disrupting the system’s equilibrium. Developers have issued bounties and public calls for the glitched assets to be returned back to the Acala network. Chen also warned:

“Many of the services on Acala have been disrupted. Therefore the team is trying to strike a balance between accuracy and speed. We still have a bit to go before services on Acala can be fully resumed, and as more traces on aUSD error mints are being completed, our community will have a clearer picture of formulating aUSD recovery proposals.”

Crypto users spent $2.7B minting NFTs in first half of 2022: Report

Over 1 million unique wallet addresses were involved in the minting process, signaling that nonfungible token market activity remained strong.

According to new market research published by blockchain data firm Nansen, crypto users spent 963,227 Ether (ETH), worth $2.7 billion, minting nonfungible tokens (NFTs) on the Ethereum blockchain in the first half of 2022. An overwhelming majority of minting took place on OpenSea.io.

Minting occurred across 1.088 million unique wallet addresses on Ethereum during this period, Nansen said. In comparison, about $107 million worth of NFTs were minted on BNB Chain and $77 million for Avalanche. A total of 263,800 unique wallet addresses were involved in NFT minting on the two blockchains.

1/ Market participants spent 963,227 $ETH (approximately $2.7b) on minting NFTs in the first half of 2022.

So what did the NFT projects do with the money they raised?

Read our latest research here: https://t.co/ifgKdTnF9S

— Nansen (@nansen_ai) August 2, 2022

Sixty-nine NFT collections launched on May 22 alone, resulting in daily minting volume surpassing 120,000 ETH. The total number of NFT collections minted and sold on Ethereum during the first half of the year was 28,986. Over two-thirds of the NFT projects raised less than 5 ETH, although 140 collections raised well over 1,000 ETH. Cumulatively, the top five NFT collections on Ethereum accounted for 8.4% of overall minting. These include Pixelmon-Generation 1, Moonbirds, VeeFriends Series 2, Genesis Box and World of Women Galaxy.

About half the amount raised stayed with NFT projects, while the other half circulated to non-entity wallets. However, Nansen could only trace direct transfers from the NFT projects’ addresses to the immediate transaction addresses. Subsequent transactions to other counterparties were not captured, thus limiting possible conclusions on how funds were used after NFT drops.

Aside from research, Nansen is also known for index aggregates , such as the NFT-500, that track the performance of the top 500 NFT collections on Ethereum for both the ERC-721 and ERC-1155 token standards. The firm secured $12 million in investments from Andreessen Horowitz last year.