Ether underperformed bitcoin this week, in part because of a SushiSwap crash that magnified the fragility of the DeFi bubble, which has boosted ether in recent months. SushiSwap, founded as a token to bootstrap liquidity on the uniswap decentralized exchange, lost more than 70% of its value after its anonymous creator Chef Nomi liquidated his wallet, netting nearly $12.5 million.
The ripple effects pushed ether down 30% last weekend, though it recovered those losses during the week. Chef Nomi transferred the keys to SushiSwap to crypto executive Sam Bankman-Fried, who was optimistic about DeFi’s future, but added that “you can imagine a scenario where it could flame out back into hibernation for a while.”
DEFI BUG NETS 100,000% PROFIT
Another DeFi cautionary tale this week came via a glitch in Soft Yearn Finance, a project meant to be artificially pegged to the Yearn Finance token. It overrides the token holder balances every 24 hours in a process called a rebase to return to its pegged price.
But when it was listed on the uniswap exchange, it spiked to $160 and then immediately plummeted back to less than a penny, but not before an investor initiated a sell transaction while the protocol was mishandling the rebase. The result: that investor turned $200 into $250,000 in a matter of minutes at the expense of misguided buyers.
Digital Currency Group, the parent company of asset manager Grayscale and media outlet CoinDesk, announced Wednesday that it acquired London-based crypto exchange Luno for an undisclosed amount. Luno CEO Marcus Swanepoel said his exchange, which has 400 employees and 5 million users, is poised to expand in the Middle East and South America.
PROGRESS IN CONGRESS
Part of the Digital Taxonomy Act made it out of committee in the House of Representatives and will be considered by the full chamber, marking the farthest a bill addressing regulation for blockchain tokens has gotten in the 116th Congress. The portion of the bill, aimed at preventing crypto scams and crime, as well as part of the Blockchain Innovation Act were incorporated into the Energy and Commerce Committee’s Consumer Protection Safety Act.