OpenSea Fights Back

Weekly Recap: OpenSea goes for the jugular, Arbitrum's 'decentralization theater'
Donovan Choy Donovan Choy Apr 8, 20234 min read
OpenSea Fights Back

Dear Bankless Nation,

After weeks of regulator aggression, this week, most of the crypto drama seemed to come from Twitter.

For our weekly recap, we dig into:

  1. OpenSea takes on Blur
  2. Arbitrum DAO drama
  3. $25M MEV hack
  4. CZ arrest rumor sell-off
  5. More DeFi momentum

- Bankless Team

📅 Weekly Recap

1. OpenSea takes on Blur

This week, OpenSea relaunched Gem as it looks to court back the NFT degen audience that made it in the first place. The newly renamed OpenSea Pro is a zero-fee marketplace aggregator with a feature set built with the crypto native in mind.

It's been a rough couple of quarters for OpenSea, which has seen its market share shrink in the wake of Blur's wildly successful tiered token incentives deployment. Blur is currently winning the market, but how long can the token subsidies sustain the platform's volumes? Does OpenSea have a chance of winning back pro users without its own token roadmap?

2. Arbitrum DAO drama

Arbitrum is experiencing some governance drama fresh out of the gate. The Arbitrum DAO, which theoretically governs the network, seems to be discovering the limits of its power.

A vote to allocate 750M ARB tokens to The Arbitrum Foundation got awkward when it was discovered that the tokens were already in the process of being allocated to the Foundation.

The vote eventually concluded with 76.7% of token holders against it. Yet, the Arbitrum Foundation aimed to override the vote and claim that the AIP-1 vote was not a real proposal and merely a formality, provoking criticism from the community of “token dumping” and “decentralization theater”. (See here for the full statement by Arbitrum)

In response to the unhappiness, Arbitrum has decided not to move any of the remaining tokens until approved by the DAO.

3. $25M MEV hack

A big topic of conversation on Crypto Twitter this week was a “rogue” validator exploiting MEV (maximal-extractable-value) bots to steal a whopping $25.4 million.

MEV bots are specialized operators at the Ethereum protocol level that can extract additional value from the network by re-ordering transactions as they're finalized. One more nefarious technique is a sandwich attack, a kind of front-running trade that executes a buy and sell before and after (hence “sandwich”) pending transactions in the Ethereum mempool for profit.

Used by 90%+ of Ethereum validators, Flashbots' MEV-Boost software is designed to make these types of attacks impossible.

However, a bug in MEV-Boost allowed the rogue validator to execute their attack by intentionally double-proposing a block which revealed the hidden transactions in the block bundle fed to them by the Flashbots relay. The revealed information then allowed the rogue validator to insert their own “sell” before their victims, effectively lifting any arbitrage profits. In short, the MEV bots got outmatched by a hacker's better MEV bots.

The bug has since been patched by Flashbots.

4. CZ arrest rumor sparks sell-off

Binance was caught up in some drama this week as crypto insiders freaked out after a rumor was spread that an Interpol Red Notice has been issued for Binance founder CZ.

An Interpol Red Notice is an international call for global law enforcement to arrest a known person. The rumor stemmed from a "hash prediction" tweet from crypto influencer Cobie. Somehow, the tweet's seed was leaked revealing the message: “Interpol Red Notice for CZ”, promptly leading to a crypto markets panic sell.

Binance later denied the rumors, but the damage was already done – BNB dropped ~10% on the rumor and Binance saw $50M+ in liquidations and $266M of withdrawals. And why did Twitter think crypto's most high-profile CEO was at risk of being arrested? CZ has had a bad month.

5. More DeFi momentum

Bankless Weekly Rollup

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Donovan Choy

Written by Donovan Choy

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Former writer at Bankless.

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