Finance Redefined: Crypto Protocols Reclaim $674 Million, Jupiter DEX Sparks Memecoin Frenzy

Here are some of the major developments from the world of crypto over the past few days.
Some of the major developments from the world of crypto.
Some of the major developments from the world of crypto.

In the realm of decentralized finance (DeFi), the past week brought forth noteworthy developments. Solana's decentralized exchange (DEX), Jupiter, took centre stage by surpassing Uniswap, the leading DEX platform, with an impressive $480 million in daily trading volume.

This surge was fueled by a fervour surrounding a new memecoin airdrop and increased activity in stablecoin swaps. The cryptocurrency market experienced a bullish mid-week, reflected in the top 100 DeFi tokens, with the total value locked (TVL) in DeFi protocols surging beyond $60 billion.

A significant aspect of the week's narrative was the resilience demonstrated by the crypto community against cyber threats. Blockchain security firm PeckShield reported that out of the $2.61 billion lost to hacks and scams in 2023, a remarkable $674 million was successfully recovered.

This represents a substantial 25% of the crypto stolen, stemming from more than 600 large-scale hacks tracked by the security firm. The report indicates a 27.78% decrease in losses compared to 2022 when global cyber thefts amounted to around $3.6 billion.

Furthermore, amidst the evolving landscape of DeFi, Polygon Labs proposed a regulatory framework advocating the classification of DeFi protocols as "critical infrastructure." The legal team behind Polygon Labs emphasized the need for oversight by federal cybersecurity agencies in the United States. Published on January 29, the framework, titled "A Conceptual Framework for Combating Illicit Finance Activity in Decentralized Finance," aims to address regulatory considerations as DeFi continues to expand.

Concurrently, the Hong Kong Securities and Futures Commission (SFC) issued a cautionary note about unauthorized staking programs affiliated with the Floki ecosystem, underlining the importance of regulatory vigilance in the cryptocurrency space.

FTX Seeks Court Approval to Liquidate $175 Million Claim Against DCG's Genesis Trading

FTX has submitted a petition to a Delaware court seeking approval to liquidate its $175 million claim against Genesis Global Capital, a digital financial services firm currently in bankruptcy.

The claim, originating from the hedge fund Alameda Research associated with the bankrupt cryptocurrency exchange, is part of an effort to streamline proceedings and avoid the complexities of extended litigation. FTX's motion allows for the potential sale of the claim in whole or in part, taking advantage of favorable market conditions.

Notably, claims against Genesis are currently fetching 65% of their face value, a considerable increase compared to the 38% obtained by Alameda Research.

The proposed sale order outlines a comprehensive procedure to apply to all sales, aiming to reduce costs and delays associated with filing separate motions for each proposed sale.

The sale price must meet certain criteria, ensuring it amounts to at least 95% of the highest price quoted by leading market-makers for general unsecured claims of Genesis Global Capital.

While FTX initially sought to reclaim $3.9 billion from Genesis in May, the negotiated reduction to $175 million was reached in August and court-approved in October.

The parties justified this substantial decrease by citing the unpredictable nature of potential recoveries and the desire to avoid protracted and costly litigation.

FTX faced a collapse in November 2022 due to irregularities in its account books, leading to Genesis filing for bankruptcy in January 2023 and triggering a complex conflict with the Gemini cryptocurrency exchange.

A critical court hearing in New York on Feb. 14 will assess the proposed bankruptcy reorganization plan for Genesis Debtors and the inclusion of the SEC settlement.

Bitcoin Ordinals Sales Dipped 61% in January, Halving Sparks Hope

Bitcoin Ordinals, the inaugural nonfungible tokens (NFTs) on the Bitcoin network, faced a sharp 61% drop in monthly sales, dwindling from $868 million in December to $335 million in January, largely attributed to market oversaturation and intensifying competition from NFT collections on alternative blockchains like Solana.

The influx of new projects and artists in the NFT space, coupled with the rising popularity of other blockchains, has created a plethora of choices for buyers, impacting the sales of Bitcoin Ordinals.

While Ethereum NFT sales also experienced a slight decline, NFT sales on Avalanche surged by 89%, reaching $46.7 million in January.

The Dokyo NFT collection dominated sales on the Avalanche network, generating $31.4 million in January, constituting 67% of the blockchain's total monthly sales.

Despite the challenges faced by Ordinals, including controversy within the Bitcoin community and technical complexities, interest appears to be shifting towards Bitcoin layer-2 solutions.

Sebastien Guillemot, co-founder of Paima Studios, notes a pivot from Ordinals developers and investors towards Bitcoin layer-2s, particularly amid growing excitement around BitVM and OP_CAT.

Despite the decrease in Ordinals sales and average sale prices, Binance, the world's largest crypto exchange, recently announced the launch of its Ordinals marketplace on February 1.

Analysts anticipate that the upcoming Bitcoin halving could potentially reignite interest in Ordinals, as the reduced supply of Bitcoin and increased transaction fees may enhance their appeal as unique and collectible assets.

In the 11th edition of the "State of Crypto" report, 21Shares, a leading crypto exchange-traded product (ETF) provider, emphasizes the potential for Ordinals and BRC-20 tokens to broaden Bitcoin's use cases beyond its role as a store-of-value asset.

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