Gate.io Podcast: $600M+ Stolen From Axie Infinity_s Ronin Chain, MicroStrategy Closes $205m Loan To Buy Bitcoin

This episode is brought to you by Gate.io and Zignaly (Airdrop). Terra's token LUNA hit an all-time high as the project has bought over $1 billion in Bitcoin since January. DC will publish Batman NFTs next month while the 'Will Smith Slap' NFT has already started trading on OpenSea. Followed by a Deep Dive on discussing whether the NFT market has peaked or not.

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In today’s Headlines:

Hacker Drains $622M From Axie Infinity’s Ronin Ethereum Sidechain | 1 | 2 |
MicroStrategy Subsidiary Will Purchase Bitcoin After Closing $205M Crypto-collateralized Loan | 1 | 2 |
Terra Adds $135 Million in Bitcoin Purchases to Back Stablecoin | 1 | 2 |
DC to Sell 200,000 Batman Cowl NFT Digital Collectibles, Eyeing $60 Million Haul | 1 | 2 |
Will Smith Token and NFTs Launch After Chris Rock Slap | 1 | 2 |

Sponsor: Zignaly (Airdrop)
Deep Dive: Has the NFT market peaked? | 1 | 2 | 3 | 4 |

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Introduction:

Welcome back to the Gate.io Podcasts. I’m Peter, this is the show to get a neutral perspective on some of the latest headlines in DeFi, Metaverse, NFTs, and Big Tech. Today’s episode is sponsored by Astar Network and brought to you by Gate.io, a centralized exchange with a neutral stance on current events.

Before we get in, the information presented in this podcast is to help you stay up-to-date on the latest happening in the crypto space, and nothing presented hereby is financial advice. The news that I cover in this podcast will have the original source at your discretion. Stick by this podcast as I show you how to stay vigilant and learn to do your own research.

But, before jumping in, make sure to subscribe to this podcast or youtube channel and don’t forget to turn on the notification bell so you’ll not miss any info about the crypto space!

Now, without further ado.

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Hacker Drains $622M From Axie Infinity’s Ronin Ethereum Sidechain | 1 | 2 |

The gaming-focused Ronin Network announced Tuesday that it has been targeted in a hack that saw an estimated $622 million worth of cryptocurrency drained from its bridge. According to a blog post published by the Ronin’s official Substack, the exploit affected Ronin Network validator nodes for Sky Mavis, the publishers of the popular Axie Infinity game, and the Axie DAO.

It is reported that the exploit took place on March 23 but was discovered late for a week after a report from a user being unable to withdraw 5k ETH from the bridge. All told, 173,600 Ethers and 25.5M USDC drained from the Ronin bridge in two transactions (1 and 2), adding up to about $622 million worth of crypto funds as of this writing.

The hack will likely be considered one of the biggest hacks in cryptocurrency history, according to data from Comparitech.

How it happened?
The attacker used “hacked private keys” to execute the exploit, per the team’s report, and thus was able to forge transactions to claim the funds. The attacker was able to sign transactions from five of the nine current validator nodes on the Ronin network, which is the threshold needed to approve signatures. Ultimately, the attacker gained access to Sky Mavis’ own four validators, along with one operated by Axie DAO.

“The validator key scheme is set up to be decentralized so that it limits an attack vector, similar to this one, but the attacker found a backdoor through our gas-free RPC node, which they abused to get the signature for the Axie DAO validator,” the report reads.

Actions taken
Axie Infinity has two million daily users and has generated $2 billion in sales and resales. Sky Mavis said it moved swiftly to address the incident once it became known and it is actively taking steps to guard against future attacks. So far, the stolen cryptocurrency hasn’t been transferred from the account that did the attack.

To prevent further short-term damage, the company has increased the validator threshold from five to eight. The company has also temporarily paused the Ronin Bridge to ensure no further attack vectors remain open. The bridge will be opened up at a later date once the company is certain no more funds can be drained. Meanwhile, it has tapped law enforcement, forensic cryptographers at Chainalysis, and its own investors to “make sure all funds are recovered or reimbursed.”

MicroStrategy Subsidiary Will Purchase Bitcoin After Closing $205M Crypto-collateralized Loan | 1 | 2 |

In a Tuesday announcement, MicroStrategy said Silvergate Bank issued a $205 million loan “secured by certain Bitcoin held in MacroStrategy’s collateral account.” The firm's subsidiary MacroStrategy will be using the proceeds of the loan to purchase Bitcoin (BTC), pay fees and interest related to the loan and handle general corporate expenses.

Silvergate Bank, a San Diego-based bank focused on cryptocurrencies, serviced the loan through the Silvergate Exchange Network (SEN). Launched in 2020, the Silvergate Exchange Network leverage service allows firms to secure BTC-collateralized loans for U.S. dollars.

According to the bank, it had roughly more than $570 million in commitments as of Dec. 31, 2021.
Last October, the bank issued a $100-million credit line to crypto mining firm Marathon Digital to be used for funding its operations as well as expanding the number of BTC miners.

As for MicroStrategy, it was one of the first big public companies to make buying Bitcoin part of its corporate strategy, buying $425 million of it in late 2020. MicroStrategy announced in June 2021 that its existing 92,079 BTC would be held by the newly formed MacroStrategy LLC subsidiary. As of the end of December 2021, MicroStrategy held 124,391 BTC. With the new leveraged buy, the company will increase its holdings to roughly 128,687 BTC worth more than $6 billion.

Not long after the news was announced Tuesday morning, MicroStrategy CEO Michael Saylor took to Twitter to tout the power of leveraged Bitcoin purchases, saying the strategy can “move the world.”

“The SEN Leverage loan gives us an opportunity to further our position as the leading public company investor in Bitcoin. Using the capital from the loan, we’ve effectively turned our Bitcoin into productive collateral, which allows us to further execute against our business strategy.”

Transition - Subscribe

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Terra Adds $135 Million in Bitcoin Purchases to Back Stablecoin | 1 | 2 |

Do Kwon, founder and CEO of Terraform Labs, the firm behind the Terra blockchain, confirmed that it has purchased more than $1 billion in Bitcoin since the end of January which includes about $135 million on Monday.

Monday's purchase came in four batches, Kwon confirmed the Bitcoin address used by Luna Foundation Guard (LFG) to buy the cryptocurrency. Data show that the address has bought a total of 27,784.96954740 Bitcoin.

As previously reported, LFG is a nonprofit organization focused on the Terra blockchain protocol. Last month, LFG said it raised $1 billion in a private token sale of LUNA, with the funds reportedly to be used for TerraUSD's reserve denominated in Bitcoin.

Earlier this month, Kwon, who is also the the CEO of LFG, announced its UST stablecoin would be backed by a reserve of Bitcoin that could eventually reach $10 billion. He tweeted on March 22 that he has $3 billion in funds ready to make purchases to back the algorithmic stablecoin.

The Bitcoin address shows that LFG first started buying on Jan. 26. The biggest purchase occurred on the same day with more than 8,588 bitcoins.

Why Terra is purchasing Bitcoins
Terra’s purchases are partly in response to criticism around UST. The stablecoin is not backed by a fiat currency like centralized stablecoins such as Tether. It has been able to maintain its peg to the dollar by issuing and destroying Luna tokens, Terra’s native cryptocurrency. For every new UST created, $1 worth of Luna is burned on the Terra blockchain.

A Bitcoin reserve for UST will help improve UST’s ability to keep its dollar peg, especially when Terra faces a short-term demand for redemption of UST, according to Kwon. “The reason why we are particularly interested in Bitcoin is because we believe that it is the strongest digital reserve asset. UST is going to be the first internet native currency that implements the Bitcoin standard as part of its monetary policy.”

At the same time, Terra's LUNA set a new all-time high following Monday's purchase. It spiked more than 10% earlier that day to reach a new record high of $106 and continue to climb up to $109 on Tuesday according to Gate.io.

DC to Sell 200,000 Batman Cowl NFT Digital Collectibles, Eyeing $60 Million Haul | 1 | 2 |

DC Comics, owning world-famous IPs like Batman, Superman, Wonder Woman, Green Lantern, The Flash, is an American comic book publisher and the flagship unit of DC Entertainment, a subsidiary of Warner Bros. The company announced on Wednesday that they will release Batman-themed NFTs next month which come with two years of promised benefits.

The Bat Cowl Collection contains a total of 200,000 unique NFTs, which are 3D-rendered images that draw on the Caped Crusader’s 83-year history. The NFTs will go on sale starting April 26, and owners of DC FanDome NFTs will receive exclusive presale access to the digital collectibles. The DC FanDome NFTs, released last year, are superhero collectibles that were doled out randomly for free to registrants of the annual fan event.

The new NFTs will be released through DC’s NFT marketplace at nft.dcuniverse.com and will be priced at $300 apiece, meaning DC and Warner Bros. are looking at landing $60 million from the drop. Those who purchase the NFTs will get access to a private DC Universe fan forum featuring behind-the-scenes content, select fan events, physical collectibles and more.

The Bat Cowl Collection NFT release is being managed by Warner Bros. Consumer Products in partnership with Palm NFT Studio, which provides creative services for artists and rights holders looking to create NFTs. Last fall, DC also collaborated with Palm for the DC FanDome streaming event.

DC has also developed a two-year roadmap, which will “expand utility” for Bat Cowl NFT owners in areas such as augmented reality, metaverse integration and expanded wallet capabilities. However, additional details on the metaverse plans were unavailable, according to a Palm NFT Studio representative.

“We believe the Bat Cowl Collection will allow collectors to deepen their connection with Batman and the DC Universe, while embracing their fandom in the growing metaverse ecosystem,” said Josh Hackbarth, head of NFT commercial development for Warner Bros, adding that DC plans to integrate the Bat Cowl Collection into future stories from DC Comics.

Will Smith Token and NFTs Launch After Chris Rock Slap| 1 | 2 |

It’s safe to say that the most memorable event during the 2022 Academy Awards was Will Smith’s unprecedented decision to slap the host – Chris Rock. In less than 24 hours, the cryptosphere has launched at least two projects, one is the Will Smith Inu, and the other is Will Smith Slap DAO.

The “Will Smith Inu” (WSI) coin has begun trading on UniSwap and other decentralized exchanges. The new meme coin saw a short, brief price surge overnight by 1000%, and attracted about USD$1.9 million in trading volume. Data from DEX Screener suggests that $WSI surged by 266% in a single hour at one point, with trading volumes hitting $770,000. According to CoinMarketCap, the total supply of WIS is set at 1,000,000,000,000.

A collection of NFTs devoted to the incident has also appeared on OpenSea, which features pictures of Will Smith's slap accompanied by popular crypto slogans. One of the NFTs shows Chris Rock wincing in the immediate aftermath of the assault, along with the word "NGMI" — Crypto Twitter slang for "not gonna make it."

A total of 2,000 "non-fungible slaps" have been listed by "Will Smith Slap DAO," which says in its bio that it has "no association to Will Smith, slaps, or DAOs." As tracked by OpenSea, the Will Smith Slap DAO has sold 13.3 ETH in less than 24 hours.

Will you buy them?
It may be the most important thing to know that anyone can create a token and call it anything, and say anything they want to about it, and they’ll probably never get in trouble. Ethereum, Binance Smart Chain and other crypto systems have tools for quickly creating secondary tokens.

However, these tokens always have no inherent value, and it can take just minutes to launch a “new project” claiming some vague association with a public figure or cultural event. This goes back at least to 2014, when Coinye West launched without any actual affiliation with rapper Kanye West. More recently, we’ve seen “Squid Game Token” capitalize on the Netflix hit.

Because they’re fundamentally tricks, almost all of them collapse as fast as they rise. Kanye West, for his part, quickly sued the Coinye project into the dirt. But these things usually collapse without outside help. After the token shot up immensely in a few days, the “developers” behind Squid Game token abandoned it – a classic "rug pull" – and it dropped to zero. Expect these Will Smith Slap things to suffer a similar fate.

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Sponsor | Zignaly

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Zignaly launched the Zigcoin in April 2021, ZIG is the token that powers the Zignaly ecosystem and is tagged as the first-ever NFT-based insurance protocol as the token is NFT-based and would be used to pay for fees within the Zignaly protocol. At the beginning of this year, ZIG was listed on Gate.io.
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DD| Has the NFT market peaked? | 1 | 2 | 3 | 4 |

The decreasing numbers
According to a latest March 2022 report published by NFT data tracker Nonfungible.com, NFT sales jumped to $17.6 billion in 2021, when compared to the 2020 figure of $82 million, the NFT market exploded in value by 21, 000%.

Although already impressive enough, the $17.6 billion figure is still lower when compared to an earlier projection from blockchain analytics firm Chainalysis that put the figure at more than $40 billion in total sales over 2021. However, Chainalysis also reported that the average weekly total of NFT transactions so far in March is the lowest since July of last year, the month before the market really took off, and is off 49% and 54% from the weekly averages in January and February, respectively.

Nonfungible.com found that over 2.5 million crypto wallets belonged to people holding or trading NFTs in 2021 compared to 89, 000 in 2020 while the number of NFT buyers rose to 2.3 million from 75,000. By contrast, since the market’s peak on January 31, more than half of its unique active buyers and sellers have left. Where there were 21,296 NFT sellers at the end of the first month of 2022, now only 7,210 remain. The absence of buyers is even worse, down from 28,207 to 7,894.

The decline can be easily observed through OpenSea, the biggest marketplace for NFTs. This month, Daily trading volumes on this platform have plummeted 80% to roughly $50mn, just a month after they reached a record peak of $248mn in February.

At the same time, the average sale price of an NFT is now below $2,000, which is down from over $6,800 in January. Cumulative daily sales have dropped from $160 million in January to $26 million on Thursday.

Primary sales of NFTs have also dipped noticeably, from nearly 26,000 per day at the beginning of the year to less than 3,200 on Thursday. Secondary market sales are down from a January peak of 38,000 per day to just over 7,900. As a comparison, secondary sales hit a daily record of 103,765 last September, while primary sales spiked as high as 795,000 last August.

Even some of the best-known NFTs are seeing their values slip. A Bored Ape Yacht Club NFT sale on March 4th seemed like a big-dollar transaction at $224,028.62, but that represented a $67,799.54 loss for the seller, who bought it at the end of January.
Affected by this, one “blue-chip” NFT index offered by Bitwise has fallen 25 per cent in the past month, leaving it down 17.1% for the year. Bored Apes and CryptoPunks, two of the most popular and richly valued collections, made up more than 60 per cent of the index as of this week.

Not long ago, NFTs had a total market capitalization of $23 billion, exceeding that of CarMax and Take-Two Interactive Software. At time of writing, it’s just over $10 billion, according to CoinMarketCap.

Notably, the total transactions this year could outpace last year’s $43 billion even if monthly totals remain in line with March. That’s largely because investors spent $20.4 billion, nearly half as much as all of 2021, in the first two months of 2022.

Why are the numbers decreasing?
Sinc the NFT market has witnessed a reduction in sales, buyers, and people in 2022, a representative of Nonfungible.com has attributed to a drop in interest in collectibles. However, the downturn in the collectibles market has been going on for a long time. The current drop seems to be caused by a variety of factors, ranging from inflation to the war in Ukraine to increased regulatory scrutiny of NFTs by the Securities and Exchange Commission.

Pedro Herrara, a senior blockchain analyst with DappRadar analyzed that the same risk-off sentiment due to tightening monetary policy and geopolitical uncertainty must have spooked NFT buyers at some level. Considering investors are looking to capitalize on NFT gains during these uncertain times, they will move their holdings to safer and more liquid digital assets like BTC, ETH, and stablecoins instead.

The prices of Bitcoin and Ether are responding to this theory as both of them are climbing between 13% to 14% over the past seven days.

It’s not just skeptics who have been warning of an NFT collapse. Even enthusiastic collectors of the digital art have cautioned that a “cataclysmic market crash” could be on the way, as the field becomes oversaturated because of how versatile and accessible NFTs are.

Will the NFT market suffer a “cataclysmic crash” ?
Despite the recent sell-off, some analysts believe it is too early to call a top in the market, which has attracted a flood of venture capital and given rise to several billion-dollar companies, including OpenSea and the NFT developers Dapper Labs and Sorare.

While admitting “there was a general sense that there was saturation in certain parts of the market, particularly in primate-themed profile pictures” by the end of last year, Nadya Ivanova, chief operating officer at L’Atelier, a trend-forecasting unit of French bank BNP Paribas, added that “We are not at the point of a bubble bursting” as the NFT market has barely pushed the boundaries of its underlying technology.

Jason Bailey, a creator and longtime NFT collector who publicly called for a NFT market pullback, also saw the decline as a silver lining. “Past bear markets gave the community the opportunity to focus and build without the frenzy, I'd argue the market grew too fast last year and a pullback could be helpful for the longer-term health of the market.”

Ashur, co-founder of Lazy Lions, another NFT avatar project emphasized the importance of preparing not for down slides but future market openings like the launch of Coinbase’s NFT platform and the confirmation from Meta’s Mark Zuckerberg that NFTs will come to Instagram.

Therefore, Mark Chrystal, founder of Bored Capital Club, a collective that invests in Bored Apes concluded that “I don’t think we are seeing the end of the NFT market, but perhaps we are seeing the end of the beginning.”

Listen the whole episode：
1. $600M+ Stolen From Axie Infinity's Ronin Chain, MicroStrategy Closes $205m Loan To Buy Bitcoin
2. $600M+ Stolen From Axie Infinity's Ronin Chain, MicroStrategy Closes $205m Loan To Buy Bitcoin