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DeFi Derivatives Project Launches $120 Million Incentive Program

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The derivatives platform for the Decentralized Finance (or DeFi, its acronym in English) sector is being launched this Tuesday (16) in style.

Developed at Cosmos, the Injective Protocol is trying to become the foundation of the DeFi sector’s decentralized trading platforms by offering a set of different financial instruments.

According to the marketing materials, tradable assets include the usual cryptoactives such as bitcoin (BTC) and non-fungible tokens (or NFTs), and the team is determined to add synthetic assets such as tokenized stocks and gold.

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However, at launch, Injective Protocol only offers five tradable assets: bitcoin, Injective’s native token (INJ), wrapped ether (WETH), chainlink (LINK) and Axie Infinity (AXS).

That’s because the Injective community (ie users who have the INJ token) is responsible for creating proposals to launch new markets.

“Up until this month, the community will vote on listings for perpetual contracts from ETH, INJ and BNB,” said Mirza Uddin, business development leader for the Injective Protocol, in an interview with Decrypt.

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“In the future, the idea will be to have each market listed on Injective, including [altcoins] low [e] mid-cap, as well as synthetic assets,” he added.

It’s the final asset class that caught Injective’s attention when it came into the picture.

In December 2020, Injective announced that it would launch big stocks such as Facebook, Google, Amazon and others in its Solstice test network.

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In April, the project raised $10 million from investors like Mark Cuban and Pantera Capital to continue developing their decentralized version of the popular Robinhood trading platform.

Now, with the launch of the core network, Uddin said “the community plans to vote on synthetics like FAANG stocks [Facebook, Apple, Amazon, Netflix e Google] in the next weeks”.

Becoming DeFi’s Robinhood is an ambitious goal, but the team hopes to accelerate growth through the launch of its incentive program called Astro.

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Giving a boost to the growth of the Injective Protocol

The crypto industry is full of incentives. Users can start borrowing and lending using a protocol simply because the project is distributing its native cryptocurrency to do so.

Other programs take the form of bonuses for development teams to create using new technology, and so on.

Injective is launching a similar program called Astro, equivalent to $120 million, to attract users to the platform.

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“The incentive program is expected to operate over the next five years,” Uddin told Decrypt. The program will be used to attract new market makers to the protocol, in addition to providing traders with a discount on fees they pay to use the platform.

Uddin also said that “there are more funds in the treasury” for additional programs that integrate developers to create using Injective in the future.

*Translated and edited by Daniela Pereira do Nascimento with permission from Decrypt.co.

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Huobi

Huobi Primelist-Supported DeFi Project Drained of $31 Million

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Days since the last DeFi hack: 0

Decentralized finance protocol MonoX Finance has been drained of $31 million as the result of a hack that occurred earlier today.

It was the third project to appear on Primelist, the token listing platform of major cryptocurrency exchange Huobi, earlier this month.

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The team has already addressed the incident in a statement on Twitter, claiming that a vulnerability in the swap contract was used by the attacker to artificially inflate the price of the MONO token and then purchase all digital assets in the pool.

In a lengthy Twitter thread, MonoX also made a desperate plea to the hacker in an attempt to reach out to him/her:

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We also really wish to have a chance in talking with the “hacker”. We value very much for what we’ve built for the current and future MonoX, and most importantly our users and their funds; PLEASE reach out to us.

The attacker pocketed $18.2 million worth of wrapped Ether (WETH) and $10.5 million worth of Polygon (MATIC).

In early August, $610 million worth of crypto was stolen from cross-chain DeFi project Poly Network, which marked the biggest DeFi heist to date. After several weeks of headline-grabbing drama, the hacker ended up returning the entire sum, which led to plenty of speculation about his real intentions.

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DAOs empower social good with yield-generating DeFi products

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Cryptocurrency was once an asset unknown to the world. Now, with the capabilities decentralized finance (DeFi) brings to the table, it is nearly a mainstream financial tool. With more institutional money flooding into the market, the question of the ability of the asset to do good and better the world remains. A reality, after many experienced the devastating impacts of the Covid-19 pandemic, reminds us that people are not masters of the planet but have a responsibility to sustain the place they live.

Institutional investors are already building portfolios that address environmental, social and governance concerns in the traditional market; therefore, the expectation is there for this advent to be carried over in the cryptocurrency market. While considerations have already been made about the impact of digital currency mining, the market is much more expansive, with current projects just scraping the surface.

Popcorn is marrying these two concepts with the slogan “Do good with Defi.”  At its very basics, users gain the opportunity to earn a high yield on their crypto assets while simultaneously creating a real-world impact. By developing yield-generating DeFi products that can allocate fees to public benefit organizations, social good becomes a part of the industry at its core, without costing a premium, further leveraging the power that comes along with the community.

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In evaluating this gap in the market, a member from the Popcorn team shares,

“If TradFi is experiencing this tectonic shift in investment strategy, with ESG assets expected to exceed $50 trillion by 2025, what does that mean for ESG in DeFi? Currently, there are only a handful of impact-driven projects that have launched and only account for a sliver in total TVL. Assuming the current growth rate in TVL with ESG DeFi increasingly developing and evolving in the ecosystem, what can we expect from doing good projects? Will they be responsible for onboarding the next 100M users to DeFi? If ingenuity and authenticity were indicators in measuring success, then WAGMI.”

The project has raised $6 million to date from Jump Capital, New Form Capital, Kenetic Capital, Cakebox Capital, The LAO, Impossible Finance, The Crypto Founders Network, Big Brain Holdings, Hestia Holdings, Amino Capital, Drop Ventures, XTBO Humla Ventures as well as angels from MakerDAO, IBM, NASA, Google and Deloitte, to name a few.

Striving for social impact

In operation, this is executed through the decentralized autonomous organization or DAO model. Unlike DeFi, DAOs look at the community rather than the financial industry, transferring the ability to drive decisions away from the organization and towards the people.

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Popcorn is kickstarting its project with Butter, a basket of wrapped yield-bearing stablecoins made with DAO treasuries and gas-conscious users in mind that is estimated to yield 20% APY on Tether (USDT), USD Coin (USDC), Dai (DAI), or LP 3pool Curve (3CRV), along with a social impact stablecoin. The coin is not only the first of its kind but will allow users to create an impact just by holding the coin. In practice, the stablecoin is the product of an overcollateralized loan and repayment process that operates through smart contracts on Popcorn.

As users extract value, a portion of the fees — anywhere from 20-50% — is redirected towards organizations striving for social impact, some of which are nominated by the token holders themselves. The team currently invites social organizations to learn more about becoming a beneficiary.

The network has integrated with Patch, an API-first platform focused on removing carbon emissions and the neutralization of them through high-impact carbon removal projects.

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Popcorn has since partnered with organizations like the Crypto Climate Accord, a public commitment for net-zero emissions, The Giving Block and the Vanderbilt University Blockchain Club.

Deployed for future impact

The network plans to initially deploy Popcorn on Mainnet and Polygon (MATIC), with future plans to deploy on Fantom Opera (FTM), Binance Smart Chain (BSC), Solana (SOL) and Avalanche (AVAX). Their abilities as a multi-chain yield optimizer are met with other future plans to onboard anchor beneficiaries, continue with mobile app development and eventually become a fully-fledged decentralized exchange.

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2022 Crypto Regulation Trends: Focus on DeFi, Stablecoins, NFTs, and More

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  • Smaller markets with a lighter administration might lead the way in terms of crypto regulation.
  • A standardized approach to regulating crypto is estimated to emerge.
  • Traditional financial will insist on a level playing field in terms of regulation.
  • A transaction involving smart contracts on-chain does often not fit into the basic legal concepts.
  • Also, expect to see interesting debates around NFTs.

If 2021 has been the year of talking about crypto regulation, then 2022 is likely to be the year of turning words into action. Because if nothing else, 2021 has shown that crypto isn’t likely going to be going away, something which has certainly forced more than a few regulators to sit up and take notice.

As with 2021, 2022 is likely to bring a mix of attitudes towards crypto, with some nations taking a very favorable view (as seen with El Salvador) and others taking a much harder line (as seen with China). However, industry players speaking with Cryptonews.com estimate that much of the regulation imposed next year will be increasingly positive for the industry, as more governments and official agencies come to appreciate its scope and more positive aspects.

At the same time, industry figures say regulators will start looking to regulate specific areas of the crypto industry in 2022, with stablecoins, non-fungible tokens (NFTs), and decentralized finance (DeFi) being particular focuses for many. And while certain people within crypto may be horrified by the prospect of more regulation, the introduction of consumer safeguards may ultimately be a net positive for the industry.

2021 predictions vs. reality

Back in November 2020, industry players predicted that 2021 will bring a piecemeal approach to introducing new crypto regulations. This is largely the case, given that most developed nations seem to still be debating and consulting on potential rules, with the likes of Ukraine, Cuba, and El Salvador being the exception rather than the norm.

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One thing commenters got wrong is that they suggested that the United States will introduce comprehensive crypto legislation in 2021. While some states have introduced their own statewide bills, the federal government has continued to dilly and dally with little to show for it.

Movements towards more favorable treatment

Speaking to Cryptonews.comDappRadar CEO Skirmantas Januškas suggests that 2022 is likely to continue playing host to a mix of divergent regulatory approaches in different parts of the world. For him, this largely results from the fact that crypto is often driven by bottom-up governance and demand.

“In countries where the underlying economic model is weak, or inflation is crippling, or access to a global market is limited, this bottom-up demand tends to be greater. Governments are, understandably, reacting to it in different ways, and that’s where politics, and even geopolitics come in,” he said.

Ian Taylor also estimates a stark difference in regulation approaches will continue emerging in 2022, with the executive director of CryptoUK putting the main divide between East and West.

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“The West is not banning crypto where they have seen more aggressive prohibition of certain activities and market participants,” he told Cryptonews.com, suggesting that different regulatory stances may stem from the different uses of cryptoassets we see in different parts of the world.

“Bitcoin (BTC) for example is largely used as an investment or speculative asset class in the West. Whereas in Asia and other developing nations the use case is more aligned to a payment tool especially for remittances,” he said.

In terms of which nations will actually implement new crypto legislation in 2022, Skirmantas Januškas suggests it will be smaller states that aim to get a headstart on attracting crypto-related economic activity.

“It seems that it will be the smaller markets with a lighter administration that will lead the way in terms of crypto regulation. Perhaps this might eventually bring a new balance of power, and perhaps not,” he said.

But while some countries might maintain a restrictive approach towards crypto, observers estimate that the general trend will be towards more acceptance of crypto, even if it involves imposing some kind of safeguards.

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“In the case of blockchain technology, I am confident that regulators will soon appreciate that the technological certainty that smart contracts on a blockchain guarantee, can achieve equivalent results in terms of consumer protection and fraud prevention as compliance with regulation can — sometimes even rendering compliance measures unnecessary. Whether or not this will happen as early as 2022 will have to be seen, but those in the industry are working hard to educate regulators about the opportunities that blockchain technology brings,” said Jan Stockhausen, Chief Legal Architect at Etherisc.

This is largely the view taken by Alexander Filatov, CEO and Co-founder at TON Labs.

“As the adoption of blockchain and crypto continues, I believe that a standardized approach to regulating crypto will emerge: likely in the form of a decentralized framework. Within this, I believe we will see great value in true decentralization and lack of control by single or few parties,” he told Cryptonews.com.

The evolving complexity of the industry

In terms of the specific areas of the industry that will be regulated, stablecoins will receive attention in various parts of the world, with the US, the EU, and the UK in particular working on stablecoin regulation as we write. 

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According to Ian Taylor, most jurisdictions are already quite advanced as far as policy-making goes, with 2022 likely to see numerous laws actually passed concerning stablecoins (in addition to cryptoassets in general).

“The UK’s consultation (see our response here) closed in March. Effectively stablecoin issuers in the UK will be treated like e-money institutions,” he said.

In the EU, the Regulation on Markets in Crypto Assets (MiCA) will roll out a similar treatment to the UK. However, Taylor explains that there will be some subtle differences. 

“For example, algorithmic stable coins (MakerDAO) will be in scope for specific requirements in MiCA, such as the issuer will be required to use a regulated custodian,” he noted, adding that this won’t be feasible under the MakerDao model, since smart contracts are used to custody the ethereum (ETH) submitted as collateral. 

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Taylor also notes that, in the United States, regulators and officials have been making plenty of noises when it comes to stablecoins, with the President’s Working Group on Financial Markets repeatedly stating this year that they need greater oversight.

Looking beyond stablecoins, DeFi is another area that will receive attention from regulators in various parts of the world.

“Speaking for the UK specifically, we are aware that the Financial Conduct Authority is looking at market integrity and market surveillance around yield-bearing products and staking on centralized exchanges,” said Ian Taylor.

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For him and the UK’s crypto sector, the hope is that such DeFi-focused regulation will limit itself to ensuring proportionate consumer protection, and not outright restriction.

“In regards to DeFi, most of the users are experienced and knowledgeable crypto users. However, we do believe that the industry can do more in regards to consumer protection, such as better risk disclosure, transparent pricing, code/smart contract audits, etc.,” he added.

Jan Stockhausen also says that DeFi might receive plenty of regulatory attention in the next couple of years, particularly if it continues its “exponential growth” (aided in part by inflation) and puts pressure on governments.

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“Traditional financial institutions may start feeling challenged and will insist on a level playing field in terms of regulation […] The fundamental challenge legislators will struggle with for some time is that a transaction involving smart contracts on-chain does often not fit into the basic legal concepts underlying existing laws and regulations,” he said. 

Stockhausen says that regulators will continue to struggle with these questions for some time, not least because business models and technologies continue to evolve rapidly in the space. As such, we may see more of a steady trickle of new regulations next year rather than an onslaught.

Another area that will receive attention next year is, unsurprisingly, non-fungible tokens, which now represent a billion-dollar industry that, as with DeFi, is becoming too big to ignore.

“I expect to see interesting debates around whether NFTs are securities, whether the trading of low-cost in-game NFT items should be taxable, whether income from play-to-earn games can be considered income at all. Play-to-earn blockchain games and gamified finance opportunities account for half of dapp usage currently, and in some cases, like in the Philippines, their contribution to the GDP per capita is at a level where these debates are already starting,” said Skirmantas Januškas.

This just goes to show that the crypto industry isn’t something that can be neatly and comprehensively covered by a few pieces of legislation. Given that it regularly transcends the limits of traditional financial and legal concepts, it may still be some time before legislators fully formulate laws or regulations that provide the clarity the industry has been expecting for several years now.

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In other words, 2022 is likely to bring some new regulations and laws, but don’t expect crypto’s regulatory issues to be solved in its 12 months.

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