1. Ethereum 2 Altair Upgrade

The Facts:

• With 98.7% of nodes already upgraded, the Ethereum 2.0 Altair update on the Beacon Chain has had a successful start.
• The first update since Beacon went live in December 2020, might as well be the last one before the highly anticipated merge with the Eth1 mainnet.
• The upgrade is twofold: it adds support for light clients and increases penalties for downtime and for slashing.

Why it’s important:

• The upgrade on the Beacon chain is the only dry-run before the Merge. Problems or too few nodes upgrading would potentially push back the Merge roadmap.
• The Merge, expected for 2022, will by the single largest Ethereum update to date, moving Ethereum from proof-of-work to proof-of-stake.

2. Bitcoin Hash Rate rebounds post China ban

The Facts:

• After China banned the mining of Cryptocurrencies in May this year, miners were forced to relocate to other jurisdictions.
• This led to a noticeable drop in the network’s hash rate of over 50%.
• Six months later, the network is back to May levels.

Why it’s important:

• The quick hast rate recovery demonstrates the resilience of the Bitcoin network and also the flexibility and mobility of mining operations.
• The US being the top beneficiary of the migration, it is expected that the ratio of renewable energy of Bitcoin mining will further increase while miners can expect a more predictable regulatory environment.

3. The FATF updates virtual asset guidance

The Facts:

• The Financial Action Task Force updated their risk guidance for virtual assets and virtual asset providers, adding specific clarifications on stablecoins, DeFi and NFTs.
• Since the first virtual asset guidance draft was published in 2019, several jurisdictions have begun to implement the standards.

Why it’s important:

• Domestically, clear regulation creates predictability and helps nascent industries to attract investment and talent. Internationally, it may help countries to attract the emerging industry to their jurisdiction and increase employment and tax revenues.
• The challenge remains to strike a regulatory balance that does not hamper the core tenets of the industry like decentralized, peer-to-peer blockchains with algorithmic governance instead of human middlemen.

4. Cream Finance keeps getting robbed

The Facts:

• The Cream Finance team confirmed on Wednesday the theft of $130 million worth of Cream LP and other ERC-20 tokens.
• In February the DeFi Protocol got hacked for $24 million in ETH, and in August for another $25 million, making this the third time the protocol lost funds within a few months.
• The flash loan attacker borrowed $2 billion in ETH from Aave before draining Cream Finance of several DeFi tokens.

Why it’s important:

• The total amount of funds stolen in DeFi attacks therefore grows above $500 million.
• The case serves as a reminder of the staggering complexity “DeFi composability” poses. The complexity of individual protocols is getting multiplied by composing paths across several protocols (“money lego”) that are very hard to understand in their dynamics.

5. Crypto companies raised over $8 billion in Q3 2021 alone

The Facts:

• 50% of the funding was allocated to CeFi companies. FTX, Moonpay and Celsius Network all raised more than $400 million.
• According to KPMG, Global VC investments hit a new high of $171.1 billion in Q3 2021, putting the crypto industry at a modest 4.67% in VC portfolios.

Why it’s important:

• Despite its high dynamics and growth shown in the recent years, “crypto” is still tiny compared to the traditional industries, also in the early-stage/venture domain.
• If the young industry can upkeep the high rate of innovation and show sustainable growth, more traditional capital will look into this new space and make investments. Given the large size of the VC space, there is significant upward potential for future funding of crypto startups.

In other news

• Coinbase app takes number 1 spot on US App Store (via The Block)
• Valve receives open letter to reverse blockchain games ban (via Cointelegraph)
• $95 million in Bitcoin up for auction in Germany (via Cryptonomist)

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