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Hey Ember Crew,
We hope you had a great week! As always, don't forget to continue stackin' sats! A new boost is coming soon. 😏
💡 Word of the Day: Ethereum Virtual Machine (EVM)
Some blockchains like Avalanche, Binance Smart Chain and Fantom are EVM compatible, which means that Ethereum-based smart contracts written in solidity can run on them, and developers can be easily port them over.
The past week was eventful for the Axie team and users on the Ronin blockchain (an EVM compatible side chain that supports the Axie ecosystem). It seems a hacker was able to exploit the bridge and drain its ETH/USDC reserves valued at $625M. The exploit was not caught until 6 days later when someone tried to bridge ETH from Ronin back to the ETH network.
Vitalik has talked many times about the risks of interoperability of separate chains and the risks posed by the bridges. In this case, when a user transfers over USDC/ETH to Ronin, the bridge stores the original ERC-20 tokens that everyone uses on Ethereum and 1-1 issues synthetic that can be used on Ronin (very oversimplified). In this case, the bridge was hacked and the original tokens were stolen. So when a user tried to convert their “Ronin” ETH back to the “Ethereum” ETH, they were unable to since there was no liquidity left.
The crypto detectives are working with law enforcement to track down the hacker but little is known and we have yet to receive official updates on next steps.
Word of caution when bridging non-native tokens across crypto, this wasn’t the first exploit and will likely not be the last.
Not sure if anyone follows Twitter activity of some of the large personalities in the space, but Do Kwon (founder of LUNA) is on a mission to build up a Bitcoin treasury for LUNA. Long story short, it helps capitalize the LUNA/UST value by diversifying into another currency. Over the past few weeks, they have been buying Bitcoin like no other, and it has helped the price surge to $47K. As of last reports, they have bought $397M worth of Bitcoin over the past few weeks and have $1.45B of BTC in their reserves, with a target of $3B over time.
Thank you for reading!
Investment Associate | Ember Fund
Ember Nuggets are a weekly update with commentary from the investment team on what’s happening within the crypto market - news, developments, market trends, and more.
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