The AB Newsletter is for informational purposes only. Do not construe any of the following as investment, financial, or other advice. You make your own decisions.
The AB Moonletter🚀 is a culmination of research & perspectives from the diverse minds of the AB Team. Ultimately our focus & mission is financial freedom. Letter #6🕵🏽♂️ includes:
Highlights:
Ready, Fight!! - SEC vs Crypto Legal Battle Begins
EigenLayer - Staking vs Restaking
AB Equity Token - Testing on Fantom
TradFi (Traditional Finance) - Hike, Pause, or Cut?
Altcoins: Buys & Watchlist
1. Ready, Fight!! - SEC vs Crypto Begins
Grab some popcorn….you might need few buckets🍿🍿🍿. The largest crypto regulatory legal battle to date is just getting started. U.S. Government regulations have been on the horizon for quite some time. Now, it seems the horizon has arrived.
The U.S. Securities and Exchange Commission (SEC) is seriously cracking down on crypto operations, setting a new stage in the development of this fast-growing industry. Ripple's XRP, already in the midst of a legal fight with the SEC over its classification as a security, is a major case to watch, as it will likely settle first, setting an industry wide precedent. Today, two more industry giants, Coinbase and Binance, find themselves in the SEC's crosshairs.
The SEC's lawsuit against Binance and CEO Changpeng Zhao “CZ”, is a comprehensive action alleging that Binance’s operations in the U.S. were deceptive, filled with conflicts of interest, and lacked adequate disclosures. The charges also include mismanagement of customer funds, accusing BinanceUS of serving as a mere facade, rather than an independent entity, for Binance to do business in the U.S.
Whether any of this is true is yet to be proven. We at AB are certainly not securities lawyers, so we do not care to provide legal speculation. However, as users of many exchanges and web3 applications since 2012, we can share our own experiences and speak on Binance from the perspective of a user. Functionality wise, Binance is one of the better exchange tools for trading crypto. Binance’s platform and CEO CZ have gone to great efforts over the years to promote security, education, and responsible risk management to their users. Compared to competition, Binance is a clear industry leader.
Despite Binance’s positive efforts, the SEC has made clear that they are considering Binance's ecosystem tokens — BNB and BUSD — as well as other popular digital assets such as SOL, ADA, ATOM, MATIC and more, as securities.
The Coinbase saga is equally critical. The SEC has launched an enforcement action against Coinbase, accusing them of an unregistered offer of securities through their staking program. Despite the accusations, Coinbase vows to continue business as usual, with CEO Brian Armstrong & Chief Legal Officer Paul Grewal expressing continued disappointment and lack of surprise over the SEC’s actions.
Coinbase put out a powerful numbers based video in response to the SEC’s incompetence and lack of guidance.
These legal battles mark a major turning point in history. They bring into focus key questions on how services in the crypto market are structured and what it means to be a security in this space. Most importantly, they signal the reality that crypto has grown too big to ignore or laugh off; it’s now a force to be reckoned with.
All of these allegations and responses remind us that this is just the beginning of a much longer narrative. Each claim, each counterclaim, will be vigorously contested in court. The outcomes are far from certain. The only certainty? The crypto industry and its regulation are now in the 'Fight You' stage. How this fight plays out will significantly shape the future of digital assets and their global acceptance. So, buckle up — we’re in for a wild ride.
Authors: Digital Duke, AB Cyborg
2. EigenLayer - Staking Is Sweet….But ‘Restaking’ Is All The Buzz
Since EigenLayer completed their Series A raise of $50M back in March of this year, the restaking narrative has been buzzing. To simplify the concept, restaking is the act of taking already staked ETH and “re”staking the staked ETH in order to secure another protocol by providing sound economic bandwidth.
EigenLayer is taking their initiative head on by allowing home-stakers, RocketPool staked ETH holders, and Lido staked ETH holders to secure other systems such as oracle networks, layer 2 networks, bridge solutions, and more. Our friends at Bankless do a great job interviewing Dr. Kannan, Eigenlayer’s lead developer.
As usual, there are pros & cons to every technological innovation. EigenLayer is set to benefit individuals/entities who elect to restake with extra yield, potentially double digit APY. As for applications/projects, benefits come from the added “re”staked nodes that are now being used to not only secure Ethereum’s network, but to specifically secure their network as well. The potential downside lies in the additional risk, as there may now be double the possibility of a staker’s ETH getting slashed (penalized) if their node goes offline.
Some further counter arguments to restaking have been laid out by Vitalik in his most recent Vitalik.ca post. Vitalik believes it can be a fine solution as long as people fully understand what they are getting into and the risks involved. He warns that Ethereum won’t roll back the chain just to save some people who took on too much risk. One specific “high risk” activity is explained by Vitalik in the following scenario:
“George creates an ETH/USD price oracle, which functions by allowing ETH holders to participate and vote. To protect against laziness and creeping bribes, they add an incentive mechanism where the participants that give an answer within 1% of the median answer get 1% of the ETH of any participants that gave an answer further than 1% from the median. When asked "what if someone credibly offers to bribe all the participants, everyone starts submitting the wrong answer, and so honest people get 10 million of their ETH taken away?", George replies: then Ethereum will have to fork out the bad participants' money.”
Totally simple and not confusing, right?
To test this new infrastructure there is currently a trial website for the adventurous - goerli.eigenlayer.xyz. Here anyone has the option of using Testnet ETH to try out the restaking application with very little risk (mostly your time to acquire Goerli ETH, which can be done here at the goerli faucet).
To learn more about EigenLayer you can head to their website at eigenlayer.xyz or see additional documentation at docs.eigenlayer.xyz/overview/readme. We’re keeping a close eye on this one!
Author: UEV Guy
3. Advantage Blockchain Tests Equity Token on Fantom
Advantage Blockchain (that’s us) has issued a securities compliant token representing equity in our Advantage Blockchain Consulting LLC on the Fantom Blockchain.
AB is working to add operational value by using smart-contracts as an on chain solution for managing our equity. A token representing equity will provide several immediate and innovative advantages such as the ability to put our documentation on chain, improve long term ownership data of the firm, smoothen equity transfers in the event of complex vesting/changing equity, and more.
Beyond the minor benefits provided now, what really excites us is the evolving security token industry, and the path towards revolutionary digital equity use cases. A growing handful of industry leaders join us in building these use cases, with the number 1 common goal seeming to be liquidity listing options on digital exchanges globally. This is typically proposed as a solution for larger companies looking to crowd fund, but maybe thats only because at current stage the full process has high overhead? We at AB strive to think outside the box, and hope to find/create even more utility for companies of all sizes.
We’ve partnered with Fantom on this project as an opportunity to build out functionality for the future of digital equity. Fantom has expressed the ability to provide partnership resources to create custom applications, smart contracts, and more for building on their ecosystem. A unique benefit to Fantom is their native concept of gas monetization, which is a program where we could earn a pro-rated portion of their gas fees by creating highly used smart contracts. If successful, this would serve not only as a great building experience, but as an additional stream of revenue for AB.
While U.S. Govt agencies fight over whether certain crypto assets are securities, commodities, or neither, its nice to know there exists a segment of the blockchain industry that openly embraces being a security, and takes every effort to be fully securities compliant. We openly embrace compliance and innovation, and look forward to furthering our on-chain presence, network and partnerships.
Author Chexco, AB Rocket Pilot
4. TradFi (Traditional Finance) - Hike, Pause or Cut?
The Federal Open Market Committee (FOMC) is set to meet in what is shaping up to be one of the most pivotal policy decisions of the last two years. Since the Fed started its aggressive tightening cycle in March 2022, policy makers have consistently hiked rates and rolled assets off their balance with the aim of taming inflation, which reached as high as 9.1% YoY at its peak in June 2022. As both consumer price index (CPI) and producer price index (PPI) metrics have gradually declined, the Fed now faces a pivotal decision; Hike, Pause or Cut?
Since the bank failures of Silicon Valley Bank (SVB) and Signature Bank in March 2023, equity markets have enjoyed a strong bounce back primarily led by the technology sector. With markets rallying and labor conditions holding up exceptionally well, the idea of an additional rate hike is not far fetched if the Fed maintains its hawkish views and ultimate goal of 2% inflation. Additionally, the Organization of Petroleum Exporting Countries (OPEC), has announced a unified plan to slash oil production across the board to further elevate crude prices which would in turn keep inflation elevated.
Despite these factors, the most recent Fed futures data suggests just a 31% chance of a rate hike and a 69% chance of a pause. Moreover, Fed futures also suggest potential rate cuts as soon as Q4 2023. The meeting is set to occur on June 13th & 14th and it remains to be seen whether the Fed will continue to pursue its fight against inflation or begin to take their foot off the gas to aid the struggling banking industry.
For further totally not boring TradFi resources:
Author: 8Bit
5. Altcoins: Buys & Watchlist
Disclaimer: Our buys & watchlist should not be takin as financial advice nor investment suggestion. We share this information in the nature of education & transparency. We value the ability for our network to be aware of new projects and ecosystems we are actively researching/participating in. Always invest responsibly. And remember…Fundamentals over Pumpamentals!
Recent Buys
Uniswap (UNI) @ $5.98
Dogecoin (DOGE) @ $0.09
Arbitrum (ARB) @ $1.23
Optimism (OP) @ $2.24
Polygon (MATIC) @ $1.13
Ethereum (ETH) @ $1,693