Coinbase Embraces Lightning Network for Faster and Cheaper Bitcoin Transactions

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We have brought together the past week’s most exciting events in this Good Crypto digest. If you want to get these updates as soon as we post them, follow us on Twitter or Telegram.

Quick weekly news

CoinEx Faces Potential $27 Million Loss Due to Unusual Fund Outflows

On September 12, crypto exchange CoinEx witnessed unusually substantial fund outflows to an address devoid of any prior transaction history, raising concerns among security experts about a potential hack. According to blockchain security platform Cyvers Alerts, the estimated losses are around $27 million.

Around 1:21 pm UTC, a known CoinEx hot wallet transferred roughly 4,947 Ether, valued at $7.9 million, to an Ethereum account. This receiving account had no prior transaction history.

Subsequently, the CoinEx hot wallet initiated multiple large token transfers to the same address. Notable transfers included 408,741 Dai stablecoin, 2.7 million Graph (GRT) tokens, 29,158 Uniswap tokens, and various other tokens.

Blockchain security firm PeckShield flagged these transactions as “suspicious.” Julio Moreno, CryptoQuant’s Head of Research, also remarked on the unusual behavior, noting that CoinEx’s Ether reserves had essentially reached zero.

At 5:25 pm UTC, CoinEx confirmed on Twitter that it had experienced suspicious withdrawals. The exchange stated that its Risk Control System had detected abnormal withdrawals from several hot wallet addresses used to store CoinEx’s assets. In response, CoinEx had formed a “special investigative team” to determine the nature of the incident.

Additionally, the team assured users that the withdrawn crypto constituted a small portion of the exchange’s total reserves and pledged to compensate users fully for any losses resulting from the breach.

Paxos Releases Inaugural Transparency Report Confirming Full Backing of PayPal USD Stablecoin

Stablecoin issuer Paxos has released its inaugural transparency report for the Ethereum-based stablecoin PayPal USD, affirming that the token is entirely backed by assets.

The aggregate assets in PayPal USD custody ‘meet or exceed the token balance.’ As of August 31, 2023, the total tokens outstanding stood at $44.4 million, while the total notional position value reached $44.5 million.

Most PYUSD assets are supported by U.S. Treasury reverse repurchase agreements, which Paxos holds in custody for PYUSD holders. Notably, nearly 97% of the total assets in PYUSD custody, amounting to $43 million, are tied up in Treasury reverse repurchase agreements.

Reverse repurchase agreements are contractual arrangements in which one party commits to selling securities to another party at a predetermined price.

Paxos explained that their repurchase agreements have an overnight maturity and are overcollateralized with U.S. Treasuries. In the event of a counterparty default, Paxos can liquidate the U.S. Treasury collateral to cover its losses. Given the over-collateralization, the risk of significant loss is considered minimal.

As of August 31, Paxos maintained $1,500,146 in fiat currency at insured depository institutions. Paxos shared a link to the IntraFi network or a list of insured depository institutions where funds may be placed.

The company clarified that it currently has no active private uninsured deposit insurance policies. Additionally, not all deposits are protected by the FDIC or private insurance, and Paxos might still incur losses if a bank becomes insolvent.

Coinbase Embraces Lightning Network for Faster and Cheaper Bitcoin Transactions

Coinbase has officially confirmed its embrace of the Lightning Network (LN), a layer 2 payment protocol, to address the growing demand for faster and more cost-effective Bitcoin transactions.

Coinbase CEO Brian Armstrong has affirmed the exchange’s commitment to implementing the Lightning Network. He stated:

“Bitcoin is the most important asset in crypto and we’re excited to do our part to enable faster/cheaper Bitcoin transactions. Will take some time to integrate so please be patient.“

This decision follows a month-long investigation into LN integration by Viktor Bunin, a Protocol Specialist at Coinbase. During this period, influential figures like MicroStrategy’s Michael Saylor and Square’s Jack Dorsey publicly questioned Armstrong’s stance on LN.

Coinciding with Armstrong’s announcement, the crypto community welcomed the move, as Coinbase’s LN integration promises to make affordable and efficient Bitcoin microtransactions accessible to a broader audience.

DCG Proposes a Plan to Benefit Genesis Global Creditors and Gemini Earn Users

Digital Currency Group (DCG) has put forth a fresh proposal designed to benefit the creditors of the now-bankrupt Genesis Global while ensuring that Gemini Earn users can recover nearly all their claims.

In a recent delivery on September 13, DCG outlined a plan that foresees unsecured creditors receiving a substantial 70–90% recovery, with a significant portion of this recovery provided in digital currencies.

Moreover, the compensation plan suggests that Gemini Earn users could recover around 95–110% of their claims without requiring any contribution from Gemini.

This proposal appears to prioritize the interests of creditors and Gemini Earn users, offering them an opportunity for substantial recovery.

A Case Study of Early DCA Bot Performance on Binance Spot

We want to showcase one of the earliest DCA Bots launched on Binance Spot, specifically for the BTC/USD pair.

In this instance, the DCA Bot executed 48 iterations (48 consecutive cycles where the Take Profit level was reached) in just 9 days, resulting in a profit of 0.00539 BTC (approximately $150) at the closure time. This represents over a 3% gain, with an impressive 125% Annual Percentage Yield (APY).

In simple terms, our initial investment of around $250 saw remarkable growth of nearly 60%, achieved through x20 leverage, resulting in a leveraged position of $4,961.

Check out the full article for a comprehensive look at all the details and insights from our DCA User Case.

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