Arkham's Dox to Earn

Aave GHO Stablecoin | Institutions Don’t Like Self-Custody

Marco Manoppo & Karon Pangestu
July 12, 2023

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In Today's Email:

What Matters: Arkham privacy concerns 😱
Case Study: Institutions don’t like self-custody 🔒
Governance & Features: Aave GHO stablecoin 👻

Narratives: Pay attention to Aave’s GHO stablecoin launch and how it will integrate with the liquid staking landscape.

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WHAT MATTERS

Arkham Privacy Concerns

Arkham Intelligence

State of play: Arkham faces criticism for collecting user data and its on-chain intelligence trading feature is accused to be potentially violating privacy rights.

Arkham’s CEO, Miguel Morel, tweeted yesterday that Arkham will post an FAQ answering more questions about data privacy.
Morel uses “fraud protection” to justify the incentivization of “doxxing”, or to identify the owner of crypto wallets.
Morel claims that Arkham is not interested with small individual private wallets, it’s only interested in info that is “extremely valuable” to the community.
The Arkham Intel Exchange uses $ARKM tokens to incentivize and reward on-chain analysis.
Arkhams users’ emails have been leaked through their referral links, due to a lack of standard encryption practice.

INSANE. ALL #ARKHAM DOXX SHILLS HAVE BEEN DOXXING THEIR EMAILS FOR MONTHS.
— m4gicpotato ⟁ (@m4gicpotato)
9:55 PM • Jul 10, 2023

Arkham’s vision in its whitepaper is to link personal identity to blockchain interactions, calling for "deanonymization”.

Arkham has the support of the founders of Palantir and OpenAI, with Palantir being known for its collaborations with the CIA and FBI.

Arkham is backed by founders of Palantir and OpenAI
Palantir works with the CIA and FBI
literally Feds.
— 𝕯𝖆𝖓𝖌𝖊𝖗 (@safetyth1rd)
6:27 AM • Jul 11, 2023

Why it matters: For crypto to truly scale, it will have to sacrifice some anonymity.

Arkham realized this, and decided to build an intelligence product instead of a typical B2C on-chain analytics SaaS as there’s not much moat there.

For builders and investors: While privacy technology has a lot of benefits, it’s also much harder to build a working business with privacy offerings as its core value prop.

We’ve seen players like Aztec Network shifting away from its privacy-focused thesis — this is because you’re going against the incentives of governments, regulators, and existing compliance rules.
If you’re building a privacy-first product, you better have a lot of mental toughness and psychic income.

CASE STUDY

Institutional Investors Avoid Self Custody

Tastycrypto

Credits to PwC and Aspen Digital for the original report.

State of play: The PwC and Aspen Digital report highlights the rising demand for institutional-grade digital asset custody in Asia.

Institutional investors are also realizing the limitations of self-custodial solutions for their trading and operational requirements.

Asian institutional investors are increasingly using third-party custody services.
Self-custody solutions offer users complete control over their digital assets, thus, the security of it is on the users’ hand.
The report shows that institutions prefer third-party custody providers due to their specialized capabilities, specifically in security.
As of April 2023, there are over 120 crypto custody providers, including well-known institutions like Citigroup and Deutsche Bank.
Digital asset custodians address security risks using advanced technologies, adapting to regulations and fulfilling investor expectations for insurance coverage.

Our take: Institutional market participants will always be limited by existing compliance rules that won’t make them adopt the entire crypto ethos.

A bank or a giant hedge fund that enters the space can’t continue to operate with 100% self-custody practice as that increases security, counterparty, and incentive-alignment risks.
Even the collapse of FTX was partially because of the lack of separation between custody and other business — FTX Japan was able to return capital to its customers because Japan had the rules to segregate users funds.

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INSIGHTS

Vitalik Sold Some ETH?

@lookonchain

@lookonchain reported that a giant whale linked to Vitalik Buterin with address "0x9e92" deposited 2,013 ETH ($3.76M) into OKX.

The address "0x9e92" received 22,300 ETH ($41.6M) from Vitalik from Dec 30, 2022 to May 18, 2023.

@lookonchain

FEATURES & GOVERNANCE UPDATE

Aave Set to Launch GHO Stablecoin

@AaveAave

Aave has proposed launching its stablecoin GHO as an ERC-20 token on the Ethereum mainnet.

The proposal aims to introduce GHO through Facilitators, enabling users of Aave V3 to generate GHO by using their collateral.
Decentralized governance within the Aave DAO will grant the ability to modify the interest rate of GHO.
The proposal voting started yesterday and will be closed on July 14.
The proposal combines two previously approved Facilitators: the Aave V3 Ethereum Pool Facilitator and the FlashMinter Facilitator.
The proposal also outlines a strategy to leverage Staked Aave tokens as a means to decrease borrowing expenses for users of the GHO stablecoin.

Why it matters: The introduction of GHO would make the decentralized stablecoin ecosystem more competitive, provides additional revenue for the Aave DAO, and expand the interest-bearing asset ecosystem in DeFi.

Other notable feature updates:

Blur launches V2.
ZigZag launches Zap.
Redacted Cartel launches Hidden Hand V2.
Pika launches V4.
Dydx launches the V4 public testnet.
Gnosis launches Gnosis Pay.
stUSDT goes live.
Archway L1 goes live.
Surge goes live on Arbitrum.
USDt goes live on Kava.
Pendle goes live on BnB Chain.

QUICK BITES

FTX launches its claims portal.
Russia to pilot Digital Rouble in August.
Multichain transferred another $103M.
Tokenized US Treasuries surpass $600M.
BIS says 15 retail CBDCs are likely by 2030.
Temasek has no interest in crypto for now.
GBTC discount narrows to lowest since May 2022.
Republicans ask JD, SEC to investigate Prometheum.
Cboe reaches surveillance sharing agreement with Coinbase.
Standard Chartered revises Bitcoin price target to $120,000.
Mantle Network proposes to form a $200M Ecosystem Fund.
Former FTX exec probed over possible campaign finance violations.

MEME & NOTEWORTHY READS

Stacy Muur’s read on modular blockchains.
ZachXBT’s read on investigation into Blue Jack Youtuber.
@takenstheorem’s read on Ethereum new data economy.

CEO of Arkham Intel (the co with the tagline "deanonymizing the blockchain" that wants ppl to dox each other to earn shitcoins) flexing in an extremely awkward video titled "HE SPENT HOW MUCH?!!" in which he is described as a "crypto fucking god" and spends £2500 on sunglasses
— 𒐪 (@SHL0MS)
7:41 PM • Jul 10, 2023

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Disclaimer: All the information presented in this publication and its affiliates is strictly for educational purposes only. It should not be construed or taken as financial, legal, investment, or any other form of advice.