Many people's confidence has been shattered by the FTX-related occurrences. How did a significant cryptocurrency exchange fall apart so quickly? Why do such meltdowns seem to be recurring? In situations like these, it is beneficial to have a long-term perspective on the web3 industry as a whole.
Web3 is a software-driven innovation that has a built-in financial system. In DeFi, where data and analytics are free and publicly accessible, the balance sheets supporting lending or trading are transparent**. Anyone with an internet connection can track a protocol’s assets and liabilities on a per-second basis and that’s what we need to strive for.**
The Internet has created a more interconnected world, accelerating the age-old problem of greed and exploitation by those in positions of power. Structural reforms to CeFi and to traditional institutions will help, but risk is intrinsic to intermediation. DeFi still has much room for improvement, but through its transparency and self-custody it has begun to prove the utility of new forms of consumer protection for a digital world.
Another difficult period has come for Web3, and for some time to come, "crypto" will be the subject of unfavourable news. But it's crucial to keep in mind that everything in these headlines relates to web3's trading and speculation component. The underlying software innovation, which is far more significant, is going uninterrupted. And that's what we're still really enthusiastic about and what we'll keep supporting!
Total Crypto Market Cap: $903B (-13.95%)
DeFi TVL: $42.56B (-21.51%)
Stablecoins: $141.23B (-3.13%)
Concerns around possible censorship of Ethereum transactions was prevalent in the weeks leading up to and after the Merge, but the latest data shows that this upward trend may be reversing.
To no surprise and given the constant research and development, the current blockspace and orderflow market dynamics are getting more interesting by the day, with MEV paving its way to effectively become the Millennium Prize Problem of crypto. Flashbots, the research collective responsible for democratising the block builder role through their block bundle relay mechanism, are now turning towards a new challenge, to decentralise block building itself. Flashbots began by publishing Flashbots—Frontrunning the MEV Crisis, a call for action for the entire crypto community in order to mitigate the negative externalities of MEV on public ALL blockchains. The idea was to propose a permissionless, transparent, and fair ecosystem for MEV extraction that would protect and reinforce the ideals of Ethereum.
Figure 1 - The MEV Landscape by Flashbots.