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Magic Eden follows OpenSea with NFT royalty enforcement tool

The open-source Open Creator Protocol of the NFT marketplace will enforce NFT creator royalties for new collections that opt-in to the tool.

Magic Eden, a Solana-based nonfungible token (NFT) marketplace, has become the latest platform to release a tool allowing creators to enforce royalties on their collections.

It follows the announcement of a similar tool from rival NFT marketplace OpenSea in early November.

According to a Dec. 1 statement, the open-source royalty enforcement tool is built on top of Solana’s SPL token standard and is called the Open Creator Protocol (OCP). This will allow royalty enforcement for new collections that opt-in to the standard starting Dec. 2.

Lu previously floated the idea of NFTs designed to enforce royalties at Solana’s Breakpoint 2022 conference on Nov. 5, citing the need for NFT creators to have a “sustained revenue model.”

Creators who use OCP will also be able to ban marketplaces that have not enforced royalties on their collections. Magic Eden will still maintain optional royalties on its platform for collections that do not adopt OCP.

2/ Solana’s community has been waiting for a resolution on royalties.

When we went to optional royalties mid Oct, we said we hoped to soon return to a royalty respecting world. However, royalties needed protection at the protocol level to be truly defensible.

— Magic Eden (@MagicEden) December 1, 2022

In a Dec. 1 Twitter thread, Magic Eden said it “can’t retroactively apply OCP to existing collections,” telling creators they will have to conduct “burn [and] re-mints” where the NFTs are sent to an unrecoverable wallet address and re-issued by the collection.

“We have been in active conversations with multiple ecosystem partners to identify solutions for creators in a timely manner,” Lu said in the statement. He added the marketplace’s intention with OCP was to “immediately support royalties” for new collections while it coordinates with other partners for more solutions.

Related: Coinbase claims Apple blocked wallet app release over gas fees

An additional feature of the protocol touted by Magic Eden is the ability for creators to introduce dynamic royalties — that could reduce the value of royalties of buyers who pay higher prices — and customizable token transferability which could see, for example, NFTs limited to a number of trades or be subject to a trade freeze for a set period of time.

Magic Eden moved to an optional royalties model in October allowing buyers the option to set the royalties they wish to contribute to projects, which split opinions in Twitter’s NFT community.

The OCP tool follows a similar on-chain tool launched in early November by OpenSea that restricted NFT sales to only marketplaces enforcing royalties.

Magic Eden created a similar royalty enforcement tool, MetaShield, in partnership with peer marketplace and aggregator Coral Cube in September before its move to optional royalties.

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Mike Novogratz: Bankman-Fried is ‘delusional’ and headed to jail

The Galaxy Digital CEO alleges Sam Bankman-Fried and his cohorts perpetuated fraud and suggested they should be in jail.

Former FTX CEO Sam Bankman-Fried (SBF) has been lambasted this week following a series of controversial public appearances, with Galaxy Digital’s Mike Novogratz one of the latest to dish out a lashing to the former kingpin of crypto.

On Dec. 1, Galaxy Digital CEO Mike Novogratz unleashed a tirade of criticism towards SBF concerning his interview with Andrew Ross Sorkin at the New York Times annual DealBook Summit on Nov. 30.

Speaking to Bloomberg, Novogratz characterized SBF as “delusional” following his declaration in the live interview that he never tried to commit fraud.

“It’s kind of surprising that his lawyers are letting him speak,” Novogratz said before adding “having watched two interviews, the word delusional kept coming to mind.”

The lambasting didn’t stop there with Novogratz echoing the sentiment from many prominent figures in the crypto community that jail time is necessary for the former FTX CEO.

“The reality is that Sam and his cohorts perpetuated a fraud. He stole money from people, people should go to jail.”

Galaxy Digital is among the victims of the FTX collapse having disclosed a $76.8 million exposure to the bankrupt firm.

The former FTX CEO also appears to be taking part in a spree of media appearances over the last few days.

During an interview on Good Morning America on Dec. 1, SBF insisted that FTX was not a “Ponzi scheme” but was “a real business” and denied knowledge of FTX customer deposits being used to pay Alameda’s creditors.

In a recent Twitter Spaces interview with IBC Group founder and CEO, Mario Nawfal, SBF again pleaded ignorance to what was occurring with his companies. When asked about what actually happened, his responses were very vague.

“I, you know, basically, and I should caveat this by saying that I, unfortunately, don’t have access to most of the data right now,” he said.

The reaction was equally vociferous with many suggesting that SBF was trying to paint a picture of his unfamiliarity and ignorance of what was going on.

Kraken co-founder Jesse Powell also called SBF out for misunderstanding how margin trading works.

SBF is completely full of shit about how margin trading works. He’s saying that the whole exchange operated on a net account equity model and anybody could borrow anything (in any amount?) from client funds or from nowhere. That’s not how it should work.https://t.co/3k7PkbAHVM

— Jesse Powell (@jespow) December 1, 2022

The creator of BitBoy Crypto, Ben Armstrong is understood to have arranged his own Twitter Spaces event with SBF, set for Dec. 3.

Related: ‘I never opened the code for FTX:’ SBF has long, candid talk with vlogger

Meanwhile, the crypto community has roasted SBF this week over his incoherent responses and lack of accountability.

On Dec. 1, Reflexivity Research cofounder Will Clemente said the NYT interview was painful to watch, adding, “SBF is clearly talking straight out of his ass. Can’t give a straight answer or even look at the camera. He’s just digging himself a deeper hole …”

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U.S. Trustee: FTX was the ‘fastest’ corporate failure in American history, calls for probe

The Department of Justice’s U.S. Trustee overseeing FTX’s bankruptcy case has moved for the court to appoint an independent examiner.

The United States Trustee handling FTX’s bankruptcy proceedings has referred to the now-defunct exchange as the “fastest big corporate failure in American history,” and is calling for an independent probe to look into its downfall. 

In a Dec. 1 motion, U.S. Trustee Andrew Vara noted that over the course of eight days in November, debtors “suffered a virtually unprecedented decline in value” from a market high of $32 billion earlier in the year to a severe liquidity crisis after a “proverbial ‘run on the bank.'”

“The result is what is likely the fastest big corporate failure in American history, resulting in these “free fall” bankruptcy cases.”

Vara has called for an independent examination of FTX, stating it was “especially important because of the wider implications that FTX’s collapse may have for the crypto industry.”

Independent examiners are typically brought into bankruptcy cases when it is in the interest of creditors, or when unsecured debts exceed $5 million.

This type of examiner has been called in other high-profile bankruptcy cases such as Lehman Brothers, and more recently to look into allegations of mismanagement by Celsius as part of its ongoing chapter 11 case.

“Like the bankruptcy cases of Lehman, Washington Mutual Bank, and New Century Financial before them, these cases are exactly the kind of cases that require the appointment of an independent fiduciary to investigate and to report on the Debtors’ extraordinary collapse,” the Trustee said.

Vara added that in regards to FTX’s collapse, “the questions at stake here are simply too large and too important to be left to an internal investigation.”

According to the motion, the appointment of an examiner — which requires the approval of the judge — would be in the interest of customers and other interested parties as they would be able to “investigate the substantial and serious allegations of fraud, dishonesty, incompetence, misconduct, and mismanagement” by FTX.

Additionally, the motion suggests an examiner could look into the circumstances surrounding FTX’s collapse, customers’ funds being moved off the exchange, and whether entities that have lost money on FTX are able to claim back losses.

Related: Former FTX CEO Sam Bankman-Fried denies “improper use” of customer funds

FTX’s CEO John J. Ray III, who replaced Sam Bankman-Fried on Nov. 11, has been highly critical of the firm’s operations since taking control, noting on the first day in court that there was a use of “software to conceal the misuse of customer funds” and “a complete absence of trustworthy financial information,” with control concentrated “in the hands of a very small group of inexperienced, unsophisticated and potentially compromised individuals.”

While the Trustee acknowledges interested parties will be concerned that the appointment of an examiner will have costs and may intersect with FTX’s internal investigation, he suggests that these concerns don’t negate the need for an examiner.

In related news, the U.S. Attorney’s Office for the Southern District of New York and U.S. Securities and Exchange Commission have reportedly sent a number of requests to investors and firms that worked closely with FTX, asking for information on the company and its key figures.

So far, the authorities are yet to make any charges but appear to be closely investigating the defunct exchange.

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Front-running scams rampant on YouTube with 500% surge in 2022: CertiK

The scam lures victims to download fake front-running bot software that swipes their assets once they try to initiate a transaction.

Front-running scam bots are significantly gaining traction on YouTube, with the number of dubious videos increasing six-fold in 2022 according to a new report from blockchain security firm CertiK.

In the firm’s Dec. 1 report, CertiK explores how a wave of front-running bot scams are promising free returns as high as 10X a day, but ultimately end up swiping people’s funds.

Notably, CertiK’s analysis found 84% of videos on YouTube mentioning “front running bot” were scams, with the number increasing 500% from 28 videos in 2021 to 168 videos in 2022:

“There are common themes in all of these videos: free code and huge returns. Successful runners won’t give away free code on a social media site, they will sell it for a large amount on underground forums.”

The scam itself generally sees victims being guided to downloaded fake bot software, which is designed to swipe their assets once they try to initiate a front-running transaction.

Even when they are not scams, front-running bots cause problems as they can give the deployer a distinct advantage over other crypto traders in certain circumstances.

The bots generally scan blockchains for unconfirmed transactions and then pay a greater gas fee to squeeze in ahead of said transactions, “essentially beating it to the punch and taking all the profit on offer” from a trade.

The report identified videos using dubious titles such as “$15,000 Front Running Crypto Bot Leak! – 50X HUGE RETURNS!” and “Uniswap Front Running Bot 2022 – EASY TUTORIAL (Huge profits)” in which scammers give fake tutorials on downloading and using the bots.

The videos’ comment sections are of course swarmed with countless bot comments praising the content so that real comments sounding alarm bells are buried under the noise.

An example of the typical comments found on front-running bot scam videos. Source: CertiK

Scam reports have been rife of late, as Cointelegraph reported on Nov. 22 that deepfake videos using Sam Bankman-Fried’s likeness were circulating online aiming to dupe people impacted by FTX’s bankruptcy.

Related: Metaverse exploitation and abuse to rise in 2023: Kaspersky

CertiK released a separate report on Nov. 17 outlining that crypto scammers have been using identities bought on the black market to put their names and faces on fraudulent projects. Described as “Professional KYC actors,” CertiK found that their identities could be purchased for as low as $8.00.

On Reddit on Dec. 1, members of the r/Metallica community were also sending out warnings over fake Metallica live streams featuring all the band members that linked to crypto giveaway scams.

Some members even claimed that the YouTube algorithm had been recommending the videos to them in their top recommendations.

Comment on r/Metallica: Reddit

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Breaking: Ankr confirms exploit, asks for immediate trading halt

The decentralized-finance protocol said it is already working with exchanges to immediately halt trading of aBNBc.

The BNB Chain-based decentralized finance (DeFi) protocol Ankr has confirmed it has been hit by a multi-million dollar exploit on Dec. 1.

The attacker was purportedly able to mint 20 trillion Ankr Reward Bearing Staked BNB (aBNBc), a reward-bearing token for BNB (BNB) staked on the protocol. The exploiter has since used services such as Uniswap, Tornado Cash, and various bridges to swap and obfuscate the funds and has successfully gained around 5 million USD Coin (USDC)

Seems that @ankr got hacked an hour ago!

The exploiter minted 20T aBNBc and dumped it on #PancakeSwap.

At present, the exploiter have successfully exchanged more than 5 million $USDC.https://t.co/hF1tgNYw0t pic.twitter.com/XIPjBi6wvs

— Lookonchain (@lookonchain) December 2, 2022

It’s believed either a vulnerability in the protocol’s smart contract or a compromise of private keys is to blame for the exploit.

Ankr only made a quick statement on its Twitter page that its “aBNB token has been exploited” and that it is currently working with exchanges to immediately halt trading of the compromised token.

Our aBNB token has been exploited, and we are currently working with exchanges to immediately halt trading.

— Ankr (@ankr) December 2, 2022

Cointelegraph contacted Ankr but did not receive an immediate response.

This is a developing story and more information will be added as it becomes available.

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Trader Joe takes its first step into the Ethereum ecosystem

Despite the new multi-chain vision, the Trader Joe team confirmed that its “true home” and “top priority for all growth efforts” will continue to be on Avalanche.

Decentralized finance (DeFi) protocol Trader Joe has announced its very first expansion from Avalanche and onto the Ethereum ecosystem, as part of its plans to access new markets and drive up user activity.

The decentralized trading platform announced its “multi-chain” expansion into Ethereum layer-2 scaling solution Arbitrum One on Dec. 1 and follows around a month after it stated its intention to expand to additional markets and ink new partnerships amid falling TVL and user activity in the third quarter.

We’re extremely excited to announce that @traderjoe_xyz has expanded into the Ethereum ecosystem with Arbitrum One as its destination! ‍ https://t.co/pjnoirxkVi

— Arbitrum (,) (@arbitrum) December 1, 2022

The team stated that they’re working closely with Offchain Labs — the team behind Arbitrum One — to launch a testnet “within the coming days,” before officially deploying it onto the Arbitrum One mainnet in January 2023:

“Deployment to Arbitrum One is the next step in this global expansion effort and we look forward to introducing the innovative AMM built on Avalanche, and also working with new partners to benefit the collective DeFi ecosystems of Arbitrum and Avalanche.”

The deployment comes as Trader Joe has also expanded its ecosystem through partnerships and integrations with wallets, data clients and other vectors” since the second quarter as a means to spread the exposure of Avalanche and the Trader Joe itself.

Among the most notable recent partnerships include that of Trust Wallet and Crypto.com.

Trader Joe added that the protocol’s original AMM — Joe V1 AMM — would also move onto Arbitrum One in addition to the Liquidity Book AMM, which will bring “zero slippage trades and discretized liquidity provisioning to all Arbinauts.”

As for why Trader Joe chose to deploy its AMMs on Arbitrum One, the team said they were impressed by Offchain Labs’ efforts in building an ecosystem of DeFi protocols on the network, which is indicative of its 53.4% market share in total value locked (TVL) across all Ethereum layer-2 scaling solutions.

“Deploying (the) Liquidity Book will be a great addition to the vibrant ecosystem,” the team added.

Image shared by Trader Joe regarding its recent Arbitrum expansion. Source: Joe Content.

Despite announcing that it was “time to go global” on Crypto Twitter, the Trader Joe team confirmed that its “true home” and “top priority for all growth efforts” will continue to be on Avalanche.

Trader Joe also also clarified that its token, JOE, in addition to lending platform Banker Joe, nonfungible token (NFT) marketplace JoePegs and its staking platform would not join Liquidity Book AMM and Joe V1 AMM on Arbitrum “in this initial phase.”

Related: New fix for curse of impermanent loss proposed on Avalanche

The announcement appears to have a positive impact on the price of JOE, which increased 13.35% from $0.163 to $0.185 over an eight hour period before cooling off to $0.179, according to data from CoinGecko.

Trader Joe is currently the top-ranked decentralized exchange (DEX) and third-ranked DeFi protocol on Avalanche with $94.13 million in TVL, trailing only Ethereum-native lending platform AAVE and Avalanche-based liquid staking provider Benqi, according to data from DeFi aggregator DefiLlama.

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This AI chatbot is either an exploiter’s dream or their nightmare

The crypto community has come across an AI-powered chatbot that can be used to audit smart contracts and expose vulnerabilities.

The online crypto community has discovered a new Artificial Intelligence (AI)-powered chatbot that can either be used to warn developers of smart contracts vulnerabilities or teach hackers how to exploit them. 

ChatGPT, a chatbot tool built by AI research company OpenAI, was released on Nov. 30 and was designed to interact “in a conversational way” with the ability to answer follow-up questions and even admit mistakes, according to the company.

However, some Twitter users have come to realize that the bot could potentially be used for both good and evil, as it can be prompted to reveal loopholes in smart contracts.

Stephen Tong, co-founder of smart contract auditing firm Zellic asked ChatGPT to help find an exploit, presenting a piece of smart contract code.

OMG WTF pic.twitter.com/I2hE0e5ppq

— cts (@gf_256) December 1, 2022

The bot responded by noting the contract had a reentrancy vulnerability where an exploiter could repeatedly withdraw the funds from the contract and provided an example of how to fix the issue.

This similar type of exploit was used in May by the attacker of the Decentralized finance (DeFi) platform Fei Protocol who made off with $80 million.

Others have shared results from the chatbot after prompting it with vulnerable smart contracts. Twitter user devtooligan shared a screenshot of ChatGPT, which provided the exact code needed to fix a Solidity smart contract vulnerability commenting “we’re all gonna be out of a job.”

omg. seriously mind-blown

we’re all gonna be out of a job pic.twitter.com/iwjjOTPDLY

— devtooligan (@devtooligan) December 1, 2022

With the tool, Twitter users have already begun to jest they’re able to now start businesses for security auditing simply by using the bot to test for weaknesses in smart contracts.

Excited to announce I’m raising for my new smart contract security consulting company.
It’s gonna be me just be throwing ChatGPT to fuzz your code. https://t.co/gSFyABd9M6

— eddie (⬅️,) (@0x_eddie) December 1, 2022

Cointelegraph tested ChatGPT and found it can also create an example smart contract from a prompt using simple language, generating code that could apparently provide staking rewards for Ethereum-based nonfungible tokens (NFTs).

ChatGPT’s example Solidity smart contract for NFT staking rewards from a simple prompt. Image: Cointelegraph.

Despite the chatbot’s ability to test smart contract functionality, it wasn’t solely designed for that purpose and many on Twitter have suggested some of the smart contracts it generates have issues.

The tool also might provide different responses depending on the way it’s prompted, so it isn’t perfect.

Related: Secret Network resolves network vulnerability following white hat disclosure

OpenAI CEO Sam Altman tweeted that the tool was “an early demo” and is “very much a research release.”

He opined that “language interfaces are going to be a big deal” and tools such as ChatGPT will “soon” have the ability to answer questions and give advice with later iterations completing tasks or even discovering new knowledge.

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FTX Japan drafts plan to return client funds

The Japanese subsidiary one of 134 companies been caught up in FTX’s bankruptcy proceedings but has been drafting a plan to return client funds.

The Japanese subsidiary of the now-defunct FTX crypto exchange has come out with a roadmap to resume withdrawals, after confirming that its customers’ assets are not part of FTX’s bankruptcy proceedings.

The firm provided an update on Dec. 1, stating it has been able to confirm that its customers’ assets “should not” be part of FTX Japan’s estate due to Japanese regulations which mandate that crypto exchanges must separate client funds from their own assets.

This was according to Landis Rath & Cobb LLP, the law firm representing FTX Group in the Chapter 11 bankruptcy proceedings.

FTX Japan was only launched in June this year after acquiring Japanese crypto exchange Liquid on Feb. 2. It was aimed at serving the exchange’s Japanese customers.

However, with liquidity issues experienced by its parent company in early November, withdrawals were halted at FTX Japan on Nov. 8, similar to its parent company.

Days later, the Financial Services Agency of Japan announced on Nov. 10 it had taken administrative action against FTX Japan and ordered it to suspend other business operations such as accepting new deposits while complying with a business improvement order.

The company was then listed as one of the 134 companies that formed part of FTX Trading’s chapter 11 bankruptcy filing on Nov. 11.

Since then FTX Japan has claimed their primary focus is to re-enable withdrawals, and are reportedly aiming to do so by the end of 2022.

Related: US Senate committee hearing on FTX fail brings gaps in regulatory authority to light

With the recent confirmation that its users’ assets are not considered part of FTX Japan’s estate, this would effectively provide them with a pathway to resume withdrawals for its users.

“Japanese customer cash and crypto currency should not be part of FTX Japan’s estate given how these assets are held and property interests under Japanese law,” the firm noted. 

FTX Japan said its management is in regular dialogue with Japanese regulators and has sent through the first draft of their plan to resume withdrawals, suggesting regular consultations will occur “as key milestones are met.”

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New York proposes to charge crypto companies for regulating them

The proposal is led by DFS Superintendent Adrienne Harris who is looking for public feedback on the move as the regulator looks to gain further oversight controls.

The New York State Department of Financial Services (DFS) has submitted a proposed change in state laws that would allow it to charge licensed crypto companies for regulating them.

While that may seem like an odd proposition, under Financial Services Law (FSL) it is common practice for the DFS to charge licensed non-crypto financial entities for the cost and expenses of maintaining oversight over them.

The proposal is led by DFS Superintendent Adrienne Harris, who announced the move via the DFS website on Dec. 1 and has submitted it for public feedback over the following 10 days.

Essentially, Harris is looking to bring virtual currency businesses in line with other regulated financial entities in the state, as FSL did not have a provision for crypto companies when crypto regulation was adopted in New York in 2015.

Harris also outlines that these “regulations will allow the Department to continue adding top talent to its virtual currency regulatory team.”

“Through licensing, supervision and enforcement, we hold companies to the highest standards in the world,” Harris said, adding that “the ability to collect supervisory costs will help the Department continue protecting consumers and ensuring the safety and soundness of this industry.”

According to the proposal document, the DFS would charge firms based on the total operating expenses of overseeing licensees, and the “proportion deemed just and reasonable” for other operating and overhead expenses.

As such, there isn’t a set figure that all companies pay as their amount of oversight differs, however, the total amount owing would be broken down into five payment periods over the fiscal year.

With the crypto sector witnessing yet another multi-billion implosion, this time as the result of now-bankrupt FTX, Alameda Research and former golden boy Sam Bankman-Fried, it is unsurprising that regulators are scrambling to impose extra regulatory oversight.

Related: We could use crypto regulation after FTX — But let’s start with basic definitions

In a U.S. Senate committee hearing on the FTX debacle on Dec. 1, Commodity Futures Trading Commission (CFTC) chair Rostin Behnam stated that while he feels his agency has the tools to oversee crypto, there are gaps in legislation that need filling.

“Without new authority for the CFTC, there will remain gaps in a federal regulatory framework, even if other regulators act within their existing authority,” he said.

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P2P Financial Systems panel: Crypto core values and transparency are critical for DeFi

Cointelegraph’s editor-in-chief Kristina Cornèr moderated a panel discussion on DeFi’s future among market dynamics, cyberattacks and regulatory uncertainty.

As one of the main growing sub-sectors in the crypto industry, decentralized finance (DeFi) has faced a challenging year amid market dynamics, cyberattacks and regulatory uncertainty. Its future demands more transparency and clarity in the regulatory landscape, according to a panel discussion at the International Workshop on P2P Financial Systems 2022 on Dec. 1. 

Moderated by Cointelegraph’s editor-in-chief Kristina Cornèr with Gaspard Pedruzzi, CEO of APWine; Daniel Perez, co-founder of Mero; Hugo Philion, CEO of Flare, and Niall Roche, CTO-in-residence at the University College London School of Management as panelists, the discussion focused on the DeFi future among a disruptive landscape worldwide.

Perez emphasized the need for transparency for DeFi’s long-term success, as well as the role of central bank digital currencies in promoting crypto’s core values to society and restoring trust in the industry following recent events such as the collapse of cryptocurrency exchange FTX.

“The point of using DeFi infrastructure is transparency […] Why not the OPEC nations should be able to be transparent too. […] If there is a formal, transparent and traceable solution, and it’s good to bring more confidence in the industry, like the stablecoins, I’m not going to say it shouldn’t be there.”, commented Perez.

After FTX: Defi can go mainstream if it overcomes its flaws

Regulation is a key point for DeFi. As Roche explained, innovation has been stifled due to the uncertainty of whether a project now complying with regulatory requirements today will be able to do so in the near future. Roche also noted:

“We need clear rules […]. People don’t know the limits. We need ways to ensure that it’s very clear with the lines and that there are rules there that you can test, verify that you’re on the right side of the line. Otherwise, we’d just be in this situation where regulation is not clear and innovation is delayed because people will try it, and they’ll get shut down.” 

Educating people about finances and technologies driving innovation is another challenge for DeFi development, since most people are learning about cryptos from friends or television. The panelists also emphasized that communication with society has been focused on making profit on cryptocurrencies, and not on promoting core values such as privacy and decentralization. Flare’s Philion stated:

“The primary product market right now is to get rich. There isn’t really a use case that ensures you can get rich. But that’s kind of the message we’re telling to people. […] I don’t think the primary thing we should be marketing to people is a way to get rich.”

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