Tick-tock, Mr. Gensler! đŸ„¶

Plus, packing more punch into Ethereum L2s, Arthur Hayes on betting smart, and more!

November 04, 2024

Good Monday! I’m Juan Aranovich, managing editor of Unchained.

In today’s edition:

  • 🚹 SEC targets Immutable: Is time on its side?

  • 🌐 Ethereum blobs boost L2 boom

  • 📊 Election bitcoin bets: Arthur Hayes plays it cool

  • 📉 Metawin hit with wallet exploit

  • 📈 Bitcoin mining: Show me the money

  • đŸš« Tether blockchain: Maybe later?

  • ⚡ Bitcoin volatility shows pre-election jitters

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What’s Poppin’?

Immutable Gets SEC’s Attention

Blockchain gaming company Immutable has found itself in the SEC’s crosshairs, receiving a Wells Notice that flags potential securities violations. With a possible change in administration just around the corner, however, the SEC’s ability to take action may be limited. 

Both major candidates have hinted they’d be open to replacing SEC Chair Gary Gensler, meaning a new leader could take a different approach to crypto regulation altogether.

Immutable, which specializes in putting in-game assets on the blockchain, was quick to defend its operations, calling out the abrupt nature of the SEC’s notice. 

The situation underscores a lingering challenge in the industry: regulators often wield a heavy stick, leaving crypto companies to speculate on what, exactly, they need to fix. The crypto community—and Immutable itself—is hoping for clearer, more constructive guidelines in the future.

Ethereum’s “Blob” Activity Fuels Layer 2 Growth

On the tech front, Ethereum has seen an unprecedented spike in “blob” usage—a key metric tied to the rising popularity of Layer 2 networks. 

For those out of the loop, blobs allow L2s to compress and post transactions to Ethereum’s main chain at a lower cost, thanks to the Dencun upgrade. Imagine blobs as a way to pack extra luggage into an already full suitcase without paying hefty fees—L2s can process more transactions, and the costs stay manageable for users.

The surge in blob usage has another benefit: it contributes to ETH’s tokenomics by burning blob fees, effectively reducing the total supply of ETH over time. The growing activity among L2s also counters the argument that they’re merely “parasitic” on Ethereum; rather, they’re helping scale the network in a sustainable way. 

Arthur Hayes: Focus on the Fed, Not Election Night

While many are buzzing about potential market swings tied to the U.S. presidential election, Arthur Hayes has a different perspective: the Federal Reserve’s monetary policy could be a far more powerful driver for bitcoin.

Hayes isn’t keen on trading election outcomes, seeing them as noisy—like betting on which way the wind might blow. Instead, he’s watching for signs that the Fed might revert to quantitative easing (QE). The ongoing rise in government debt may force the Fed to inject liquidity back into the economy, which historically bodes well for assets like bitcoin as investors look for inflation-resistant alternatives.

So, as tempting as it might be to try and predict which candidate will swing the crypto market, Hayes’s message is clear: keep an eye on the Fed’s moves, not just the political play-by-play. It’s a good reminder to stay focused on the big picture—one that could see bitcoin soaring again if the economic pressure cooker keeps heating up.

Metawin Loses $4 Million in Ethereum, Solana Wallet Exploit

Online casino Metawin lost $4 million in an exploit on Sunday after an attack on the platform’s withdrawal system drained funds from hot wallets on Ethereum and Solana. 

Onchain sleuth ZachXBT shared details of the attack on a Telegram investigations channel. ZachXBT also identified 115 addresses linked to the exploit, noting that the stolen funds had been transferred to crypto exchange Kucoin and a HitBTC nested service. 

Metawin CEO Skel said in Discord that the platform had temporarily disabled withdrawals, but that it had later resumed service for 95% of users.

In a subsequent update, Skel said: “It’s in the hands of the feds now,” and implied that he had topped up the hot wallets using his own personal funds. 

“I just emptied my piggy bank,” he said. “We don’t dwell on it. We keep building.”

Bitcoin Mining Still Profitable Even as Cost Rises to $49,500

Bitcoin miners have had a tough year, but mining the OG cryptocurrency is still profitable at current prices, according to a report by CoinShares.

Data compiled by the firm shows that, across all listed miners, the average cost of producing one bitcoin is now $49,500, based on Q2 cash costs data, up from $47,200 in Q1. That figure doesn’t factor in depreciation or stock-based compensation, whose inclusion would push the cost up to as much as $96,100.

CoinShares forecasts that the total network hashrate will be close to 765 exahashes per second by the end of the year. 

Assuming that bitcoin reaches a price of $130,000 by December 2026, and that the cost of electricity remains at its current industry average of $0.045 per kWh, it would take 27 months to see a full return on capital.

Based on that trajectory, and capital expenditure considerations, it’s more profitable to invest in bitcoin directly, at least on a four-year horizon. Buying 1 BTC today would yield a 234% return in four years, while a mining operation would yield 62% over the same period.

Tether CEO: ‘No Plans to Build Official Blockchain’

Tether CEO Paolo Ardoino dispelled rumors of a so-called Tether chain on Monday, saying on X that the firm has no plans to build its own blockchain at this time.

“Simply different independent L2 solutions are working to support USDT for gas fees,” Ardoino said.

One of the main reasons behind that decision comes down to “neutrality,” which Ardoino said underlines the firm’s interest in partnering with other firms rather than centralizing operations.

USDT reached a record 330 million onchain wallets and accounts in Q3.

Ardoino last week dismissed rumors that the stablecoin issuer was the subject of a U.S. Department of Justice probe, also revealing that it holds 82,454 BTC and 48.3 tons of gold in its reserves. 

Bitcoin Volatility Spikes Ahead of U.S. Election

Bitcoin’s volatility index is at a three-month high as traders brace for the outcome of Tuesday’s U.S. presidential election on crypto markets. 

Data from TradingView shows that Deribit's bitcoin implied volatility index rose to an annualized 63.24% on Sunday. 

Meanwhile, analysts at QCP Capital said that bitcoin’s seven-day implied volatility rose to 74.4% — much higher than the previous seven-day reading of 41.4% and suggestive of “a significant risk premium around the elections.”

Markets appear to be pricing in a Donald Trump victory as the more bullish scenario, based on the price action that followed the Republican candidate’s odds dropping on prediction markets Polymarket and Kalshi. 

Options market data suggests a one-standard-deviation move of around 9%, said Laevitas analyst Nazri Nordin, noting that the election-driven premium was even higher than the premium linked to events such as what he described as “the Iran-Israel news.”

At the time of writing, bitcoin was trading at $68,838, up from an intraday low of $67,482.

by Kristin Smith

Whoever winds up prevailing in Tuesday’s momentous US presidential election, one thing is clear—crypto has already won.

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Mark Your Calendars! 📆

On Wednesday, November 6, Bits + Bips will do a live-streamed show at 4:30pm ET! Join hosts James Seyffart and Alex Kruger, with special guest Noelle Acheson, to discuss all things election! Link and more details to come.

Daily Bits
 ✍✍✍

  • 🛑 Ethereum researchers Justin Drake and Dankrad Feist resigned as advisors to EigenLayer, citing neutrality concerns after a controversy involving significant token payments, sparking new calls for Ethereum Foundation conflict-of-interest policies. Meanwhile, the EIGEN token continues to hemorrhage value. Since its launch last month, it has slumped almost 50% and is trading at an FDV of less than $4 billion.

  • ⏳ Tornado Cash developer Roman Storm’s trial on charges related to crypto laundering was postponed until April as his defense seeks to protect witness information through a November appeal.

  • đŸ§‘â€âš–ïž DWF Labs’ managing partner announced potential legal action against former partner Eugene Ng after allegations of drink-spiking emerged, intensifying internal investigations.

  • đŸ›ïž The U.S. government is pursuing the return of $13 million in political donations from former FTX executives, extending negotiations with PACs, including the Senate Majority PAC and Future Forward.

  • 📜 Taiwan’s finance sector regulator announced stricter rules for crypto listings and compliance from January 2025 that will require virtual asset providers to register for anti-money laundering compliance and implement measures for security, record-keeping, and customer support, with penalties for breaches.

Today in Crypto Adoption...

  • 🏩 Major TradFi institutions keep choosing Ethereum, with UBS launching a tokenized money market fund on Ethereum, following BlackRock and Franklin Templeton’s forays into blockchain-based funds backed by traditional assets.

  • đŸ’” Another stablecoin debuted as Paxos launched U.S. dollar-backed token Global Dollar (USDG) in collaboration with Singapore’s DBS Bank, aligning with the city-state’s regulatory framework for stablecoins.

  • 🇾🇬 Singapore’s central bank released frameworks to drive tokenization in finance, focusing on deepening liquidity and creating common settlement networks for assets such as fixed income and foreign exchange, while its Project Guardian outlines standards for tokenized fixed income and funds.

The $$$ Corner


  • 💾 Superscrypt, backed by Singapore sovereign wealth fund Temasek, unveiled plans to raise $100 million for a new blockchain venture fund with Temasek and fintech firm Republic as lead partners, despite the sovereign’s past FTX losses.

What Do You Meme?

📈 Your Market Update 📉

  • BTC is up 0.6%, trading at $68,754

  • ETH is up 0.7%, trading at $2,469

  • BTC dominance: 56.64%

  • Crypto market cap: $2.41T

*All data as of today, 06:38 am ET. Source: CoinGecko

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