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News Summary 1/4: Bitcoin, Chainlink, Aave, NFT, and Polygon

Bitcoin turns 13 years! Chainlink announces that staking will be implemented in 2022. Aave is evolving rapidly. The NFT sector is also growing fast. Polygon quietly fixed up a massive vulnerability.

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Bitcoin turns 13 years

The new year always starts with Bitcoin’s birthday! Yesterday was the 13th time when we had reason to celebrate the world’s biggest cryptocurrency. Satoshi Nakamoto launched the Bitcoin blockchain on January 3, 2009.

The First Bitcoin block is called the genesis block. Nakamoto included the following statement in it:

The Times 03/Jan/2009 Chancellor on brink of second bailout for banks.

This is a reference to the front page of The Times on that day.

The year 2021 ended in a huge disappointment for many investors. The Bitcoin 100K target price was not reached. Unlike many expected, December was quite a depressing time in the market.

At this point, it’s worth zooming out and looking at Bitcoin’s price on its previous birthdays. This year the price is almost 7x higher than two years ago and more than 12x higher than three years ago. That’s a decent annual return, isn’t it?

Despite the disappointments in late 2021, Bitcoin’s fundaments look great. The hash rate of the network reached a new record of 207.53 EH/s over the weekend. You can check up-to-date information from here.

At the end of June, the hash rate was at its lowest at around 58 EH/s. This was due to the mining bans in China. Large mining companies were forced to drive down their operations and relocate to other countries. Bitcoin’s network has recovered quickly from what happened. Now it is safer and stronger than ever.

The year 2021 was full of historical events: El Salvador made Bitcoin a legal tender, Bitcoin’s Taproot update, and the first Bitcoin ETF in the United States. Maybe 2022 is the year for the 100,000$ price?

Chainlink staking will be launched in 2022

The year 2022 had barely begun when interesting news came out from Chainlink. The founder Sergey Nazarov announced that Chainlink staking will be finally implemented in 2022. Investors have been waiting for staking to launch since 2019.

Chainlink staking doesn’t work the same way is it does in Proof of Stake blockchains such as Cardano or Solana.  In these examples, staking is performed by the network validators and it’s linked to blockchain safety & maintenance.

Chainlink is a decentralized app (an oracle network) originally launched on Ethereum. It is not a platform and does not have its own blockchain. In the case of Chainlink, staking is performed by its oracles. The idea is to strengthen the security of the network. The video below goes through the topic well.

Chainlink has grown greatly during the last few years. It has been integrated into every significant DeFi application. Chainlink has become a critical piece of the DeFi infrastructure. However, the price of the LINK token is unchanged from January 2021.

The lack of staking explains the poor performance quite a bit. Investors have been excited about the aforementioned Proof of Stake smart contract platforms. Almost all non-staking projects have performed poorly in 2021. At least when compared to Proof of Stake alternatives.

Chainlink staking is quite complex and takes time to implement fully. It has been expected for more than two years, and we don’t have a release date yet When staking will be available it might move the LINK token back to the top 10 rankings

Aave protocol is evolving

Aave is one of the leading DeFi applications. It is a liquidity protocol, which allows users to collect interest on their deposits or take out loans through the protocol. The founder of Aave is Stani Kulechov from Finland.

Stani started the year 2020 by announcing Aave’s plans of building its own wallet.

Unlike many other projects, Aave has a license for providing payment services. This would allow wallet integration with Apple Pay & Google Pay.

There was also institution-related news at the end of December. The Swiss bank SEBA is the latest member of the Aave institutional platform. Aave has built a separate Aave Arc application that offers liquidity pools to banks and other financial institutions.

Institutions have a strong desire to earn yield from the DeFi market. This is due to the global environment of zero interest rates, which drives institutions to look for returns elsewhere instead of government loans. Aave Arc is a regulated solution for this need.

The third interesting news relates to the Centrifuge application.

At the heart of this DeFi application is the RWA market, which means real-world assets. These are tokenized assets like bonds. They can also be stocks, real estate, or any other real-world assets. You can check Centrifuge’s marketplace here.

In the future, Centrifuge’s RWA products can be used as collateral in the Aave protocol. This is an important step on the path of tokenization.

Aave is also releasing a new version of its application in 2022, Aave V3. You can read more about its features from here.

Is 2022 a successful year for the AAVE token? Its current price is still 61% below the ATH from May 2021. Like other DeFi tokens, Aave had a really bad Q3 & Q4 in 2021. A possible sectoral rotation towards DeFi tokens could well be one of the themes of Q1 2022.

NFT market is running hot

The term NFT finally became familiar even outside the crypto industry in 2021. The biggest headlines were seen in the spring before the general market crash took place in May. The NFT sector has continued to grow after that.

However, there are still some technical problems. Ethereum’s high transaction fees keep small investors away. The prices of popular NFT collections are also super high. For example, the Bored Ape Yacht Club (BYAC) NFT collection has a floor price of 72.5 ETH, which is about $270,000.

byac

The year 2022 has started with very strong demand. OpenSea marketplace has reached the third and fourth highest volumes in its history on January 2 and 3, according to Dune Analytics. The daily trading volume has been on both sides of $100 million over the last few months. The first days of 2022 have been 169, 243, and 255 million dollars.

Well-known rapper Eminem also ended up to headlines this week after purchasing his own monkey avatar for about $462,000!

There was also a significant NFT hack lately. About 615 ETH ($2.2 million) worth of the aforementioned Bored Ape Yacht Club and its mutant version NFTs were stolen from the owner of an American art gallery. The person had apparently clicked on a phishing link via Google and lost control of his Metamask wallet.

Stealing expensive NFT is a pretty bad idea these days. Selling can only be done in a couple of different marketplaces and not on regular cryptocurrency exchanges. Even if a hacker would make a sale privately, NFT’s movements can be tracked from the blockchain data. In the above case, OpenSea froze the stolen NFT’s making it impossible to sell them.

Polygon fixed a significant vulnerability

Polygon was one of the best-performing smart contract platforms in 2021. It is an Ethereum scaling solution and a sidechain, but Polygon can also be seen as an independent platform.

Polygon investors were relieved last week when the project announced it had patched a vulnerability that threatened all MATIC tokens. It was a bug in the smart contract related to MATIC staking.

The Coin Bureau channel goes through the incident in the video below.

Polygon discovered the issue on December 3 when a hacker managed to steal more than 800,000 MATIC tokens. The Polygon Foundation paid over $ 3.4 million in rewards to so-called white hat hackers who found the vulnerability.

The bug was eventually fixed up in two days. You can read a more detailed report on Polygon’s blog.

This was not the first time a serious vulnerability was found in Polygon’s code. Just over two months ago there was another $850 million bug. In this case, Polygon paid a $2 million bounty to the finder of the vulnerability.

Although user funds were not lost and the MATIC token price has not suffered from the cases, these are good reminders of the risks associated with cryptocurrencies. A serious bug can be detected one day too late when the hacker has already dumped the tokens on the market and crashed the prices. Whether it’s Polygon or any other cryptocurrency.

Polygon didn’t report both cases intentionally until weeks after the incident. The first step is to ensure that the vulnerability is actually patched, i.e. the new software version works. Other hackers would seek to exploit the vulnerability if it were immediately reported.

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