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FSB calls for global regulation of multifunction crypto firms

  • The Financial Stability Board (FSB) says multifunction crypto-asset intermediaries (MCIs) are critical to the cryptocurrency ecosystem.
  • However, their business models have vulnerabilities and risks that may negatively impact global financial stability.
  • The FSB recommends a global approach and cooperation on regulation of these MCIs.

The Financial Stability Board (FSB), an international organisation that monitors and makes recommendations about the global financial system, is seeking for greater cooperation among national regulatory bodies when it comes to the regulation of crypto.

In particular, the FSB has called for cross-border collaboration between different regulators across the globe in the supervision of multifunction crypto-asset intermediaries (MCIs). While critical to the crypto ecosystem, there are risks and vulnerabilities linked to crypto behemoths that combine services and products.

These risks can be impactful on global financial stability, the FSB said.

MCI vulnerabilities

In its report published on Tuesday, the FSB describes MCIs as “individual firms, or groups of affiliated firms – such as FTX (prior to its failure) – that combine a broad range of crypto-asset services, products, and functions.”

Per the Swiss-based organisation, these services and products typically marks a trading platform’s operations and bear similarities to those handled in traditional finance.

However, unlike in crypto, traditional finance platforms do not usually offer all these under the same entity. Often, restrictions are applied “to prevent conflicts of interest and promote market integrity, investor protection, and financial stability.”

While it says vulnerabilities in crypto, including leverage, liquidity mismatch, and technology, are not dissimilar to those in traditional finance, a combination of functions only works to exacerbate the potential vulnerabilities.

Examples of combined functions at MCIs include proprietary trading, market making and lending and borrowing. FSB pointed to the collapse of crypto-friendly banks this year as an indicator of how growing interconnectedness could pose risks.

Allowing crypto firms to combine different activities as is with MCIs risks vulnerabilities that can have negative impact on the global financial system, FSB warned in its report. A global approach to regulatory enforcement across the crypto-asset markets is therefore needed, the agency recommended.

Concerns and issues in the latest report are a follow up on FSB’s February 2023 report on risks of decentralised finance (DeFi) on financial stability. The FSB also released a global regulatory framework for crypto, which the G20 endorsed in September this year.

As highlighted last week, crypto exchange Binance agreed a historic $4.3 billion penalty as settlement with US authorities, with its founder and then CEO stepping down.

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dYdX trading and launch rewards live after governance vote

  • dYdX trading and launch rewards went live on the dYdX Chain on November 28.
  • dYdX users can now earn rewards for using the dYdX Chain, with $20 million set for launch rewards.

dYdX trading rewards are live on the dYdX Chain, the decentralised derivatives trading protocol announced on Tuesday.

This comes as the platform began its full trading after progressing from the beta stage, with the move made possible following a community vote. 

dYdX Chain progresses to full production trading

The dYdX Chain’s mainnet beta went live on November 14, with trading available across 33 markets and offering leverage of up to 20x. The platform recorded more than $1.86 million in trades across some 14k transactions over the two weeks.

With 100% of trading fees accrued by traders, the launch of full production trading on November 28 opens up trading rewards distribution to users. Unlike staking rewards, trading and launch rewards were inaccessible to traders during the beta stage. 

Rewards are paid in the native DYDX token.

“Following the conclusion of the governance vote earlier today, trading rewards are now fully enabled. Staking rewards for validators and stakers will continue to be paid in USDC and DYDX,” the dYdX Chain team wrote in a blog post.

Approximately 50,000 DYDX are available to traders as rewards each day and will be distributed immediately rather than traders having to wait for a month.

$20 million approved for launch incentives program

Other than the trading rewards, the community is also poised to benefit from a launch incentives program. Chaos Labs, an economic security and risk management platform for DeFi protocols, will manage the program while the dYdX Foundation will handle the distribution.

$20M of DYDX was approved for the incentives, with the funds taken from the dYdX Chain Community Treasury. The rewards will be distributed to the community over the next six months – 80% of which will be for trading activity and 20% for market maker activity.

According to today’s announcement, the launch incentives program will monitor the protocol, with possible adjustments to the above weights taken in tandem with the activity on dYdX Chain.

Full trading on the dYdX Chain will initially support four markets – Ethereum (ETH), Bitcoin (BTC), Solana (SOL) and Chainlink (LINK). 

New markets will be added continuously over the next few weeks, with these available via the dydx.trade frontend operated by the dYdX Ops subDAO, a community-run dYdX DAO.

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Animoca Brands now largest Validator in TON Network after strategic investment

  • Animoca Brands has secured its position as the largest validator on the TON blockchain.
  • Animoca Brands actively supports third-party gaming projects within the TON ecosystem.
  • Telegram’s endorsement of TON as its blockchain of choice for Web3-related developments in September adds weight to TON’s prominence.

Hong Kong-based venture capital firm Animoca Brands has made a significant move in the blockchain and gaming space, solidifying its position as the largest validator on the TON (Telegram Open Network) blockchain.

The strategic investment aligns with Animoca’s focus on gaming and metaverse projects, contributing to the TON ecosystem’s development.

Animoca Brands’ investment in TON

In a recent announcement, Animoca Brands confirmed its investment in the TON ecosystem, refraining from disclosing specific details regarding the terms of the investment. The firm is actively supporting third-party gaming ventures within the TON ecosystem, emphasizing its backing for TON Play, the blockchain network’s dedicated gaming infrastructure project.

In September, TON received a notable endorsement from Telegram, designating it as the preferred blockchain for Web3-related developments. This endorsement positioned TON as a significant player in the blockchain space, especially given the vast potential audience of Telegram, boasting a user base of 800 million. With Animoca Brands’ investment and involvement in TON, the gaming and metaverse sectors may witness increased innovation and collaboration within the TON ecosystem.

This strategic move by Animoca Brands underscores the growing intersection of blockchain and gaming, with TON providing a robust infrastructure for decentralized applications (DApps) in the gaming industry. As TON continues to gain support from influential players like Animoca Brands, it reinforces the blockchain’s position as a key player in the evolving landscape of Web3 technologies.

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Jito Foundation unveils governance token for Solana MEV development

  • Jito Foundation Launches Governance Token (JTO).
  • Impactful Solana MEV Mitigation by Jito Labs.
  • The JTO token will have a total supply of 1 billion.

Jito Foundation, the driving force behind Solana MEV developer Jito,  has made a significant move with the launch of a governance token, JTO.

This move aims to not only manage the protocol but also foster development in the Solana ecosystem. With a total supply of 1 billion JTO tokens, this initiative seeks to democratize decision-making within the Jito Network, allowing community members to play a pivotal role.

Empowering Solana’s liquid staking with JTO tokens

In a bid to address challenges posed by Maximum Extractable Value (MEV) on Solana, Jito Labs, backed by the Jito Foundation, has taken a proactive approach by launching a governance token, called JTO, for the Jito Network.

The Jito MEV network, consisting of validators, has now garnered over 40% of the Solana network’s stake weight. This statistic underscores the practical impact of Jito Labs in mitigating MEV-related issues on the Solana blockchain. Jito’s software enables Solana to run more efficiently and earn MEV rewards.

With a carefully crafted tokenomics model, the Jito Foundation has allocated 34% of the JTO tokens for community growth, emphasizing the importance of grassroots involvement. Additionally, 10% of the tokens are earmarked for an airdrop, a gesture recognizing the vital contributions of community members in bootstrapping the network.

With JTO, users can set fees for the JitoSOL stake pool, update delegation strategies by controlling StakeNet parameters, manage the DAO treasury of JTO tokens and revenue from JitoSOL, and contribute to the enhancement of the Jito Network.

Solana Ventures and Anatoly Yakovenko, co-founder of Solana Labs, are among notable investors in Jito Labs, which successfully raised $10 million in a Series A funding round last year.

This governance token launch by the Jito Foundation aligns with the broader trend of decentralized decision-making within blockchain projects. By involving the community in protocol management and development decisions, the Jito Network aims to strengthen its position within the Solana ecosystem.

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