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What an airdrop!

Uniswap distributes its governance tokens to all historical users

Following the recent SUSHI drama, which we covered in the previous digest, the largest decentralized exchange Uniswap launched its native governance token UNI. One billion tokens will be released over the next four years, with 15% of total supply to be distributed among historical users, liquidity providers, and SOCKS tokens redeemers/holders.

In other words, all Ethereum addresses that were ever used to exchange tokens via Uniswap protocol — including ~12,000 addressees that only submitted failed transactions — are eligible for a 400 UNI airdrop, worth around $1,200 on the day of the announcement. After the 4 years period since genesis allocation, an annual inflation rate of 2% will start rolling in order to continue incentivizing liquidity providers with UNI tokens.

The Uniswap protocol was created by a VC-backed company, so it needs to repay its investors. Even though the decentralized exchange has recently surpassed Coinbase by trading volume, the company doesn’t generate any direct profit from that, because all exchange fees go directly to liquidity providers. Thus, many analysts were anticipating the launch of a native token as a way to fund the further development and repay to investors. According to the official post, 40% of genesis UNI supply is allocated to investors, advisors, and the team.

Meanwhile, Uniswap’s most hyped rival SushiSwap has successfully migrated more than $800 million of crypto assets from Uniswap to its own automated market maker (AMM) protocol and reduced liquidity mining (also known as yield farming) rewards from 1,000 to 100 SUSHI per block. Additionally, 9 leaders were elected by the community to temporary control the project’s funds via a multisig wallet while the protocol will pursue further decentralization. The community has also voted to hardcap the total SUSHI supply at 250 million.

Network congestion

Ethereum transaction fees spiked again

Shortly after the UNI airdrop announcement, the number of pending transactions on the Ethereum network jumped by 30%, sending an average transaction fee above $11. Following the network congestion, Coinbase Pro announced that it will charge its customers network fees during withdrawals.

Apart from legit DeFi projects, the Ethereum network is clogged by allegedly Ponzi scheme protocols that use multi-level marketing and the so-called “price floor”.

Despite network congestion, though, Tether performed another larger swap, moving 1 billion USDT from TRON to Ethereum.

While DeFi users struggle with high gas fees, the proposal for the first phase of Ethereum 2.0 has been formally submitted, moving its launch a bit closer. The first phase — also known as “Serenity Phase 0” — will implement the beacon chain, which will be responsible for synchronizing shard chains.

Ethereum 2.0 is a long-awaited transition from the current proof-of-work to a proof-of-stake consensus algorithm, which is expected to help with network congestion by distributing data among multiple shards.

In other news

  • DeFi lending protocol bZx has suffered from a third exploit this year despite being audited by top security firms Peckshield and Certik. While two previous incidents allowed hackers to steal less than $1 million, the latest exploit led to the loss of $8.1 million of user funds. According to the official post, the insurance fund will cover the losses.

  • US-based cryptocurrency exchange Kraken announced that it has obtained approval from the State of Wyoming to create America’s first crypto bank. Additionally, U.S. federal regulators has officially clarified that national banks and other U.S. financial institutions are allowed to hold reserves for stablecoin issuers.

  • Following suit, Switzerland passed a new legislation that allows companies to create digital shares and other tradable assets. The Indian government, on the contrary, is reportedly planning to ban cryptocurrency trading in the country.

  • Hong Kong’s Bitcoin Association launched a massive “Bitcoin Tram” ad campaign that was funded by the community. The campaign includes trams and billboards with a slogan “be your own bank” located outside of the Bank of China HK, and HSBC. According to Reuters, global banks are screening their HK clients for potential ties to city’s pro-democracy movement.

  • Michael Saylor, the founder of Nasdaq-listed business intelligence firm MicroStrategy, disclosed that his company has acquired an additional $175 million worth of Bitcoin, increasing the total holdings up to 38,250 Bitcoin — worth around $416 million at the time of writing.

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