Apologies for the missing letter last week — was not that nothing had happened but I was traveling. Been a bloody week this week with many calling for the official end of the bull market after BTC broke below 100k again -4% WoW and ETH at 3200 also -4%. DATs have been a big focus this time with scary headlines of them trading under water and even MSTR now affected. Probably more a gage of the overall sentiment than anything. In the news we had Greyscale filing for IPO, Perp DEX Lighter raised 68mm at a 1.5bn valuation, a Balancer Hack that spooked market and raised concerns about DeFi Vault curators and backdoor deals. Stay safe out there and enjoy reading!
Bat Tai Chi — btc21@mail.com
HEADLINES:
Balancer Hack — Multi-chain Mayhem and DeFi’s Tough Lesson
Balancer’s flash loan exploit was like a nasty wake-up call. Over $120 million drained in minutes from interconnected pools across multiple chains: Ethereum, Arbitrum, Berachain, and more. This multi-chain exposure made the impact feel like a tsunami sweeping through DeFi. The attack exploited a vulnerability in Balancer’s “manageUserBalance” function, allowing unauthorized swaps and draining assets rapidly. What’s scary is how quickly the exploit cascaded across networks sharing the same codebase but with different security postures. Berachain for example paused the chain and did a reorg coz the code sat so deep on protocol level while others went for freezing out attackers address. For OG DeFi protocols like Balancer, reputation takes a hit, and confidence in cross-chain operational security drops sharply. This, combined with USDX’s synthetic stablecoin depeg on PancakeSwap and Lista DAO, shows DeFi’s risk disclosure is still weak — with some backdoor deals and emergency liquidations happening behind the scenes. DeFi is maturing, but the scars of trust remain fresh.
Non-US Stablecoins Backed by Gold — Central Asia Leads New Era
Kyrgyzstan just launched USDKG, a government-issued stablecoin fully backed by physical gold reserves, pegged 1:1 to the USD. Kazakhstan is also eyeing a 1bn crypto reserve fund, using seized assets to back its initiative by 2026. These moves mark a bold push by governments historically skeptical of digital assets to embrace Web3, yet on their own terms. Meanwhile, across the pond, the UK’s Bank of England announced strict stablecoin holding limits — just £20k per coin for individuals and £10mm for businesses. It’s clear regulators remain wary of stablecoins becoming the “new Euro dollars,” nervous about systemic risks and financial sovereignty in the 21st century crypto economy. A fascinating clash between innovation and regulation is unfolding.
Coinbase Launches ICO Platform — Back to the ICO Future?
November 10 saw Coinbase unveil its new ICO platform aiming to “set a new industry benchmark” for token issuance. The platform promises more sustainable, decentralized token sales, pulling lessons from past frenzies and the rise of airdrop controversies. Bitwise’s Matt Hogan recently highlighted that crypto capital formation is evolving, with institutional flows ramping up but requiring new transparency standards. This comes as debates rage over token allocation disclosures, notably around Wintermute’s market-making. The era of opaque token deals is facing scrutiny like never before — but will institutional and public crypto users find common ground?
QUOTES:
TBH this is the easiest bear market I’ve ever seen. Seems like most of you have forgotten what 2022 was like. Luna collapsing, then 3AC, then FTX, then Genesis, BlockFi, Axie, NFTs — pretty much everything felt like a house of cards. And then after all that stuff collapsed, the BANKS collapsed, stablecoins depegged, Gary Gensler and the president tried to destroy almost every company in the industry — I really wasn’t sure how much of this stuff was going to survive. Compared to that? This is breezy. Prices have gone down, yeah whatever. Fundamentals are great. Crypto is working. So relax, get something to eat. Lock in. We’ll be fine.
Haseeb Quershi — Managing partner at Dragonfly
DUMMIES GUIDE TO BEING QUANTUM SAFE. In the past it was about protecting your PRIVATE KEY (your seed phrase). In the age of big scary quantum computers (BSQC) that are coming, you need to protect your PUBLIC KEY also. Basically a BSQC can figure out your private key from a public key. The present day taproot addresses (the latest format) are NOT safe, these are addresses starting with “bc1p” and they embed the public key into the address, not good. Prior formats hide the public key behind a hash, so a BSQC can’t easily crack it.
Willy Woo
Today Coinx`base is announcing our decision to leave Delaware and reincorporate in Texas. This decision was not made lightly, but we’ll always do what’s best for our customers, our employees, and our shareholders.
Paul Grewal — Chief Legal Officer coinbase