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What is MiCA and what does the European regulation mean for crypto?

What is MiCAR, and what is the Eurozone market’s crypto regulation? Read the complete guide.

What is the MiCAR regulation, and what does it provide for? A more than legitimate question after the European Parliament approved in June 2023 the document that will regulate the cryptocurrency market in the Eurozone, published in the Official Journal of the European Union, and which will gradually come into effect during 2024.

This document is known by the acronym MiCAR or MiCA, which stands for Markets in Crypto-Assets and is the first EU regulation governing the cryptocurrency sector.

This regulation package aims to ensure investor protection through transparency obligations, requirements to operate, and prevention of abuse and to bring systemic order to the crypto asset sector. 

Let’s see what it establishes and how it changes the crypto landscape. 

From ICOs to MiCAR

The regulation of MiCAR was inspired by the phenomenon of crypto public offerings activities in 2017, better known as Initial Coin Offerings (ICOs). These have particularly attracted the attention of national and European lawmakers and regulators. 

The announcement in 2019 of the development of Libra, Facebook’s stablecoin, prompted states to approve regulation on this type of cryptocurrency quickly. Libra would have allowed the transfer of a private currency to billions of users within the closed circuit of the blockchain. 

The opportunities provided by MiCAR

The basic idea is that crypto assets have the potential to become efficient means of raising capital for small and medium-sized enterprises and, due to their inherently transnational nature, to offer themselves as instruments for new payment services while maintaining the European Union as a pole of 

Ensuring a unified regulatory framework would lead Europe to strengthen its industrial and innovation capacity within safe and ethical limits. Indeed, this Euro-unified regulation is unique worldwide and can turn Europe into the first ‘continental’ single market for new assets, securing it a leading position vis-à-vis other jurisdictions, including the United States. 

The current regulatory environment of cryptocurrencies

The European regulatory situation on crypto is highly fragmented and evolving. Each country has adopted its laws, making regulatory harmonisation difficult. France, for instance, has regulations for ICOs (Initial Coin Offerings), whereas Germany classified crypto as a digital currency and subjected it to specific taxation some time ago. Italy has also introduced the taxation of cryptocurrencies within the Budget Law for 2023.

The starting point: what is a cryptocurrency?

The EU’s first attempt was to search for a term and definition encompassing most types of cryptocurrencies and related activities. 

Hence, the term ‘crypto-asset’, defined as ”’a digital representation of a value or right that can be transferred and stored electronically, using a distributed ledger or similar technology”, was introduced.  

MiCAR: what it provides for crypto projects

The MiCAR addresses both crypto-asset issuers and crypto-asset service providers (CASPs). 

From now on, crypto-asset issuers can operate with prior authorisation. They must comply with various requirements, including transparency requirements and publishing a “white paper” detailing the rights and risks associated with the issued asset. Specific categories of crypto-assets must also comply with specific reserve, governance and price stabilisation requirements.

The whitepaper will thus provide transparency on aspects such as system architecture, security mechanisms, governance strategies and the intended use of the technology, thus facilitating investors’ understanding of the project. 

Additionally, CASPs (Crypto-Asset Service Providers) will need to register with national authorities and adhere to strict standards to protect their users.

MiCAR: what it provides for exchanges

The MiCAR stipulates that all companies providing crypto-asset-related services, such as custody, exchange, advisory, and others, must register with national regulators and adhere to strict organisational, operational, and business conduct standards. These standards include protecting clients’ assets, preventing conflicts of interest, and ensuring market transparency. The new framework also holds CASPs directly liable in case of bugs, exploits or insolvency. This will ensure that users are compensated if part of the platforms’ capital is lost. Furthermore, CASPs must keep a history of all transactions processed on their platform for at least five years.

MiCA: Combating Money Laundering Regarding anti-money laundering, the monitoring and enforcement of current regulations will be entrusted to the EBA (European Banking Authority). The entity will also maintain a register of companies that will be prohibited from engaging in CASP activities in the EU, which it will use to restrict the entry of organisations considered to be at “high risk” of money laundering into the market. Additionally, all companies dealing with Proof-of-Work crypto-assets must regularly submit documents attesting to their environmental impact. MiCA does not ban PoW cryptocurrencies but limits their spread by cutting public incentives directed towards this type of technology.

Crypto-assets as Financial Instruments While issuers must comply with MiCA directives concerning all crypto-assets that are not considered financial instruments, service providers must apply them regardless of the nature, value, or right that the crypto-asset incorporates.

The distinction between crypto-assets that can be considered financial instruments and those that cannot is a fundamental component of the entire regulatory framework. MiCA seeks to address all use cases of crypto-assets that were not previously covered by historical regulations, such as MiFID, which regulates crypto-assets akin to financial instruments, and PSD for those akin to electronic money and deposits.

Drawing on the principles of existing regulations, MiCA represents a new and complementary regulatory body which seeks to adapt to the peculiarities of the crypto sector.

New Legal Categorisation of Crypto-assets The first step was defining three categories of crypto-assets that, as mentioned, are not akin to financial instruments:

  • Electronic Money Tokens (EMT)
  • Asset-Referenced Tokens (ART)
  • “Residual” Tokens

The classification of tokens is still evolving and will, therefore, require further clarification from the relevant Authorities.

Let’s see the definitions of the three categories of tokens.

E-money tokens

Electronic money tokens (indicated by the acronym EMT) include all those tokens that refer to the value of a single legal tender fiat currency, such as the euro or the dollar. The difference with ‘asset-linked tokens’ is right here: they link to the value of a single fiat currency.  

This category would include many stablecoins, such as Tether, cryptocurrencies designed to maintain a stable value through a ‘pegging’ system to a trusted currency in a 1:1 ratio. The anchoring, whereby, for example, one unit of stablecoin always corresponds to 1 dollar, is ensured through currency reserves or algorithms. 

With the MiCAR, issuers and EMT providers will mainly have to comply with these obligations:

  • The European Banking Authority (EBA) will supervise and regulate all EMTs.
  • EMT issuers will need an ‘e-money licence’, similar to a standard bank licence, but with strict limits that do not imply the possibility to operate as a credit institution.   

Asset-referenced tokens

The second category, asset-referenced tokens (denoted by the abbreviation ART), include those tokens that are not EMTs and “aim to stabilise their value by reference to another value or right, or a combination thereof, including one or more official currencies.”

An example is Pax Gold, whose acronym is PAXG, an attempt to combine the advantages of gold and blockchain. This stablecoin reproduces 1:1 the value of gold, the precious metal of which its reserves are also composed. Pax Gold is issued by Paxos Trust Company. Thanks to this stablecoin on the blockchain, even small and fractional amounts of gold can be purchased.

With the MiCA, issuers and providers of ART will be subject to additional obligations, such as:

  • Unless deemed ‘significant’, all ARTs will be supervised by the European Securities and Markets Authority (ESMA). They are significant when they exceed certain thresholds, such as a market capitalisation of more than 5 billion. In this case, the EBA will take over. 
  • Only token issuers with a registered office in the EU can issue ARTs.  
  • ARTs not pegged to a European currency will be controlled to preserve the EU’s monetary integrity.   

The interpretive debate on EMT and ART

The debate on the definition of ART is particularly heated. It seems to extend to all stablecoins, thus constituting a broad set that includes the more specific one of EMT. However, for some, the interests and rights associated with ART are not easily compatible with those of EMT. 

Regardless of first impressions, it is clear that these definitions remain too limited to cover the various facets of stablecoins fully. A regulation that truly reflects the sector’s technological and legal characteristics will require true collaboration between the cryptocurrency world and the regulatory authorities, not a cramped ‘copy cut’ of the old regulations for the crypto market.

Residual tokens

The third category, the ‘neither meat nor fish’ category, includes all ‘residual’ tokens. This general category also includes utility tokens and all crypto-assets that do not qualify as ART or EMT—that is, those that do not peg their value to a fiat currency or basket of assets. 

Utility tokens provide digital access to a specific product or service. The MiCAR rules require transparency here but are less restrictive than those for EMTs and ARTs.

Companies issuing this type of token must create a White Paper, which must be published on the website of the organisation issuing the cryptocurrency.

This document should contain all fundamental information about the token, such as a detailed project description, how crypto is issued and sold, and the technologies on which it is based.

The case of Bitcoin

Although bitcoin (BTC) falls under ‘residual tokens’ in terms of categorisation, the exclusion from the Regulation is clarified in the Considerando. Here, it is said that the rule does not apply when a crypto asset is automatically created as a reward for blockchain maintenance or transaction validation. 

This regulatory approach demonstrates the choice to exclude blockchain technology’s most innovative and dynamic aspects. The division into three categories, while including a residual open category, excludes many crypto assets, effectively ignoring Bitcoin.

It is almost as if placing it in limbo, neither currency nor financial instrument, is the best way to make it as harmless as possible. This is if it is true that every good or bad law ends up being perceived positively because its mere existence can incentivise investment and a certain trust in the entire ecosystem. 

The fact remains that we continue to ignore the elephant in the room. Bitcoin is the most popular crypto asset by far, the number one by market capitalisation, with a dominance (Bitcoin’s valuation relative to the overall cryptocurrency market valuation) of over 50%. In addition, almost all of the market players for which MiCAR is intended offer related services. Bitcoin is unique in its decentralised governance characteristics, against which the regulator’s ambitions of control continue to clash without finding a solution. 

DeFi, the great absentee 

DeFi is also outside the MiCAR framework.

DeFi is an issue, changing every criterion for imputing liability in decentralisation. Therefore, it is putting regulators worldwide in a quandary, uncertain how and whether creating an ad hoc rule makes sense.

It is also surprising that credit markets in crypto assets have been excluded from regulation, considering their reputation as one of the most risky areas for consumers, especially regarding the relationship between service providers and consumers. 

MiCAR focuses on the risks associated with centralised platforms, whereas lending and staking crypto assets are more common on decentralised platforms. Although these activities often imply a certain centralisation of processes, raising doubts about whether decentralisation is truly decentralised and whether responsible parties can be identified, this does not seem to lead to a balanced supervisory framework.

NFTs are also missing

The exclusion of NFTs (Non-Fungible Tokens) from regulation is based on their distinctive characteristics. Unlike other crypto-assets, NFTs are unique and not easily interchangeable, which makes it difficult to determine their value through direct comparisons with other markets or equivalent assets. 

Their uniqueness significantly reduces their use in the financial sector and the associated risks for the financial and monetary system (fiat). Consequently, the legislator decided to exclude them from the scope of certain regulations. 

This does not imply that NFTs cannot be classified as financial instruments in the future. The discussion on NFTs is ongoing, and further guidelines on their classification and regulation may emerge.

Exchange wallets and private wallets: what changes with MiCAR?

Also, European laws aim to protect users when regulating crypto wallets. P2P payments between private individuals via cryptocurrencies have not been affected.

Finally, MiCAR also deals with the impact of crypto influencers, those who express personal opinions on certain cryptocurrencies by recommending them to their followers on social networks. The bill penalises those who do not behave transparently, expressing opinions on a particular asset without disclosing their exposure.

Industry opinion: pro-MiCAR

Crypto enthusiasts have known about the MiCAR and its provisions for several months. In fact, the first draft of the document was drafted in 2020, so they have had plenty of time to understand this regulation. 

According to some experts, MiCAR is positively impacting the industry. The new framework’s consumer protection makes the crypto world more accessible. In addition, the new rules prevent suspicious or questionable companies from entering the European market, reducing the risk of scams or rug pulls. According to Dante Disparte, Circle’s Head of Global Policy, the laws will transform the European Union into a competitive and innovative crypto terrain.

Looking at the confusing and penalising regulatory situation in the US, MiCAR has become an example of how clear rules can attract developers and new projects. In Europe, investments in crypto projects are becoming the most numerous in the world.

Industry opinion: against MiCAR

On the other hand, critics think these new European laws could negatively affect the market. This is mainly because some transactions that, as of today, are carried out immediately, such as transactions between exchange wallets and withdrawals of large amounts of crypto, could become complicated. Critics, therefore, believe this will slow the adoption of cryptocurrencies.

In general, however, the opinions of members of the crypto community who have long known what MiCAR regulation is and what it provides are positive. After all, most of the pioneers in the field (such as Charles Hoskinson and Andre Cronje) have always favoured cryptocurrency regulation.  

You are on the blog of Young Platform, the Italian platform for buying cryptocurrencies. Here you can find the latest news on blockchain, Bitcoin and Web3. We look closer at this emerging economy with an eye on traditional finance so you have everything you need to enter the new age of money.

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Want to buy Bitcoin? Recurring purchasing is the way

Buying Bitcoin with recurring purchases: why it pays off

Why you should consider buying Bitcoin regularly explained in 3 charts

Buying Bitcoin through recurring purchases is cheaper than spot buying by constantly looking for the perfect moment to enter the market (spoiler: it does not exist). We’re going to show you this with three charts: you’ll see that the drawdown is lower, as is the volatility and average price. Recurring purchasing is the most effective strategy to set aside Bitcoin regularly and automatically and you can set it up in your Moneybox. 

We ran a simulation based on historical market data on the price of BTC, and imagined a recurring purchase of €50 in Bitcoin per week from January 2020 to March 2023. Here are our results. 

A positive performance for 80% of the period 

Maybe you have some regrets about 2020 spent on the couch in your pyjamas… Today we add to the list not having set up a recurring purchase on the Moneybox. If you had decided to spend €50 per week to buy Bitcoin automatically now your situation would be as described by this chart. 

Chart Bitcoin Value with recurring purchase

Here you can see the value your wallet would have had in March 2023. The yellow line indicates the total amount spent to buy BTC, the green line is the value of your holdings (+22.5%). The moneybox represented by the graph was in the positive for 86.2% of the time considered. With the best performance at +71.43 and the worst at -30.77%. 

Wouldn’t it have been cheaper to buy Bitcoin at its lows instead of at any time? If you have this doubt, read the results of this research which shows that there is actually no such thing as the ‘perfect moment’. Predicting market movements is not for everyone, recurring buying removes this difficulty and still leads to good results. 

Even in a bear market the losses are smaller

In this second graph, the blue line shows the price of BTC from March 2022 to March 2023, the green line the percentage return (profit and loss) of the holder that chose to buy Bitcoin with recurring purchases. 

Chart Bitcoin performance with recurring purchase

According to the analysed data, the drawdown, i.e. the maximum loss that can occur in a time interval, is smaller compared to that of a single purchase. In the period considered, from the beginning of March last year with BTC at $45,000 to March 2023, there would have been a maximum drawdown of 20% compared to the -64% recorded by the price of Bitcoin. In short, the recurring buyer would be in profit by 16% after one year. 

The savings are obvious

In these times of inflation, saving money is becoming a mission for most people. If you are looking for a way to buy Bitcoin while optimising your spending, recurring purchasing is again an option you might consider. Let’s look at the third chart. 

Chart Bitcoin's average price with recurring purchase

The blue line shows the price of BTC from January 2020 to January 2023, while the red line shows the average price paid to buy Bitcoin with recurring purchases. Considering that the cryptocurrency has a bullish trend over large time intervals, the result is that with recurring purchases over the long term, you can get a very good average purchase price compared to the market value. In January 2022 buying spot would have been around $5,000, with recurring buying instead less than $2,000. This is not because there are different prices in the same period, but because the price of the recurring purchase averages out all levels by also including purchases made when the cryptocurrency was at its lowest. 

Again you may ask yourself if buying at lows is not the best thing to do, theoretically the answer is yes. But again ‘lows’ are not easy to predict, so buying on a regular basis is a good trade-off to avoid fretting over ‘impromptu’ market analysis and instead buy Bitcoin conveniently. 

*The information in this article is for educational purposes and is not an incentive to invest. It is based on historical and objective Bitcoin market data, charts do not represent future predictions. The performance of any cryptocurrency wallet is always subject to market conditions and volatility. 

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Polygon zkEVM: mainnet beta is live. The most eagerly awaited tech news of the year

Polygon zkEVM: the mainnet beta is live. What do you need to know?

Everything you need to know about Polygon zkEVM, Ethereum’s Layer 2 that exploits zero-knowledge technology

We’re live: the Polygon zkEVM mainnet beta went online on 27 March. MATIC‘s blockchain team announced on 20 July 2022 the development of an innovative scalability solution for Ethereum (Layer 2), capable of improving the performance of the entire industry. Thus, the Polygon zkEVM was born, combining zero-knowledge (ZK) technology and compatibility with the Ethereum Virtual Machine. 

The project has become the most eagerly awaited tech news in recent months, so much so that 2023 has been dubbed the year of ‘zero-knowledge’.  

Now that the mainnet beta is live, here’s everything you need to know about Polygon zkEVM, Ethereum’s latest scalability innovation!

Polygon zkEVM: blockchain focuses on zero-knowledge

For Ethereum, there is no more pressing challenge than scalability. The increasing amount of dapps and DeFi services using its network are testing its efficiency. The number of transactions to be processed increases day by day and according to Polygon, the most promising solution to meet this challenge are Layer 2s based on zero-knowledge technology. Which allows so many transactions to be processed at once and at a reduced cost. 

One type of Layer 2 derived from this technology are rollups. These aggregate a series of  off-chain transactions into a ‘rollup’ that is transferred to the reference Layer 1 blockchain with one and only one proof of validity for all transactions (zero-knowledge proof). In other words, transactions are not verified one by one, transferring a large amount of data to Ethereum. Everything is reduced to a single step.

This makes the finalisation of transactions and the amount of data that ends up on the blockchain lighter. Polygon zkEVM rollups allow instantaneous transactions unlike other types such as optimistic rollups, chosen as a scalability solution by protocols such as Arbitrium and Optimism. 

Zero-knowledge rollups: pros and cons

Although promising, zk rollups are an underused technology as a scalability solution for Ethereum. In general, these take a long time to develop and are expensive to integrate. Most importantly, in most cases, they are not compatible with the Ethereum Virtual Machine and are therefore not interoperable with Ethereum. 

Compatibility is crucial because it allows different projects to be standardised and interchangeable with each other, facilitating the exchange of information and value. 

Polygon decided to work precisely on this weakness of zk rollups: ‘We knew that Ethereum needed to scale. We knew that ZK Proofs were the best way to do so. We knew that EVM-equivalence was the secret sauce that would empower both devs and users. So we built Polygon zkEVM”. 

The Polygon zkEVM mainnet beta that went online on 27 March is thus a zero-knowledge Layer 2 solution for scaling Ethereum, that is fully compatible with the EVM. 

Polygon zkEVM: why it’s really news

Zk rollups yes, but compatible with Ethereum. This is Polygon‘s project that is finally a reality! Basically, not being EVM compatible is a big disadvantage, it means not being able to use the same programming language as Ethereum (Solidity), its code or development tools. The problem with zk rollups is therefore one of usability. 

Polygon zkEVM however is a Layer 2 that can be used exactly like Ethereum. Developers and users can find the same security and decentralisation of the ETH network but more speed and convenience. 

Polygon zkEVM: what changes now for blockchain

To summarise, the advantages of Polygon zkEVM are: 

  • More scalability and security for the network;
  • Lower transaction processing costs;
  • Faster transaction finalisation times;
  • Compatibility with Ethereum, the most widely used smart contract platform.

So what is going to change with the arrival of the Polygon zkEVM mainnet beta? The first immediate consequence according to the project team is that the cost of transaction fees on Layer 1 (i.e. on Polygon itself) will decrease by 90%. 

Moreover, thanks to full compatibility with EVM, Web3 developers who want to improve the performance of their dapps built on Ethereum can simply transfer the execution of existing smart contracts to Layer 2. 

Polygon zkEVM: first applications

The Polygon team explained that the main applications of Polygon zkEVM will be in the field of DeFi dapps, NFTs, blockchain gaming and payments. 

One of the first projects to have chosen the Polygon zkEVM to scale its activities is ImmutableX, the blockchain dedicated to crypto gaming that has always used zk rollups since its foundation.  

Earlier this month, Polygon unveiled a new product built on its zkEVM: Polygon ID. It is a service for verifying one’s digital identity, in which users can register credentials in a wallet via smart contract. The owner of a café, for instance, could verify the age of a customer even without documents. Or developers could build decentralised solutions for KYC. 

After the launch of the Polygon zkEVM mainnet beta on 27 March, we will see further applications of the new scalability solution. Which has all the makings of setting new tech standards for blockchain and its development. 

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How to hedge against inflation with Bitcoin? An analysis

How to hedge against inflation with Bitcoin

Research compares Bitcoin and traditional financial assets in the fight against inflation

How to hedge against inflation? A legitimate question given the recent trend in consumer prices. Well, Bitcoin turns out to be an effective hedge against inflation according to research from 2022 published in Axioms, an international academic journal supported by The European Society for Fuzzy Logic and Technology (EUSFLAT), International Fuzzy Systems Association (IFSA) and Union of Slovak Mathematicians and Physicists (JSMF). 

In this article we will explain why:

  • Bitcoin is the asset that responds better than other safe haven assets in both stable and turbulent market times; 
  • Recurring buying (or DCA) is the best strategy to enter a market (whatever its trend may be); 

Hedging against inflation? Bitcoin beats the competition

In the economic climate in which we live, characterised by rising prices and stagnating wages, it is legitimate to try to understand how to hedge against inflation. And thus protect our savings. 

The research entitled “Do Bitcoin and Traditional Financial Assets Act as an Inflation Hedge during Stable and Turbulent Markets? Evidence from High Cryptocurrency Adoption Countries‘, compares the effectiveness of different strategies and instruments to combat inflation using those with high cryptocurrency adoption as sample countries. 

In summary, what has emerged is that Bitcoin is better protected against inflationary shocks than other traditional assets such as shares, gold and oil.

On Young Platform with the ‘Recurring Purchase‘ feature you can set aside Bitcoins automatically and with an amount and frequency of your choice.

What is inflation? 

When wondering how to hedge against inflation, it is worth making a few conceptual clarifications. Inflation refers to the increase in the prices of the goods and services we buy every day, which leads to a reduction in the purchasing power of money. In other words, we can buy fewer things with our savings than in the past. 

For example, in the US in 1980 going to the cinema cost only $2.89, in 2019 the average price of a ticket increased to $9.16! So with a $10 note in 1980 we would have bought 3 tickets, but today only 1. 

Solutions against inflation 

You may have heard that one of the most effective solutions to respond to rising prices is to invest ‘in bricks and mortar’. For a long time, real estate has been a safe haven for our savings, but it is not always a viable option for those who are perhaps younger and do not have much liquidity. 

In any case, this option reminds us that the important thing is to defend our own savings by converting them into an asset that is more resilient than money, whose value is maintained over time, such as a safe haven asset. This is because keeping your earnings ‘under the mattress’ does not bring results in the long term, as they gradually lose their value due to inflation.  

Investors try to hedge against inflation by buying assets that increase in value when prices rise, such as shares in companies that produce commodities or raw materials. Other examples are gold and oil. In short, the rule applies: investing is better than saving. 

Beyond gold and oil: how to hedge against inflation with Bitcoin 

Are gold, stocks and oil really the only ways to hedge against inflation? There are those who advocate relying on Bitcoin, but can it work as a hedge? At first it is difficult to answer this question with certainty. After all, Bitcoin is a new asset that needs to be studied in its own right, in relation to its target market. 

The analysis presented by Axioms experts tries to answer this doubt. See the results. 

First, it is noted that in order to assess how well an asset can hedge against inflation, several factors must be taken into account. Such as inflation trends over time and the national territories studied. Which in the case of this research are 10.  

In short, there are some assets that can offer protection in the short to medium term, such as Bitcoin, gold, stocks or oil. For the long term things get complicated, the levels of effectiveness against inflation are more heterogeneous and it is not easy to find a better and definitive asset.

However, Bitcoin seems to be an attractive option for countries with high cryptocurrency adoption. In times of increased economic turbulence, Bitcoin is the asset that statically responds best to market downturns. But what does this mean for investors?

To avoid inflation, you should consider leveraging BTC to create a hedge during a market downturn or when asset prices respond to inflation more quickly.  

Secondly, research results show that Bitcoin is the most effective inflation hedging instrument for most countries, both in stable and turbulent economic regimes. With a peak especially in countries with less resilient economies. This could be an advantage that every government should consider when developing cryptocurrency regulations.

What is the best strategy? 

To hedge against inflation, however, it is not enough to choose the right asset, this must be combined with a strategy. That of regularity. 

The analysis conducted by the Charles Schwab Corporation, a US investment firm that manages over $7 trillion in assets for its clients, compares five investor profiles and calculates their performance over five years, assuming each has $2,000 to invest each year. 

Here is the result: in first place is the trader who – by preparation or luck – chooses the timing perfectly and buys at the correct time. They are followed in second and third place by those who invested the $2,000 every year in one lump sum and those who broke it up into 12 installments and entered regularly every month. Closing the ranking with the worst results are those who bought at the wrong time – driven by FOMO or through extreme bad luck – and those who did nothing and obstinately kept their liquidity on their savings account. 

The good news is that for ordinary mortals who are not traders or do not feel kissed by luck, there are great opportunities to get the most out of their investments through regularity. That is, by regularly buying a certain asset. This strategy is called recurring buying or (DCA). 

Sticking to the terms of the analysis, if we had bought €25 worth of Bitcoin once a week for 5 years, as of today (March 2023) we would have €6,925 in Bitcoin but with a portfolio value of €15,803, i.e. a net gain of €8,800 (+128%). 

Conclusions 

In summary, those who are trying to figure out how to hedge against inflation should keep in mind that no asset can offer complete protection in the long run. But assets like Bitcoin can be a good option in the short to medium term. In any case, it is always important to pay attention to asset selection and the timing of investments.

***

*This article was written on the basis of research published in Axioms, an international, peer-reviewed, open-access academic journal covering mathematics, mathematical logic and mathematical physics, published monthly online by MDPI. Aximos is supported by The European Society for Fuzzy Logic and Technology (EUSFLAT), International Fuzzy Systems Association (IFSA) and Union of Slovak Mathematicians and Physicists (JSMF). To read the full research, download the PDF at this link.  

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Gautam Adani: the financial scandal that brought down the world’s third richest man

Gautam Adani and the collapse of the Adani Group: what happened?

In just a few days, billionaire Gautam Adani lost a large part of his fortune. What happened to the Adani Group? 

The collapse of the Adani Group was a major blow to the Indian economy. In just a few days, billionaire Gautam Adani’s empire lost significant shares, estimated at around $100 billion. 

Adani Group: the collapse and financial scandal

What triggered the collapse of the Adani Group were the serious allegations made by the US firm Hindenburg Research. On 24 January 2023, the Indian giant was accused of using tax havens, tax fraud, share value manipulation and unsustainable debt. Hindenburg placed the main emphasis on the high debt. 

Adani Group CFO Jugeshinder Singh called the Hindenburg report a ‘malicious combination of selective misinformation and stale, unfounded and discredited allegations’. Singh stated that the company has always complied with all laws and suggested that the allegations had a devious purpose. 

Singh was referring to the upcoming IPO (Initial Public Offering) of Adani Enterprise, the flagship branch of the group, which was to be listed on 27 January with the aim of raising USD 2.5 billion. According to the CFO, Hindenburg would have exposed itself at a crucial moment, just in time to block the IPO. Which indeed happened, the Enterprise’s IPO was cancelled, marking the peak of Adani Group’s collapse. 

Hindenburg’s accusations had immediate effects. The group’s seven listed companies lost a total of $10.73 billion in market capitalisation in one day. Just as Gautam Adani’s net worth dropped from $126.4 billion to $120 billion. Moreover, a large number of investors abandoned Adani Group.

Finally, the Indian market regulator, the Securities and Exchange Board of India (SEBI), started an investigation (still ongoing) to confirm or deny the validity of the allegations made. 

Adani Group vs Hindenburg Research

In the early stages of this affair, Adani Group hinted that it would take legal action against Hindenburg. The latter in turn commented on Twitter: 

Who is behind Hindenburg?

Hindenburg Research is a forensic financial research firm that analyses equities, credit and derivatives, founded in 2017 by Nathan Anderson. On its website, Hindenburg says they look for “man-made disasters” such as accounting irregularities, mismanagement and suspicious transactions. And on Twitter they specify ‘we burst bubbles where we see them’. 

The firm was named after the Hindenburg airship disaster that caught fire in 1937 while flying towards New Jersey. 

After identifying potential wrongdoing, Hindenburg publishes a report explaining the case and bets against the targeted company, hoping to make a profit. According to its website, Hindenburg has reported at least 16 companies since 2017. 

Gautam Adani, who is the Indian billionaire?

Before the collapse of Adani Group, Gautam was the third richest person in the world. According to Forbes, he is now at the 32nd position in this ranking. 

The entrepreneur, originally from Gujarat in western India, built his empire from scratch after starting his career as a commodities trader. He was born on 24 June 1962 into a large family, consisting of his textile dealer father, mother and seven siblings.

After compulsory schooling, Adani enrolled in the Faculty of Economics at the University of Gujarat, but dropped out after two years. He then moved to Mumbai with just over a hundred dollars in his pocket, where he started working as a diamond selector for Mahendra Brothers. After three years in the diamond business, he opened his own company, but the real turning point came when his older brother asked for his help in handling a large shipment of plastic that he had purchased. From there, he began his career in the commodities business that led him to found the Adani Group in 1988. 

This is not the first time that Gautam has ended up at the centre of a scandal. He is in the spotlight mainly because of his friendly relationship with Narendra Modi, the Indian Prime Minister. The latter, as a supporter of Adani, found himself in trouble in the face of Hindenburg’s accusations. This is why the issue also took a political turn.  

The most recent controversy that has engulfed Adani concerns the protest of some fishermen against the construction of a $900 million port in Kerala, southern India. 

Also in Australia, environmental activists have been protesting for years against the Carmichael coal mine project by Adani in Queensland, over carbon emissions and damage to the Great Barrier Reef.

Adani Group: what does it do? 

Adani Group is a conglomerate, i.e. a company that operates in several sectors through separate subsidiaries. The company was founded in 1988 and is based in Ahmedabad, in the Indian state of Gujarat. The company operates in various sectors, including energy, transport, agriculture, logistics and utilities. Some branches of the group are the aforementioned, Adani Enterprise, Green Energy, Power, Ports & SEZ.

The group is one of the largest private power producers in India, with a renewable energy generation capacity of over 18,000 MW. 

Its growth has been large and remarkable over time thanks to a strategy of diversification and acquisitions. It has a global presence and also operates in Australia. United Arab Emirates, Bangladesh and Myanmar. 

By November 2022 it was the second largest conglomerate in India. 

But the company does not only have industrial interests, the company also owns several sports teams such as the Gujarat Giants of the Pro Kabaddi League and the Gulf Giants of the Cricket League.  

Simple allegations, which have not yet been confirmed, led to the sudden collapse of the Adani Group. However, this is not a definitive exit or bankruptcy. Until the investigations are concluded for Indian billionaire Gautam Adani, the game is still open. 

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Metaverse Fashion Week 2023: all the brands and things to know

Metaverse Fashion Week 2023 is coming. Which haute couture brands will parade in Decentraland? 

Decentraland’s Metaverse Fashion Week 2023 is just around the corner! According to a study by Gartner dated 7 February 2022, in 2026 25% of the global population will spend at least one hour a day in the Metaverse “for work, shopping, education, social interactions and entertainment”. Considering that 2026 is only three years away, it is safe to say that this virtual world will soon be part of our everyday life. The fashion industry seems to be the most advanced as far as this new technology is concerned and the second Metaverse Fashion Week in history will take place from 28 to 31 March 2023. 

The Metaverse chosen for the occasion is once again Decentraland (MANA), which has already hosted the 2022 edition. This year’s theme mixes tradition and innovation through collaborations between new generation designers and historically established fashion brands. Find out all about the event and the brands that will be guests at Metaverse Fashion Week 2023!

Metaverse Fashion Week 2023: how to access

Metaverse Fashion Week was created to let the public experience fashion from different perspectives and to make it accessible to everyone, not just insiders. To enter Decentraland’s metaverse and thus participate in the events of this fashion week, you simply have to connect your crypto wallet or visit the virtual world in guest mode. Decentraland has already provided the coordinates of all the areas where the events will take place and with a simple click (‘jump in’) you can reach afterparties, digital shops, fashion shows and conferences organised by many brands. 

The Metaverse Fashion Week 2023 calendar

Below you can find a selection of events from the eagerly awaited Decentraland virtual fashion week 

28 March 

  • 00:00 UTC, Fashion District: Metaverse Fashion Week 2023 opening event – DJ Set by ‘KDS’ and discussion on the future of fashion in the metaverse;
  • 14:14 UTC, Genesis Plaza: “CRISTÓBAL BALENCIAGA: NEW CODE” – Haute couture evening dresses inspired by the designs of Cristòbal Balenciaga;
  • 14:14 UTC, Decentraland South, Neo Plaza: ” META FASHION HOUSE IN THE NEO PLAZA FEATURING 3DMETADRESS” – The augmented reality presentation of the digital clothing that will be physically produced for NFT Week New York 2023;
  • 18:18 UTC, Genesis Plaza: “HAUS OF FUEGO FASHION SHOW!” – The Nikki Fuego avatar fashion show, inspired by cyberpunk and high tech culture.

29 March

  • 00:00 UTC, Adjacent District: “THE TRAVELER PARKA” CO-CREATION @SAKOASKO AND @KAFTANCREADOR” – The second day of Metaverse Fashion Week 2023 will open with an event dedicated to Latin American artists from the metaverse;
  • 21:21 UTC, Binary Code Building: ‘FASHION SPACES: MERCURY DASHA X RENOVI STUDIOS’ – The fashion show of the ‘urban-luxe’ collection resulting from the collaboration between the two brands (Mercury Dasha and Renovi Studio);
  • 22:22 UTC, Valhalla: ‘METAVERSE FASHION WEEK BY DECENTRALAND (MVFW) AFTER PARTY’ – A concert featuring various musicians from the Decentraland community.

30 March

  • UTC, Uniquely.io Land: ‘METAVERSE FASHION WEEK MEETING BY UNIQLY.IO & PUNKSCLUB’ – Debate on the relationship between fashion and NFT followed by a DJ Set;
  • 16:16 UTC, The Crypto Valley “NTR1-META” – A party in the metaverse organised by the digital sneakers brand of the same name;

31 March

  • 21:21 UTC, Dlan Holding 004: “DKNY.3 X MVFW23 CLOSING NIGHT PARTY” – The closing party of Metaverse Fashion Week 2023

This calendar is generic and does not present the events organised by the most famous brands, these have their own customised LANDs where their respective programmes will be staged. But which of these big brands have decided to participate?

Dolce and Gabbana

Among the brands that have already shown in Decentraland during Metaverse Fashion Week 2022 is Dolce and Gabbana. D&G’s journey into the Metaverse began in 2021 and after several NFT collections that expanded the brand’s artistic and craftsmanship potential, it organised its own fashion show in Decentraland. During the 2023 edition, the historic Italian brand will present a selection of the winning entries of the Future Reward competition. The designs were chosen by Domenico Dolce and Stefano Gabbana themselves and are all digital wearables.

Tommy Hilfiger

Tommy Hilfiger opened its digital shop in the Boson Portal District during 2022 and is making its second appearance at Metaverse Fashion Week. Last year, users were able to buy some limited edition products from the Spring 2022 collection in NFT format and have them worn by their avatars. For the 2023 event, new digital garments designed by artificial intelligence will be released every day and a challenge will be held among the community of aspiring designers attending the event. The winner will be selected by Tommy Hilfiger himself!

Adidas

At Metaverse Fashion Week 2023 Adidas will present the ‘adidas virtual gear‘ collection, a collection of cyberpunk and high-tech inspired garments that will be produced in both physical and digital versions. These include a personal flotation device, a life jacket built for space.

Clarks

The British footwear brand will be present at Metaverse Fashion Week 2023 with its own dedicated area called ‘Clarks Arcade’ – part amusement park and part disco. Within this space, people will be able to try out Clarks-themed video games and compete with others at dance competitions. This is not the first experience in the Metaverse for the shoe brand, which had already landed on Roblox in May 2022 to present its trainer for kids, ‘Cica’.

Decentraland Fashion Week 2022

Metaverse Fashion Week 2023, which will be held from 28 to 31 March, is the second edition ever; the first was last year and was very well received by the community and brands. Among the main events of the past year, besides those already mentioned by Dolce and Gabbana and Tommy Hilfiger, was Philipp Plein. The German brand presented its space on Decentraland, the Plein Plaza, in which it exhibited works from the NFT Museum of the Arts (M.O.N.A).

Etro‘s event was also a success. The ‘liquid paisley’ motif reinterpreted by the brand in a contemporary way and presented at Metaverse Fashion Week 2022 was also back in fashion in the real world. Hogan‘s event, on the other hand, featured guest Bob Sinclar who played at the after party.

Why a Fashion Week in the Metaverse?

The brands that participated last year and will participate in Metaverse Fashion Week 2023, presenting their collections online, have made a significant choice that falls primarily on the fashion house’s own perception of innovation. The potential of events in the virtual world lies in the contact with younger consumers, Gen Z or the even more budding Gen Alpha, who are increasingly interested in buying digital goods. 

Secondly, participating in events in the Metaverse is a way for brands to experiment, test trends and give value to their products, which are protected by blockchain. 

However, as Sam Hamilton, creative director of the Decentraland Foundation and co-organiser of Metaverse Fashion Week 2023 reiterated: ‘fashion and high fashion are not new to the Metaverse. Decentraland has been at the forefront of digital fashion, in demand since the launch of wearables (tokens) in 2020. Since then, creators have been working on the technical and stylistic limits of these digital wearables and have created a booming economy’.

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The 10 most expensive NFTs ever

The most expensive NFT ever sold: all the digital artworks

What are the most expensive NFT ever sold? Here is the list of million-dollar crypto artworks! 

Have you ever wondered: “what are the 10 most expensive NFT ever sold?” Digital works of art sold at sky-high prices. Along with Picasso‘s cubism, Botticelli’s renaissance style and Rembrandt‘s baroque style; collectors and galleries of the future (and present) will also exhibit CryptoPunks and Beeple’s digital art. 

10. CryptoPunk #7804 – 7.56 million 

In tenth place among the most expensive NFT ever sold is a CryptoPunk, number 7804, purchased in March 2021 for $7.5 million (4,200 ETH). This Punk is an ‘Alien’, a decidedly rare category – only 9 out of 10,000 exist! Hallmarks? Sunglasses and a pipe! 

9. CryptoPunk #3100 – 7.67 million

There are 406 CryptoPunks who have the tennis-style band, but only one of them is an alien. That’s the 3100. Imagine how much it could be worth? 

8. CryptoPunk #5577 – 7.7 million

As you may have noticed, CryptoPunks are leading the ranking of the most expensive NFT ever sold. The #5577 was purchased in February 2022 by Robert Leshner, the CEO of Compound, one of DeFi’s most popular lending (decentralised lending) platforms. The CEO of the protocol shelled out a whopping 2,500 ETH to get it.

7. CryptoPunk #4156 – 10.2 million

All CryptoPunks are unique, but the number 4156 stands out because of the interesting story of its former owner. The user, whose Twitter handle echoes this numerical succession, is a very famous crypto influencer on the social network who is also part of the nouns DAO development team. When @punk4156 sold the NFT because he disagreed with Larva Labs‘ copyright policies, the entire community was stunned.

6. Tpunk #3442 – 10.5 million

Another Punk, also in sixth position in the ranking of the most expensive NFT ever sold. This time, however, not one from the collection created by Larva Labs, but a TPunk, a specimen from the collection inspired by CryptoPunks but built on the Tron blockchain. Purchasing this rare piece of the ‘derivative’ collection was Justin Sun, the founder and former CEO of TRON, who pulled 120 million TRX out of his crypto wallet.

5. CryptoPunk #7523 – 11.7 million

Crypto Punk #7523 was sold in 2021 for 4,700 ETH at a Sotheby’s digital art auction. Another ‘Alien’ equipped with earrings, cap and surgical mask. Perhaps the NFT was so coveted because of the presence of this very ‘avant-garde’ accessory at the time it was purchased.

4. CryptoPunk #5822 – 23.2 million 

Wooden medal for the ‘alien’ CryptoPunk sporting the blue bandana. This NFT was purchased by Chain’s CEO Deepak Thapliyal for the astronomical sum of 8,000 ETH.

3. Human One by Beeple – 28.9 million

In third place in the ranking of the most expensive NFT ever sold is Human One, a 3D digital sculpture by the famous artist Beeple, which depicts an astronaut walking in a glass case. The backgrounds are digital and the scenery changes on a rotating basis.

2. Clock by Pak and Julian Assange – 52.7 million

The silver medal goes to Pak for his work Clock. This NFT is a timer that counts down the days since Julian Assange, the co-founder of Wikileaks, has been detained in Belmarsh prison (UK). The digital artwork was purchased by the AssangeDAO, an autonomous and decentralised organisation established with the aim of fighting for the freedom of the Wikileaks founder. 

1. Everydays: the first 5000 Days by Beeple – 69.3 million

This work by Beeple is a collage of 5,000 photographs from the Everyday project: one photograph per day since May 2017. Not only does it hold the record for the most expensive NFT ever sold, but it is also a “historic” event that brought non-fungible tokens to mainstream media for the first time. It was talked about everywhere, even on Saturday Night Live.Do the most expensive NFT ever sold list include your favourite? The digital art scene is vast and you don’t have to spend astronomical sums to become an NFT owner. There are ones for all budgets, or you can hope that the ones on this list will become cheaper. After all, the prices you see here are not definitive, it is the market that determines their value.

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ApeCoin in the spotlight: what is it and how does the Bored Ape token work?

What is ApeCoin, the token of the Bored Ape Yacht Club community, the world’s most valuable NFT collection  

What is ApeCoin (APE), the token of the Bored Ape Yacht Club community? The ‘monkey’ NFT collection is one of the most famous in the panorama of non-fungible tokens, but for about a year now it has also been on the market for ‘fungible’ ones. Thanks to ApeCoin (APE), the token managed by the Bored Apes community and the Ape Foundation. In these lines, you will discover not only what ApeCoin is, but in general everything you need to know about the crypto of the Bored Ape community.  

What is ApeCoin and how to use it

APE is an ERC-20 token developed on the Ethereum blockchain. At its launch on 17 March 2022, it was distributed to all users who owned an NFT from the Bored Ape Yacht Club (BAYC) and Mutant Ape Yacht Club (MAYC) collections through an airdrop. This free token distribution was one of the most valuable ever, with each holder of BAYC NFTs receiving more than $100,000 in APE.

Owning ApeCoins (APE) grants the right to participate in the autonomous and decentralised ApeDAO organisation. The DAO of the Bored Ape Yacht Club community, whose decisions are overseen by the Ape Foundation, serves to discuss and vote on ideas and new projects proposed by users. 

The Ape Foundation is the decentralised institution that administers the ApeCoin DAO, specifically it is responsible for the management of proposals on the platform and for accounting. At the head of the Ape Foundation is a special council, whose members are elected by the decentralised organisation itself. Ape Foundation is not linked to Yuga Labs, it acts independently by proposing initiatives for the community. 

In addition to participating in governance, the token is used as an incentive for the developers of the BAYC project. Finally, according to the ApeCoin DAO announcement, APE will also be the currency in the Bored Ape Metaverse, Otherside and will grant access to exclusive video games and events!

ApeCoin tokenomics

The total supply of APE is 1 billion, and the tokens, released as of 17 March 2022, will be distributed to the market progressively until 2026. 15% of ApeCoin availability was distributed to BAYC and MAYC holders at launch, while 47% is stored in DAO-owned crypto wallets. This percentage of APE tokens serves to finance BAYC community proposals that have been approved. The remaining part of the ApeCoin (APE) is owned by investors. These include the Web3 company that created the NFT collection of the Bored Ape Yacht Club, Yuga Labs, which owns 15% of the supply.

What is ApeCoin DAO?

The ApeCoin DAO is the decentralised community organisation of the BAYC. It is necessary to point out that it is completely separate from Yuga Labs, which can express its opinion on future decisions as if it were a wealthy user with a large amount of APE. 

The way it works is simple: anyone who owns at least one APE is entitled to be a member of the DAO, and each token held is equivalent to one vote. Members can propose so-called AIPs (Ape Improvement Proposals), i.e. improvements to the ecosystem on three broad themes: Core, Process and Informational.

Core

Core proposals concern the heart of the ApeCoin project. This category includes all AIPs requiring a financial commitment from the DAO and all those involving the ApeCoin brand and possible collaborations with other Web3 players.

Process

Proposals that intend to change the AIP approval process. For example, those that include changing the voting procedures, or the technical tools of ApeCoin. In particular, the community may decide to vote against the current system whereby 1 token = 1 vote, or it may decide that a more than absolute majority of votes in favour (e.g. more than 70% in favour) is required to approve a proposal. 

Informational

Under this category are proposals on general community guidelines.

The Process for Proposing an Idea on the ApeCoin DAO

To understand not only what ApeCoin is but also how it works within the BAYC governance, let’s look in detail at the process leading to the approval of a new ApeCoin DAO proposal.

  • AIP idea: a member of the community publishes a proposal, which must first be analysed by a moderator of the AIP Foundation;
  • Draft AIP: the draft AIP enriched with comments from other DAO members and approved by a moderator is labelled, ‘AIP-#: (Name) – (Category)’;
  • Board review: the APE Foundation’s Board of Directors reviews the draft AIP and issues a report to ensure that costs and legal implications have been considered;
  • AIP approval: the draft and report are reviewed and approved by a team of moderators according to DAO guidelines;
  • AIP voting: approved proposals are published on the DAO’s platform during the ‘Weekly AIP Release’ Thursday and users can cast their votes for one week
  • Activation of AIPs: accepted AIPs move on to the ‘activation’ phase, which will be managed by the AIP owner and the ApeCoin Foundation team, while rejected AIPs can be resubmitted using the template provided.

The ApeCoin DAO website states ‘the ways in which blockchain can impact culture are infinite, and impossible to predict them all. APE is a token created to shape the future of the Internet, controlled and developed by the community’. So what is ApeCoin? Now you know, and we even went over the mechanisms governing its DAO, so you can make up your own mind. Is the BAYC community well on its way to shaping the web of the future?

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What happens when all 21 million Bitcoins are mined?

What happens when all 21 million Bitcoins are mined?

In 2140, miners will finish issuing Bitcoin. Will their work no longer be needed? What will happen after that? 

Bitcoin, like all precious things, is limited and scarce and therefore will not be issued forever. The distribution of coins will cease at 21 million, more or less around the year 2140. This event, although very far away, will affect future miners who will no longer receive new BTCs as a reward. What happens when all 21 million Bitcoins are mined? Will the miners stop securing its blockchain?

Why aren’t Bitcoins infinite?

The maximum amount of Bitcoins that can be issued is limited to 21 million. This number is also called ‘max supply‘. This limit was introduced by Satoshi Nakamoto since the creation of the cryptocurrency to curb inflation and make crypto scarce and therefore more valuable. If Bitcoin’s availability were unlimited and BTCs were mined indefinitely at some point each of these cryptos would no longer be worth anything. Currently 19 million Bitcoins have been issued and therefore there are only 2 million left to reach total supply. 

Miners’ rewards reduced by halving

Another Bitcoin mechanism, related to mining, is halving. This regulates the gradual decrease in rewards given to miners who validate blocks, which are halved about every four years. This also serves to reduce the crypto in circulation, to maintain scarcity. After the successful halving in April 2024, miners get 3.125 BTC for each validation block. The process of validating a block takes, on average, 10 minutes.

What happens to the miners when all Bitcoins are issued?

The security of Bitcoin’s blockchain is guaranteed by the miners, so it is legitimate to wonder whether the moment no more BTCs are issued, the network will stop working, because no one will have any incentive to check the validity of transactions. 

Fortunately, Satoshi Nakamoto has also thought of this. In fact, the miners not only receive a portion of the newly mined BTC as a reward, but also the transaction fees. When all 21 million Bitcoins have been issued the fees will become the only source of income for the miners.

The end of Bitcoin minting will have an unpredictable impact. Certainly miners may be affected, and for some of them, mining Bitcoin may cease to be a profitable activity. But this depends very much on the evolution of Bitcoin as a cryptocurrency. For example, if in about 120 years BTC becomes a fully-fledged store of value, the transaction fees (which will be much more expensive than now), will probably be sufficient to reward the miners. Alternatively, they could migrate to other blockchains, as happened to Ethereum when its network switched from Proof-of-Work to Proof-of-Stake consensus mechanism.

Over the past year, thanks to a new technology called inscription, Bitcoin’s blockchain is evolving. The BTC network is no longer a ‘pure’ network that only handles cryptocurrency transfers but can also host NFTs, decentralised applications (Dapp), DeFi protocols, and even Layer 2 blockchains. In short, the activity on Bitcoin’s network is increasing, which also contributes to raising the fees that users have to pay, on average, to make a transaction. As the volume of commissions increases, the miners will earn more money.

Lately, thanks to a new technology called inscription, Bitcoin’s blockchain is evolving. The BTC network is no longer a ‘pure’ network that only handles cryptocurrency transfers, but can also host NFTs and possibly soon decentralised applications (Dapp) and DeFi protocols. Due to inscription, activity on the Bitcoin network is increasing, which also helps to raise the fees that users have to pay on average to make a transaction. As the volume of fees increases, the miners will earn more money.

Unfortunately, there is no certain answer to the question: what happens when all 21 million Bitcoins are mined. In any case, since it is about 120 years away, the miners still have some time to prepare.

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Arbitrum news: guide to the ARB token airdrop

Arbitrum airdrop news: guide to the ARB crypto eligibility and drop

All eyes on the Arbitrum airdrop news: ARB token coming soon

It’s all over the news: the Arbitrum airdrop (ARB) is coming on 23 March! Arbitrum is one of Ethereum’s most popular and widely used Layer 2s, i.e. networks built on existing blockchains that allow transactions to be executed outside the main networks in a more efficient and cost-effective manner. In recent months, its popularity has increased significantly, and consequently, so has its use.

This is evident from the high number of transactions processed by the network. This Layer 2 was created in 2018 by Off Chain Labs, a New York-based startup founded with the aim of developing scalability solutions for Web3. ARB will be distributed to users who have interacted with the Layer 2 in the past months on 23 March. Here you will find everything you need to know about the Arbitrum airdrop news or, more specifically, the ARB token release.

How to get the arbitrum airdrop: eligibility requirements

23 March was the day chosen for the Arbitrum airdrop, i.e. the token launch: users who have interacted with the Layer 2 over the past months are eligible to claim the ARBs to which they are entitled. You can already check your arbitrum eligibility and how many ARB tokens you will receive by linking your crypto wallet to the Foundation’s website. The quantity is calculated based on the number of transactions executed on the network and the frequency with which they were made. 

The number of Arbitrum tokens a user receives will increase if they have executed transactions on the Layer 2 regularly during the past months. The ARB airdrop had been announced in January via Twitter by the project’s co-founder, Steven Goldfeder: “the appetiser always precedes the main course,” referring to the main competitor’s airdrop, Optimism, that had just taken place. 

In these hours, most Crypto Twitter users are wondering about the Arbitrum airdrop price, and wondering whether its countervalue in dollars will be comparable to that obtained with Optimism’s airdrop. OP’s free distribution in April 2022 was worth between $3,000 and $30,000 to users who had interacted with the network, depending on the quantity and complexity of interactions. No one can, as of today, know whether the airdrop of the Arbitrum token (ARB) will be as generous.

Arbitrum airdrop: price and distribution

The initial supply of the Arbitrum token will initially be 1 billion ARB, distributed in this way:

  • 12.75% to the community through airdrop; 
  • 42% will be owned by the Arbitrum DAO, to finance governance decisions and the most widely used dapp;
  • 29.94% to Offchain Labs, the startup developing Arbitrum;
  • 17.54% to the investors who financed the project.

The circulating supply of the Arbitrum token has not yet been disclosed, and it is therefore impossible to predict the Arbitrum airdrop price. However, should the market capitalisation be similar to that of its main competitor Optimism, i.e. around 0.7 billion, the price of ARB could be close to the dollar.

What can I use the Arbitrum token (ARB) for?

The Arbitrum token distributed through the airdrop on Thursday, 23 March, will be used primarily with governance functions. The Arbitrum Foundation intends to entrust the most important decisions for the future of the blockchain to the people who use it, and this is where ARB comes in. At the launch in fact, the Arbitrum DAO will be set up, which will be composed of the holders of the Arbitrum token, who will be able to vote on all future decisions of the project. Users will also be able to create their own sub-networks, called ‘Layer 3’, should they receive approval from the Arbitrum DAO.

Arbitrum: excellent performance in recent months

Ethereum’s Layer 2s, in particular Arbitrum and Optimism, which together have surpassed the number of transactions processed on the ‘mother’ blockchain, have been the protagonists of the last period. On Arbitrum, the number of transactions executed daily, as of November 2022, hovers between 200,000 and 500,000. Despite the raging bear market, which has caused losses for all major crypto networks, the total locked-in value (TVL) on the network has continued to orbit around $1 billion. This allowed it to climb the ranking of the most widely used blockchains, compiled taking into account their TVL, to fourth position. We await the Arbitrum airdrop (of its token) to find out whether its blockchain’s TVL will rise further.

The last few months have been positive not only because of increasing adoption, but also because a number of important updates have been implemented. These include Nitro, which has enabled the network to process faster and cheaper transactions, and the integration of Arbitrum Nova, a sub-network dedicated to gaming and decentralised social networks. In addition, the arrival of the Arbitrum token and the birth of the Arbitrum DAO opens up a number of interesting opportunities for Layer 2 on the technological side as well. For instance, the possibility for users to create their own sub-networks.

The best dapps on Arbitrum

A portion of Arbitrum tokens will also be distributed to the most successful decentralised applications (dapp) in the ecosystem. The best known of these are those originating in Ethereum that have landed on Arbitrum in recent months. From Uniswap to Aave, from Sushi to Opensea, practically all the most famous Web3 companies have decided to integrate the blockchain of the moment, facilitated by the great similarity between Ethereum’s blockchain architecture and that of its Layer 2. 

Among Arbitrum’s most successful projects is the decentralised exchange (DEX) GMX, which originated here and on Avalanche. GMX allows its users to engage in leveraged trading through financial instruments called perpetual futures. 

Arbitrum’s blockchain is not only populated by decentralised finance projects (DeFi) but also by dapps dedicated to gaming and NFTs. One of the most famous of these is Treasure, a gaming metaverse that claims to be ‘the Nintendo of the Web3’ on which various play-to-earn video games can be played. Its entire ecosystem functions thanks to the MAGIC token, which allows for the non-fungible tokens needed to play and is distributed to players as a reward. 

In short, this Layer 2 is proving to be one of the most promising scalability solutions for Ethereum. The arrival of the Arbitrum airdrop news and the ARB token, could help make the definitive leap forward for a blockchain that will most likely continue to make waves in the cryptocurrency world.