Notes: 6/24: A Web3 Phone And Crypto Hacks

The crypto ecosystem continues to sparkle and explode like a tinderbox. There’s a launch here. A potential blowup there in what promises to be a Summer of Disasters for crypto projects.

All of this is happening even as the price of bitcoin remains rangebound. Earlier this morning, it touched $21,327.41, up 20% from its low of $17,721 six days ago. As of this writing, it is changing hands at $20,893, up from 2.71% from 24 hours ago.  

Solana Launches Web3 Phone  

As if decentralization was not enough.

Solana, a blockchain that functions off Ethereum’s blockchain, announced apurpose-built” smartphone for Web3 earlier this week. The $1,000 phone features a Web3 store of decentralized applications (dapp), an integrated “Solana Pay” feature for payments, and a “seed” vault for private keys. The Web3 paradigm calls for direct connections between audiences and creators. (Much as Web2 did). And so, there will be no “extractive fees” charged by the dapp store.

On the face of it, Solana seems to be the perfect company for the venture. It has already been hacked for $400 million in 2022, so far, and its blockchain clock fell adrift of real-world time by 30 minutes recently. Its blockchain is not as secure as Ethereum and considerably less decentralized. It is also more prone to congestion and has had to stop operations on its blockchain 12 times this year due to traffic issues.

There’s also the question of fees. While it may not charge “extractive fees”, users will still have to pay fees to conduct transactions on Solana’s blockchain. The company wants to become the Visa of the decentralized ecosystem, according to reports.

More Crypto Hacks and Scandals   

There’s been another crypto hack. Harmony is an Ethereum sidechain that functions in a manner similar to Solana. That is, transactions are conducted on Harmony and committed to Ethereum. The Horizon bridge connecting Ethereum and Harmony was the site of a theft this morning and $100 million was stolen by the hacker.

Bridges are used to connect and enable exchange of tokens between blockchains. Today’s hack adds to a growing list of exploits targeting bridges this year. The biggest one was the $326 million hack of Solana’s Wormhole bridge in February. Harmony says it is working with federal authorities (the FBI, no less) to identify the attacker.

Meanwhile, Coinflex, another exchange, has frozen withdrawals of currency due to “extreme market conditions” and uncertainty around a counterparty. The identity of that counterparty is not known.

Much like the Celsius pause on withdrawals, one of the questions here is about ownership of the crypto available with the exchange. In lending a coin to exchanges, do users sign away their rights and ownership to it? In the case of Celsius, it seems they did.

CoinFLEX’s regulatory credentials are unclear. The company is headquartered in the Seychelles but operates out of the UK. It offers crypto derivatives contracts on its platform. Notably, the exchange does not require KYC for transactions up to $10,000.

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