Last week brought to light many revelations where FTX and Alameda essentially fostered instability in our industry through underlying fraud disguised as effective altruism. Within the last 7 days, roughly $169 billion has been wiped out from the total crypto market cap.

Many casualties were endured by firms with exposure to FTX and Alameda. Prominent Ikigai fund manager, Travis Kling, announced on Twitter yesterday that they had a majority of their assets on FTX. Another fund, Sino Global, has met a similar fate with losses in the mid-seven figures — SBF played an integral role in their operations.

Even though this large scale fraud has shed light on the disgusting practices Sam Bankman-Fried and Caroline Ellison led at their firms, SBF is still attempting to raise funds despite the Chapter 11 bankruptcy. One unfortunate reality of our society is that many of those with the privilege to be in front of millions of viewers will obfuscate facts and details to push their narratives.

A “puff” piece on SBF recently written by the New York Times is one of the perpetrators of immense deceit toward the masses. However, many in our industry see this: JPMorgan spoke out against media source skeptics and obfuscators by detailing the delineation between CeFi and DeFi.

As history relapses and skies darken, we can expect pertinent volatility within the crypto market over the next few weeks. Brought to you by the recent implosion of FTX and Alameda, the market is now quite vulnerable. According to the Crypto Volatility Index, the past week has seen the largest spike in volatility since May 2022.

- Anthony Loya

Lido’s post-Merge APR has been skyrocketing in lieu of market volatility brought on by the FTX and Alameda bankruptcies. When Ethereum block space demand picks up, validators have greater MEV opportunities and receive a greater amount of tips. MEV and tips are then passed on to ETH stakers. Consensus layer rewards are a function of the total amount of ETH staked, but the execution layer rewards are dependent on network activity. For the first time since the Merge, execution layer rewards are greater than the consensus layer.

Miners are seeing little relief in competition despite the BTC price treading water. High electricity prices, a near all-time high in hash rate, and depressed BTC prices are putting immense stress on miner’s profit margins. It is likely that some miners will capitulate and turn off their rigs over the coming months if BTC continues to trade below $20,000. On the bright side, the Bitcoin network has never been more secure.

Frax Q3 Update

After another quarter in the grueling bear market, FRAX’s supply dropped by ~$300M since early September. However, Frax launched several new products, including frxETH and Fraxlend.

The Implications of ATOM 2.0

ATOM 2.0 gives direction to the Cosmos Hub. The proposal brings ecosystem scalability with Interchain Security, a sustainable revenue model with the Scheduler and Allocator, and improved tokenomics with updated monetary policy and liquid staking.

FTX Doom Draws Dozens of Federal, State, International Agencies

Three-letter agencies are set to hone in on Sam Bankman-Fried’s collapsed FTX empire, which could have more than a million creditors

Funds With FTX Exposure Have 7% to 12% of AUM Trapped: Report

Crypto Fund Research expects a record number of investor redemption requests from crypto hedge funds in November

The insights, views and outlooks presented in the report are not to be taken as financial advice. Blockworks Research analysts are not registered broker/dealers or financial advisors. Blockworks Research analysts may hold assets mentioned in this report, further outlined in the Firm’s Financial Disclosures.

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