The Protocol: Justin Sun, Bitcoin Mempool Sniping, XRP for Harris, Inspirational Women

Is Tron founder Justin Sun good or bad for wrapped bitcoin (WBTC), the Ethereum token backed by bitcoin held in custody? It was a one-sided argument before – mostly bad. Now, there’s a counterargument that’s not entirely crazy. Read down for our exclusive interview with Robert Liu, director at BiT Global, a new Hong Kong-based custodian advised by Sun that holds one of the project’s three keys.

This article is featured in the latest issue of The Protocol, our weekly newsletter exploring the tech behind crypto, one block at a time. Sign up here to get it in your inbox every Wednesday.

Schematic of QuarkID architecture, from the project documentation (QuarkID)

MUNICIPAL INTEGRATION: The city of Buenos Aires has launched a digital identity service designed to strengthen residents’ privacy using zero-knowledge proofs, a type of cryptography that long predates but often bolsters cryptocurrencies. The service, QuarkID, has been integrated into miBA, the city’s seven-year-old app for accessing municipal services and documents. The idea, in short, is to give 3.6 million porteños – residents of Buenos Aires – greater control over their personal information. The ZK proofs will let users show that a document has indeed been authenticated by the government without disclosing information that is irrelevant to the task at hand. The development has got some industry executives buzzing: “It sounds like if this goes well, other countries in the region, like Uruguay, could follow suit,” Harrison Seletsky, director of business development at digital identity platform SPACE ID, told CoinDesk in an emailed statement.

ELECTION PUSH. Is dark money is manipulating prediction markets? A mysterious high-stakes bettor, identified as “Fredi9999,” has spent $25 million solely betting on Trump across prediction markets, according to research done by Polymarket whale “Domer.” Fredi, according to on-chain detective work done by Domer, appears to operate under multiple accounts – Fredi9999, PrincessCaro, Michie and Theo – funded through sizable Kraken deposits (in precise amounts like $500,000 or $1 million). The matter has drawn mainstream media attention, from the likes of the Wall Street Journal and Reuters, while inspiring speculation over whether the trader was “spending heavily to ‘paint the tape’ and make a Trump victory appear more likely.”

DE-REBRANDING? The DeFi project formerly known as Maker, now known as Sky, could soon be formerly known as Sky, once again known as Maker. The reconsideration of its recent marketing and branding overhaul came in response to a lukewarm reception, and after a successful launch of the USDS stablecoin. “It is also now more clear than ever just how much the DeFi community loves and trusts the Maker brand,” Sky co-founder Rune Christensen wrote on its governance forum. “There was a lot of affinity for the brand and what it stands for: stability, security, and DeFi scale. And there is a lot of commitment to holding the MKR token versus upgrading to SKY.”

XRP FOR HARRIS! Ripple co-founder and Executive Chairman Chris Larsen said he’s pitching in with $10 million in XRP tokens to the political action committee Future Forward, in support of U.S. Vice President Kamala Harris’s run for president as the Democratic candidate. “It’s time for the Democrats to have a new approach to tech innovation, including crypto,” he wrote, adding that Harris “will ensure that American technology dominates the world.” Federal Election Commission records show Larsen had previously donated $1,750,000 to the PAC. He’s also given hundreds of thousands of dollars to Democratic congressional campaigns.

CHARGES WITHDRAWN. Nigeria’s government has withdrawn the money laundering charges against Binance executive Tigran Gambaryan days after a court denied him bail, local news outlet Punch reported first on Wednesday. “People are on the way to give the order” to the Kuje prison and then he should be released “immediately,” Gambaryan’s lawyer Mark Mordi told CoinDesk on the phone. He did not share any other details about when Gambaryan is expected to leave the country.

Satflow takes aim at the practice known as ‘mempool sniping’ in new decentralized exchange for trading Ordinals and Runes tokens (A.B. Frost/Wikipedia, modified by CoinDesk using PhotoMosh)

Satflow, a Bitcoin infrastructure firm focused on the Ordinals and Runes ecosystems, has introduced a decentralized exchange (DEX) for professional traders – positioned as a less-expensive alternative to the popular NFT marketplace Magic Eden. In a press release shared with CoinDesk, Satflow said that its fees initially will be 0%, claiming they would be a couple percentage points lower than Magic Eden’s. The new DEX’s aim is to eliminate the practice of mempool sniping, which is when users exploit the time lag in which a transaction is waiting to be added to a Bitcoin block.

Coinbase Institutional Research wrote in a weekly report, referring to Ethereum co-founder Vitalik Buterin’s recent blog posts on the blockchain’s project roadmap, that “the majority of the content remains largely academic and unlikely to be a near-term market driver.”

World Liberty Financial, the startup DeFi project touted by Republican U.S. presidential candidate Donald Trump, “is a more of an idea than a protocol,” Galaxy Research’s Thad Pinakiewicz wrote in a newsletter. “It’s a governance token that has no value accrual for a project that doesn’t yet exist. Details were scant leading up to the protocol launch and they remain so now. There has been no code released, no detailed project plan, just broad strokes of what the team plans to do with the project.” He added: “The market is clearly not convinced of the protocol’s future even with crypto’s tendency to lean more Republican.”

ICYMI: Who’s Afraid of Gary Gensler? Not Don Wilson, the Trader Who Beat the Regulator Once Before

Sign with Justin Sun’s image in foreground of Tron party at Bitcoin Nasvhille in July (Bradley Keoun)

In August, the mere disclosure that Tron founder Justin Sun was involved in the custody operations related to wrapped bitcoin (WBTC) – a popular token in decentralized finance – was enough to rattle the crypto industry.

At least one major decentralized finance (DeFi) project considered eliminating WBTC completely as a collateral option, and several major crypto players, including the exchange Coinbase, rushed out competing products.

Sun is seen as controversial by some crypto industry analysts, owing to his involvement in various stablecoin projects that turned turbulent, and in other instances where a lack of transparency was cited.

BitGo, the original and longtime custodian of the bitcoin backing WBTC, announced on Aug. 9 that it would distribute control over the project’s custody to three entities globally instead of just one – as a way of helping to decentralize the operation. According to the release, BiT Global is a global custody platform with regulated operations based in Hong Kong, registered as a Trust and Company Service Provider (TCSP), and is a “a strategic partnership between BitGo, Justin Sun and the Tron ecosystem.”

WBTC is a token that allows investors to use bitcoin (BTC) on other blockchains, and plays a key role in lending DeFi as collateral, with a $9 billion market capitalization.

BiTGlobal is now one of three holders of the keys overseeing the bitcoin in custody, project officials have confirmed.

But what if Sun’s involvement is a strength rather than a liability?

This argument was made to CoinDesk this week by BitGlobal director Robert Liu, in an exclusive interview.

What exactly is Sun’s role with the project? And who owns it? We got some clarity, but not total clarity.

Go here for the full Q&A with BiTGlobal’s Robert Liu, by Bradley Keoun

Fundraisings

Jackson Denka, the 21-year-old founder of Azura (Azura)

Deals and grants

Data and Tokens

Unstoppable Women of Web3 and AI, an organization founded in 2022 by Unstoppable Domains COO Sandy Carter and committed to fostering diverse talent in the industry, released its “Most Inspirational Women in Web3 and AI” list for 2024. Some 135 women were named, according to a post on X, announced on stage at Singularity South Africa, according to a message from the team. Winners included:

Screengrab from cover illustration from electronic copy of the new book (Qian, Alizadehfard Piech)

Three crypto-industry vets based in UAE have written a book, “Lessons Learned (The Story of Crypto Winners and Losers),” to share their experiences. A PR firm was kind enough to share a preview copy with us. The authors are Bill Qian, Seyed Mohammad Alizadehfard (Bijan) and Stefan Piech. The following is an excerpt:

The slow decline of Litecoin offers valuable lessons for the cryptocurrency community and future projects:

Litecoin’s story highlights the complexities of sustaining relevance and adoption in the rapidly evolving cryptocurrency landscape. Despite its initial success and substantial market valuation, Litecoin has struggled to keep pace with technological advancements and changing market dynamics. The lessons learned from its decline underscore the importance of continuous innovation, clear use cases, community engagement, and strategic leadership in building and sustaining successful cryptocurrency projects. As the cryptocurrency market continues to evolve, these insights can guide new and existing projects toward long-term success and relevance.

Top picks of the past week from our Protocol Village column, highlighting key blockchain tech upgrades and news.

Dan Lynch introduces Hyperweb onstage at Cosmoverse on Wednesday. (Comsology)