This Week in Crypto

Gaming in Polygon

Polygon (MATIC) is an India-based cryptocurrency company that recently experienced rapid adoption, fueled mostly by its low transaction fees. In July, Polygon announced Polygon Gaming Studio, which will help developers create games in Polygon. Polygon also announced an NFT studio for developing NFT models and marketplaces.

Polygon already had gaming apps before the announcement, but in general, adoption by game developers has been slow.

Gamer growth has also been slow. The most popular game on Polygon had only 6,000 users over the last 7 days. Axie Infinity (AXS), the most recent hit on the Ethereum network, had 127,000 users over the same period.

Polygon Doesn't Have a Hit

It's only been a month since Polygon announced it would expand its game and NFT offerings, but so far there hasn't been much movement in gaming.

Revv Racing (REVV) is a car racing game with customizable cars. Revv operates multiplayer tournaments with cash prizes. It is the most popular game on Polygon, with 6,000 users and 30,000 transactions over the last 7 days.

Revv Racing seems like an early contender for a breakout Polygon game, and its parent company offers several products operating on REVV. But Revv Racing is still very new. For instance, there appears to be only one model of car in the game, the REVV Ambition. Car racing games are popular on consoles, so if Revv Racing continues to roll out new NFTs for cars and skins, it could become very popular.

Polygon is still waiting for a hit game, and progress has been slow. Polygon is experiencing growing pains as it expands support for game and NFT development. Developers say the gaming and NFT documentation is outdated and incomplete, and the support team is slow to respond to developer questions. Poor developer experiences will cause many developers to avoid Polygon.

$235M in Ethereum Has Been Burned Since the London Fork

The most recent update to Ethereum, “London,” went live earlier this month. This update was very highly anticipated because of its influence on the economics of fees within the ecosystem. Two major changes were rolled out: one that decreased the average fee cost for transactions and another that destroyed much of the fee, in lieu of paying it all to miners. This means that the total supply of Ethereum is being decreased, making it a deflationary currency.

Before these changes were deployed, it was unclear just how much of an effect they would have on the amount of Ethereum in circulation. As of this article’s writing, roughly $235M in Ethereum has been burned in the 3 weeks since the update; that is nearly 73,000 ETH.

You can watch the live progress of ETH burning over at Watch The Burn, and if you want more detail on the London update, we did a full breakdown of its impact.

TL;DR: $235M worth of ETH has been burned since the London Fork went live – that’s nearly 73,000 ETH!

Poly Network Hacked for $614m, Offer Hacker a Job

Earlier this month, Poly Network, a platform built to make cross-chain interactions possible, had a security flaw exploited by a hacker who stole $614m.  This is the largest known hack in crypto so far and is not without an associated dramatic flare.

The hacker, known as “Mr. White Hat,” willingly returned most of the stolen funds, including $256m the day following the hack. Poly subsequently offered Mr. White Hat a position as their Chief Security Advisor, accompanied by an additional $500,000 in bounty, in return for identifying the security flaw.

At this time, Mr. White Hat remains in control of some $141m in Ethereum and Bitcoin, as well as $33m in Tether. The coins are currently locked away in a wallet, with Tether having frozen its share pending legal proceedings.

Poly Network has stated it “has no intention of holding Mr. White Hat legally responsible” for the hack.

Blockchains and Crypto Exchanges are Buying Insurance for Their Data

Blockchains and crypto exchanges are buying insurance against smart contract hacks and data loss from DeFi insurance companies, and you can back their policies.

DeFi insurance companies provide insurance coverage for decentralized finance (DeFi) crypto companies and projects. Crypto projects and exchanges buy insurance policies to cover their contracts and their users' funds in the event of data loss or a hack.

Investors provide funding for the insurance policies by depositing crypto. When an insurance company sells $1 million of coverage in a policy to a blockchain project, the insurance company uses $1 million of investor funding to back the policy.

Investors earn the premiums paid by the policyholder. Often this is paid in the coin or token minted by the insurance company.

Many DeFi insurance companies are structured as decentralized autonomous organizations (DAO), where stakeholders in the project can vote on the company's decisions and initiatives. Frequently, the stakeholders vote on whether to pay out insurance claims.

The DeFi insurance market is immature and relatively unregulated. There is large variation between products. Generally, the companies fall into three categories:

• high-premium coverage providers that operate like traditional insurance companies
• low-premium coverage providers with policy premiums and claims decided by an algorithm
• "higher-layer" products that aim to integrate into insurance companies' product lines and offer the lowest premiums

DeFi insurance occupies a small segment of the greater crypto insurance space. Currently, the top 15 DeFi insurance companies have a combined market cap of roughly $1 billion, and only two companies are above $100 million: Nexus Mutual (NXM) and inSure DeFi (SURE). As the DeFi space matures and crypto transactions become more mainstream, it's possible that demand for ensuring data integrity and customer funds could increase.

Early Leader:

Nexus Mutual (NXM), $823 million market cap

Nexus is an early leader in the DeFi insurance market, offering primarily exchange hack and smart contract insurance. Nexus has no claims review board; members decide which claims are valid.

Small Companies with Traction:

Bridge Mutual (BMI), $40 million market cap, No KYC

Bridge Mutual allows investors to stake insurance policies for crypto contracts, stablecoins, and exchanges. Bridge Mutual is decentralized, and claims go through a 2-phase voting process. Bridge Mutual is likely the largest DeFi insurance company with no KYC requirements.

InsurAce (INSUR), $22 million market cap, No KYC

Launched in April 2021, InsurAce sells low-premium custom insurance policies to crypto projects, and they offer coverage on more than 50 protocols.

Unslashed (USF), $7 million market cap

Unslashed is a growing, London-based insurance company with roughly 300,000 ETH, and 30 policies. Unslashed covers exchange and smart contract hacks, and their customers include Lido, Kyber Network, and Paraswap. Investors are currently earning about 25% on their stakes.

Solana’s Price has Exploded, Showing Signs of Institutional Investors

Solana (SOL), an incredibly fast (50,000 transactions/sec) and inexpensive ($0.00025/transaction) competitor of Ethereum, has made substantial headway recently. It’s been a huge year for Solana, which can be summarized by its past month: in the past 30 days, SOL has risen by 216%, up from $25.94 to a high of $82.04. In the past week alone, SOL increased 68%.

Many market participants are pointing to institutional interest as an explanation for the rapid price increase, this is largely because the trading patterns are consistent with algorithmic trading that many firms use. In addition to money flowing directly into Solana, projects built on the coin have seen an influx of sizable amounts of capital. For example, Mango Markets, a decentralized exchange, raised $70m last week in a token sale.

Advocates of Solana say the speed of the network allows for many niche uses in DeFi that aren’t possible in slower networks.

Takeaway: Solana’s price has exploded – it’s up 2,400% on the year and 180% at the time of this writing.