Riding The Wave News Summary #46
Korean Government Considers Imposing Unified Listing Standard on Crypto Exchanges After LUNA, UST Collapse, Why web3 companies get hacked so often, according to crypto VC Grace Isford, & more
Welcome to Riding The Wave. If you have questions or feedback, please reply to this email. If you are new to the Newsletter, please check out what we provide on our about page and consider subscribing. Within the Newsletter, I provide News Summaries, Weekly Status Updates, & Deep Dive Articles on Specific Topics (Ex: How do I pick which coins/tokens to buy?). More details here
News
Table of Contents
Tweets
Why web3 companies get hacked so often, according to crypto VC Grace Isford
Bitcoin price action decouples from stock markets, but not in a good way
Tweets
Korean Government Considers Imposing Unified Listing Standard on Crypto Exchanges After LUNA, UST Collapse
The South Korean government is shifting responsibility for the crash of cryptocurrency terra (LUNA) and algorithmic stablecoin terrausd (UST) onto crypto exchanges, the Korea Times reported Thursday.
The Korean National Assembly and the government held an emergency meeting with the heads of major crypto exchanges in the country Tuesday to discuss measures to prevent the recurrence of the LUNA and UST implosion. However, the lawmakers and financial authorities appeared to support the imposition of tougher regulations on crypto exchanges, the publication conveyed.
Vice-Chairman Kim So-young of the Financial Services Commission (FSC), the country’s top financial regulator, said: “We are going to build close ties with the Ministry of Justice, the prosecution and police, in a bid to monitor any illegal acts in the industry and protect investors’ rights.”
An official from one of the domestic cryptocurrency exchanges opined: “Exchanges can easily become a target of criticism at this period of time when no specific regulatory guideline has been introduced.” He added:
"We understand the purpose of the meeting, but the most urgent step is to summon Do Kwon, co-founder of the company, as quickly as authorities can."
Most current, past, & future failures within the crypto space will likely lead to exchanges being penalized by governments as they are the easiest place to apply pressure when a government wants to. They also act as the main point of contact for people who are starting out with crypto or who dont want to go beyond dipping their feet in.
Overall this isn’t a bad thing as someone needs to take action to protect people with less experience that are new to the space but it does create the potential danger of exchanges moving to heavy gatekeeping to prevent fines and backlash. This could happen at some point but at least for now the fines and backlash are small enough that the fees gained from users’ trading make it worth it for the exchanges to take these risks (for users) and likely will continue to for the near future.
Why web3 companies get hacked so often, according to crypto VC Grace Isford
On the Chain Reaction podcast this week, Lux Capital’s newest investor, Grace Isford, joined us to talk about the opaque but crucial world of web3 infrastructure. At Lux, Isford invests in the companies working behind the scenes to make sure crypto exchanges are secure and reliable enough to avoid being hacked.
Compared to web2, Isford said, web3 lacks enterprise-level security solutions. Alchemy and Infura are the only two major node service providers in the industry, meaning that most of crypto is reliant on two infrastructure providers to manage their data.
“There seems to be a new security hack reported every week [in web3],” Isford said, citing the recent Metamask and Ethereum dApp outage that originated from Infura and February’s Wormhole bridge hack.
While a number of startups are working on developing security solutions, Isford said, the tech is “still quite nascent” when it comes to developer tools, data infrastructure monitoring, and storage.
“I think TRM Labs, Chainalysis, and several other companies in this space have 10x potential in terms of compliance and monitoring because you just do not have that yet at scale in the same way that we’ve kind of created these sophisticated AML systems on the financial infrastructure side in the web2 world,” Isford said, referring to traditional financial institutions’ anti-money laundering technology.
While crypto is known for security, smart contracts are ironically at extra risk compared to other systems when it comes to security due to how they are designed. They often aim to programmatically and automatically capture complex tasks creating many potential points of failure which bad actors can then take advantage of and at the speed of a computer, much faster than any person can react in the moment, to wipe out a project.
Keep reading with a 7-day free trial
Subscribe to Riding The Wave to keep reading this post and get 7 days of free access to the full post archives.