🟣 Dropping like a rock

Consumer Price Index falls like your favorite altcoin did last week.

Author

Luke Leasure
July 11, 2024

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Welcome back to 0xResearch. Here's what we’ve got for you today:

  • This morning’s CPI print

  • Squarespace-hosted domain exploit

  • Pyth introduces Express Relay solution for MEV

  • A tough go for BUSD

Consumer Price Index Falls

This morning’s Consumer Price Index print shows a decline of .1% month-over-month, beneath expectations of a .1% increase. As inflation continues to cool, a majority if this reduction is attributable to the decline in energy prices, with Gasoline dropping 3.8% m/m. With this print, equities have reversed from their all-time highs and are selling off intra-day. Crypto majors remain largely unchanged. With trailing 12-month inflation still at 3%, work remains to be done to get back to the 2% target. Currently, Federal Funds Rate futures are pricing ~44% odds of 3 rate cuts by the end of January, ‘25. As always, probabilities can change.

Another Domain Exploit

Unfolding now, it has been revealed that over 90 crypto protocols that host their domains through Squarespace are at risk of exploit. Revealed by @0xngmi, this exploit would allow an attacker to deploy a malicious frontend in lieu of the protocol’s correct landing page to direct users to a phishing link. As of right now, it appears Compound and Celer have been victims of this exploit, with more to be determined. This attack doesn’t compromise the existing protocol smart contracts, but rather, would jeopardize the funds of users interacting with the malicious website domain. Curve Finance fell victim to a similar attack in August, 2022, where a malicious frontend was deployed, leading to the loss of 327 ETH.

Pyth’s Express Relay Solution

Pyth Network, a multi-chain oracle solution, announces their Express Relay solution to reduce MEV. Express Relay exposes an integration for protocols to route their transaction flow to top searchers, who compete in a bidding auction to win the right to settle certain lucrative transactions, such as a swap or liquidation. Protocols that integrate this solution can effectively price, auction, and recapture the MEV related to transactions originating from the protocol. Express Relay allows protocols to integrate with an already established network of top searchers, while searchers can access aggregated flow from a number of protocols with one integration. This offering should be competitive with UMA’s Oval, announced earlier this year, which lets protocols price and recapture the MEV that originates from oracle updates. Pyth’s Express Relay is now live on EVM mainnets, with a number of protocols already integrated, comprising over $1B in deposits.

— Luke Leasure (X: @0xMether)

From modularity to restaking, to the intersection of AI and crypto, to the long-awaited consumer-facing apps to the most recent Bitcoin-related innovations.

We’ll be breaking down all of these and more with the help of a few of the thought leaders in crypto at Permissionless.

Total BUSD Supply (source: DefiLlama)

Today, the SEC has dropped their probe into Paxos for issuing Binance’s BUSD stablecoin as unregistered security. Following the SEC’s February ‘23 issue of a Wells notice, which alleged BUSD as an investment contract, Paxos has managed BUSD in a redemption-only mode, facilitating one-way withdrawals out of the stablecoin product. As such, BUSD’s supply dropped from a high over $23B to just $70M now.

Aerodrome is a "MetaDEX" that combines elements of various DEX primitives such as Uniswap V2 and V3, Curve, Convex, and Votium. Since its launch on Base, it has become the largest protocol by TVL with more than $495B in value locked, doubling Uniswap's Base deployment.

Arbitrum recently released three proposals with the potential to drastically change the future of the DAO and its treasury. These proposals tackle ARB staking, MEV revenue collection, and possibly increasing the gas fees.

Thursday’s CPI report shows prices are coming down more quickly than analysts had anticipated, renewing hope that central bankers will cut rates in the fall.

If we tokenize all assets in a speculative rush, the risk of creating illiquid markets and trapped value will manifest on a large scale.

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.