Warren Calls Crypto The New “Shadow Bank”

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Dom Hofmann creates an additional 1.3 million Loot NFTs, Elizabeth Warren calls crypto a shadow bank, more than $1 billion is locked up on Ethereum L2, and more than 200k ETH has been burned since the implementation of EIP-1559.

Quick Take

  • Loot NFT creator Dom Hofmann announced the creation of 1.3 million more Loot.
  • U.S. Senator Elizabeth Warren told the New York Times that cryptocurrency is the new “shadow bank.”
  • There is now more than $1 billion in Total Value Locked (TVL) on Ethereum layer 2.
  • More than 200k ETH has been burned since the implementation of EIP-1559.

Loot Founder Announces 1.3 Million More Loot

Dom Hofmann, creator of the Loot project, announced on Twitter the launch of More Loot, an extension of the original text-only NFT. More Loot has a new dynamic supply of 1.3 million items with an estimated 250,000 More Loot NFTs to be minted each year. The original Loot featured a max supply of less than 8,000 NFTs and reached a peak floor price of 20 ETH. Within an hour of the More Loot drop, the floor price of original Loot sank to 7 ETH causing holders to worry about the impact of the new supply.

At the time of launch, the gas cost associated with minting the More Loot NFT was higher than the floor price, meaning it costs users more to mint than to buy on the secondary market. It’s likely Hofmann released more Loot not for users to make a profit, but for holders that were left out in the first drop to be able to participate in the Loot community. Only about 2,400 accounts managed to mint the original Loot, which were also airdropped roughly $50,000 in $AGLD tokens per NFT.

Will Papper, the creator of the $AGLD token that serves as Loot’s native currency, said on Twitter that the community can decide whether Loot, More Loot, or both are eligible for future $AGLD claim seasons. The $AGLD contract supports any underlying NFT for claims, so there is nothing stopping the community from deciding to expand the pool of $AGLD holders. It appears unlikely that More Loot will ever be worth as much as the original Loot, considering the Loot market cap would have to reach $1 billion for each More Loot NFT to be worth $1,000.

Elizabeth Warren Calls Crypto a “Shadow Bank”

In an interview with the New York Times, U.S. Senator Elizabeth Warren (D-MA), told reporters that cryptocurrency is the new shadow bank, referring to non-bank financial entities that provide services outside of traditional regulated banking. The NYT article revolved around crypto lending startup BlockFi and it’s battle with numerous state regulators scrambling to regulate crypto banking-like services.

She told the times that “Crypto is the new shadow bank. It provides many of the same services, but without the consumer protections or financial stability that back up the traditional system.” Warren remains a long-standing critic of cryptocurrency. She even raised the idea of banning banks in the U.S. from holding cash deposits backing up stablecoins, which could effectively end the surging market.

Via a series of public letters, Warren has initiated dialogue with the head of the Securities and Exchange Commission, Gary Gensler. In July, Warren wrote a letter to Janet Yellen, President Joe Biden’s Treasury Secretary, calling for “a coordinated and cohesive regulatory strategy to mitigate the growing risks that cryptocurrencies pose to the financial system.”

$1 Billion Locked Up in Layer 2

There is now more than $1 billion in TLV on Ethereum L2, according to data from L2 tracker L2Beat. Decentralized exchange dYdX leads the charts with $285.6 million locked on L2. More than half of the total locked value in L2 is based on ZK Rollups. An estimated 250k daily transactions are processed on Ethereum L2.

L2Beat does not track data on Polygon, which is a proof-of-stake sidechain and not considered a L2 solution. L2Beat defines layer two as a chain that fully or partially derives its security from mainnet Ethereum so that users do not have to rely on the honesty of L2 validators for the security of their funds.

Although Ethereum is already transitioning into PoS consensus, there is still a place for L2 scaling. The network will have the potential to reach an estimated 100,000 transactions per second by combining sharding with rollups and other scaling solutions.

Fractionalized DOG NFT Worth $336 Million

The fractionalized DOG NFT, the meme image of Doge, is now worth $336 Million. PleasrDAO, an investment and art acquisition collective, fractionalized the original doge meme NFT, which it purchased for $4 million in June. On September 2nd, PleasrDAO fractionalized the NFT into nearly 17 billion fungible DOG tokens. Fractional NFTs turn a single non-fungible token into many fungible tokens, allowing more people to own a share in a single NFT.

Each individual DOG token represents fractional ownership in the original Doge meme. DOG tokens currently sell for $0.019 and reached a peak market cap of more than a half billion dollars on September 3rd. PleasrDAO still holds 55% of the DOG token supply. Since its release, DOG investors and PleasrDAO members have created spin offs of the token. PleasrDAO member Matt Condon, created Doggos, a spin-off of Dom Hofmann’s Loot project. Doggos can be claimed for free by anyone with a wallet containing DOG token.

200k ETH Burned Since EIP1559

More than 200k ETH has been burned since the implementation of EIP-1559. The burn rate has surpassed the rate of new ETH being minted, causing the cryptocurrency to become deflationary over the past day.

EIP-1559 uses a hybrid system of base fees and tips to more evenly incentivize miners in periods of high and low network congestion. Rather than incentivising the highest bidder, all transactions use the same base fee which is burned while miners keep the tips. However, the influx of new users has kept gas fees astronomical.