The biggest letdowns in crypto and blockchain in 2021


2021 has been one of the crucial attention-grabbing years for blockchain know-how and cryptocurrencies, each when it comes to adoption and mainstream acceptance. From governments similar to El Salvador to giant companies like Tesla, Goldman Sachs, Bank of America and Morgan Stanley, many establishments have made a step towards changing into part of the ecosystem.

Even so, there have been a number of points and occasions that soured the temper for cryptocurrency traders and the neighborhood typically.

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SEC’s rejection of VanEck’s spot Bitcoin ETF

Following the USA Safety and Change Fee’s approval of ProShares’ Bitcoin (BTC) futures exchange-traded fund early in October, Bitcoin rallied to a brand new all-time excessive of $68,789.63 on Nov. 10, as per information from Cointelegraph Markets Pro. The ProShares Bitcoin Technique ETF, which trades beneath the ticker BITO, had the biggest ever first day of any ETF when it comes to pure quantity, indicating how extremely awaited the launch of a BTC ETF was.

Quickly after, on Nov. 12, the monetary regulator spoiled the occasion by rejecting Van Eck’s proposal for a spot Bitcoin ETF, which led the value of the flagship cryptocurrency to begin its downward spiral journey.

Jan van Eck, CEO of VanEck, wasn’t happy with the rejection.

The bid to get approval from the SEC for a spot ETF has been happening for greater than eight years, since July 2013 when Cameron and Tyler Winklevoss tried to launch the “Winklevoss Bitcoin Belief.” Despite the fact that such a very long time has handed and the narrative round cryptocurrencies has modified, Gary Gensler’s SEC has not but permitted a spot ETF for Bitcoin.

Associated: VanEck’s Bitcoin spot ETF shunt solidifies SEC’s outlook on crypto

Eric Balchunas, senior ETF analyst at Bloomberg, opined on the SEC’s rejection. Balchunas has been vocal concerning the SEC’s rejection of the a number of spot ETF purposes which have been filed. He has develop into one of many distinguished voices monitoring new ETF developments surrounding cryptocurrencies like Bitcoin and Ether (ETH).

Ethereum community: Fuel charges uncontrolled

The Ethereum community underwent a landmark improve in 2021: its London exhausting fork, which put ETH on a deflationary trajectory with Ethereum Enchancment Proposal (EIP) 1559. As of the time of writing, 1.244 million ETH has been burned, valued at over $4.96 billion.

Together with the burn mechanism being launched, Ethereum gas fees also saw a huge spike in mild of the elevated utilization of decentralized finance (DeFi) protocols on the blockchain and the proliferation of Ethereum-based nonfungible tokens (NFTs) within the cryptoverse. Fuel charges proceed to cross 100 gwei, even main as much as 2022. “Gwei” is the smallest unit of Ether, equal to 0.000000001 ETH.

The gasoline fees on the community hit a yearly excessive of 373.8 gwei on Feb. 23. Despite the fact that gasoline charges gave the impression to be in management between Might and August, there have since then been a number of situations of spikes which might be extremely unfavorable, particularly for retail traders within the DeFi markets. This has additionally led to a number of DeFi protocols and traders selecting various blockchain networks, similar to Binance Sensible Chain, Solana, Polygon, and so on.

To be able to handle this ongoing problem, Vitalik Buterin, co-founder of Ethereum, has suggested the upgrades EIP 4448 and EIP 4490, which might function a short lived repair by resorting to a way generally known as information sharding, which might minimize prices for zk-Rollups on the blockchain.

Nevertheless, it stays to be seen whether or not the proposal will cross the governance construction of the community and the way efficient these upgrades will truly be in decreasing gasoline charges.

Associated: London’s impact: Ethereum 2.0’s staking contract becomes largest ETH holder

Solana community: Outage and DDoS assault

Launched in April 2019, Solana has grown quickly to develop into one of many main blockchain networks, with a complete worth locked (TVL) of just about $12 billion. The community’s native token, SOL, has elevated in worth by virtually 130 occasions given the present worth of round $180. The token hit an all-time excessive of $260.06 on Nov. 7.

Nevertheless, on Dec. 4 at 13:46 pm UTC, the Solana network suffered an outage that lasted practically six hours. The mainnet beta cluster of the community stopped producing blocks at slot 53,180,900, which stopped new transactions from being confirmed on the blockchain. This outage drew criticism from numerous merchants and builders, who took to Twitter to criticize the community.

Scott Lewis, co-founder of DeFi Pulse, was one of many critics, citing Serum’s order ebook information as proof of a scarcity of “actual buyer orders.”

This wasn’t the primary outage Solana skilled this 12 months. Again in September, the network suffered a 17-hour outage between Sep. 14 and 15 because of a distributed denial-of-service (DDoS) assault focused at Grape Protocol’s preliminary decentralized alternate providing on Sept. 14. Throughout a DDoS assault, a lot of coordinated gadgets or a botnet congests a community with pretend site visitors in an try to take it offline.

Quickly after the second outage on Dec. 4, the network was hit by another DDoS attack on Dec. 9 that quickly congested the community, though it managed to remain on-line all through the assault.

Associated: Scalability or stability? Solana network outages show work still needed

Despite the fact that the assault was blamed on Solana’s basic design and use of its proof-of-history consensus mechanism, the builders nonetheless appear to have religion within the community’s potential. Solana co-founder Raj Gokal elaborated on the DDoS assault on Twitter:

Within the aftermath of the DDoS assault, Solana’s on-chain development efforts saw a noticeable spike when it comes to day by day GitHub submissions. In truth, the community surpassed Polkadot and Cardano to develop into probably the most developed blockchain community between Nov. 12 and Dec. 13.

Binance Sensible Chain community: Safety exploits

Binance Sensible Chain is the parallel chain to Binance Chain, with each blockchains designed and maintained by the cryptocurrency alternate Binance. BSC was first unveiled in April 2020 and launched quickly after in August 2020.

Since then, the community has grown to develop into the second most generally used blockchain to deploy decentralized purposes, after Ethereum. In response to DefiLlama, the TVL in DeFi protocols on the community presently stands at practically $17 billion. The TVL hit an all-time excessive of $31.72 billion on Might 10, on the peak of the earlier bull run available in the market.

Nevertheless, the community and the protocols operating atop it have been extraordinarily weak to safety exploits ever since its launch. Beneath is a listing of a number of the DeFi protocols on BSC which have been a sufferer of safety exploits and hacks:

Contemplating that the record above isn’t exhaustive in nature, it’s protected to say that there have been hacks and safety breaches resulting in losses of lots of of thousands and thousands of {dollars} within the 18 months that the community has been in operation. Along with these safety exploits, there have been several phishing attacks on the PancakeSwap decentralized alternate alongside Cream Finance.

Associated: DeFi hacks on Binance Smart Chain rise as TVL and volumes increase

Nevertheless, the Binance ecosystem is trying to deal with this problem in a number of methods. The most recent effort is the introduction of Challenge Protect, a safety audit program that can add an extra layer of safety for customers trying to realize publicity to each BEP-20 and ERC-20 tokens on the Binance alternate.

A lot to look ahead to

Regardless of these situations and points resulting in disappointments for the crypto neighborhood in 2021, it’s evident that the expansion in digital foreign money use is increased than ever earlier than.

With improvements like NFTs, GameFi and the Metaverse, the cryptocurrency area is tapping into the subsequent huge factor on the planet of artwork, gaming, music and finance with a single innovation that can change these industries for the higher.