Prizmabet

EigenLayer’s Token Launch Draws Scrutiny Over Supply Concerns

The token has dropped from $4.39 to $3.57 since it went live.

In some ways, the release of EigenLayer’s native EIGEN token this week went as expected.

The price surged moments after it was listed on exchanges, leading to a price discovery period culminating in a 22% slide from its momentary record high.

But there appears to be a more serious issue brewing, with investors and community members complaining about a lack of transparency regarding token supply.

EIGEN’s total supply is fixed at 1.68 billion and its circulating supply is 186 million. These figures give the asset a fully diluted value of $5.8 billion and a market cap, excluding tokens not in circulation, of $650 million. The issue many community members raise stems from a portion of those locked tokens, which belong to early investors that bought during heavily-discounted funding rounds.

Investors that bought in EigenLayer’s $14.4 million seed round, $50 million Series A and most recent $100 million raise in February now can stake their locked tokens to yield rewards. As it stands, there are 130 million EIGEN tokens staked. Many believed these were all a part of the claimed tokens but in fact, 70 million of these tokens belong to this small group of early investors.

Data availability protocol Celestia suffered a similar issue following its token launch, as early investors staked their dominant TIA stacks to receive tradable rewards, which many then traded away. TIA has plunged 75% since February.

EigenLayer investor TardFiWhale.eth wrote on X that the project recently updated its documents to state that “Eigen Labs investors are not restricted from staking” and that rewards are not subject to lock-ups. The X post claims this information wasn’t in an archived document from mid-September.

EigenLayer’s blog post on “token disclosures” was last revised on Sept. 30.

“Transparency will enable us to engage in more honest and open discussions about these issues,” TardFiWhale.eth wrote. “I personally believe that allowing investors with locked EIGEN to stake makes sense from a governance perspective, given the complexity and goals of Eigenlayer. However, I also believe that the rewards earned from staking should be locked until the cliff is reached” at the end of the 12-month vesting period.

EigenLayer allocated 86 million tokens to early adopters including node operators and stakers, but even this has led to criticism as whales were able to receive disproportionate rewards compared to the general population. Tron founder Justin Sun received an airdrop worth $8.75 million, almost all of which was deposited to HTX, the exchange formerly known as Huobi, according to data provider Arkham.

EIGEN recently traded at $3.57, having initially surged as high as $4.39, CoinMarketCap data shows.

An EigenLayer spokesperson offered no comment by press time.

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Indiana Man Pleads Guilty to Stealing $38M in Crypto Via ‘Cyber Intrusion’

Evan Light, 21, faces up to 40 years in prison for his role in the crime.

An Indiana man has pleaded guilty to taking part in the “cyber intrusion” of a Sioux Falls, South Dakota-based financial services company, during which he and unnamed co-conspirators hacked into the company’s servers, stole customers’ personal information, and then stole nearly $38 million in cryptocurrency from 571 victims.

According to his plea agreement, 21-year-old Evan Light, of Lebanon, Indiana, and his unnamed co-conspirators were able to infiltrate the unnamed company’s servers after stealing the identity of one of its clients. They then used that client’s information to illegally gain access to the company’s servers and carry out the theft.

After the theft, Light pleaded guilty to laundering the group’s ill-gotten gains, funneling them through “multiple mixing services and gambling websites” to conceal his identity and the identities of his co-conspirators. He also pleaded guilty to wiring the proceeds and then storing them in a cold wallet under his control.

“These convictions reflect the relentless efforts of the U.S. Attorney’s Office and the FBI in identifying a cybercriminal, holding him accountable, and prioritizing the victims of his crimes,” said U.S. Attorney Alison Ramsdell in a Tuesday press release. “Although this defendant tried to hide in the shadows of a cyber underworld, he was not beyond the reach of our team, and today’s guilty verdicts should serve as a reminder that this Office and its law enforcement partners will bring cyber criminals to justice, regardless how sophisticated their crimes may be.”

The theft took place in February 2022. According to a local news outlet, the FBI raided Light’s residence, which he shared with his mother, in May 2023, approximately two weeks after he was indicted by a grand jury for conspiracy to commit wire fraud and conspiracy to launder monetary instruments.

Both counts carry a maximum sentence of 20 years, meaning Light faces up to 40 years in prison. No date has yet been set for Light’s sentencing.

The Protocol: Inside North Korea’s Campaign to Put Crypto Developers on Payroll

In this week’s issue of CoinDesk’s weekly blockchain tech newsletter, we’ve got names, details and anecdotes on crypto companies’ unwitting hires of North Korean developers. PLUS month-end rankings for bitcoin, ether and other digital assets in the CoinDesk 20 index during a strangely bullish September.

When trying to determine if your crypto company might be unwittingly employing North Korean workers, sometimes it helps to pay attention to little details that just don’t seem to add up – such as when your workers claim they were distracted by an earthquake in Japan, when there was no recent earthquake in Japan. That’s just one of the tantalizing details from our Sam Kessler’s investigative opus, hot off the press, detailing North Korea’s successful campaign to place its workers on crypto-company payrolls.

ALSO:

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“Naoki Murano,” one of the suspected North Korean IT workers identified by ZachXBT, provided companies with an authentic-looking Japanese passport. (Image courtesy of Taylor Monahan)

HERMIT EMPIRE: An investigation published Wednesday by CoinDesk’s Sam Kessler reveals just how aggressively and frequently North Korean job applicants have targeted crypto companies in particular – successfully navigating interviews, passing reference checks, even presenting impressive histories of code contributions on the open-source software repository GitHub.

Kessler spoke to more than a dozen crypto companies that said they inadvertently hired IT workers from the Democratic People’s Republic of Korea (DPRK), as the nation is officially called. These interviews with founders, blockchain researchers and industry experts reveal that North Korean IT workers are far more prevalent in the crypto industry than previously thought. Virtually every hiring manager approached by CoinDesk for this story acknowledged that they had interviewed suspected North Korean developers, hired them unwittingly, or knew someone who had.

“The percentage of your incoming resumes, or people asking for jobs, or wanting to contribute – any of that stuff – that are probably from North Korea is greater than 50% across the entire crypto industry,” said Zaki Manian, a prominent blockchain developer who says he inadvertently hired two DPRK IT workers to help develop the Cosmos Hub blockchain in 2021. “Everyone is struggling to filter out these people.”

Among the unwitting DPRK employers identified by CoinDesk were several well-established blockchain projects, such as Cosmos Hub, Injective, ZeroLend, Fantom, Sushi and Yearn Finance. “This has all been happening behind the scenes,” said Manian. This investigation marks the first time any of these companies have publicly acknowledged that they inadvertently hired DPRK IT workers.

ELSEWHERE:

Crypto Winter-Era Seed Startups Mostly Persist Despite Tumult and Crisis

Ethereum had the most projects among the 2022 cohort, Bitcoin had the lowest fail rate, and Binance had the highest fail rate. (Lattice)

Crypto’s hellish 2022 was awash in washouts: Terra-Luna crashed, FTX rugged and crypto lenders bombed. Yet the disasters failed to sink many of the teams perhaps most vulnerable to mayhem: early-stage startups.

Over 80% of the crypto startups that announced seed rounds in 2022 continue to build today, according to a new report from Lattice VC.

The finding may add some retrospective hope to what was otherwise crypto’s darkest year yet. Venture capital companies deployed over $5 billion into 1,200 teams that unveiled their seed rounds during the tumultuous months of 2022 – 2.5 times more capital than in 2021.

“Because of the massive influx of capital for 2022, there was just a natural expectation” of a higher fail rate, said Mike Zajko, co-founder at Lattice. The prediction hasn’t really come to fruition.

Go here for the full article by CoinDesk’s Danny Nelson

Money Center

Fundraisings

Deals and grants

Jon Atack (Maelstrom)

Data and Tokens

Regulatory, Policy, and Legal

Protocol Village

Top picks of the past week from our Protocol Village column, highlighting key blockchain tech upgrades and news.

Diagram of Strata’s system architecture (Strata)

Bitcoin’s Uncharacteristically Strong September Yields to Unpleasant October Surprise

Bitcoin (BTC) is suffering its worst start to October, typically its most bullish month, as Israel-Iran tensions have flared. Some $450 million in bullish crypto bets were liquidated.

September, on the other hand, looked bullish – typically in the largest cryptocurrency’s worst month of the year.

Looking back on September, the CoinDesk 20 index of blue-chip digital assets outperformed the Standard & Poor’s 500 Index, as well as gold. Here’s what that looked like, courtesy of my colleague Tracy Stephens at CoinDesk Indices

(Tracy Stephens/CoinDesk Indices)

Bitcoin (BTC), despite gaining an entirely respectable 8.3% during the month, was a bit of a laggard compared to the rest of the CoinDesk 20 members.

The alternative layer-1 blockchain’s NEAR token topped the charts, with a 36% climb.

Ethereum’s ETH put in another month of subpar performance, in what has been an inarguably lackluster year for the largest smart-contract blockchain.

Polygon’s MATIC, which is being swapped out for a new token called POL, was the index’s sole loser during the month, sliding 3.2%.

Calendar

SEC Enforcement Director Gurbir Grewal Is Leaving the Agency

Deputy Director Sanjay Wadhwa will take over for Grewal as acting enforcement chief.

Gurbir Grewal, the U.S. Securities and Exchange Commission’s (SEC) director of enforcement, is stepping down and departing the agency, according to a Wednesday press release.

Grewal’s last day will be Oct. 11. Sanjay Wadhwa, Grewal’s deputy director of enforcement, will step in as acting director of the SEC’s enforcement division after Grewal’s departure. Sam Waldon, who is currently the chief counsel for the enforcement division, will be named acting deputy director.

“We have been incredibly fortunate that such an accomplished public servant, Gurbir Grewal, came to the SEC to lead the Division of Enforcement for the last three years,” SEC Chairman Gary Gensler said in a press statement. “Every day, he has thought about how to best protect investors and help ensure market participants comply with our time-tested securities laws. He has led a Division that has acted without fear or favor, following the facts and the law wherever they may lead.”

Under Grewal’s three-year tenure as enforcement director, the SEC authorized more than 2,400 enforcement matters, leading to over $20 billion in disgorgement and civil penalties, and handed out over $1 billion in awards to whistleblowers, according to the press release.

In their announcement of Grewal’s departure, the agency lauded his crypto-related enforcement track record in particular, writing:

“Under Mr. Grewal’s leadership, the Division recommended and the Commission authorized more than 100 enforcement actions addressing widespread noncompliance in the quickly growing crypto space, including against the operators of the largest crypto asset trading platforms in the world and the operator of the largest crypto asset trading platform in the United States for depriving investors of crucial investor protections by not complying with the registration provisions of the federal securities laws.”

The SEC has announced a number of enforcement actions and settlements in the crypto space over the past few weeks, ahead of the end of the fiscal year, including eToro, Mango Markets and Galois Capital.

Bitcoin Bounce Above $62K Quickly Fades; Ether, XRP, ADA, LINK Lose as Torrid October Continues

The largest cryptocurrency’s price is currently retesting its “Bull Market Support Band” trend indicator, where prices often rebounded from pullbacks during uptrends.

Bitcoin’s (BTC) modest rebound from the geopolitical turmoil-induced sell-off was arrested at $62,400 during the Wednesday U.S. session, tumbling back below $61,000 in the later hours.

BTC recently changed hands at $61,100, down 1.5% over the past 24 hours, while the broad crypto market benchmark CoinDesk 20 index was 2% lower during the same period. Altcoins fared worse, with ether (ETH), Ripple’s XRP (XRP), Cardano (ADA), Chainlink (LINK) and Near (NEAR) declining 3%-5% during the day.

U.S. stock indexes remained mostly flat after yesterday’s losses on rising conflict between Israel and Iran. Gold pared some of its gains while oil retraced to $70 from its intraday top at $72, perhaps a sign of easing investor concerns over further military escalation.

The Japanese yen tumbled 1.8% against the U.S. dollar on incoming prime minister Shigeru Ishiba ruling out further interest rate hikes in the near term, saying that the country’s economy isn’t ready yet for more restrictive monetary policy. Keeping central bank policy loose would support risk assets, as the Bank of Japan’s surprise rate hike in August triggered a broad-scale market crash as traders were forced to unwound their positions funded by cheap yen-based loans.

Bitcoin’s key test

Crypto’s dismal start of October, which was widely expected to be a bullish month, has left crypto traders worried about further downside as the euphoria from bitcoin’s swift run to $66,000 from $52,000 last month quickly faded.

Whether prices rebound or tumble lower may depend on bitcoin’s ongoing retest of its “Bull Market Support Band,” a key trend indicator defined by the asset’s 20-week simple moving average (SMA) and a 21-week exponential moving average (EMA). The band often served as support for prices during previous uptrends, and currently ranges between $61,100 and $62,900. A bounce from the band would reinvigorate the uptrend from the September lows to target, but a decisive break below could undo all the recovery, with many more weeks chopping below $60,000.

Analysts at crypto hedge fund QCP said that bitcoin could tumble to as low as $55,000 if the Middle East conflict escalates further and investors move risk-off, but the $60,000 level acted as solid support so far.

“Middle East geopolitics will steal the limelight for now, but the shallow sell-off suggests that the market remains well bid for risk assets,” QCP said in a Tuesday update.

“This minor setback shouldn’t distract from the bigger picture,” QCP analysts added. “Asset prices are expected to remain supported heading into 2025, as both the largest (the Federal Reserve) and third-largest (People’s Bank of China) central banks in the world have started their cutting cycles in earnest.”

Blockchain analytics firm CryptoQuant noted signs of BTC demand recovering from the summer slump, driven by U.S.-listed spot ETFs.

If demand picks up and favorable year-end seasonality materializes, BTC could target the $85,000-$100,000 range in the last quarter, according to CryptoQuant.

“These levels align with the upper range of the on-chain trader realized price bands, where short-term traders often take profits following price rallies,” CryptoQuant analysts said.

SEC Files Notice of Appeal in Case Against Ripple

A federal judge ruled last year that the SEC had not made its case that Ripple violated securities law by selling XRP to retail customers through exchanges.

The U.S. Securities and Exchange Commission announced it would appeal a federal judge’s ruling in its case against Ripple on Wednesday.

The federal regulator filed a “notice of appeal” to the Second Circuit Court of Appeals, just under two months after Judge Analisa Torres imposed her final judgement in the regulator’s now four-year-old-case against the crypto company.

In July 2023, the judge ruled that while Ripple violated federal securities law through its institutional sales of XRP, its programmatic sales to retail exchanges did not violate securities rules. The SEC attempted to file an interlocutory appeal against the motion for summary judgement, but was denied by the judge.

This past August, Judge Torres imposed a $125 million fine against Ripple, well below the nearly $2 billion the SEC requested in disgorgement, prejudgment interest and civil penalties.

In a statement, an SEC spokesperson said, “We believe that the district court decision in the Ripple matter conflicts with decades of Supreme Court precedent and securities laws and look forward to making our case to the Second Circuit.”

Ripple did not immediately return a request for comment.

Earlier Wednesday, Bitwise filed an application to list and trade shares of an exchange-traded fund that would invest in XRP.

Protocol Village: Polyhedra’s ZK Prover Tops Speed Rankings in First Results From ‘Proof Arena’

The latest in blockchain tech upgrades, funding announcements and deals. For the period of Oct. 3-9.

Thursday, Oct. 3

Polyhedra’s ZK Prover, Expander, Tops Speed Rankings in First Results From ‘Proof Arena’

Polyhedra Network, a blockchain project specializing in zero-knowledge (ZK) proofs, released the first set of data from its new Proof Arena, a benchmarking platform designed to evaluate and compare different ZK provers. According to the team, “The data includes comparisons of provers from Polyhedra, Polygon, Linea and StarkWare – Expander, Plonky3, GNARK, Halo2 respectively. Results: the Expander prover is significantly faster in terms of proof generation time and peak memory; Plonky3 achieves stellar performance in terms of setup and verification time, and GNARK has the smallest proof size.” [EDITOR’S NOTE: Please see our exclusive feature story on Proof Arena, published in July.)

Sui Claims First Among L1 Chains to Run Scion Architecture, Enhancing Defense Against Internet Routing Attacks

Sui, a blockchain built around the Move smart-contracts programming language, has become the first layer-1 project to drop the outdated Border Gateway Protocol (BGP), and is now running Scion’s cutting-edge network architecture. According to the team: “The upgrade provides validators with a comprehensive defense against internet routing attacks that have caused significant downtime on other networks, making Sui even more secure. Implementing Scion enables fallback between networks, giving Sui resilience to network hijacking and DDoS attacks. Validators maintain consensus during attacks, improving epoch rewards. Full nodes benefit from better state sync, avoiding bottlenecks and retry delays.” (SUI)

Polish Bank Pekao Partners With Aleph Zero to Launch ‘Archiv3,’ for Tokenizing Works by Nation’s Artists

Poland’s second-largest bank, Bank Pekao S.A., has partnered with Aleph Zero to launch Archiv3, “a project to tokenize and preserve renowned Polish artworks,” according to the team: “Using Aleph Zero’s eco-friendly blockchain, digital reproductions of masterpieces by artists like Jan Matejko and Stanisław Wyspiański have been minted as NFTs and stored in the Arctic World Archive for long-term preservation. This marks the first use of blockchain to safeguard historical art in the AWA, combining technological innovation with cultural preservation.”

Digital-Asset Platform Taurus Collaborating With Chainlink Labs to Accelerate Tokenized Asset Adoption

Taurus, a digital asset-platform to custody, issue and manage cryptocurrencies, and Chainlink Labs, a blockchain oracle developer, announced a collaboration to accelerate tokenized asset adoption by financial institutions. According to the team: “Taurus will use Chainlink to enrich tokenized assets with offchain data and enable cross-chain interoperability. This includes integrating Chainlink Data Feeds, Proof of Reserve and CCIP. The collaboration aims to accelerate time-to-market for tokenized assets, increase liquidity and enhance cross-chain security.”

VC Firm Key Difference Labs Partners With Ethereum L2 List to Launch ‘Pioneer’ Incubator Program

Key Difference Labs, a venture capital firm, is partnering with Lisk, an Ethereum layer-2 project, to launch the Lisk Pioneer Program, an incubator program for projects looking to build on the Lisk blockchain. According to the team: “Benefits Include Funding: $100,000 per project (total of 20 projects); Mentorship: Guidance from industry leaders with a proven track record; and Exposure: Access to events, marketing support, and networking opportunities. This program is a four-month go-to-market process. Startups will receive expert guidance on tokenomics, raising capital, partnerships, community growth, and assistance with exchange listings.”

Protocol Village is a regular feature of The Protocol, our weekly newsletter exploring the tech behind crypto, one block at a time. Sign up here to get it in your inbox every Wednesday. Project teams can submit updates here. For previous versions of Protocol Village, please go here.

XRP’s ‘Bearish Skew’ Persists After 10% Price Slide Amid SEC Appeal and ETF Filing

Just as optimism was about to surge, clouds rolled in, pushing prices lower.

XRP’s (XRP) options market shows a greater risk of an extended price decline than renewed gains as renewed regulatory uncertainty overshadows Bitwise’s ETF filing and weighs over the cryptocurrency’s price.

On Monday, asset manager Bitwise submitted an S-1 form to the U.S. Securities and Exchange Commission (SEC), filing for an exchange-traded fund (ETF) that would invest in XRP. Bitcoin and ether spot ETFs, which debuted in the U.S. early this year, have pulled in billions of dollars in investor money.

However, to the dismay of XRP bulls, Bitwise’s action was quickly followed by the SEC filing a notice of appeal to the Second Circuit Court of Appeals, pushing back against Judge Analisa Torres’s two-month-old ruling that fintech company Ripple Labs did not violate programmatic sales to retail exchanges did not violate securities rules.

Four years ago, the SEC charged Ripple with selling unregistered securities after the platform sold $1.3 billion worth of XRP. While Ripple is a fintech company dedicated to building a global payments network, XRP is an independent digital asset for online payments and currency swaps.

Being categorized as security is widely seen as a bearish development in the crypto market, as securities are more tightly regulated than commodities and demand greater reporting and transparency by companies.

As such, XRP has declined by 11% to 53.7 cents in the past 24 hours, taking the week-to-date loss to over 16%, according to data sources CoinDesk and Coingecko. It’s the third worst-performing cryptocurrency among the top 100 coins by market value. Market leaders bitcoin and ether are down 0.5% and 3.7%, respectively.

Bearish options skew

Options traders on Deribit seem relatively more bearish on XRP than bitcoin and ether, according to the seven-day call-put skew, which measures the difference between call and put volatility (demand).

At press time, XRP’s seven-day skew was -3.2%, a sign of bias for puts offering protection against price slides. BTC and ETH’s seven-day skews were 0% or neutral and 2.8%, according to data source Amberdata.

Meanwhile, funding rates in the XRP perpetual futures market have turned positive, reversing the brief overnight negative flip, which represented a bearish bias.

SEC’s Gensler Won’t Reveal his View on Trump’s Bitcoin Reserve, Reiterates Bitcoin Isn’t a Security

Gensler was responding to CNBC’s question on whether the SEC chair was “warming up to top-tier crypto?”

U.S. Securities and Exchange Commission (SEC) Chair Gary Gensler reiterated his stance that bitcoin (BTC) is “not a security” but doubled down on his stated position that regulatory clarity exists for the crypto space in an interview with CNBC on Thursday.

“As it relates to bitcoin, my predecessor and I have said, that’s not a security,” Gensler said. “You now have a way that you can actually express that view — buy into that through exchange-traded products.” Such products were approved by the SEC in January, marking a monumental shift in the agency’s approach to the crypto space.

Gensler was responding to CNBC’s Joe Kernen asking whether the SEC chair was “warming up to top-tier crypto?”

“Where are you on what’s called altcoins, there’s 15 or 20 thousand of them. Where are you Joe?” Gensler asked.

Gensler refused to reveal a position on what he thought about Donald Trump’s idea “to keep the current government holdings “as the core of the strategic national bitcoin stockpile.”

“I have a view but given my role and also we are in election season so for the listening public I will stick to my chalk lines which are securities markets and chairman Powell and others can speak to that.”

Apart from bitcoin, Gensler has maintained that the vast majority of other tokens fit the legal definition of securities that are rightfully under the SEC’s jurisdiction. This position remains despite industry push back, lawsuits against the SEC and a recent hammering the SEC got for two hours during a congressional hearing titled “Dazed and Confused: Breaking Down the SEC’s Politicized Approach to Digital Asset.”

Asked by CNBC if the SEC had been regulating by litigation, Gensler once again argued that current laws give his agency the power to oversee the crypto space.

“Not liking the rules is not the same as that there aren’t rules.”

Gensler also said that he didn’t know where bitcoin will be in 20 years but that that he felt “the field is going to have a challenge building trust” which it is “already” when “there’s so many fraudsters, scammers.”

“Look at the leading lights in this field, in the crypto field just two years ago. A number of them are in jail right now, and I’m not just talking about SBF… there’s been tens of billions of dollars of losses and bankruptcies and so forth,” Gensler said on Thursday. “What innovative field in America survives without having building trust in that field and protecting investors or consumers?”

Binance founder Chang Peng “CZ” Zhao, who is currently serving a four-month prison sentence, will be a free man by the end of this week.

Celestia’s TIA Posts Biggest Monthly Gain This Year Even as Impending $1.13B Token Unlock Spurs Hedging

TIA has outperformed the CoinDesk 20 Index by a wide margin.

TIA, the token of data-availability blockchain network Celestia, posted its best monthly gain this year, outperforming the broader market by a significant margin and confounding traders who’d positioned for a drop in the price as the result of a $1.13 billion token unlock due next month.

The market-beating 40% surge, the biggest since December 2023, contrasts with a 13% gain in the CoinDesk 20 Index, a measure of the largest, most liquid cryptocurrencies. It takes place against a background of some market participants seeking downside hedges due to concerns the massive token unlock due Oct. 31 will flood the market and depress prices.

Next month’s unlock will release 175.74 million TIA. That’s 16% of the cryptocurrency’s total supply and worth $1.13 billion, or 82% of the market capitalization, according to data source CryptoRank. Such large unlocks often create bearish pressures in the market.

“There has been an uptick in TIA hedging demand ahead of the Oct. 31 unlock – both via exchange-traded perpetuals, alongside OTC forward agreements with market makers/trading desks,” Jake Ostovskis, an over-the-counter trader at Wintermute, told CoinDesk in a Telegram chat.

Short squeeze

The bias for shorts, likely stemming from the hedging activity, might have led to a “short squeeze,” contributing to the TIA rally. A short squeeze happens when the asset price remains resilient, contrary to expectations, forcing bears to close their positions, which are bets that an asset will drop. That, in turn, puts upward pressure on prices.

“Traders tried to sell ahead of the [unlock] event from Julyish. I’d argue the squeeze has already happened,” Ostovskis said.

That’s evident from the recovery in funding rates tied to TIA perpetuals, which have rebounded to nearly zero, or neutral, having been in negative territory since July. As suggested by Ostovskis, rates below zero are a sign of traders taking bearish bets to protect against the downside price risk posed by the influx of so many tokens.

The recovery to neutral alongside the TIA price rally suggests shorts have been crowded out and might have inadvertently squeezed the price higher.

The $100 million fundraise

A $100 million fundraise announced this week likely gave bears another solid reason to exit shorts, adding upward momentum. The fresh round raised the foundation’s cash stash to $155 million, although the team did not detail how it plans to use the funds.

Some pseudonymous observers have suggested the fundraising was an OTC deal at a $3.4 billion valuation directly with the foundation, with the token sale priced at $3 and one-third of the same to be unlocked on Oct. 31.

According to Ostovskis, the impending unlock may have been priced in.

“Some commentators have seen their OTC sale sales as controversial, however, the result that a large cliff has been removed and enabling the pre-hedging unlocks has overall been positive, allowing the market to price in this event in advance,” Ostovskis noted.