Over the last few months, crypto hacking has turned rampant, especially in the decentralized finance (DeFi) market. This month itself, more than $750 million have been already lost in crypto hacks as per data from Chainalysis.
Rewarding Crypto Hackers?
Crypto billionaire and FTX chief Sam Bankman-Fried have recently outlined a framework to deal with this problem of crypto hacks. Interestingly, the solution proposed by SBF involves rewarding the hackers.
In his latest blog post, the FTX chief proposed a “5-5 standard” wherein the hackers get to keep 5% of the total funds stolen. Alternatively, they can also keep $5 million whichever is smaller.
Other provisions include that the hacker acts in “good faith” and intends to cooperate on returning most of the crypto-assets.
In crypto hacking, some of the hackers are also white-hat hackers who seek to expose vulnerabilities. The hackers will do this in the protocol in return for a reward instead of making malicious gains. The SBF chief noted:
“Hacks are extremely destructive to the digital asset ecosystem. The 5-5 approach would have curbed the impact of hacks more than 98%.”
However, SBF is unsure of what would be the right standard for this process. The FTX chief also stated:
Keeping DeFi and peer to peer transfers free is crucial. There are policies I honestly think are key to achieving that. I could be wrong about those policies–I probably am wrong about some! But in the end the most important thing is to keep commerce and expression free.
As said, DeFi protocols have been the most vulnerable to hacks this year. So far in 2022, the DeFi protocols have lost a sum total of more than $4.4 billion.
FTX On Crypto Regulations
Sam Bankman-Fried also said that the U.S. arm of the crypto trading platform FTX will start conducting its own analysis. Their analysis will be on whether the crypto assets work as securities before listing them.
In the blog post, SBF said that FTX plans to use its internal framework for crypto securities. This they will do until there’s more clarity from the SEC. However, this internal framework doesn’t guarantee that FTX will be free from scrutiny by the U.S. SEC.
Meanwhile, Elon Musk Does Damage Control
The crypto market struggles due to a wide variety of macroeconomic factors. The altcoins market in particular faced a major crisis. Ethereum fell by 2% in the last 24 hours and is trading at $1281.
Meanwhile, Cardano and Solana fell by 3% and 5% respectively. The Tesla earnings report was an important reason for the poor performance of the altcoins market.
Tesla missed its expected earnings for the third quarter and the company’s stock plummeted as a result. In the after-market, $TSLA is down by 6.25%.
Tesla CEO Elon Musk informed investors that despite strong demand in the fourth quarter, the company will miss its vehicle delivery target in 2023.
Tesla was expected to earn over $22 billion in the third quarter. However, the company revealed that its third-quarter revenue was $21.45 billion. Tesla’s gross automotive margin also missed the estimates.
Why Tesla Earnings Impacts The Altcoin Market
The crypto market is strongly correlated to the broader general market. In particular, it shows a strong correlation between technology stocks and the tech-oriented NASDAQ. As major companies miss earnings estimates, the stock market plummets. As a result, the crypto market struggles too.
Moreover, Tesla’s earnings stoke fears of a slowdown in the economy and a potential recession. The World Bank believes that the economy will face a recession in 2023. Major figures such as Amazon founder Jeff Bezos believe that a recession is inevitable.