Today in the world of decentralized finance (DeFi), there have been several noteworthy events that are worth discussing. First and foremost, the US Internal Revenue Service (IRS) has issued a ruling stating that rewards for validation activity on a proof-of-stake (PoS) network should be treated as income. This means that investors who receive staking rewards will need to report and pay taxes on those rewards in the year they gain control of the tokens.
Moving on to the Base platform, Coinbase’s Layer 2 (L2) solution that is still in pre-launch phase, there has already been a rugpull incident. The developer behind a memecoin project called Bald on Base L2 removed a staggering 6,800 ETH (equivalent to approximately $12.5 million) from the BALD liquidity pool on LeetSwap. As a result, the liquidity crunch caused a sharp 90% drop in the price of BALD. Interestingly, Nansen’s analysts have discovered connections between the address associated with the Bald deployer and the prominent crypto trading firm Alameda.
Unfortunately, the rugpull incident was not the only issue experienced on Base. LeetSwap, a decentralized exchange (dex) built on Base, had to temporarily halt trading due to an exploit. This exploit resulted in a loss of around 340 ETH (approximately $630,000). The exploit followed closely after the Bald rugpull incident, raising concerns about the security of the Base platform.
In other news, Pancakeswap, a popular decentralized exchange on the Binance Smart Chain (BSC), has launched a revenue sharing pool. This new feature allows Fixed-Term CAKE stakers to earn additional real yield from the trading fee revenues generated by PancakeSwap’s version 3 trading pairs. The rewards will be distributed on a weekly basis, with the first distribution scheduled to begin on August 9th.
Clearpool, an institutional lending protocol, has expanded its services to include Polygon’s zkEVM. This move aims to provide institutional investors with lending opportunities on Polygon’s Layer 2 scaling solution, which offers faster and cheaper transactions compared to Ethereum’s mainnet.
Lastly, Celo governance has approved a transition from an Ethereum Layer 1 (L1) network to an Ethereum Layer 2 (L2) solution. This transition will enable Celo to benefit from the scalability and cost-efficiency of Layer 2 while remaining connected to the Ethereum ecosystem.
In conclusion, today’s developments in the DeFi space have highlighted the need for caution and due diligence when participating in emerging projects. The IRS’s stance on taxing staking rewards emphasizes the importance of understanding the tax implications of one’s crypto investments. The rugpull and exploit incidents on Base serve as reminders of the risks associated with early-stage platforms, while the new revenue sharing pool on Pancakeswap and Clearpool’s expansion to Polygon demonstrate continued innovation and growth in the DeFi sector.