GizmoLab Report: Cutting-Edge Developments in Web3📈

A Quick TL;DR:

- Hamster Kombat User Base Drops, Paws App Soars on Telegram

- Mt. Gox Moves $2.2 Billion in Bitcoin to Unknown Wallets

- ZachXBT’s Accidental Token Reaches $3.4 Million Market Cap

- Major Firms Unite to Launch Global Dollar Network for Stablecoin USDG

- Polymarket Likely to Retain Users After U.S. Election, Study Shows

- Binance, CZ Seek Dismissal of SEC’s Amended Complaint

Hamster Kombat Loses 86% of Users Amid Surging Popularity of Paws Mini App on Telegram 

Hamster Kombat, once a leading tap-to-earn game on Telegram with over 300 million users, has seen its active monthly player count plummet to 41 million, marking an 86% decline by November 5, 2024. The game's downturn is attributed to increasing political backlash, emerging competitors, and regional bans, particularly in countries like Iran and Uzbekistan. The HMSTR token has also suffered a severe price drop, falling 70% from its September peak of $0.01 to $0.0022, further reflecting the declining user interest and network engagement. In stark contrast, Paws, a new Mini App on Telegram, has quickly gained traction, amassing 20.5 million users within its first eight days and surpassing Hamster Kombat's initial growth rate.

The app's popularity was evident in a November 4 announcement, which reported 10 million wallets connected and over one million followers on X (formerly Twitter). Data from IntoTheBlock (ITB) highlights Hamster Kombat’s struggles, showing a 36% weekly decline in active addresses and a drop in active address ratios to 0.34% of total holders. Hamster Kombat’s development team is attempting a comeback by integrating payment systems, adding new games, and incorporating NFTs as in-game assets. While Telegram-based games like Hamster Kombat and the DOGS token continue to face volatility and fluctuating user engagement, Paws' rapid rise could signal a shift in user preferences on the platform. This emerging trend raises questions about the sustainability of Hamster Kombat’s model in the face of new competition.

Mt. Gox Transfers $2.2 Billion in Bitcoin to Unmarked Wallets as Major Credit Repayment Looms

Defunct cryptocurrency exchange Mt. Gox transferred approximately 32,371 BTC, valued at around $2.2 billion, to unmarked wallet addresses on Monday evening. Blockchain analytics firm Arkham reports that the funds were split into two significant transactions: 30,371 BTC went to the wallet “1FG2C…Rveoy,” while 2,000 BTC moved first to Mt. Gox’s cold storage address and then to another unidentified wallet. This movement marks the largest transfer from Mt. Gox in recent months and follows a smaller transfer of 500 BTC observed last week. The purpose of these transactions remains unclear. Analysts speculate that they could signal upcoming repayments to creditors who lost funds when Mt. Gox collapsed in 2014.

Historically, such large transfers have often preceded creditor reimbursements through exchanges like Kraken and Bitstamp. However, Mt. Gox recently postponed its final repayment deadline from October 31, 2024, to October 31, 2025, indicating that affected creditors might have a longer wait. Established in 2010, Mt. Gox once dominated the global Bitcoin exchange market until it suffered a catastrophic breach in 2014, resulting in the loss of 850,000 BTC. Creditors have since been awaiting the partial return of their funds, a process complicated by ongoing logistical delays and market uncertainties. The latest transfers raise questions about the timing and nature of Mt. Gox’s long-awaited settlements.

Unintended Token by On-Chain Sleuth ZachXBT Hits $3.4 Million Market Cap Amid Speculative Frenzy

ZachXBT, a well-known on-chain investigator, unintentionally created a meme token that reached a market cap of $3.4 million after using the Zora protocol on the Base network to mint open-edition NFTs. His original goal was to release a digital collectible titled “243M Theft” related to an investigation of a $243 million theft involving a Genesis creditor. However, due to the Zora protocol's setup, the open-edition NFTs were automatically converted into ERC-20 tokens, making them tradeable on decentralized exchanges, sparking a speculative frenzy. ZachXBT clarified that he intended to use the NFTs solely to archive investigative content on the blockchain. He stated that Zora’s user interface did not alert him that minting these NFTs would generate ERC-20 tokens for trading, citing a lack of transparency on the platform’s end.

Zach shared screenshots to illustrate that creators weren’t informed about this automatic token conversion. The tokens, created under Zora's "ERC20z" standard, allow NFTs to be wrapped as ERC-20 tokens or unwrapped back into ERC-1155, making trading on platforms like Uniswap seamless. This feature is the default for new mints on Zora and has led to the token’s rapid market capitalization growth, with valuations currently at $970 per token. Reacting to the unintended trading frenzy, ZachXBT expressed frustration, warning that he may take actions to discourage further speculation, including minting additional tokens indefinitely or replacing Zora-hosted artwork with blank images. Meanwhile, Zora has yet to comment on the situation or address the transparency concerns raised.

Anchorage Digital, Bullish, Galaxy Digital, Kraken, Nuvei, Paxos, and Robinhood Launch Global Dollar Network to Boost Stablecoin Adoption and Use Cases

A coalition of top digital finance firms, including Anchorage Digital, Bullish, Galaxy Digital, Kraken, Nuvei, Paxos, and Robinhood, has joined forces to introduce the Global Dollar Network, a stablecoin platform designed to encourage the worldwide adoption of stablecoins and foster innovative use cases for their newly launched stablecoin, USDG. Announced on November 1, the USDG is issued by Paxos out of Singapore, complying with the Monetary Authority of Singapore’s regulations, and is backed by reserves custodied at DBS Bank, one of Singapore’s largest financial institutions. This network, open to qualified entities like custodians, exchanges, and financial technology firms via invitation, is seen as a response to the limited competition in the regulated stablecoin market.

Kraken Co-CEO Arjun Sethi emphasized that USDG’s model aims to broaden stablecoin participation and stimulate mainstream interest. By targeting a fairer and more competitive ecosystem, the Global Dollar Network seeks to attract significant institutional and retail involvement, setting USDG apart from market leaders. USDG is initially available on the Ethereum blockchain, with plans for expansion to other blockchains. The network intends to challenge the dominance of Tether (USDT), which currently controls over 58% of the Ethereum-based stablecoin market, according to data from The Block’s Data Dashboard. Through this initiative, the coalition envisions accelerated adoption and a more diverse stablecoin market.

Animoca Brands Research Predicts Polymarket’s Popularity Will Persist Post-U.S. Election, Driven by Diverse User Interests

A recent report by Animoca Brands Research suggests that users of Polymarket, a decentralized prediction market, are likely to stay engaged beyond the U.S. presidential election, which has been a major attraction for the platform. Polymarket’s monthly trading volume spiked from $40 million to an impressive $2.5 billion between April and October, and its open interest also surged, growing from $20 million to $400 million. The platform recorded over 35 million website visits in October alone, marking its debut into the mainstream media spotlight. While some speculated that Polymarket's appeal would wane after the election, Animoca Brands Research found that approximately 75% of the platform's active positions involve non-election topics, indicating sustained interest in a variety of issues.

Additionally, the platform’s uncertainty about a potential token generation event could keep users engaged in the long run, with many airdrop hunters likely staying active in hopes of future rewards. The report highlights that Polymarket’s sustained success will depend on strategically managing its market positioning, content variety, and regulatory compliance. As it gains traction, Polymarket faces growing scrutiny and competition from both traditional and blockchain-based platforms. The platform’s long-term challenge will be to capitalize on its current popularity while navigating these emerging challenges and reinforcing user loyalty.

Binance and CZ Move to Dismiss SEC’s Amended Complaint, Arguing Secondary Resales of Crypto Assets Aren’t Securities Transactions

Binance and its former CEO, Changpeng “CZ” Zhao, have filed a motion to dismiss the U.S. Securities and Exchange Commission’s (SEC) updated lawsuit, claiming that secondary market resales of crypto assets do not qualify as securities transactions. This legal move, submitted on November 4, challenges the SEC's classification of certain crypto tokens, including AXS, FIL, ATOM, SAND, and MANA, as securities, arguing the amended complaint contradicts an earlier court decision that differentiated between crypto assets and investment contracts. Binance’s legal team argues that secondary market transactions involving tokens, especially those exchanged anonymously on platforms, should not be classified as securities transactions, despite some buyers potentially expecting value appreciation.

The motion further highlights a prior legal ruling in which Judge Analisa Torres found that some Ripple token sales didn’t violate securities laws because buyers couldn’t confirm whether payments were made directly to Ripple. The SEC’s amended claims focus not on Binance's initial token offerings but rather on “blind transactions” on Binance’s exchanges, where buyers are unaware of sellers' identities. Binance’s attorneys contend that these secondary transactions are outside the scope of securities laws, thus invalidating the SEC’s arguments. Binance has requested the court dismiss the SEC’s case against them with prejudice, seeking closure on a complex legal battle that has continued since June 2023.

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