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Cryptoverse: A mixer with your crypto cocktail?

Cryptoverse: A mixer with your crypto cocktail?

The Challenge the dream is shaken. And restless. The big crypto project waned in 2022: Total user funds deposited in decentralized finance fell to around $61 billion, from more than $170 billion at the start of the year, according to figures from the Defi Llama data aggregator.

In a new burst, the WE The Treasury has sanctioned one of the industry’s biggest ‘mixers’, tools that aggregate and scramble the cryptography of thousands of addresses to boost anonymity, saying it was used by hackers to launder their earnings . The WE this month’s intervention forced many Challenge plans to block money from wallets linked to the Ethereum-based mixer, Tornado Cash, representing a blow to devotees who dream of a brave new world without a central authority.

“The motion has receded Challenge in its ability to be decentralized and operate in a censorship-resistant manner,” said Katie Talati, research director at Digital Asset Manager Arca. Indeed, the market impact could be significant, given the growing role of mixers, which proponents claim serves a legitimate use in creating privacy and say that specific users should be targeted by the authorities rather than an entire code.

Average usage of these services over a 30-day period hit an all-time high of 51.8 million at the end of April, about double the level of the previous year, according to a On-chain analysis study in July, before declining along with the broader crypto market. “It makes sense given that the timing coincides with the growing importance of DeFi within the overall cryptocurrency ecosystem,” On-chain analysis wrote the researchers.

Tornado Cash did not respond to a request for comment on the sanctions. LOCKED AND CODED

Aave and Uniswap, two of the most popular Challenge platforms that blocked wallets linked to Tornado, have seen user funds, or Total Locked Value (TVL), plummet since the imposition of the sanctions – $6.4 billion out of over $6.9 billion for Aave and $5.7 billion for dollars out of $6.5 billion for Uniswap, according to Defi Llama. All this may not be due to Tornadoas most cryptocurrencies suffered heavy losses in the past week and the Challenge The sector has seen little change in activity – for example, Uniswap says its weekly trading volumes have remained fairly stable at around $8 billion.

“TVL has gone down, but at the same time the price of tokens has gone down,” said Max Krupyshev, CEO of payments provider CoinsPaid. “People haven’t taken money out so much as the value of their investments has gone down.” Aave and Uniswap also did not respond to requests for comment on the mixers.

FAT CATS PROWLING? Whereas Challenge players may face tough decisions on whether to exit mixers, some observers spy upside potential for the market if the WE measures encourage traditional institutional investors to join the fray.

“Larger institutions may view sanctions as a step towards legitimacy, potentially giving them more comfort in engaging or investing in Ethereum and other digital assets,” analysts at digital asset manager Grayscale wrote. In the immediate term, however, few things are certain.

“Illegal” addresses identified by the data company On-chain analysis accounted for 23% of funds sent to mixers in 2022, compared to 12% in 2021. Tornado In cash specifically, analytics firm Elliptic reported that at least $1.54 billion in proceeds of crime had been laundered through the platform. Talati d’Arca thinks we haven’t seen the end of the crackdown on mixers.

“Tornado Cash is one of the longest around,” she said. “It’s not the last thing we’re going to see.”

(This story has not been edited by the Devdiscourse team and is auto-generated from a syndicated feed.)


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