You are reading an excerpt from our free but shortened abridged report! While still packed with incredible research and data, for just $20/month you can upgrade to our FULL library of 50+ reports (including this one) and complete industry-leading analysis on the top crypto assets. 

Becoming a Premium member means enjoying all the perks of a Basic membership PLUS:

• Full-length CORE Reports: More technical, in-depth research, actionable insights, and potential market alpha for serious crypto users
• Early access to future CORE ratings: Being early is sometimes just as important as being right!
• Premium Member CORE+ Reports: Coverage on the top issues pertaining to crypto users like bridge security, layer two solutions, DeFi plays, and more
• CORE report Audio playback: Don’t want to read? No problem! Listen on the go.

Headlines

• Visa taps Solana and USDC to boost cross-border payments.
• Bitcoin posts first positive-returning September in 6 years  
• Percentage of Bitcoin supply held by long-term holders officially reaches all-time highs
• DeFi TVL on Ethereum reaches lowest level since January 2021
• MetaMask adds crypto-to-fiat features.
• Base experiences stall in block production.
• Canto migrating to ZK L2 built on Polygon's CDK
• EclipseFND announces their mainnet: ETH SVM L2
• Celestia airdrop announced
• Ethereum’s new test network, Holesky, experienced a failed launch due to a misconfiguration in one of its genesis files
• Dencun upgrade likely delayed until 2024
• Ethereum turns slightly inflationary
• SEC warns more charges coming against crypto and DeFi exchanges
• VanEck Ethereum Strategy ETF set for CBOE listing
• Grayscale seeks to convert its Ethereum Trust to an ETF
• 10-year UST yields rise to levels unseen since 2007
• SEC Delays 7+ Spot BTC ETF Applications Due in October and November, All Eyes on SEC’s Response in Grayscale Ruling
• Su Zhu Arrested at Airport in Singapore, Sentenced to Four Months in Jail for Contempt of Court, Kyle Davies Is A Fugitive
• SEC to Allow ETH Futures ETFs
• Ripple Announces the Acquisition of Collapsing Custodian Fortress Trust, Then Backs Out of Deal
• CFTC Settles Charges Against DeFi Protocols Opyn, 0x and Deridex

Exploits

• MixinKernel hacked for $200M
• Crypto Casino “Stake” Hacked for >$40mm
• Coinex Hacked for $28mm
• Huobi Hacked for $8mm
• Goledo Finance GOL token suspiciously sells
• Balancer frontend compromised, hacker stole $240k
• LinearFinance LUSD exploited
• Nansen third-party security breach exposes 6.8% of user emails and some blockchain addresses
• Opensea 3rd party data breach

Macro

September saw Bitcoin display impressive resilience, even as a plethora of conventional assets faced notable downturns. This stability enhances the digital currency's reputation as a valuable diversification tool in investment portfolios. The turmoil in global markets appeared predominantly influenced by escalating government bond yields and a surge in oil prices.

Crucially, the underlying fundamentals of Bitcoin demonstrated their robustness. Its on-chain metrics displayed commendable progress throughout September. Another noteworthy development was the stabilization of the stablecoin market capitalization, especially after a year-long downtrend. Moreover, the digital currency realm displayed an unwavering focus on the advancements in Layer 2 blockchains. Coupled with this was the anticipation surrounding the potential nod for a spot Bitcoin ETF within the United States.

While the crypto sector showed promising signs, the overarching financial market climate could present challenges in the foreseeable future. Nevertheless, Bitcoin's commendable consistency implies a possible valuation resurgence as soon as the macroeconomic environment finds its footing.

Notably, the recent strain on global assets has its roots in the U.S. bond market. Delving deeper, the Federal Reserve's policies come into the spotlight. After their mid-September conclave, the institution indicated a likely uptick in overnight interest rates slated for later this year. In contrast, the coming year might see a more measured approach to rate reductions than previously anticipated. Such strategic shifts by the Federal Reserve played a significant role in elevating short-maturity bond yields and enhancing the U.S. Dollar's stature.

Source: Grayscale

In August, the Personal Consumption Expenditure (PCE) index, the Federal Reserve's primary metric for inflation, reported a 0.1% rise month-over-month, outperforming market predictions. Remarkably, this marks the first instance of the annualized PCE inflation rate dipping below the Fed's 2% benchmark since the onset of the pandemic. Such figures bolster the growing sentiment that the Federal Reserve might abstain from elevating rates in its November session. Yet, accompanying data highlighted that American households maintain a robust savings cushion. Even with challenges like the reintroduction of student loan payments and escalating fuel costs, it appears U.S. consumer spending may prove sturdier than anticipated.

Source: Kaiko

Polygon 2.0 is Coming

Polygon Labs unveiled its groundbreaking open-source codebase, the Polygon Chain Development Kit (CDK), on August 30, 2023. This initiative should help facilitate the development of zk Layer 2 chains and expand the Polygon L2 ecosystem. One of the standout features of the CDK is its versatility. It supports the development of not only zk rollups but also validiums. Another benefit of the CDK is the customization capabilities. Beyond data availability, developers can tailor various components to their specific needs, including virtual machines, fee tokens, sequencers, whitelisting protocols, and the Zero-Knowledge Proof (ZKP) submission timeframe. This level of adaptability ensures that blockchain solutions can be finetuned to match unique project requirements.

An additional highlight of the Polygon CDK is its innate ability to interface with Polygon 2.0's Interop layer. Any chain birthed using the CDK establishes an automatic connection, similar to OP Chains in Optimism's Super Chain system. The resultant user experience is fluid and unified, giving the illusion of a single cohesive network, even though the reality may involve multiple interconnected networks.

Several frontrunning projects have already adopted the Polygon CDK to drive their initiatives, including Aavegotchi, Immutable, Gnosis Pay, and Palm Network. Their adoption underscores the potential and efficiency of the CDK in contemporary blockchain development.

In essence, Polygon Labs' release of the Chain Development Kit signifies a monumental leap in simplifying and enhancing zk Layer 2 chain development. It accentuates the company's commitment to fostering innovation and pushing the boundaries of what's achievable in the decentralized tech space.

Canto and Astar Plans to Join

Previously an alt-L1, Canto has announced it plans to migrate to a ZK-rollup on Ethereum, harnessing the power of Polygon's Chain Development Kit (CDK). Born as a permissionless general-purpose blockchain, Canto boasts of features like an EVM execution layer and fundamental financial instruments. These include a decentralized exchange, a lending market, and a unique unit of account (NOTE). But, what makes Canto stand out is the Canto Commons—a democratic framework that guides core protocol-level enhancements and development. It champions a decentralized and open model with "protocol public goods."

So, the pertinent question is, what does this significant shift towards an Ethereum ZK-powered Layer 2 signify for the dynamic Canto community? For Canto, this transition is monumental. Once the Canto Commons reaches a consensus, core developers will possess the tools to design a ZK Layer 2 that embodies Canto's foundational principles: an unwavering commitment to permissionless sovereignty and the public availability of liquidity. By utilizing a communal ZK bridge, Canto aims to channel the vast liquidity present in the Polygon ecosystem and tap into a straightforward Ethereum bridge. When it comes to user security, it's bolstered by a top-tier ZK prover currently in use, ensuring cryptographic protection that's a legacy of Ethereum, eliminating dependence on socio-economic motivations associated with fraud proofs.

Additionally, the Astar Network, previously a parachain in the Polkadot ecosystem, has announced Astar zkEVM, its own upcoming move to an Ethereum zk-rollup built using the Polygon CDP.

New POL Proposals

On September 14, Polygon Labs unveiled its roadmap for its new Polygon 2.0 visions and "unlimited scalability and unified liquidity." Central to this ambitious endeavor is Phase 0. Here, Polygon Labs has charted its plan to transition from its existing MATIC token to a new token named POL. This POL token isn't just a replacement but is positioned to be the foundational gas and staking token within the proof-of-stake version of the Polygon platform.

Beyond token dynamics, the company is poised to release its Staking Layer, which is designed to empower validators with the capability to fortify multiple chains within the newly envisioned Polygon ecosystem.