The rapid emergence of the Ethereum-enabled Decentralized Finance movement has brought with it some curious and heroic tales.
Maker CDP 3228 was the first such tale to attract attention, with industry analysts watching in real time as 50,000 Ether (ETH), valued at close to $7m, was liquidated in orderly fashion after a major move down in the markets on the 19th November.
It has taken just over two weeks for another fascinating saga to arise, this time intersecting three decentralized applications — Compound, Maker, and Paradex.
Compound is an Ethereum-based permissionless money market. The sleek user interface allows long-term crypto asset investors to seamlessly put their otherwise idling assets to use, lending to speculators on a variable yield basis.
As always, the following is for educational purposes only. This is not investment advice.The continued, aggressive market recession has many investors questioning the fundamental value underpinning the crypto asset class.
This week Alex Wearn, CEO of IDEX, published an article explaining his decision to block access to New York IP addresses. Wearn also announced that his exchange will soon begin instituting KYC procedures for all users in order to comply with money laundering and sanctions laws.For those unfamiliar, IDEX is currently the most popular ‘decentralized exchange’ (DEX) on the market: at its peak in May 2018, the exchange saw over 21,000 ETH in 24hr volume. For context, Paradex, the DEX relayer recently acquired by Coinbase, peaked at just over 7,000 ETH in 24hr volume back in September.
Some exciting news to share: starting from next week, CryptoChat will narrow its focus, moving away from content aggregation towards a more targeted and analytical approach.This will likely come in the form of weekly/bi-weekly data-driven ‘Op-Ed’-style pieces, similar to my previously published works, Bitcoin: Disinflating to Death, EOS: Don’t Believe The Hype, and Introducing: Fee Ratio Multiple.
The precarious state of Tether (USDT), the ever-present 1,000 tonne elephant in the crypto asset-themed room, can no longer be ignored.At the time of writing USDT is trading for $0.93 vs. USD and $0.90 vs. TrueUSD, a regulated fiat-collateralized stable coin. Spreads across USD and USDT exchanges now exceed $500, having peaked at $1,500 this morning.
Last week I featured Vlad Zamfir’s Governance 101 article, which outlined the various challenges – with emphasis on coordination mechanisms (or lack thereof) – to governing decentralized systems.Governance 101 was great.
In last week’s CryptoChat I briefly discussed the Fee Ratio, a new Key Performance Indicator proposed by Nic Carter, founder of CoinMetrics and Managing Partner at Castle Island Ventures.The Fee Ratio measures total miner revenue as a percentage of transaction volume, providing a sense as to what percentage of transaction volume will have to be paid in fees in order to maintain existing security levels once block rewards eventually trend to zero.
A major bug was discovered in the Bitcoin Core client this week: had it been exploited, an attacker would have been permitted to:a) print unlimited coins, thereby decimating the sacrosanct 21 million supply cap b) mount a denial of service attack, forcing honest nodes to go offline
Leading crypto asset fund Polychain Capital was the subject of an unflattering Wall Street Journal profile this week.Having realized over 2,000% returns in 2017, Polychain’s assets under management (AUM) have now shrunk by 40%, the result of a combination of investment losses and investor redemptions.
New York’s leading crypto asset exchange, Gemini, announced the launch of their own US Dollar-collateralized stable coin (SC) this morning. GeminiUSD (GUSD) exists as an Ethereum-based token (ERC20 standard) and will be regulated by the New York State Department of Financial Services (NYDFS). You can check out the GUSD smart contract here.
The Ethereum community has come to consensus regarding its inflation rate: Constantinople, the hard fork planned for October, will include a reduction of the block reward from 3 ETH to 2 ETH, with the Uncle reward falling by the same rate. As a result, ETH's approximate inflation rate will be 4.7% at the start of 2019, down from 7.2% at present. For comparison, BTC inflation currently sits at 4.11%. It is expected that the issuance rate will be revisited 8 months after Constantinople, with the community analyzing the effects of reduced block rewards on network security and adjusting parameters accordingly.
Vitalik details the history and state of Ethereum’s Casper research, touching on the great FFG vs. CBC debate, the transition from hybrid to full Proof of Stake implementation, and the role of randomness.Confused as to where we stand today?
Leading mining hardware manufacturer and mining company, Bitmain, is back in the headlines for all the wrong reasons.Bitmain recently secured pre-IPO investments from Tencent and Softbank at a valuation of $15bn, having been valued at $12bn in June following a $400m funding round. Bitmain is expected to list on the Hong Kong Stock Exchange in September at a valuation between $30bn-$40bn.
Cuy Sheffield has published a fascinating thesis for Ether (ETH), Ethereum’s native digital asset, as a Store of National Security.In order to fully understand Sheffield’s thesis it is worth reviewing the various competing value capture narratives driving this market: Fat Monies; Protocol Wars; Tokenized Securities, and dApps. Nathaniel Whittemore does a phenomenal job summarizing these narratives here.
BlockFi, the leading crypto asset-to-USD lender, announced that it has raised $52.5m from Mike Novogratz’s Galaxy Digital Ventures to expand operations, marking the first institutional investment in the crypto asset backed loan industry. $50m will be reserved to lend capital on the platform, with the remaining $2.5m acting as an equity investment.BlockFi currently operates in 42 US states — with plans to expand into the remaining 8 in the near future — and is backed by other leading investors including ConsenSys Ventures, Kenetic Capital, and SoFi.
The conversation around EIP-999, the proposal to recover funds stuck in the Parity multi-sig wallet, resurfaced this week after Ryan Zurrer, a partner at the prolific Polychain Capital, published an article laying out a path towards Ether fund recovery. Disappointingly, Ryan did not disclose that Polychain is a large investor in Polkadot, the Parity-led project most affected by the frozen funds.
Plenty of controversy in the last two weeks around the Zcash (ZEC) Founders Reward (FR).
Eric Meltzer, INBlockchain: “If the cheapest anyone got involved with your project is at a $200m valuation, then you simply cannot have a community similar to that of Bitcoin, where there is a mass of HODLers who got in at a very low price and are almost completely unperturbed by subsequent price volatility.”
After what felt like centuries of uncertainty, the U.S. Securities and Exchange Commission (SEC) has issued a statement declaring that the Ethereum network has reached a level of decentralization such that its native digital asset, Ether (ETH), should not be regulated as a security.
Several interesting developments on the EOS front this week as the smart-contract platform attempts to move towards a mainnet launch.
All eyes on EOS this week as the firm behind the software production, Block.
Leading crypto asset exchange Coinbase acquired Paradex, a 0x relayer, this week.
Brian Venturo, CTO of Atlantic Crypto, published an analysis of the economics of Casper FFG, Ethereum’s hybrid Proof of Work/Proof of Stake consensus mechanism.