Forget Dogecoin: These 3 Cryptos Have Much Brighter Futures
There are over 11,000 cryptocurrencies on the market right now, and it isn't easy to predict which might be successful in the long term.
CoinDesk Crypto
I'm Considering Buying Crypto -- but These Are the Rules I'm Setting First
Cryptocurrency scares me. I'm not ashamed to admit that.
Jack Dorsey Says He Is Mining Bitcoin Through a Remote Hosting Service
Twitter and Square Chief Executive Officer Jack Dorsey announced this week that he is mining Bitcoin (BTC) through a third-party service called Compass Mining that hosts equipment that are necessary for him to secure the network and compete for its rewards.
Why the Fed Jackson Hole Show Matters to Bitcoiners
When Jerome Powell steps up to the podium Friday at the Federal Reserve’s annual economic symposium, held virtually this year but traditionally near Jackson Hole, Wyo., the chair of the U.S. central bank is likely to deliver a speech that has had many revisions in the past two months.
Many market participants expect the Fed chair to announce a date and pace for tapering its $120 billion a month in bonds purchases. But the dominance of the Delta variant of COVID-19 makes such a pronouncement less certain, some economists say.
Some crypto analysts see tapering as an obstacle for bitcoin speculation because quantitative easing (QE) is generally thought to give investors the liquidity to invest more in riskier assets. Because of macroeconomic uncertainty created by the course of the pandemic, bitcoiners may be able to continue to count on quantitative easing staying at the same pace or tapering at a slower pace than might have been expected a few months ago, when coronavirus-related restrictions looked to be nearing an end and vaccines were becoming more widely distributed.
Related: Goldman Sachs Raises Odds of Fed Taper in November
“I was expecting him to maybe announce plans for tapering, but the increase in the Delta variant makes it less likely,” said David Beckworth, a former international economist at the U.S. Treasury Department, of Powell.
“We know for certain there’s more caution but the economy is still growing rapidly. Inflation is high,” said Beckworth, now a senior fellow at the Mercatus Center at George Mason University. “I think you can make a case for why they might still go ahead and taper.”
Less confidence“I would have more confidently said he was going to signal something more concrete than the committee has if this were maybe two months ago,” said Steven Kelly, a research associate at the Yale Program on Financial Stability. “I assume he has ripped up a couple drafts in the intervening weeks given the state of the Delta virus and the fact that the conference itself has moved online due to disruptions.”
It’s possible that Powell will wade into the issue of stablecoins – digital tokens linked to government-issued currencies such as the U.S. dollar – and financial stability because that issue came up in last month’s Fed meeting minutes. But given the importance of monetary policy at Jackson Hole, it’s unlikely that crypto will come up in the speech, Beckworth said.
Related: Market Wrap: Bitcoin Stalls Near $50K Ahead of Options Expiration Date
Powell will also likely review what the central bank has learned so far with the implementation of its flexible average inflation targeting framework. The framework came at a good time because it allowed the Fed to respond to 2020’s inflation misses, but this past year has also made it more difficult to assess the success of the framework because most of the high inflation is supply-side inflation and not inflation across all prices, Beckworth added.
In last month’s Fed meeting minutes, officials at the central bank expressed an interest in delinking quantitative easing from interest rates, which could give the Fed more flexibility to maneuver without causing a “taper tantrum,” wherein market expectations for the Fed funds rate go up because investors expect interest rate hikes to follow, Kelly said.
‘Transitory’ or persistent?Because most inflation has been driven by supply chain bottlenecks, the Fed won’t feel much pressure to taper in response to inflation headlines. Powell has characterized the elevated inflation rate as “transitory.”
“There’s a reason they do these purchases in the billions and trillions [of dollars] because it takes so much of it to have an impact,” Kelly said. “Even with hundreds of billions of dollars of QE we’re talking about, maybe a 100 basis points impact – if you’re lucky – on the 10-year [Treasury bond] yield.”
General inflation is subdued, said Stanford economist Erik Brynjolfsson. “The 10-year real yield is negative 1%,” he said. That’s the nominal yield on the U.S. government bond, minus the inflation rate.
“What that tells us is that people are willing to lend money to the U.S. government at negative real interest rates, so there’s no real evidence of the economy overheating by that metric,” Brynjolfsson said.
With the $1 trillion infrastructure bill making its way through Congress, the pressure on the Fed to maintain economic growth may be eased, Brynjolfsson added.
“When the government spends money, it makes a huge difference as to whether that’s spent on investment like infrastructure, or whether it’s spent on current consumption, like payments to individuals,” Brynjolfsson said. “If it’s spent on investment, then that means that productivity is going to grow, capacity is going to grow and inflation is going to go down. If it’s spent on consumption, then you don’t have more supply and you don’t have more output.”
At the moment, it’s unknown when lower unemployment will lead to more general inflation and the Fed, policymakers and Congress will want to test how far they can push the economy, Brynjolfsson said.
“For most of the past decade, the Fed has missed by having an unemployment [rate] higher than what their target was, and also having inflation lower than what their target was,” he said. “Both of those point in the same direction that the Fed has been too tight.”
Related StoriesCoinbase Names Former Facebook Executive as Chief Marketing Officer
Coinbase has hired former Facebook veteran Kate Rouch as its new chief marketing officer, the cryptocurrency exchange giant’s president and chief operating officer, Emilie Choi, wrote in a blog post Thursday.
- Rouch, who will manage Coinbase’s branding, spent more than a decade at Facebook, most recently as its global head of brand and product marketing for Instagram, WhatsApp and Messenger, among other areas of the social media giant.
- Choi wrote that Rouch’s experience would help Coinbase in its effort “to bring millions more people into the crypto economy.”
- Rouch’s Facebook marketing teams won multiple advertising awards and helped increase the company’s active users from more than 500 million to almost three billion.
- “I am so inspired by what I’ve learned about crypto and the vast ecosystem it is helping to usher forth,” Rouch said, adding, “I can’t wait to get started helping to introduce millions more people to the benefits of crypto.”
Related Stories
South Korea’s Top Financial Regulator Is Forming a Crypto Bureau
South Korea’s Financial Service Commission (FSC), the country’s top financial regulator, announced Thursday that it is forming an independent, crypto-focused bureau to supervise digital assets in South Korea.
- The new bureau will officially launch in September and fall under the authority of the Korea Financial Intelligence Unit (KFIU), an arm of the FSC that handles anti-money laundering enforcement.
- The new bureau will be called the Crypto Asset Monitoring Bureau and will be responsible for overseeing licenses for exchanges and other operators, according to a report from the Korea Times.
- In April, FSC officials said that exchanges that don’t register with and receive a license from KFIU by late September won’t be permitted to operate in South Korea. The FSC’s licenses require exchanges to tighten their know-your-customer (KYC) standards and collect personal information about customers.
- The bureau will also be responsible for looking out for suspicious activity, including fraud and money laundering, according to the Korea Times.
- South Korea’s crypto crackdown is tied to the growing level of debt among young people, which FSC Chief Koh Seung-beom has blamed, at least in part, on digital asset speculation.
How Blockchain Will Change the Way We Work, Play and Stay Healthy in the Future
Blockchain may not be as famous as Bitcoin and many of the cryptocurrencies that it works to power across an ever-evolving ecosystem, but the technology’s applications may be capable of stretching far further than the coins it supports.
RLY Holders Approve Social Token Platform’s Decentralization Plan
Social token platform Rally is set to initiate a five-pronged decentralization plan after token holders voted unanimously in favor of the proposal Thursday.
Rally will now branch into a venture studio, a decentralized autonomous organization (DAO), a nonprofit, an Asia-focused entity and U.S.-based Rally.
Platform leads pitched the new structure as a “major step” toward full decentralization – a common goal in the crypto sector. The proposal was submitted last week.
Related: A16z Details Its New Approach to Crypto Governance
Each wing will shortly receive millions of dollars in crypto-denominated funding from Rally’s treasury, according to the proposal. It’s part of Rally’s attempts to appeal to internet creators willing to experiment with tokenization – and fan engagement – in the digital economy.
“Rally offers a new frontier for creators to engage with their communities, receive meaningful value for their creative endeavors and have full ownership over their own independent economies,” said Bremner Morris, who becomes Rally’s CEO under the proposal.
Holders of Rally’s “social tokens” can use the Rally platform to create their own cryptocurrencies, and the tokens also give them access to content and products that haven’t been released.
The vote garnered 36 participants who used their RLY tokens to approve the plan. The voters committed 9.29 million RLY (worth roughly $5.5 million) for the duration of the vote.
Related StoriesA16z Details Its New Approach to Crypto Governance
Following a pair of controversial votes in the governance forums of the Uniswap exchange, venture capital giant Andreessen Horowitz (a16z) said in a blog post Thursday it will “open source” its decentralized finance (DeFi) delegation procedures.
Titled “Open Sourcing our Token Delegate Program,” the post lays out how a16z selects the individuals and entities it chooses to delegate its considerable voting heft to.
Given the size of the DeFi ecosystem – now rivaling mid-sized American banks at $146 billion in total value locked (TVL) – and the considerable governance token reserves controlled by a16z, this effort towards transparency sheds light on policies that have the power to shape an emerging financial vertical.
Related: RLY Holders Approve Social Token Platform’s Decentralization Plan
The a16z post shares a draft of the 1,500-word legal agreement intended to ensure delegate independence, shows a full breakdown of current a16z delegates and their voting power and explains a16z’s conceptual approach to delegation.
DAO voting and delegation will be managed by a new, four-person team led by a16z partner Jeff Amico, he said in an interview with CoinDesk. Former 0x engineer Alex Kroeger announced last week he’d also be joining the team:
The a16z Protocol team will be perhaps the first-ever third-party professional protocol politicians with a purview that will comfortably rank a16z among the most powerful voices in DAO governance.
The Protocol team will select the entities that will receive “well over half” of a16z’s voting powers, and also choose how to vote with the remaining percentage – ultimately commanding a pot of tokens that can single-handedly sway governance proposals.
DAO democracyRelated: Can Avalanche Keep It Up? DeFi Users Rush In as Incentives Roll Out
The effort to “open source” delegate procedures comes after a pair of controversial votes in Uniswap’s DAO governance system.
In June, a proposal passed to fund a $20 million DeFi Education Fund designed to engage in political activism. The proposal, which was written by a16z delegate Harvard Law Blockchain and Fintech Initiative and which a16z voted in favor of, was broadly criticized for lacking transparency and oversight mechanisms.
Last week, a16z also voted against a proposal to allocate $25 million in UNI toward yield farming, the proceeds of which would have been used to fund analytics firm Flipside Crypto. In a Twitter thread explaining the rationale behind the vote, Amico wrote that a lack of transparency and oversight was a motivating factor:
Even by the standards of sometimes-rancorous DeFi governance forums, the Flipside vote was contentious and messy – including bugs that flipped intended “No” votes to “Yes” and multiple parties with relationships to a16z publicly disagreeing on Twitter.
The final vote on the proposal was 47,624,544 in favor to 46,988,497 (meaning UNI owners accounting for 18% of the circulating token supply participated in the vote, an unusually high percentage), though it was cancelled because Index Coop, which delegated its UNI to Flipside in order to make the proposal, fell below a necessary UNI ownership threshold to keep the proposal live.
A16z and its delegates accounted for a significant portion of the voting power. The venture capital firm cast a “No” vote with just over 15 million UNI ($375 million), while a16z delegates Dharma, Argent, the Stanford blockchain club, the Columbia University blockchain club and Compound contributor Getty Hill pitched in another 22,728,754 million UNI – almost 40% of the UNI represented in the vote in aggregate.
If the analysis were to include parties with a financial relationship with a16z, such as Robert Leshner, who founded the a16z-funded Compound, the percentage climbs higher.
CoinDesk could not verify if a16z’s delegates were voting only with their delegated tokens or with their personal stake as well, and likewise CoinDesk could not verify if the nearly 38 million tokens on display represent a16z’s full UNI ownership stake or if its net holdings are larger.
Sybil.org, a dapp designed to make delegating DeFi governance votes easier, shows that a16z’s 15 million voting stake is itself delegated from 10 different wallets.
A16z has never publicly disclosed the quantities of governance tokens they hold in major DeFi protocols such as Maker, Compound and Uniswap. The VC firm also has investments in multiple companies expected to launch governance tokens, including OpenSea and Nansen.
TransparencyAmico told CoinDesk that the “open sourcing” of the delegate program is a bid to lift the veil on how a16z approaches protocol governance.
“If we’ve had a fault to date, it’s been a lack of transparency,” he said.
The goal moving forward is to “build in public.” One key takeaway from the Flipside vote, Amico added, was that there is significant appetite for more public governance debate. As such, he told CoinDesk that the Protocol team will be communicating its thoughts on governance developments more frequently in the future.
Additionally, a16z said the team would be open to providing smart-contract-based guarantees of delegate independence (rather than possibly flimsy legal ones) as the technology becomes available, and that the team would be open to delegating voting power to an organization that is itself decentralized, such as a DAO.
In a somewhat symbolic gesture given that there’s little to no associated code, the team has also posted the details of its delegate selection process on the software development platform and open-source hotspot GitHub, and is inviting public comments, contributions and conversation.
Ultimately, a16z’s Amico said a long-term aim is to inspire other large token holders, such as VCs, to rethink their approach to governance:
“Our hope is that presenting a systematic, thoughtful way to do this will lead to others trying it too.”
Related StoriesConstellation Network to Provide US Air Force With Blockchain Security for Data Sharing
Blockchain firm Constellation Network is to provide end-to-end security for data sharing between the U.S. Department of Defense and its commercial partners.
- Constellation has secured a SBIR Phase II contract with the U.S. Air Force to develop a way of exchanging mission data securely across the Defense Transportation System.
- The contract is a transition from the Phase I contact secured by Constellation two years ago.
- In partnership with Kinnami Software, Constellation has applied its Hypergraph Transfer Protocol to create a security product that uses blockchain encryption and distributed data management.
- The aim is to solve “an important identified mission security need,” according to an announcement by Constellation Thursday.
- Cuando China habló, bitcoin reaccionó. ¿Cuando lo hizo Estados Unidos? No tanto
- Crypto Long & Short: When China Spoke, Bitcoin Reacted. America? Not So Much
- US Derivatives Traders Are Easily Bypassing Blocks on Offshore Exchanges: Report
- FTX US Affiliate Sees Record Daily Trading Volume in First Half of 2021
3LAU Raises $16M to Tokenize Music Royalties for Artists and Fans
Related: Crypto News Roundup for Aug. 26, 2021
“There’s an NFT component to them but then a bunch of other smart contract infrastructure that basically enables the distributed collection of royalties from the off-chain world to the on-chain world.”
Related StoriesAnchorage Hires Former Wells Fargo Digital Assets Executive for Banking, Capital Markets
Crypto bank Anchorage said Thursday it has hired former Wells Fargo blockchain executive Ken Chapman to be its director of banking and capital markets products.
“My primary role is going to be helping Anchorage address the overwhelming demand they’re receiving from banks for their services, including custody, trading and lending,” Chapman said. “I’m also going to be helping banks look at a different paradigm for settlement using blockchain as a rail.”
Chapman led digital assets and blockchain initiatives for the capital markets team at Wells Fargo for two years. He has also worked for Bank of America, BNY Mellon, investment firm Bridgewater Associates, JPMorgan and UBS.
Related: Citigroup se prepara para operar futuros de bitcoin en la Bolsa Mercantil de Chicago
Chapman said he envisions most banks setting up lending facilities for customers to take out loans against crypto collateral in the future. In addition to providing trading and custody services, banks will be looking for a federally chartered institution to partner with, he said. In June, Anchorage began offering ether-backed loans through Massachusetts-based BankProv.
“Anchorage is the first digital asset company to receive a federal charter from the OCC,” Chapman said, referring to the Office of the Comptroller of the Currency. “This is the same charter that other banks like BNY Mellon … I am moving from a traditional bank to a digital asset bank, but it’s still a bank.”
Related StoriesBrazilian Police Seize $28.8M in Crypto: Report
Brazilian Federal Police seized R$150 million ($28.8 million) in crypto assets and made five arrests after cracking down on an alleged financial pyramid scheme, according to a CNN Brazil report.
- Police carried out 15 search warrants and also seized R$19 million ($3.6 million) in cash, 21 luxury vehicles, high-end watches and jewelry on Wednesday, CNN said.
- The operation dubbed “Operation Kryptos” involved police investigating an alleged financial pyramid scheme.
- Police made five arrests, including Glaidson Acácio dos Santos, the owner of a bitcoin consultancy based in the Lakes Region of Rio de Janeiro. He has a custody hearing today.
- His defense team released the following statement to CNN: “Glaidson Acácio’s defense is aware of the arrest and so far without access to the contents of the investigations. Only after proper analysis of all documentation will we be able to express ourselves in a concrete manner.”
- In July, Brazil’s civil police seized $33 million in an investigation into money laundering carried out through crypto exchanges in Sao Paulo and Diadema.
Read more: Brazilian Police Seize $33M in Crypto Money Laundering Probe
Related StoriesBitcoin Eyes 200-Day Moving Average Support as $2B Options Expiration Nears
Bitcoin is again experiencing moderate price turbulence heading into the monthly options expiration.
The cryptocurrency is trading at about $47,000 at press time, representing a 4.4% drop on the day, CoinDesk 20 data show. The decline has reversed Wednesday’s 2.7% gain and exposed bitcoin to the widely tracked 200-day moving average (MA) line located at $46,040
“What we are seeing is typical pre-expiry price volatility,” said Philippe Bekhazi, CEO at XBTO Group. “[The] market generally rebounds after monthly settlement.”
Related: AriseCoin Inventor Sentenced to 5 Years in Prison for Securities Fraud
A total of 42,500 option contracts worth roughly $2 billion are set to expire on Friday, according to data provided by Skew. The dominant crypto options exchange Deribit will settle the majority of open interest at 8:00 UTC.
Data since January show bitcoin tends to move toward the “max pain” point in the lead-up to an expiration and sees a solid directional move in days after settlement. In traditional market theory, that behavior results from option sellers, mostly institutions, manipulating the spot market to push prices closer to the strike price at which the highest number of open options contracts expire worthlessly, yielding maximum losses – or maximum pain – for option buyers and minimizing losses for the sellers.
History seems to be repeating itself, as the max pain point for Friday’s monthly expiration is $44,000, according to Deribit. The options market has also flipped bearish for the short term, with the one-week put-call skew reporting positive values at press time. That’s a sign of short-term puts, or bearish bets, drawing higher demand than calls. The one-month skew is neutral, while the three- and six-month skews are still trading negative, indicating a long-term bullish bias.
A continued inflow of BTC onto crypto exchanges could also bring some price volatility. Blockchain analytics firm CryptoQuant data show the Huobi exchange received 23,256 BTC at 06:08 UTC today.
Related: Market Wrap: Bitcoin Back Above $48K, Expect Consolidation
“It’s an actual deposit from a user,” CryptoQuant CEO Ki-Young Ju told CoinDesk in a Telegram chat. Users typically transfer bitcoin to exchanges when they plan to liquidate holdings or sell coins to fund derivatives and alternative cryptocurrency trading, leading to increased price turbulence.
“Bitcoin reserve across all exchanges is increasing lately, and this could affect the market in the short term,” Ju said. “These bitcoins could be sold, used as collateral for derivative trading, or used for altcoin trading. Either way, it increases the market volatility.”
From a technical analysis standpoint, the immediate bias has flipped bearish owing to the cryptocurrency’s failure to keep gains above $50,000 earlier this week.
“Both bitcoin and ether confirmed short-term counter-trend ‘sell’ signals per the DeMark indicators, which have been fairly timely in the past as indicators of short-term inflections,” Katie Stockton, founder and managing partner of Fairlead Strategies, said in an email. “The message is for another 1-2 weeks of sideways-to-lower price action.”
Stockton added that while the intermediate-term momentum remains positive, some risk management may be necessary for the very near term, given the 50-day MA at $39,652 is the initial support. Meanwhile, XBTO’s Bekhazi mentioned $46,800 as key support.
Also read: Bitcoin Miners Hold Onto Rigs, Betting the Bull Run Will Continue
Related StoriesBitcoin Eyes 200-Day MA Support as $2B Options Expiration Nears
Bitcoin is again experiencing moderate price turbulence while heading into the monthly options expiration.
The cryptocurrency is trading near $47,000 at press time, representing a 4.4% drop on the day, CoinDesk 20 data show. The decline has reversed Wednesday’s 2.7% gain and exposed the widely tracked 200-day moving average (MA) line located at $46,040
“What we are seeing is typical pre-expiry price volatility,” said Phillipe Bekhazi, CEO at XBTO Group. “[The] market generally rebounds after monthly settlement.”
Related: AriseCoin Inventor Sentenced to 5 Years in Prison for Securities Fraud
A total of 42,500 option contracts worth roughly $2 billion are set to expire on Friday, according to data provided by Skew. The dominant crypto options exchange Deribit will settle the majority of open interest at 8:00 UTC.
Data since January show bitcoin tends to move toward the “max pain” point in the lead up to the expiration and sees a solid directional move in days after settlement. In traditional market theory, this behavior results from option sellers, mostly institutions, manipulating the spot market to push prices closer to the strike price at which the highest number of open options contracts expire worthlessly, yielding maximum losses – or maximum pain – for option buyers and minimizing losses for the sellers.
History seems to be repeating itself, as the max pain point for Friday’s monthly expiration is $44,000, according to Deribit. The options market has also flipped bearish for the short term, with the one-week put-call skew reporting positive values at press time. That’s a sign of short-term puts, or bearish bets, drawing higher demand than calls. The one-month skew is neutral, while the three- and six-month skews are still trading negative, indicating a long-term bullish bias.
A continued inflow of BTC onto crypto exchanges could also bring some price volatility. Blockchain analytics firm CryptoQuant data show Huobi exchange received 23,256 BTC at 06:08 UTC today.
Related: Market Wrap: Bitcoin Back Above $48K, Expect Consolidation
“It’s an actual deposit from a user,” CryptoQuant CEO Ki-Young Ju told CoinDesk in a Telegram chat. Users typically transfer bitcoins to exchanges when they plan to liquidate holdings or sell coins to fund derivatives and alternative cryptocurrency trading, leading to increased price turbulence.
“Bitcoin reserve across all exchanges is increasing lately, and this could affect the market in the short term,” Ju said. “These Bitcoins could be sold, used as collateral for derivative trading, or used for altcoin trading. Either way, it increases the market volatility.”
From a technical analysis standpoint, the immediate bias has flipped bearish owing to the cryptocurrency’s failure to keep gains above $50,000 earlier this week.
“Both bitcoin and ether confirmed short-term counter-trend ‘sell’ signals per the DeMARK Indicators, which have been fairly timely in the past as indicators of short-term inflections,” Katie Stockton, founder, and managing partner of Fairlead Strategies, said in an email. “The message is for another 1-2 weeks of sideways-to-lower price action.”
Stockton added that while the intermediate-term momentum remains positive, some risk management may be necessary for the very near term, given the 50-day MA at $39,652 is the initial support. Meanwhile, XBTO’s Bekhazi mentioned $46,800 as key support.
Also read: Bitcoin Miners Hold Onto Rigs, Betting the Bull Run Will Continue
Related StoriesShould You Invest in Cryptocurrency in 2021?
Cryptocurrency is one of the most intriguing types of investments, and if you're on the fence about whether or not to buy, you're not alone. While only 14% of U.S. adults own crypto, according to a 2021 report from crypto exchange Gemini, around 63% of Americans classify themselv
Microsoft Is Awarded US Patent for Crypto Token-Creation Service
Microsoft has been awarded a U.S. patent for software it says can help users develop blockchain applications by making it easier and more efficient to create crypto tokens for different distributed ledgers.
- According to the patent, creating and managing tokens is currently “difficult and cumbersome” due to the lack of standardization across different blockchains.
- Microsoft’s patent describes a ledger-independent system for helping users to create tokens, and for managing them across different networks.
- On receiving a request from a user, the system offers templates with various attributes and control functions. Those would depend on the type of token required, representing, for example, a digital or physical asset. Once the user has selected the desired template, the system creates the token on the designated networks.
- The system also provides a common interface for managing the tokens, so developers don’t have to worry about token-specific code to interact with them.
India’s Securities Watchdog to Launch System for Monitoring Financial Instruments
India’s securities watchdog plans to lean heavily on distributed ledger technology for the monitoring and recording of financial instruments, beginning next year.
The Securities and Exchange Board of India (SEBI) announced Wednesday its intentions to roll out a system for “security and covenant monitoring” for non-convertible debentures (NCDs) by April 1, 2022.
It marks a significant step for the use case of blockchain within India’s financial ecosystem and follows other major institutions in leveraging the technology for increased systems efficiency.
Related: Stock and Crypto Investor Sign-Ups Jump 45% Year-on-Year Across Rural India: Report
NCDs are financial instruments that recognize a debt obligation toward the issuer. Typically a debenture is a long-term instrument with a feature that allows it to be cashed in for shares at a later date at the discretion of the owner. Debentures that cannot be converted into shares are considered “non-convertible” products.
The system will also keep tabs on covenants – terms inserted into a debt agreement – and will monitor the credit ratings of the NCDs. The system will provide necessary permission to trustees, issuers, and credit rating agencies to update transaction data. In turn, the data will be accessible to stock exchanges and depositories to provide for a more transparent process.
Data stored will be cryptographically signed, time-stamped, and sequentially added to the ledger, leaving behind a verifiable audit trail of transactions. Transaction history and data on the ledger will be “fully” encrypted and will be shared only with necessary stakeholders on a “need-to-know basis,” SEBI said in its statement.
“DLT has the potential to provide a more resilient system than traditional centralized databases and offer better protection against different types of cyber-attacks because of its distributed nature, which removes the single point of attack,” the watchdog said.
Related StoriesCan Avalanche Keep It Up? DeFi Users Rush In as Incentives Roll Out
In an explosive move reminiscent of the growth of Binance Smart Chain (BSC) and Polygon earlier this year, the Avalanche blockchain is attracting a flood of new deposits into its decentralized finance (DeFi) ecosystem.
Despite the signs of strength, however, not all analysts are convinced the Ethereum competitor has staying power.
At the end of July, Avalanche’s DeFi ecosystem accounted for just $180 million in total value locked (TVL) – a figure that has since ballooned 1,000% to over $1.8 billion at the time of writing. Likewise, Avalanche’s native token, AVAX, has rallied from $13.41 to a high of $55.42 earlier this week.
Related: Market Wrap: Bitcoin Back Above $48K, Expect Consolidation
Money market Benqi is leading the way, cracking the $1 billion TVL threshold Tuesday – less than a week after its Aug. 19 launch. By comparison, Aave, among the first DeFi lending protocols when it launched in 2019, took more than eight months to reach the same mark on Ethereum.
In an interview with CoinDesk, Ava Labs Director of DeFi Luigi Demeo said that a number of factors, including a revamped token bridge and a $180 million incentive program, are chief catalysts for the surge.
“We’ve kind of seen all these things culminate at once, between the bridge, lending, a massive incentive program and a lot of things the team has been working on very deeply, heads down, for six months,” he said.
However, Mewny, a self-described “Internet Couch” and a pseudonymous member of the angel investing collective eGirl Capital, cautioned that the burgeoning ecosystem could be due for an eventual pullback.
Related: Solana’s Apricot Finance Raises $4M in ‘Party’ Funding Round
“It could go one of two ways,” Mewny told CoinDesk, speaking to the roving horde of DeFi investors. “The [liquidity mining] incentives kickstart a flywheel effect around their ecosystem, or enthusiasm dries up and the hot ball of money moves to the next pot of honey.”
Incentives and catalystsThe timing of Avalanche’s emergence is something of a surprise, given that the layer 1 went live on mainnet in September 2020 and had a functioning (if clunky) bridge as early as February this year.
“The UX wasn’t great,” Ava Labs’ Demeo said. “It was slower, more extensive… it was a temporary solution, frankly.”
Additionally, Demeo said that the ecosystem was missing “key infrastructure pieces,” including oracles, a faster bridge, a lending platform and stablecoin support.
Chainlink oracles went live July 21, providing the pricing data infrastructure that allowed Benqi’s lending platform to launch. Money market Aave will soon be joining with $20 million in liquidity mining incentives; Curve, a protocol allowing for efficient stablecoin swaps, is also signing on with $7 million in AVAX liquidity mining rewards.
Demeo added that the new bridge provides free AVAX (for deposits above a certain amount) to pay for subsequent transactions.
While Demeo refers to Ethereum-native dapps such as Curve, Sushi and Aave deploying implementations on Avalanche as a “validation of the technology,” eGirl’s Mewny says other layer 1s paved the way for Avalanche’s success.
“I think BSC and Polygon set the stage for this current AVAX run. The relationship between the [liquidity mining] incentives that dropped and the rapid TVL that bridged is obviously no coincidence,” they said, adding:
“While I think the tech is interesting and this isn’t a negative comment on its technical merits, many people saw the green light to capture the gains that were seen with the aforementioned platforms. As money trickles in to play the casino yield farms and/or long the same basic DeFi primitives but on a new platform, the same playbook is possible (yet again).”
Future developmentsDemeo argues that Avalanche has built-in technical advantages that will allow it to compete in the long term, including a unique consensus mechanism and architecture.
“A key fundamental decision was to allow for multiple subchains, which should let AVAX easily integrate any virtual machine or smart-contracting language,” he said. “This should be a competitive advantage for long-term sustainability [allowing] AVAX to pivot easily to capture different devs.”
Additionally, Demeo said the $180 million Avalanche Rush program is currently tailored to users. Over time, the money could be used to incentivize developers to build more platforms on Avalanche. He said a user base is a necessary first step.
Related StoriesWhat Binance Smart Chain’s Lagging Performance Means for Layer 1 Blockchains
It was not long ago when Binance Smart Chain (BSC) was beating Ethereum by several blockchain metrics, but the former Ethereum alternative darling has seen its growth slow amid intensified layer 1 blockchain competition.
A growing number of “rug pulls” or exploits on BSC, meanwhile, has also raised questions around BSC’s security, as some BSC users have left the platform over fears about the safety of their funds, according to analysts.
BSC’s challenges show that while attracting new capital via cheaper, faster transactions is a first key step for any smart contract blockchain, security and decentralization are still essential for retaining users in the long run.
Related: AriseCoin Inventor Sentenced to 5 Years in Prison for Securities Fraud
Although still the No. 2 blockchain by total value locked (TVL), the layer 1 blockchain supported by crypto exchange Binance, is far off its all-time TVL high in early May. TVL is the amount of crypto assets that are locked in decentralized finance (DeFi) protocols on the blockchain.
Other layer 1 blockchains, including Solana, Terra, and Avalanche, have hit record TVL highs in the past week.
Although Binance founder and CEO Changpen Zhao has not been shy on social media about BSC outperforming Ethereum, a BSC spokesperson told CoinDesk that BSC “does not compete” with other blockchains.
“TVL growth and retracements are driven by several factors, including importantly and primarily market conditions, which are very different from what it was when BSC’s TVL was at its all-time high,” Samy Karim, BSC’s ecosystem coordinator, told CoinDesk via Telegram messages.
Related: Market Wrap: Bitcoin Back Above $48K, Expect Consolidation
“TVL alone does not indicate the health or performance of BSC’s DeFi ecosystem,” Karim argued.
Messari’s second quarter review on layer 1 blockchains highlighted that BSC was particularly hurt by the May market crash because most of the value locked on BSC was money-oriented capital looking for liquidity mining rewards, and the majority of assets on BSC had few use cases.
According to data from DeFi Llama, the top protocols by TVL on BSC are decentralized exchange PancakeSwap and lending protocol Venus. Both have plateaued since the TVL declined dramatically in early May.
Venus protocol faced more than $200 million worth of liquidations in late May, possibly due to a price manipulation of its native venus token. Meanwhile, PancakeSwap was taken advantage of in a flash loan exploitation worth about $45 million on another BSC-based DeFi protocol, PancakeBunny.
“BSC should’ve just rebranded to Binance Rug Chain,” Ryan Watkins, research analyst at Messari, said dryly, noting that the growing number of hacks on BSC-based protocols has scared away users.
In a Telegram chat, Venus’ global community deputy, “Danny,” who did not disclose their full name, told CoinDesk that the Venus team is working on several upgrades to improve its security.
“Once all the major changes have been completed, we will return to normal growth, most likely much faster than anticipated by others,” they said.
Rupert Douglas, head of institutional sales at another popular BSC-based DeFi protocol Alpaca Finance, argued that the increased number of attacks on BSC is “in approximate proportion to the sizes of the blockchains,” who noted that BSC is not the only blockchain that has suffered exploitations and failures.
“As networks grow, more suitable targets emerge for hackers to look at,” Douglas said. “The more high-TVL projects there are, the greater the number of hackers that will poke at their code for potential exploits. All of these emerging networks haven’t hit that point yet since the majority of them only have one to three projects with significant TVL.”
Nate George, crypto asset analyst at Cumberland, the Chicago-based crypto trading unit of DRW Holdings LLC, argued that in developing layer 1 blockchains, one of the three fundamentals, scalability, security and decentralization, has to be sacrificed to optimize the other two, a so-called blockchain trilemma. In BSC’s case, decentralization was sacrificed.
The BSC blockchain’s security algorithm, known as Proof-Of-Staked-Authority (PoSA), is controlled by 21 node operators who are mainly controlled by Binance. BSC’s rise came as Ethereum’s network became too congested and its gas fees skyrocketed. Gas refers to the computational efforts required to execute specific operations on a blockchain like Ethereum. Users must pay a fee in the blockchain’s native token to conduct a transaction.
Binance’s Zhao said in an interview with CoinDesk last year that the company had to sacrifice elements of decentralization to compete against Ethereum in designing BSC.
“There is a trade-off between more decentralization versus speed, so we thought that 21 nodes run by the community is probably enough,” Zhao said in the interview.
Venus’ Danny told CoinDesk that BSC’s fast speed and low fees are among the reasons Venus chose the platform, enabling it to provide users, including those in developing countries, with easy access to Venus’ lending and borrowing services.
BSC’s Karim said that for BSC to continue its “momentum,” the team at BSC and the protocols on BSC need to introduce “advanced security layers and build better user awareness.”
Related Stories
Leader in cryptocurrency, Bitcoin, Ethereum, XRP, blockchain, DeFi, digital finance and Web 3.0 news with analysis, video and live price updates.
Subscribe to CoinDesk Crypto feed