CoinDesk Crypto

Decentralized, Ethereum-based music streaming platform Audius hit a major milestone on Thursday, as five million people a month now use the platform to stream music, making it one of the largest consumer applications on any blockchain. 

Blockchain technology has been touted by many in the community as a way to make the monetization of art and music fairer in the digital age by giving creators more ownership of their work, as well as by clarifying the licensing and metadata issues that cause music to be taken down from online platforms. Audius’ rapid expansion is a signal that artists and fans alike are increasingly finding value in blockchain-based streaming. 

According to Audius co-founders Roneil Rumburg and Forrest Browning, most of Audius’ approximately 100,000 artists have small and mid-sized audiences. But major players in the music industry such as Skrillex, deadmau5 and Weezer are also using Audius to get music — including works-in-progress and unreleased music — out to their fans. 

Related: Solana Woos Creators With $5M Fund for Artists and Musicians

Audius, which launched in 2019, operates closer to a decentralized version of SoundCloud than Spotify. Creators are not paid directly by Audius based on streams, but instead are given the infrastructure needed to monetize their work in the way they see fit, including via sales of non-fungible tokens (NFTs). 

Creators and community members can also be rewarded for contributing to the platform with Audius’ native token, AUDIO. 

Related Stories

• Audius Brings NFT Galleries to EDM-Heavy Streaming Service
• Audius Has Big Numbers by Crypto Standards but Can It Take On SoundCloud?
• Audius, the ‘Decentralized Spotify,’ Is Moving Part of Its Service to Solana Blockchain

Ether, the second largest cryptocurrency by market capitalization, was in the spotlight on Thursday as the latest hard fork upgrade, which wasa dubbed “London,” officially activated on the Ethereum blockchain network. The upgrade contributed to bullish price action as ether rose about 5% over the past 24 hours, compared with a 3% rise in bitcoin during the same period.

Despite ETH’s rally, some analysts expect widespread institutional adoption to take a few years. Institutional interest boosted bitcoin’s investment appeal over the past year, which contributed to a crypto rally during the fourth quarter of 2020. 

“I think Ethereum might flip the bitcoin market cap in the long term, but not this year,” CryptoQuant CEO Ki Young Ju, said in an interview with WuBlockchain.

Related: Philipp Plein Becomes First Major Fashion Brand to Accept Crypto Payments

“I met Goldman Sachs, Fidelity and other big institutional asset management firms in Miami a few weeks ago and they said they’re still struggling explaining what Ethereum/DeFi (decentralized finance) is to their bosses,” Ju said.

Latest prices

Cryptocurrencies:

• Bitcoin (BTC) $41143, +2.83%
• Ether (ETH) $2806.8, +4.11%

Traditional markets:

• S&P 500: 4429, +0.6%
• Gold: $1814.2, +0.21%
• 10-year Treasury yield closed at 1.217%, compared with 1.16% on Wednesday.

Meanwhile, some institutions remain active across the crypto market either directly or indirectly. On July 22, Fidelity Investments acquired a 7.4% stake in crypto miner Marathon Digital Holdings for about $20 million. 

Related: The Node: I Don’t Understand Bitcoin Maximalism

On Thursday, French asset manager Melanion Capital won regulatory approval to launch an exchange-traded fund (ETF) tracking the price of bitcoin and several crypto-related stocks. 

Also on Thursday, Invesco, a U.S.-based asset manager, filed with the U.S. Securities and Exchange Commission (SEC) to list an ETF with indirect exposure to bitcoin via futures and other investment vehicles.

Large institutions are easing into the crypto market with a bitcoin-first approach. It will likely take some time, however, before investors fully embrace altcoins such as ether as regulatory hurdles must be cleared first.

Ethereum London hard fork

Ether was initially steady after the London hard fork was activated, but it started rallying about an hour later. As of press time, ether was changing hands at around $2,807, up from about $2,600 right before the changes took effect, CoinDesk 20 data shows.

Many crypto traders are focused on one component of the upgrade, called Ethereum Improvement Proposal (EIP) 1559, which changes the network’s fee structure so that a certain amount of the cryptocurrency’s supply will be “burned,” or removed from circulation. The bet is that the blockchain’s net issuance of new units of the cryptocurrency will slow as a result of the change, ultimately helping to set a floor under the price.

Analysts at Stack Funds and elsewhere have compared the London hard fork and implementation of EIP 1559 to the Bitcoin blockchain’s “halvings” that occur every four years in the sense that major changes in the cryptocurrency’s supply growth are deployed at specific moments in the blockchain’s lifecycle. Some investors believe Bitcoin’s halving events in the past have helped to increase the price of the underlying cryptocurrency.

As of 15:06 UTC, some 585 ETH of fees had been burned, or roughly 43% of the block rewards issued since the Ethereum hard fork took effect at data block No. 12,965,000, according to the website ultrasound.money.

Ether technicals

Ether is now above the 100-day moving average for the first time since June. The price rally has cleared a significant technical hurdle, although the price could find some resistance at the $3,000 level. 

ETH’s rally has outperformed bitcoin after a few months of consolidation. The ETH/BTC ratio is testing initial resistance at 0.06, but could see further upside as momentum improves.

Bitcoin seasonality

Similar to stocks, bitcoin is approaching a seasonally weak period, which could encourage buyers to take profits. The table below shows, on average, relatively weak returns in August over an eight-year period. September tends to be the worst month. Buying picks up in October and February.

Seasonal patterns can vary, especially as bitcoin departed from its historical trends when it tumbled in May.

Stablecoins as collateral

The margin assets for bitcoin futures trading has been shifting from bitcoin to stablecoins, according to Delphi Digital, a research company that focuses on digital assets. The shift has become especially significant as cash margined open interest soared after bitcoin’s price crashed in May. 

“The most important implication of this is that longs don’t have the added boost of holding both spot BTC and BTC futures while it goes up, but they’re no longer exposed to deeper losses when their position turns against them (because their margin is in stablecoins, not BTC),” Delphi wrote. “For shorts, they can take advantage of downtrends without their margin value eroding, but they lack protection when BTC moves up.”

Altcoin roundup

• TRU soared following TrustToken’s fundraising news: The price of TRU, the native token of TrustToken’s DeFi lending protocol TrueFi, rose 414% to $0.863. CoinDesk reported that TrustToken had raised $12.5 million in a new funding round led by BlockTower Capital, Andreessen Horowitz (a16z) and Sam Bankman-Fried’s Alameda Research. TRU is trading at $0.65 as of press time. (Bankman-Fried is a billionaire, who also founded the FTX crypto exchange.)
• HUSD reserves all held in cash: The reserves backing HUSD, the eighth-largest stablecoin by market cap, are all held in cash in money market accounts in the United States, the token’s issuer, Stable Universal, told CoinDesk. It’s the first time the issuer has released such information. (EideBailly, an accounting firm, publishes monthly attestations that the HUSD token is backed 1-to-1 with dollars, but has never provided a reserve composition.) The disclosure comes at a time when more stablecoin issuers have started revealing the breakdown of their reserves, as investors and regulators demand more transparency. 
• Are Web 3.0 Tokens the next hot trade? Data tracked by Messari and published by Arca Chief Investment Officer Jeff Dorman shows the cryptocurrency sub-sector of “Web 3.0 tokens” gained 22% in the week ended Aug. 1, outshining bitcoin and every other sub-sector, including non-fungible tokens (NFTs). Bitcoin, the largest cryptocurrency by market value, rallied 10%. Web 3.0 tokens refer to digital assets associated with visions of a decentralized internet. 
• Mark Cuban’s NFT platform completes Polygon integration: Billionaire entrepreneur Mark Cuban’s NFT platform, Lazy.com, has joined forces with Polygon, an Ethereum-scaling product, to offer cheaper transactions. Polygon’s NFT-centric and gaming hub Polygon Studios announced the integration on Thursday, stating it would help drive mainstream adoption of digital collectibles. Users can now connect their Polygon wallet to Lazy.com, which also supports NFTs based on the Ethereum blockchain.
• Chainlink Unveils Crypto ‘Keepers’: Chainlink, the market-leading provider of data feeds to blockchain-based smart contracts, is expanding its services to include decentralized off-chain computation – a job done by a network of node operators known as “Chainlink Keepers.” Chainlink Labs is also standing up cross-blockchain bridges that come with an anti-fraud risk monitoring component.

Relevant news:

• JPMorgan Launches In-House Bitcoin Fund for Private Bank Clients
• CFTC Commissioner Says SEC Lacks Authority Over Commodities, Including ‘Crypto Assets’
• Hedge Fund Billionaire Steven Cohen’s Point72 Leads $21M Funding Round in Messari
• Coinbase Is Expanding Its Payment and Cash-Out Methods
• New York City to Explore Blockchain for Preventing Deed Fraud in Land Sales
• ​​Invesco Files With SEC for Bitcoin Strategy ETF

Other markets

Notable winners of 21:00 UTC (4:00 p.m. ET):

aave (AAVE) +10.92%

uniswap (UNI) +8.39%

algorand (ALGO) +2.09%

Notable losers: 

stellar (XLM) -1.68%

chainlink (LINK) -0.85%

dogecoin (DOGE) -0.63%

Related Stories

• What Crypto Analysts Are Saying About the Ethereum Hard Fork
• Furniture Retailer Ethan Allen, Tired of Its Search Traffic Going Into the Ether, Changes Stock Ticker

U.S. Securities and Exchange Commission Chairman Gary Gensler’s comments this week have some digital asset managers realizing that the excitement in the first half of the year for a true bitcoin exchange-traded fund (ETF) may have been premature. 

In remarks at the Aspen Security Forum on Tuesday, Gensler noted that he would be partial to ETFs based on bitcoin futures traded on the Chicago Mercantile Exchange (CME).

“I think his comments are pretty clear that a pure spot bitcoin ETF isn’t coming soon and that futures products would potentially be considered,” Steven McClurg, chief investment officer for Valkyrie, which has filed an application with the SEC for a bitcoin ETF. “I think it’s certainly going to direct our conversations and our product road map.” 

Related: CFTC Commissioner Says SEC Lacks Authority Over Commodities, Including ‘Crypto Assets’

While many in the crypto world suspected that Gensler would favor investment vehicles that include bitcoin futures, this is the first time that Gensler has confirmed his preference explicitly, said James Seyffart, ETF research analyst at Bloomberg Intelligence.

Some industry participants have said that this could lead to a spate of applications that include bitcoin futures. On Thursday, Atlanta-based asset manager Invesco applied for an ETF that would include exposure to futures, the Grayscale Bitcoin Trust (GBTC) and Canadian bitcoin ETFs. (Grayscale is a subsidiary of Digital Currency Group, CoinDesk’s parent company.) 

The benefit of prioritizing bitcoin futures over bitcoin spot ETFs is unclear, McClurg said.

“It’s a really bizarre world where you can launch a bitcoin ETF in Canada, U.S. people can buy it through their brokerages, and you can create a U.S. ETF that includes Canadian ETFs, but a bitcoin ETF isn’t available in the U.S.,” McClurg said.

Related: Invesco Files With SEC for Bitcoin Strategy ETF

Gensler may believe that an investment vehicle based on federally regulated bitcoin futures may offer more regulatory cushion than one based on bitcoin from spot exchanges that are regulated on a state-by-state basis, Seyffart noted. 

“I don’t really buy that, because … there’s a definitive relationship between spot bitcoin and the futures market, so no matter what you do here, there’s going to be some overlap [in] related markets,” Seyffart said. “I think the biggest thing here is that it’s basically a delay.”

Bitcoin futures products would not only be more complex and costly to manage, but the market may not want them, Seyffart said. 

Historically, institutions have flocked to closed-end funds such as GBTC over trading bitcoin futures on the CME, Seyffart said.

“Bitcoin futures are growing and they’re growing at a healthy clip, but they still don’t see anywhere near GBTC trading,” Seyffart said. “We’re talking about $25 billion in GBTC after a drawdown and trading at a discount.” 

Aside from surveys showing that investors want a bitcoin ETF, MicroStrategy’s stock acting as a proxy for a bitcoin ETF is also evidence that the market wants an investment vehicle based on bitcoin’s spot price, Seyffart added. MicroStrategy is a software company that holds a large amount of bitcoin in its treasury.

Commodity futures also have the potential to trade with a negative premium, Valkyrie’s McClurg said. 

“I would argue that [a futures ETF is] not as safe for retail investors given that futures don’t always accurately track what’s happening in the spot market,” McClurg said. 

After Gensler’s comments this week, it’s likely that the SEC will continue to approve bitcoin futures mutual fund applications and then approve ETFs based on bitcoin futures, Seyffart said. 

“The benefit of the mutual fund is that if they get out of control or the size gets too big or whatever happens, you can close a mutual fund, but you can’t close an ETF,” Seyffart said. 

ETF provider Teucrium is the only issuer to have filed an application for an exchange-traded product (ETP) based solely on bitcoin futures, Seyffart added. But Teucrium has only filed its S-1 and has yet to kick off a review period at the SEC by filing a Form 19b-4. 

The SEC has 240 days after an issuer files its 19b-4 to make a decision on an application. The first expiration of one of those regulatory windows is coming in November with VanEck’s 19b-4, and Seyffart said he expects the SEC to reject VanEck’s application and possibly other applications throughout the rest of the year and early 2022. 

VanEck was one of the first issuers to file for a bitcoin futures ETP before bitcoin futures existed, and has filed for a bitcoin futures mutual fund, according to Gabor Gurbacs, director of digital-asset strategy at VanEck. 

“Managing futures is expensive and the margin requirements are extremely high at an exchange level like the CME,” Gurbacs said. “You also have to roll the futures contracts every month which incurs costs and adds volatility.” 

Gurbacs would not comment on VanEck’s future strategy, but said he expects to see more bitcoin futures-based ETF applications in the future despite the costs and complexity associated with futures. 

Related Stories

• What’s Really Behind SEC Chairman Gary Gensler’s Crypto Speech
• Gary Gensler Speaks. The Reviews From Crypto Aren’t Terrible

Ether prices rose in digital-asset markets on Thursday after the Ethereum blockchain’s “London hard fork” went live, and cryptocurrency analysts are now weighing in on the impact of the network upgrade.

At press time, ether was trading at $2,802. The world’s second-largest cryptocurrency by market capitalization is up more than $300 from its daily lows, with a 4.83% gain over the past 24 hours.

Martin Gaspar, research analyst at CrossTower:

• The apparent success of the upgrade is getting priced in.
• “The notion of ethereum becoming a deflationary cryptocurrency in the future is now tangible, and the effects on ethereum’s valuation could be profound.”

Related: With EIP 1559, Has ETH Become Ultra-Sound Money?

Alex Svanevik, co-founder & CEO at Nansen:

• It will take a while, possibly even weeks, to see any real impact from the upgrade.
• Currently, he is focusing on a metric that looks at the percentage of EIP 1559 transactions, which is currently very low.
• “As wallets, bots, etc. start making use of the EIP 1559 features, we will know more about how this upgrade affects Ethereum long term.”

Denis Vinokourov, head of research at Synergia Capital:

• “Overall, the reaction is more or less as expected. It is very rarely that ethereum benefits from any immediate upside following such network upgrades, although a bias tends to materialize over time.”
• These occasions are typically well documented heading into the event, given the transparent discussions on various forums and conferences, he said.
• That’s “unlike, for example, the [Federal Reserve] meeting, where slight nuances with regards to language used may have a more pronounced impact on reaction by different asset classes,” Vinokourov said.

Laurent Kssis, managing director of exchange-traded products at 21Shares AG:

• Kssis sees a possibility of a short-term correction as the network stabilizes, before resuming an upward trend.
• He said he can’t see a definite trend in the short term, but a relative value trade could be implemented between ether and bitcoin.
•  “With [non-fungible tokens] in full swing, we see a consolidation as demand remains strong in the [decentralized finance] segment.”

Alexandre Lores, analyst at Quantum Economics:

• Increased scarcity of ether will bring longer-term value to supply/demand factors. 
• “Short term, this is another reason to be bullish,” Lores said.
• Lores also said that bitcoin is looking bullish on the 15-minute and one-hour candle charts.
• “I believe this is anther supporting factor in the ETH rally; however, in this case it does not appear to be the dominant factor,” he said.
• Normally, bitcoin is the main influencing factor, but in this instance it is merely adding fuel to the “bullish fire,” according to Lores.

Related: Furniture Retailer Ethan Allen, Tired of Its Search Traffic Going Into the Ether, Changes Stock Ticker

Tom Salter, digital asset analyst at ByteTree:

• “This is the most extensive upgrade to Ethereum in years. Part of me thinks Ethereum maximalists did not expect it to be implemented. Clearly, hype has a part to play.”
• “Bear in mind this rise has taken [ETH] to a 30-day relative high against BTC. That alone will give this breakaway legs.”
• In terms of what is next, Salter hopes that several debates will be settled in the Ethereum community: whether EIP 1559 will give Ethereum a deflationary supply, and whether fee tips will be enough for “greedy miners.”

Rick Bensignor, president of Bensignor Investment Strategies:

• Bensignor attributes ether’s rise in price after the London upgrade to a combination of the theoretical bullishness that comes from the “hard fork” (i.e., lower transaction costs along with slightly reduced supply).
• He also said the uptick is because crypto traders tend to trade the news of the day, and “it’s not a developed enough market to really know what the long-term fundamentals truly are,” said Bensignor.

Related Stories

• Crypto News Roundup for Aug. 5, 2021
• Ethererum Hard Fork Sends Price Jumping as Fees Start to Burn

Brian Quintenz, a Republican commissioner for the Commodity Futures Trading Commission (CFTC), tweeted Wednesday that the U.S. Securities and Exchange Commission (SEC) does not have jurisdiction over “pure commodities or their trading venues,” including “crypto assets.”

• Quintenz’s tweet followed remarks earlier this week by U.S. SEC Chairman Gary Gensler, who reiterated his position that stock tokens and “stable value tokens backed by securities” qualify as securities, meaning they must be registered and their issuers must abide by existing federal law.
• Retweeting Quintenz’s post, the U.S. House Committee on Agriculture said that “#crypto is bigger than the SEC,” and urged Congress to “write the rules … to protect investors AND innovation.”
• In his own tweet, former CFTC Chairman Christopher Giancarlo said the CFTC was the only agency with the experience to regulate cryptocurrency markets and pressed the CFTC to nominate a new chair to generate “sensible cryptocurrency regulation.”

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• Invesco Files With SEC for Bitcoin Strategy ETF
• What’s Really Behind SEC Chairman Gary Gensler’s Crypto Speech
• Gary Gensler Speaks. The Reviews From Crypto Aren’t Terrible
• SEC Needs Clear Authority Over Crypto Platforms, Gensler Says

BitGo’s hard-won deal to custody cryptocurrency seized by the U.S. government was a victim of the company’s own success.

The $4.5 million, six-year contract with the U.S. Marshals Service, which CoinDesk revealed in April, fell through late last week. Instead, Anchorage, a stiff albeit smaller competitor, secured an even larger USMS contract – $6.6 million – that expires after just five years.

Turns out, BitGo got disqualified on a technicality. USMS spokeswoman Lynzey Donahue told CoinDesk the firm was simply too big to win a small-business contract, as this contract was earmarked for. So the Small Business Administration (SBA) nixed the original deal, she said.

Related: Gemini to Serve as Custodian for Filecoin Fund of Australian Equities Manager

The last-minute turnabout is the latest development in a custody saga stretching back to 2018, when the USMS first hinted it needed help storing criminal coins. A division of the sprawling U.S. Department of Justice, USMS is responsible for disposing of millions of dollars in crypto that its sister agencies have seized.

Fifteen companies pitched USMS beginning in June 2020, public records show. Some were excluded from consideration – the government says being too big for a small business contract is the most common reason – but BitGo and Anchorage both survived the cull. BitGo inked its win on April 21. CoinDesk broke the news the next day, and BitGo trumpeted the victory the day after that.

That win began to teeter within five days when at least one of the contract’s 14 losers cried foul to the SBA. 

“BitGo was their first choice and it was protested by competitors,” BitGo CEO Mike Belshe told CoinDesk. 

Related: US Marshals Service Chooses Anchorage Digital for Custody of Seized Digital Assets

Who that protester was remains a mystery, but they kicked off a bureaucratic review that ultimately stripped BitGo of up to $4.5 million in government cash. Instead, runner-up Anchorage is set to emerge with that – and $2 million more.

“We are unable to comment on BitGo, but Anchorage participated in more than a year-long process, and in the end, we were chosen,” the company said in a statement. It declined to comment on what happened behind the scenes.

Lucre and glory

The hyper-competitive world of federal contracting is awash in cash, private sector suitors and more than a hint of prestige. Especially in crypto, an industry with a robust criminal underworld, getting to boast of a law enforcement partner that perhaps counteracts the shadow is itself a prize. 

Some crypto firms avoid that megaphone. For example, Chainalysis, the largest of the crypto tracers, does not trumpet every million-dollar deal it inks with Washington’s alphabet soup of agencies. It has secured more than 100 federal contracts from IRS, FBI, ICE, DEA and others since 2015. 

BitGo and Anchorage have each had only one record in the public databases: the same USMS custody deal. Both quickly turned their opposing victories into marketing plays.

“We see this as a validation” of BitGo’s service, one company exec crowed in the April press release. Three months later, Anchorage declared more or less the same.

Losing the $4.5 million will likely make little difference, financially speaking, for BitGo, which two weeks after declaring pre-emptive victory in April agreed to a $1.2 billion acquisition by Mike Novogratz’s crypto conglomerate, Galaxy Digital. 

Galaxy’s certainly no small business, and few in the crypto world would consider pre-buyout BitGo or Anchorage, a BitLicense-holder, mom-and-pop shops either. But the SBA sets the line for small businesses in the “commodity contracts dealing” industry at those with less than $41.5 million in annual revenue. 

SBA press officer Tiffani Clements told CoinDesk the agency checked a “snapshot” of BitGo’s financials from May and June 2020 and found the firm’s revenue was too high to fly. The result: BitGo was removed from small business contention. 

“BitGo has the option of appealing our determination, so far they haven’t,” she said in an email.

If BitGo had appealed, then a trove of documents detailing its size, salaries and revenue could be made public, according to Shane McCall, a partner at the law firm Koprince McCall Pottroff, which specializes in challenging SBA rulings.

Belshe, who will become Galaxy’s deputy CEO and a board member once the merger closes, said he’s decided to just walk away from this.

“We’re busy with the business,” he said, “The last thing I need to do is continue,” this fight.

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U.S. furniture maker and retailer Ethan Allen Interiors wants you to know that its vision of American design is meant to evoke “Classic, Country & Coastal and Modern.” It does not do crypto.

To make this clear, the company announced Thursday it is changing its New York Stock Exchange (NYSE) ticker symbol from “ETH” to “ETD” to avoid confusion with the cryptocurrency ether.

The Danbury, Conn.-based company’s stock soared earlier this year, which many analysts attributed to retail traders confusing its symbol with the identical abbreviation for ether, the native currency of the Ethereum network.

Related: What Crypto Analysts Are Saying About the Ethereum Hard Fork

“We’ve definitely seen a massive increase on a percentage basis in mistaken activity on the Ethan Allen stream,” Rishi Khanna, CEO of Stocktwits, told the Wall Street Journal in May.

Clearly, the retailer had had enough. “This change will better differentiate Ethan Allen news from Ethereum news in search results, as Ethereum is often abbreviated as ETH,” CEO Farooq Kathwari said in the press release.

Farooq said the “D” in the new ticker symbol stands for “design.”

Ticker confusion is not unique to Ethan Allen. Similar confusion has been seen in the stock market as retail traders mistake unrelated companies for chat application Clubhouse or encrypted messaging application Signal. Researchers have been finding correlations between corporation name changes and internet-related “dotcom” names for decades.

Related: Ethererum Hard Fork Sends Price Jumping as Fees Start to Burn

In fact, Ethan Allen’s management could have perhaps been forgiven for going the other direction and trying to increase its association with the cryptocurrency. After all, while the furniture retailer’s stock price climbed nearly 80% since last August, the price of ether soared about 580% during the same time period.

The change to “ETD” will take place on Aug. 16, ending 28 years of “ETH” for Ethan Allen since the company’s initial public offering in 1993. 

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Cryptocurrencies are typically ranked by their market capitalization, and with good reason: the value of a cryptocurrency is a direct reflection of investor appetite. Here are ten of the largest and most well-known cryptocurrencies.

Miami Mayor Francis Suarez recently announced that the city of Miami will launch its own cryptocurrency called MiamiCoin (MIA). And starting this week, MiamiCoin mining is ready to be activated. Traders can trade, buy or sell the coin on California-based crypto exchange Okcoin.

Chainlink, the market-leading provider of data feeds to blockchain-based smart contracts, is expanding its services to include decentralized off-chain computation – a job done by a network of node operators known as “Chainlink Keepers.”

Chainlink Labs is also standing up cross-blockchain bridges that come with an anti-fraud risk monitoring component.

Announced Thursday at Chainlink’s annual event, SmartCon, Keepers is a kind of service layer to tell smart contracts how and when to behave. The feature is now live on Ethereum and being used by Aave, Synthetix, PoolTogether, Barnbridge, Bancor and Alchemix.

Related: How a ‘Lazy Robot’ Might Solve a Big Problem for Crypto’s Whale Traders

The evolution of decentralized finance (DeFi) is a cross-pollination of on-chain logic in the form of smart contracts and real-world data that lives outside the blockchain.

Chainlink allows inputs – such as market data for DeFi, random number generators for gaming or sports scores for prediction markets – to be piped into blockchains via decentralized oracle networks that are maintained by a committee of Chainlink nodes.

Keeping time

The next step, as outlined in the Chainlink white paper, is to offer computation as well as data inputs via the same decentralized network. To illustrate what is meant by computation in this context, Chainlink co-founder Sergey Nazarov picked the simplest use case.

“A smart contract can’t know what time it is,” Nazarov said in an interview. “It doesn’t have a conception of time. So if you want a smart contract to settle at midnight on Tuesday, you need a Keeper.”

Related: Telecoms Giant Swisscom Launches Chainlink Node for DeFi Data

A common sort of computation used in DeFi applications would be the triggering of limit orders, or it could be more advanced things like the monitoring of certain debt pools for under-collateralized loans. What project teams currently do is build this computation layer in-house. But that’s antithetical to the whole decentralization narrative, said Nazarov.

“We’ve created an end-to-end decentralized application,” he said, adding:

“It has decentralization of the code and it has decentralization of all the systems controlling the code. Because if you arrive at partial decentralization of the code but not everything controlling the code, that’s where you can have flash loan attacks and all these other attacks.”

Chainlink keepers will be selected from the network’s existing pool of reliable node operators, said Nazarov, and the profit they earn will ensure they provide computation at any level of congestion or cost scenario. Going forward, more enterprise-grade keepers will be added to the network, like Deutsche Telekom’s T-Systems.

Missing links

Slightly further down the Chainlink roadmap, but something the team has been working on for the last two years, is a pair of cross-blockchain bridges. Chainlink’s Programmable Token Bridge is for moving tokens across blockchains; its Cross-Chain Interoperability Protocol (CCIP) is for sharing computational commands. 

Crypto lender Celsius announced Thursday it has committed to using the CCIP.

The time is ripe for this, Nazarov said, pointing to last month’s high-profile THORChain exploit.

“When other people make cross-chain [bridges], they have two fundamental problems,” Nazarov said. “Either they haven’t designed a secure system, or they don’t have a relationship with the other blockchains that will result in adoption of the bridge.”

Under the hood, Chainlink’s cross-chain system leverages something like multi-signature security, Nazarov said, but done in a way that efficiently aggregates signatures from hundreds of reliable Chainlink nodes.

In addition, a new anti-fraud network will run parallel to the Chainlink cross-chain bridge, and monitor every single signature, transfer and addition or reduction of a node, Nazarov explained. The anti-fraud network has the ability to lock the bridge at any moment completely unilaterally, he added.

“This creates a critical layer of risk management and anti-fraud management,” Nazarov said, adding:

“If you look at any system out there in the world that moves value and transacts value, they all have anti-fraud, and anti-risk departments. They have huge investments in anti-fraud systems. But for some reason, we want to move around billions of dollars in all these bridges without a risk management system. How does that make sense?”

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U.S. Sen. Rob Portman (R-Ohio), one of the leaders of a bipartisan negotiation team that drafted a $1 trillion infrastructure bill, said he supports an amendment that would narrow the tax reporting requirements on crypto businesses.

The original provision, which sought to raise about $28 billion from the industry, would have enforced wider information reporting rules on crypto brokers and broadened the definition of brokers to any entity that provides digital asset transfer services. Industry participants worried that the provision would include miners, node operators/validators, software developers and hardware manufacturers, among others, rather than just trading platforms like exchanges or over-the-counter trading desks that actually provide the transfer services.

Sens. Ron Wyden (D-Ore.), Cynthia Lummis (R-Wyo.) and Pat Toomey (R-Penn.) proposed an amendment on Wednesday that would exempt the non-custodial business functions.

Related: With EIP 1559, Has ETH Become Ultra-Sound Money?

Portman – who previously defended the original provision and said it wouldn’t affect companies like miners – tweeted his support for the new amendment on Thursday, calling on the Senate to vote on the move.

However, the Joint Committee on Taxation (JCT), which projected the original $28 billion figure, reportedly said the amendment could knock about $5 billion off the actual amount of tax revenue generated.

It’s unclear when the Senate might vote on the amendment. Senate Majority Leader Chuck Schumer (D-N.Y.) is looking to close up all amendments by Thursday and set up a vote on the actual bill by Saturday, Politico reported.

Should the Senate vote to advance the bill by next week, it would move to the House of Representatives for a vote this fall before. If the House passes the legislation, it would then be sent to President Biden’s office to signed into law (or vetoed).

Related: Crypto Tax Exemptions Floated for $1T US Senate Bill

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Mutual fund giant Fidelity Investments has acquired a 7.4% stake in crypto miner Marathon Digital Holdings for about $20 million, according to a Forbes report. 

• The investment was made on July 22 and was spread across four index-based funds, including Fidelity Extended Market Index Fund (FSMAX), Fidelity Nasdaq Composite Index Fund (FNCFX), Fidelity Total Market Index Fund (FSKAX) and Fidelity Series Total Market Index Fund (FCFMX).
• Fidelity is one of the largest financial services companies in the world, with almost $5 trillion in assets under management and more than 35 million clients.
• The investment reflects the growing institutional and individual interest in investing in crypto-related companies. Several other large institutional firms  have large stakes in Marathon, including Vanguard (7.58%), Susquehanna (2.7%) and BlackRock (1.59%), according to Forbes. 
• Shares of Marathon were up more than 4% on Thursday, potentially on the Fidelity news. Shares of Marathon are up well over 600% over the past year.  
• Marathon said this week it increased its generation of bitcoin by 66% in July. 

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The Coinbase crypto exchange is adding support for more payment and cash-out methods in the U.S. as well as allowing users with linked bank accounts to instantly sell as much as $100,000 per transaction.

In a blog post published Thursday, Coinbase announced new integrations with Apple Pay and Google Pay, previously only available when synced with the Coinbase Visa debit card. Now, users with any Visa or Mastercard debit card linked in their Apple Wallets will automatically have Apple Pay appear as a payment method when transacting with Coinbase on their cellphones. Google Pay will be available in the fall. 

Instant cash-outs will be made through the Real Time Payments (RTP) network as an alternative to Automated Clearing House (ACH) transfers, which can take up to five days. RTP cash-outs allow for near-instantaneous transfers of funds around the clock, with no limits on the number of cash outs per day.

Related: Coinbase Agrees to Buy Zabo, the ‘Plaid of Crypto,’ for Undisclosed Sum

The RTP Network is controlled by the Clearing House (TCH), a payments company and banking association owned by the largest U.S. commercial banks. TCH has been following the evolution of the cryptoeconomy since at least 2014, when it sponsored a report on the risks and regulation of virtual currency.

Additionally, Coinbase said the exchange will now accept crypto purchases via linked Visa and Mastercard credit and debit cards in over 20 countries. 

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The reserves backing HUSD, the eighth-largest stablecoin by market cap, are all held in cash in money market accounts in the United States, the token’s issuer, Stable Universal, told CoinDesk. 

It’s the first time the issuer has released such information. (EideBailly, an accounting firm, publishes monthly attestations that the HUSD token is backed 1-to-1 with dollars, but has never provided a reserve composition.) The disclosure comes at a time when an increasing number of stablecoin issuers have started revealing the breakdown of their reserves, as investors and regulators demand more transparency. 

“The reserves backing HUSD are currently backed 100% by cash held in money market accounts,” the company said in an email. “The current asset composition does not contain ‘cash equivalents,'” such as “U.S. government Treasury bills, bank certificate of deposits, bankers’ acceptances, corporate commercial paper, and other money market instruments.”

Related: USDT Usage on Ethereum Shifts Away From Asia Daytime Hours

Money market accounts are deposit accounts at a bank or credit union that pay interest based on the market for short-term funds. They should not be confused with money market mutual funds, which are mutual funds that invests directly in debt securities such as U.S. Treasurys and commercial paper.

Stable Universal did not give a date for the breakdown.

In May, the largest stablecoin issuer, Tether, released a breakdown of its reserves for the first time, following a settlement with the New York Attorney General’s office. Roughly half of Tether’s reserves were invested in commercial paper, the company said. To this day it has not identified any of the issuers.

In June, Circle, the issuer of the No. 2 stablecoin that plans to go public, revealed the assets backing USDC, after CEO Jeremy Allaire pledged to improve transparency. That disclosure said 13% of the stablecoin’s collateral was invested in Yankee certificates of deposit (CDs issued by non-U.S. banks), 12% U.S. Treasuries and 9% in commercial paper; the remaining 61% was in “cash and cash equivalents” but that figure was not broken down further.

Related: Tether’s Collapse Would Be Chaotic, Not Cataclysmic

Paxos also revealed a breakdown of assets backing PAX and BUSD for the first time, with 96% in cash and cash equivalents and the remaining 4% backed by U.S. Treasury bills. 

Though USDT and USDC still capture the largest market share, issuers of smaller stablecoins, such as BUSD, HUSD and GUSD, are releasing more information to bolster investor confidence.

“The HUSD stablecoin ensures that each HUSD is backed by 1 U.S. dollar, held in its safest form,” Stable Universal said in the statement. It aims to ensure “sufficient liquidity and guarantee for customers to redeem their stablecoin assets for fiat in real-time, regardless of market volatility,” according to the company.

“The plan is to hold these reserves in only cash, cash equivalents and short-term, low-risk financial instruments to ensure that the balance of assets held in reserve either meets or exceeds the volume of HUSD in circulation at all times,” said the statement. 

Created in 2019, HUSD is a Huobi-branded stablecoin (though technically, the “H” in HUSD stands for “hot”) created by Stable Universal, a British Virgin Islands company. On June 24, Stable Universal appointed Nevada-licensed retail trust company Huobi Trust as its custodian, replacing Paxos Trust, which was the custodian when the token launched.

HUSD has a market cap of $499.6 million and a 24-hour trading volume of $46 million as of Aug. 4, according to CoinGecko. 

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The New York City Department of Finance (DOF) is planning to explore how blockchain can be used as a means of preventing deed fraud in land records.

• The department will work with Medici Land Governance (MLG) to develop a proof-of-concept for applying blockchain technology to the city’s land records.
• The department has property records starting in 1996 on its automated system. MLG will simulate 500,000 records on the blockchain and then display them in a DOF interface to test for accuracy.
• The project is designed to increase transparency and reduce the chances of fraud. If successful, it will be followed by a pilot incorporating user testing and operational efficiency improvements.
• The project may demonstrate the potential for broader blockchain-based interventions around other aspects of public administration in New York City and elsewhere.

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Huobi Trust has hired former homeland security agent Robert Whitaker as chief operating officer (COO).

• The U.S. subsidiary of Hong Kong-based Huobi Technology has hired the veteran with 20 years experience in law enforcement to adapt its products to meet regulatory requirements, the company said in an emailed announcement Thursday.
• Huobi Trust offers fiat custody services and is the custodian for Huobi’s dollar-backed stablecoin, HUSD.
• Whitaker spent nearly 12 years at Homeland Security, and from 2014 to 2017 was supervisory special agent of the U.S. agency’s Illegal Finance and Proceeds of Crime Unit, during which he investigated criminal cases on darknet markets and other activities related to crypto.
• He most recently worked as COO for crypto transaction investigators Blockchain Intelligence Group.
• Huobi Trust launched at the end of July having acquired a trust license from the Nevada Financial Institutions Division in December last year to offer custodial and compliance services in the U.S.

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Billionaire entrepreneur Mark Cuban’s non-fungible tokens (NFT) platform, Lazy.com, has joined forces with Polygon, an Ethereum scaling solution offering cheaper transactions.

• Polygon’s NFT-centric and gaming and metaverse hub Polygon Studios announced the integration on Thursday, stating it would help drive mainstream adoption of digital collectibles.
• Users can now connect their Polygon wallet to Lazy.com, which also supports Ethereum-based NFTs.
• Launched in March, Lazy.com is a digital art gallery designed to showcase NFTs as traditional art galleries work.
• NFTs are all the rage this year, with sales volume surging to $2.5 billion in the first six months. That’s a 180-fold increase from the sales figure of $13.7 million in the first half of 2020.
• The trading volume of NFTs on Ethereum reached a record high of $171 million last week, up 338% from the equivalent week in the previous month.
• “NFTs still have their adoption hurdles, but none are as consequential as transaction fees and efficiency,” Cuban said in the press release shared with CoinDesk. “Polygon’s structured and easy-to-use scaling solution obliterates these barriers. I’m excited to see how the NFT space develops from here.”
• Polygon is a scaling solution facilitating faster and cheaper transactions by running sidechains or tangential networks alongside the main Ethereum blockchain. Scaling refers to increasing the throughput of the system, as measured by transactions per second.
• Several decentralized finance giants and NFT and gaming projects, including WeNew, NFT marketplaces Rarible, and OpenSea have partnered with Polygon to bypass high Ethereum transaction costs.

Also read: NFT Markets Post Record-Breaking Week

CORRECTION (Aug 5, 15:08 UTC): This article has been corrected to reflect the accurate spelling of Mark Cuban’s first name. A previous version of this article contained an incorrect spelling.

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Billionaire entrepreneur Marc Cuban’s non-fungible tokens (NFT) platform, Lazy.com, has joined forces with Polygon, an Ethereum layer 2 scaling solution offering cheaper transactions.

• Polygon’s NFT-centric and gaming and metaverse hub Polygon Studios announced the integration on Thursday, stating it would help drive mainstream adoption of digital collectibles.
• Users can now connect their Polygon wallet to Lazy.com, which also supports Ethereum-based NFTs.
• Launched in March, Lazy.com is a digital art gallery designed to showcase NFTs as traditional art galleries work.
• NFTs are all the rage this year, with sales volume surging to $2.5 billion in the first six months. That’s a 180-fold increase from the sales figure of $13.7 million in the first half of 2020.
• The trading volume of NFTs on Ethereum reached a record high of $171 million last week, up 338% from the equivalent week in the previous month.
• “NFTs still have their adoption hurdles, but none are as consequential as transaction fees and efficiency,” Cuban said in the press release shared with CoinDesk. “Polygon’s structured and easy-to-use scaling solution obliterates these barriers. I’m excited to see how the NFT space develops from here.”
• Polygon is a layer 2 scaling solution facilitating faster and cheaper transactions by running sidechains or tangential networks alongside the main Ethereum blockchain. Scaling refers to increasing the throughput of the system, as measured by transactions per second.
• Several decentralized finance giants and NFT and gaming projects, including WeNew, NFT marketplaces Rarible, and OpenSea have partnered with Polygon to bypass high Ethereum transaction costs.

Also read: NFT Markets Post Record-Breaking Week

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Data analytics platform Messari has closed a $21 million Series A funding round led by hedge fund billionaire Steven Cohen’s Point72 Ventures.

• The round is New York-based Point72 Ventures’ first completed investment in the crypto space.
• The funding will be used by Messari to triple its engineering and research headcount, expand its market intelligence platform and launch new token governance tools.
• “We have a 35-person team now and we will expand to 75 in the next few quarters,” Messari CEO Ryan Selkis told CoinDesk. “We are going to be tripling in size particularly the product engineering side and expanding our analyst hub to include 1,000 contract analysts.”
• “What is notable is that we have affiliates from pretty much all of the major Western exchanges, and custodians. So Blockchain Ventures, Kraken, Gemini, Coinbase and Alameda,” he said.
• Other investors include Underscore VC, Sam Bankman-Fried’s Alameda Capital, Blockchain Ventures, CMS Holdings, Gemini Frontier Fund, Kraken Ventures and Nascent. Angel investors include former Thomson Reuters CEO Tom Glocer and Anchorage CEO Diogo Monica, Messari said Thursday.
• Point72 Ventures operating partner Adam Carson has joined Messari’s board of directors.
• Back in May, it emerged that Point72, Millennium Management and Matrix Capital Management were all at varying stages of setting up dedicated cryptocurrency investment vehicles.

Read more: Hedge Fund Giants Millennium, Matrix and Point72 Standing Up DeFi Funds: Sources

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Ether’s price popped in cryptocurrency markets after the underlying Ethereum blockchain underwent one of its biggest upgrades in the network’s six-year history.

The upgrade, known as the London hard fork, took place on Thursday just after 12:30 coordinated universal time (8:30 a.m. ET), according to websites set up to track the blockchain.

Ether (ETH), the second-largest cryptocurrency by market value after bitcoin (BTC), was initially steady afterward but started rallying about an hour later. As of press time ether was changing hands around $2,780, up from about $2,600 right before the changes took effect, CoinDesk 20 data shows.

Related: Ethereum’s Hotly Anticipated ‘London’ Hard Fork Is Now Live

Crypto traders had been hotly anticipating the upgrade while monitoring the deployment for signs of how the changes might affect the pace of new issuance of ether by the blockchain – a key factor in determining the balance between supply and demand. Analysts had also noted the risk that something might go amiss as the new technology is implemented.

Ether staged an impressive rally in the weeks leading up to the London hard fork, breaking out of a two-month consolidation relative to bitcoin. The ether price has more than tripled this year, vastly outperforming bitcoin’s 31% gain.

Many crypto traders are focused on one component of the upgrade, called Ethereum Improvement Proposal (EIP) 1559, which changes the network’s fee structure so that a certain amount of the cryptocurrency’s supply will be “burned” or removed from circulation. The bet is that the blockchain’s net issuance of new units of the cryptocurrency will slow as a result of the change, ultimately helping to set a floor under the price.

Analysts at Stack Funds and elsewhere have compared the London hard fork and implementation of EIP 1559 to the Bitcoin blockchain’s every-four-years “halvings” in the sense that major changes in the cryptocurrency’s supply growth are deployed at specific moments in the blockchain’s life-cycle. Some investors believe Bitcoin’s halving events in the past have helped to increase the price of the underlying cryptocurrency.

Related: Bitcoin Again Falters at $40K as Ether Retreats From Two-Month High

But just as in prior Bitcoin halvings, it may take time before the full impact of Ethereum’s London hard fork is known, so any resulting price in ether moves might be slow to materialize.

Once the upgrade takes effect, it will activate a mechanism to “burn” a portion of fees paid to miners. Although it might help to support the price of ether, this aspect of EIP 1559 is seen as controversial because of its potential to reduce Ethereum miners’ revenue.

Until now, Ethereum’s gas fee has been determined by a free market that operates freely. Users set aside a certain amount of ETH for their transaction to be processed and the highest priority goes to the highest bidder.

According to Compass Mining, miners will see their revenues dip by 20% to 30% after the upgrade because part of their fees will be burnt. 

Big milestone

The Ethereum network has gone through a number of upgrades in the past, but this is arguably set to be one of the most significant in the network’s history.

In 2016 the DAO Hard Fork took place, which was a major event in that it changed the face and community of Ethereum. The launch of the ETH 2.0 beacon chain in December 2020 was also a major event; although not a hard fork, it established the new version of Ethereum that would be using Proof of Stake (PoS).

In 2015 and 2019 the network underwent two slightly more obscure upgrades coined “Constaninople” and “Ice Age.”

Ice Age in 2015 introduced the difficulty bomb, which refers to a mechanism built into Ethereum that increases the difficulty of mining over time. That difficulty bomb has been delayed repeatedly since then. In fact, one of the EIPs in London pushes the Ice Age to December 2021.

Constantinople in 2019 consisted of several proposals to make the blockchain more efficient and pave the way for a move to Proof-of-Stake in future Ethereum updates. There ended up being a serious bug in the code after this got executed and the developers had to release a second hard fork to patch the bug, delaying the upgrade.

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