CoinDesk Crypto

The new frontier of miner maximal extractable value (MEV) on Ethereum may have negative consequences for network finality and immutability. Key to defending Ethereum against these MEV forces is the upcoming transition to Eth 2.0 and proof-of-stake (PoS). But will the transition come soon enough? 

This article originally appeared in Valid Points, CoinDesk’s weekly newsletter breaking down Ethereum 2.0 and its sweeping impact on crypto markets. Subscribe to Valid Points here.

Pulse check

Bitcoin dominance tends to fall every crypto bull market cycle. As background, BTC dominance is a metric tracking the percentage of total cryptocurrency market capitalization made up by BTC. 

Related: Ether Erases Early Losses, Faces Resistance Above $2K

During the most recent bull market cycle, BTC dominance dropped from roughly 70% in January to as low as 40% in May. While the volatile crypto markets have since turned bearish over the latter half of Q2 2021, causing BTC dominance to pick back up again, the metric continues to trend between the range of 40% and 50%. 

Among the alternative cryptocurrencies eating up the market share of BTC, the native cryptocurrency of Ethereum, ether, is the next largest coin, making up roughly 18% of total crypto market share. While ETH is the second-largest cryptocurrency next to BTC and has been since as early as 2016, it is not the fastest-growing altcoin on the market. 

In 2021 Q2, the fastest-growing altcoin, excluding stablecoins, by monthly market cap growth, was the native token of Chiliz, a blockchain services network for sports and entertainment providers.

The chiliz token (CHZ) is the exclusive marketplace currency on Socios.com. Socios.com aims at decentralizing fanbase interaction with sports teams by leveraging blockchain infrastructure to facilitate payments for team merchandise, voting rights and other rewards. The marketplace has partnered with over 20 sporting and esports organizations including FC Barcelona, Juventus and Atletico de Madrid. 

Related: DeFi Startup Optimism Launches Alpha of Its Uniswap Layer-Two Solution

Fans for each of these teams can purchase branded “Fan Tokens” on Socios.com that allow them to vote on certain team decisions such as renaming facilities or changing entrance songs. Since the CHZ is the exclusive means of exchange in the marketplace, the token accrues in value alongside demand for voting rights and rewards provided by the entertainers on the Socios.com platform. 

The sports industry alone has a yearly value in the hundreds of billions of dollars and could gain further value through strong customer loyalty programs like the ones being experimented on through CHZ and Socios.com. The Chiliz token is one way to speculate on the use of Ethereum-based tokens for fan engagement and the continued growth of the Socios.com marketplace as the main platform to do this. 

Teddy Oosterbaan

New frontiers: Does Ethereum need a stronger defense against MEV?

Block subsidies, transaction fees and miner/maximal extractable value (MEV): These are the three main revenue streams of Ethereum miners. 

In efforts to combat currency inflation, protocol developers lowered block subsidies from 5 ETH to 3 ETH in 2017, and again from 3 ETH to 2 ETH in 2019. Starting in August 2021, transaction fees are also expected to decline as a result of Ethereum Improvement Proposal 1559 and its fee-burning mechanism. The only revenue stream that is expected to grow larger and more lucrative for miners in the months to come is MEV. 

MEV refers to the income a miner receives as a direct result of their ability to insert, leave out and reorder transactions within a block. The order of transactions is of utmost importance in the context of high-frequency trading on decentralized exchanges (DEXs) where automated bots can identify buy or sell orders waiting for execution on Ethereum and front-run these trades before they get executed. 

The higher the liquidity and value being moved on-chain through these DEXs, the greater the profit opportunity for miners to earn additional income through MEV. 

*Missing values for daily extracted MEV appear in this chart as interpolated dotted lines that connects the plot points immediately preceding and succeeding the missing value

The larger MEV rewards become in comparison to block subsidies and transaction fees, the greater the financial incentive for miners to adjust not only the order of transactions but also the order of blocks themselves. In what is known as a “time bandit” attack, miners may begin to identify MEV opportunities in blocks that have already been finalized and reorganize the blockchain in their favor if potential rewards from frontrunning are larger than earnings from honest mining (i.e., block subsidies and transaction fees).

Speaking to the potential for miners to reorganize Ethereum blocks and disrupt chain finality, Georgios Konstantopoulos and Leo Zhang from Paradigm Research wrote in a blog post back in March, “This scenario is not obviously plausible: Miners are (for the most part) structurally long ETH, and such an action would directly negatively impact their ETH investment.”

Theory manifesting into reality

However, it would appear the tools for MEV extraction by way of block reorganization are actively being built and already being executed in primitive forms. 

Edgar Aroutiounian of Flashbots tweeted on Thursday, July 8, that he had created a personal GitHub repository codifying how payments to miners can be facilitated in exchange for destabilizing blockchain consensus. Shortly thereafter, on Saturday, July 10, Twitter user “0xbunnygirl” announced their own code repository for MEV extraction through block reorgs called “Request for Reorg.” 

While the possibility of MEV negatively impacting chain finality and immutability has been a long-running concern, discussed as early as November 2020 among Ethereum researchers, the reality of this happening appears to be manifesting today. 

In light of this reality, there are a handful of defense mechanisms that researchers insist will protect the integrity of Ethereum’s blockchain. First, there is the collective will of the Ethereum community to censor this kind of behavior. Users can leave mining pools that are using their computational power, also called hashrate, to reorg blocks. Honest miners can resist accepting blocks they know to be from hostile miners engaging in these MEV practices. 

Second, there is the forthcoming upgrade to a proof-of-stake (PoS) consensus protocol with Eth 2.0, after which miners will no longer have the ability to propose blocks or reorder transactions within blocks. These two responsibilities will fall into the hands of validator node operators, who are required to own a large investment of ETH, worth roughly $63,600 or 32 ETH, and have skin in the game in order to participate in blockchain consensus. 

Weak lines of defense

Neither of these two defenses is convincing. The former assumes the collective will of the community is homogeneous and aligned on resisting MEV extraction through block reorgs despite clear evidence to the contrary. For some, such as Aroutiounian, if block reorgs can be done on Ethereum and there is a clear financial incentive for them to happen, they should – regardless of how it impacts public perception of the network. 

The upgrade to Eth 2.0 and PoS as a defense against block reorgs for MEV extraction does not address the present reality and the impact these events can have on the value of Ethereum in the interim before the upgrade is ready for deployment. The readiness checklist which outlines all the tasks needed for PoS activation remains in large part unfinished. The earliest that developers estimate Ethereum’s transition to PoS will happen is the beginning of 2022. 

Ethereum needs a stronger line of defense to combat the reality of MEV extraction through block reorgs. 

Validated takes

• Short-term profitability proves more important for decentralized exchange (DEX) users on Polygon than Ethereum. TAKEAWAY: Polygon’s DEX trading volume and liquidity came and went with a spike in rewards during the month of June, while remaining comparatively more stable on Ethereum over the same time period. (Data, Glassnode)
• Sygnum Bank becomes the first banking institution to offer staking services for Ethereum 2.0. TAKEAWAY: The Swiss bank built for digital asset custody, brokerage and tokenization is expanding its offering of yield generating products by offering clients up to 7% per annum on their ETH through staking. In today’s low or negative interest rate environment, the bank wrote in a blog post, digital assets offer an alternative to yield generation.  (Article, Yahoo)
• Gas prices on Ethereum have been on a downward trend since late April, dropping from roughly 150 gwei to 15 gwei. TAKEAWAY: A higher block capacity, the rising popularity of layer 2 scaling solutions and increased use of alternative payment channels between DEX traders and miners are all likely factors contributing to lower gas prices on Ethereum. (Newsletter issue, Coin Metrics)
• Circle, the co-creator of dollar-backed stablecoin USDC, is set to go public at a $4.5 billion valuation. TAKEAWAY: USDC is the second-largest stablecoin on Ethereum by circulating supply next to tether. In a presentation on Circle’s plans to go public, the company  predicted sevenfold growth in USDC’s market capitalization by 2023. The predicted circulating supply would be $190 billion, much higher than leading stablecoin, USDT, which currently is sitting around $63 billion. (Article, CoinDesk)
• Weekly volumes in dollar markets for BTC and ETH reached new all-time highs in 2021 Q2. Notably, notional volumes in ether-dollar pairs consistently surpassed bitcoin pairs for the first time ever in the month of May. TAKEAWAY: Surging interest in NFTs and DeFi since the beginning of this year are likely factors contributing to the growth of ether trading volumes. (Report, CoinDesk)

Teddy Oosterbaan

Factoid of the week Open comms

Valid Points incorporates information and data directly from CoinDesk’s own Eth 2.0 validator node in weekly analysis. All profits made from this staking venture will be donated to a charity of our choosing once transfers are enabled on the network. For a full overview of the project, check out our announcement post. 

You can verify the activity of the CoinDesk Eth 2.0 validator in real time through our public validator key, which is: 

0xad7fef3b2350d220de3ae360c70d7f488926b6117e5f785a8995487c46d323ddad0f574fdcc50eeefec34ed9d2039ecb. 

Search for it on any Eth 2.0 block explorer site.

New episodes of “Mapping Out Eth 2.0.” with Christine Kim and Consensys’ Ben Edgington air every Thursday. Listen and subscribe through the CoinDesk podcast feed on Apple Podcasts, Spotify, Pocketcasts, Google Podcasts, Castbox, Stitcher, RadioPublica, IHeartRadio or RSS.

Related Stories

• Don’t Blame Bitcoin for Ransomware
• CoinFund, ParaFi Lead $5.2M Seed Round for Liquidity Staking Platform ClayStack

The High Court of Delhi has called for standardized disclaimers on crypto-related advertising on national television.

• The Securities and Exchange Board of India (SEBI) and other relevant bodies should issue appropriate guidelines for crypto exchanges advertising on TV, the High Court said, according to reports Wednesday.
• The court is seeking responses from SEBI, the Ministry of Information and Broadcasting and some of India’s prominent crypto exchanges like WasirX, scheduling the matter for discussion in August.
• This request comes after lawyers Ayush Shukla and Vikash Kumar petitioned for SEBI to mandate disclaimer text covering 80% of the screen, with a voiceover reading slowly for five seconds.
• The suggested format compares with current practice where a disclaimer is displayed briefly in small text with wording such as “Cryptocurrency is an unregulated digital currency, not a legal tender and subject to market risks,” according to the request.
• Should guidelines be issued, that might be interpreted as a further sign of India moving away from the outright crypto ban that had been threatened by the government and adopting a more lenient approach by regulating the industry.

Related Stories

• India’s ICICI Bank Stops Customers From Making Overseas Crypto Investments
• UK Ad Watchdog to Clamp Down on Crypto Marketing: Report
• Indian Exchanges Unfazed by Current Crypto Bear Market: Report
• Coinbase to Woo India Recruits With $1,000 in Crypto

While many Chinese provinces and cities are cracking down on crypto mining, most are trying to boost their local blockchain industries.

• Out of China’s 34 provinces and province-level cities, 33 have enacted policies to accelerate blockchain innovation, local media reported, citing research from Chinese blockchain news site ChainNews.
• The newest issue of China’s most important economic-planning document, the Five-Year Plan, named blockchain a nationally strategic technology for the first time, calling on local governments to spur innovation in the field.
• Fourteen governments are offering financial rewards to companies that excel in blockchain innovation.
• Ganzhou, a city in one of China’s poorest provinces, Jiangxi, is promising 17.5 million yuan ($2.7 million) to companies that become unicorns, according to the report.
• Shanghai is offering permanent residency to highly skilled workers that move there to work on blockchain, the report said. Permanent residency in Shanghai is a lifetime aspiration for many Chinese citizens because it allows them to live, buy property, and access public services in the country’s most international city.
• At the same time, several provincial and city governments have moved to shut down or curtail crypto mining, following signals from China’s top leadership.

Related Stories

• 3 More Chinese Provinces Shutter Crypto Mines as Clampdown Continues
• Paraguay Proposed Bitcoin Law Includes Crypto Registration: Report
• Market Wrap: Bitcoin Weakens as US Inflation Hits 13-Year High
• France Wants EU to Give ‘Greater Powers’ to ESMA in Overseeing Crypto: Report

Ether buyers stepped in below $1,900 on Wednesday, helping the second-largest cryptocurrency erase early losses. At press time, the native cryptocurrency of Ethereum’s blockchain was trading unchanged on the day at about $1,941.

• The relative strength index on the hourly chart shows bullish divergence and scope for further upside.
• The RSI on the four-hour chart also favors a recovery rally, while the weekly chart stochastic is signaling interim oversold conditions.
• The upside signaled by short-term indicators may run into resistance at $2,040. That level is housing the widely tracked 200-day simple moving average (SMA) resistance.
• A break higher would expose the make-or-break 50-day SMA hurdle lined up at $2,310.
• “We would add exposure if ether can confirm a breakout above its 50-day MA, as with bitcoin, with next resistance on the chart above $3,000,” Katie Stockton, founder and managing partner of Fairlead Strategies, said in the weekly research note published Monday.
• Support levels to watch out for are the daily low of $1,865 followed by the June low of $1,700.

Also read: Bitcoin’s Range Play Likely to End With Bullish Breakout: Analyst

Related Stories

• Valid Points: The Problem With MEV on Ethereum
• DeFi Startup Optimism Launches Alpha of Its Uniswap Layer-Two Solution
• CoinFund, ParaFi Lead $5.2M Seed Round for Liquidity Staking Platform ClayStack
• Polychain Leads $21M Round for Retail-Oriented DEX

Bitcoin extended Tuesday’s decline even as gold, a traditional inflation hedge, remained resilient to increased bets that the U.S. Federal Reserve will tighten its monetary policy sooner than previously expected.

The leading cryptocurrency was trading near $32,300 at press time, a 1.4% drop on the day. Prices hit a 2 1/2-week low of $31,669 early today, having run into offers above $33,000 on Tuesday, CoinDesk 20 data show.

The drop to the lowest level since June 26 comes a day after futures tied to the federal funds rate and eurodollars, which track short-term interest-rate expectations, raised bets on Tuesday that the Fed would increase interest rates between December 2022 and the first quarter of 2023. According to Reuters, the repricing happened after the U.S. Labor Department said the consumer price index increased 5.4% year-over-year in June, the fastest pace since 2008.

Related: Visa Approves Australian Startup to Issue Debit Cards for Spending Bitcoin

Rate hikes, or possible tapering as signaled by Federal Reserve Bank of St. Louis President James Bullard, boost the attractiveness of holding fiat currencies, in this case the dollar, and dilute the appeal of perceived store-of-value assets such as bitcoin and gold.

However, while bitcoin is nursing losses, gold is trading 0.35% higher on the day at $1,814 an ounce. The discrepancy spurred Amber Group, a crypto services provider, to call for caution in reading too much into the rate-hike narrative for the time being.

“Bitcoin’s weakness this morning could be associated with the Fed rate-hike fears,” Amber Group said. “However, it’s hard to force this rate-hike narrative as a headwind if other risk assets (stocks) are hitting new highs and gold remains bid.”

Trader and analyst Alex Kruger said the cryptocurrency has been looking heavy for a long time, courtesy of weak flows, and “the CPI may have helped.”

Related: Market Wrap: Bitcoin Weakens as US Inflation Hits 13-Year High

That said, some analysts say concerns over tightening or gradual unwinding of stimulus may not be a threat to traditional markets, but present immediate downside risk to bitcoin.

“Is tapering a real concern? Not for broad markets, but arguably it is a risk for bitcoin, considered by fiat-based institutional investors at the extreme end of the risk spectrum,” Messari’s Mira Christanto said in a blog post dated May 27. “Capital to this new asset class is still mercenary and tends to over-react on the bull and bear side.”

The mid-May sell-off from $58,000 to $30,000 occurred after a reported surge in U.S. inflation in April increased concerns that the Fed may consider an early rate increase or reduction of liquidity-boosting asset purchases, known as quantitative easing.

Stack Funds Chief Operations Officer Matthew Dibb said, “The recent increase in Fed rate-hike bets may not bode well for BTC in the short term, as the recent correlation is more tied to equities, liquidity and retail sentiment, rather than BTC being a ‘hedge’ to inflation.”

Dibb said the cryptocurrency has been looking weak on technical charts for the past few weeks, and the latest U.S. CPI release may add to the selling pressure.

However, while bitcoin has come under pressure this week, it is still locked in the broad two-month range of $30,000 to $40,000. “It’s hard to read too much into the price action currently while we’re still stuck in this range,” Amber Group said.

Also read: Bitcoin’s Range Play Likely to End With Bullish Breakout: Analyst

Related Stories

• Inflation Is Rampant. Is It Time to Buy Bitcoin?
• US June Consumer Price Index Rose Faster Than Expected

Three provinces in China have joined a growing list of jurisdictions in the country that have ordered a halt to crypto mining amid a nationwide crackdown on the industry.

Heifi Online, a Chinese state-owned website in Anhui, reported Wednesday that the province will “clean up and shut down” crypto mines to avoid an imminent power shortage.

Also on Wednesday, Chinese journalist Colin Wu reported that the provincial departments of China’s State Grid Corp. in Henan and Gansu will shutter local mining industries in those provinces.

Related: Almost All Chinese Provinces Have Blockchain-Boosting Policies

The two provincial State Grid departments are implementing a decision that the state-owned enterprise made late last month, Wu told CoinDesk on Wednesday. The notice by State Grid’s headquarters calls on provinces to “clean up and crack down” on crypto mines that are using up electricity from the national grid.

More provinces are expected to follow suit, Wu wrote.

Gansu province is in West China, bordering Xinjiang, Qinghai, Sichuan and Inner Mongolia. It accounted for 2% the country’s hashrate between September 2019 and April 2020, according to the Cambridge Bitcoin Electricity Consumption Index.

China’s National Energy Administration has warned that Anhui’s electricity demand will exceed its supply starting in 2022, Hefei Online wrote.

Related: Paraguay Proposed Bitcoin Law Includes Crypto Registration: Report

Henan and Anhui are landlocked provinces in eastern China.

At a May meeting of China’s State Council, ministers discussed a crackdown on crypto mines. Provinces, prefectures and cities have moved against the industry since. Qinghai, Xinjiang, Inner Mongolia and Sichuan announced they are either cleaning up or shutting down mining.

The concern is partly environmental and partly financial. China is gearing up to achieve ambitious carbon neutrality goals set in its five-year plan in March, while regulators are concerned about crypto’s impact on financial stability.

In response, mining firms are starting to move their rigs overseas.

Related Stories

• Market Wrap: Bitcoin Weakens as US Inflation Hits 13-Year High
• France Wants EU to Give ‘Greater Powers’ to ESMA in Overseeing Crypto: Report

Blockchain investment firm QR Capital is to list an ethereum exchange-traded fund (ETF) on Brazil’s stock exchange after winning approval from the markets regulator.

• The ETF will list on the Sao Paulo-based B3 exchange under the ticker QETH11, QR Capital said in a tweet Tuesday.
• QETH11 won approval from Brazil’s Securities and Exchange Commission and will use institutional custody provided by crypto exchange Gemini. It is Latin America’s first ethereum ETF, QR Capital said.
• QR Capital will buy ether and offer investors exposure to it without them having to worry about wallets or private keys.
• Last month, QR Capital’s bitcoin ETF began trading on B3, itself the first bitcoin ETF to be approved in Latin America.

Related Stories

• Hashdex to Launch Bitcoin ETF Seeking to Offset Mining Emissions
• Brazilian Securities Commission Should Pay ‘Special Attention’ to Crypto Assets, Director Nominee Says
• Brazil’s Bitcoin Banco Group and Leader Arrested for Alleged Embezzlement of $300M in Crypto
• SoftBank Invests $200M in Brazil Crypto Exchange Mercado Bitcoin

Four men were arrested by Japanese police for allegedly defrauding thousands of investors out of millions of dollars, according to a report by Asahi Shimbun Digital on Monday.

Shoji Ishida, Yukihiro Yamashita, Takuya Hashiyada, and Masamichi Toshima stand accused of cheating 20,000 investors out of more than 6 billion yen (US$54.3 million) by promising to generate large returns through the use of artificial intelligence (AI) on their crypto trading platform.

Investors, who are filing civil lawsuits, say the men ran a crypto scheme known as the “Oz Project” which purported to automatically trade on a user’s behalf through the use of AI.

Related: UK Police Seize $250M Worth of Crypto

The scheme promised two-and-a-half times a user’s initial principle in return on their investment over a four-month period, per the report. A “solicitation officer” held seminars calling for further investment into the project.

Those who invested also invited friends and acquaintances, increasing the total pool of investors, Asahi reported.

Related Stories

• South Korean Prosecutors Indict Former Bithumb Chairman in $100M Fraud Probe
• Japan’s CBDC to Get a Clearer Picture by 2022, Says Government Official: Report
• A Reckoning for Binance and Other ‘Global’ Exchanges

Binance-backed travel website Travala’s Q2 revenue rose 141% over the previous three months amid a rebound in global travel, the company said in a report.

The London-based company generated $9.8 million in revenue from April to June, which was also a whopping increase from the $274,718 it generated in the same period last year when the coronavirus pandemic kept people home. In the Q2 report, Travala also attributed the strong performance to “strategic initiatives, optimisations and partnerships” that have broadened its offerings and improved service.

The Q2 result also signaled a wider embrace of the company’s blockchain-based travel booking platform after Travala generated only $249,365 in revenue for Q2 2019, a year prior to the pandemic’s onset. Co-founder and CEO Juan Otero told CoinDesk in an email that he was heartened by the improvement and expects 2021 revenue to be seven to eight times higher than last year’s.

Related: Australian Government Grants $4.1M to 2 Blockchain Pilot Projects

Travala, which accepts over 40 cryptocurrencies, Binance Pay and fiat payment forms, allows guests to purchase hotel stays, flights and experiences directly through its platform. According to data from Travala, crypto purchases account for approximately 70% of the platform’s business.

“Travala.com has been through some challenging times,” Otero said in a written response to CoinDesk questions. ”Now we are starting to see travel rebound and all the hard work we’ve done is starting to pay off. We’re extremely optimistic about travel coming back stronger than ever.”

While hotels account for the largest share of Travala’s revenue, it expanded its flight offerings following a merger with competitor TravelbyBit in May 2020. An existing partnership with tour and activity provider Viator is expected to help Travala increase its revenue.

Otero said Travala plans to find new partners within the crypto industry and traditional travel sector as part of wider expansion plans. Travala is also developing a concierge service that will cater to crypto-VIP and corporate clients looking for crypto-paid luxury travel experiences.

Related Stories

• IBM, Heifer International to Assist Honduras Farmers Access Global Markets Using Blockchain
• Oppenheimer More Bullish on Coinbase
• Tech Mahindra Joins StaTwig in Global Vaccine-Tracing Blockchain

Australians will soon be able to spend crypto via existing brick-and-mortar point-of-sales with the issuance of a new physical debit card, the Australian Financial Review reported Wednesday.

Global payments giant Visa has approved local Australian startup CryptoSpend to begin issuing debit cards for the startup’s users. Those using the CryptoSpend app can then pay using their bitcoin and other supported crypto at retail stores and hospitality venues.

Instead of needing to convert from crypto to fiat, like some other offerings on the market, users of CryptoSpend’s app can make direct purchases.

Related: Market Wrap: Bitcoin Weakens as US Inflation Hits 13-Year High

CryptoSpend co-founder Andrew Grech told CoinDesk via email CryptoSpend’s card will give Australians another “flexible way” to spend their crypto on everyday items.

“Anything from a cinema ticket to your new pair of headphones,” said Grech.

ASX-listed Novatti will issue the card, which is expected to hit Australia in September, while custody of the crypto holdings will be handed over to New York-licensed custodian BitGo, AFR reported.

CryptoSpend’s app allows users to spend their crypto, pay out to their account, and pay bills with supported cryptos including bitcoin, ether, XRP, bitcoin cash and litecoin. The app has its own wallet on which users can hold their coins.

Related: Superfluid Raises $9M for a New Take on Streaming Payments

“We have customers that range from 18-year-old students to 70-year-old grandmothers, said Richard Voice, co-founder & COO of CryptoSpend. “[This] further emphasizes the growing appetite for people of all ages to use crypto as an everyday currency.”

Indeed, the move captures the growing interest in cryptocurrencies for Australia’s economic market. Hong Kong-based Crypto.com became a principal member of Visa Australia in March, allowing the business to directly offer its version of a crypto Visa card in Australia.

Related Stories

• US June Consumer Price Index Rose Faster Than Expected
• Fed’s Bullard Says Time Is Right to Scale Back Stimulus; Bitcoin Unmoved

Chia Network, the smart transaction platform created by BitTorrent founder Bram Cohen, has added five executives across multiple divisions, including sales, product development and professional services, and has nearly doubled its workforce since closing its last venture round in early May.

The San Francisco-based company said in a press release that the hirings would help it reach a goal of making deeper inroads into the financial services community. The Chia platform is designed to make crypto financial transactions user-friendly and energy-efficient.

“Chia’s expansion and key talent acquisitions will support our growth and the broader adoption of our cryptocurrency,” Chia President and Chief Operating Officer Gene Hoffman said in the release.

Related: Investor Jill Carlson Joins Board of Bram Cohen’s Chia Network

The hirings reflect Chia’s promise to spend a good portion of the $61 million it raised in its recent Series D capital round that was led by Andreessen Horowitz (a16z) and Richmond Global Ventures. Chia now has 40 employees, including the latest newcomers, up from 21 on May 3, the day Chia closed its funding.

“It was also the day that I started trying to hire like a madman,” Hoffman told CoinDesk in a phone interview.

Hoffman expects to add another 30 people by year’s end, about half in research and development and the remainder in “various business roles.” Cohen has for years made clear his intent to take Chia public.

Chia’s latest recruits come from the tech and consulting worlds.

Related: Bram Cohen’s Chia Drives Hard Disk Demand in Europe: Report

Steve Booth, the new vice president of sales, moved from subscription and recurring revenue services provider Vindicia, along with Trace Galloway, who is vice president of sales engineering.

Paul Hainsworth, who is now vice president of product, was a project manager on Amazon’s virtual assistant Alexa unit. J. Eckert, who is vice president of ecosystems operations, served as an executive at software tools developer Genvid Technologies while Ken Griggs, who is senior director of customer success and professional services, worked at Deloitte.

The company’s headcount increase “underscores our trying to build a real software business,” Hoffman said.

Related Stories

• Chia Project and Journalist Exchange Legal Barbs Over Trademark Issue
• Blockchain Payments Platform Chia on an ‘Accelerated Timeline’ to IPO

After a long wait, decentralized finance (DeFi) startup Optimism has launched its Alpha layer-two (L2) solution for Uniswap via the Optimistic Ethereum (OΞ) mainnet.

The “move marks the first step for DeFi applications (dApps) to rival and surpass traditional web user experiences,” the startup said in a blog post on Tuesday.

DeFi exchange Uniswap’s transactions are conducted on Ethereum and accompanying gas fees which have, at times this year, reached unsustainable heights. Solutions such as Optimism’s seek to reduce costs associated.

Related: DeFi Gets Proactive About Policy Thanks to a $20M Grant From the Uniswap Community

During the Alpha period, OΞ will support an initial throughput of 0.6 transactions per second, the startup said in its post.

As a result of Uniswap’s third iteration, known as version 3 (V3), and being one of the few protocols deployed on the startup’s mainnet, transaction capacity should be in line with layer-one (L1) results.

Unlike L1 though, transactions on OΞ should be confirmed instantaneously, the startup said.

“No more pending or stuck swaps,” said Optimism, whose focus has been on developing rollups – solutions that perform transactions outside Ethereum’s L1 chain in a bid to scale and reduce costs.

Related: CoinFund, ParaFi Lead $5.2M Seed Round for Liquidity Staking Platform ClayStack

Optimism’s launch comes almost two years after its Unipig exchange release – a demo testnet of Uniswap showcasing what’s possible with L2 solutions to scale transactions and smooth the user experience.

Related Stories

• Polychain Leads $21M Round for Retail-Oriented DEX
• Market Wrap: Bitcoin Drops as Traders Await June CPI Inflation Report

Brazil-based asset manager Hashdex will launch a fully bitcoin-based exchange-traded fund (ETF) that seeks to neutralize carbon emissions, the company announced Tuesday.  

The ETF will use a portion of the management fee to buy carbon credits and offset the carbon produced by the bitcoin held in the fund, Roberta Antunes, chief of growth at Hashdex, told CoinDesk. 

The product will be listed on Brazilian stock exchange B3 as of Aug. 4, Antunes said. Investors have until July 30 to secure the first shares of the Hashdex Nasdaq Bitcoin Reference Price Index Fund (BITH11). 

Related: Brazilian Securities Commission Should Pay ‘Special Attention’ to Crypto Assets, Director Nominee Says

“We understand that bitcoin can contribute greatly to encouraging the use of clean energy around the world. We want to anticipate this movement and offer investors a product that stimulates the sustainable potential of this asset,” said Antunes. She added that the company has the support of the Crypto Carbon Ratings Institute (CCRI). 

According to Hashdex, CCRI will produce annual reports containing calculations and estimates of energy consumption and carbon emissions relating to the mining process of all bitcoins acquired by BITH11. 

Based on the calculations, the ETF will reduce its carbon footprint and seek to invest in stocks that make it feasible to maintain the environment, said Antunes. She said Hashdex will rely on CCRI’s assistance in selecting potential partners and projects that aim to reduce the environmental impact in Brazil and worldwide. 

XP, Itaú BBA and Banco Genial will be the coordinators of the new ETF offering, according to Hashdex.

Related Stories

• Brazil’s Bitcoin Banco Group and Leader Arrested for Alleged Embezzlement of $300M in Crypto
• SoftBank Invests $200M in Brazil Crypto Exchange Mercado Bitcoin
• Australia’s Financial Watchdog Says Bitcoin ETP Could Create ‘Risk,’ Seeks Feedback

An “art-based social experiment” involving non-fungible tokens (NFTs) created by the celebrated British artist Damien Hirst was officially kicked off on Wednesday.

Hirst, who is probably most famous for exhibiting a 14-foot shark in a vitrine of formaldehyde, has launched “The Currency,” comprising a series of 10,000 of his widely recognized “spot paintings” on signed and watermarked sheets of A4 paper, along with digital watermarks in the form of NFTs cast on a blockchain.

The one-week window for applying to own one of the pieces opens Wednesday at 3 p.m. London time.

Related: Soccer’s Copa America Trophy to Be Minted as NFT

Over the past eight months or so, there has been a breathless rush into NFTs, which has seen sports stars, musicians and artists hawking blockchain-based title deeds linked to various items, climaxing in Christie’s auction house selling a digital artwork for $69 million in March. 

However, Hirst’s foray into NFTs, a more measured affair, was over three years in the planning, according to Joe Hage, a collaborator of the artist’s. Hage is the CEO of art services business HENI, which has partnered with Brooklyn, N.Y.-based ConsenSys on the NFT-focused Palm ecosystem to bring Hirst’s work into crypto.

“It’s been a long time coming,” Hage said in an interview. “It’s such a beautiful project in its simplicity, but it’s been a challenge to do it the way we wanted, technologically.”

It also comes with the artist’s inimitable twist. 

Related: Polygon Puts Up Prize Money for Esports Tournaments on Community Gaming

Buyers of “The Currency” (each edition is priced at $2,000) must choose whether to swap the sui generis digital version for the physical artwork. They will have one year from when the NFTs are distributed – or until 3 p.m. BST on July 27, 2022 – to decide to keep either the digital NFT or the A4 piece of paper.

If they have not exchanged their NFT in that period, the physical artwork will be destroyed. Similarly, if they have redeemed their token for the physical work, the NFT will be destroyed. 

“It’s a kind of battle between the people who want the physical art world and people who want some NFT or digital art,” said Hage. “People can decide what they want, like an art-based social experiment.”

Only time will tell which version the market values more.

Related Stories

• ‘Space Jam’ NFTs Launched by Warner Bros. and Nifty’s
• Orioles Slugger and Cancer Survivor Trey Mancini to Release NFTs During MLB’s Home Run Derby

Bitcoin was lower for a second day in a row, further decoupling from the stock market after a report showing U.S. consumer prices rose last month at their fastest pace since 2008.

The largest cryptocurrency is seen by many digital-asset investors as a hedge against inflation, and so the price reaction led to some head-scratching among Wall Street analysts. That’s been the case for the past couple months as the U.S. Bureau of Labor’s consumer price index (CPI) accelerated, with the price of bitcoin tumbling to about $32,800 now from an all-time high near $65,000 in April.  

“Interesting that as CPI inflation has climbed from +1.4% y/y in January to 5.4% in June, bitcoin has essentially been cut in half,” Liz Ann Sonders, chief investment strategist at Charles Schwab, tweeted. 

Latest prices

Related: DeFi Lending: 3 Major Risks to Know

Cryptocurrencies:

• Bitcoin (BTC) $32259, -1.68%
• Ether (ETH) $1919.8, -4.59%

Traditional markets:

• S&P 500: 4369.22, -0.35%
• Gold: $1809.1, +0.13%
• 10-year Treasury yield closed at 1.41%, compared with 1.369% on Monday

Looking at the larger macroeconomic picture puts bitcoin’s price action into perspective: Bitcoin prices quadrupled last year as the U.S. Federal Reserve pumped trillions of freshly printed dollars into financial markets, nearly doubling in one year the amount of money it had created over the prior 107 years. 

But bitcoin’s market reaction to faster-than-expected inflation also might reflect the topsy-turvy nature of financial markets, where the data points matter far less than what the Federal Reserve might do in response to them.

Related: France Wants EU to Give ‘Greater Powers’ to ESMA in Overseeing Crypto: Report

In this case, many economists say that the pace of inflation still appears to be “transitory,” as Fed Chairman Jerome Powell has put it.

“Fed officials are still telling everyone that `inflation is transitory,’ while they pour an unjustifiable $120 billion into the market each month,” Mati Greenspan, founder of the cryptocurrency analysis firm Quantum Economics, wrote Tuesday.

But there’s an increased chance that some of those higher prices might last longer and thus push the U.S. central bank to curtail its easy-money policies sooner than previously expected. That might help explain bitcoin’s weakness – if a “looser-for-longer” monetary policy starts to look less likely.

“A hot inflation report unnerved some investors as expectations grow that the Fed will have to acknowledge that higher inflation will stick around,” Edward Moya, senior market analyst for the brokerage Oanda, wrote in a daily note. “This inflation shock might not be a strong enough catalyst to break bitcoin’s recent trading range.”

Bitcoin’s range gets tighter

Bitcoin is in its eighth week stuck in a range of between roughly $30,000 and $40,000, and the sideways trading is reflected in the anemic cryptocurrency trading volumes of late. 

The fast-moving gains witnessed earlier this year are nowhere to be seen at the moment. According to Alternative.me’s “Crypto Fear & Greed Index,” cryptocurrency markets are currently gripped by “extreme fear,” as noted Tuesday in a report by the Norwegian firm Arcane Research.   

Even so, plenty of buyers have proven ready to pounce whenever bitcoin dips into the $30,000 range. 

“Bitcoin’s consolidation range is getting tighter,” Arcane Research noted. According to the firm, the market is showing healthy signs, with future prices trading at a premium to the spot market. “A more aligned futures market is overall a healthy sign,” the firm said.

The largest cryptocurrency’s price volatility has declined recently, and a look at the historical chart (below) shows just how lackadaisical the market got during last year’s summer months in the Northern Hemisphere. 

Bitcoin dominance inches back up

Ironically given bitcoin’s reputation as an extremely risky financial asset, the largest cryptocurrency might be considered the safest play for now, with some analysts declaring digital assets to be in a bear market.

Over the past seven days, bitcoin is down 4.3%, while ether, the native cryptocurrency of the Ethereum blockchain, has lost 14%. 

“In a downward trending crypto market, bitcoin is the safest bet,” Arcane Research wrote. “This has led bitcoin’s market dominance to increase.” 

“Market dominance” represents bitcoin’s market capitalization as a percentage of all cryptocurrency markets. The gauge started off 2021 at around 70% but fell to about 40% as bitcoin’s price retreated and alternative cryptocurrencies, or “altcoins,” rallied. Lately, it’s rebounded to about 45%. 

Ether staking rewards – for the committed

CoinDesk Research’s just-published second-quarter review includes a chart comparing the returns from staking ether in Ethereum 2.0 with the returns available from depositing ether into decentralized lending apps like Compound, dYdX and Fulcrum. 

“The rates on Eth 2.0 are significantly more attractive,” with an annualized rate of 6.72% versus “at most 2%” from the decentralized finance (DeFi) protocols, the report concluded. 

The drawback is that “staking on Eth 2.0 does not offer users liquidity on their ether and requires a minimum of 32 ETH, worth $72,832 at the close of the quarter,” according to the report. “Over the long term, as transfers are enabled on Eth 2.0 and a greater number of users trust the protocol with their ether holdings, the return for running a validator is expected to decrease and increasingly take on the role of a risk-free interest rate on Ethereum. 

CPI shows big (transitory?) jump in used-auto prices

The U.S. consumer price index jumped by 5.4% in the 12 months through June, exceeding the 4.9% increase expected by economists.

Core CPI, which excludes food and energy prices, rose 4.5% year over year, also higher than economists’ expectations of a 4% increase. On a month-to-month basis, consumer prices rose 0.9%, higher than the expected 0.5%, and accelerating from May’s 0.6% pace. Excluding food and energy, the index also rose 0.9% from the previous month.

The CPI report, released Tuesday, shows an economy that’s working through supply constraints while trying to meet increasing demand as the country reopens, with business lockdowns ending and coronavirus vaccines reaching more people.

“Many of the same indexes continued to increase, including used cars and trucks, new vehicles, airline fares and apparel,” the Labor Department wrote. 

The CPI report is particularly important for some cryptocurrency investors who view bitcoin as a hedge against inflation and currency debasement.

Bitcoin technical analysis

According to Eqonex: “A break below $32,000 will allow the bears to push for a return to support at $29,800, with $28,700 being the key level the bulls must protect. On the upside, the bulls will need to close the market above $33,600 to prevent further downside price action. Above $33,600, we look for $34,600 to limit gains as the market continues to trade is a tight sideways pattern.”

Altcoin roundup

• DeFi Education Fund Turns UNI into USDC: The freshly funded DeFi Education Fund (DEF), a new policy organization supported through Uniswap, turned half of the assets allocated to it by Uniswap governance, 500,000 UNI (around $10 million) into USDC via a trade facilitated by Genesis, it announced on Monday.
• S&P Dow Jones Crypto Indexes: S&P Dow Jones Indices on Tuesday rolled out five new cryptocurrency index products, the first major expansion of its digital assets benchmarking tools since entering the market in May. Headlining the tranche is a “broad digital market,” or BDM, index that includes more than 240 coins, a press release said. “The new sub-indices also provide different slices and dices of the BDM by market cap so that investors can track different segments of the market,” an S&P spokesperson told CoinDesk.
• Retail-Oriented DEX Raises $21M: Clipper, a new decentralized exchange (DEX) that caters to retail traders, closed a $21 million funding round on Tuesday. Olaf Carlson-Wee’s Polychain Capital led the $4 million equity round and participated in the $17 million liquidity round. Other investors included 0x Labs, DeFi Alliance and MetaCartel DAO.

Relevant news

• India’s ICICI Bank Stops Customers From Making Overseas Crypto Investments
• State of Crypto: Binance Is Firmly in the Regulatory Crosshairs
• Bank of England Warns of Crypto Spillover to Mainstream Markets
• 3 Firms Vie to Develop South Korea’s CBDC Pilot

Other markets

Most digital assets on the CoinDesk 20 ended up lower on Tuesday.

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

algorand (ALGO) +2.71%

tezos (XTZ) +0.33%

USD Coin (USDC) +0.03%

Notable losers: 

eos (EOS) -7.49%

Aave (AAVE) -7.09%

uniswap (UNI) -5.73%

Related Stories

• DeFi Gets Proactive About Policy Thanks to a $20M Grant From the Uniswap Community
• Inflation Is Rampant. Is It Time to Buy Bitcoin?

Cryptocurrency regulation reads more like a film script than the traditionally dull and stodgy world of financial rulemaking. 

Just look at the hot water Binance appears to be in now, with regulatory authorities from the U.K., Japan and Germany, to name a few, calling foul against the exchange.

More broadly, the Financial Action Task Force (FATF), a global anti-money laundering (AML) watchdog, is reviewing the crypto industry annually. But the sector is moving so fast that FATF guidance teams are left scratching their heads, wondering how to deal with things like decentralized finance (DeFi).

Related: State of Crypto: Binance Is Firmly in the Regulatory Crosshairs

For now, the regulatory focus is mainly directed at crypto’s third-party intermediaries, the exchanges, trading desks and custodians. When it comes to this arena of virtual asset service providers (VASPs), Jeff Horowitz, chief compliance officer at BitGo, a digital assets custodian,, understands where regulatory tensions and fault lines lie. Prior to joining BitGo in October, Horowitz spent two years steering compliance efforts at Coinbase, the now-publicly listed crypto exchange. 

Asked his opinion on Binance, Horowitz said Binance.US – the arm of the Binance business serving American customers and complying with U.S. regulations – made a “smart move” when it hired former U.S. banking supervisor Brian Brooks. (Brooks previously served as U.S. acting comptroller of the currency, and prior to that worked alongside Horowitz as Coinbase’s chief legal officer.)

“If there’s anybody who can balance being regulated and growing a business, I think Brian will be able to pull it off,” Horowitz said in an interview. “From what I know, Binance.US and Binance.com are two very separate companies. I think embracing regulation is the only path to go for the long run.”

Binance is said to be looking to hire an ex-regulator or government figure like Brooks for the U.K., where a satellite company owned by Binance attempted to become regulated, but was later slapped down by the Financial Conduct Authority (FCA). A Binance spokesperson described the situation as a “misunderstanding” with the FCA.

Related: Binance Suspends Sterling Withdrawals Again: Report

Coinbase, in the Form S-1 it filed when going public, made mention of Binance’s lack of regulatory compliance as potentially giving it an unfair competitive advantage. 

“Coinbase and other entities long ago made a decision to play the long game and go the regulated route. And there is a cost to doing that,” Horowitz said, adding:

“I don’t think anyone wants to change direction there, but they do want this to be a level playing field. I think that is the only way that folks aren’t running to the path of least resistance or finding the one country where they’ll be able to do things that you can’t do in other spaces.”

Have rules, will travel 

Preventing regulatory arbitrage, when the rules are still only half-baked, is the challenge being addressed by the FATF, which has made the recommendation that firms like BitGo and Coinbase share customer identification data along with cryptocurrency transactions over a certain amount, known colloquially as the “travel rule.”

Aside from devising a technical travel rule system everyone is happy with, there’s obvious concern among large established businesses when it comes to sharing sensitive customer information with lesser known third parties. That has led to a piecemeal approach, where firms in more buttoned-up jurisdictions like the U.S., Switzerland and Singapore are rolling out products for registered crypto firms in those regions.

In terms of those sorts of products, Horowitz is proud to have been the initial driving force behind the U.S. Travel Rule Working Group (USTRWG), which he originated when he was at Coinbase. 

“The reality is there are multiple solutions being built and at some point they’ll need to be interoperable. But we were feeling the regulatory pressure to start building,” he said. 

The 30-plus member USTRWG includes a core membership composed of firms like Coinbase, BitGo, Gemini, Fidelity Digital Assets, Paxos and Kraken. No mean feat then to get these bare-knuckle crypto competitors round the table to collaborate.

“I come from traditional finance, where legal and compliance would collaborate and put competition aside for the right thing for the industry,” Horowitz said. “And we just partnered, and I’m pretty proud of that.”

Related Stories

• Binance Payments Cut Off by Clear Junction
• Santander Blocks Binance Payments for UK Customers

French regulators have suggested European Union governments give responsibility to the European Securities and Markets Authority (ESMA) in overseeing cryptocurrencies, according to a Financial Times report.

• France proposed the change Tuesday as part of a package of reforms to strengthen financial regulation across Europe by giving “greater powers” to the EU’s Paris-based, securities markets regulator, ESMA.
• “Granting ESMA the power of direct supervision of public offers of cryptoassets in the EU and of cryptoasset service providers would create obvious economies of scale for all national supervisors and concentrate expertise in an efficient way, for the common European benefit,” said the Autorité des Marchés Financiers (AMF), France’s markets regulator.
• “The aim of these proposals is to endow ESMA with a greater role in order to achieve harmonized, unified supervision, ensuring a level playing field while minimizing the possibility of regulatory arbitrage,” the AMF said in a statement.
• ESMA did not respond to CoinDesk’s request for comment by press time.

Read more: France Tests CBDC Flows With Singapore Using Automated Liquidity Pool

Related Stories

• Market Wrap: Bitcoin Weakens as US Inflation Hits 13-Year High
• Bitmain Co-Founder Wu Says Regulatory Pressure Is Healthy for Crypto: Report
• Chinese Miner The9 Reserves Facilities From Russia’s BitRiver
• Why Crypto Miners Are Expanding Beyond Quebec

Digital payments company Square is set to launch its own Bitcoin hardware wallet, billionaire Jack Dorsey confirmed on Twitter.

The freshly funded DeFi Education Fund (DEF), a new policy organization supported through Uniswap, turned half of the assets allocated to it by Uniswap governance, 500,000 UNI (around $10 million) into USDC via a trade facilitated by Genesis, it announced on Monday.

DEF was created to advocate for policies friendly to decentralized finance (DeFi) globally. Marc Boiron, one of the signatories to the group’s multisig and a member of the group’s steering committee, told CoinDesk that deploying half the funds quickly was part of the plan communicated to UNI holders from the start. 

The fund was formed with 1 million UNI (worth a little over $19 million at press time) after receiving support from holders of Uniswap’s UNI governance token. The vote closed on June 29, with 79.7 million UNI voting in favor and 15.0 million voting against. It’s only the third proposal to successfully pass the Uniswap community’s governance process. Many of the supporters of the proposal were very large wallets, though two of the top 10 largest wallets voting on the measure were in opposition.

Related: DeFi Lending: 3 Major Risks to Know

“I wouldn’t say I feel that we’re behind, but if I think that if we were to wait any longer we would be behind,” Boiron, who also serves as general counsel at the options exchange dYdX, said in a phone call.

A timeline for issuing a budget is delineated in the proposal on the voting page on Uniswap’s website.

The first order of business for DEF is hiring a policy director, its first staffer. The nascent organization shared the job listing on Twitter on July 2.

Decentralized finance (DeFi) has proven to be one of the biggest drivers of activity in the blockchain industry since mid-2020. There’s now more than $100 billion committed to different financial projects across the biggest blockchains. However, these projects don’t adhere to the kind of customer scrutiny that the traditional financial world has, and regulators like the U.S. Securities and Exchange Commission have started to pay attention.

Related: Market Wrap: Bitcoin Weakens as US Inflation Hits 13-Year High

When it was first raised as an idea on May 27 on the Uniswap forums by the Harvard Law Blockchain and Fintech Initiative, the post authors wrote, “Governments around the world are considering how they will regulate decentralized finance, and we need to defend the ecosystem and decentralized ideals.”

Boiron said, “Two things that DEF plans on focusing on [are]: One, funding organizations that have expertise or can easily gain expertise in DeFi and can advance policy or thought leadership or any of the other goals the fund is looking to advance. And, second, to educate others and organizations on policy and DeFi.”

Boiron is a member of an initial committee laid out in the Uniswap proposal. The other members are:

• Larry Sukernik of Reverie
• Rebecca Rettig of Aave
• Jake Chervinsky of Compound Labs
• Katie Biber of Brex
• Sheila Warren of the World Economic Forum (and co-host of a CoinDesk podcast)
• Marvin Ammori of Uniswap Labs

By and large, he said, the crypto policy organizations have not done a lot on DeFi yet but “if we fund them with capital they can use on DeFi specific issues, that’s not capital they have to go find elsewhere,” he said.

Early on, getting more written content in places that can move policy, such as policy papers from think tanks or op-eds in the pages of large newspapers, will be a high priority for the new policy director. The director will also be part of devising a budget for the organization within 90 days of the proposal passing, as promised in the Uniswap proposal.

The funds

The UNI allocation a one-time contribution with no promise of future investment. At roughly $20 million, that’s a very strong starting budget for a trade organization.

For comparison, according to the Center for Responsive Politics, the internet industry spent a little over $80 million on disclosed legislative activities through 2020.

Facebook and Amazon, two companies with market capitalizations over a billion dollars, were the top spenders, at $19.7 million and $18.7 million, respectively. Alphabet (Google’s parent company) came in a somewhat distant third at $8.7 million.

The job listing and the proposal on Uniswap both note that part of the job of the new policy director will be to interface with other decentralized autonomous organizations (DAOs) with an eye toward securing additional funds from other communities. The Harvard group wrote, “We expect other communities will contribute as they wake up to additional threats and rushed proposals targeting them directly.”

The fund has been created as a 501(c)(4), a non-profit designation in the U.S. that allows for slightly more political activity than most non-profits are permitted; while the income of such organizations is not taxed, donations to them are generally not tax-deductible. A source familiar with the group told CoinDesk that it planned to move quite quickly and that the first position should be filled very, very soon.

While the first $10 million is likely to go out the door quickly as DEF gets off to a rapid start, the second half will be spent over about five years, to make the organization sustainable, according to Boiron.

First staffer

The job listing describes a collection of objectives that sound fairly typical of a new policy organization, such as engaging with the media, policymakers and devising an overall strategy. There’s already an existing network of policy organizations focused on crypto in the United States, such as Coin Center, the Chamber of Digital Commerce and the Blockchain Association.

For once it seems like the regulators are ahead of industry. Case in point: the Financial Action Task Force, which coordinates anti-crime regulations in finance globally, has explicitly directed its attention to the DeFi industry’s lack of know-your-customer measures.

While DEF didn’t exist as that conversation was underway, “several of the DeFi education fund members were very involved in exactly that,” Boiron said. FATF is holding off finalizing these rules until at least October.

Kristin Smith, executive director of the Blockchain Association, wrote in an email, “There is so much work to be done educating policymakers in Washington, especially when it comes to DeFi. We welcome additional voices in this space and look forward to coordinating with the DeFi Education Fund.”

The Harvard Law students argued in their initial proposal:

“The need for such an organization is urgent as governments around the world are awakening to decentralized finance and are rushing to regulate the projects without being properly educated on their benefits. Currently DeFi is not at the table – but on the menu.”

UPDATE (July 13, 2021, 17:55 UTC): Corrects Grayscale to Genesis in the first paragraph. Both companies are owned by CoinDesk parent Digital Currency Group.

UPDATE (July 13, 2021, 18:25 UTC): A previous version of this story listed Biber as affiliated with Anchorage, her prior employer.

Related Stories

• Polychain Leads $21M Round for Retail-Oriented DEX
• Superfluid Raises $9M for a New Take on Streaming Payments

Band Protocol, the second-biggest blockchain data provider after market leader Chainlink, has gone live with its next version, dubbed “BandChain 2.”

So-called blockchain oracles, such as Band Protocol, Chainlink and others, pipe external information into digital smart contracts to power areas like decentralized finance (DeFi), the vast majority of which is attached to the Ethereum public ledger.

Back in 2017 Band Protocol chose to build using Cosmos blockchain software, a system focused on helping chains talk to each other and exchange assets seamlessly, looking beyond DeFi’s home on Ethereum.

Related: DeFi Data Feed Service API3 Becomes a DAO

As the current version of Ethereum has gradually become rather crowded and expensive to complete transactions on, faster and more nimble options have sprung up, supporting Band Protocol CEO Soravis Srinawakoon’s interoperability thesis.

“We wanted to be cross-chain compatible from the early days, in the belief that there will be a bunch of blockchains with different designs and trade-offs,” Srinawakoon said in an interview, adding:

“You can see this play out with big players like Solana, Cosmos, Polkadot, BSC [Binance Smart Chain] and Terra. So we positioned ourselves to address the needs of these faster, cheaper and more scalable blockchains.”

A key part of Band Protocol’s move to phase two is to allow data providers to run nodes themselves rather than having intermediaries acquire the data. It’s a shift that will make the system more transparent and decentralized, an approach chosen by other data services such as API3, another data oracle provider. 

Related: Solana-Based Pyth Network Adds Institutional Crypto Exchange LMAX as Data Provider

Srinawakoon says this should eventually bring more traditional players onto the network, providing what he called “premium APIs” with which these firms can monetize that data directly. While Band Protocol is at least an order of magnitude smaller than Chainlink at the moment, the number two network has made great strides when it comes to soliciting data partners, being the first blockchain project to join the OpenAPI Initiative.

As a result, Band Protocol has formed working relationships with the likes of Google, Microsoft and financial data giant Bloomberg, although Srinawakoon pointed out these potential partnerships are still “a work in progress.”

In terms of getting traditional players to adopt his vision of a more transparent and decentralized option, Srinawakoon said the main obstacle is, how do you get these firms to actually use your solution?

“That’s a big hurdle,” he said. “Because it’s actually quite difficult to convince a firm like Bloomberg to run your infrastructure. So we try to make sure it’s as seamless as possible and these players can use existing infrastructure and make it easier to onboard them.”

Related Stories

• If LaMelo Ball Wins NBA Rookie of the Year, This NFT Gets Rarer
• Lithium Raises $5M for Decentralized Oracle Tracking Private Assets