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A cybersecurity firm has unearthed a monero mining script embedded in a public instance of an Amazon Web Service (AWS) virtual machine. Now the firm is raising the question: How many other community Amazon Machine Instances (AMIs) are infected with the same malware?

Researchers at Mitiga revealed in a blog post Friday an AWS AMI for a Windows 2008 virtual server hosted by an unverified vendor is infected with a Monero mining script. The malware would have infected any device running the AMI with the purpose of using the device’s processing power to mine the privacy coin monero in the background – a malware attack that has become all too common in crypto’s digital wild west.

“Mitiga’s security research team has identified an AWS Community AMI containing malicious code running an unidentified crypto (Monero) miner. We have concerns this may be a phenomenon, rather than an isolated occurrence,” the blog post reads.

Monero meets AMI

Related: Los Alamos Scientists Develop AI to Fight Cryptojacking

Businesses and other entities use Amazon Web Services to spin up what are called “EC2” instances of popular programs and services. Also known as virtual machines, these EC2s require an Amazon Machine Instance to function, and businesses leverage these services to lower the costs of compute power for their business operations. AWS users can source these services from Amazon Marketplace AMIs, which are Amazon-verified vendors, or Community AMIs, which are unverified. 

Read more: BlackBerry and Intel Tackle Cryptojacking Malware With New Detection Tool

Mitiga discovered this monero script in a Community AMI for a Windows 2008 Server while conducting a security audit for a financial services company. In its analysis, Mititga concluded that the AMI was created with the sole purpose of infecting devices with the mining malware, as the script was included in the AMI’s code from day one.

Outside of the financial services company that hired Mitiga to review the AMI, the cybersecurity firm is unaware of how many other entities and devices may be infected with the malware. 

Related: Indian Users Almost 5 Times More Likely to Encounter Crypto Hacking: Microsoft Report

“As to how Amazon allows this to happen, well, this is the biggest question that arises from this discovery, but it’s a question that should also be directed to AWS’s (sic) Comms team,” the team told CoinDesk over email.

CoinDesk reached out to Amazon Web Services to learn more about its approach to handling unverified AMI publishers but a representative declined to comment. Amazon Web Service’s documentation includes the caveat that users choose to use Community AMIs “at [their] own risk” and that Amazon “can’t vouch for the integrity or security of [these] AMIs.”

One-off event or one of many?

Mitiga’s principal concern is that this malware could be one of several bugs worming around in unverified AMIs. The fact that Amazon does not provide transparent data regarding AWS use exacerbates this worry, the firm told CoinDesk.

“As AWS customer usage is obfuscated, we can’t know how far and wide this phenomenon stretches without AWS’s own investigation. We do however believe that the potential risk is high enough to issue a security advisory to all AWS customers using Community AMIs.”

Read more: North Korea Is Expanding Its Monero Mining Operations, Says Report 

Mitiga recommends that any entity running a community AMI should terminate it immediately and search for a replacement from a trusted vendor. At the very least, businesses that rely on AWS should painstakingly review the code before integrating unverified AMIs into their business logic. 

Mining malware could actually be the most innocuous form of infection a business may experience, the firm continued in the post. The worst-case scenario includes an AMI installing a backdoor on a business’ computer or ransomware that would encrypt the company’s files with the aim of extorting it for money to regain access.

The attack is the latest in a trend of so-called “crypto-jacking” attacks. Monero is the coin of choice among attackers thanks to its mining algorithm, which can be run easily using a computer’s CPU and GPU. When attackers infect enough computers and pool their resources, the collective hashpower is enough to merit a pretty payday.

If Mitiga’s fears are true, other AMIs may have infected user devices with monero mining scripts and gone unnoticed.

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Next time your phone rings and the caller ID says it’s your bank, telecom company or employer’s IT department, it might be someone else.

That’s because little-discussed types of SIM cards offer the ability to spoof any number, can be encrypted and in some cases allows the user’s voice to be altered and cloaked. Such SIM cards are favored by criminals, and they can make social engineering attacks like those that struck Twitter last month easier to execute. 

A SIM (Subscriber Identity Module) card is essentially what stores information about a phone’s user, including country, service provider, and a unique idea that matches it to its owner. 

Related: Russia, With Bitcoin Playing Bit Part, Tried to Hack 2016 US Election, Senate Report Finds

While spoofing a phone number is an old trick, these SIMs offer a streamlined way to do it. They underscore the wide array of vulnerabilities companies and individuals face when trying to protect against social engineering attacks. 

Twitter was the victim of a phone spear-phishing attack, in which a person posing as a company insider (often supposedly from the IT department) calls a real employee to extract information. That attack, which led to the takeover of 130 accounts, including high-profile ones such as Elon Musk and Kanye West, to scam their followers out of $120,000 worth of bitcoin, has brought increased attention to the practice. Tools like these SIMs are one way for attackers to try and stay ahead of suspecting companies. 

See also: ‘Crypto Instagram’ Is Becoming a Thing, Scams and All

“Other companies might be a softer target for these same techniques,” said Allison Nixon, chief research officer at Unit221B, a cybersecurity firm. “And they’re just not going to be prepared in the same way that battle-scarred telecommunications companies have been.”

Related: Tor Network Compromised by Single Hacker Stealing Users’ Bitcoin: Report

Indeed, since the Twitter hack, there has reportedly been a rise in spear-phishing attacks across companies, individuals, and cryptocurrency exchanges.

White SIMs

The cards are known as White SIMS, owing to their color and lack of branding. 

“White SIMS make it extremely easy to conduct outgoing spoofed calls,” said Hartej Sawhney, Principal at cybersecurity agency Zokyo. “They are illegal basically everywhere.”

Given the wide array of services SIMs such as these offer, they make social engineering just a little easier, and sometimes that’s all an attacker needs. SIMS can generally be bought on the Dark Web or related sites, using bitcoin. 

Social engineering often relies on an attacker tricking someone into doing something he or she shouldn’t. It can look as simple as a phishing attack, but can also involve more elaborate means such as SIM swapping, voice spoofing or extensive phone conversations, all to gain access to someone’s information or data. 

See also: Student Gets 10-Year Jail Term for SIM-Swap Crypto Thefts Worth $7.5 Million

For years the cryptocurrency community has been the target of SIM swaps, a subset of social engineering. It involves an attacker fooling a telecommunications company employee into porting the victim’s number to the attacker’s device, which lets them bypass two-factor authentication protections to an exchange account or social media profile. 

“Spoof calling is a flaw at the protocol layer and is not something that can be fixed overnight. It requires essentially rewriting the internet,” said Sawhney. “What’s interesting to note is that 99% of telecom employees have access to all customer accounts, meaning you only need to social engineer one of them.”

These SIMs present challenges for those working to protect against social engineering, including banks and other financial institutions. 

A business like any other

Social engineering attackers pick their targets by weighing the money, time and effort required to dupe them against the payoff, said Paul Walsh, CEO of the cybersecurity company MetaCert.

“It’s easier, cheaper and faster to compromise a person a human through social engineering than it is to try and take advantage of a computer or computer network,” said Walsh. “So any tools or processes like these that make that job quicker and easier for them is obviously good, in their eyes.”

The ability to mimic a specific phone number is what makes these SIMs dangerous. For example, spam callers often spoof their number to make it seem they’re calling from a number in the recipient’s local area. But these SIM cards allow an attacker to spoof a specific number, making it more likely someone will answer the phone. 

See also: A New Ultrasonic Hack Can Exploit Your Siri

A person with a number-spoofing SIM could easily imitate the number of Bank of America, for example, said Walsh, making it more likely people would give out sensitive personal information. If the number comes up as Bank of America, why would you have reason to immediately think otherwise?

Walsh also said a lot of systems will automatically detect the number you’re calling from, and use that as a piece of information verifying your identity. 

“So you call your bank and if you can confirm with your phone number and maybe one other piece of information, you gain access to all kinds of information like your bank balance and last transaction,” said Walsh. “That information alone might be useful in the context of social engineering by calling the bank without additional information you need to target someone, and acquiring it through the bank.”

Voice mimicking tech on the way

What concerns Haseeb Awan, CEO of Efani, a company that specifically works to protect against SIM hacks, is the way these SIMS might be used with other tech, such as voice spoofing. Technology that can be used to recreate someone’s voice is readily available online, and people’s voices can be reconstructed from just a few snippets of speech. 

“If you’re able to replicate anyone’s voice, and couple that with their phone number, that’s what starts to worry me the most,” said Awan. “A lot of companies are now using your voice as an authentication method, so this is where the risk of fraud is going to get really high.”

See also: North Korean Hackers Ramp Up Efforts to Steal Crypto Amid Coronavirus Pandemic

And while most people might think they’d be able to tell if someone’s voice was altered, or sounded off, Awan, who was born in Pakistan but lives in the U.S., is quick to point out the tech has gotten so good he’s seen it able to replicate his accent. In fact, one study found our brains fare poorly at differentiating a fake voice from a real one, even when we’re told it is going to be fake. 

Unlike the near-universally illegal White SIMs, encrypted anonymous SIMs that also alter your voice in real time can be easily purchased in the open. For example, the U.K. company Secure Sims, which did not respond to a request for comment by press time, offers one for sale that disables your location and encrypts data, among a variety of other features. 

It’s listed for sale for £600-£1,000 ($794-$1,322).

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While open positions in bitcoin (BTC) options have risen to near record-high levels, it’s not necessarily a good thing for those hoping for the rally in the cryptocurrency to continue.

• The total number of outstanding BTC options contracts – open interest (OI) – increased to $2.10 billion Thursday – just shy of the all-time high of $2.11 billion in late July, per data from Skew. 

• On its own, high open interest can indicate existing trends are likely to be sustained – suggesting BTC’s recent rally from $10,650 could continue.
• But the number of bearish puts relative to bullish calls has recovered from -10.3% to -3% in the past four days. As the graph below shows – traders are offloading much of their call options onto the market.

• This suggests bullish speculation is beginning to ease – a sign of investors anticipating consolidation or price drop
• Indeed, BTC has already pulled back more than 5% from the 13-month high above $12,400 it reached on Monday. 
• Unless buying action comes quick, downwards momentum could push prices down to $11,000, QCP noted earlier this week.

See also: Odds of Bitcoin Hitting Record High in 2020 Are (Slightly) Up, Options Data Suggests

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It’s hard to participate in the influencer economy from Cuba, but YouTuber Erich García Cruz is making it work. 

“We do not have access to Visa cards or Mastercard products because of the embargo,” Cruz explained. “We are monetized through YouTube.” 

Bitcoin is one of many tools he uses to turn those dollar earnings, in foreign bank accounts, into rent and grocery money in Cuba. Most of the freelancers around the world using bitcoin as borderless money appear to be programmers or other types of technical workers. However, Cruz is among the slowly growing number of content creators relying on bitcoin as well. 

Related: Bitcoin Options Open Interest Nears All Time High – But Rise in Puts Could Presage Drop

Cruz monetized his tech-centric YouTube channel back in November 2019 and started working with bitcoin around July 2020, inspired by tales from local friends. It’s harder to move around and do business outside these days, in Cuba as it is everywhere. Meanwhile, Cruz said more people in the local tech community are learning about bitcoin. 

“Thousands of Cubans buy cards at Bitrefill to consume those digital services by paying with cryptocurrencies. There is no other way,” Cruz said.

Bitcoin in Cuba

It’s impossible to say definitively how many people in Cuba use bitcoin. Brazil-based Cuban expat Claudia Rodriguez said her exchange served nearly 7,000 Cuban user accounts by November 2019. As of August 2020, she said the exchange’s operations there stopped for legal reasons, including a lack of regulatory clarity from the Central Bank of Cuba. 

Read more: Cuba Eyes Cryptocurrency as Solution to Sanctions, Financial Woes

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“Due to the economic crisis caused by the pandemic and the new restrictions in Cuba, cryptocurrencies can be an efficient solution,” Rodriguez said. “It is a shame that we cannot continue to support the community at this time.” 

Regardless, Cruz estimated there are now roughly 50,000 Cuban bitcoin users in this socialist nation of roughly 11.3 million people. He, like many Cubans sanctioned by the U.S., doesn’t acquire bitcoin through exchanges. Instead, Cruz earns his money abroad, with the help of a relative. The relative may send Cruz bitcoin as remittances or other forms of money as well. 

“The money earned in Cuba is exchanged in the informal market to later buy [goods] in state-run or private stores,” Cruz said. “There’s Cubans even making money with [both crypto and fiat] trading.”

Influencer economy

Cruz said his reliance on bitcoin swiftly went from 10% of his earnings to now a third of his household income. 

Looking for products and services to manage his newfound crypto showed him there’s an opportunity for his YouTube channel to monetize Spanish-language crypto content. 

Read more: Bitcoin in Emerging Markets: Latin America

“I realized that all these [crypto] platforms are simply pyramid schemes and scams that take advantage of ignorance,” Cruz said. “That is why I considered addressing those issues on [my] Bachecubano channel, to offer our correct point of view on how to use them.”

Cruz is now one of a small and widely dispersed group of Latin American influencers who use bitcoin as a tool for their daily work. 

Read more: ‘Crypto Instagram’ Is Becoming a Thing, Scams and All

Fabiano Dias, vice president of business development at the startup Bitwage, said a couple of Latin American YouTubers now use bitcoin as an international payments tool.

“We also serve YouTube streamers, which are few in numbers but large in volumes. It’s up to $20,000 a month for some of them,” Dias said, adding they are a minority among hundreds of monthly users from the tech industry. 

Overall, Dias said Bitwage facilitated $2 million worth of transactions in July 2020, including work with companies like Paxful, half of which was in bitcoin. Dozens of YouTubers rely on Bitwage for fiat money management, especially in Argentina and Brazil. A couple of them use it for acquiring bitcoin as well.

As for Cruz in Cuba, he described the local crypto scene as “growing and gaining strength” throughout 2020. 

“It’s a solution,” he said. “A pretty effective solution.” 

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Three Swiss crypto companies say they’ve successfully completed the first automated Bitcoin transaction that meets anti-money laundering (AML) standards.

• Zug-based Crypto Finance AG and 21 Analytics, and Geneva’s Mt Pelerin announced Friday 21 CHF worth of bitcoin (~$23) had been sent in a live demonstration of a new transaction that automatically complied with the AML requirements set by the Financial Action Task Force (FATF) and Swiss markets regulator.
• The transaction took place late Thursday.
• FATF holds virtual asset service providers (VASPs) to the same standards as traditional bank transfers.
• Known as the Travel Rule, the FATF standard requires VASPs to exchange data that identifies both the originator and the beneficiary on any transaction over $1,000.
• Since the rule came into force last year, intermediaries have so far been forced to do this manually – but the live demonstration shows that transactions now can be sent with all the AML details automatically added.
• “The transfer was fully automated using TRP [Travel Rule Protocol], instead of manually creating PDFs and sending that for each transaction, which happened to be the case for FINMA-regulated Swiss VASPs so far,” said Lucas Betschart, CEO and founder 21 Analytics in an email.
• The live demonstration – viewable here – between Crypto Finance and Mt Pelerin was powered by 21 Analytics’ AI regtech, and ran over Swiss FATF travel rule system OpenVASP and the Travel Rule Protocol (TRP), another institution-focused solution led by ING Bank.
• It also used the industry’s data standard, the InterVASP Messaging Standard (IVMS101). 

See also: FATF Plans to Strengthen Global Supervisory Framework for Crypto Exchanges

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INX Ltd. said it will launch its long-awaited landmark initial public offering (IPO) as soon as Monday, capping a nearly two-year journey for the startup cryptocurrency and security token exchange.

• “It is anticipated that the offering will begin on Aug. 24, 2020, or shortly thereafter,” the Gibraltar-based company said in a press release Thursday.
• As previously reported, INX has priced its 130 million tokens, which are to run on the Ethereum blockchain, at $0.90 each, totaling $117 million in gross proceeds. This was smack in the middle of the target range of $0.80 to $1.00 per token.
• After offering expenses and fees to advisory firm A-Labs, the sale would net up to $111 million, according to INX’s latest filing with the U.S. Securities and Exchange Commission (SEC).

The net proceeds would be used to:

• Build INX Trading Solutions, a regulated exchange for cryptocurrencies, security tokens and derivatives.
• Build a cash fund to protect the company and its customers in the event of a data breach, trading execution error or counterparty default.

The instruments on offer are a hybrid of utility and security tokens.

• Investors could use them to pay trading fees on INX’s platform.
• The tokens would also entitle holders to a share of company profits.

Related: Swiss Crypto Firms Say First Automated, AML-Compliant Bitcoin Transfer Completed

INX’s sale would mark a milestone for the blockchain industry.

• It would be the first security token offering (STO) registered with the SEC, and thus legally marketable to mom-and-pop investors.
• Previous STOs were unregistered and limited to wealthy investors, with the issuers simply filing notices to the regulator; the initial coin offerings (ICO) of the 2017-2018 boom were conducted with little if any regard for compliance.
• INX’s sale would also be one of very few IPOs in the blockchain industry and almost certainly the largest.

It’s been a long road for the company, whose U.S. operations are led by Executive Managing Director Alan Silbert. (His brother Barry is the CEO of Digital Currency Group, the parent company of CoinDesk.)

• INX first signaled its intent to go public with a draft registration statement submitted in January 2018.
• The company filed its F-1 prospectus (the SEC’s form for foreign issuers) almost exactly a year ago.
• To comply with know-your-customer (KYC) regulations, INX has written a smart contract that allows only wallet addresses belonging to investors that have been vetted and put on a “whitelist” to receive the tokens.
• TokenSoft, a registration agent that specializes in blockchain token offerings, is doing the KYC checks and maintaining the registry of investors.
• Last month, INX hired Paz Diamant as its chief technology officer, regulatory filings show. Diamant is the former managing director of R&D and product at eToro, where he built the brokerage’s crypto trading system, according to his LinkedIn profile.

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Cryptocurrency exchange Mexo, developed with Latin American users in mind, launched on Thursday, backed by global venture capital firm and blockchain incubator Krypital Group. 

• According to a statement from the firm, Mexo will offer a range of services to its Latin American users including spot trading, contract trading, P2P lending, and a trading academy.
• Mexo’s chief marketing officer, David Yao, said the services were developed because crypto users in Latin America have said they were looking to access more advanced products through a convenient mobile application.
• Mexo, together with its Spanish language website, is designed to meet the growing demand for digital assets in Mexico and the rest of Latin America, the firm said in its statement.
• The exchange launched at 6:00 p.m. Mexico City Time (11 p.m. UTC) on Aug. 20. 

Read More: Why it’s Time to Pay Attention to Mexico’s Booming Crypto Market

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Bitcoin’s price is trending up while August has been a hot month for the cryptocurrency in decentralized finance.

• Bitcoin (BTC) trading around $11,857 as of 20:00 UTC (4 p.m. ET). Gaining 1.3% over the previous 24 hours.
• Bitcoin’s 24-hour range: $11,568-$11,891
• BTC above its 10-day and 50-day moving averages, a bullish signal for market technicians.

Bitcoin is on the uptrend, going as high as $11,891 with buyers outnumbering sellers in the market Thursday. ”This is similar to what we saw on Sunday, Aug. 9 – a quick move from $11,500 to $12,000 and then back to $11,300,” said John Willock, CEO of crypto asset manager Tritum. “Maybe we’ve got $13,500 in the next phase up in the coming days,” he added. 

Read More: Bitcoin Risks Deeper Drop if Dollar Rebounds

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David Lifchitz, chief investment officer for quant trading firm ExoAlpha, expects a bitcoin price bull run to proceed should it overcome a nearby hurdle. “All in all, $12,500 is the key level to watch for a sustainable breakout on strong volume,” he said. ”Anything different will be a fake, as it can be seen many times in a historical chart of BTC/USD.”

In the bitcoin options market, open interest (the number of outstanding contracts) is starting to level off after passing the $2 billion mark for the first time since July.

Juicy returns in the DeFi market are making traders lose interest in options, according to Viashl Shah, founder of derivatives exchange Alpha5. “Every derivatives trader that was looking for incremental yield and levered returns has been besotted by the magnitude of moves in DeFi,” Shah told CoinDesk. “So, naturally, cost of capital dictates at least some attention that way.”

Read More: Stablecoin Demand May Drop if Traders Abandon Bitcoin ‘Cash and Carry’ 

Bitcoin on DeFi doubles in August

Related: Binance Launches DeFi Staking With Cryptos Kava and Dai

Ether (ETH), the second-largest cryptocurrency by market capitalization, was up Thursday, trading around $415 and climbing 4% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

Read More: Algorand’s Move Into DeFi Gives ALGO Price a Boost

At the start of the year, the number of bitcoin locked in decentralized finance, or DeFi, stood at 1,453 BTC. That amount is now up to 48,922 BTC as of Thursday. In August alone, bitcoin in DeFi has more than doubled from 20,890 BTC at the first of the month. Decentralized finance is giving investors new avenues to generate income, or “yield,” and, as a result, bitcoin owners have over $570 million worth of BTC at current prices locked in the DeFi ecosystem. 

Michael Gord, co-founder of trading firm Global Digital Assets, says many traders are taking gains and buying more bitcoin given the potential ephemeral nature of DeFi. “I’d assume that DeFi profits are being put back into BTC as the safe asset,” he told CoinDesk. “DeFi long term will revolutionize finance, but this short-term bubble is bound to pop eventually, in my opinion.”

Other markets

Digital assets on the CoinDesk 20 are mostly in the green Thursday. Notable winners as of 20:00 UTC (4:00 p.m. ET):

• 0x (ZRX) + 22.3%
• qtum (QTUM) + 16.5%
• basic attention token (BAT) + 16.2%

Read More: OMG Doubles as DeFi and Record Ethereum Fees Create ‘Perfect Storm’

One notable loser as of 20:00 UTC (4:00 p.m. ET):

• chainlink (LINK) – 3.1%

Read More: High Ethereum Fees Push Tether to Its Eighth Blockchain, OMG Network

Equities:

• In Asia the Nikkei 225 ended the day slipping 1%, dragged down by manufacturer Dainippon losing 5.1% and Yahoo Japan down 4.5%.
• In Europe, the FTSE 100 closed in the red 1.6% as U.S. unemployment numbers jumped to 1.1 million this week.
• The United States’ S&P 500 gained 0.30% as tech stocks again made gains and has been the best-performing sector of the index so far this year.

Read More: Ren Just Had a Great Week as Demand for Bitcoin on DeFi Rises

Commodities:

• Oil is is flat, up 0.05%. Price per barrel of West Texas Intermediate crude: $42.77.
• Gold was in the green 1.2% and at $1,927 as of press time.

Read More: Collapsing Bitcoin Futures Premium Offers Glimpse of New Digital Money

Treasurys:

• U.S. Treasury bonds all slipped Thursday. Yields, which move in the opposite direction as price, were down most on the 10-year, in the red 5.2%.

Read More: BlockFi Raises $50M as Crypto Lending Soars

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Stablecoin issuer Tether shifted 1 billion in USDT from the Tron blockchain to the Ethereum blockchain in an early morning chain swap Thursday.

• Swapped in conjunction “with a 3rd party,” according to a Tether tweet, the token transfer drains 23% of TRON’s USDT reserves, which previously stocked $4.3 billion in the stablecoin.
• It also pumps up Ethereum’s reserves, where well over half of the nearly $13 billion circulating USDT already reside. Ethereum is a hotbed for decentralized finance projects and as such a popular spot for USDT.
• Tether has played a notable role in the Ethereum blockchain’s recent congestion, according to Decrypt.
• Big-dollar USDT transfers and billion-token burns spotted by the exchange-tracking Twitter account Whale Alert suggest that Binance may be the third party that ordered the swap.

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ETC Labs says it’s developed an action plan to protect its oft-targeted Ethereum Classic blockchain against 51% attacks.

• Shaken by weeks of damaging hacks, ETC Labs rolled out on Wednesday a series of immediate security changes and long-term proposals that it says will bolster Ethereum Classic, the origin chain of Ethereum.
• For now, the blockchain-supporting organization will move to stabilize Ethereum Classic’s plummeting hashrate, increase network monitoring, coordinate closely with exchanges and deploy a finality arbitration system.
• These immediate fixes will shore up Ethereum Classic in the short-term, ETC Labs said. More wide-ranging patches that all require community consensus are now in development and thus will take more time.
• Among the long-term proposals: changing Ethereum Classic’s proof-of-work mining algorithm, introducing a treasury system, and adding 51% attack resistant features such as PIRLGUARD.
• Those consensus-only fixes could deploy in the next three to six months, ETC Labs said.

Read more: Ethereum Classic Suffers Second 51% Attack in a Week

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Bitcoin’s Lightning Network has reached a significant milestone. An important capacity limit meant to protect users of the nascent protocol is being tweaked, toppling a barrier to entry for companies looking to adopt the novel payment system. 

LND, a leading Lightning Network implementation from startup Lightning Labs, has announced it has adopted support for wumbo channels. Going forward, users can deposit more money into Lightning Network channels than before, as well as send larger transactions.

Read more: What Is Bitcoin’s Lightning Network?

Related: Dust Attacks Make a Mess in Bitcoin Wallets, but There Could Be a Fix

ACINQ’s eclair and Blockstream’s c-lightning both adopted a form of wumbo earlier this year. According to LND’s fresh release notes, the node software now allows users to opt into “accepting” and “creating” wumbo channels.

What is wumbo?

The word “wumbo” comes from, believe it or not, SpongeBob SquarePants, a cartoon series about a talking sponge that works at a burger joint under the sea with an assortment of sea friends. In one scene, SpongeBob’s starfish friend Patrick Star teaches him the word “wumbo.” 

“You wumbo, I wumbo,” Star says, pointing to Spongebob, then himself. Lightning’s “wumbo” is similar in that two users have to agree to wumbo before they wumbo.

There are two parts to wumbo. The first part removes the limit to the total amount of bitcoin that can be held in a channel: This limit is currently capped at 0.16777215 BTC, worth about $1,988 at press time. The second strips away the limit to how large an individual payment can be: That limit has been 0.04294967 BTC, worth about $508 at press time.

Related: Bitcoin DeFi May Be Unstoppable: What Does It Look Like?

Read more: This Spongebob-Themed Tech Proves That Bitcoin’s Lightning Is Advancing

Wumbo isn’t technically difficult; in fact, it’s very simple. With wumbo channel support, a user can signal he or she wants to go beyond the aforementioned limits and find other nodes to connect to that also support higher limits.

Developers added the limitation to protect users from pouring too much money into Lightning, as it’s still a new and experimental technology. As such, one reason wumbo is a big deal is it is a sign that the payment technology is maturing.

“We view shipping wumbo in LND as a sign that the software has progressed to a certain point where advanced users, companies, and node operators can open larger channels. These larger wumbo channels enable a better user experience with larger transactions on the network and more efficient capital usage for startups and node operators,” Lightning Labs CEO Elizabeth Stark told CoinDesk.

That’s not to say they don’t think people still need to be careful working with this new technology.

“That said, we do not encourage people to go all ‘DeFi’ on Lightning (looking at you, YAM), as we believe people should balance the risks of deploying capital on a new protocol that could have bugs with the benefits of larger channel sizes,” Stark added.

Why wumbo?

Average Lightning users might not be impacted much by wumbo. If they’re using the Lightning Network to send small amounts, then this lift on capacity won’t make a difference to them. 

Larger entities such as business or exchanges, on the other hand, might want to take advantage of a larger capacity.

“Most users can likely get by without wumbo channels, but larger nodes or exchanges/services may really benefit from the ability to manage a smaller set of larger channels,” LND developers explain in the release notes.

Read more: To Beat Online Censorship, We Need Anonymous Payments

That’s why some developers think wumbo will take the Lightning Network to the next level. They think it will attract wider adoption of the Lightning Network among larger entities, making it accessible to more bitcoin users.

“Most of the major node operators and startups run our LND implementation, so unless they’ve forked LND and added Wumbo themselves (which a few have, and this was riskier without official support), they would not have had this feature enabled,” Stark said.

Still, some companies have already added support for wumbo without waiting for an official route to do so. As such, Acinq CEO Pierre-Marie Padiou is skeptical LND adding support for wumbo will make a huge difference.

“It can’t hurt, but larger nodes […] have already switched, so the improvement has probably already taken place,” he told CoinDesk.

Are we ready to wumbo?

Channel and transaction limits were put in place to protect users from potentially losing large amounts of bitcoin by sending it over an experimental network. What makes developers think Lightning is now ready to live without these limits?

“I think we’ve gained experience, and with that comes confidence,” said Blockstream engineer Rusty Russell, though he still expressed caution: “As always, it’s best to think of Lightning as your petty cash, rather than your life savings.”

Read more: Grasping Lightning: Mapping the Key Players in Bitcoin’s Next Phase

People have a choice – they obviously don’t have to use the ballooned capacity that wumbo channels allow. “With regard to security, with Eclair you can decide whether or not you decide to allow large channels and what the maximum channel size you accept [is]. We also scale the number of confirmations for the funding transaction depending on the amount of funds at stake,” Padiou told CoinDesk.

Russell also pointed out that the payment limit of 0.16777215 BTC was far less valuable, equivalent to about $10 dollars, when it was originally proposed years ago. As bitcoin’s price has increased over the last several years, this value limit has ballooned to almost $2,000. So, to a degree, the limit has naturally lifted over time.

“So we got wumboed already without having to even put our belt on,” Russell said, referencing the belt SpongeBob wears in the wumbo scene.

Related Stories

• ‘Rat Poison Squared on Steroids’: What’s New in Bitcoin’s Latest Lightning Release
• To Beat Online Censorship, We Need Anonymous Payments

Rep. Tom Emmer of Minnesota will accept crypto donations for his campaign.

The chairman of the National Republican Congressional Committee (NRCC) and member of the Congressional Blockchain Caucus opened his first cryptocurrency town hall on Thursday with the announcement, telling CoinDesk that BitPay will process all donations. 

The town hall, announced last week, was held in conjunction with the Chamber of Digital Commerce (CDC) to celebrate innovators in the crypt industry and to encourage engaged voters to participate in political discourse.

Related: Pro-Bitcoin Senate Candidate Wins Primary Race in Wyoming

CDC founder and President Perianne Boring told CoinDesk contributors can make donations to Emmer’s campaign using any of the eight cryptocurrencies supported by BitPay, including bitcoin, bitcoin cash, Gemini’s U.S. dollar stablecoin and Circle’s USDC.

Emmer is not the first politician to accept crypto contributions. In 2015, U.S. Sen. Rand Paul (R-Ky) accepted bitcoin to fund his presidential campaign. Last year, Democrats Rep. Eric Salwell of California and Andrew Yang both accepted crypto donations for their presidential campaigns as well. But, according to Boring, Rep. Emmer’s initiative is different. 

“He’s engaging the community. It’s more than just adding a button on his campaign website. It’s about including more people in the political process, especially young people who prefer to leverage advanced technologies,” Boring said.

The crypto town hall was described as a “celebration” of innovators in the crypto space, and featured industry leaders BitPay CEO Stephan Pair, Circle CEO Jeremy Allaire, Ripple CEO Brad Garlinghouse, eToro Managing Director Guy Hirsch, Bloq co-founder and Chairman Matthew Roszak as well as Paxos co-founder and CEO Chad Cascarilla. 

Related Stories

• After Years of Resistance, BitPay Adopts SegWit for Cheaper Bitcoin Transactions
• The COVID-19 E-Commerce Boom Hasn’t Trickled Down to Bitcoin, Despite Advantages
• US Fed Chair Says Private Entities Should Not Help Design Central Bank Digital Currencies

BlockFi has raised a Series A, B and C within a 12-month span, an ICO’s investors can’t find the people they’re trying to sue and stablecoin demand may become unbalanced by traders ditching a “market-neutral strategy.” 

You’re reading Blockchain Bites, the daily roundup of the most pivotal stories in blockchain and crypto news, and why they’re significant. You can subscribe to this and all of CoinDesk’s newsletters here. 

Top shelf

Semper BlockFi?
Crypto lender BlockFi closed a $50 million Series C led by Morgan Creek Digital and with participation from Peter Thiel’s Valar Ventures – the lead investor in BlockFi’s A and B rounds – Castle Island Ventures, Winklevoss Capital as well as NBA player Matthew Dellavedova and two unnamed university endowments, among others. BlockFi has now raised $100 million in the past 12 months, has accrued $1.5 billion in crypto assets on its lending platform, and sees about $10 million in monthly revenue. So why the raise? CEO Zac Prince said BlockFi is still trying to add personnel and keep equity capital stable in order to quickly expand geographically, CoinDesk’s Nathan DiCamillo said. 

Related: First Mover: Collapsing Bitcoin Futures Premium Offers Glimpse of New Digital Money Market

Error 404: promoters not found
Investors in a $12 million ICO want their money back, but the celebrity couple behind the project has disappeared, CoinDesk’s Leigh Cuen reports. A district court ruled investors in the marijuana project Paragon can pursue a class action. The project appears to have been helmed by Jessica VerSteeg, a former Iowa beauty queen and reality star, and her husband, Russian entrepreneur Egor Lavrov. Rapper “The Game” is also listed as a defendant, among several technologists. It’s unclear if any of the project’s stated plans to revolutionize the marijuana industry would have materialized had it not been for legal action from the SEC in 2018.

DeFi headlines
Algorand has unveiled smart contract capabilities aimed at luring DeFi projects away from its larger competitors. New “stateful smart contracts” store certain information in user accounts, rather than its own code, increasing efficiency and reducing fees. ALGO tokens have jumped 20% on the news. Binance users can now stake dai and kava tokens as the exchange’s DeFi-centered platform goes live.

Election experiments 
Russian communications giant Rostelecom has published details of its blockchain-based voting system that will be deployed in two local regions. The system will be based on a private enterprise version of the Waves blockchain, with nodes located only by Rostelecom servers. “All information from the enterprise voting chain will be published on a special portal that can be accessed by anybody,” CEO Sasha Ivanov said. A previous pilot saw personal information of voters on the blockchain system end up on darknet markets. Authorities deny the allegations. Russia’s Department of Information Technologies will host a separate voting pilot during the by-elections this fall.

Harried: Cash & carry
Institutional demand for stablecoins may cool because yield on “carry trades” has been cut in half since Monday. Carry trading, a market-neutral strategy, involves buying an asset at spot prices and simultaneously selling a futures contract against it when the futures contract is trading at a premium to the spot price. The decline in the carry strategy yield – pushed by declining yields – could also mean a cut in  demand for dollar-backed stablecoins like tether. CoinDesk’s Omkar Godbole reports. “Stablecoins are widely used as funding currencies and there has been a high demand for these dollar-backed cryptocurrencies from institutions,” Skew CEO Emmanuel Goh said. Carry trades have been a main driver of stablecoin issuance this year.

Quick bites

• Pro-bitcoin U.S. Senate candidate Cynthia Lummis wins her primary race in Wyoming. (Nikhilesh De/CoinDesk)
• South African regulator advises clients of crypto trading network Mirror Trading: Take your money and run. (Danny Nelson/CoinDesk)
• Hawaii welcomes crypto exchanges back with a new regulatory sandbox. (Sandali Handagama/CoinDesk)
• The Bitcoiners who live “permanently not there.” (Daniel Kuhn/CoinDesk)
• How DeFi is ushering in the age of “cypherpunk governance.” (Jason Nelson/Decrypt)

At stake

Related: Blockchain Bites: Bitcoin in Space; Prime Brokerage Race; Nodes You Can’t Trace

Earlier this week, Axios reported tensions between investors and developers have delayed the Filecoin project. 

According to the report published Tuesday, investors in Protocol Labs, a for-profit incubator of anticipated Web3 projects like IPFS and Filecoin, believe they are owed disbursements of Filecoin’s native token.  

Filecoin raised about $205 million in a 2017 ICO, in which some – but not all – of Protocol Lab’s seed round backers participated. Axios reports Protocol Labs “retained a percentage of the tokens,” with regular distributions being made to CEO Juan Batiz-Benet and early employees, “which in theory would be value accruing to the equity investors.”

Unnamed parties are apparently in mediation over receiving a portion of these tokens, which could potentially delay Filecoin’s imminent launch next month if not resolved, reporters Dan Primack and Kia Kokalitcheva intuit. 

Fortune’s Jeff John Roberts read the news and added this insight: Filecoin is a representation of the entire blockchain space where it is common to raise millions of dollars through novel funding mechanisms, and frequently, fail to deliver. 

Part of the issue is, it’s hard building a new, open and fair version of the internet or the financial system. “But there is another reason to be skeptical, and that is the lack of incentive that blockchain companies have to succeed,” he writes. 

Front-loaded with cash, it’s easier to “travel the world” rather than “toil over blockchain code,” Roberts writes. 

While Filecoin is no stranger to delays (in February 2019, developers pushed back the launch of its first testnet. The mainnet had been estimated to deploy in the first quarter of 2019, then the second quarter, then to Q3/Q4 2019, then between July 20 and Aug. 21, 2020, now in a month), its network participants are less cynical. 

Despite a year of delays, Filecoin has found an incentivized community in China, and has onboarded miners, after it emailed hard drives containing climate data to future (probable) network participants.

In Benet’s own words from Consensus: Distributed: “Web 3 is about creating a platform that is decentralized, that puts human rights foremost, and can build a much freer and open internet and lock it in place.” 

Blockchain and cryptocurrency have already “changed the underlying guts and rails of major industries,” he said. But it hasn’t yet solved the dilemma between project developers and their investors. 

Market intel

Greens & reds
Bitcoin’s price pullback may worsen as the U.S. dollar shows signs of life. The dollar index, which tracks the greenback’s value against that of other reserve currencies, has jumped 1% to 93.000 in the past 24 hours – the biggest single-day rise in two months. This jump comes after July’s Federal Reserve meeting minutes show the central bank is not planning on implementing controversial yield curve controls on bonds. The correlation between bitcoin and the U.S. dollar has been historically weak but has picked up in the past month as investors look for alternative safe-haven assets, CoinDesk markets reporter Omkar Godbole writes.

Rendering Ren
Prices for ren, the token for the RenVM DeFi network, surged by more than 100% over the past week. That’s because the total amount of renBTC, a tokenized bitcoin that is locked in RenVM, broke 10,000 on Monday, according to data collected by DeFi Pulse. The total value locked in RenVM jumped to more than $174 million on Monday from approximately $59.9 million a week earlier. There is a growing demand for having bitcoin (BTC) on the Ethereum blockchain as it is increasingly used in DeFi, CoinDesk’s Muyao Shen reports. 

Tech pod

OMG! Fees!
Tether has added its eighth blockchain, OMG Network, to help alleviate congestion on the popular rail Ethereum. OMG is touted as a scaling solution to handle thousands of transactions at a third of the cost of Ethereum, which is currently experiencing a record high gas fees, or the price to run transactions. The third-largest cryptocurrency with a market capitalization of $13.1 billion is among the top Ethereum “gas guzzlers,” according to Ethgasstaion. CoinGecko data shows OMG tokens have increased 115% from $1.70 to $3.65 in the past seven days, as investors look to the network to escape climbing gas prices.

Op-ed

Gamifying gains
Andrew Thurman, a content consultant for Chainlink Labs and an adviser to IdeaMarkets, thinks non-fungible tokens (NFTs) are immutable, immortal, resistant to theft, impossible to forge and “boring as dirt.” Crypto collectibles aren’t for everyone, but NFTs have properties that can be applied to a variety of games increasing the stakes and the fun. Although, “not all NFT projects need to introduce such elegantly designed systems to become more fun,” he writes. 

Podcast corner

Real enough?
Some people think a recovery in stocks is divorced from reality, in which stores are closing, prices are rising and roughly 14.8 million Americans are collecting unemployment. Nathaniel Whittemore dives into the controversy and asks how real is it, and how are leading finance minds interpreting the recovery?

Who won #CryptoTwitter? Related Stories

• First Mover: Money Legos Turn ‘Exuberant’ as Chainlink Stripped of ‘DeFi’
• Blockchain Bites: Hashrates Drop, Bitcoiners Hodl and an Open Letter to Bankers

Thailand’s largest court system is developing a blockchain storage network that will move judicial information entirely online when it debuts in Thai Courts of Justice in 2021.

• Already in the midst of a national digitization campaign, the Office of the Court of Justice, which oversees 91% of Thai courts, said Thursday that it is “actively developing” the blockchain network. 
• Details are scant on the newly revealed blockchain project, and it was unclear at press time if Thailand is building the network with private-sector help. 
• The announcement called the network “in-house.” Court officers could not immediately be reached for comment.
• But the system, expected to launch next year, is far enough along that Thai’s judiciary is now getting ready to train officials on how to use it.
• Although the Office of the Court of Justice claimed Thursday that Thai’s system will be the world’s first judicial blockchain, a handful of Chinese courts have already moved reams of data on-chain.

Related Stories

• ETC Labs Rolls Out Fixes to Thwart Further 51% Attacks on Ethereum Classic
• It’s Now Cheaper to Buy One Bitcoin Than to Buy a Single DeFi Token YFI
• Algorand’s Move Into DeFi Gives ALGO Price a Boost
• OMG Price Doubles as DeFi and Record Ethereum Fees Create ‘Perfect Storm’

Price Point

Bitcoin traded slightly higher early Thursday at $11,772 after falling for two straight days. 

The largest cryptocurrency by market capitalization has declined 1.3% this week as the U.S. dollar strengthened in foreign exchange markets. The greenback gained support Wednesday as the Federal Reserve said it wasn’t immediately planning to implement a “yield curve control” program that probably would have brought an accelerated pace of money printing.

You’re reading First Mover, CoinDesk’s daily markets newsletter. Assembled by the CoinDesk Markets Team, First Mover starts your day with the most up-to-date sentiment around crypto markets, which of course never close, putting in context every wild swing in bitcoin and more. We follow the money so you don’t have to. You can subscribe here.

Related: Bitcoin Risks Deeper Drop if Dollar Rebounds

“The corrective moves we witnessed are necessary for the market to cool down and catch a breath,” Joe DiPasquale, CEO of the cryptocurrency investment firm BitBull Capital, told CoinDesk in an email. “Moving forward, we can expect the market to lean on the support zone between $11,000 and $11,500 to consolidate and try another push above $12,000.”

Market Moves

Bitcoin’s mini sell-off this week has revealed a key feature of fast-evolving cryptocurrency markets: How dollar-linked “stablecoins” are being used to fund exotic futures trades, similar to the way money markets serve as a vital lifeblood on Wall Street.

As flagged earlier this week by the Norwegian cryptocurrency-analysis firm Arcane Research, prices for bitcoin futures contracts on the Chicago-based CME exchange have been trading well above “spot” prices for the underlying security. That premium rose last week to 20%, the highest in five months, seen as a sign of just how bullish big investors have become on bitcoin. 

This week’s retreat in prices below $12,000 has led to a squeeze for traders who were attempting a “cash and carry arbitrage,” as reported Wednesday by CoinDesk’s Omkar Godbole. It’s a strategy in which traders buy bitcoin and then short futures contracts on the cryptocurrency, betting the prices will eventually converge and the premium will be pocketed as a profit. 

Related: Market Wrap: Bitcoin Sinks to $11.6K as Ether’s Gas Keeps Rising

The annualized premium dropped to 14% in under 48 hours as prices slid, and some traders rushed to unwind their arbitrage trades. 

One lesson from the episode is that traders were apparently using stablecoins such as tether (USDT) to fund the trade, according to Godbole. 

“Stablecoins are widely used as funding currencies, and there has been a high demand for these dollar-backed cryptocurrencies from institutions,” Skew CEO Emmanuel Goh told Godbole in a Telegram chat.

Bitcoin Watch

Bitcoin’s recent price pullback may worsen as the U.S. dollar shows signs of life on the back of minutes released Wednesday from the Federal Reserve’s meeting in July. 

• The U.S. Dollar Index, which tracks the greenback’s value against that of other reserve currencies, has jumped 1% to 93 in the past 24 hours, the biggest single-day rise in two months.
• USD has picked up on the news the Fed is not planning on implementing controversial yield curve controls on bonds – something markets had been anticipating.
• The correlation between bitcoin and the dollar is historically weak. But in the past month there has been a growing inverse relationship between the two as more investors look for alternatives to the U.S. currency. Analysts with Goldman Sachs and some investors have warned the greenback's reserve-currency status might be at risk. 
• CoinDesk pricing data shows bitcoin rising from $9,000 to $12,400 in the four weeks through Aug. 17, just as the dollar index declined to 92 from 97.
• But in the face of a strengthening dollar, bitcoin has fallen to around $11,780, down 5% from a 2020 high reached earlier this week.
• Continued recovery in the dollar could yield further losses for bitcoin, but a sustained rebound in the U.S. currency still looks unlikely. Interest rates likely to remain close to zero to stimulate the economy, and inflation-adjusted yields are trading at negative levels; analysts at Deutsche Bank and elsewhere say the Fed might be forced to undertake more radical monetary measures.

– Omkar Godbole

Token Watch

Ren (REN) is benefiting from rising demand for tokenized bitcoin in DeFi: Prices for the Ren token have doubled in the past few days. Like other protcols designed to produce synthetic version of cryptocurrencies, RenVM takes bitcoins and produces an ERC-20 token called renBTC that can be used in Ethereum-based applications. More than 10,000 of the tokenized bitcoin, renBTC, were locked on Monday, according to DeFi Pulse. RenBTC currently represents about 21.7% of the tokenized bitcoin market, ranking it second behind wrapped bitcoin (WBTC).

Rates to borrow the Synthetix stablecoin sUSD monetarily spiked to almost 50% Wednesday on Aave’s decentralized lending platform. The cause? According to Stani Kulechov, chief executive of Aave, users were clamoring for the dollar-linked sUSD tokens to send to Curve, so they could participate win that protocol’s CRV tokens via “yield farming.” Prices for CRV were trading at $4.35 at the time of writing, up 14.8% in the past 24 hours, according to CoinGecko. As Arcane Research put it earlier this week, it’s a “summer of crazy returns” in ” exuberant DeFi.”  

Aave (LEND) is seeing a surge in transactions to go with its 2020 price jump: “Despite growing criticism  about the actual value locked being significantly smaller than reported in DeFi Pulse, on-chain activity for these protocols and their tokens demonstrate thriving activity,” according to a post Wednesday by the crypto-intelligence firm IntoTheBlock on CoinMarketCap.com’s blog . The decentralized lender’s token is up 29-fold this year, for a market valuation of $700 million, inspiring incredulity. The bull case is that “there is no denying that these innovations have the potential to redefine finance as we know it,” IntoTheBlock wrote. CoinDesk’s Will Foxley reported last week that Aave plans to work the firm RealT to tokenize home mortgages. 

-Muyao Shen

Analogs – on the economy and traditional finance

Federal Reserve officials saw need for more stimulus at last month’s meeting (Fed)

Asset bubble isn’t really bubble; it’s rational due to easy Fed monetary policy. (WSJ)

“Pandemic has ignited a Schumpeterian process of creative destruction.” (FT)

Deutsche Bank, Citi, Other Big Banks Sitting on $250B of Murky Assets (Bloomberg)

Bitcoin outperforming Apple in 2020 as computer maker hits $2T market cap.

Tweet of the Day What’s Hot

The Bitcoiners Who Live ‘Permanently Not There’ (CoinDesk)
Bitcoiners are no different than the old rich in that they want to look for the best place possible to avoid paying more tax. Here’s one company helping them do just that.

High Ethereum Fees Push Tether to Its Eighth Blockchain, OMG Network (CoinDesk)
Tether has adopted Ethereum scaling solution OMG Network amid record demand for settlement space on the “world computer.”

Eventus says crypto exchange Gemini to use its anti-market-manipulation system. (Bloomberg)
The Winklevoss twins have tappedEventus Systems Inc. to provide surveillance and anti-market manipulation tools for crypto.

– Sebastian Sinclair

Related Stories

• Stablecoin Demand May Drop if Traders Abandon Bitcoin ‘Cash and Carry’ Strategy
• Blockchain Bites: Bitcoin in Space; Prime Brokerage Race; Nodes You Can’t Trace

There’s a joke in the world of digital advertising: How many companies does it take to put an ad on a website? 

In fact, there can be as many as 15 intermediaries participating in this opaque process, sponging up around 30% of the advertising spend. To fix this broken system, the next generation of adtech specialists are again pinning their hopes on blockchain technology. 

Announced Thursday, MadNetwork, a permissioned layer running on top of Ethereum while using the public blockchain itself as its immutable system of record, emerges from stealth with a testnet coming next month. 

Related: OMG Price Doubles as DeFi and Record Ethereum Fees Create ‘Perfect Storm’

Adtech provider MadHive and advertising industry consortium AdLedger had previously piloted an entire system of data sharing and accounting on Ethereum, but over the past couple of years they decided a Layer 2 approach was needed in order to scale.

Blockchain is often used to help automate manual or paper-based processes, but in the case of advertising, it’s the system of automation itself that’s the problem. The first iteration of hastily-erected programmatic web advertising – a mish-mash of servers and accounting platforms – has led to a black box riddled with fees and inconsistencies.

‘Programmatic cesspool’

The time is right for blockchain transparency to cut through the Gordian Knot of programmatic advertising, particularly as traditional broadcast television makes the transition to the world of connected devices, said MadNetwork project lead Adam Helfgott.

“An NBC or a Fox can’t really afford to lose 30% of their television media revenue into this like programmatic cesspool,” said Helfgott. “These legacy media companies are used to having a very clean transaction, and not all this black-boxy programmatic stuff in the middle.”

Related: High Ethereum Fees Push Tether to Its Eighth Blockchain, OMG Network

The AdLedger blockchain consortium, of which MadHive is a member, includes some heavyweight media players such as Viacom, Publicis Media, Hearst Television, IPG Mediabrands, Hershey and also IBM. (Back in 2018, AdLedger did a pilot with IBM, which committed some advertising budget to a system running on Big Blue’s preferred blockchain, Hyperledger Fabric.)

Read more: IBM-Backed Blockchain Trial Takes Aim at Advertising’s Middlemen

As well as clarifying where intermediary systems impinge, MadNetwork’s blockchain also helps provide insights into the programmatic supply chain in the era of oncoming data privacy regulation, said Christiana Cacciapuoti, AdLedger’s executive director.

“We are seeing a greater demand for insights into which data is going to which players and from which consumers, and who got that consent and how it’s being passed around,” said Cacciapuoti. “Just as that [blockchain-based] system of accounting can track the transfer of dollars and the business-outcome angle, it can also track data transfer and take account of privacy angles.”

Touchpoint of truth

The revamped Layer 2 solution on Ethereum uses the public mainnet as a “touchpoint of truth,” said Helfgott, likening it to the Baseline Protocol built by John Wolpert of ConsenSys and Paul Brody of EY. The deployment of nodes is handled by “nodes as a service” provider Blockdaemon, a close partner of MadHive, Helfgott added. 

Read more: Microsoft, EY and ConsenSys Tout New Way for Big Biz to Use Public Ethereum

In terms of the roadmap, Cacciapuoti said: “We are looking at around Sept. 1 for publicly launching our testnet, and then mainnet in Q4.”

In the not too distant future, it’s inevitable that most people will be watching TV via IP-delivered video, said Helfgott. 

“Unless a company like MadHive and MadNetwork steps in, it’s inevitable that we’ll run over the mobile media infrastructure that exists today, that Google kind of owns,” he said. “Adtech paid for the internet to be built out by Google, and now we kind of see adtech paying for blockchain to be built out at scale.”

Related Stories

• Chainlink to Provide Data for Farming Insurance Startup Arbol
• Blockchain Privacy Firm HOPR Releases Mixnet Hardware Node for Ethereum

Users of crypto exchange Binance can now stake dai and kava as the exchange’s decentralized finance (DeFi) staking platform goes live.

Binance’s DeFi staking program was first announced Wednesday with dai, the stablecoin generated by loans on MakerDAO. The Binance initiative aims to tap into this year’s booming DeFi market by offering the ability for users earn staking rewards (akin to interest) on select digital assets.

On Thursday, Binance added kava as the second asset to its staking product. Kava is a DeFi platform backed by Binance, Huobi and OKEx with a native token by the same name.

Related: It’s Now Cheaper to Buy One Bitcoin Than to Buy a Single DeFi Token YFI

In a statement to CoinDesk, Binance CEO Changpeng Zhao said:

“Our users have been requesting Binance.com giving them access to DeFi. Binance prioritizes user experience and in the spirit of the community, Binance.com now offers direct integration into these DeFi products allowing the products’ value to flow out to Binance.com users and that’s happening with KAVA and BNB to name a few.”

The move means Kava users no longer need to interface with the Kava app but instead can go directly through Binance’s DeFi staking portal.

Read more: Multi-Chain DeFi Protocol Raises $750K in Token Sale With Framework Ventures

Related: Algorand’s Move Into DeFi Gives ALGO Price a Boost

Kava’s CEO and co-founder, Brian Kerr, said today’s DeFi market would not resemble tomorrow’s, claiming the sector is just at the “tip of the iceberg” in terms of adoption.

Staking in DeFi means users can participate, utilizing smart contracts, on various issues via voting in a proof-of-stake model as well as earning passive rewards by locking up their crypto.

Read more: Chainlink Integration Brings Data Feeds to Binance’s DeFi Project

One of India’s largest exchanges and a subsidiary of Binance, WarzirX, recently announced it was developing a DeFi product known as an automated market maker in collaboration with Matic.

Related Stories

• Algorand Readies On-Chain Smart Contracts as the Summer of DeFi Rolls On
• Ren Just Had a Great Week as Demand for Bitcoin on DeFi Rises

CORRECTION (Aug. 20, 13:18 UTC): Adds context at the top of the story to make it clear it’s the price of a single YFI that’s more expensive than a single BTC and that the overall market value of bitcoin continues to be vastly greater. Also notes other tokens are priced above bitcoin, but YFI is the only one with notable trading volume.

Though the total market value of yEarn.finance’s governance token (YFI) is still little more than a rounding error compared with sector behemoth bitcoin’s (BTC), the explosive growth of decentralized finance (DeFi) along with the recent fallback in BTC have propelled the price of a single YFI past that of its much bigger crypto sibling.

• yEarn.finance’s governance token (YFI) has surged 35% in the past 24 hours and is currently trading at nearly $13,500, according to CoinGecko data.
• In comparison, after hitting a yearly-high earlier this week, bitcoin has now fallen back down to just under $11,800 – possibly in response to a strengthening dollar.
• Bitcoin’s exchange rate is also superseded by other obscure tokens, according to comprehensive pricing data from CoinGecko, but YFI represents the only token priced above BTC with any sort of notable 24-hour trading volume with roughly $107 million at last check.
• YFI only launched four weeks ago – initially trading at just $32; it surged $400 as CoinDesk went to press.

• Investors deposit select digital assets into YFI, which then automatically executes various DeFi trading strategies with ROIs of up to 95% – the platform takes 5% of the yield as commission.
• Total value locked (TVL) in yEarn stood at $9.3 million on July 18 but boomed to $600 million by Tuesday. At press time, TVL stood at $675 million, according to DeFi Pulse.
• As a governance token, YFI can be staked to give holders a vote on the protocol’s direction. It can also be farmed like many other DeFi tokens.
• But only 30,000 YFIs were created, meaning that despite the price surge its market cap currently sits at just under $400 million – a fraction of BTC’s $218 billion.

See also: $200M Staked in YAM-Inspired DeFi Protocol in Under 12 Hours

Related Stories

• Binance Launches DeFi Staking With Cryptos Kava and Dai
• Algorand’s Move Into DeFi Gives ALGO Price a Boost
• OMG Price Doubles as DeFi and Record Ethereum Fees Create ‘Perfect Storm’
• Algorand Readies On-Chain Smart Contracts as the Summer of DeFi Rolls On

After $50 million in fresh capital, crypto lender BlockFi has now raised nearly $100 million in the past 12 months.

Announced Thursday, the latest round, a Series C, was led by Anthony Pompliano’s Morgan Creek Digital. (It’s the second-largest round to be led by the VC firm, with Figure’s $103 million Series C topping the list.)

At the moment, BlockFi has $1.5 billion in crypto assets on its lending platform and is producing a little less than $10 million a month in revenue, CEO Zac Prince said in an interview. He said BlockFi is still trying to add personnel and keep equity capital stable in order to quickly expand geographically.

Related: Crypto Savings Accounts Are Coming to Fintech Firms That Use Wyre

Prince also expects to have the first bitcoin rewards cards in the market by year’s end and a more public rollout early next year.

“You have to work with quite a few partners to bring a credit card to market,” Prince said. “Some of them haven’t really handled the transition from being fully in-office to being fully remote as smoothly as companies like BlockFi have.” 

New investors

Other participants in the Series C include Peter Thiel’s Valar Ventures – the lead investor in BlockFi’s A and B rounds – CMT Digital, Castle Island Ventures, Winklevoss Capital, SCB 10X, Avon Ventures, Purple Arch Ventures, Kenetic Capital, HashKey, Michael Antonov, National Basketball Association player Matthew Dellavedova and two unnamed university endowments.

Read more: Bitcoin Lender BlockFi Raises $30M in Series B Led by Peter Thiel’s Valar Ventures

Related: NBA’s Spencer Dinwiddie, Andre Iguodala and More Join Dapper Labs $12M Funding Round

Dellavedova, who is a guard for the Cleveland Cavaliers, first learned about crypto in 2017 and was introduced to BlockFi by Morgan Creek’s Pompliano later on, he said in an interview. 

Dellavedova has been making angel investments for the past three to four years, but BlockFi is the basketball player’s first crypto play, aside from holding “a little” bitcoin and ether, he said.

“I would say I’m still a rookie in this space,” he said. “I think having an interest rate that you can have on your crypto is appealing.”

Repeat investor Sterling Witzke, a partner at Winklevoss Capital, said BlockFi’s ability to “resonate with both retail and institutional customers” has been a key selling point. “We look forward to supporting the BlockFi team as they launch their next iteration of products and continue to drive mainstream adoption, firmly cementing crypto at the core of the future of finance,” she said in a statement.

Profits during a crisis

Prince said BlockFi was able to continue its lending operation even after the March bitcoin crash while other lending firms took a short break.

Similar to Genesis and Celsius, BlockFi says March ended up being a good month for crypto lending because of the sector’s primary borrowers – proprietary traders and market makers. 

“The event in March, we didn’t like it because there were clients of ours who have borrowed dollars secured by their cryptocurrency holdings, where we had to issue margin calls,” Prince said. “The way that we handled that I believe was more fair and flexible than the way those things are handled on platforms where everything is very black and white.”

Read more: $100M+ in Margin Calls: Crypto Lenders Demand Collateral as Market Buckles

While interest rates on fiat-backed crypto loans have trended downward after March, demand for bitcoin-backed dollar loans remains high, he added.

“If you look at the futures curve today, it’s implying north of 15% cost of borrowing cash, which makes sense given the bullish position in the market,” Prince said. 

What’s next

BlockFi’s largest expense is people, Prince said, as the team has grown from just under 100 at the beginning of the year to 175 now, with engineering and security making up half of the staff.

Another major growth area is BlockFi’s risk-management team, including hires related to security infrastructure, compliance and financial risk, Prince said. The lender also has new sales and client-relationship teams in London and Singapore and one employee in Hong Kong. 

Part of the Series C will go toward building a larger balance sheet so BlockFi can remain a less risky institution in the eyes of its counterparties. As a general rule, the firm is aiming to have a loan leverage ratio that is more conservative than what you would find at a traditional bank, which typically holds a minimum 5% leverage ratio. 

Read more: Crypto Lender BlockFi Rolls Out Zero-Fee Trading for Bitcoin, Ether, GUSD

Nothing has changed about BlockFi’s collateral levels or its rehypothecation of loan collateral, Prince added. The CEO claims the firm’s loan and security agreement is more transparent than what customers would find at a securities lender in the traditional markets, where rehypothecation of loan collateral is also common. 

“It’s a scary word,” Prince said about rehypothecation. “It’s the folks who are cut from a similar cloth as the ‘not your keys, not your crypto’ crowd.”

Prince would not say whether BlockFi invests customer assets into perpetual swaps, Grayscale Bitcoin Trust shares or other investment vehicles. 

“We think about those and would consider them if it’s appropriate within the context of our risk-management function,” Prince said without going into detail.

Prince also admitted that BlockFi does uncollateralized lending to counterparties with “certain financial requirements” but would not say what percentage of the lender’s loan book was comprised of unsecured loans.

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Bitcoin’s price pullback may worsen as the U.S. dollar shows signs of life on the back of the newly released minutes from July’s Federal Reserve meeting.

• The dollar index, which tracks the greenback’s value against that of other reserve currencies, has jumped 1% to 93.000 in the past 24 hours – the biggest single-day rise in two months.
• The U.S. dollar (USD) has picked up on the news the Federal Reserve is not planning on implementing controversial yield curve controls on bonds – something markets had been anticipating.
• The correlation between bitcoin and the USD has been historically weak but has picked up in the past month as investors look for alternative safe-haven assets.

• CoinDesk data shows bitcoin rising from $9,000 to $12,400 in the four weeks up to Aug. 17 just as the dollar index declined from 97 to 92.
• But in the past week and in the face of a strengthening dollar, bitcoin has fallen to around 11,780 – down 5% from the recent high of $12,400 it reached earlier this week.
• Continued recovery in the U.S. dollar could yield further losses for bitcoin but a sustained dollar rebound still looks unlikely – interest rates will remain at rock bottom to stimulate the economy, increasing the chances that the Fed might be forced to more radical monetary measures.

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