CoinDesk Crypto

Paul Brodsky, a former partner at storied crypto investment firm Pantera Capital, has left to launch a hedge fund aimed at volatility plays across cryptocurrencies and traditional assets.

Brodsky’s new fund, PostModern Partners, will open in 2021 with a focus on high-risk, high-return blockchain investment opportunities, according to a source familiar with the matter. It will be open only to accredited investors – and only those, the source said, who can stomach potentially heavy market dips.

The fund’s launch comes three years after Brodsky joined Pantera. Leaning on Brodsky’s traditional portfolio management chops, CEO Dan Morehead had tapped the former derivatives trader in October 2017 to lead his crypto VC’s investor outreach. 

Related: Climate Startup Nori Raises $4M to Solve Carbon Market Double-Spending

But even back then, regulatory filings indicate that Brodsky, a founder and chief of multiple funds, was laying the groundwork for an eventual pivot back to asset management. He first registered PostModern Partners GP LLC with FINRA in early 2017.

The PostModern that Brodsky is now preparing to lead will trade in highly liquid asset classes of all kinds with a special focus on high-growth, volatile cryptocurrencies, according to organizational documents obtained by CoinDesk.

That means shying away from a bitcoin-heavy portfolio, the documents said. PostModern asserted that bitcoin is too easily accessible, its derivatives market too established and its network too energy-demanding to offer massive investor upside.

“We believe there are greater scaling opportunities in Proof-of-Stake tokens,” the documents state – while leaving open the possibility of investing in bitcoin for near-term upside.

Related: Violent Reflexivity: Why Market Movements Are More Aggressive Than Ever, Feat. Corey Hoffstein

Pantera’s bitcoin fund rallied by over 10,000% since its late-2013 launch. PostModern’s refusal to embrace bitcoin indicates Brodsky is on the hunt for the eye-popping returns that bitcoin can no longer deliver.

Such a calculus on the market-leading crypto clashes with the long-on-bitcoin mantra sloshing around some corners of Wall Street. Michael Saylor, whose publicly-traded business intelligence firm MicroStrategy put its $425 million treasury reserve into BTC this month, publicly touts the sprawling network as a strength. 

But PostModern is playing for capital accumulation rather than capital preservation, the source said. It’s for accredited investors looking to place risky bets on volatile crypto assets with the alluring yet hardly assured potential of extremely high returns.

“It’s not for the faint of heart,” the source said.

Related Stories

• Bitcoin Traders Say Options Market Understates Likelihood of Chaotic US Election
• Facebook’s Libra Co-Founder Morgan Beller Departs to Return to VC

A new blockchain-enabled mobility platform from Mercedes-parent Daimler will kick off with a product that lets users’ in-car settings follow them to other vehicles.

• Announced Thursday, Daimler is building the platform in partnership with Ontology, an open-source blockchain specializing in data and digital identity.
• The first product to emerge out of the partnership, “Welcome Home,” will be demonstrated at Dalmier’s virtual live event at the Startup Autobahn event today and is built to service users who’d like to transfer preferences from one auto to another. 
• “Preferences in a car are settings such as lighting, the seat, the music players,” said Gloria Wu, Chief of Global Ecosystem Partnerships at Ontology. She also said that a user, “could basically use a ‘Welcome Home’ application to access another car rental service provider within the app without having to do all the registration.” 
• The platform built under the Daimler and Ontology partnership would allow a user to both port identification information and in-car preferences from one region to the other, given that the rental service or leasing agent is registered with the platform. 
• The statement added that the ‘Welcome Home’ solution is the first product on the MoveX platform. Being built in partnership by the Daimler AG Blockchain Factory and Ontology, the MoveX platform is targeted at solving barriers to adoption around “user roaming, bundling, and sharing.”
• “‘Welcome Home’ combines mobility with social networking,” said Harry Behrens, head of Blockchain Factory at Daimler Mobility, in the emailed statement. The statement also said that the platform is not limited to in-car experiences and can also include smart devices. 
• “What did you eat, what kind of itineraries you had, you can save it to one of your profiles, and share it with a friend, assuming that she’s also using ‘Welcome Home,’” Wu said.
• She added that following the demonstration on Thursday, the platform is targeting a release to potential business partners and potential operators in October. 

Related Stories

• Dapp Platform NEAR Protocol Taps Ontology’s Expertise for Decentralized Identity Effort
• Mercedes Maker Daimler Tests Blockchain for Supply-Chain Data Sharing
• Daimler to Produce Crypto Hard Wallet for Automotive Industry
• ‘Up to 100 Million’ Paxos Stablecoins to Be Issued on Ontology Blockchain

The U.S. dollar is showing signs of life and a continued breakout could weigh over bitcoin, which surged amid the greenback’s sharp sell-off this summer.

• The top cryptocurrency by market value is currently trading at $10,320 – up nearly 2% from Wednesday’s low of $10,140, according to CoinDesk’s Bitcoin Price Index.
• However, the relief rally could be short-lived, as the dollar index (DXY), which tracks the greenback’s value against major fiat currencies, has broken above its two-month-long range of 92.00–94.00.
• “Bitcoin will likely follow further downside together with precious metals given the DXY breakout,” Matthew Dibb, co-founder and COO of Stack, a provider of cryptocurrency trackers and funds, told CoinDesk.

• “Bitcoin, like gold, is inversely correlated to the dollar,” Max Keiser, a broadcaster and finance analyst tweeted on Tuesday.
• Indeed, bitcoin and the dollar index have moved in opposite directions since March, with the apparent inverse correlation becoming more noticeable since mid-July.
• The DXY is looking north following Wednesday’s breakout and is currently hovering near 94.40.
• “The dollar has been very heavy since March on the back of Federal Reserve’s easing, and we expect to see some profit-taking [in dollar shorts] across the board,” said Darius Sit, CEO of Singapore-based QCP Capital.
• As such, there’s a risk bitcoin may fall to the psychological support of $10,000.
• Gold has already declined to a two-month low of $1,860, tracking the dollar strength.
• “A break below $10,000 support could mean a further drop to $8,800,” Stack’s Dibb said.
• However, on-chain analyst Willy Woo doesn’t foresee a mega bump. “While I’ve heard talk of bearishness down to even [$7,000], I don’t see fundamentals supporting this as a likely event,” he tweeted Wednesday.
• If stock markets rebound sharply, the haven demand for the U.S. dollar will likely weaken, potentially allowing a notable recovery in bitcoin and gold.

Also read: Bitcoin Market Weakening After Macro-Based Sell-Off, On-Chain Data Suggests

Related Stories

• Bitcoin in Africa: FastBitcoins Partners With Flexepin to Expand Global Footprint
• Market Wrap: Bitcoin Drops to $10.2K; Scaling Solution xDai Doubles in Value Locked
• Violent Reflexivity: Why Market Movements Are More Aggressive Than Ever, Feat. Corey Hoffstein
• UNI Market Cap Rebounds $120M as Rest of Crypto Market Falters

FastBitcoins has partnered with prepaid voucher giant Flexepin to increase its global footprint, while at the same time accessing mobile money providers in 14 countries in Africa, where demand for crypto is growing.

Announced Thursday, the deal with Flexepin (a subsidiary of ASX-listed payments company Novatti) expands FastBitcoins’ coverage to some 20,000 point-of-sale locations in Australia where Flexepin is based, as well as across Canada and Europe.

Flexepin caters to users who want to make online payments without using credit or debit cards. But in addition to improving the security and privacy of online spending, the service is about enabling many of the unbanked population worldwide to purchase goods and services using an alternate method of payment, according to the company’s website.

Related: Strengthening US Dollar Could Bring Further Downside for Bitcoin

“The big one for me, personally, is we can accept mobile money payments in 14 countries in Africa,” said FastBitcoins CEO Danny Brewster. “So, users in places like Kenya or Uganda can use M-Pesa or MTN Pay on their mobile phone to buy a Flexepin voucher which is then redeemed for Bitcoin via us. We charge only 4.5%. The best price equivalent on, say, Paxful, charges 40%. That’s all through this Flexepin deal.”

There is an interesting shift in position here. A few years back, when M-Pesa was establishing a veritable monopoly in Kenya, its owners Vodafone and Safaricom were very resistant to any interoperability with Bitcoin on the grounds of anti-money laundering (AML) concerns.

“Today, the regulatory and AML environment surrounding Bitcoin is a far throw from what it was in 2013 and 2014,” said Brewster. “Also, our agreement with a publicly-traded company like Flexepin provides leverage with all sorts of partnerships.”

M-Pesa did not return requests for comment by press time.

Related: Crypto Companies Are Lining Up to Work With Us, Says Visa Exec

Read more: Where FATF Crypto Compliance Gets Interesting: Africa

Rather like mobile money itself, which grew out of a hack where users traded mobile minutes as a form of cash, pre-paid cards and gift cards have become popular in Africa, where they can be exchanged for Bitcoin on peer-to-peer platforms like Paxful. The redemption codes of cards purchased in places like Canada, for example, can be sent to relatives in Africa who then exchange these for bitcoin.

The likes of LocalBitcoins have banned gift cards because of the regulatory challenges, but Paxful says it has gone to some effort to continue supporting this channel since the vast majority of these transactions are legitimate and offer more access to the financial system for unbanked users. 

Asked if Flexepin vouchers could be used in a similar way by African users of FastBitcoins, Brewster said: 

“As long as the recipient has their account open with us, they can do that.”

For its part, London-based FastBitcoins has an application underway for registration with the U.K.’s Financial Conduct Authority in line with Europe’s Fifth Anti-Money Laundering Directive and has also signed up with government body AUSTRAC (Australian Transaction Reports and Analysis Centre).

Read more: Identity Startup Notabene Launches Exchange Tool for FATF Travel Rule Compliance

Brewster explained that FastBitcoins’ approval involves some know-you-customer (KYC) checks, such as providing a driver’s license or passport, while doing the best to preserve customer privacy.

“The voucher is just the mechanism for transferring fiat to our platform, the AML/KYC is no different to any other exchange platform as per the regulatory environment of the countries we operate within,” he said. “As a company, we take those responsibilities seriously but also balance that with the onus placed onto the customer and their experience when using our service to ensure they only provide what is absolutely necessary.”

Since 2016, Flexepin has become the leader in prepaid vouchers used at cryptocurrency exchanges globally, Flexepin operations manager Effie Dimitropoulos said in a statement.

“Flexepin is happy to be a new funding method on the FastBitcoins site,” she said. “Every day, consumers around the world use Flexepin to purchase their first cryptocurrency and many more use it to add to their holdings. Flexepin is continually expanding its distribution network with thousands of online and offline locations being added regularly.”

Related Stories

• Market Wrap: Bitcoin Drops to $10.2K; Scaling Solution xDai Doubles in Value Locked
• First Mover: Bitcoins Hit Exchanges as Bloomberg Touts Crypto and DeFi Hedge Fund Seeks $50M

The world’s largest payments processor has said it’s considering partnership proposals from an increasing number of crypto companies.

• Terry Angelos, Visa’s global fintech lead told Forbes cryptocurrency companies had shown a “significant interest” in working with them.
• Although Angelos didn’t mention any by name, he said most wanted to plug themselves into the payment processor’s network, which has over 60 million merchants in more than 200 countries – the largest of its kind in the world.
• Visa is an increasingly prevalent force in the digital asset space.
• Having first dabbled with a few proof of concepts in 2015, the payment processor has joined (and left) the Libra Association, invested in custodial provider Anchorage, and become a member of the Digital Chamber of Commerce – a blockchain advocacy group in the U.S.
• Exchange Coinbase has been Visa’s most prominent crypto partner. After initially collaborating on a branded payment card, Coinbase became a principle member earlier this year, giving it the right to issue Visa cards to other crypto companies.
• But Angelos said Visa had already “onboarded” another 25 crypto companies that were “at various stages of development.”
• Some have been through its fast track program, he continued, an initiative that gives selected startups a leg up through guidance and support as well as providing them with access to its payments network.
• Just this month, the crypto lending platform Cred joined the fast track and can now use Visa’s network to send interest payments directly to users’ bank accounts.
• Asked if Coinbase was likely to remain the only crypto company to be a Visa principle member, Angelos said “we have some that are potentially in the queue.”

See also: Visa Blog Post Hints at Future Digital Currency Projects

Related Stories

• Bitcoin in Africa: FastBitcoins Partners With Flexepin to Expand Global Footprint
• World’s Biggest Meat Processor to Tackle Amazon Deforestation Using Blockchain Tech
• Valentus Capital Plans $50M Token Raise for Credit Fund: Report
• UNI Market Cap Rebounds $120M as Rest of Crypto Market Falters

JBS S.A., the biggest meatpacker globally by sales, plans to use blockchain technology to stem deforestation caused by cattle suppliers in the Amazon.

• As reported by Reuters Wednesday, the Brazilian company aims to be monitoring all of its meat suppliers on a blockchain system by 2025.
• JBS said that currently it checks that all direct suppliers do not clear forest without authorization, but others further down the chain may “launder” meat from cattle raised on illegally cleared ground.
• The announcement comes as the company seeks to counter criticism of the meat industry in the region, which is said to be responsible for extensive forest clearances to make way for cattle pastures.
• JBS also announced that it would set up a fund worth 1 billion reals (around $179 million) fund to support social and economic development in the Amazon.
• The company aims to provide 25% of the funding (250 million reals) itself over the first five years, with other parties expected to join the initiative and match its donation.
• Another 25% may follow later if third-party support is strong enough, JBS’ global CEO, Gilberto Tomazoni, told Reuters.
• Despite years of campaigning from environmentalists, Amazon rainforest destruction is still soaring.
• Reuters said an area the size of Lebanon was cleared in 2019 – the most in over 10 years.
• The extensive forest fires that have plagued the region have also been linked to the beef industry.

Also read: Ecological Sanity Is Compatible With Human Freedom

Related Stories

• Crypto Companies Are Lining Up to Work With Us, Says Visa Exec
• Valentus Capital Plans $50M Token Raise for Credit Fund: Report
• UNI Market Cap Rebounds $120M as Rest of Crypto Market Falters
• Venezuela Legalizes Crypto Mining but Will Force Industry Into National Pool

Some tricks of the trade employed by today’s booming decentralized finance (DeFi) platforms are being used for a completely new paradigm: decentralized data marketplaces.

Announced Thursday, blockchain-based data monetization startup Ocean Protocol is teaming up with Balancer Labs to create the first automated market maker (AMM) for data.

Ocean Protocol is about helping people and businesses unlock data and monetize it, spreading the benefits of data and AI beyond the handful of organizations that hoard, control and get rich from it. Creating efficient data marketplaces is really the lynchpin of this, according to Ocean founder Trent McConaghy. Thus the collaboration with Balancer.

Related: MakerDAO Users Hosed by March Flash Crash Won’t Get MKR Payouts, Say MKR Whales

“Many people have tried to build data marketplaces in the past, but have been held back by issues of privacy and control. With blockchain and compute-to-data, Ocean is addressing this,” McConaghy said in an interview. “So our goal is to unlock this data economy with data marketplaces, connecting the buyers and sellers of data. These can be individual humans, families, small companies, large companies, cities, nations, etc.” 

Ethereum-based Ocean creates data tokens, which can represent a particular dataset – be it an individual’s DNA or something much larger and more valuable, like all of Daimler’s self-driving car data. The tokens act as an on-ramp to the data, which is stored elsewhere. The second part of the puzzle is establishing a marketplace where this tokenized data can be discovered, priced and traded using Ocean’s native token (OCEAN) or other cryptos like ether (ETH) or dai (DAI). 

Pricing data is hard. Now, with the third version of Ocean, McConaghy has concluded AMMs like Uniswap do the job best. 

Read more: Mercedes Maker Daimler Tests Blockchain for Supply-Chain Data Sharing

Related: UNI Market Cap Rebounds $120M as Rest of Crypto Market Falters

Unlike an auction-based approach, AMMs continue to price throughout the asset’s lifetime. And unlike order books, they don’t need a lot of upfront liquidity and a double coincidence of wants. As such, AMMs – which have been instrumental in DeFi’s $13 billion ascent – can be thought of as robots that are always ready to buy or sell.

The Balancer pool functions as a “self-balancing weighted portfolio and price sensor,” which means it behaves like an index fund – if a given asset out- or under-performs, it is respectively sold or bought to keep its value share of the total portfolio constant. But this is done in a decentralized manner without human intervention.

This is basically what DeFi application Uniswap does, but Balancer has the added advantage of allowing non-equal weights among tokens in the pool (e.g. 90/10 vs. 50/50). That means someone with lots of data tokens can offer these without having to tie-up a great deal of Ocean tokens or other cryptos.

Ocean: ‘Liquidity mining for the people’

McConaghy pointed to a trend where people are launching things on AMMs, and in the case of an Ocean data-token pool he has coined the term “initial data offering” or IDO. 

“Our community has been really loving this term and using it a lot internally,” McConaghy said, adding:

“Basically it’s an example of liquidity mining for the people. Right now when people want to do liquidity mining on Balancer or other tools, they need to have assets. This works well for the whales, and it works even for some medium-sized folks, but the small guys are completely priced out because of gas prices. But we all have assets, as in our data assets; I have location data or whatever, and I’m going to start putting it up there and see what happens as the price gets automatically discovered.”

Read more: Following COMP’s Surge, DeFi Platform Balancer Begins Distribution of BAL Tokens

On the subject of the high gas costs associated with deploying pools on Balancer, the Ocean partnership has led to a useful tweak of Balancer pool contracts to use the ERC-1167 proxy pattern to reduce those costs. 

“The idea of having millions of different tokens and pools wasn’t viable with today’s gas prices on Ethereum, so it’s very nice the way we have extended Balancer to make it cheap for the creation of new data pools,” said Balancer Labs CEO Fernando Martinelli, adding:

“It doesn’t cost a lot for someone to just put up their location data or their DNA data. It’s great because it’s shown us the need to create more efficient markets – something that’s going to be addressed in our version two.”

Related Stories

• This Ethereum Startup Is Building a ‘DeFi Firewall’ for Institutional Investors
• First Mover: Bitcoins Hit Exchanges as Bloomberg Touts Crypto and DeFi Hedge Fund Seeks $50M

Cryptocurrency exchange and custodian Gemini announced on Thursday that it is expanding “fully” into the United Kingdom.

• According to a press statement emailed to CoinDesk, users, both individual and institutional, will now be able to trade and store crypto in the nation, with pounds sterling (GBP) now added as a funding currency. 
• U.K. residents will be able to make GBP crypto purchases with their debit card or make GBP deposits to fund their account using wire transfers, Faster Payments and CHAPS. 
• In August, Gemini was granted an Electronic Money Institution (EMI) license by the U.K.’s Financial Conduct Authority. 
• The watchdog also approved Gemini as part of its Fifth Money Laundering Directive (5MLD) crypto asset registration process, per the announcement.

Also read: Winklevoss-Owned Gemini Now Provides Custody for .Crypto Blockchain Domains

Related Stories

• Meet in the Middle: Crypto Companies and Banks Are Evolving Together
• Cryptopia Users Can Claim Assets From End of 2020, Says Hacked Exchange’s Liquidator
• Binance, Huobi, OKEx Have FOMO for DeFi
• Bitstamp Integrates Nasdaq’s Matching Engine for Faster Order Executions

MakerDAO will not compensate victims of March 12’s “Black Thursday” flash crash that left some of the decentralized finance (DeFi) platform’s investors out $8.33 million, according to a vote that closed Tuesday. The Maker community had initially voted in early April to refund sunken investors. 

Nearly six months later and the community – represented by current holders of Maker’s MKR governance tokens – concluded a final vote to give zero compensation for lost funds. Some 65% of votes opted for zero compensation, with the next two options for partial compensation receiving 18% and 15%, respectively.

The vote itself was dominated by large MKR holders. Only 38 unique votes were cast, equivalent to 8.74% of MKR token holders, with the low turnout reflecting some of the current difficulties associated with governance in the booming DeFi sector.

Related: UNI Market Cap Rebounds $120M as Rest of Crypto Market Falters

Stepping back, many Maker users had collateral positions for outstanding loans liquidated after a sudden, mid-March crash in the price of ether (ETH). Additionally, investors were unable to maintain positions because of a backlog of transactions on the Ethereum blockchain as investors sought to flee the COVID-driven market collapse.

The one-two punch was preyed upon by market making bots that exploited the flaw to the tune of 2.4 million ETH. Broken logic in the platform’s collateral liquidation engine could be exploited under the right conditions to gobble up collateral on the cheap.

Read more: Mempool Manipulation Enabled Theft of $8M in MakerDAO Collateral on Black Thursday: Report

Investors have since lobbied the community for partial compensation denominated in the platform’s MKR governance token. All options included in Tuesday’s vote included MKR as the compensation vehicle. (Early on, affected investors had pushed for ETH.)

Related: This Ethereum Startup Is Building a ‘DeFi Firewall’ for Institutional Investors

Yet, participating MKR holders were incentivized to vote against the compensation as any additional printing of MKR tokens would dilute the value of their holdings. Many community members said as much in the MakerDAO forum. 

Class action update

Litigation against the Maker Foundation in the form of a class-action lawsuit continues regardless of the vote’s outcome, said Adam S. Heder, the Harris Berne Christensen LLP attorney representing MakerDAO’s Black Thursday investors.

Lead plaintiff Pete Johnson filed three counts against the Maker Foundation in April including negligence, intentional misrepresentation and negligent misrepresentation. He and joining members of the suit are seeking up to $28.35 million in compensation.

“The parties have submitted briefing on the Maker Defendants’ motion to compel arbitration. We don’t know yet when the Court will issue its ruling,” Heder said via email.

The Maker Foundation declined to comment.

Related Stories

• First Mover: Bitcoins Hit Exchanges as Bloomberg Touts Crypto and DeFi Hedge Fund Seeks $50M
• Data Site DeFi Pulse Fixes Bug, Says Value Locked Actually Hit $13B Last Week

A prospective U.S. private equity investments shop called Valentus Capital Management is hoping to raise its first $50 million by tokenizing itself and offering the tokens for sale.

• According to Reuters, the yet-to-be-registered asset manager hopes to sell digital securities called VAL1 that gives its holders a stake in Valentus’ planned $250 million credit fund.
• Valentus is pursuing the tokenization and offering with a little-known digital asset outfit called Realio, Reuters said. Realio’s CEO Derek Boirun did not immediately provide comment.
• Token sales will fund Valentus’ planned investments in distressed debt and morgatge securities, the Reuters article said.
• If the offering goes through late this year or early next, it will be the first time a U.S. private equity fund has successfully tokenized itself for U.S. investors, Valentus investments chief Behzad Taufiq told Reuters.
• Valentus did not immendiatly return CoinDesk requests for comment.

Related Stories

• UNI Market Cap Rebounds $120M as Rest of Crypto Market Falters
• Venezuela Legalizes Crypto Mining but Will Force Industry Into National Pool
• Robinhood Raises Cool $660M in Extended Funding Round
• Data Site DeFi Pulse Fixes Bug, Says Value Locked Actually Hit $13B Last Week

The bitcoin market continues to display weakness; xDai total value locked shows interest in Ethereum scaling solutions.

• Bitcoin (BTC) trading around $10,285 as of 20:00 UTC (4 p.m. EDT). Slipping 1.8% over the previous 24 hours.
• Bitcoin’s 24-hour range: $10,250-$10,575
• BTC below its 10-day and 50-day moving averages, a bearish signal for market technicians.

Bitcoin’s price had remained in a narrow range since Monday, as the world’s oldest cryptocurrency stuck within $10,400 territory Wednesday before falling to as low as $10,250 just prior to press time.

Read More: Bitcoin Market Weakening After Sell-Off, On-Chain Data Suggests

Related: First Mover: Bitcoins Hit Exchanges as Bloomberg Touts Crypto and DeFi Hedge Fund Seeks $50M

“September has been a unique month in the crypto markets,” said Elie Le Rest, a partner at quant trading firm ExoAlpha. “Crypto has become way more thinly traded,” he added. 

Indeed, after the month opened with a rarely-seen $1 billion day on major exchanges September 3, bitcoin volume has weakened. It was at $202 million Wednesday as of press time.

As the bitcoin market remains tepid, the U.S. Dollar Index, a measure of the greenback versus a basket of other fiat currencies, is bouncing back from 2020 lows, in the green 0.40% as of press time.

Cryptocurrency traders like to keep an eye on the strength of the dollar, but many have differing views on what the index’s rise might mean. 

Related: Bitcoin Market Weakening After Macro-Based Sell-Off, On-Chain Data Suggests

“I see the Dollar index going up as a correction after its performance during the pandemic,” said Alessandro Andreotti, an over-the-counter crypto trader in Italy. “On the mid- to long-term, I’m personally still bullish on bitcoin as well as on precious metals like gold.” 

Henrik Kugelberg, another European over-the-counter trader based in Sweden, said he expects the dollar will become deflationary, where the prices of goods and services drop. 

“I now feel convinced that what we see and will see is deflation and not inflation,” he said. “If this is correct, people will sell bonds and buy safer stuff, like high-end real estate, gold and bitcoin.” 

Whatever the trader narrative is on the dollar, this much is true: Based on Federal Reserve data, there are more dollars floating around the global economy than ever before.

As for bitcoin’s tepid performance the past few days, a loss of momentum for decentralized finance, or DeFi, this week may partially be to blame for a lackluster crypto market. “The recent crash in DeFi may explain the current market silence for the past two days as traders and lenders are figuring out next steps to allocate capital and execute trading strategies,” said ExoAlpha’s Le Rest.

xDai value locked doubles

The second largest cryptocurrency by market capitalization, ether (ETH), was down Wednesday trading around $327 and slipping 4.7% in 24 hours as of 20:00 UTC (4:00 p.m. EDT). 

Read More: Data Site DeFi Pulse Fixes Bug, Says Value Locked Hit $13B Last Week

Stablecoin xDai, developed via a collaboration between MakerDAO and POA Network, saw a jump in value locked to $1.2 million on Wednesday from $559,000 on Sept. 20.

The stablecoin offers capabilities on the Ethereum network with lower fees and without the hassles of slow block confirmations, a problem as DeFi grows. xDai accomplishes this by acting as a “sidechain” off of the main Ethereum blockchain network where transactions have often clogged the system during high-transaction activity the past few months.

XDai might be a tool for traders to better navigate DeFi in high-transaction times, said Brian Mosoff, chief executive officer of investment firm Ether Capital. “As we’ve seen in recent months, the use of Ethereum has skyrocketed, bringing with it rising gas costs,” said Mosoff. “Many use cases and participants may be better served using xDai, it offers an immediate scaling solution that allows people to stay in the Ethereum ecosystem.”

Other markets

Digital assets on the CoinDesk 20 are mostly in the red Wednesday. One notable winner as of 20:00 UTC (4:00 p.m. EDT):

• tron (TRX) + 0.78%

Notable losers as of 20:00 UTC (4:00 p.m. EDT):

• chainlink (LINK) – 11.1%
• 0x (ZRX) – 8.5%
• tezos (XYT) – 7.5%

Read More: Crypto Fund Looks for $50M to Buy DeFi Tokens Amid Market Pullback

Equities:

• Asia’s Nikkei 225 ended the day flat, in the red 0.05%, dragged down by losses in the automotive sector.
• Europe’s FTSE 100 closed up, climbing 1.2% as investors weighed the possibility of further economic stimulus due to a rise of coronavirus infections.
• In the United States the S&P 500 2.2% as coronavirus concerns and a sell off in tech stocks, including Amazon falling 4.1%, dragged down the index.

Commodities:

• Oil was down 0.45%. Price per barrel of West Texas Intermediate crude: $39.54.
• Gold was in the red 2% and at $1,860 as of press time.

Treasurys:

• U.S. Treasury bond yields all slipped Wednesday. Yields, which move in the opposite direction as price, were down most on the 2-year, in the red 1.4%.

Related Stories

• Crypto Hedge Fund Looks for $50M to Buy DeFi Tokens Amid Market Pullback
• Market Wrap: Bitcoin Clings to $10.4K; Ether in Smart Contracts Highest Since 2016

Cryptocurrency exchange and wallet platform Coinbase announced it has hired Shilpa Dhar, Ravi Byakod and Frank Yoo for VP roles on its product, engineering, and design & research teams. 

• In an announcement published on its website, Coinbase said it was also creating a new “Platforms” team across its product and engineering organisations and that Dhar and Byakod would head the new team. 
  
• Prior to joining Coinbase, Shilpa Dhar worked at Venmo as head of product after spending 10 years at Paypal.
  
• Ravi Byakod previously worked with Adobe, and also held senior engineering leadership positions at eBay, Flipkart, and Google. 
  
• Frank Yoo, the new VP for design & research, previously led Google’s global design and research teams for that company’s GSuite product. He also worked with Lyft and led design at Linkedin and Yahoo!.

Related Stories

• Coinbase Pro Lists Uniswap’s New Token Just Hours After Launch
• Coinbase Effect Hits DeFi as yEarn’s YFI Token Surges 10% on Pro Listing News
• Kraken Taps Casa Co-Founder, Former CEO Jeremy Welch as VP of Product
• Venezuela Blocks Access to Coinbase and Remittance Service MercaDolar

The Takeaway:

• For this year’s Blockchain Commons internship, Christopher Allen had an uncommon “problem”: too many quality applications to turn down.
• Instead, he expanded the program to accommodate 7 interns where he usually only accepts one.
• With the internship drawing to a close, the interns have just about completed their projects – but that doesn’t mean they’re done contributing to Bitcoin’s open source landscape. 

When Christopher Allen received applications for the 2020 Blockchain Commons internship, he had a problem: He had more applications than he had ever received in the internship’s history, and all from stellar applicants.

This was a good problem to have, of course, and Allen tackled it head-on by expanding the internship program. He typically only takes one intern under his tutelage, but this year he took on 7.

Related: ING Bank, Rolls Royce Join Alliance to Promote Blockchain Education

With so many extra hands, each intern had the opportunity to work on a project of his or her preference. Each of these projects went toward improving software in the Blockchain Commons repositories. 

As the internship draws to a close, the interns’ contributions to free and open-source software (FOSS) are nearing completion and will soon be open to the public to use. 

The Blockchain Commons: a hub for open-source software

Allen founded the Blockchain Commons in 2018 in a bid to keep Bitcoin’s development open and distributed.

In a past life, he helped pioneer the OpenSSL/TLS protocol, an encryption standard for securing data transmitted over the internet. Come 2014, the Heartbleed Bug compromised the OpenSSL implementation of the encryption standard, which handled 60% of the internet’s traffic at the time (and with it, trillions of dollars of online commerce).

Related: The Linux Foundation Wants Open-Source Tech to Address Future Pandemics

The flaw was promptly patched. But Allen took that tribulation to heart and vowed to not allow a single point of failure to threaten the security of other software projects he works on.

Cue Allen’s discovery of Bitcoin and the founding of the Blockchain Commons. After a brief tenure at Blockstream, Allen founded his not-for-profit benefit organization to do his part to keep Bitcoin’s development distributed. 

Now, after a summer of tinkering, his newest interns have enriched the codebase and Github libraries of some of the Blockchain Commons’ principal projects – including the addition of a project of their own design.

What these budding Bitcoin developers created Spotbit

For their new group project, the interns began building Spotbit, a software for curating Tor-supported bitcoin (BTC) price feeds. 

Led by Dartmouth senior Christian Murray with assistance from Nishit Shah, the modular, self-hosted feed draws pricing data from 100 cryptocurrency exchanges across various stablecoin and fiat trading pairs. Users can choose which exchanges they want their feed to tap into, which trading pairs to support and what data they want to store. If a user doesn’t want to host a Spotbit node, they can connect to others. 

Lethe Kit

Besides Spotbit, each intern has an individual project which they work on alongside Allen to improve.

Gorazs Kovacic, a student from Hungary, for example, has been working on the Blockchain Commons’ code for the Lethe Kit. The DIY hardware wallet – so-named after the river of Greek mythology that cleansed the underworld’s denizens with amnesia of their past lives – is an air-gapped hardware wallet, meaning it cannot come in direct contact with an internet-connected device. 

Instead it uses partially signed Bitcoin transactions (PSBTs) which allow users to sign a transaction on the device and then port that transaction to a computer using an SD card; this way, the private key needed to sign the transaction is never revealed to an internet-connected device.

Kovacic has been working on integrating animated QR codes and Shamir secret shares (a cryptographic technique for dividing a private key into multiple parts) into the Lethe kit.

Gordian

Another intern, Gautham Ganesh Elango, is working on Gordian, a Bitcoin full-node implementation which runs over Tor. 

The software operates similarly to Bitcoin node dashboards like My Node by offering its users a graphical user interface (GUI) for interacting with Bitcoin Core. 

A GUI (an interface type we use everyday when commanding our Macs and PCs with iOs or Windows, to give one example) is the user-friendly, layman’s version of the command-line interface – the raw coding terminal that developers use to speak to their devices. 

The project has a mobile version (Gordian Wallet) and a desktop version (GordianServer).

Elango, a freshman from Australia, is also building out an accounting tool which will allow Gordian users to import transaction and price data to Microsoft Excel for tax purposes.

For another project, Elango and fellow intern Javier Vargas are stepping into the role of instructor by fleshing out the Blockchain Commons’ documentation of RPC codes for managing a Bitcoin node from the command-line interface. 

Internship takeaways

Almost all the tools the interns have been working on contribute to each others’ tech stacks (Spotbit, for example, provides price data for the Gordian Wallet). Showing that there’s more to open-source development than coding, cross-project collaboration is one of the internship’s key instructional points.

For Murray, this was indeed one of the internship’s primary lessons: that open-source development means creating sustainable tools that go beyond a solitary use case.

“This was my first introduction to open-source development, and definitely one of the big learning curves is learning to collaborate effectively and developing processes for yourself. A lot of the stuff I wrote before I got here was something I needed to work one time, but this is a lot more about something that is going to work all the time,” he told CoinDesk.

Murray said that he plans to continue to work on Bitcoin open-source software after the internship, whether professionally or otherwise. This was a common thread for the soon-to-be alumni of the Blockchain Commons. 

Kovacic, who is already diving into other open-source repositories like Blockstream’s c-lightning, said the internship “reaffirmed my position that I want to work in the Bitcoin space.” 

For his part, Elango agreed, saying the internship shook off his apprehension about approaching the seemingly daunting task of maintaining open-source projects.

“It’s definitely got me interested in Bitcoin open-source development. At first I was kind of intimidated by these large open-source projects. After the internship, I’ve become more comfortable with doing large contributions to these projects. Once I learn the basics of C++ I may start contributing to Bitcoin Core. And if not Bitcoin Core specifically, then some other open-source project,” he told CoinDesk.

Looking ahead to the next cohort of interns

With this internship coming to a close, Allen is offering another one that will begin in October and end in December. He stressed that the latest internship hopes to pull in more talent from Bitcoin-adjacent fields, not just the realm of computer science. This could mean students studying law, library science or other disciplines to help improve aspects of Blockchain Commons’ documentation. 

When Allen asked his students what they would say to incoming interns, Murray answered in the spirit of what may be considered the internship’s core ethos: Ask plenty of questions and cooperate with others whenever possible.

“If I could give advice to anyone coming in it would be: don’t be afraid to ask for help when you need it. We have one group chat and I wanted to be professional and not spam the chat with questions. One time, I had spent several hours trying to fix this Github commit and couldn’t figure it out. But then Gorazs ended up giving me this one-line solution. If I had asked the question early, I would have saved a lot of time.”

Related Stories

• What People Who Aren’t Bullish on Bitcoin Still Like About It
• Marlin Releases Open-Source ‘Layer 0’ Transaction Relayer for Ethereum

DeFi Pulse fixed a bug that led to a substantial misreporting of total value in decentralized finance protocols, former acting White House chief of staff Mick Mulvaney joined the Chamber of Digital Commerce and there’s a new stablecoin that functions like a savings account. 

Top shelf

Fresh capital
Crypto projects are raising funds as the industry continues to build out decentralized protocols. Ethereum data firm Dune Analytics, a Github-like platform which provides DeFi insights, has raised $2 million led by Dragonfly Capital and included Multicoin Capital, Coinbase Ventures, DCG and DeFi angels. Meanwhile, Skynet Labs, a startup formerly known as Nebulous, has raised a $3 million funding round led by Paradigm. Using the token-fueled Sia network, Skynet allows for decentralized and permissionless hosting. Recently, community members spun up a Skynet app store following rumors that TikTok might get delisted from popular app stores.

Crypto lobby
It’s been a busy season for crypto lobbyist groups, even amid the coronavirus pandemic. Yesterday, the Blockchain Association announced members from 0x, the Stellar Development Foundation and Kraken will join its board. The new members bring regulatory and DeFi experience to the Washington, D.C.-based association. Elsewhere, former acting White House chief of staff Mick Mulvaney has joined the Chamber of Digital Commerce, also based in the U.S. capitol. “His experience as a legislator is very very valuable because he can help us navigate Congress,” CDC’s founder Perianne Boring said. The blockchain advocacy group also added Visa, Goldman Sachs and Six Digital Exchange (SDX) have joined the group as executive committee members.

Related: First Mover: Bitcoins Hit Exchanges as Bloomberg Touts Crypto and DeFi Hedge Fund Seeks $50M

DeFi fund
The cryptocurrency money manager Panxora is raising up to $50 million for a new DeFi-centered hedge fund, CoinDesk reporter Bradley Keoun reports. Based in the Cayman Islands, the fund will primarily buy tokens listed on centralized cryptocurrency exchanges rather than from decentralized – and sometimes community-owned – automated exchanges. Panxora CEO Gavin Smith said few if any decentralized exchanges can guarantee sufficient compliance with anti-money-laundering rules, and also because a token listing from an exchange theoretically implies some level of vetting. The fund is scheduled to start trading on Nov. 2.

Bug fix
DeFi Pulse, the go-to data aggregator for the DeFi scene, said on Twitter late Tuesday night that it had identified and fixed a “previously undetected issue” that led to a substantial misreporting of the total value held on DeFi protocols. The site’s representatives said the TVL (total value locked) in DeFi exceeded a record $13.2 billion on September 18, rather than the $9.1 billion it had previously displayed. Representatives didn’t say explicitly what caused the discrepancy. 

Interest earning?
Peer-to-peer commerce company Origin has unveiled a stablecoin that functions like a savings account. Called Origin Dollars, or OUSD, the coin will earn users “interest” from leveraging various DeFi projects without users having to stake in those protocols. Backed one-for-one by the three big stablecoins on Ethereum, Tether’s USDT, Circle and Coinbase’s USDC and MakerDAO’s DAI, Origin Dollars can be minted by depositing those coins onto Origin’s app or bought on Uniswap. On the backend, Origin will take deposits and start yield farming them in different protocols, starting with the DeFi money market Compound. Returns will be driven back into OUSD, minting more OUSD that will be distributed proportionally to all the wallets that have it, CoinDesk’s Brady Dale reports. 

Quick bites

• Messaging Giant LINE Launches Token Reward Program (David Pan/CoinDesk)
• Christie’s to Auction Bitcoin-Inspired Artwork, Associated Non-Fungible Token (Jaspreet Kalra/CoinDesk)
• More Than 430 Altcoins Are Now Derived From Bitcoin (Will Heasman/Decrypt)
• MakerDAO won't compensate Vaults affected by liquidations during the March market crash (Yogita Khatri/The Block)
• Bitcoins Hit Exchanges as Bloomberg Touts Crypto and DeFi Hedge Fund Seeks $50M (First Mover/CoinDesk)

At stake

Tokenized BTC
The number of bitcoins on Ethereum continues to grow, propelled by ballooning volumes in the DeFi space. 

Related: Blockchain Bites: OCC’s Stablecoin Guidance, EU’s Digital Euro Plans, Chamath’s Bitcoin

CoinDesk’s Will Foxley reports the supply of BitGo’s wrapped bitcoins (WBTC) alone topped 76,000 last week, with more than 21,000 entering circulation. Including the other six major issuers, there’s as many as 107,000 BTC (worth ~$1.1 billion) tokenized for use on Ethereum.

This raises questions about why investors or traders would want to tokenize their bitcoin, which adds complexity and potential software risks to their bags. 

For many, it appears to be the higher rates of return found on decentralized finance protocols especially when compared to other options such as BlockFi, Foxley notes. “Tokenized bitcoin allows investors to bring large amounts of value over to the Ethereum network and its young DEX market in a few clicks,” he writes. 

Skeptics note there really isn’t any bitcoin “on” Ethereum, more of a representation of its value. Others go further in saying that many tokenization options rely on trusting a third party like BitGo to print these representative tokens, thereby adding counterparty and censorship risks to bitcoin. 

Recently, though, a trustless alternative, tBTC, relaunched after an abortive first attempt last April. 

Market intel

Selloff = slump?
A selloff from bitcoin miners may hint at a weakening market, CoinDesk markets reporter Omkar Godbole says. On Tuesday, the net inflow of bitcoin to exchanges (measured by the total change in exchange balances) was 36,800 BTC – the biggest single-day rise since the markets crash on March 13. The uptick in net inflows represents an increase in selling pressure, since investors typically move coins from their wallets to exchanges when they see a possible need to liquidate their holdings. This could extend bitcoin’s recent price losses in the short term, with immediate supports at $10,000 and $9,868 (Sept. 8 low).

Internet 2030

Jeff Wilser paints a picture of the coming “currency cold war,” offering three scenarios of how either bitcoin, digital dollars or China’s DCEP will become the dominant world currency, and one where that concept is thrown out the window. The excerpt below is taken from CoinDesk’s “Internet 2030” series about the future of the crypto economy.

SCENARIO FOUR: A non-government-backed cryptocurrency (such as Bitcoin) gains dominance

What would the internet look like if a private (non-government regulated) currency emerged as dominant?  “If you could pay anybody anywhere in the world, instantly and for free, we wouldn’t be so dependent on the advertising model of internet content,” says fintech guru David Birch.  Micropayments (such as Brave) might finally emerge from niche to widespread.  

“If I can pay 25 cents to read the thing I want to read on The New York Times – I don’t have to subscribe to it and use credit cards – they don’t have to show me disgusting adverts for ear wax, so that’s kind of a win-win,” says Birch. Then again, he acknowledges that this is class-based, as “the rich can buy themselves out of this cesspit.” 

Birch also highlights the optimist possibilities, as “If you could do business with anyone in the world, hopefully, new products and services would spring up, to facilitate that trade and interaction.”

International uncertainty may drive cryptocurrency usage. “If we have a stable geopolitical structure, where most people and most nations feel secure, then that will not encourage a large rise of non-government digital currencies,” reasons futurist Ross Dawson. 

“Whereas if we have a deep social division and disruption – and civil wars in developed countries in the next decade, that’s very plausible, depending on how you define ‘civil war’ – this will fracture societies and trust in government, and could lead to wholesale shifts to cryptocurrencies.”  

With apologies to the crypto super-bulls, this is not necessarily the Lambo Scenario or Moon Scenario. Dawson imagines a potential world of “dueling economies” – even within the United States – if a cryptocurrency emerges dominant. One will be the official legal economy that’s regulated by the U.S. government (like today), and the other an unregulated “shadow economy” that’s dominated by the cryptocurrency. 

“There will always be national currencies,” says Dawson. “We’re never going to have a time when the government says, “Okay, we give up, we’re not going to do this anymore.” (He later clarifies that maybe “never” is too strong of a word, but certainly not in the next decade.) 

So the question is what’s the balance between the shadow economy and the regulated economy? He points to Italy’s shadow economy as an example, which by some estimates is more than 12% of the nation’s GDP – largely the result of  tax evasion.

At least  in this scenario, Bitcoin (or some other cryptocurrency) is finally not just a Store of Value or a speculative investment. It could be widely used to buy a cup of coffee, pay your rent, or, yes, to buy your pair of sunglasses.

CoinDesk’s “Internet 2030” series examines the future of the medium and what role blockchain and crypto will play in it with content and conversations on the future of the decentralized web. If you are interested in submitting an op-ed for the series, please reach out directly to daniel@coindesk.com.

Podcast corner

Unlikely allies
Marty Bent, author of one of the best known daily bitcoin newsletters and host of “Tales From The Crypt” podcast, joins The Breakdown to discuss his latest venture, Great American Mining, an apparently energy-efficient bitcoin mining project. According to Bent, bitcoin mining and big energy are unlikely allies.

Who won #CryptoTwitter? Related Stories

• First Mover: Bitcoin’s Latest Sell-Off Gets Crypto Traders Mulling Election Chaos
• Blockchain Bites: DeFi’s Dividend, China’s ‘New Battlefield,’ the Big Banks’ ‘Suspicious Activity’

Parity Technologies has released the second version of its blockchain building kit, Substrate 2.0, according to a blog post shared Wednesday with CoinDesk. 

The new release gives developers additional tools to customize a blockchain “precisely for your application or business logic,” the post reads. 

Parity Technologies is the developer of the Polkadot blockchain with ambitions for developing a Web 3.0, undergirded by a meshing of various blockchains.

Related: Polkadot Projects Will Be Able to Mint Their Own Tokens in 2021

The centerpiece of that multi-blockchain vision is Substrate. It acts as a tooling kit for developers making their own blockchains with Polkadot – also built on Substrate – working underneath as a communication and economic layer of sorts between Substrate-based blockchains.

For example, Parity Tech’s “canary” network Kusama and security token platform Polymesh are two Substrate blockchains. Both chains should be able to communicate with each other, if everything pans out as co-founder of Parity Tech Gavin Wood foresees.

Read more: Polymath Moves Security Token Platform Off Ethereum and Onto Parity’s Substrate

Substrate 2.0

The new release adds a few core functionalities as Polkadot continues rolling developments after its May debut, said Parity Technologies head of public affairs Peter Mauric to CoinDesk in a phone interview.

Related: Swisscom Blockchain Wins Grant From Web3 to Help Toughen Polkadot’s Proof-of-Stake Network

Most importantly, the code shipment includes 70 composable “modules” for blockchain architects to plug and play various design ideas. Parity developers call these modules “pallets.” 

Read more: Polkadot Releases Rococo, Its Test Environment for Interoperable ‘Parachains’

For example, pallets exist for managing an on-chain developer treasury or for allowing smart contracts on a Substrate-based blockchain to speak with the Ethereum Virtual Machine (EVM). 

Substrate 2.0 also includes modules for bringing off-chain data onto the blockchain using what it calls “off-chain workers.” These remove the burden of intensive processes and massive data sets from specialized nodes on the network, and communicate with the main chain to ensure all network participants are kept up to date automatically.

Addressing what is generally referred to as the “oracle problem,” these off-chain workers help bring data from the real world, such as prices or temperatures, onto a blockchain and are “ideal for Internet-of-Things (IoT) devices or real-world data inputs via oracles,” the blog states.

Related Stories

• Polkadot-Based Acala Raises $7M as DeFi Grabs Land on Another Blockchain
• Developers Eye Mid-September for Ethereum, Polkadot Bridge Proof-of-Concept

Uniswap’s week-old UNI token is the big winner in Wednesday trading with a rebounding price and a market cap swelling by over $100 million in the past 24 hours.

• Data from CoinGecko shows the price of the UNI token has increased by just under 20% from $3.80 to over $4.60 over the same time frame.
• That’s led to the coin’s market cap jumping by nearly $120 million, from $460 million to just under $580 million at around 13:00 UTC.
• At press time, UNI was the 33rd biggest cryptocurrency with a market cap of $581 million, and individual tokens trading at $4.75.

• Mounting concerns over a second possible lockdown in both the U.S. and Europe have, over the past few days, sparked a macro sell-off which has had a knock-on effect on digital assets, with approximately $30 billion shaved off the total market cap since Saturday.
• UNI has been no exception. Having hit a record high of $8.40 on Friday, the coin slid across the weekend and into the new week, hitting a low of $3.44 Tuesday morning.
• But its rebounding price in the past 24 hours is markedly different from the lackluster movement of other, more established, cryptocurrencies.
• Bitcoin, the largest digital asset by market cap, has stuck around $10,400 to $10,500 since its $500 fall on Monday.
• Ether, the second-largest, has climbed just $4 over the same time frame.
• The net inflow of bitcoin into exchanges, indicative of holders preparing to sell, has since risen to levels not seen since March 13.
• Launched last Wednesday, UNI is designed to power on-chain governance decisions on Uniswap – one of the most popular trading platforms in the decentralized finance (DeFi) space.
• It’s possible that as a barely week-old DeFi coin, UNI’s price may be shielded from some of the “real world” macro effects that have put other more widely traded digital assets into the deep freeze.
• But it could also be that the market is anticipating greater institutional involvement in the DeFi space.
• CoinDesk reported Wednesday that crypto money manager Panxora is looking to raise $50 million for a new DeFi hedge fund. CEO Gavin Smith said the firm saw this new branch of crypto as having “great potential.”
• Indeed, while there doesn’t appear to be a surge in DeFi coins across the board, the native tokens for both yEarn and Band, two alternative DeFi protocols, have surged 7% in the past 24 hours, according to CoinGecko data.

See also: Uniswap Users Say Uniting Can Strengthen UNI

Related Stories

• Venezuela Legalizes Crypto Mining but Will Force Industry Into National Pool
• This Ethereum Startup Is Building a ‘DeFi Firewall’ for Institutional Investors
• First Mover: Bitcoins Hit Exchanges as Bloomberg Touts Crypto and DeFi Hedge Fund Seeks $50M
• Robinhood Raises Cool $660M in Extended Funding Round

Venezuela’s government has given cryptocurrency miners mixed news this week.

• Firstly, the government department responsible for regulating cryptos has legalized the mining industry, local industry news site CriptoNoticias reported Tuesday.
• The new decree was published in the Official Gazette on Monday and authorized by by Joselit Ramirez, head of National Superintendency of Crypto Assets and Related Activities (SUNACRIP).
• It states that any local entity wishing to mine cryptos must apply for a licence and be listed on a government register.
• Applicants will need to hand over information to the authorities on the nature of their mining activities and keep their mining-related records for 10 years.
• Manufacturers of mining equipment or mining data centers will be able to apply for a special license, according to the report.
• The importing and manufacturing of mining equipment will be supervised by Venezuelan authorities.
• Unusually, all mining activities must be carried out through an official National Digital Mining Pool, with those who operate outside it to face penalties.
• Centralizing mining in this way will mean that the government is able to control any income earned from the pool’s combined mining rewards, as well as paying out to contributors.
• Thus the government could potentially freeze or delay miners’ payments or levy any taxes before payments have been made, says CriptoNoticias.
• Venezuela’s economy has been suffering from economic mismanagement and international sanctions led by the US.
• Its president, Nicolas Maduro, has previously launched a purportedly oil-pegged crypto token called the petro in an attempt to bring in much-needed foreign currency.
• The U.S. Department of Justice alleged earlier this year that Maduro had used cryptocurrency to conceal transactions related to illicit drug-running, though it did not specify if the petro was involved.
• SUNACRIP’s Ramirez is also wanted by the U.S government on charges of corruption and links to the narcotics trade.

Also read: Venezuela’s Maduro Mandates Petro Use in Funding of Housing Project

Related Stories

• Robinhood Raises Cool $660M in Extended Funding Round
• Data Site DeFi Pulse Fixes Bug, Says Value Locked Actually Hit $13B Last Week
• 0x, Kraken and Stellar Awarded Board Seats at Top Crypto Lobbying Association
• Nasdaq, SEC-Registered Fund Manager to Launch First-Ever Crypto ETF in Bermuda

As decentralized finance (DeFi) balloons to a roughly $10 billion market, infrastructure builders are coming up with ways to reduce the associated risks.

Announced Wednesday, wallet and custodial technology provider Trustology has added a “DeFi Firewall” to its suite of institutional-investment tools. The “Firewall” is basically a set of rules or filters selected by a fund, specifying which DeFi protocols or decentralized exchanges they consider kosher.

With DeFi’s liquidity mining opportunities driving adoption and demand, investors from a more traditional or institutional background want some of this action. At the same time, they have to be able to show that funds are being managed in as prudent a fashion as possible.

Related: First Mover: Bitcoins Hit Exchanges as Bloomberg Touts Crypto and DeFi Hedge Fund Seeks $50M

Trustology, which is backed by ConsenSys and Two Sigma Ventures, has already built wallet-native tools to prevent clients from sending their crypto to the wrong address or the wrong exchange, and now this is being extended to DeFi smart contracts, explained Trustology CEO Alex Batlin. 

“A fund might decide it’s allowed to use Uniswap but not KyberSwap, for one reason or another,” said Batlin. “Or they might decide that USDC or MakerDAO’s Dai are allowed but not USDT and that these funds are only ever circulated within a permitted set of addresses – now they can prove to their investors that is all possible.”

Catering to institutional investors who’ve remained largely on the sidelines of the emerging yield farming trend is something other industry players are also courting. Just last week, the Chicago DeFi Alliance launched a Liquidity Launchpad program to get “informed and professional players” into the DeFi space.

Read more: This DeFi Group Wants to Bring Maturity to the Yield Farming Craze

Related: Data Site DeFi Pulse Fixes Bug, Says Value Locked Actually Hit $13B Last Week

Certain blockchains have endeavored to protect smart contracts by preventing unauthorized access, and there are several DeFi-primed wallet solutions around today, said Batlin, but nothing that offers the type of institutional controls for businesses to legally operate in DeFi. 

Next on the Trustology roadmap will be the introduction of “DeFi Notifications,” Batlin said. This is an automated system to deal with DeFi events, such as when a fund manager has placed a lot of collateral in a particular smart contract and the price of ether (ETH) has gone up or down.

“One of the problems with blockchains is the lack of a notification service so you have to be constantly monitoring the blockchain to figure that out because if you don’t, your positions can get liquidated,” said Batlin. “We can either send you the automated notification through webhooks or email alerts.”

Read more: Alchemy Notify Wants to Simplify Blockchain UX With a Single Push

Further down the road, the plan is to introduce “DeFi Flows,” Batlin added. “So we can pick up that an event has happened and have an automated response to that. For instance, when some event takes place, a broker might want funds automatically sent to Aave to be interest-bearing.”

Batin said both of the upcoming products would be released in four to six weeks.

So, if institutional DeFi is a thing, what form is it likely to take? 

“It’s more family office and very alternative, and they’re looking at 10%-15% allocation,” said Batlin, adding:

“We’ve signed up five new funds in the last two weeks and they were all guys from the traditional space who had set up crypto funds to focus on DeFi. So it’s more about fragmentation than traditional funds allocating.”

Related Stories

• DeFi Angels, VC Firms Back $2M Round for Data Provider Dune Analytics
• Crypto Hedge Fund Looks for $50M to Buy DeFi Tokens Amid Market Pullback

The upcoming U.S. presidential election has become one of the most contentious in history, fraught with searing divisions over everything from the economy to race to the continued health of democracy itself.  

So it’s not surprising that Wall Street options traders are now pricing in expectations of elevated market volatility around the November election. Analysts for the investment banking giant Goldman Sachs noted earlier this month that price swings of nearly 3% are implied around election day in the Standard & Poor’s 500 Index of U.S. stocks. 

What’s surprising is that options trading on notoriously volatile bitcoin prices, which often trade in sync with stocks, implies a stretch of uncanny calm come November, CoinDesk’s Omkar Godbole reported Tuesday.  

Related: This Ethereum Startup Is Building a ‘DeFi Firewall’ for Institutional Investors

Godbole writes that ample technical factors might explain the discrepancy, from the influence of certain hedging strategies to the reality that the nascent bitcoin-options market is still quite small in relative terms, with most action concentrated in “front-month” contracts that expire in September.  

Another possibility, according to Godbole, is that bitcoin, as a globally traded asset, might actually be less susceptible to the U.S. outcome, even though the cryptocurrency is priced in dollars. The implication could be that bitcoin decouples at that point from the U.S. market. 

“The U.S. elections will have relatively less impact on bitcoin compared to the U.S. equities,” Richard Rosenblum, head of trading at the digital-asset firm GSR, told Godbole. 

Crypto investment firm Panxora seeks $50M for new hedge fund to buy DeFi tokens

There’s been a months-long string of astonishing developments and ridiculous twists in the fast growing arena of decentralized finance, or DeFi. Digital tokens with names like YAM and SUSHI have appeared overnight, exploding in value, dominating crypto headlines and sparking serious conversations about the far-reaching potential of digital-asset markets and financial technologies. 

Related: Bitcoin Market Weakening After Macro-Based Sell-Off, On-Chain Data Suggests

With total collateral locked into automated, blockchain-based DeFi trading and lending platforms surging more than 20-fold this year to $13 billion as of last week, big centralized cryptocurrency exchanges like Binance, Coinbase and OKEx have rushed to list the tokens and roll out DeFi offerings to avoid missing out. 

Now, one cryptocurrency money manager, Panxora, seeks to raise up to $50 million for a new hedge fund to buy digital tokens associated with the fast-growing decentralized finance (DeFi) sector. 

“This has got the potential to really change the way finance is carried out,” Panxora CEO Gavin Smith said in an interview. 

In an ironic twist, Panxora’s announcement comes just as the DeFi market appears to be cooling. Just in the past week, total collateral in the systems has declined to about $9.5 billion, according to data tracker DeFi Pulse. Aave, a decentralized lender, saw its LEND tokens fall by 12% during the seven days through Tuesday, according to Messari, a cryptocurrency data firm.

Smith suggests that a correction was bound to come at some point. “We expect the market to be volatile in the early years,” Smith said. “While there is great potential there will inevitably be setbacks along the way.”  

Read More: Crypto Hedge Fund Looks for $50M to Buy DeFi Tokens Amid Market Pullback

Bitcoin Watch

Key bitcoin (BTC) on-chain metrics have flipped bearish this week, suggesting the top cryptocurrency by market value may remain under pressure in the short-term. 

On Tuesday, the net inflow of bitcoin to exchanges (measured by the total change in exchange balances) was 36,800 BTC – the biggest single-day rise since the markets crash on March 13, according to data source Chainalysis.

“Since Sept. 20, the net daily inflow of bitcoins to exchanges have been increasing and trade intensity has been declining,” Philip Gradwell, an economist at Chainalysis, told CoinDesk.

The data point “indicates a weakening market,” he said. 

– Omkar Godbole

Read More: Bitcoin Market Weakening After Macro-Based Sell-Off, On-Chain Data Suggests

Token Watch

Ether (ETH): Ether in parked in smart contracts rises to four-year high. 

Wrapped Bitcoin (WBTC), Ren’s rBTC (RBTC): Supply of tokenized bitcoin on Ethereum passes $1.1B.

TBTC (TBTC): Thesis-built protocol relaunches after bitcoin-on-Ethereum project suffered smart-contract bug in May.

Aavegotchi (GHST): Aave-themed game revolving around value-staked NFTs serves as meta trip through DeFi ecosystem, Delphi Digital says. 

What’s Hot

Bloomberg says “DeFi mania” pushes crypto to top-performing asset class of 2020, beating stocks, bonds, gold (Bloomberg)

Currency cold-war prognosticators mapping out scenarios from “Rainbow” to “Red,” dominated by the U.S., China or bitcoin (CoinDesk)

Bermuda Stock Exchange announces listing of exchange-traded fund to track digital-asset market (CoinDesk)

Peer-to-peer commerce company Origin’s new OUSD stablecoin uses yield farming to automatically grow holders’ balances (CoinDesk)

Trump’s former White House chief of staff Mick Mulvaney joins blockchain advisory group Chamber of Digital Commerce; Goldman Sachs and Visa join as executive committee members (CoinDesk)

Analogs The latest on the economy and traditional finance

Bank of England governor won’t say no to negative interest rates; it’s “in the tool bag” (FT)

Federal Reserve Chair Jerome Powell says U.S. central bank will continue providing aid “for as long as it takes” (CNBC)

Trump Fed nominee Shelton draws scrutiny for reversal of earlier stance that U.S. should raise interest rates and return to the gold standard (NYT)

Iconic clothing retailer Ralph Lauren to cut 15% of workforce after steep revenue drop (WSJ)

Blackstone closes $8B fund for real-estate lending just as remote-working trend casts clouds over commercial office market (WSJ)

Tweet of the Day Related Stories

• Data Site DeFi Pulse Fixes Bug, Says Value Locked Actually Hit $13B Last Week
• DeFi Angels, VC Firms Back $2M Round for Data Provider Dune Analytics

Part of an art project that combines 40 paintings carrying a transcription of the code behind the Bitcoin blockchain is set to go under the hammer at Christie’s New York. 

According to a press statement, the sale for 20 such paintings in the project will kick off at Christie’s in New York City through an auction for the artwork “Block 21” which is slated to take place on Oct. 7. 

• Created by the Robert Alice project, the first half of the paintings (Blocks 0 to 20) were privately offered to collectors and are currently held by some prominent names in the blockchain world including Binance CEO Changpeng Zhao, Bloq Chairman Matthew Roszak, Coinscrum founder Paul Gordon and others.
• The project was started by London-based artist Benjamin Gentilli to promote blockchain culture in the visual arts. The project and was created solely by Gentilli over a three-year period, according to the statement.
• The artwork to be auctioned at Christie’s on Oct. 7 will also be put on display in the auction house’s galleries in New York between Oct. 1 and Oct. 7. The firm’s statement also said that “Block 21” will be offered for sale at an estimated price ranging between $12,000 to $18,000. 
• The auctioned artwork is also associated with an Ethereum-based non-fungible token (NFT), which will serve both as a way to prove authenticity and be a digital representation of the physical painting. “The NFT will be hosted on Ethereum, drawing links between Bitcoin’s codebase as the originator and ground zero for the rest of the ecosystem,” Gentilli said in an email.
• Said Vivian Brodie, a contemporary art specialist at the auction house: “This is Christie’s first time presenting a work that explores crypto culture at auction and, as ever, we are very excited to welcome new audiences and collecting communities across the globe to Christie’s.”

Read more: As Museums Go Dark, Crypto Art Finds Its Frame

Related Stories

• The Fast-Growing NFT Market Is Problematic Yet Promising
• Dapper Labs–USDC Integration Helps NBA Collectibles Game Clear $2M in Revenue Since June
• NFT Marketplace Blockparty Partners With DJ 3LAU on Digital Music Collectibles
• Dapper Labs Releases CryptoKitties Based on Rock Band Muse