CoinDesk Crypto

The Swiss government is encouraging blockchain startups to set up shop with new laws that lower legal barriers to such businesses while leaving favorable tax laws untouched.

The National Council, Switzerland’s equivalent of the U.S. House of Representatives, unanimously passed a legislative package changing about a dozen financial laws on June 17. The changes, proposed by the Swiss Federal Council, are intended to remove legal barriers to applications of blockchain and distributed ledger technology. 

On June 19, the Federal Council acknowledged a report prepared by the Federal Department of Finance that concluded there was no need to make special amendments to existing tax laws with regard to blockchain. The report was commissioned by the Federal Council in 2018 when the government decided to examine existing tax laws and assess any need for amendments. 

Related: South Korean Government Turns to Blockchain Tech to More Securely Store Clinical Diabetes Data

Switzerland has long been a blockchain startup magnet. The city of Zug, in particular, was a popular location for token-funded projects during the initial coin offering (ICO) boom of 2017, earning it the nickname Crypto Valley. 

While ICOs have faded, Switzerland’s enthusiasm for blockchain technology has not. 

“It’s known that Switzerland is very much trying to encourage blockchain business. It’s a political objective,” said Rolf H. Weber, professor of financial market law and chair of the working group for regulatory issues at the Swiss Blockchain Federation.

The changes were largely based on a Federal Council proposal filed last year, and will now be passed on to the upper chamber, the Council of States, for a final vote this fall. 

Related: Mapping the Future of the SEC (There’s a Nonzero Chance Hester Peirce Takes Over)

Through communications specialist Joel Weibel, the Swiss Federal Tax Administration said that Swiss laws must guarantee legal certainty and the openness of authorities to new technologies.

As it exists now, Swiss law is cumbersome, particularly when applied to the transfer of security tokens, Weber said. All transfers must be done in writing, like the traditional exchange of hands of a bond. But the new legislation will make the transfer of security tokens easier, Weber said. 

“In my opinion, the most important changes are in company and securities law,” Weber said. 

Unlike any digital asset before it, a token has the same characteristics of a piece of paper, or written agreement, said Christian Meisser, CEO of Swiss blockchain legal consultancy fim LEXR AG.

“Why not give it the same properties as a piece of paper? If you transfer a token, you also transfer any right of ownership linked to it. That is the revolutionary aspect of the new Swiss law,” Meisser said.

According to Weber, as soon as the law is enacted, owners will be able to freely register and transfer their security tokens within distributed electronic ledgers, and providers of ledger technology will be allowed to offer those services without legal ramifications.

New provisions made to bankruptcy laws would allow owners to appeal to authorities to reclaim their assets. 

“This is not possible today with digital tokens because with tokens you don’t have proof of ownership. It’s similar to cash. You can never extract or withdraw cash from a bankrupt estate,” Weber said. 

The new laws also contain eight provisions describing how providers of digital ledger technology and trading platforms can obtain a license from the financial authority. 

Even though the legislative package passed without opposition, according to Meisser, left-leaning politicians raised concerns that the new laws failed to address the environmental impact of bitcoin mining, a process that requires large quantities of energy and resources.

Instead of proactively regulating new financial instruments, lawmakers in Switzerland typically try first to apply existing laws, said Luzius Meisser, founder of Bitcoin Association Switzerland 

“Once that doesn’t work anymore, then we create a new law,” Luzius said. 

In his view, Switzerland does not look at blockchain technology or crypto assets as unique entities, but as extensions of existing instruments.

According to Weber, the new laws would change the broader framework to improve conditions for owners and providers of crypto assets.  

“You may say this is a ‘blockchain law’ because all changes relate to blockchain business models. But in contrast to a few other countries like Malta or the Principality of Liechtenstein, Switzerland is not going to implement blockchain law in a narrow sense,” Weber said. 

Two days after the National Council vote on June 17, the Federal Council decided that prevailing Swiss tax laws will not need to be amended to include special considerations for blockchain technology. 

As things stand in Switzerland, bitcoin mining is exempt from Value Added Tax (VAT) while some security tokens are exempt from withholding tax, and there is no capital gains tax on investments. 

According to Luzius, Switzerland has a withholding tax placed on dividends earned from traditional securities such as bonds or shares. Weibel from the tax authority said that this tax also applies to “shares in tokenized form” to ensure all investors are treated equally.

“But current Swiss law also allows participation in the company’s profit without levying the withholding tax on the income related to this profit. This option is now also available in the attractive form of tradable participation tokens,” Weibel said. 

In simpler terms, there are certain special taxes in Switzerland that do not apply to security tokens but apply for securities, Luzius said.  

“Lawmakers say they are okay with not filling this gap for now because the market for security tokens is still very small,” Luzius said. 

To encourage earnings through investment, the country does not tax capital gains on any investment, and the Department of Finance report assessing the need for new tax laws concluded that there was no need to start with crypto. 

“This is very good news for the crypto space because it means less taxes at least for now,” Luzius said.

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Deutsche Boerse has listed an exchange-traded product (ETP) that tracks the value of bitcoin.

21Shares, a Swiss-based product provider formerly known as Amun, said its bitcoin ETP had been officially accepted Wednesday to list on Xetra, Deutsche Boerse’s electronic trading venue.

“The listing on Xetra not only strengthens our current position in Germany but also opens up institutional-grade crypto products to the wider European and international markets,” said Laurent Kssis, 21Shares’ managing director, in a statement.

Related: Forget Bitcoin’s Volatility, BoA Says Unstable UK Pound Like an Emerging Market Currency

Deutsche Boerse Group has two trading venues: Xetra, and the Frankfurt Stock Exchange. Together, they count as the third-largest trading platform in Europe, just behind the London Stock Exchange and Euronext.

Deutsche Boerse’s data shows more than €150 billion worth of equities and derivative products changed hands at Xetra in May. In December last year, the exchange handled approximately €300 billion in volume.

The London-based investment firm ETC Group listed a bitcoin-backed security on Xetra, earlier this month.

Bitcoin ETPs provide exposure to bitcoin in a regulated asset-class. In contrast to the U.S., where regulators have been loathe to sign off on bitcoin ETF applications, there are already three to four entities offering crypto-backed products across Europe.

Related: Bitcoin News Roundup for June 10, 2020

21Shares launched its first Bitcoin ETP at the end of 2018 on the SIX Swiss Exchange, the largest in Switzerland. The company has since launched products that track other cryptos, some track multiple digital assets. It released a “Short Bitcoin” ETP which inversely tracks bitcoin’s price in February.

See also: Asset Manager Wilshire Phoenix Files to Launch New Bitcoin Investment Trust

WisdomTree, the world’s largest product provider, launched a physically-backed bitcoin ETP on SIX last December.

21Shares’ products already listed seven of its ETPs on retail-orientated Boerse Stuttgart – Germany’s second-largest exchange – in January.

Kssis told CoinDesk the firm wanted to increase exposure in Europe’s institutional market.

“Most institutions do not have easy access to Stuttgart as it’s a regional exchange,” he said.

Swiss institutions currently hold up to 80% of 21Shares’ assets under management, according to Kssis. Listing on Xetra, which has a greater international reach, will make 21Shares’ Bitcoin ETP accessible not to investors based around the world.

Investors will be able to begin trading the Bitcoin ETP on Xetra from Thursday.

• Deutsche Borse Exchange to List New Bitcoin Exchange-Traded Product
• ‘Short Bitcoin’ ETP Available to Investors on Germany’s Second-Largest Exchange

Not every U.S. lawmaker is on board with the idea of a central bank digital currency (CBDC) or digital dollar, but no one explicitly rejected it during a hearing of the powerful Senate Banking Committee Tuesday.

That’s probably the biggest takeaway from Tuesday’s hearing, where the panel heard from former regulator turned CBDC evangelist Chris Giancarlo, Paxos CEO Charles Cascarilla and Duke Law professor Nakita Cuttino as expert witnesses. 

The lawmakers present asked questions about financial inclusion, including what potential regulations or laws might make digitization easier and more accessible to the unbanked.

Related: BIS Plans New Central Banking Fintech Research Hubs in Europe, North America

“The U.S. needs a digital dollar,” said Senator Tom Cotton (R-Ark.). “The U.S. dollar has to keep earning that place in the global payments system. It has to be better than bitcoin … it has to be better than a digital yuan.”

Other highlights of the hearing:

• Chairman Mike Crapo (R-Idaho) noted some traditional financial systems may be limited in how accessible they are, citing the need for pre-existing bank accounts. Fintech solutions such as stablecoins can provide an alternative, Crapo said, though there are concerns around the oversight of some of these coins, which unlike most cryptocurrencies are designed to hold their value relative to fiat.
• Ranking Member Sherrod Brown (D-Ohio) warned that tech companies have made large promises about disrupting existing industries. He pointed to ridesharing and social media services, saying they promised to “build a more just and equal country,” but instead the companies essentially found ways to “pay themselves.”
• While only eight senators asked questions, out of 25 on the committee, every question was relevant to the topic of digitizing payments, which you can’t always count on (recall last year’s off-the-rails Facebook grillings).
• Cuttino called for open access to real-time payments: “In the absence of public policy addressing open access payments and real-time payments, low-income and moderate-income Americans will continue to have limited resources needed, whether by traditional fringe services like payday loans or some novel fringe service.”
• The current accounts-based payment architecture in use today is “slow and exclusionary,” Giancarlo said. While a token-based architecture is not a “panacea,” it can help provide broader access.
• Cascarilla said a federal framework toward regulating crypto companies could be beneficial, though he noted that his company operates nationwide despite operating under the New York Department of Financial Services’ limited-purpose trust charter.

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Spain’s National Police on Sunday arrested 33 people who allegedly sold illegal medications online and laundered at least part of their €3 million ($3.37 million) profit in virtual currency.

• The busts, conducted against two separate organizations, resulted in the seizure of over 70,000 erectile dysfunction tablets and other drugs that Spain’s health regulators have not approved.
• Police claim that one of the organizations’ vendors moved the drugs from a factory in India through Singapore and the United Kingdom before importing them to a Murica garage for distribution.  
• In documenting the suspects’ attempts to cover their digital tracks, police said the “purchase of virtual currency stands out.”
• The Murica organization netted vendors at least 3 million euros, authorities said. They alleged the criminals laundered some of those funds through virtual currency, but did not disclose which cryptocurrency.

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Zimbabwe’s central bank, seeking to block attempts to avoid the country’s hyperinflation, halted all transactions conducted by “mobile money agents” this week, and limited payment sizes through other processors.

• This impacts potentially up to 85% of all transactions.
• Residents with money stored in one of these mobile providers will need to visit a local bank to withdraw their funds.
• In a statement, the Reserve Bank of Zimbabwe said the move is necessary to “[p]rotect consumers on mobile money platforms which have been abused by unscrupulous and nonpartisan individuals and entities to create instability and inefficiencies in the economy.”

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Quiet is the best word to describe the bitcoin market. Tuesday’s trading stayed within the same price range maintained over the past several weeks, with bitcoin remaining inside a tight $200 range for much of the day. 

• Bitcoin stays in a tight range above $9,000
• Ether up less than 1%
• Bitcoin volatility continues to drop
• Market in “wait and see” phase

The leading cryptocurrency only briefly dipped below $9,050 Tuesday afternoon and did not break above $9,250, according to Bitstamp. Bitcoin was trading hands around $9,140 as of 20:00 UTC (4 p.m. ET).

Ether, the second-largest cryptocurrency by market capitalization, dropped 1.2% from its Tuesday open, trading around $225 as of 20:00 UTC (4 p.m. ET), according to Bitstamp. 

Related: UCSF Hospital Paid $1.14M in Bitcoin After Ransomware Attack

Some traders are growing tired of this range as expectations for a breakout in either direction are crushed. “Every breakout in the last six weeks has revealed to be a false one, taking many traders to the woodshed in just a few hours,” said David Lifchitz, partner at quantitative trading firm ExoAlpha. 

See also: Bitcoin Still Up 27% This Year Despite Dismal June Performance

Even liquidated contracts on BitMEX, the largest bitcoin derivatives exchange by open interest, show how stagnant bitcoin’s price action has become. Total daily liquidations on the exchange have not passed even $4 million for three consecutive days, according to Skew. 

Traders are getting “mixed messages” from the bitcoin markets, Denis Vinokourov, head of research at prime broker Bequant, told CoinDesk. “On the one hand, the futures curve is in contango (upward sloping), which is indicative of leverage interest. But, yet at the same time, the options market continues to point to downside price protection demand, with front-end (shorter-dated one-month [expirations]) skew much higher relative to the rest of the curve and also when compared to Ethereum,” said Vinokourov.

Related: Coin Metrics Offers More Rigorous Measure of Crypto Market Supply

As its price stands still, bitcoin’s volatility plummets. Its 30-day volatility, for example, is reaching its lowest level since late February, according to Coin Metrics. 

When bitcoin will finally pick a direction – up or down – for a new trend is anyone’s guess. “We’re still in a ‘wait-and-see’ phase,” Lifchitz told CoinDesk. The market, he added is “definitely in need of a catalyst to break above $10,000 on heavy volume or below $8,000.”

If the price drops, however, some traders expect bulls to capitalize on the opportunity and buy more. “Dip buyers,” a name for investors who increase their position sizes when an asset price declines, will “aggressively” buy any substantial drops in the bitcoin price, said Alistair Milne, chief investment officer at Altana Digital Currency Fund. 

See also: Crypto Long & Short: What Trends in Volatility Could Mean for Bitcoin

Taking to Twitter, Milne said traders are “still underestimating” the amount of bitcoin that has been accumulated and removed from the market by long-term, often ideological investors. The exact amount of bitcoins held off the market is roughly 73%, according to Glassnode. Also taking to Twitter, CTO Rafael Schultze-Kraft noted that approximately 13.5 million bitcoins have not moved since the start of 2020, signally bitcoin investors’ commitment to hold through an uncertain market.  

Tuesday cryptocurrency gains included a variety of decentralized finance assets, according to Messari. Nexo (NEXO) gained 4.2%. Also up was kyber network (KNC) by 2.8%. All price changes were as of 20:00 UTC (4:00 p.m. ET).

In commodities, Tuesday was a good day for gold bulls as the yellow metal gained 1.25% from its daily low at $1,764. Silver gained more than 2% from its daily open Tuesday. 

Meanwhile, gains from the S&P 500 pushed most other major stock indices down on Tuesday.

See also: A Key Thesis for Bitcoin’s Long-Term Bull Market Just Got a Knock

The S&P 500 gained 1.5% Tuesday, trading at 3038 as of 20:00 UTC (4 p.m. ET). 

The FTSE 100 index in Europe dropped roughly 1.5% from its daily open. Nikkei 225 also dipped Tuesday, down 0.25% from its daily open.

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According to a recent report by BBC News, University of California San Francisco paid hackers $1.14 million in bitcoin after a ransomware attack earlier this month. 

• The Netwalker ransomware group is believed to be behind the attack which encrypted data on the School of Medicine’s servers, making it temporarily inaccessible. While the hackers first demanded $3 million, after negotiations on the dark web with UCSF they agreed to a ransom of $1.14 million. 
• After the university transferred 116.4 bitcoins to Netwalker’s electronic wallets, it was given a decryption tool to unlock the data blocked by the attack. 
• While the university did not specify what data was affected, a statement released on its website said it does not currently believe that patient medical records were exposed. The incident also did not affect patient care delivery operations or COVID-19 related work, according to the university. 
• UCSF told BBC News that it was now assisting the FBI in its investigation, while also working to restore the data that was taken down. The Netwalker group has also been linked to ransomware attacks on two other universities over the last couple of months. 

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• First Mover: Bitwise Calls $50K Bitcoin Price When Market Calm Finally Breaks
• Bitcoin Still Up 27% This Year Despite Dismal June Performance

The daily distribution of the Compound protocol’s COMP token will soon change dramatically.

Compound governance proposal #11 passed today at 18:37 UTC. It will go into effect in two days, after the cooling-off period passes. When that happens, it’s very likely yield farmers will exit the riskiest markets of basic attention token (BAT) and 0x (ZRX) and move their activity into safer assets, stablecoins such as USDC and DAI.

A week ago, the Compound team put forward a proposal to shift how COMP gets distributed to liquidity providers and borrowers on Compound, the premiere collateralized lending application in decentralized finance (DeFi). 

Related: DeFi’s ‘Agricultural Revolution’ Has Ethereum Users Turning to Decentralized Exchanges

“When the Compound token distribution began, no one really knew what to expect,” Robert Leshner, Compound’s founder, told CoinDesk. “Our team was surprised by how powerful the impact of the distribution was on incentives, and so was the community.” Compound staff wrote the proposal but Leshner said they abstained from voting.

The vote closed Tuesday with 771,804 COMP staked in favor and less than one COMP staked against; that is the equivalent of 26% of all liquid COMP voting in favor of the change, based on CoinGecko statistics. A total of 115 wallet addresses participated with only four voting against the motion.  

Compound started distributing COMP tokens on June 15 following the announcement of the distribution mechanism on CoinDesk.

COMP changes

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Under the original rules, users are given COMP based on the amount of interest they earn or the amount of interest they pay (or both, in most cases).

The theory in designing it that way, Leshner said, was that “if you are paying a lot in interest or earning a lot of interest you have skin in the game [for governing the protocol].”

Read more: Compound’s Approach to DeFi Governance Starts With Giving Away COMP Tokens

The hope had been the system would favor the most fervent users with an actual need for Compound’s services, but no one expected the gap between the cost of yield farming COMP and the price of COMP on the market to diverge so dramatically. 

This became very attractive for investors looking to find ways to game the system, and they did.

There was a dramatic shift in the usage patterns on Compound and markets that had not been very popular before saw a spike in activity. BAT offers the starkest example. 

On June 15, total supply of BAT on Compound was just under $2 million. As of this writing, it is $333 million.

What will happen?

Every day, 2,880 COMP are distributed to users. That’s not changing. But under the new rules, which go into effect Thursday, users will simply earn COMP on the dollar value of assets they have put in or borrowed from the system.

By simply allocating COMP based on dollars in the system, stakeholders say the overall interest in COMP yield is unlikely to drop, but the assets will almost certainly shift to different markets. 

“By distributing on the basis of total borrow, the incentive to self-deal in niche asset pools largely dries up, and we’re likely to see much of this capital (particularly the BAT market) flow out of the protocol,” Brendan Forster of Dharma, which uses the Compound protocol to offer stablecoin “savings” accounts, told CoinDesk in an email.

Read more: Some Numbers That Show Why Yield Farming COMP Is So Seductive

“The goal of the COMP distribution is to allocate COMP to users who are generating value for the protocol, whether by supplying capital or by paying interest on borrow,” Forster continued. “The change to the distribution mechanism, in my opinion, better achieves this goal.”

Sowmay Jain, a co-founder of Instadapp, which has tools to help investors maximize their COMP yields, expressed support for the newly passed proposal to CoinDesk in an email. He wrote, “This will incentivize the genuine user of the protocol and make it harder to game the system.”

One group that’s nervous about the change is MakerDAO. Cyrus Younessi from MakerDAO’s risk team wrote a post on the project’s forum that the change could cause a spike in demand for dai. (MakerDAO has not responded to a request for comment.)

“My expectation is that the two most popular farming assets will be USDC and Dai due to the shapes of their (attractive) interest rate curves,” he wrote. “There is a chance (likelihood, even) that we see an unprecedented demand for Dai. Much of the natural supply for Dai could also be locked up in COMP farming, thinning out sell-side order books.”

That said, there’s an additional advantage for an investor to extend their yield farming to dai: By focusing on stablecoins, they are much less exposed to underlying volatility in their investments (far less than what might be expected yield farming with ZRX or BAT).

On that note, Forster wrote, “This change de-risks the protocol, and so should increase demand for COMP.”

Read more: Compound Tops MakerDAO, Now Has the Most Value Staked in DeFi

Dai aside, if the change works out as planned, longtime Compound users should start earning more COMP each day, which has the potential to put upward pressure on COMP’s price as proportionately less gets sold on exchanges, as Forster explained.

“The current ‘yield-harvesters’ or ‘yield-farmers’ aren’t really interested in COMP as a governance asset, only the economic gains they get from the distribution. They are likely selling off COMP on a regular basis,” Forster wrote. “This change will likely result in COMP being distributed to users who are more likely to be long-term believers, and therefore more likely to be COMP hodlers.”

There is currently $977 million in assets supplied to Compound as of this writing and $361 million borrowed, making it the largest DeFi protocol in terms of total value locked. The price of COMP is $215, down from an all-time high of $373 on June 21.

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Decentralized exchanges (DEXs) are seeing more action than ever thanks to a surge in decentralized finance (DeFi) activity.

The chief benefit of DEXs compared to the Coinbases of the world? They allow users to hold their crypto until they make a trade, without trusting anyone besides the counterparty of each sale.

“Most people don’t want self-custody,” pseudonymous DeFi gadfly Defione said this week in the DeFi Telegram channel. “For sure not in dollars, and even in crypto people don’t want self-custody. Isn’t that obvious?” 

Related: Compound Changes COMP Distribution Rules Following ‘Yield Farming’ Frenzy

In this context, DEX protocol maker 0x is launching Matcha today, a DEX aggregator that helps people find the best price for whatever Ethereum-based token they want. 

Read more: First Mover: 0x’s ZRX Token Surged 67% in May to Become Month’s Top Performer

This isn’t a new use case in crypto, but 0x believes it can stand out on user experience, which is not always the industry’s strength. 

“DEXs are traditionally very unintuitive from a UX perspective and don’t include necessary info to make informed trades,” 0x marketing lead Matt Taylor told CoinDesk in an email. “We redesigned the DEX trading experience from the ground up with the goal of reaching feature-parity of centralized exchanges.”

Related: Blockchain Project Kyber Unveils Date for Planned ‘Katalyst’ Protocol Upgrade

0x was one of the early initial coin offerings (ICOs). It raised $24 million in August 2017, selling the ZRX token in order to build a protocol that would enable DEXs on Ethereum. Earlier this month 0x co-founder Will Warren announced 0x Labs on Medium, a new business to enter into the DEX industry. 

There’s already proof of demand for the DEX aggregator use case. 1inch.exchange has seen steady growth over the last year and sharp growth in June, according to data collated using Dune Analytics. In May, 1inch had about $75 million in trading volume. As June ends, it’s showing slightly over $300 million. 

The 1inch stats page also reports numbers for new versus old users, and this month has seen far more new users than old ones. Last month was roughly equal at about 1,400 returning and new users, whereas this month has seen 2,500 new ones as opposed to 1,900 returning ones.

As the “yield farming” surge has taken hold of the crypto space, it has been easy to see its impact on automated market makers (AMMs), one particular kind of DEX, in which users provide the smart contract with liquidity in order to earn fees and traders make trades with those pools.

Two of the leaders in this area, Curve and Uniswap, have had a dramatic uptick in volume. 

Read more: COMP’s Sudden Growth Has Swamped a DEX Dealing Only in Stablecoins

Compound Labs started distributing the COMP token to the credit protocol’s users on June 15. Every single day on Curve, an AMM specializing in stablecoins, since June 15 has had more volume than any other day prior. 

Its best day was June 21, when volume broke $54 million. Only as of June 28 has volume started to level off.

Meanwhile, on the premier AMM, Uniswap, volume has been ticking up as well since the COMP debut. It has yet to top its best day ever, which was $40 million on March 13, but the general trading volumes are up. 

Uniswap is really two AMMs right now, version 1 (which routes all trades through ETH) and version 2 (which supports direct trades between any two ERC-20 tokens that someone is willing to bootstrap liquidity for). 

Read more: Uniswap V2 Launches With More Token-Swap Pairs, Oracle Service, Flash Loans

So far, the best day since the launch of version 2 has been June 19, which saw $25 million in volume across the two versions. Still, overall volume made a step change on June 15. Prior to the launch of COMP, version 2’s best day had been June 11, with $6 million in volume. Every day since June 15 has been better than that. In fact, from June 19 to June 28, every single day has seen more than twice as much volume.

The most dramatic spike has occurred on Balancer, an app that lets users make self-rebalancing token portfolios that also happens to work as an AMM when needed. 

Balancer allowed users to yield farm its governance token last week and volume immediately went up.

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

Before the distribution, volume had generally been under $2 million. Since the distribution, it has generally been around $4 million. But on Sunday, June 28, volume shot up to $14 million, though this aberrant growth likely relates to an unexpected attack on Balancer using non-standard ERC-20 tokens on Sunday.

Nevertheless, usage on the new app is up sharply.

It is easier to maximize interest spurred by Compound and Balancer by remaining in the DeFi ecosystem, rather than toggling back to centralized (or “CeFi”) options like custodial exchanges.

Ben Forman of Parafi Capital, an alternative investment firm, argues DeFi products are just outperforming the centralized options in more ways all the time. 

“Compound sparked the beginning of a new agricultural revolution where so-called yield farmers are siphoning volume through AMMs instead of centralized exchanges. This isn’t ideological behavior – it’s the same CeFi users now shifting to DeFi because it’s more efficient and profit-maximizing,” Forman said via email. 

Will Foxley contributed reporting.

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Pantera Capital CEO Dan Morehead and 10T Holdings cofounder Dan Tapiero traded conflicting views of the economic recovery at the Real Vision virtual crypto summit Tuesday.

• The crypto space investment chiefs, both “die-hard macro guys,” disagreed on where COVID-19 is leading the economy, with Morehead projecting a “lingering” recession and Tapiero saying he hasn’t been this bullish since 2012.
• They both agreed, however, that this environment will be good for bitcoin.
• Central bankers’ unrelenting money printing may well boost fixed quantity assets, said Morehead. “It just seems inevitable that the global macro tsunami of paper money is gonna float a lot of boats,” he said. 
• Both said Paul Tudor Jones’ recent bitcoin advocacy signaled a strong investment opportunity to the markets. Even so, Tapiero said the legendary macro trader still has a ways to go before he grasps bitcoin’s systemic value.
• “We’ve just got to wait until more people adopt [bitcoin] and the network effect increases, and we’re at a good spot to take advantage,” said Tapiero.

• Unlimited QE and Why Markets Can’t Price In COVID-19

Pantera Capital CEO Dan Morehead and 10T Holdings cofounder Dan Tapiero traded conflicting views of the economic recovery at the Real Vision virtual crypto summit Tuesday.

• The crypto space investment chiefs, both “die-hard macro guys,” disagreed on where COVID is leading the economy, with Morehead projecting a “lingering” recession and Tapiero saying he hasn’t been this bullish since 2012.
• They both agreed, however, that this environment will be good for bitcoin.
• Central bankers’ unrelenting money-printing may well boost fixed quantity assets, said Morehead. “It just seems inevitable that the global macro tsunami of paper money is gonna float a lot of boats,” he said. 
• Both said that Paul Tudor Jones’ recent bitcoin advocacy signaled a strong investment opportunity to the markets. Even so, Tapiero said the legendary macro trader still has a ways to go before he grasps bitcoin’s systemic value.
• “We’ve just got to wait until more people adopt [bitcoin] and the network effect increases, and we’re at a good spot to take advantage,” said Tapiero.

• Unlimited QE and Why Markets Can’t Price In COVID-19

So many users are dependent on Ethereum client Geth that a bug could temporarily freeze the network – something blockchains aren’t supposed to do, ever. In light of this, Ethereum Core developers decided Friday to postpone work on the Berlin hard fork until at least August in an effort to give other clients a chance to increase their share of the network.

Geth makes up only one of 11 client specifications, but 79% of Ethereum nodes run on it, according to Ether Nodes. That percentage is also up 5% since December. Developers worry that a serious bug could break Ethereum – particularly as rolling updates to Eth 1.x continue before the network transitions to a Proof-of-Stake (PoS) consensus algorithm under Eth 2.0.

“Geth is the majority of the network,” Geth team leader Péter Szilágyi said in last Friday’s All Core Developers group call. “It’s super important that we are correct because we cannot afford to not be correct.”

Related: Coinbase Ventures Invests in $5M Token Sale for Ethereum Data Firm ‘The Graph’

Having a diversity of clients is good for the network. It allows different projects to join Ethereum’s developer community – from the tiniest startup to JPMorgan. Ethereum had eight languages in various levels of completeness one year after its 2015 launch. The Ethereum Foundation currently lists clients in five languages including Go, Solidity, Java, JavaScript and Python. 

Read more: The Zcash Privacy Tech Underlying Ethereum’s Transition to Eth 2.0

Yet, like the human tongue, every programming language has its nuances and therefore implementation drawbacks. When Ethereum developers conduct updates those nuances can turn into nasty bugs.

“The main reason [to postpone Berlin] would be to reduce dependency on Geth and allow it to fail without bringing down the whole network,” said independent developer Alexey Akhunov in a private chat. “Currently the burden is too high since Geth correctness is so critical, and they end up doing most of the work on ensuring everything works correctly.”

Related: Ethereum Developers Consider New Fee Model as Gas Costs Climb

This has been accelerated by the deprecation of the Parity Ethereum client as announced by Parity Technologies in December 2019. “Parity is increasingly unable to dedicate the level of resources required for even simple maintenance of this project,” the Parity team wrote in a blog post at the time.

That project’s codebase was handed off to a decentralized autonomous organization (DAO) of developers funded by ConsenSys spinout Gnosis. It now operates under the name “Open Ethereum.” Since December, the client has lost nearly 60% of its nodes, according to the Web Archive. (Note: Geth has lost some 14% of its nodes since December as well.)

“In an ideal world we would have multiple clients with no client having a higher market share than 33%,” Gnosis founder Martin Köppelmann said in a private message. “While it is true that Open Ethereum has not reached the number of nodes running [that] the Parity client had, we don’t see that as a decline. Quite the opposite. When Gnosis effectively took over the responsibility for Open Ethereum we started at a market share of 0.”

Szilágyi’s concerns remain valid regardless of Köppelmann’s enthusiasm, however. Getting individuals, exchanges or clients to run anything but Geth has been difficult and that dependency would be fatally exposed if Geth ever encounters technical issues.

This dependency is the very reason Eth 2.0 is so slow to launch. Eth 2.0 researchers have agreed to wait until a diversity of clients can launch in concert to prevent any hiccups if one or more goes down.

Comparatively, Bitcoin and most other cryptocurrencies don’t hard fork as often or have as many applications running on them. Etheruem faces something of a bind: loads of projects depending on it for 100% uptime but rolling hard forks every six to 12 months. 

Moreover, how to get other clients to catch Geth’s lead remains an open question.

Ethereum developer Greg Colvin said in the developer call that it has become a business question and one unlikely to be resolved by developer initiatives. Projects will choose to work with a minority client because they have acute needs that Geth cannot address, such as code not being open-sourced. That being said, Colvin said Geth should hire more staff, if possible.

Suspension of testing Ethereum Improvement Proposals (EIPs) slated for Berlin was one option the developers settled on. Still, Szilágyi concluded that the 24/7 responsibility of keeping the “world computer” turning is burning out his team.

“If we are wrong, and for example, [Ethereum client] Nethermind is correct, then it doesn’t matter that Nethermind’s code was correct and ours was wrong, because the network went off on the wrong chain,” he said.

• Many Bitcoin Developers Are Choosing to Use Pseudonyms – For Good Reason
• Summer 2020 Is Funding Season for Open-Source Bitcoin Development

Australia’s stock exchange may delay its blockchain overhaul, thought leaders are meeting in Washington, D.C., to discuss the digitization of money and Ethereum devs have a proposal to pump the brakes on high gas fees. Here’s the story:

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. 

Digital Dollars
The U.S. Senate Committee on Banking, Housing and Urban Affairs will hold a hearing on “The Digitization of Money and Payments.” The witnesses include former Commodity Futures Trading Commission Chair J. Christopher Giancarlo and Paxos CEO Charles Cascarilla, suggesting a focus around central bank digital currencies and stablecoins. Elsewhere, the Bank for International Settlements (BIS) will establish four additional “Innovation Hub” branches – in Toronto, Stockholm, London and a joint location for Paris and Frankfurt – to further study the adoption of digital monies and distributed ledger technologies. Finally, the Bank of Canada has published a note saying blockchain privacy solutions, like zero-knowledge proofs, aren’t ready yet for use in a CBDC. (The Block)

Related: Blockchain Bites: EY’s Auditing Slip and Bitcoin’s Long Line of Pseudonymous Developers

Tech Solutions?
The Australian Securities Exchange (ASX) has come under pressure to postpone the launch of a blockchain replacement for its decades-old settlement and clearing system. One of the main share registry companies in Australia, Computershare, told the Financial Times on June 25 it was seeking a two-year delay to the implementation of the ASX’s new blockchain-based system because the new project “lacked clarity.” Meanwhile, a new technical proposal is addressing Ethereum’s growing gas fees by implementing a dynamic pricing system. Called EIP 1559, Ethereum users would now pay a set “base fee” to the network plus a tip to miners.

Crime and Punishments?
Alexey Andryunin fakes volumes to get coins listed on exchanges. He didn’t think his services were needed after the collapse of the ICO market, but has found business growing again during the COVID-19 pandemic as token promoters pay him to pump their projects so they’ll be accepted on crypto exchanges. Meanwhile, Sergey Medvedev, a Russian national who operated a digital currency escrow service for the $568 million payment card fraud forum he founded in 2010, pleaded guilty to racketeering charges in what the U.S. government called its largest-ever cyber fraud case. Elsewhere, a hacker has attempted to disrupt a blockchain voting system currently being used in the Russian Federation while hackers have extorted $1.14 million in bitcoin from the University of California. (The Block)

​​​New Metrics
Coin Metrics announced a free float supply methodology for digital assets Tuesday to improve and standardize the industry’s liquidity and market capitalization data. The metric excludes issued cryptos that don’t provide liquidity to get a better sense of a token’s supply. Independently, blockchain analysis company Elliptic has added two privacy coins – zcash (ZEC) and horizen (ZEN) – to its monitoring platform, which provides exchanges and institutional investors insight into when a transaction trail ends so they can take additional due diligence measures.

Fresh Capital
Blockchain data startup The Graph has raised $5 million in a token sale with Framework Ventures, Coinbase Ventures, Digital Currency Group (CoinDesk’s parent) and others. The funding round follows a $2.5 million VC round early last year and used the “simple agreement for future tokens” (SAFT) format for accredited investors. That is as miner Hut 8 raised a total of $8.3 million from selling a 6% equity stake, it said, approximately $800,000 more than the original $7.5 million target. Finally, The Block’s Michael McSweeney reports crypto exchange giant Binance will acquire a majority stake in Swipe.io, a crypto card startup. “The move paves the way for the crypto exchange giant to move ahead with its plan for a branded payments card,” McSweeney reports.

• Wuhan Kingold Jewelry collateralized 83 tons of counterfeit gold to secure approximately $2.8 billion in loans to institutions. (Decrypt)
• Balancer will compensate victims of the $450,000 flash loan attack (The Block)
• The largest known non-exchange bitcoin wallet address recently moved 101,857 BTC (~$933 million) to two separate addresses. The transaction cost $0.48 in fees. (Decrypt)
• Crypto.com’s and TenX’s Visa debit cards are back online. (The Block)

Related: First Mover: The Return of the Bitcoin Retail Investor (and Why That’s a Good Thing)

Leading the Pack
Bitcoin is still outperforming the top traditional financial assets so far in 2020 – even after a dour performance this month. Bitcoin is trading around $9,170, representing a 27.8% gain on a year-to-date basis, according to CoinDesk’s Bitcoin Price Index. Meanwhile, gold and the U.S. Dollar Index, which tracks the value of the greenback against major currencies, are reporting 16% and 5.4% gains for 2020, respectively. 

COMP Returns?
Compound’s governance COMP token has dropped 40%, after surging to $400 per token last week. (Decrypt)

Valuing Bitcoin
Nearly half of investors in a recent survey said a lack of fundamentals keeps them from participating. In a 30-minute webinar July 7, CoinDesk Research will explore one of the first and oldest unique data points to be developed by crypto asset analysts: Bitcoin Days Destroyed. 

We’ll be joined by Lucas Nuzzi, a veteran analyst and a network data expert at Coin Metrics. Lucas and CoinDesk Research will walk you through the structure of this unique financial metric and demonstrate some of its many applications. Sign up for the July 7 webinar “How to Value Bitcoin: Bitcoin Days Destroyed.” 

Humility Before a Fall: Your Crypto Startup Hasn’t Done Anything Yet
Dave Balter, CEO of Flipside Crypto, has a message for crypto startups: “Dig a hole, throw your ego into it and pour concrete on top. Find humility instead.” Failure precedes success, he said, a notion often absent from the crypto conversation. “Many leaders think just being in the blockchain space makes them untouchable. They count an easy ICO raise as validation of success. They’re proud of developing something so technically complex their team barely understands it.”

Why Bitcoin Will Take a Long Time to Dethrone the Dollar
Byrne Hobart, a CoinDesk columnist and New York-based investor, consultant and writer, takes a look at the concept of hyperbitcoinization, the theory that bitcoin will become a global reserve currency, and thinks it’s a ways off. The same forces that one might assume lead to a crypto future are those that are keeping the U.S. dollar in its throne. “Ironically, the same factors bitcoin advocates point to as evidence the fiat system is broken – high leverage and a financialized economy – make it durable, too. With so many forces arrayed in favor of the status quo, even the inevitable can take a long time,” he writes.

• Crypto Long & Short: What Trends in Volatility Could Mean for Bitcoin
• Blockchain Bites: Crypto.com Refunds, Sovrin’s Layoffs and AML Bitcoin’s AML Issues

Decentralized cloud computing startup Dfinity has announced its “Internet Computer” is now open to third-party developers.

The firm said in a press release Tuesday it’s already operating on a “network of independent data centers” across the U.S. and Europe, enabling developers and businesses to build and launch their own apps and projects onto the platform.

Projects already being built atop of Dfinity’s Internet Computer include a decentralized payment app as well as a platform for luxury goods. Apps on the platform can also benefit from a native ecosystem fund known as Beacon Fund that is being delivered in conjunction with Polychain Capital.

Related: AMD-Backed Blockchain Project Amassing 20K GPUs but Won’t Say Why

Dfinity describes its product as “cloud 3.0,” which it claims is a scalable decentralized network that is more efficient than proof-of-work consensus, aka mining.

Dfinity’s “Tungsten” release is aimed at developers, with the firm touting it as a way to disrupt the near-monopolies of big tech companies.

“One of the biggest problems emerging in technology is the monopolization of the internet by big tech companies that have consolidated near-total control over our technologies,” said Dominic Williams, founder and chief scientist at Dfinity. “They collect vast amounts of information about us that they sell for profit and leverage to amass greater market share and acquire or bulldoze rivals at an alarming rate.”

The Internet Computer and its open services, Williams continued, create a way to “reboot the internet creating a public alternative to proprietary cloud infrastructure.”

Related: Handshake Goes Live With an Uncensorable Internet Browser

As part of that process, Dfinity also announced Tuesday it has built a new service called CanCan. The press release said CanCan highlights the “simplicity” of the Internet Computer because it was built with less than 1,000 lines of code, in contrast to Facebook, which took 62 million lines.

See also: The Domain Startups Building an Uncensorable Internet on Top of Ethereum

Dfinity, which was backed by Andreesen Horowitz’s A16z Crypto fund and Polychain Capital in a $102 million fundraise in 2018, successfully concluded what it said was the largest airdrop ever back in May the same year. The event saw $35 million Swiss franc ($36.1 million) given away in a distribution of its native DFN token.

• With Arweave’s ‘Lazy’ Approach to Smart Contracts, Its Version of Web3 Does More
• Torus Goes Blockchain-Agnostic With New DirectAuth Dapp Login Tool

Blockchain startup Kirobo says its technology can prevent the loss of cryptocurrency caused by human error when sending what are normally irreversible transactions between wallets.

The firm’s Retrievable Transfer feature works by building a new layer onto existing blockchain protocols. Users then have the ability to “cancel” a transaction sent to an incorrect cryptocurrency wallet address, the Israeli company said in a press release Tuesday.

“Our aim is to make blockchain transactions as simple and as secure as online banking,” said Kirobo CEO Asaf Naim.

Related: Many Bitcoin Developers Are Choosing to Use Pseudonyms – For Good Reason

See also: Maker of Coldcard Bitcoin Wallet Rolls Out an Extra-Strength ‘USB Condom’

The company’s logic layer functions by providing a unique transaction code that must be entered by the recipient in order to receive funds from the sender. Until the recipient has entered the correct code, the sender may retrieve the funds at any time.

Loss of funds can and does occur when a sender includes an error in the long string of alphanumeric characters that make up cryptocurrency addresses.

Kirobo cited a survey that found that 18% of respondents said they had lost funds through such sending errors. A way to make transactions less risky could help encourage new users of cryptocurrency..

Related: US Homeland Security’s Tech Scouts Reissue Call for Blockchain Startups

“By removing the fear from crypto transactions, Kirobo will facilitate the adoption of cryptocurrency as a whole,” said Adam Levi, DAOstack CTO and adviser to Kirobo.

The startup said it does not hold or store a user’s private keys, with the unique code simply governing whether or not the transaction would be finalized. The feature can also operate offline should Kirobo’s servers go down.

See also: Many Bitcoin Developers Are Choosing to Use Pseudonyms – For Good Reason

Kirobo’s platform has received support from Israel’s Innovation Authority, the arm of the government charged with fostering industrial research and development. The firm has also been audited by cybersecurity firm Scorpiones Group, according to the press release.

Kirobo’s Retrievable Transfer feature is now available for bitcoin transfers on wallets from France-headquartered firm Ledger, while support in other wallets is expected to roll out over coming months.

• Encrypted Messaging Site Privnote Cloned to Steal Bitcoin
• Maker of Coldcard Bitcoin Wallet Rolls Out an Extra-Strength ‘USB Condom’

Blockchain predictions platform Augur is launching a new version of its protocol next month, but users will have to migrate to a new token if they want to use it.

The company announced Monday the “v2” rollout has been slated for release on July 28, and will represent an entirely new deployment of the Augur core protocol on the Ethereum network.

Augur v1 will continue to exist in its current form independently on Ethereum, as it has no “escape hatch or method of halting trading activity on the protocol or of the REP token,” the company said.

Related: Augur

Augur v2 will offer a new version of the platform’s native REP token called “REPv2,” with REPs renamed “REPv1.” Current token holders are being asked to manually migrate to the new REPv2 token in order to participate in the new platform’s reporting system.

See also: With Token Uptick and Israeli Election Work, It’s Been a Busy Year for Bancor’s Founders

Action is only required by REP holders after Augur’s v2 deployment has gone live. A migration tool will be provided within the platform’s user interface, along with a tutorial on how to carry out the swap.

The new upgrade will also reintroduce a concept known as “Use it or Lose it” whereby all REPv1 and REPv2 holders will need to participate in a potential future network-wide fork of its system. If users fail to participate within the 60-day forking grace period they will be unable to use their REP tokens to participate in future forks of the project.

Related: This USV-Backed Startup Has a Solution for Buying Information With Confidence

The predictions market said the forking of its project is the “crux” of its security model and is intended to be an “extremely rare event” with no market in Augur v1 nearing forking thresholds.

“Currently, triggering a fork would cost approximately $9,100,000 (550,000 REP at $16.50), rendering the ‘losing’ side of the forks REPv2 presumably worthless,” the firm said.

See also: This USV-Backed Startup Has a Solution for Buying Information With Confidence

Augur’s decentralized prediction market project aims to use “the wisdom of the crowds” to create accurate forecasts for different scenarios.

In 2019, blockchain prediction market startup Veil deployed a new version of Augur called AugurLite, created to support bets on the upcoming (at the time) U.S. presidential election.

• Nasdaq Lists New Decentralized Finance Index Including MakerDao, 0x, Augur
• Startup Veil Forks Augur to Create Prediction Markets for 2020 Election

Blockchain analysis company Elliptic has added two privacy coins to its monitoring platform.

Announced Tuesday, the addition of zcash (ZEC) and horizen (ZEN) will provide exchanges and institutional investors insight into when a transaction trail ends so they can take additional due-diligence measures.

Privacy is a core tenet of crypto, and firms looking to shine a light on shielded transactions must walk a fine line.  

Related: Bitcoin ATM Growth May Be a Boon for Money Launderers

“We are helping regulated businesses look at transactions on the blockchain and completely support people’s rights to financial privacy,” said Tom Robinson, Elliptic’s chief scientist. “If funds are seen to come from a shielded address, that might then trigger some additional compliance processes.”

Elliptic’s announcement follows close on the heels of arch-rival Chainalysis, which trumpeted its support for zcash and dash earlier this month.

Read more: Crypto Forensics Firm Chainalysis Adds Tracing Support for Zcash, Dash

Robinson said his company was not seeking to defeat any of the privacy-enhancing functionality of these coins, adding a philosophical jab at his competitor.

Related: Argo Buys $500K Worth of Zcash Miners as Bitcoin Revenue Shrivels

“One of the core differences between us and Chainalysis is that they are really focused on law enforcement and so they will have customers who are asking them to de-anonymize the likes of Monero,” said Robinson. “We provide transaction screening tools for exchanges and don’t plan to offer our functionality on something like Monero where everything is private by default.”

Regarding the philosophical issue of shining a light on private transactions, Chainalysis communications director Madeleine Kennedy said:

“We believe there needs to be a balance between privacy and transparency and specifically blockchains like bitcoin achieve this balance. They provide pseudonymity so that personally identifiable information is not publicly available on the blockchain, but provide enough transparency to ensure safety and security.”

Privacy coins have a range of clever techniques built into them to avoid leaving a transaction trail on the blockchain. In the case of ZEC and ZEN, there’s a kind of opt-in privacy measure whereby users can choose to make their transactions visible on the blockchain or not. 

Similar to how exchanges want to know if a bitcoin transaction has come their way via a mixer (a technique of combining many addresses to hide the originator of the transaction), Elliptic is offering a comparable service for privacy coins, said Robinson, showing when a transaction has come from a shielded address. 

Read more: Coinbase UK Dropping Support for Cryptocurrency Zcash

“Regulated businesses want to know whether funds are coming from shielded addresses, just as they want to know whether bitcoin is coming from a mixer,” Robinson added. “That doesn’t necessarily mean those funds are bad or illicit in some way; firms just need to know in order that they can take the appropriate next steps.” 

Being able to tell when a transaction comes from a shielded zcash or horizen address will help increase adoption of these coins, Robinson said, since in some cases exchanges have been forced to delist privacy coins in order to maintain banking relationships.

“I think this capability remedies that,” said Robinson. “Something like zcash is now lower risk than bitcoin because you have the same visibility. Our analysis also shows zcash isn’t really used for illicit trade; there are very few dark marketplaces that accept zcash as a means of payment,” he said.

Kennedy of Chainalysis said the vast majority of zcash transactions are supported in the company’s analytics products. 

“Roughly 14% of Zcash transactions involve one of Zcash’s two shielded pools in some way,” she said. “But of the transactions that interact with a shielded pool, only 6% are completely shielded, i.e. sender, receiver and transaction amount are all encrypted. That’s only 0.9% of all Zcash transactions.”

Read more: Blockchain Sleuthing Firm Elliptic Adds 87 Crypto Assets in Arms Race With Chainalysis

Crypto trading and lending firm Genesis Trading (which is owned by CoinDesk parent company Digital Currency Group) announced it will be incorporating Elliptic’s transaction and wallet monitoring tools for ZEC and ZEN.

Genesis does not conduct transactions with shielded addresses and does not conduct transactions with coins with any shielded address history, said Martin Garcia, the firm’s managing director.

“If coins come from an unshielded address, and have an unshielded address history, we perform additional due diligence based on the risk rating of the counterparty and the dollar value of the transaction,” said Garcia.

• The Zcash Privacy Tech Underlying Ethereum’s Transition to Eth 2.0
• Fireblocks Adds Crypto-Tracing Tool to Guard Against Money Laundering

Blockchain data startup The Graph has raised $5 million in a token sale with Framework Ventures, Coinbase Ventures, CoinDesk parent Digital Currency Group, Multicoin Capital, DTC Capital and others.

The funding round follows a $2.5 million venture capital round early last year. The new token sale used the “simple agreement for future tokens” (SAFT) format for accredited investors.  

The Graph CEO Yaniv Tal said “thousands” of developers already use the startup’s tools, including the teams behind the decentralized exchange (DEX) Uniswap and the token-fueled Aragon project. 

Related: Ethereum Developers Consider New Fee Model as Gas Costs Climb

His startup created an indexing protocol for organizing blockchain data so people can access it. People use The Graph’s open-source software to search for specific Ethereum data, the same way we search Google for a recipe, sometimes instead of running their own Ethereum node.

Read more: Multicoin Capital Leads $2.5 Million Seed Round for Blockchain Data Index

Uniswap co-founder Hayden Adams said a considerable portion of the DEX ecosystem is reliant on nodes operated by Infura, the ConsenSys-owned API provider. Likewise, The Graph offers another tool for companies that want to offer Ethereum-related services regardless of direct participation in the blockchain network. 

“We use [The Graph] for Uniswap.info, our analytics site,” Adams said. “As a company we don’t manage or run our own databases. … Right now it’s pretty difficult to get historic data from the Ethereum blockchain in an efficient way.” 

Related: ‘Social Money’ Startup Inks Deal With Rapper Ja Rule, Releases Song With Lil B

Since The Graph freely provides open-source software, and isn’t promising prompt revenue, any investment in its tokens may be a signal the investor is bullish on Ethereum applications. 

“We haven’t shared the token distribution yet,” Tal said when asked about the token sale and strategy.

Instead, he said his startup’s staff of 17 is “taking a similar path as Compound,” the decentralized finance (DeFi) startup that also attracted investment from Coinbase and recently inspired the “yield farming” craze with the issuance of its COMP governance tokens.

Read more: A Coinbase Pro Listing and Other Eye-Opening Data Points on Compound’s Surge in Demand

Tal said Compound’s model looks like “a really good route, in general” for a crypto startup.

“We’ll expand to other blockchains soon,” Tal said.

In a press release, investor Michael Anderson of Framework Ventures said the firm “couldn’t be happier to back Yaniv and the team, and we look forward to helping grow the decentralized network when it launches.” 

Anderson’s firm is also invested in the price feed provider Chainlink, indicating the firm may be betting on the growth of Ethereum-based services. DTC Capital investor Spencer Noon said he doesn’t expect most users to interact with The Graph token. 

“They’ll pay for this service with dai or ether, a more liquid token,” Noon said, explaining how The Graph could follow the 0x model where many service providers offer paid access to the open-source software. Such index providers would use the token on the backend.

Read more: Uniswap V2 Launches With More Token-Swap Pairs, Oracle Service, Flash Loans

A spokesperson for The Graph said the startup uses an “external node provider,” declining to specify which, and that in the future other indexers will choose whether to rely on such providers or run Ethereum nodes themselves. 

“Their plan is to decentralize their protocol and make it community-owned and -operated,” Noon said of Tal’s team. “I look at [The Graph] as the first of many middleware options in the space. … They are now processing 45 million queries per day. That’s product-market-fit.” 

As for Tal, he said although token sales “got a bad name in 2017,” he thinks 2020 will be a fruitful year for the Ethereum ecosystem. 

“It’s encouraging to see this next wave of projects are finally solving real problems and finding product-market fit,” Tal said. 

• Status Keycard Now Works With Android Mobile Devices
• Activists Document Police Misconduct Using Decentralized Protocol

Major League Soccer (MLS) fans will now be able to collect and trade digital cards representing league players and use them to play fantasy soccer games run by the firm Sorare. 

The MLS Players Association and OneTeam Partners, the athletes’ licensing rights firm, announced Tuesday they had signed a licensing agreement with the blockchain-enabled collectibles platform. The U.S. deal comes fresh on the heels of an auction for Italian soccer club Juventus that fetched 59 ether (ETH), or $13,470, for the team’s star player, Cristiano Ronaldo.

According to the release, the agreement will bring over 700 MLS players onto Sorare’s platform, which currently includes players from the South Korean K League and teams including Juventus, Napoli and Lyon. 

Related: South Korean Soccer League Tokenizes Players for Fantasy Football Game

Read more: South Korean Soccer League Tokenizes Players for Fantasy Football Game

The announcement comes a little over a week before MLS players hit the field again for a special tournament at Disney World in Florida. The MLS season was suspended in March due to the COVID-19 pandemic and the special tournament, dubbed “MLS Is Back,” kicks off July 8. 

Sorare generates unique digital trading cards on the Ethereum blockchain which represent players and can be traded by users. The user plays as the manager of the team and upon joining is given a random set of five cards, which they can use to build a team and participate in weekly league competitions. 

Users also have the option to buy tokens for other players to improve their team and – depending on how the soccer players perform in real life – they may receive rewards in more trading cards or ETH.

Related: How an Art Collective Is Using Blockchain to Protest Police Brutality

Read more: Italian Soccer Giant Juventus Inks Deal for Ethereum-Based Player Collectibles

“We are excited to be a part of giving fans the opportunity to engage with their favorite players in a new digital landscape,” said Dan Jones, COO of the MLS Players Association, in the emailed statement. 

According to Sorare CEO Nicolas Julia, the firm’s platform currently has about 3,500 monthly active users and recorded over $350,000 in sales for June.

“Sorare has been growing consistently despite the lack of football during the crisis,” Julia said.

Overall, blockchain-enabled gaming also seems to have gained in popularity as screen times went up around the world during the coronavirus pandemic. 

Data collected by blockchain gaming database NonFungible shows Sorare’s platform has recently climbed to the top spot in weekly transaction volume. In terms of all-time volume, CryptoKitties and Decentraland are the top-ranked games.

“To keep building on this popularity, we’ll be onboarding more clubs and we will start communicating with influencers and football players,” Julia said.

• CryptoKitties Creator Debuts NBA Game on Its Own Blockchain
• As Museums Go Dark, Crypto Art Finds Its Frame

Swiss private equity firm VIVA Investment Partners AG is leaning into crypto funding through a new stake in blockchain venture capital firm SPiCE VC. 

Announced Tuesday, SPiCE said the Swiss firm acquired an equity position in SPiCE’s management company and its fund. The release also said one of the equity firm’s co-founders, Rene Eichenberger, would join the board of the venture capital company. 

“Together with VIVA Investment Partners, SPiCE VC will further strengthen its leadership position in this rapidly growing market,” said Tal Elyashiv, co-founder of SPiCE VC. 

Related: ParaFi Invests in Kyber Network as Buzz Grows Around DeFi Projects

Elyashiv said SPiCE would focus on services including custody, marketplaces, compliance, rating, payments or banking-related tokenization, among others. 

Read more: Securitize’s Japan Subsidiary Becomes First International Firm to Join Self-Regulatory Group

VIVA CEO Julie Meyer said the partnership represents the shared belief that a fundamental shift is happening in the securities industry. 

“We all see the emergence of a new market sector akin to when music went digital or when Tesla emerged,” she said. “We intend to make SPICE VC the leading investor in this ecosystem.” 

Related: When Ferrari? Tokenized Supercar Gives European Investors Exposure to Asset Class

The partnership with SPiCE VC is the Swiss private equity firm’s first investment in the crypto space. VIVA previously invested in firms including UK-based DRIVE Software Solutions,  Swiss battery technology company IQ International and a Milan-based AI firm.  

• Indian Crypto Exchange CoinDCX Raises $2.5M From Polychain Capital, Coinbase Ventures
• Andreessen Horowitz Forecasts Fourth Crypto Bull Cycle