Top Stories of Last Week

Regulatory

  • China’s Commerce Ministry officially said it would expand digital yuan pilot program to cover most Chinese cities and regions such as Beijing, Tianjin, Hebei, Yangtze River Delta and Guangdong. Not yet clear when pilot programs would begin, but policy design is expected to be completed by end of year.
  • Twelve cryptocurrency firms approved by Hawaii’s regulatory sandbox Digital Currency Innovation Lab, the initiative between Hawaii Department of Financial Institutions and Hawaii Technology Development Corporation. Sandbox allows crypto firms to do business in Hawaii without obtaining state money transmitter license for two years.
  • SEC tapped head of New York office Marc P. Berger to be deputy director of enforcement for agency alongside current director Stephanie Avakian.

Project Development

  • Standard Chartered successfully conducted Bangladesh’s first blockchain trade transaction, where Standard Chartered bank issued Letter of Credit for trade between garment exporter Viyellatex Ltd and Viyellatex Spinning on Contour blockchain network built on R3’s Corda blockchain.
  • Prysmatic Labs’ editor Raul Jordan said launch timetable for ETH 2.0 remains on track despite Ethereum 2.0 Medalla testnet issues. Medalla testnet came to a halt on August 14 when a bug took most of the testnet’s validators offline.
  • LND, a Lightning Network implementation from Lightning Labs, announced it has adopted support for wumbo channels, allowing users to deposit more money into Lightning Network channels than before, as well as send larger transactions.
  • Ongoing dispute between Protocol Labs, the developer of Filecoin project, and equity investors has reportedly resulted in ongoing mediation process. Dispute centers around lack of distribution of Filecoin tokens and resolution has been allegedly found, but unclear if all investors signed off on proposed resolution.
  • Tether stablecoin went live on OMG Network amidst record demand for settlement space on Ethereum. Integration between Tether and OMG said to offer reduction of confirmation times delivering faster payments while reducing fees.

Exchanges

  • Gemini partnered with Blockchange, a crypto investing platform for professional wealth managers, to offer trading and storing services to registered investment advisors. Blockchange-Gemini solution will allow RIAs to manage crypto assets within client portfolios. Quantum Capital Management, a wealth management firm with $125 million AUM, is first client of Gemini and Blockchange.
  • Bequant announced adding of Signature Bank’s blockchain-based payments integration, Signet, to platform, which will allow firm to more easily settle fiat for clients. Bequant now boasts list of services that include capital introduction, fund administration, securities lending, multi-exchange direct market access, custody, collateral management, leveraged trade execution, OTC block trading, risk management and smart order routing.
  • U.K.’s Financial Conduct Authority approved Archax, an upcoming digital securities exchange set to launch later this year. Archax received a multilateral trading facility license for digital securities marketplace, custody permissions to store clients’ digital and fiat assets, and brokerage permissions for platform.

Mining

  • Marathon Patent Group signed purchase agreement with Bitmain to increase output with 10,500 Antminer S-19 rigs for $23 mil, which will see its bitcoin mining capacity quadruple from 3,020 units to over 13,520 rigs. Bitmain plans to ship 1,000 previously purchased rigs to Marathon in Oct and Nov.
  • Data center power management firm Lancium accused bitcoin mining firm Layer1 of infringing upon patented technology to adjust power usage in bitcoin mining facilities. According to Lancium’s filed complaint, Layer1’s “demand-response” model which allows firm to shut down mining operations and redirect power to grid during high demand, violates firm’s patent. 
  • Riot Blockchain announced purchase of 8,000 additional S19 Pro Antminers from Bitmain. Once fully online in early 2021, the rigs will vault Riot Blockchain’s hashrate well above 1 exahash per second, with 15,040 deployed rigs posting 1.45 exashashes per second and consuming 47 megawatts of energy.

Fundraising

  • BlockFi announced it raised $50 million in Series C funding led by Morgan Creek Digital. Other investors include Valar Ventures, CMT Digital, Castle Island Ventures, Winklevoss Capital, SCB 10X, Avon Ventures, Purple Arch Ventures, Kenetic Capital, HashKey, NBA player Matthew Dellavedova and two university endowments.
  • Pantera Venture Fund III reportedly raised $164,705,834 to date from just under 200 investors, with $68,841,379 of that coming over last twelve months. Average investor ticket size, which amounted to $1.77 million, increased more than fourfold relative to 2019 and doubled versus 2018.
  • Robinhood raised $200 million in Series G funding round, adding D1 Capital Partners as new investor. New funding elevates valuation to $11.2 billion, and move comes two months after raising $320 million at $8.6 billion valuation.
  • DIA, a data platform focused on DeFi, raised over $15 million with plans to build open-source financial data product reminiscent of Bloomberg’s offerings. Capital raise was conducted via private sale and bonding curve distribution, a token sale model by which value of token increases algorithmically with each new purchase, that netted $15 million from nearly 10,000 investors.

Defi

  • Aave released specifications for v2 of protocol and announced partnership with real estate tokenization firm RealT to bring home mortgages to DeFi. v2 will include transaction fee optimizations such as native support for smart contract GasToken. 
  • Huobi DeFi Labs launched effort described as “international consortium of centralized and decentralized financial service providers and platforms,” spearheaded in collaboration with MakerDAO, Compound, Nest and dYdX. Alliance aims to bring in more DeFi and CeFi members in next few months.

Things to Watch This Week

  • Bitcoin Cash Hard Fork 
    • A controversial upgrade has been proposed by Bitcoin ABC, the dominant implementation of Bitcoin Cash led by developer Amaury Sechet, which BCH supporters must deploy prior to November 15. The update will introduce a new difficulty adjustment algorithm “ASERT” alongside a controversial feature that will reject all newly mined blocks that do not divert 8% of rewards to fund ongoing development to the ABC protocol. This “coinbase rule” appears set to become the catalyst for a hard fork in November, with some supporters of the alternative BCH implementation “Bitcoin Cash Node (BCHN)” calling for the resignation of Sechet. Talks are still ongoing, but the potential outcome of the situation could be severe, as in the event of a fork, Sechet warned that the BCHN chain could be wiped out after the chain split. This situation will be monitored closely, along with any coinciding effects it has on the price of Bitcoin Cash.
  • Bitcoin CME Futures Expiry
    • This week will also see the expiry of August CME Futures contracts on August 28, which coincides with roughly 57,000 BTC worth of options contracts expiring on the same day. This accounts for just over a third of the $2 billion in open interest on Bitcoin options contracts that exists currently. Since the beginning of 2020, the BTC options market has grown six-fold and questions surround the potential price impact this can have on markets. A close eye will be kept on price activity as we reach the upcoming expiry date.
    • John Lilic@JohnLilic

      EIP-2878: Block Reward Reduction to 0.5 #ETH #Ethereum is currently paying a 2.52x higher block reward than #Bitcoin. It’s time for the community to consider
      ethereum-magicians.org/t/eip-2878-blo…

      Peter McCormack @PeterMcCormack

      Here it is, my discussion with @Excellion and @VitalikButerin is now live. I did my best to be as impartial and fair as possible. Enjoy, feedback welcome!

      What Bitcoin Did @WhatBitcoinDid

      *Bonus Show* WBD251 – Bitcoin Vs Ethereum with Samson Mow (@Excellion) & @VitalikButerin. We discuss: – Supplygate – Running an Ethereum full node – Philosophical differences – Decentralisation and immutability
      whatbitcoindid.com/podcast/bitcoi… 

      Jack Mallers @JackMallers

      Listening to this I’m in absolute shock. How can anyone listen to this and buy ETH or continue to own ETH? I’m truly at a loss for words and the fact that the @SEC_Enforcement is allowing people to get blatantly scammed in broad daylight will unfortunately be historic

      @VitalikButerin I’m torn between feeling awful for you because of the position you’ve found yourself in while also feeling deeply disturbed and angered by you. At times this podcast is incredibly hard to listen to because of how blatantly ridiculous and absurd it is
      Luke Martin@VentureCoinist

      This is one of the most useful charts for an altcoin bull market. •Find a coin doing well •Scan chart for coins that move together •Get long those coins No need to predict the first mover, just find the next. h/t @HsakaTrades for creating this

      Byzantine General@ByzGeneral

      High exchange withdrawal mean does seem to somewhat indicate local bottoms. It’s pretty damn high again although we’re not “bottoming”, we’re just consolidating  #Bitcoin

       

      Comparison for those interested.

      David Puell@kenoshaking

      1) It has been a long road since the Bitcoin top of 2017. Herein, a nowhere-near complete summary of what has transpired. Next below, a brief thread on few interesting tidbits. Shoutout to @whale_map for the innovative on-chain metrics.

       

      2) Looking only a year and a half back, we had some of the most interesting market structures in any Bitcoin cycle. During several attempts at a “typical” bullish trend with a strong halving narrative, two swans hit price discovery one after the other: PlusToken and COVID-19.
      READ MORE

      Andrew Kang@Rewkang

      There’s a mountain of DeFi virgin capital from institutional trading desks looking to yield farm Smart Contract insurance will be the factor that opens the flood gates

      The size of the insurance market should be in the same magnitude as the oracle market. But insurance is 2-3% of the oracle market Wouldn’t be surprised to see $NXM at $1B+ within a month

      There are 3 tailwinds here for the crypto insurance market cap: – Rerating of the assets involved as investors realize they missed this potential of this sector – Continued explosive growth of $ in DeFi (much of which will require insurance) – Higher rate of $ insured

      PlanB @100trillionUSD

      ICYMI: #bitcoin is nicely moving away from 200 week moving average. 200WMA is currently $6400, is increasing $200 per month, and has never decreased. Best of all, BTC monthly close has never been below 200WMA.

      Jason Somensatto @jasonsomensatto

      1/ As someone who has been pretty pro DeFi for the past two years and like to consider myself one of the first lawyers focused on the sub industry, I’m pretty shook by some of the new popular projects. Been thinking a lot in the past week and wanted to set out my current thinking

      2/ DeFi protocols that don’t add economic value and are just used to recycle gains among speculators will likely win out in the short run. We should get ourselves comfortable with that fact.

      3/ They will teach us very little about the future of finance but will hopefully show how governance tokens can incentivize actual participation in a community. Speculators will proactively coordinate to govern the protocols in a manner intended to maximum speculative gains.

      4/ As a result, most of the high profile successful DeFi projects in the near future will probably not be relevant for what they create but may teach lessons for the creation of future communities on how to successfully incentivize ownership and governance over a public good.

      5/ Despite what I see as a delayed benefit of this current DeFi movement, I’m hopeful there are some immediate benefits that will it will bring:

      6/ First, and most practically, I hope it shows the very real value of a self-controlled, private, and universal login for all financial transactions. twitter.com/QWQiao/status/…

      7/ Second, I’m hopeful it will alert us to the importance, and proper way for managing, smart contract risk. I feel like some much of the discussion (particularly among lawyers) fails to think about solutions to this problem.

      8/ Third, it might prove that governance tokens can be the antithesis of securities – a capital asset in which returns are not the result of a passive investment in a third party team but the result of proactive governance and coordination among a large group of people.

      9/ I think inevitably this craze will invite difficult legal questions and regulatory scrutiny. I don’t know how that will pan out for industry more broadly but I hope it leaves a healthier ecosystem in the end.

      10/ Finally, a two-part request: (1) It would be great to see some coordination on self-regulatory measures: identifying projects with best practices on security, financial design, and legal structure. It probably wont matter to most users but will be important in the long run.

      11/ Second request: Start pooling money for lobbying, legal defense funds, and other initiatives that will try to explain the real benefits these technologies are trying to provide. Because this can all be killed very easily.

      Maria Shen@MariaShen

      China is starting to test the Digital RMB and educate its citizens.  This video is circulating WeChat: China’s digital currency in action w/ the Agricultural Bank of China The woman takes out 50RMB from her bank card & converts it into China’s new digital RMB

      While China runs trials of its digital currency, it’s also normalizing the currency in media Here’s a video from CCTV 1 (top channel in China) in May, 2020: “What is Central Bank Digital Currency and How Do We Use It?” youtube.com/watch?v=l6XARd…

      Top questions they address in the video w/ paraphrased answers: 1. What’s the difference between the digital RMB, Bitcoin, and Libra? “A central bank issued digital currency is gov’t issued. Other digital currencies are not legal tender. The value of the digital RMB is stable.”

      2. What’s the difference between digital RMB, WeChat payment, and Alipay? “The key difference is you don’t need to have a bank account, just a wallet to use the digital RMB.”

      3. Will digital RMB replace cash? “Cash will still exist. Digital RMB will replace a portion of cash, but not all of it. Digital RMB and RMB are exchangeable 1:1. You can think of these as the same thing.”
      READ MORE

      Jake Brukhman@jbrukh

      Answer: . . .because this NFT isn’t the image, it is a LICENSE to the image. 1/Here is a thread about why the NFT-as-LICENSE view is completely disruptive to digital creation. 

      2/For most digital content — images, photographs, videos, blogs, music files — ways of monetizing it are few and far between.  A stock photographer might move prints for a few bucks on an online marketplace.  A blogger might earn from some ads on her blog.

      3/  A musician might sell the rights to her songs to a record label, in exchange for money and a contract. …but by and large, creators either don’t own the rights to their work (musicians) or monetizing those rights is very difficult (ad blogging).

      4/The magic happens when you add NFTs, scarce digital LICENSES for online digital content! And if you sprinkle in #blockchain, you get disruption. -> NFTs + blockchains enable global, public secondary markets for all digital content LICENSES. <- blog.coinfund.io/what-we-look-f…

      5/A LICENSE to content confers certain fundamental rights: – The right to own & keep – The right to sell & lend – The right to royalties – The right to confer reuse Today most such rights live on balance sheets of private corporations. NFTs allow them to be traded in public.

      6/Secondary markets for RIGHTS to digital content are a game changer for creators, investors, and incumbents. The music industry alone pulled in $11B in 2019, suggesting that the market of music rights might be worth hundreds of billions in perpetuity. billboard.com/amp/articles/b…

      7/In the future, @taylorswift13 will be able to sell NFTs representing the legal rights to her songs or albums. Why would you buy the NFT to “Folklore” when you can listen to it on Spotify? Because you also receive the royalties from the album’s 7-figure sales.

      8/For content like visual art, most creators don’t realize they can monetize works at all. Digital creators put works up on sites like Behance, hoping to get a gig. With secondary markets for visual art, they can transact directly with consumers. behance.net

      9/Overall, NFTs will create secondary markets that unlock tremendous latent value that today is in the form of private rights and private LICENSES. There’s still a lot more to be built, but this is one of the biggest opportunities blockchain technology brings to the Internet.

      The Block@TheBlock__

      The Block Research presents: A Global Look at Central Bank Digital Currencies. This 180 page + white paper takes a deep dive into the history of CBDCs and current developments by central banks around the world. Commissioned by @BlocksetHQ and @KPMG
      theblockcrypto.com/post/75022/a-g…