Top Stories of Last Week

Regulatory

  • Christine Lagarde said European Central Bank should reach decision on releasing digital euro early next year, after viewing results of digital euro consultation the central bank launched in October that should be ready in January 2021. Although she stated that ECB was not “racing to be first” in efforts to release CBDC, she did say she believes region’s monetary authority will move to launch digital version of euro in next two to four years.
  • Gary Gensler will lead financial policy transition team for U.S. President-elect Joe Biden. A former chairman of the CFTC, Gensler was tapped to lead agency review team for Federal Reserve, banking and securities regulators. As CFTC chairman, Gensler served as financial regulator for Barack Obama. More recently, he has also testified before Congress about cryptocurrency and blockchain, and called blockchain technology a “change catalyst” in 2019.
  • Lebanon’s chief central banker said country is preparing a national digital currency for 2021 debut. Banque Du Liban Governor Riad Salameh said CBDC project is part of a “regulatory mechanism” to restore confidence in Lebanon’s troubled banking sector and will also help Lebanon move to a “cashless system” that enables more seamless cash movement locally and abroad.
  • South Korea’s Financial Services Commission is seeking legal amendments that would make it mandatory for VASPs within country to report names of customers. Proposed update to Act on Reporting and Using Specified Financial Transaction Information is aimed to help guard against money laundering and changes will mean VASPs are required to use real-name accounts in financial transactions.
  • Treasury Department of United Kingdom revealed it is drafting proposals to regulate private stablecoins. U.K. Treasury Chancellor Rishi Sunak noted forthcoming regulatory proposals alongside other goals for country’s financial services industry. Also revealed that both England’s central bank and treasury are currently researching a CBDC, with Chancellor welcoming work from two departments into “whether and how central banks can issue their own digital currencies as a complement to cash.”

Project Development

  • China Construction Bank partnered with Fusang to launch sale of US$3 billion worth of debt on blockchain, the first digital security issued by Chinese bank. China Construction Bank’s certificates of deposit will be issued through Labuan branch with tenor of three months. Issued at minimum of US$100 each, certificates will yield about 0.75 percent at maturity. Deal also allows investors to trade China Construction Bank’s digital certificates using bitcoin on Fusang Exchange, a digital exchange licensed by financial regulator in Labuan, Malaysia.
  • PayPal’s crypto trading and payments went live for all eligible customers in United States. Trading features a limit of $20,000 per week, double originally announced $10,000. Global services are expected to launch at beginning of 2021, alongside crypto payments on Venmo.
  • Ethereum blockchain network suffered issues after infrastructure provider Infura said it experienced service outage for its Ethereum mainnet API. Problems at Infura look to have stemmed from a bug in Go Ethereum (Geth) client, whose code underpins 80% of Ethereum’s applications, splitting Ethereum blockchain in two. Two conflicting transaction histories meant users were temporarily interacting with different versions of Ethereum blockchain. Infura has since fixed issue by updating their nodes.
  • LiquidStake launched by crypto trading firm DARMA Capital, which will allow ether stakers to take out USDC stablecoin loan against staked assets while earning staking rewards from new network to tackle lockup issue, where first generation of participants staking crypto on Eth 2.0 blockchain must commit coins to restrictive multi-year contract. In addition, DARMA intends to allocate over $50 million worth of ETH to Ethereum’s new deposit contract.
  • Crypto lender Cred Inc. filed for Chapter 11 bankruptcy protection in Delaware after publishing letter in October saying that it experienced “irregularities” in the handling of “specific” corporate funds by a “perpetrator of fraudulent activity.” Cred said Grant Lyon has been named to company’s board to oversee restructuring process and also hired MACCO Restructuring Group as financial advisor. Cred listed estimated assets of between $50 million and $100 million and liabilities between $100 million and $500 million.

Exchanges

  • Bitfinex unveiled new lending service called Bitfinex Borrow, a crypto loan obtained via Bitfinex’s peer-to-peer lending platform. When customers put up crypto assets as collateral in exchange for loan, Bitfinex allocates assets to different customer as part of separate product called Bitfinex Funding. Service comes with annual interest rates ranging between 5.5% and 18.25%. Additionally, customers can only hold borrowed funds for 120 days.   
  • KuCoin allegedly has recovered majority of assets lost in $280 million hack in September, according to Johnny Lyu, KuCoin’s co-founder and CEO. 84% of affected assets have reportedly been recovered via “approaches like on-chain tracking, contract upgrade and judicial recovery.” 
  • Binance allegedly has begun blocking U.S. users from accessing exchange, more than a year after Binance first announced in July 2019 that it would stop serving U.S. residents. Binance reportedly sending emails to U.S. residents based on IP addresses in what appears to be step toward enforcing blockade.

Mining

  • Hive Blockchain deployed largest batch of new ASIC miners, bringing 1,240 MicroBT WhatsMiner M30S machines online to double firm’s aggregate operating hashrate. Hive’s current hash power went from 116 PH/s to 229 PH/s, and total operating hash power of 1,000 PH/s is company’s goal within next 12 months.

Fundraising

  • API3, which is developing network for decentralized APIs, raised $3 million in seed funding led by Placeholder Capital, with participation from Accomplice, CoinFund, Digital Currency Group, Hashed and Pantera Capital. API3 sold 10 million of its tokens to the funds, which will vest over a two-year period.
  • Balancer Labs raised a seven-figure sum via sale of native governance token BAL to Pantera Capital and Alameda Research. Balancer plans to expand team ahead of protocol’s V2 launch that offers improvements to transaction costs and user experience.
  • UNION, a DeFi protocol building risk management tools, raised $3.9 million in funding from Alameda Research, Solidity Ventures, 3Commas, and Black Edge Capital, among others. UNION looks to launch its protocol in coming months, offering risk management tools for DeFi that will mitigate issues around transaction finality, smart contract risk, Layer-1 risk, Impermanent loss, collateralization risk, flash loan exploits and portfolio correlation risk.

Defi

  • DeFi platform Akropolis suffered $2 million loss following re-entrancy attack utilizing flash loan from dYdX. Attacker pulled out tranches of $50,000 in DAI from project’s yCurve and sUSD pools, collecting $2 million worth of stablecoin before exhausting pools.

Other

  • Bill Miller told CNBC in an interview that risks of bitcoin going to zero are “lower than they’ve ever been before” and predicted more institutional investment in the cryptocurrency. The chief investment officer of Miller Value Partners revealed in Dec 2017 that his MVP1 hedge fund had half of its investments in bitcoin. 
  • Stanley Druckenmiller stated in CNBC interview that Bitcoin has potential to store value for future generations. Druckenmiller said he had purchased some Bitcoin and that “bitcoin could be an asset class that has a lot of attraction as a store of value to both millennials and the new West Coast money.” Druckenmiller highlighted growing stabilization in market since launch 13 years ago, comparing act of investing in bitcoin to investing in gold.

Things to Watch This Week

  • Uniswap Liquidity Mining Program Ends
    • Uniswap’s current liquidity mining program is scheduled to end on Nov. 17, less than 24 hours from time of writing. Community calls have discussed whether to extend the existing program that allocated 5 million UNI per pool to liquidity providers in total, equal to 83,333 tokens per pool daily. With over $2.2 billion dollars worth of ETH, WBTC, USDC, USDT and DAI currently locked up in these pools, the ramifications of these discussions could be widespread if a reasonable amount of these assets leave the Uniswap system in search of higher yields or to be offloaded. A close eye will be kept on community call discussion updates as we approach the deadline.  
  • ZCash Halving
    • Also coming up early this week is ZCash’s first halving, where ZCash’s inflation rate will drop from 25% to 12.5%. Similar to Bitcoin’s halving in May, some arguments point to reduced downward pressure from miners selling newly mined ZEC providing relief to the price of ZEC. However, just this past week, ShapeShift reportedly delisted Zcash, removing it from their trading platform in addition to monero and dash “to further derisk the company from a regulatory standpoint.” Recent statements and actions against privacy coins in several countries have brought a cloud of uncertainty over the future of these cryptocurrencies. We’ll be monitoring events as they unfold along with updates that possibly provide regulatory clarity. 
    • Su Zhu@zhusu
      for institutional old money, before ATH, risky to be in
      After ATH, risky not to be in
      $BTC

      Eric Conner@econoar
      From an investor perspective I’m treating eth2 phase 0 as just another yield farm. There is no need for altruism in this game. Consider the risks (new code, liquidity lockup) versus the reward (high yields) and go from there. Don’t deposit just because others are.

      The question to ask is, is 15-20% APY worth locking up your ETH for a year while needing to run the proper infrastructure? If yes, then stake! If no, don’t. Simple

      Mohit Sorout @singhsoro
      $btc futures & perpetuals aggregated Open Interest has made a new all time high today
      Liquidation fest hasn’t even started
      Leshner@rleshner
      Uniswap liquidity incentives are expiring in five days, sooner than $UNI Governance can act. When incentives expire, liquidity in $DAI$USDC$USDT, and $WBTC will decline, and slippage (the cost of trading) will go up. This is bad for traders that use & adore, the #1 DEX

      This morning, @MonetSupply organized a community call to discuss solutions (thanks!). Long story short, the community need to create a solution, because it won’t happen on its own. Details: https://gov.uniswap.org/t/announcement-unofficial-community-call-thursday-12-nov-17-00-utc/8371/12…

      After analyzing the situation, I recommend that the community maintains incentives for the following two pools:
      ETH/USDC
      ETH/WBTC
      This reduces incentives by half, by narrowing them into the two most important pairs–without hampering the trading UX.
      READ MORE
      Nikita Zhavoronkov@nikzh
      (1/2) Ok, so what happened today on #Ethereum:
      1. At some point Ethereum developers introduced a change in the code that led today to a chain split starting from block 11234873 (07:08 UTC)
      2. Those who haven’t upgraded (@Blockchair,@infura_io, some miners, and many others)…
      Image

      (2/2)… got stuck on a minority chain (~30 blocks in 2 hours)
      3. Technically, that was an unannounced hard fork. Something similar happened to #Bitcoin 7 years ago when there was a database upgrade: https://github.com/bitcoin/bips/blob/master/bip-0050.mediawiki…
      4. Fix: upgrade geth and run debug.setHead(11234872)

      Image
      In my opinion, today’s consensus failure in #Ethereum shouldn’t be underestimated and should be considered as the most serious issue Ethereum has faced since the DAO debacle 4 years ago. An investigation is in order.

      Jing is hiring for Optimism @jinglanW
      Hey everybody – I would like to apologize to the community for inadvertently causing some nodes to fall out of sync on Ethereum last night. Here’s the timeline of events and our takeaways:

      Our Optimistic Virtual Machine relies on a version of geth that we forked 6 months ago. We’ve been pushing the limits of geth in the OVM and we found a very mysterious bug. We were able to patch the bug on our geth fork but the root cause remained unclear.

      We were excited about making potential a contribution to geth – a really fun part of working with the OVM is how close to the EVM we sit. This means we get to benefit from geth improvements & vice versa. But in this case, we assumed the bug came from our customizations to geth
      Last night we began to suspect that this wasn’t true, and that the bug was actually present in old versions of geth. We realized that for nodes that hadn’t upgraded yet, the bug may cause them to fall out of sync.
      We checked http://ethernodes.org and saw that almost all nodes had upgraded to the fix. So we decided to test the bug and see what would happen. This was boneheaded in hindsight – we didn’t realize the impact of the few nodes that were not upgraded
      We’ve learned never to underestimate the impact of one’s actions in a decentralized network. Even if it seems like the impact is very mild, you never know for sure how it will impact the myriad of people and projects in the ecosystem
      Mason Nystrom@masonnystrom
      Polychain Capital doubled down and purchased another 141 $YFI this week. Polychain is now the 10th largest holder with 470 YFI (~8.5m) or 1.6% of the total supply. twitter.com/masonnystrom/s…
      Joseph Young @iamjosephyoung
      almost every morning we wake up to a new billionaire liking bitcoin. i like this
      Steven @Dogetoshi
      High quality version of Drunkenmiller’s Bitcoin interview.
      twitter.com/Dogetoshi/stat…
      Pomp @APompliano
      HOW IN THE WORLD COULD YOU BE BEARISH ON BITCOIN RIGHT NOW?
      – Paul Tudor Jones
      – Stanley Druckenmiller
      – Cathie Wood
      – Chamath Palihapitiya
      – Mike Novogratz
      – Abigail Johnson
      – Jack Dorsey
      All Bitcoiners. What could you possibly know that the worlds best investors don’t know?!?

      Caitlin Long   @CaitlinLong_
      BIG NEWS FROM SEC-clarity in US #crypto regulation did come w/ #Wyoming‘s Oct 23 #NoActionLetter regarding #qualifiedcustodian (SEC just confirmed) tl;dr=SEC Custody Rule favors banks as QCs, bc state trust cos may not give as much protection as banks sec.gov/news/public-st…

      2/ Lack of clarity has kept the HUGE #RIA & asset mgr market out of #crypto but this should help. Sum: * banks are #qualifiedcustodian by def’n, but * state-chartered trust cos may not be RIA must defend that a state trust co provides as much protection as a bank, broker, FCM.
      READ MORE