The Disrupt Weekend

Recommended read.

“Ethereum is a platform for Global Public Goods in the realm of Money and Finance.

The Protocol Sink Thesis illustrates how applications move from being financial experiments to unstoppable global financial platforms, used by everyone.

The thesis states that the more trustless, permissionless, and credibly neutral a protocol is, the further it can scale itself to a global platform, and as a consequence, absorb a larger amount of capital.

Things that are very useful and cannot be captured will find themselves at the bottom of the Protocol Sink.

The Web2 movement illustrates the presence of the same outcomes that the Protocol Sink Thesis predicts. Global, non-rivalrous, non-exclusionary platforms like Instagram, Facebook, Twitter, YouTube, Medium have seen incredible adoption and growth due to the density they amass from free user-generated content, and their ability to scale to the widest audience possible. However, being a product from a for-profit company that answers to nation-state regulators places a limit on the scale of these platforms.

As it turns out, the human subjectivity involved with monitoring content limits their neutrality and prevents them from being an unbiased protocol. Additionally, being a centralized company forces them to be subject to the rules and regulations of a nation-state government.

As a result, crypto-economic protocols are destined to fall below centralized companies in the Protocol Sink. Simple game theory suggests that centralized companies like crypto banks (e.g. Coinbase and Gemini) will leverage the power of decentralized protocols beneath them.

Global Public Goods (GPGs) are the things that are found at the bottom of the Protocol Sink. Any crypto bank can improve its products and services by enabling users to access the Dai Savings Rate (DSR). You can repeat this same model for any protocol or application on Ethereum: Maker, Compound, PoolTogether, Augur…

Useful protocols that have removed trust, bias, and permission will find themselves leveraged by companies, businesses, banks, and individuals from all over the world. Ethereum generates a platform for hosting Global Public Goods.”

The goal of the Yield Protocol is to bring fixed-term, fixed-rate lending and interest rate markets to decentralized finance using a new kind of token we call “yTokens.” Version 1 will enable fully collateralized fixed-rate borrowing and lending in Dai.

yDai tokens are Ethereum-based tokens (ERC20) that may be redeemed one-for-one for Dai after a predetermined maturity date. yDai are analogous to zero-coupon, or discount, bonds.

yDai trade freely and will typically be priced at a discount to Dai. The difference between the discounted value and 1 Dai (the maturity value) represents the interest earned by the lender. Since the market determines the price of yDai, it also determines the interest rate.

The system is tightly integrated with — and complementary to — Maker. Maker users will be able to “migrate” their Dai vaults into yDai vaults, locking in a fixed interest rate for a period and converting back to a Maker vault after maturity.”

“Many people have asked—will sharding really work for DeFi? After all, sharding breaks composability, and isn’t composability the main thing about DeFi?

Ethereum 2.0 is going to create a bunch of shards, which will work like loosely connected blockchains. But all the DeFi stuff will end up living on a single shard, since it all wants to coagulate together. It’s wrong in being alarmed about this: in fact, this is perfectly fine and to be expected!

Imagine the day that Ethereum 2.0 launches with full smart contracts. On day one, it’s empty, like a fresh and untouched landscape. Eager Ethereum 1.0 settlers disperse across the shards. Will they spread uniformly across this landscape? Of course not! The first settlers will want to band together and form cities.

In cities, individuals live and work together because they benefit from coordination and proximity. In exchange for the increased productivity of living in a city, those settlers are willing to pay more in higher rents. This first city in Ethereum 2.0 will likely be the DeFi shard. I expect if there is a second city shard, it will be for centralized exchange settlement, separated from DeFi and all of its chaos.

I expect there will be two other kinds of shards: suburbs and farmlands. Suburbs are places where lots of people will live at relatively low cost, and have access to decent services.

Finally, there are the farmland shards. These are the rural areas that are empty of people. If you are a blockchain game that is mostly doing its own thing and doesn’t immediately need to interoperate with other assets, you can just settle all your game actions directly onto a farmland shard.

Sharding doesn’t mean that activity is uniformly spread across shards. That’s not only impossible—it’s economically stupid. Let high-value enterprises move into the cities, let boring families move to the suburbs, and let farmlands do their thing far away from the valuable real estate.

You can think of sharding as offering a similar vision to interoperability as Cosmos or Polkadot. Many different blockchains, each specialized for certain economic equilibria, with a superhighway connecting them all. Except in Ethereum 2.0’s case, all those shards will speak the same language, share the same tooling, and benefit from the immense community that Ethereum has already garnered.”

Since Sunday, 1,043 more bitcoins were tokenized through Wrapped Bitcoin than were actually created by bitcoin miners as the Ethereum-based decentralized finance (DeFi) boom shows no signs of abating.

At last check, nearly 31,000 bitcoins have been tokenized on Ethereum, according to Dune Analytics, 75% of which were minted by Wrapped Bitcoin (WBTC).

The rate of bitcoin tokenization signals the surging demand to use bitcoin in the burgeoning network of Ethereum-based DeFi applications.”

“According to the latest 13F, Howard Buffett’s Berkshire Hathaway not only dumped all his airlines – as we learned previously, but has also liquidated huge amounts of its exposure to US banks (exiting Goldman Sachs entirely).

  • Berkshire’s JPMorgan Stake Down 62% to 22.2M Shrs
  • Berkshire’s Wells Fargo Stake Down 26% to 238M Shrs
  • Berkshire trimmed its bet on PNC Financial and M&T Bank as well as Bank of New York Mellon Corp., Mastercard, and Visa.
  • Berkshire Exits Goldman stake entirely
  • Berkshire took a new stake (20.9 million shares) in Barrick Gold, a holding that was valued at about $564 million at the end of that period.”

See Also: Peter Schiff Says the Fed Can’t Print Purchasing Power (Video)

“With yield farming becoming one of Ethereum’s killer narratives, non-custodial DeFi management platforms are becoming increasingly valuable.

DeFi management platforms abstract away the complexities of these systems to make it easy for anyone to capitalize on the opportunity. Instadapp is one of them. They’ve been one of the dominant players in the space with over $300M in value locked.”

See Also: Unsecured loans are coming to DeFi

Decentraland, MANA & The Virtual World Built Entirely On Ethereum

Another day, another billion dollars. The growth is staggering. On August 9, DeFi’s market cap hit $11 billion. By August 12, $13 billion. And now four days later—the rise almost like clockwork in DeFi’s steampunk utopia—the market cap hits $15 billion. As of today, DeFi’s market cap is $15.1 billion.

The huge rise is of course down to the prominence of Chainlink, the decentralized price oracle that’s responsible for 49.2% of DeFi’s market cap. Chainlink seems to rise every weekend, and this weekend resulted in a huge price bump of about 13% in under 24 hours.”

See Also: Crypto locked in DeFi clocks record $6bn
See Also: “Completely valueless” YFI token rises by 53% overnight

“In our last update we introduced “Tokenised Staking” to the world using our new rETH token, which represents a staking deposit and the rewards it gains over time in the Rocket Pool 2.5 network.

It can be held, sold, traded or all of the above long before Phase 1.5/2 of the ETH2 rollout occurs and provides our users with liquidity during this time in which all staking deposits are locked on the beacon chain.”

“This week a series of hedge fund indexes, reported average performance for July of 2.6%, and a year-to-date return of 1.7%. This significantly underperformed the S&P 500 (+4.7% for the month), Nasdaq Composite (+5.3%), gold (+10.3%), bonds (the long bond TLT index is up 4.4%) and, of course, bitcoin (+22%).

Aren’t hedge funds supposed to outperform the industry benchmark? The YTD performance of bitcoin to the end of July is 55% – in other words, the leading cryptocurrency by market cap outperformed crypto-focused hedge funds by five basis points, or 10%.

So, is the story here the outperformance of crypto hedge funds compared to their traditional brethren? Or is it the underperformance of crypto hedge funds compared to the industry’s benchmark?

I think it’s the former, that crypto funds are outperforming non-crypto funds, a trend that is likely to continue given evolving market developments and sentiment.

Investing in a crypto hedge fund instead of directly in the market is going to be a more attractive option for many investors even if the returns are slightly lower, because using a vehicle run by seasoned management is probably safer than direct market participation. Investors don’t have to worry about custody, best execution and liquidity crunches.”

“Angel League allows groups of investors to jointly purchase the stocks of startups in the “pre-IPO” stage. The members, known as “lead angels,” are selected through a recruitment process to incorporate new people willing to sign a stock trading contract to operate on the platform.

The trading company will then issue membership confirmation on an NFT-based digital card through the Kakao’s Klip crypto wallet. With the NFT-based digital card issued, members can then trade on the platform.

By making it possible to verify the membership of the Angel League through the NFT digital card of Klip, we have reduced operational hassle and strengthened the convenience of members.”