The Disrupt Weekend

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A new report from the Center for New American Security (CNAS) not only lays out in stark terms the history and state of China’s CBDC system but also reviews what few technical details of it are available and recommends policy steps the U.S. should consider in an escalating CBDC conflict.

This CBDC system, which the Chinese government calls Digital Currency/Electronic Payment (DCEP), will likely enable the Chinese Communist Party (CCP) to strengthen its digital authoritarianism domestically and export its influence and standard-setting abroad.

By eliminating some of the previous constraints on government data collection of private citizens’ transactions, DCEP represents a significant risk to the long-held standards of financial privacy upheld in free societies.

DCEP would give the Chinese Communist Party something that no government has ever had in history: The ability to monitor in real time the minute financial dealings of its citizens.

It’s not yet clear how accessible DCEP would be outside China, but if it is, this has implications for other governments.

The U.S. government needs to assess whether DCEP use should be blocked in the United States. But private-sector U.S. tech companies should also be thinking about whether they will allow the DCEP application to be accessible on their platforms, such as app stores.

In the U.S., the founders created the Fourth Amendment to the Constitution precisely because it was understood that if the government had access to everyone’s private possessions (such as their papers at home), it would lead to government repression.

This dynamic continues to exist, and places like China which don’t have this standard built into their governing system are more likely to abuse their citizens and hinder their ability to advocate for their interests or redress grievances.”

Maximizing Ethereum’s inclusivity has been why Ethereum 2.0 has taken so long (six years!) to roll out. Ethereum 2.0 offers the ability for the average individual to stake ETH on consumer level hardware, on laptops or Raspberry Pi’s, and participate in Ethereum security and receive ETH issuance. The BLS signature scheme that was incorporated into ETH 2 allows for unlimited numbers of participants from joining into the protocol and offering their security to the network.

[However] the US dollar price of 32 ETH is already prohibitively expensive for 98% of the world’s population, and right now the price of ETH is going up and to the right pretty damn fast. As a result, it would be a shame if Ethereum consensus participation was only restricted to ETH whales and early adopters who made a high conviction bet on the future of crypto networks.

Ethereum has an app for that. Decentralized Staking-as-a-Service (DSaaS) has the opportunity to successfully offer a decentralized alternative to centralized staking-as-a-service providers.

If centralized SaaS come to dominate Ethereum consensus, that could spell trouble. It’s common belief that all SaaS (Centralized or Decentralized) will all issue a S-ETH derivative token, and they will all compete for liquidity in Ethereum.

This could be the ‘DETH of Ethereum’. Liquidity begets liquidity, and when it comes to S-ETH (or DETH), that compounding effect means that a centralized entity comes to hold more and more ETH. If the S-ETH derivative token issued by a centralized SaaS provider comes to be the dominant form of yield-bearing ETH, this would mean that the centralized entity would slowly march its way into a dominate position in Ethereum consensus.

In the way that DAI offers us a trustless alternative to USDC and USDT, rETH (Rocket Pool’s S-ETH token) can offer us a similar safe-haven for trustless Staked ETH.

When you come to Rocket Pool and stake your ETH, you will receive rETH in return. It’s important that rETH becomes competitive as a money. And I think it will, as rETH has certain features that gives it stronger assurances than any centralized S-ETH token could ever offer.

If a protocol is trustless, it means that you have complete assurances that you are uncompromised in your control over money and assets. Rocket Pool is a math-driven protocol, meant to serve any and all requests no matter way. Coinbase is a trust-driven company, which will never be able to offer stronger assurances than what is offered by decentralized applications on Ethereum like Uniswap or Rocket Pool. rETH offers the strongest possible assurances with ETH redeemability. Therefore, rETH will be good money.

As these young DSaaS providers like Rocket Pool come into the market, we as users can protect Ethereum by adopting rETH or any other DSaaS S-ETH derivative token that arrives.”

“Layer 2 is often touted as our best scaling option. The industry has spent years trying figure out the best Layer 2 model. We’ve seen state channels, plasma, and now, rollups. All have their own trade-offs.

The reason Rollups have become the defacto L2 scaling method is that they offer similar capabilities as Plasma, but they also solve the data availability problem. Rollups offer many-to-many transactions, smart-contract capabilities, and significantly reduced total L1 blockspace requirements.

That’s why rollups are so promising. It sufficiently scales the network with full security guarantees. Layer 2’s aren’t perfect yet, but don’t be mistaken…They’re coming.”

“How is it possible in 2021 to have 136% of stock sell short? Who allows such things to exist and why isn’t anyone being held responsible? While everyone is focused on enabling the Reddit mob to buy GME, no one is looking into the root cause of the GME problem: the collusion of brokers and hedge funds to use naked shorting to destroy companies for pure profit.

When the GameStop short squeeze took place, we found out who Robinhood’s largest customer really was: Citadel & Point72 (two of the most storied hedge fund managers on Wall Street), which pays Robinhood over $300 million in fees yearly for the order flow and securities lending.

We need to take advantage of this moment, when the traditional financial institutions are exposed, to introduce the waves of innovation that have been occurring on blockchain technologies.

From naked short positions to lying about how much annual percentage yield you really should be making from holding your assets with these institutions, it is time to introduce real, impactful financial freedom through financial tools and methods that act in the best interest of the users and not the abusers at the very top.

See Also: Why Crypto Markets Aren’t ‘All-to-All’ Either (and How They Can Be)

Nevada Governor Steve Sisolak is pushing a plan for “opportunity zones” that would give large tech companies the power to create their own governments. The semi-autonomous zones would be able to carry out the same functions as county governments, ‘including the ability to impose taxes, form school districts and justice courts and provide government services.’

The zones would be earmarked for “innovative technology,” including blockchains, AI, and robotics. Blockchains, LLC made a big splash in 2018 at Devcon, when the tech company announced plans for a “smart city” in the desert outside Reno, Nevada.”

“While focusing on domestic use cases is understandable for individual countries, CBDCs will only ever operate in local sandboxes unless there is some type of interoperable protocol. It is critical to bridge the gaps between the various CBDC initiatives and existing payments systems as well as other digital currencies to ensure their success on a global scale.

The Bank of International Settlements’ Innovation Hub, or BISIH, announced that CBDC research is a top priority for it in 2021. It plans to gauge the feasibility of faster, cheaper cross-border payments. This initiative is going to be highly beneficial for global economies exploring the interoperability of their own CBDC projects.

While governments exploring the use of CBDCs is undoubtedly a step in the right direction, truly borderless, global commerce will be powered with the help of an interoperable protocol, as our economic system is too multifaceted to be replaced by a singular currency.”

“Balancer, a non-custodial portfolio manager, is releasing version 2.0, which puts all the assets entrusted to it in one big vault. This should dramatically reduce gas fees for decentralized finance (DeFi) trades because users can swap as much as they want, only paying gas for going into and out of Balancer.

It will go live with the familiar weighted pools that Balancer users know already. It will also have stable pools that work more as Curve does, so big trades on stablecoins can see very little slippage. Soon, Balancer will launch smart pools, whose logic can change on the fly.

Balancer will also introduce asset managers, external smart contracts that can be used to put some of a liquidity pools’ underlying value to work elsewhere in DeFi. Balancer version 2.0 is under audit now. The team currently projects a March launch.”

The COVID-19 crisis has increased consumer demand for identity solutions that don’t compromise individual privacy and freedoms. As the travel industry and various governments continue to explore ideas like “immunity passports,” which would maintain vaccination and/or testing records, the creation of a global standard around digital credentialing seems both necessary and elusive.

Awareness of the power that centralized platforms and service providers wield over our lives is moving beyond the crypto and blockchain community to the mainstream. Take, for example, the recent mass exodus from WhatsApp to Signal following a (relatively minor) change in Facebook’s data-sharing policies. This may create an increase in demand for decentralized service provision.”

Since June 2020, transactions have consistently peaked above the 1 million daily mark, driven upward by the use of decentralized finance applications built atop the blockchain.

Increased use of the blockchain put strain on the network; it pushed up gas fees on an increasingly congested blockchain. The proof-of-stake Ethereum 2.0 network, which went live last year but is not yet fully functional, is designed to process a larger amount of transactions—and quickly.”

“Miller Value Funds–run by veteran hedge fund manager and bitcoin bull Bill Miller–may invest in the Grayscale Bitcoin Trust through its flagship fund, the Miller Opportunity Trust.

Miller Opportunity Trust had assets under management of $2.25 billion as of Dec. 31, 2020, making the fund’s potential maximum investment in GBTC $337 million.