The Disrupt Weekend

“Bitcoin and ethereum come with very different stories, and thus what to track is quite different.

Bitcoin is digitally scarce, and therefore can be viewed as “hard and sound” money. While the Chinese authorities may attempt to stomp out bitcoin mining like a weed, it does little to change the network’s ability to secure transactions and generate a store of wealth for people who want to do so away from their governments. In this way, Bitcoin is a political tool aimed at sovereigns, meant to strip away their monopolies on wealth.

It is a breath of fresh air to switch from talking about existential geopolitics and who gets to be the money god – a monarch, a president or a computer program – to talking about creative computation.

Once you layer in programmability into blockchains, you are no longer constrained into talking about money. Yes, money is lovely. But it is also a mere derivative of actual things that actual people do. Money does not exist without some work that has gone into the tangible world, and then became abstracted into something else. To us, it is that work that is important.

Paying for your sandwich in BTC or Apple stock is not a digitally native economy. Building software that runs on Ethereum, or another bridged computational blockchain, definitely is.

Having open-source, mutualized financial engines that provide the best financial functionality in the world is a worthwhile goal. Fixing the original sin of the internet by rewiring human creativity out of attention-eating advertising monsters and into economic exchange seems like a pretty good goal too. Designing, congealing and governing an emerging metaverse to make the cyber expanse feel grounded and worth inhabiting may be the largest goal of all.

To that end, we find it much easier to root in Ethereum’s fundamentals because it welcomes non-canon extensions, whether they are scalability networks like Polygon, Optimism or Arbitrum, or whether they are the myriad decentralized applications extending the financial uses of ETH through trading, lending, investing, insurance, structuring and asset management.

The more others build, and the easier it is for them to build and therefore generate economic exchange and transactions, the better off everyone becomes.

To believe in the future of the crypto economy, you don’t have to believe in stories about sovereigns, digital or flesh. Rather, you have to believe in stories about the benefits of non-coercive peer-to-peer economic exchange. To that end, instead of swapping out old governments for the internet, the thesis is that you are swapping out the old economy for the internet.

As the crypto markets continue to display both (1) pronounced volatility and (2) increased correlation between different asset types, it’s important to articulate the main difference between the motivating purpose of Bitcoin and Ethereum. We do not think crypto prices are telling a useful or clear story, so it is worth considering the fundamentals of what one is betting on to become true.

Bitcoin and Ethereum/Web3 are aiming for quite different goals and will take very different paths to get there. Perhaps during some beautiful singularity, they will converge. The Twitter universe will yell at you until you comply to its price narrative, so be vigilant and pay attention to core principles. A lot is at stake.”

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“The backlash from establishment figures in the U.S. and Europe has been somewhat muted but obvious. You can absolutely smell the fear.

The IMF, which is dominated by advanced economies and consistently headed by Europeans, makes loans to developing countries in economic or financial crisis. Though founded with high ideals, since the 1970s the IMF has used these loans as a coercive tool to advance first-world interests as part of a neoliberal strategy that Naomi Klein termed “The Shock Doctrine.” The IMF has consistently tied its emergency loans to drastic economic “reforms” that usually amount to brutal austerity for working people and free rein for international (read: mostly American and European) corporations.

In 2019, when Ecuador was in a severe economic slowdown, the IMF stepped in to loan it $4.2 billion. In exchange for that truly insulting pittance, the IMF demanded “modernization” policies that included privatizing public assets, stripping worker protections and cutting public spending by 6% over three years. The IMF knew and acknowledged these spending cuts would send Ecuador into a recession, increasing unemployment and poverty.

The same rapacious policies have been deployed, usually in a cookie-cutter fashion with little flexibility based on local conditions, in dozens of developing countries. Under the most repulsive of these provisions, the IMF even prohibited some countries from providing free education to children in the name of fiscal discipline.

Remember all the hoops Ecuador jumped through for that $4.2 billion? The total capital on DeFi systems today is $59.4 billion. It is not a great leap to imagine a future in which the IMF is no longer the lender of last resort for countries in crisis. They can borrow directly from the rest of us, without submitting to destructive, anti-human “reforms.”

You can begin to see why the IMF might regard a developing nation’s adoption of an independent currency system as deserving of “very careful analysis,” as a spokesperson put it.

[…] Bukele’s resistance to anti-corruption measures should be seen in this grim context: In Latin America, “anti-corruption” is too often code for “an American plot to overthrow your government.” The U.S. has violently intervened in the domestic politics of Latin American countries at least 14 times since the beginning of the 20th century, according to a tally by the Associated Press. The term “banana republic” derives from America’s old habit of knocking over governments for the benefit of fruit companies – including the one now known as Chiquita Brands International. These various operations frequently involved the use of secret death squads, including the Contras in Nicaragua, whose operations were allegedly funded by the CIA’s direct involvement in international drug smuggling.

Again, you can see why a left-wing South American president might look for ways to reduce his country’s dependence on the U.S. dollar and the U.S.-controlled financial system. While death squads never go out of fashion, the increasing internationalization of banking and finance has added a subtler weapon to the imperialist arsenal. Adopting bitcoin is a first step towards loosening that death grip.”

“Michael Saylor went on CoinDesk TV this week and described a world in which citizens of dollarized, bitcoin-adopting countries like El Salvador have digital wallets holding multiple cryptocurrencies. That’s where Saylor departed the text. “It’ll move on Bitcoin rails,” he said, talking about that dollar stablecoin, leading to further dollarization across the world. The possibility of dollarization via stablecoins is real, but as for what rails it will move on, the market has spoken: It’s not Bitcoin, it’s Ethereum.

As of this Tuesday, the supply of WBTC was 188,961. Lightning Network’s bitcoin capacity was 1,523.

The chart above shows the supply of tether (USDT), the largest stablecoin by supply, on three networks that support it. The nearly flat line is tether on Omni, an application-supporting layer that runs on Bitcoin, and tether’s original network. The line that goes up and to the right-hand corner of the chart is tether on Ethereum.

In sum, it’s finance, not commerce, that is leading adoption of crypto, and while bitcoin enjoys a unique status as the blue-chip investment in this category, the market is showing a clear preference for rails built on Ethereum.

“Solutions designed to redress the problems of the past, rather than the problems of the future, are almost surely doomed to failure because they are playing in the sandbox of old paradigms.

Part of the solution may lie in the complete transition to automation, assisted by the developing wave of AI and crypto, which will remove the kind of harsh systems that promoted no-cost (slavery) or low-cost (industrial age) human labor, as well as legacy government initiatives that are extractive, such as taxation. Automation, if deployed well, promises solutions to remove the need for anyone to take a hard labor and low-wage job ever again.

As always, with more solutions come more problems. There are fears that the coming wave of automation will remove worker agency and create even more wealth stratification, with some people living above the automation line and some people living below it.

This can be solved by taking the automation line and placing it at the very bottom of civilization so that no human being lives below it. The distributive properties of cryptocurrency can help us better do this effectively.

When we can effectively do that, with post-extractive technologies like AI and crypto, there will be systems that will emerge that allow for that possibility, to make poverty, food lines and the tent cities that have defined this early decade as an inhumane relic of the past, just like slavery. If nothing else, the advent of distributed autonomous organizations, rather than extractive ones, opens the possibility for us to follow a new way, a better way.”

“The brand new TriCrypto pool from Curve represents a major mathematical and economic breakthrough.

Conceptually, the Transformed Peg Invariants allow for high liquidity among differently priced assets (5-10x greater than the product invariant used by other AMMs). The pool internally computes an “internal oracle” price that adjusts when the loss becomes smaller than the system’s profit.

Curve has already launched a TriCrypto pool on Polygon for those brave enough to jump in. TriCrypto contains Bitcoin, Ethereum, and USD, arguably the three most important assets within the cryptocurrency space.”

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“In a slide presentation Friday, Eric Rosengren, president of the Federal Reserve Bank of Boston, listed Tether among the “financial stability challenges” the U.S. central bank is watching.

The reason I talked about Tether and stablecoins is if you look at their portfolio, it basically looks like a portfolio of a prime money market fund but maybe riskier. Tether has a number of assets that, during the pandemic, the spread got quite wide on those assets.

I do worry that the stablecoin market that is currently, pretty much unregulated as it grows and becomes a more important sector of our economy, that we need to take seriously what happens when people run from these type of instruments very quickly.”

Binance shouldn’t be operating in the U.K., the Financial Conduct Authority (FCA) warned Saturday, a day after Japan financial regulator issued a similar notice to the cryptocurrency exchange.

No other entity in the Binance Group “holds any form of UK authorisation, registration or licence to conduct regulated activity in the U.K.

Binance responded in a series of tweets saying that the notice has no direct impact on the services provided on and that its relationship with its users hasn’t changed.”

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