“The current, dominant economic regime in the U.S. is nominally capitalist, but in practice, it is something far afield. Government actors and the unelected Federal Reserve have long been in the business of picking and choosing winners in the market – sometimes directly. Regulation is often treated as a moat for powerful incumbents. If crypto is the Wild West, then traditional finance is the protectionism, cronyism and decadence of early modern Western Europe.
By comparison, crypto is a textbook example of “free enterprise.” It is a global financial architecture that anyone with internet access can use. It runs 24/7, it’s liquid, and it has winners and losers determined by the rules of the game.
When liquidity crises happen, people get liquidated. Businesses go bankrupt. Exchanges go down. People lose in proportion to the risks they take. Those are market forces functioning according to the rules.
There’s a case to be made that crypto ought to and can stand independent of the current economic system. As The Economist wrote recently, the state’s role in markets is to guarantee property rights. Crypto is a grand experiment with conceding that turf to blockchains. Taking ownership of your keys means taking on associated risks.
“Pure” capitalism promises something ruthless, but sticks to its own rules. Too bad it’s never been tried. Not even in the Wild West.”
See Also: Rep. Tom Emmer on Crypto Regulation, CBDCs, Infrastructure Bill (Video)
“The core problem with the TradFi money stack is that all of its components require participants in the system to trust a centralized entity. Someone or some institution must be trusted to keep the ledger, to issue the currency, to coordinate the conversion of short-term savings into longer-term loans and to certify people’s rights to property.
That trust imperative implies that the centralized entity has the capacity to act in its own interests against those of the users of the system. For that reason, society has developed a complex nexus of laws, regulations, accounting and auditing procedures to provide people with the confidence they need to use these services. All of that adds friction to our transactions and, ultimately, burdens the economy with massive costs.
This is where the decentralizing, disintermediating promise of cryptocurrencies, blockchains, digital assets and smart contracts comes in. These technologies are coming together to forge a decentralized version of the money stack. Here’s how it maps out:
- Ledger = blockchains like Bitcoin and Ethereum
- Currency = bitcoin the currency, ether and/or other cryptocurrency payment vehicles
- Debt = DeFi
- Property = Non-fungible tokens (NFTs)“
See Also: Bitcoin On-Chain Analysis (Video)
“Investors can make double-digit returns via weekly ether or bitcoin “covered call” strategies offered by decentralized finance (DeFi) asset management platforms, including Ribbon Finance and StakeDAO. All you have to do is deposit coins in “strategy vaults” designed to automate the trade.
A popular traditional market strategy, “covered calls” involve selling out-of-the-money (OTM) call options, or those with strike prices above the current market level, while owning the underlying asset. It is typically seen as a neutral to bullish strategy, because the upside is capped.
At press time, projected yields from Stake DAO’s ETH and BTC covered call strategies were 31% and 32%, respectively, while Ribbon Finance’s ETH covered call offered a 12% yield. Check that versus the cash-and-carry trades executed on Binance, the world’s largest centralized crypto exchange by volume: Traders would earn just 5%.
With Stake DAO and Ribbon Finance, the strategy is automated. Users deposit their coins, wrapped ETH (wETH) or wrapped BTC (wBTC), into the strategy vaults, which take care of the complexities, like selecting the appropriate strike price for selling the weekly option.
These structured products open doors for the retail crowd to participate and earn yield from the otherwise complex options market, dominated mainly by sophisticated traders and institutions with ample capital and experience.
The emergence of this new category of offerings in the crypto options marketplace provides yet another example of how blockchain-industry developers are engineering cryptocurrency projects to replicate the structured-finance alchemy pioneered by Wall Street, and in some cases taking it to the next level.”
See Also: How to lend crypto to institutions
“As DeFi matures, it is becoming increasingly clear that [liquidity mining] incentives are not a viable long-term strategy for networks. The goal should always be to bootstrap and accrue long-term defensible value, rather than perpetually pay high interest on mercenary capital.
Olympus flipped this model on its head. While we started with liquidity incentives at launch, we used them (as they should be used) as a short-lived bootstrapping mechanism. LP incentives allowed us to build up a large liquidity pool quickly, but it was never a long term strategy. Bonds are.
Bonds are a mechanism by which the protocol itself can trade its native token in exchange for assets. Instead of renting liquidity from third parties, it purchases them outright. Once the bond is created, the protocol owns those assets.
Olympus has found enormous success through bonds. Within the first six months, the protocol has amassed over $150 million in assets. This is higher than many protocol’s TVL, and it will never have to pay another dime for them. Not only that, most of these assets are productive; instead of costing the protocol money, they make the protocol money.
Through bonds, protocols can accumulate the crucial infrastructural liquidity that they generally service via liquidity mining. Instead of renting that liquidity (often at astronomical interest rates), they simply purchase it, turning a value-draining perpetual expense into revenue-producing assets that facilitate the functionality of the rest of the platform.”
“In September, bitcoin dominance was 42%. That’s the lowest it’s been at that point in the year in any of the previous four years. While Ethereum’s share was higher in the most recent September than at any time in the series since 2017, the share for all other blockchains was the highest of any of the last five Septembers.
BTC losing dominance does not imply that it is losing, especially as it continues to cement itself as a sound money and global monetary network. Waning dominance for bitcoin more accurately suggests that there is money flowing into other projects with different use cases.”
“Mozilla Foundation, which develops the Firefox browser and is usually a half-decent supporter of internet privacy and security, filed an objection in early September to the working draft of a new DID standard being developed by the collaborative W3C foundation.
Coin Center, in an open letter this week, characterized those objections in part as “transparently irrelevant,” and more broadly warned that ‘a promising effort to standardize Decentralized Identifiers (DIDs) at the W3C is being waylaid by the objections of centralized digital identity providers.‘ The new standard would potentially disrupt centralized digital identity providers such as Google and Facebook.
Among other benefits, this is a much more secure and private model than the Facebook or Google logins which currently dominate identity verification on the web. That’s in part because service providers could limit the data they see or collect based on their security risk level or specific qualification requirements.
The Mozilla objection … dedicates the vast majority of its critique to the putative environmental costs of proof-of-work mining. This is transparently irrelevant to the W3C DID standardization process.
It is especially strange since the current DID draft standard does not even mention PoW mining, according to Coin Center, and can accommodate many data architectures. Coin Center characterizes Mozilla’s statement as “scare tactics and hyperbole,” and it is certainly a strange and off-putting position from an organization that is usually quite intellectually honest.”
“One approach that has been growing in popularity lately is what we’re calling “Airdrop scams”. A typical airdrop scam involves minting a new malicious token, sending it to user accounts, and relying on users investigating what this mysterious token is to phish those users.
These tokens however do not behave like normal tokens, and when those users try to swap them, they throw an error, which directs the user to a phishing site for help, where they are phished.”
“The Nigerian Federal High Court joins the growing list of regulators across the globe to approve the rollout of a central bank digital currency (CBDC) as a legal tender. Named eNaira, the digital currency will be issued by the central bank and supported by a homegrown eNaira wallet.
The official eNaira website says that the digital version of the Nigerian naira will be made available universally, stating “anybody can hold it.” While eNaira will continue to circulate alongside its fiat counterpart, it is marketed as a faster, cheaper and more secure option for monetary transactions.
It is important to note that the move to introduce digital naira also coincides with the falling value of the nation’s fiat currency, currently standing at its lowest point since 2003.”