29 January

“WisdomTree Investments is prepping the launch of a digital finance app that will allow customers to trade cryptocurrencies and other financial products. The move will expand the New York-based asset manager’s purview with a greater focus on retail traders.

The firm wants the app to “provide a core suite of savings, payments and investment” services while avoiding the worst of “trading and speculation.” Unlike Robinhood’s crypto service, “WisdomTree Prime” will be “blockchain native” at launch.

WisdomTree manages over $76 billion in assets globally. The investment firm seeks a beta launch in some U.S. states during the second quarter and expects a national rollout later this year.”

See Also: $8B New York commercial bank to offer Bitcoin services

“Visa users made $2.5 billion in payments with crypto-connected cards during the company’s fiscal first quarter ended Dec. 31. Kelly said Visa continues to “lean into the crypto space” and improve areas such as connectivity, scale, consumer value propositions, reliability and security for crypto offerings to continue growing.

More than 65 crypto platforms and exchanges, including Coinbase and BlockFi, have partnered to issue Visa credentials. More than 100 million vendors in the Visa network are also now accepting Visa crypto payments, the company added.

See Also: Google Cloud Hiring Team of Blockchain Experts

“A scandal has rocked investor faith in a popular stablecoin; as users rush to exit, the clamor is threatening to throw the asset off its dollar peg. Even worse, some observers worry that one stablecoin losing its peg could have a “contagion” effect, diminishing the value of multiple stablecoin assets.

Abracadabra’s MIM algorithmic stablecoin is among the victims of the crisis in confidence. The ensuing low liquidity briefly pushed MIM off its dollar peg on Curve throughout the day. This, in turn, has thrown Terra’s UST stablecoin into flux. In addition to a MIM-UST Curve pool linking the assets, Abracadabra offers a “degenbox” product that allows for leveraged yield farming with deposits into UST – a dynamic that means MIM is heavily collateralized with UST.

This creates a potentially dangerous link where if one of these stablecoins falter, the other will, in turn. Thursday’s stablecoin volatility is due to investors running for the exits.

What we’re seeing now [is] a lot of people withdrawing to coins that aren’t UST or MIM. So far, on the hard dips we’ve seen it didn’t seem to affect the other stablecoins. If anything, people are running away from MIM and UST and to other stablecoins.

However, there are incentive-based stabilization mechanisms for the assets that so far have held up under the strain of major liquidity providers withdrawing. If users deposit 3pool stablecoins (USDC/DAI/USDT) into Curve when MIM or UST are depegged from a dollar price, the timing grants the users a “bonus” to their positions.

While Thursday’s events have tested the peg of each stablecoin, both have thus far withstood the volatility.”

See Also: Terra’s LUNA Dumps After Wonderland Controversy
See Also: Bankless: Drama in Wonderland (Video)
See Also: Users flock to Curve amid lack of stablecoin liquidity on major DEXs

A group of executives from major firms in the crypto industry have formed a political action committee (PAC) to support candidates running in November’s midterm elections.

Backers of the PAC include top executives at crypto exchange FTX and SkyBridge Capital, the hedge fund led by Anthony Scaramucci, who was briefly a White House communications director under President Donald Trump.

GMI PAC is the crypto community’s campaign arm and we are here to stay.”

“The bill must pass the Arizona state senate and house before Gov. Doug Ducey, a Republican, could sign it into law. Whether such a law could go into effect is questionable, given that the U.S. Constitution doesn’t allow individual states to create their own legal tender.

Don Huffines, a Republican real estate developer and current candidate for Texas governor, recently said he would make bitcoin tender if he’s elected.”

See Also: Texas Governor Greg Abbott Is Inviting Bitcoin Miners to Stabilize Electrical Grid

“The road map, signed by the deputy chairman of the government, suggests introducing know your customer (KYC) and anti-money laundering (AML) rules for cryptocurrency platforms, defining their regulatory status, mandating a supervisory body and establishing penalties for those who don’t play by the rules.

The timetable says that by May the Ministry of Finance should have designed a system of compliance control for peer-to-peer (P2P) platforms. By November, anti-money laundering standards set by the global Financial Action Task Force (FATF) should be adopted. By December, rules for registration and reporting by crypto platforms should be created.”

See Also: Trezor Backtracks on ‘Travel Rule’ App for Self-Hosted Crypto Wallets Amid Uproar
See Also: Hong Kong Regulators Impose Limits on Investing in Spot Crypto ETFs

The Supply Chain Bets on Blockchain

28 January

Wonderland’s TIME tokens fell 32% in European hours after blockchain sleuths revealed ‘Sifu,’ a core member of the founding team, is allegedly a long-time serial scammer, with a conviction and deportation on his record. He was also the co-founder of QuadrigaCX, a failed Canadian cryptocurrency exchange.

Avalanche-based Wonderland has been among the most popular crypto protocols in recent months, with community members referring to themselves as the “Frog Nation.” The protocol locked up billions of dollars of investor funds at its peak.

Wonderland founder Daniele Sestagalli confirmed the allegations in a later tweet, saying he was aware of Sifu’s identity and connections to QuadrigaCX. The community wasn’t impressed by Sestagalli’s response.

In 2005, he pled guilty to credit and bank fraud. In 2007, he admitted burglary, theft, and computer fraud. In 2018, he and his partner ‘lost access’ to $115M in customer funds.”

See Also: How Did a Former Quadriga Exec End Up Running a DeFi Protocol? Wonderland Founder Explains

Anchor, the flagship savings protocol of the Terra Luna (LUNA) ecosystem, has seen its reserves decline by 35.7% in the past seven days. Since the beginning of December, the amount of Terra USD Stablecoin (UST) held in the smart contract has declined by over 50%, with only $35.7 million remaining.

Whenever there is a deficiency between the income generated through borrowers’ interest, collateral staking and the yield expenses paid out to depositors, Anchor must tap into the aforementioned TerraUSD (UST) reserves to make up for the difference. Last July, its creator Terraform Labs injected 70 million UST into the reserve protocol and its value was relatively stable. But in the past 60 days, the total deposit amount has increased from $2.3 billion to $6.1 billion, while the total borrowed amount only increased from $1.2 billion to $1.5 billion.

If the trend were to continue, the reserve would run out in the coming months, and Terraform Labs would need to inject another round of UST for liquidity or sharply lower Anchor’s promised interest rate.”

An automated way of sharing proof that a user owns a private cryptocurrency wallet when transacting with a regulated exchange in Switzerland is being integrated by hardware wallet Trezor. The Address Ownership Proof Protocol (AOPP) streamlines and automates that manual signing process.

Going beyond the recommendations made by FATF, crypto requirements in Switzerland include the identification of private wallets transacting with the country’s virtual asset service providers (VASPs).

AOPP makes it simpler and faster for users to withdraw to the safest place for their coins: their Trezor.”

“Diem was in discussions with investment bankers to sell its intellectual property to return money to investors, Bloomberg reported on Tuesday.

The California bank, which serves blockchain companies, had agreed last year to partner with Diem in launching a U.S. dollar-pegged stablecoin. The agreement was supposed to breathe fresh air into a struggling project.

As Libra, the project originally envisioned a stablecoin backed by a basket of fiat currencies that could be used worldwide as a means of exchange. But it immediately spurred international regulatory backlash, with lawmakers demanding that all development cease until they could provide some regulatory guidance and ensure that it didn’t threaten financial stability.”

Amazon Marketplace owners who sell their business to Elevate Brands will now have the option of being paid in crypto. Elevate Brands is teaming up with Coinbase to offer the option. Elevate has raised over $370 million from institutional investors and owns over 30 private label brands. The company says it’s a top 100 seller on Amazon.

We’ve learned that [Fulfillment by Amazon] sellers are already well entrenched in crypto, so we are thrilled to be the first company in the Amazon ecosystem to offer the option of Cash or Coin.”

“The institutional arm of the Consensys-owned MetaMask has integrated its first multichain digital asset custody solution called Cactus Custody. Cactus Custody will provide institutional customers with multichain connectivity to all Ethereum Virtual Machine (EVM) chains, sidechains and layer 2s supported by MetaMask.

This is a profound DeFi offering for institutions.

The decentralized finance (DeFi) Connector feature will also provide additional security and compliance aspects, such as audit trails for transactions conducted on MMI, private key safeguarding and “role-based approval” processes.”

See Also: Matter Labs, BitDAO Back $200M DAO for zkSync
See Also: Axie Infinity Founder Sky Mavis Launches RON Governance Token

How to Use Polygon and Manage MATIC with Ledger (Recommended Watch)

“The 11 representatives have challenged the infrastructure bill’s definition of “broker,” believing it to be incompatible with the crypto ecosystem. The representatives propose following a definition which avoids placing “unworkable customer reporting obligations” on parties who do not in fact have customers, such as crypto miners and stakers.

Similar concerns over how the act defines a broker were raised previously, with a group of six senators penning an open letter to Yellen in December.”

See Also: DOJ Indicts Cryptsy Exchange Founder for Stealing $1M in Crypto

“NFTs are known for their transferability and commercial viability, but there are also downsides to those features, according to Buterin.

Buterin explained that if someone shows they own an NFT that is obtainable by doing X, such as attending an auction, it is not possible to tell if the person attended the auction to obtained it or simply bought the NFT via the secondary market.

The soulbound feature in WoW prevents an item from being traded, mailed or sold at the in-game Auction House to other players. It was designed by developers to prevent “twinking” or passing down gear from high-level to low-level characters. However, they also serve the purpose of demonstrating achievement; that is, the character earned the item by defeating challenging bosses and not via an heirloom.

The latter property seems to be of interest to Buterin, as the Ethereum co-founder raised the point that on-chain proposals to store driver’s licenses, university degrees, etc., would face problems if someone who doesn’t meet the necessary conditions can readily purchase them.”

“WMG is the owner of a slew of popular music properties, including record labels Atlantic, Warner Records, Elektra and Parlophone.

The virtual theme park will feature “concerts and musical experiences” from the music company’s star-studded roster of artists, which includes the likes of Ed Sheeran, Bruno Mars, Dua Lipa and Cardi B, according to a press release.

We are deeply focused on Web 3 right now and the impact it will have on music. We want to be driving opportunity, not behind the eight ball.

The Sandbox’s SAND token was up nearly 7% over the past 24 hours.”

See Also: New Metaverse-linked ETF shorts Meta shares in holdings

27 January

“A relief rally in crypto that had bitcoin trading near $39,000 was short-lived as the largest cryptocurrency by market capitalization fell back below $37,000 after the U.S. Federal Reserve released a statement Wednesday about reducing the size of its balance sheet.

Bitcoin briefly rose to nearly $39,000 right after the U.S. central bank released its statement, as the market believed the news was already “priced in.” Following the stock market, bitcoin gave up the earlier gains as investors and traders weighed Fed Chairman Jerome Powell’s comments. Powell said that he won’t rule out an interest rate hike at a future meeting and signaled that the central bank would steadily remove support for the economy in order to fight high inflation.

After hearing Fed Chair Powell talk, it became clear the risk of more rate hikes was elevated. The Fed may raise rates at every other meeting, with the balance sheet runoff starting in May or June.

But Moya added that the panic selling of cryptocurrencies may be over as a rally in alternative cryptocurrencies could be coming if bitcoin can stabilize at between $40,000 and $50,000.

On the weekly chart, the RSI is approaching oversold territory, similar to what happened last July in what was a prelude to a strong price rally. Still, momentum signals remain weak; buyers will need to make a decisive move above $40,000 to signal a recovery phase.”

See Also: Fed Keeps Interest Rates at Zero, Says Hike Appropriate ‘Soon’

“According to crypto policy advocate group Coin Center, the America COMPETES Act recently released by House members contains a provision that would be “disastrous” for crypto users from both a privacy and a due process standpoint.

The bill would give the U.S. Secretary of the Treasury ‘unchecked and unilateral power to ban exchanges and other financial institutions from engaging in cryptocurrency transactions.’ The provision, according to Brito, would essentially bypass the existing checks and balances on the Treasury Secretary’s authority in this area.

Removing restrictions from the Treasury Department’s “special measures” authority could have significant implications for individuals and companies operating in the crypto space:

[The law] would hand the Treasury Secretary unchecked discretion to forbid financial institutions (including cryptocurrency exchanges) from offering their customers access to cryptocurrency networks.”

See Also: Coin Center Report

The Diem Association, the Meta Platforms (formerly Facebook)-led group seeking to create a stablecoin, is considering the sale of the project’s assets to return money to investors. The group has been speaking with investment bankers about selling Diem’s intellectual property and helping the developers of Diem technology find new places to work.

The initiative has had a rocky journey since its unveiling in June 2019 as the Libra Association. Last November, Libra project creator David Marcus announced he was leaving Meta.”

The approval allows Gemini Galactic to operate an alternative trading system (ATS), which will facilitate the trading of “digital asset securities.”

Back in 2016 and 2017, tokenized securities and security tokens were all the rage as believers said they would trade on regulated ATS venues and revolutionize existing market infrastructure. A couple of years on, it could be argued the action has moved elsewhere. But Gemini Galactic appears to be biding its time.

The growth of the digital asset securities market and the use of blockchain for securities infrastructure will depend on further clarity from regulators and additional investment by companies such as Gemini. We are excited to be a pioneer in this space.”

See Also: FTX US Attains $8B Valuation in $400M Fundraise Including SoftBank, Temasek
See Also: SEC Scrutinizing Crypto Firms Over Interest-Paying Services: Report

“Speaking in a video conference with government ministers on Wednesday, Putin asked for “some kind of unanimous opinion” between his government and the Bank of Russia to be formed via discussions in the near future.

Crypto’s risk must be offset against the country’s “competitive advantages” when it comes to mining, Russia’s leader said. The Bank of Russia’s crypto ban call has been opposed by the country’s finance ministry on the grounds that it would undermine the industry’s technological development.”

Neven’s Law, not Moore’s, gives quantum computers about 10 more years before they could ever crack the leading crypto.

Mark Webber and his colleagues from the Ion Quantum Technology Group at the University of Sussex concluded that quantum computers need to be a million times larger than they currently are before ever cracking Bitcoin’s SHA-256 algorithm.

Webber estimates that if an attacker has a ten-minute window to crack the key, they would need a quantum computer with 1.9 billion cubits. If the key is vulnerable for 24 hours, this figure drops to 13 million qubits. The largest superconducting quantum computer on the market is IBM’s 127 qubit model.”

See Also: Engineer hacks Trezor wallet, recovers $2M in ‘lost’ crypto

Vitalik Buterin explains zkEVM

26 January

YouTube CEO Susan Wojcicki said she wants content creators to be able to benefit from new technologies. Wojcicki said her team is looking ahead to the future and has been following everything happening in Web 3 ‘as a source of inspiration to continue innovating on YouTube.’

The past year in the world of crypto, non-fungible tokens (NFTs), and even decentralized autonomous organizations (DAOs) has highlighted a previously unimaginable opportunity to grow the connection between creators and their fans.”

See Also: YouTube Loses Pair of Executives to Web 3 and Polygon Studios

It appears that buyers are starting to return, but analysts expect choppy price action ahead of the U.S. Federal Reserve’s press conference on Wednesday.

The Fed is expected to provide details about ending its asset-purchase program in March, which could coincide with a rate hike. Concerns about a tighter monetary policy have contributed to a sharp sell-off across speculative assets, including equities and cryptocurrencies over the past two weeks.”

See Also: Bitcoin’s Correction Continues for Now, but Eventually It Could Go ‘Parabolic,’ Says Peter Brandt
See Also: Bitcoin hits $37.5K, stocks recoup losses ahead of Wednesday’s FOMC statement
See Also: Ethereum Money Markets See Record Liquidations as Ether Tanks; MakerDAO Revenue Surges

Russia needs to regulate cryptocurrencies, not ban them, according to the head of the financial policy department at Russia’s Ministry of Finance. Chebeskov said the ministry opposes the stance of the Bank of Russia, which earlier this month issued a report calling for a full ban on cryptocurrency trading and mining.

Regulation is sufficient to protect our citizens.

Banning crypto transactions and mining would mean undermining the industry’s technological development, Chebeskov said. ‘We need to let these technologies develop.'”

See Also: Thai Authorities Plan to Regulate Crypto as Means of Payment
See Also: IMF Urges El Salvador to Discontinue Bitcoin’s Legal Tender Status [Again]

“Blockscan Chat is a messaging platform for users to simply and instantly message each other, wallet-to-wallet.

Users are already talking about potential use cases. For instance, wallet-to-wallet messaging could undercut NFT marketplaces by allowing bidders to directly message asset owners. And as Ryan Sean Adams of Bankless points out, you could even communicate with hackers, useful in cases when you’re trying to negotiate the return of funds.”

See Also: New private messaging app claims to be decentralized and quantum-resistant

“Spinning up a cryptocurrency-fueled investment community in the form of a decentralized autonomous organization (DAO) should be as easy as creating a group chat. Syndicate has gone some way towards making it easier to comply with whatever requirements are necessary.

We’ve worked with a number of external partners like law firm Latham & Watkins, who helped advise in the creation of the different legal templates and tools, specifically for investment clubs that are embedded in the product.

Syndicate is also partnering with Doola, a platform that helps incorporate businesses in the U.S. and which will help DAOs become legal entities, open fiat bank accounts and even file taxes and issue K-1s to members.

Translating [investment clubs] to the DAO space will open up the sea change in terms of what the future of capital allocation looks like.”

See Also: Syndicate
See Also: Crypto VC Firm Dragonfly Raising $500M for New Fund, Documents Show

“Kazakhstan’s energy problem worsened on Tuesday when a major transmission line was disconnected. Kazakhstan’s energy grid has been struggling to meet power demand, especially during the winter. KEGOC said it will consider rolling the limitations back if the energy situation improves.

Kazakhstan was home to about one-fifth of the world’s bitcoin mining at the end of August 2021.”

“The Blockchain-Based Service Network (BSN), China’s state-sanctioned blockchain infrastructure project, said it is releasing its platform for non-fungible tokens (NFT) in the country today.

The BSN-Distributed Digital Certificate (BSN-DDC) network is a structure for building NFTs that is compliant with Chinese regulations. Authorities in China discourage public networks like Ethereum that are commonly used in the NFT ecosystem.

Instead, BSN is making 10 Open Permissioned Blockchains available on the BSN-DDC. These are localized versions of their permissionless counterparts that set restrictions on who can participate in network governance and use fiat currency for payment. DDCs are the same as NFTs, but renamed to emphasize their uses for certification.”

“BIS is planning projects to explore CBDCs, next-generation payments systems, DeFi and green finance through its Innovation Hub in 2022.

At the end of last year, at least 64 central banks were exploring a retail CBDC, according to the CBDC Tracker. Of those, 20 have been launched or tested or were in the very advanced exploration stages.

As for DeFi, details are sparse, but a new project at the Hong Kong center plans to explore whether DeFi technologies including blockchain, tokenization and smart contracts, can ‘improve financing for small and medium enterprises, a historically underserved market segment.’

25 January

“Cryptocurrencies are starting to stabilize after declining sharply over the past week. Some indicators show investor sentiment at extremely bearish levels, which typically precede periods of buying activity. Bitcoin returned to above $35,000 and was up 3% over the past 24 hours, versus a 5% decline in SOL and roughly flat performance in ETH over the same period.

Long-term bitcoin holders appear unfazed. The proportion of long-term holder supply has actually returned to a modest uptrend, which indicates a general unwillingness for this cohort to liquidate.’ Inflows into digital-asset funds last week – after five straight weeks of outflows – suggest investors were taking advantage of the price dip.

I think the determination of a bull/bear market is not as clear as previous cycles, due to the structure of the market changing drastically with institutions entering the space. Now, it is apparent that bitcoin is in a ranging environment (between $29,000 to $69,000 approximately) rather than a trending environment.”

See Also: Near Record Foreign Demand For Stellar 2Y Auction Suggests Fed Tightening Panic Is Over
See Also: Bitcoin ‘enters value zone’ as BTC price floor metric goes green again
See Also: Analysts say Bitcoin’s bounce at $36K means ‘it’s time to start thinking about a bottom’

All Eyes on FOMC

No matter which way the Fed goes, the game theory calls for more capital moving into crypto.

  • Fed backs down: Currency devalues. Everything Bubble back on. Bitcoin up.
  • Fed hikes and normalizes: Global bond bubble implodes. Debt collapse. Capital flees, at least some of it into Bitcoin.
  • Central banks issue CBDCs: Yield curve control, no more cash, social credit (no jab = can’t spend). Capital flight to cryptos.

So while the nocoiner NPCs suffering from monetary Stockholm Syndrome gleefully celebrate Just Another Crypto Correction, remember to zoom out and keep the big picture in mind. We aren’t dealing with an asset bubble in Bitcoin, we’re dealing in a collapse of the global monetary regime, the decentralized revolution and the obsolescence of the nation state.”

Bankless: Inflation, The Fed, & Macro Markets

The Biden administration is readying an executive order for release as early as next month that will outline a comprehensive government strategy on cryptocurrencies and ask federal agencies to determine their risks and opportunities.

The directive would place the White House in a central role overseeing efforts to set policies and regulate digital assets. Biden Administration senior officials have met multiple times to discuss the directive, which will be presented to the president in the next few weeks.”

“A U.S. central bank digital currency (CBDC) would differ from the digital money currently available to the public because it would be a liability of the U.S. Federal Reserve, not a commercial bank, and so would have no credit or liquidity risk, Bank of America said in a report.

Preserving the dollar’s status as the world’s reserve currency, improving cross-border payments and increasing financial inclusion are all seen as benefits of a U.S. digital currency, analysts led by Alkesh Shah, wrote in the note Monday.

Bank of America said key considerations before issuing a CBDC are the need for it to be privacy-protected, intermediated, transferable and identity-verified. Stablecoins are likely to see an increase in usage in the absence of CBDCs, the bank noted.

See Also: Uniswap founder’s bank account shut down by JP Morgan Chase, shadow-debanking allegations surface

“Decentralized predictions platform Polymarket has launched new information markets just three weeks after being fined $1.4 million by regulators. However, U.S. residents will not be able to trade on the site.

Earlier this month, Polymarket launched a market called Airdrop Futures that allows speculators to follow and trade on the likelihood of airdrops.”

“A Saturday post by Telegram founder Pavel Durov stated that the proposed ban on crypto would ‘destroy a number of sectors of the high-tech economy.’

These technologies improve the efficiency and safety of many human activities, from finance to the arts. Such a ban is unlikely to stop unscrupulous players, but it will put an end to legal Russian projects in this area.”

The Disrupt Weekend

In recent months, liquidity mining has come under fire for being an imprecise incentivization tool often attracting mercenary farmers.

As a result, a range of novel new services such as bonds, time-weighted voting systems and DAO-to-DAO-focused stablecoin issuers have emerged to replace it – a broad range of advancements with the potential to permanently alter how DeFi protocols attract fresh deposits.

Depending on the project, the mechanics at play might be referred to as “liquidity as a service,” “protocol controlled value” or even “DeFi 2.0,” but in all instances, the basic principle is the same: to manage and direct vast sums of capital via incentive mechanisms.

Liquidity is one of the two most important resources in this new world, and whoever controls liquidity controls DeFi.

On the heels of the emerging bribe economy, a number of new products are coming to market that serve as governance or voting middleware in an evolving tech stack devoted to helping protocols route and control liquidity: Warden, Bribe, Llama Airforce, Votium and Votemak. Tokemak is aiming to become a decentralized market maker. Other projects – such as Frax and Yearn – have introduced venomic models as well.

It’s definitely an order of magnitude increase in terms of capital efficiency and pricing as far as liquidity mining schemes, which can cause excessive sell pressure on native governance tokens.

While some protocols are playing the bribe game in an effort to direct liquidity to favorable pools, others are vying to control the liquidity directly themselves – an emerging trend of “protocol-owned liquidity.”

Algorithmic stablecoin project Fei is working with Ondo Finance, a risk-tranching protocol focused on mitigating impermanent loss, to build a product that will allow protocols to pair native governance tokens from their treasuries with Fei’s stablecoin to directly create liquidity pools.

Instead of protocols blasting incentives at a pool to generate user deposits, this would allow protocols to create the pools directly – and, critically, also keep a portion of the trading fees from the pool, creating a new revenue stream. This logic also applies to Olympus Pro, Olympus’ bond program.

This is part of an emerging sector of “direct-to-DAO” services where third parties help DAOs more efficiently bootstrap liquidity for their tokens, among other needs.

See Also: What’s a SubDAO?

Great charts. Recommended read.

“In our view, the most important developments this year in Ethereum were:

  1. Layer 2 arrives – after years of development, L2 protocols launch on mainnet and expand Ethereum’s capacity
  2. Creator economy goes mainstream – NFTs are everywhere and artists use Ethereum to earn billions
  3. Core protocol upgrades – the Ethereum R&D community ships multiple upgrades, preparing for the transition to Proof of Stake
  4. DAOs pass the tipping point – DAOs become a viable tool for communities to self-govern, accumulating billions of assets and drawing in new users.”

El Salvador adopted bitcoin as legal tender in September. Five months later, the perception of the country’s sovereign credit is four times worse than it was.

Credit default swaps measure the cost of insuring against a country defaulting on borrowing repayments any time in a specified period. As of Wednesday, the nation’s CDS was second highest in Latin America, behind Argentina.

Salvador’s CDS is telling you a default is expected at some point.

While several traditional market observers were quick to call out El Salvador’s supposedly utopian decision to adopt bitcoin as legal tender and invest in the top cryptocurrency as the reason for the spike in the country’s CDS, the U.S. Federal Reserve’s hawkish turn also appears to have played a role.

  1. The jump probably reflected concern that the country’s negotiations with the IMF for a $1 billion loan program would flounder.
  2. The country’s credit outlook is now exposed to bitcoin’s price gyrations because the nation holds more than 1,300 BTC and plans to issue a $1 billion, 10-year bitcoin bond this year.
  3. The debt burdens of El Salvador and other emerging nations with dollar-denominated bonds become more expensive as the Fed tightens. Thus, CDS offering insurance against potential default become costly.”

See Also: Why Brazil Is the Big Latin American Bet for Global Crypto Exchanges

“With crypto-based scams becoming increasingly more sophisticated, it’s easier than ever to fall for them. Here’s how to keep your NFTs safe.”

22 January

“The crypto market was in a sea of red on Friday as bitcoin, the world’s largest cryptocurrency by market capitalization, tumbled more than 10% over the past 24 hours. Alternative cryptocurrencies (altcoins) led the way lower given their higher risk profile relative to bitcoin.

The total market cap of the cryptocurrency industry has fallen 11% to $1.9 trillion as of Friday afternoon U.S. time from an all-time high of $3.1 trillion in November. There has been nearly $600 million in liquidations during the last 12 hours. Bitcoin led the liquidation pack at $250 million, followed by ether at $163 million.

It appears that global investors have entered the year with a reduced appetite for risk, and so the correlations between speculative assets such as cryptocurrencies and equities have increased, which results in widespread losses. Bitcoin is down roughly 40% from its all-time high of almost $69,000, while the S&P 500 is down about 7% from its peak, compared with a 10% drawdown in the Nasdaq 100 Index.

We expect BTC to find a bid around the $35K mark, close to 50% from the top. In the short term, we can bounce to challenge the $45K-$50K zone, but the overall outlook remains bearish as liquidity remains tight.

Many altcoins are into support at their summertime 2021 lows, making it critical that bitcoin holds support as it sets the tone for the cryptocurrency space.

For now, technical indicators show nearby support at about $37,000 for bitcoin, although stronger support at $30,000 could stabilize a deeper correction.”

See Also: El Salvador Purchases 410 More Bitcoins Amid Market Drop, President Bukele Says
See Also: Crypto Twitter responds to Bitcoin dump: ‘Ok cool’
See Also: Crypto Trader Tantra to Liquidate After ‘GBTC Discount’ Widens to Record

“The world’s largest cryptocurrency by market capitalization began to drop Thursday around 19:00 UTC (2 p.m. ET), following the lead of the equity market, which saw a sharp decline into the U.S. 4 p.m. close. Here’s what analysts are saying is behind the fall in price:

1. BTC is moving in conjunction with traditional markets

Bitcoin and the broader cryptocurrency market as a whole is acting as a high-sentiment beta asset – meaning it is moving in tandem with the broader markets and is more impacted by the recent negative sentiment. Macroeconomic fears and poor technology company earnings have also exacerbated this correlation.

2. Leveraged long positions

Leveraged long positions exacerbated the sell-off into the Asian open on Friday. $40,000 was an important support which has now turned into a resistance level.

3. Negative market sentiment

Bitcoin’s (BTC) fall in price is a simple continuation of the same trend that has been occurring in the last few weeks – negative market sentiment. Once fear sets in, it takes a while to break and you simply have to wait for capitulation before you can move back to “normalized” ranges.”

Mining difficulty on the Bitcoin network increased by 9.32% and hit an all-time high of 26.64 trillion on Jan. 21, beating the previous record set on May 13, 2021.

Most miners from China estimated they would come back online in Q1 2022, so ‘we can attribute a good bit of this increase [in difficulty] to Chinese miners finally coming online in North America.’ Given the soaring price of bitcoin last year, miners booked “super profits,” so they tried to get more mining capacity online as fast as possible. Analysts and industry insiders expect the trend to continue well into 2022.

From July 2022 to December 2022, most of the largest miners have enormous deliveries of the Antminer’s newest ASIC Antminer S19 XP. These deliveries will make the difficulty soar throughout the whole 2022.”

“The role – “Senior Product Manager, Crypto,” – has a special focus on “creator monetization.

In this capacity, we’ll be looking closely at NFTs and NFT tooling, membership tokens, DAOs and more!

The announcement comes as Twitter ventures further into the realm of Web 3, perhaps to the chagrin of founder Jack Dorsey, an avowed bitcoin maximalist. Notably, the Twitter job post lists collaboration with Bluesky, the company’s decentralized social media initiative.

Yesterday, the company rolled out NFT verification services to those who pay $3 a month for its Twitter Blue service.”

The only real “ETH killer” might end up being Ethereum 2.0, according to analysts at Coinbase Institutional, which provides cryptocurrency research to big investors.

Ethereum’s layer 2, or companion system, which works alongside the main blockchain to speed transactions at lower cost, may help to stave off competition from other layer 1, or base layer, protocols. Planned upgrades to Ethereum itself, such as a full transition to a proof-of-stake blockchain from the current proof-of-work system as well as the introduction of sharding may also help.

As the ecosystem’s scalability improves, users of decentralized applications, or dapps, may refrain from looking for faster and cheaper alternatives to Ethereum. The development is likely to narrow layer 1 alternatives’ opportunities in the second half of 2022, according to the Coinbase analysts.

We do think that the culmination of [layer 2] scaling solutions combined with upgrades like the Beacon Chain merge and sharding could limit progress for alternative [layer 1s] in their current form.”

Ethereum Arbitrum Tutorial! Use Crypto Defi: Uniswap and Curve Finance

Britain has been lagging behind, particularly when it comes to crypto, according to some industry watchers. Meanwhile, the U.S. is seeing fintech firms with $100 billion valuations going public. ‘The global race has started and the U.K. is getting left behind.’

The U.K. has focused only on risk, and perhaps missed the big picture. We need to ensure that regulation keeps pace with the rapid advancements in technology.

We will lose a lot of innovators in the U.K. if this FCA rhetoric continues. Right now the word on the street is don’t set up in the U.K.”

21 January

Link your Ethereum wallet to your Twitter account, and you’ll be presented with a list of NFTs you own. Choose an NFT, and your profile picture – typically enclosed within a circle – will get a nifty new hexagonal border. If a pesky right-clicker tries to use your NFT as their profile picture without first buying the token, they will still be able to use the image, but they will be stuck with the classic circle frame.

Twitter’s NFT verification process is both a bid to keep crypto enthusiasts on the platform and an explicit rejection of former CEO Jack Dorsey’s “Bitcoin-only” philosophy. Verification is available only for Ethereum-based NFTs, at the moment, though a representative for the company clarified that this is only the “first iteration” of a feature that may go on to support other blockchains.

For now, NFT verification is available only for users with Twitter Blue, the company’s $2.99-a-month subscription service. For NFT fans, it may be a price worth paying.”

See Also: Meta reportedly plans to integrate NFTs on Facebook and Instagram profiles

“The U.S. central bank believes the current financial system might be bolstered by the creation of a central bank digital currency (CBDC), but only one that works within the current network of private banks, rather than a CBDC that the Federal Reserve issues directly to consumers.

Officials haven’t yet committed to issuing, or even developing a digital dollar, and the document underscored how far away such decisions remain. Still, it shed considerable light into what would make a hypothetical CBDC successful for the U.S.

The Federal Reserve’s initial analysis suggests that a potential U.S. CBDC, if one were created, would best serve the needs of the United States by being privacy-protected, intermediated, widely transferable and identity-verified.

The intermediaries could be commercial banks or other nonbank payment entities. In other words, the Fed does not want consumers setting up personal accounts at central bank locations to access these CBDCs, but rather, would prefer that existing banks and similar financial firms maintain their role.

Moreover, the Fed wants “clear support” from both the executive branch of the federal government and Congress before it will issue a CBDC, “ideally in the form of a specific authorizing law.” Public comments are open for the next 120 days.

Senator Pat Toomey said he was “encouraged” by the report’s noting it needs Congressional support before the Fed would issue a CBDC, as well as the Fed’s note that it would not directly offer retail accounts. The lawmaker did raise concerns about the privacy aspect of the Fed’s CBDC proposal however.

While the report mentions the importance of CBDC privacy, I’m concerned the Fed does not clearly explain how it would protect consumer transaction data. There’s also a question in my mind whether the Fed’s report implies that a CBDC would not allow for direct peer-to-peer transactions. This characteristic is fundamental.”

“Five industry experts appearing before the United States House Energy and Commerce Oversight Subcommittee had different views on how lawmakers should address the energy consumption of cryptocurrencies.

Former Comptroller of the Currency Brian Brooks argued that the energy consumption of Bitcoin (BTC) mining was “economically productive,” given other assets including gold required roughly the same amount of energy for mining, with “a host of other environmental concerns.” In addition, Brooks said that the traditional global banking system consumed roughly 2.5 times the amount of power to produce the same amount of value BTC does at its current market capitalization.

Cornell Tech professor Ari Juels, who has often been a critic of crypto mining as it currently stands, was supportive of the crypto space as a whole but argued in favor of “energy-efficient alternatives” rather than the proof-of-work (PoW) common for mining. He added that the Ethereum blockchain’s transition to proof-of-stake (PoS) would likely consume “far less electricity.”

Steve Wright hinted that mining firms should consider “mechanisms to assure cryptocurrency production is encouraged toward efficient outcomes as early as possible.”

If policymakers take a cautious approach and foster a pro-innovation environment, the rewards for consumers, investors and all Americans are likely to be great.”

See Also: Live Blog: Congressional Hearing Puts Crypto Energy Use in the Crosshairs

BTC Bull Setup Spoiled

“Andreessen Horowitz (a16z), a venture capital firm that has invested extensively in the crypto industry, is looking to raise $4.5 billion for new funds.

The new crypto fund would be the industry’s largest, overtaking the $2.5 billion raised by Paradigm in November.”

See Also: Agoric Raises $50M in CoinList Token Sale to Bring JavaScript Developers Into Crypto
See Also: Shakepay Raises $35M to Help Canadians Buy, Sell and Earn Bitcoin

“I’ve asked staff to look at every way to get these platforms inside the investor protection remit. If the trading platforms don’t come into the regulated space, it’d be another year of the public being vulnerable. What we want to do is provide some of the basic protections against fraud and manipulation.

His comments come amid yet another crypto-related hack. Earlier today, crypto exchange Crypto.com confirmed the exchange lost almost $34 million to hackers.”

See Also: SEC Rejects First Trust SkyBridge’s Spot Bitcoin ETF Proposal
See Also: FINRA Considering Changes to Crypto Regulations to Better Protect Investors: Report

“Italian luxury fashion house Prada and sportswear giant Adidas, which recently ventured into the metaverse, have joined forces to launch a new non-fungible token (NFT) project built on the Polygon network. The project will allow fans to contribute their own designs.

From Jan. 24, fans will be able to register with a digital wallet to create and mint NFTs by submitting a photograph. The project will then choose 3,000 contributors who will also own IP rights to their individual NFTs and be able to take part in the drop later that week.

Prada sees the emergent metaverse as a new space for the brand to re-define luxury for the next generation and cultivate shared experiences that honor the brands’ spirit of experimentation and creativity.

Luxury fashion brands are already making millions of dollars from auctioning off NFTs. In September, Italian haute couture label Dolce & Gabbana launched its NFT collection, Collezione Genesi, which fetched approximately $5.65 million in a sale.”

See Also: Jefferies Sees the NFT Market Reaching More Than $80B in Value by 2025
See Also: Bud Light Owns a Nouns Ethereum NFT—And May Use It in Super Bowl Ad

“The report says cryptocurrencies are volatile and widely used in illegal activities such as fraud. The bank, therefore, said Russia needs new laws and regulations to effectively ban crypto-related activities.

Miners said the stance was not a surprise. The report is a reiteration of the bank’s existing position, and final policy is likely to include input from other stakeholders. The probability of a complete ban of the entire cryptocurrency industry is “negligible.”

The crypto market also seemed unperturbed. Bitcoin was trading about $43,000 at publication time, up more than 3%.”

See Also: El Salvador explores low-interest loans backed by Bitcoin

“Larimer, who quit Block.one – EOS’ now-estranged mother company – last January, is ratcheting up technical contributions to the software he spearheaded in 2017. In return, EOS Network Foundation (ENF) – now the ecosystem’s de facto shot caller – will bankroll Larimer’s development work with token grants in its native EOS.

Larimer’s “Mandel” upgrade is a hard fork that would give ENF effective control of the EOS codebase – and thus the network’s power seat – if validators adopt it in the second quarter.

Team leads say fully severing ties with Block.one is the first step. The company that conducted EOS’s $4 billion token sale in 2017 had long since shifted its focus and funding – and even its vested EOS tokens – to the crypto exchange Bullish, which is preparing to go public through a special purpose acquisition company (SPAC).

B1 essentially transferred their assets to a new company, which feels like the ultimate rug.”

Bloomberg: From Bitcoin to DeFi (in 12 Short Years)

20 January

“Just three months after abandoning a strategy to let Google Pay users create checking and savings accounts via its proposed Plex service, the search and advertising giant will wade more deeply into other financial services—including cryptocurrency debit cards.

Crypto is something we pay a lot of attention to. As user demand and merchant demand evolves, we’ll evolve with it.

While Ready told Bloomberg that Google isn’t ready for crypto transactions just yet, it’s clear that it’s a part of the strategy moving forward.”

“On Jan. 18, Mike McGlone, senior commodity strategist at Bloomberg Intelligence, sounded the alarm on global markets’ “up only” narrative.

As the Fed attempts to rein in inflation and dramatically decrease asset purchases, the outlook is thus much less appealing for risk assets in the near term. For McGlone, however, there is a silver lining when it comes to Bitcoin’s inherent appeal: ‘I think it’s transitioning from a risk-on to a risk-off asset.’

Here’s my prediction: The markets pull back finally, and we get a 10%–20% correction in the stock market. All correlations are one, which is usually the way it works. Bitcoin comes out better off for it.”

See Also: 2 key Bitcoin trading indicators suggest BTC is ready for a 62% upside move
See Also: Bitcoin Stabilizes; Analysts See Relative Value in Altcoins

“Associate law professor and member of the Securities and Exchange Commission’s Investor Advisory Committee J.W. Verret is calling for the government agency to open for public comment in regards to digital asset regulation.

In a petition addressed to SEC Secretary Vanessa Countryman, Verret said opening the floor to comments on digital assets could function as a ‘Genesis Block’ for the SEC to reform its regulations on digital assets.

The SEC’s present course appears to be one designed to strategically bring cases using the Howey test as a weapon against tokens (and token trading services and technologies), which cannot reasonably be registered as securities (or securities exchanges) under the regulations promulgated pursuant to the ‘33 and ‘34 Acts, even if they wanted to and were required to do so (despite neither necessarily being true). I believe this is ultimately a losing strategy for the SEC as an institution.

According to Verret, the current regulatory path the SEC is taking seems not to recognize that ‘digital assets, by their very design, do not fit within the classic framework of regulations designed for equity investments in firms led by boards of directors.’ The law professor also criticized SEC chair Gary Gensler’s approach of asking crypto projects to “come in and talk to us,” saying many could be concerned that ‘engaging with the SEC may make their project the next enforcement target of the SEC.’

This Digital Asset Reg Genesis Block can commence an interactive process that can make securities regulation more flexible, more robust and ultimately better protect investors.”

Erik Thedéen said EU regulators should nudge the crypto industry towards the less energy-intensive proof-of-stake mining, in an interview with the Financial Times.

The solution is to ban proof-of-work. Proof-of-stake has a significantly lower energy profile.

The EU does not currently account for a particularly significant share of the proof-of-work mining industry. Bitcoin mining is currently dominated by the U.S. (share of 35.4%), Kazakhstan (18.1%) and Russia (11.23%).”

See Also: The House Looks Into Crypto’s Energy Impact

“Opera has launched the beta version of its “Crypto Browser Project,” an internet browser with built-in Web 3 integrations. The product is targeted at both “the crypto-native and the crypto-curious,” with Opera’s own crypto wallet at the core of its user experience.

The main feature of the browser is that users can switch between applications without having to sign into their wallets for every new tab, which will work for any app that has an Opera wallet integration.

While the current Opera wallet is exclusively compatible with Ethereum, the company plans to roll out Polygon and Solana compatibility in the near future, with a “biglLayer 2 announcement” coming in February.

We actually believe that browsers will be more important in Web 3 than they were in Web 2.”

See Also: Number of ‘Active’ Blockchain Games Doubled in Past Year to Almost 400

“Gemini announced the launch of Gemini Prime, which aims to simplify trading for institutional investors by providing access to multiple exchanges and over-the-counter liquidity sources. Gemini Prime, which is already being used by a select group of clients, will be fully rolled out in the second quarter.

A growing number of institutions have expressed a desire to provide crypto services, not least due to demand from their wealthy clients. Last May, Swiss financial giant UBS Group said it was looking for ways to offer exposure to crypto, and a survey in July found that 82% of institutional investors expect to increase their exposure to digital assets by 2023, with four out of 10 expecting to do so dramatically.”

See Also: FDIC-Backed Banks Send Stablecoins in USDF First
See Also: THORChain brings DeFi yields and swaps to DOGE

“Although token prices for leading blockchain games like Axie Infinity have fallen recently, the user metrics are up. There are now 398 active blockchain games, defined as having at least one active wallet in the past 24 hours within the game. That’s a 92% increase from a year ago.

User statistics show the rapid pace of adoption of blockchain gaming. According to Massoit, the number of daily unique wallets interacting with game-related smart contracts surged to 1.3 million last year, a 46-fold increase over the 28,000 at the end of 2020.

Meanwhile, venture capital firms have invested $4 billion to support the development and creation of blockchain-based games and their underlying infrastructure. And the fast expansion shows few signs of slowing.”

“The Hedera Governing Council has officially voted to purchase the intellectual property rights to the hashgraph consensus algorithm from founding architect and inaugural member of the council, Swirlds Inc, for an undisclosed fee.

A Wednesday announcement also details plans to transition their code to an open-source model this year under Apache 2.0 license, in addition to deploying community staking and node opportunities, among other updates.

The governing council is composed of 25 corporations, including Google, IBM, Tata Communications and Boeing, who each support the project’s decentralized ambitions through the establishment and operation of blockchain nodes, and participating in governance voting.

The decision to enact this change came about following conclusive technical assessments that the probability of a network split within the Hedera ecosystem is highly unlikely, and therefore the patent upholding legislative exclusivity to the technology can be safely distributed into the public domain, with assurances that it will not serve as an advantageous tool for market competitors but rather a mechanism to foster internal growth.”

19 January

“Futures markets remain a powder keg for short-term volatility with Perpetual Futures Open Interest at ~250,000 BTC- a historically elevated level. Since April 2021, this has paired with large pivots in price action as the risk for a short or long squeeze increases, resolved in market wide deleveraging events.”

See Also: Cryptocurrencies Decline With Equities, Traders Remain Cautious

Payments platform Cash App is making the Bitcoin Lightning Network available to customers in the United States over the next few weeks.

Customers can send Bitcoin internationally from Cash App to any external compatible wallet to a friend, family members, a self-managed wallet, or any merchant that accepts Lightning Network payments, with zero fees.”

The partnership will see Coinbase working with Mastercard to classify NFTs as “digital goods,” which will, it claims, enable “a broader group of consumers to purchase NFTs.” The crypto exchange also promised to “unlock a new way to pay using Mastercard cards.”

Buying digital goods should be as simple as buying a T-shirt or coffee pods on an e-commerce site.”

See Also: NFT Marketplace OpenSea Acquires DeFi Wallet Firm Dharma Labs

“Bankhaus von der Heydt was formed in 1754 and has in recent years become one of the first regulated institutions in Germany to offer digital asset services. The German bank offers cryptocurrency trading and custody, the latter through technology provider and crypto unicorn Fireblocks.

The planned purchase forms part of BitMEX’s strategy to create a one-stop shop for regulated crypto products in Germany, Austria and Switzerland.”

Microsoft shook up the video game industry this morning, announcing that it will acquire publisher Activision Blizzard—the company behind Call of Duty and Warcraft—in a deal valued at $68.7 billion. And Microsoft says that it’s a move made in anticipation of the metaverse.

Gaming is the most dynamic and exciting category in entertainment across all platforms today, and will play a key role in the development of metaverse platforms.

Microsoft has been involved in the crypto industry for years, announcing an alliance with Ethereum software technology company ConsenSys back in 2015. Microsoft’s M12 venture fund also recently invested in Palm NFT Studio, and has released free educational NFTs around its hit game Minecraft, as well as promotional NFTs around last year’s Windows 11 launch.”

“The latest structured-finance alchemy from the crypto industry allows traders to get exponential returns on the price of ether (ETH). Last week, the decentralized options protocol Opyn launched an ether derivative contract linked to a new index called Squeeth – a word play on “squared-ether.” The index tracks ether’s price change, raised to the power of two.

The basic purpose of the new tool is to give traders exposure similar to the highly leveraged bets they could get from trading options, but without the need to set strike prices or determine contract expiration dates.

Squeeth turns the options trade into a perpetual contract and can be used as a hedge. On the long side – betting on price upside – the trade offers leverage without liquidations. Traders who take the short side – betting on prices to stay range-bound – can collect premium yield.

A key drawback is that Squeeth funding rates – the cost of holding long positions – are expected to be higher than a 2x leveraged position due to the product’s exposure to pure convexity.

The ideal market condition to hold Squeeth is when a trader has conviction in the upward price movement of ETH in the short- to mid-term.”

“Red Date Technology, the architect of China’s internet of blockchains, is working with the Shenzhen Municipal Government and Singapore’s Infocomm Media Development Authority (IMDA) to build the blockchain-based Transnational Trade Network (BTTN).

Using the BTTN, companies will be able to transfer trade data between countries and firms, while adhering to local data privacy and security laws. Much like with the Blockchain Services Network (BSN), Red Date envisions the BTTN as a fundamental piece of the future global blockchain architecture.

Just like with the BSN, Chinese companies won’t have access to permissionless chains, which allow anyone to join, to comply with Chinese regulations. Using the BSN’s interoperability technology, the BTTN will allow for permissioned and permissionless chains to interact.

Chinese data centers, like the one in Shenzhen, will host “a corresponding permissioned system-level chain for each public chain,” the white paper said. One such chain is dubbed the “Ethereum Access Chain.” With that, Chinese firms will be able to pay for gas in fiat currencies, while a permissioned chain records data to comply with Chinese law.”