2 July

Ethereum has a technical endgame – an open, transparent world computer – but nobody knows what Ethereum is for. The point, the rationale, why we are here. Compare the situation to Bitcoin where the political endgame can be summarized in one word: hyperbitcoinization. Bitcoin’s goal is to transition from a fiat monetary system to a Bitcoin standard.

What is the equivalent one-word term in Ethereum? To find it, it is important to understand the contemporary Ethereum political landscape. The spectrum contains the following:

  • Cypherpunk: Ethereum is rooted in an earlier tradition of privacy and tech advocacy, which thought coders should use encryption and computing to build neutral infrastructure others can imbue with meaning. Ethereum’s politics is its apolitical stance and the only focus is to create open source tools that requires little human mediation.
  • Experimental liberalism: Ethereum’s combination of experimental governance (e.g., soulbound tokens) and market-making (e.g. Quadratic Voting) can generate new liberal democratic political innovations. This position is associated with the network’s founder Vitalik Buterin and Microsoft’s Glen Weyl.
  • Solarpunk: The social coordination enabled by DAOs can create positive externalities on wider society, with a warm ambient humanism embedded in its aesthetics.
  • Lunarpunk: The privacy enhancements afforded by zero-knowledge proof variations on Ethereum-native technologies (DAOs, DeFi, NFTs) are necessary to protect crypto culture against contemporary surveillance capitalism.

Is there some common thread running through these positions that would correspond to Bitcoin’s compact hyperbitcoinization? Across the spectrum, Ethereum’s goal is to transition from a deteriorating inherited financial system built on unsustainable practices. Seeking consensus across the spectrum, the political endgame of Ethereum can be summarized in one word: hyper-regenization.

  • Regenerative economics rather than illusory limitless growth: Ethereum offers retroactive and proactive public goods funding through the Quadratic Funding (QF) mechanism. It contains the potential to expand the cypherpunk mechanism of neutral public goods beyond Ethereum and Web3, into the traditional political world, as the solarpunks suggests with their focus on positive externalities.
  • Regenerative citizenship: Ethereum could reward good citizenship through retroactive airdrops, such as participation in Gitcoin rounds, governance voting, testnets and community channels. The activities of the citizens of experimental liberalism could be captured in soulbound tokens that grow over time.
  • Regenerative decentralization rather than centralization atrophy: Ethereum is an information commons or common knowledge pool. Transparency allows us to recognize, albeit not without its challenges, when centralized clusters are emerging. Recent efforts to re-decentralize client diversity and current efforts to re-decentralize staking reveal the cultural instincts to disrupt centralization atrophy are intact.

What is Ethereum for? To bring about ever more hyper-regenization.”

Crypto industry figures welcomed, for the most part, the European Union’s (EU) landmark crypto law, the Markets in Crypto Assets (MiCA) regulation, agreed upon late Thursday. But the picture is more complicated when looking at the details.

Sheila Warren of the Crypto Council for Innovation said the new crypto law mostly avoids stifling innovation – and indeed may prove a net positive.

Legal and regulatory certainty for the market will enable more crypto firms to invest and innovate across the region. Until now, every different [EU] member state has their own regulation, or they didn’t have anything, so it was very hard for different companies and projects to be present and offer their services in the whole market.

Lobby group Blockchain for Europe said rules for crypto asset service providers such as exchanges and wallets are “savvy,” and that the law will let decentralized finance (DeFi) prosper. Meanwhile, conventional investment banks, a heavily regulated sector that doesn’t want to get undercut by more lightly overseen crypto firms, also seem to appreciate the balance struck.

One of the most eye-catching measures would be a cap, which means stablecoins that aren’t tied to a single fiat currency would have to stop issuing if daily transactions exceed 200 million euros ($209 million) – intended to stop private companies usurping the role of the euro. For some, that’s an “arbitrary restriction,” and an example of the law discriminating against a means of payment because of the technology it uses.

Given that the top four stablecoins in the market currently significantly exceed this volume, this could be a barrier to stablecoins becoming widespread in the EU.

Markezic also noted that, in practice, it will be impossible for decentralized stablecoins – those that don’t have a single identifiable issuer – to comply with the rules that in practice oblige a central entity to take charge.

Other restrictions in the law, like ban on interest payments for users, and heavy restrictions on how reserves can be invested, have led some to ask if there will ever be an incentive for stablecoin issuers, and the DeFi ecosystem they bring with them, to set up in Europe at all.”

The decentralized autonomous organization (DAO) is emerging as Web3’s answer to the traditional LLC or C-corp. The number of new DAO governance proposals, which codify a company’s organizational and operational structure, has risen eightfold in the past year. In May 2021, only 700 DAOs were operational. Today there are more than 6,000.

Many brands and companies aren’t in a position to fully decentralize their corporate structure, eliminate titles and put all decisions in the hands of a decentralized community of pseudonymous members. Every company, however, can implement a hybrid DAO model that gives customers a greater voice, increasing engagement and putting brands in a position to thrive in a decentralized future.

A hybrid DAO model – where projects deploy a community-owned token – can enhance customer engagement by offering all stakeholders an opportunity to have a voice in a variety of decisions that enhance buy-in, inform better products and cultivate community.

When brands give customers more of a voice, they foster an avid following of loyal customers who are highly invested in the future of the brand/product because they are contributing to elements of decision making.

Simply put, insights into customer demands and desires help brands to be more successful in delivering what people actually want. Crowdsourcing ideas can lead to even stronger end results when it comes to changes to products, branding, design and more. In other words, brands can benefit from the wisdom of the crowd.

Brands and companies that adopt a hybrid DAO model will create a shift from thinking of buyers as “customers” to thinking of them as team members and part of their community. Ultimately, the rise of the metaverse and Web3 will favor brands that adopt this type of model over those that do not, making a hybrid DAO model a multifaceted competitive differentiator that can set brands apart from the competition both now and in the years ahead.”

BlockFi and FTX US have reached a deal that will provide the embattled crypto company with a $400 million credit facility. The deal also gives FTX US the right to acquire BlockFi and will, according to BlockFi CEO Zac Prince, “protect client funds.”

As a matter of principle, we fundamentally believe in protecting client funds. Not only because it’s absolutely the right thing to do, but this also benefits the ongoing health and adoption of crypto financial services worldwide.”

See Also: Voyager Digital Temporarily Suspends All Trading, Withdrawals and Deposits
See Also: Custodia Bank’s CEO Says Bad Actors and Regulators Caused Crypto Crash

Crypto investment platform BnkToTheFuture proposed three recovery plans on Thursday aimed at helping users affected by the insolvency of crypto lender Celsius Network. A community vote for the three proposals is underway as of Friday, following which BnkToTheFuture is expected to hold a formal meeting with Celsius board members.

The first proposal calls for restructuring and relaunching Celsius, which would allow depositors to benefit from ‘any recovery through financial engineering.’ This could refer to the issuance of additional tokens or additional fundraising.

The second proposal is to form a pool of the most influential holders of bitcoin (BTC) and have them ‘co-invest with the community‘ in a bid to raise significant amounts of capital for Celsius. The third proposal is to ‘form an operational plan that allows a new entity and team to rebuild and make depositors whole.'”

See Also: Crypto Lender Celsius Network Exploring Options to ‘Preserve and Protect’ Assets
See Also: The Collapse of 3AC (Video)

“Hundreds of Bored Ape owners have signed up to a new nonfungible token (NFT) licensing marketplace that enables hodlers to rent out their Apne’s IP to brands. Blockchain accelerator Mouse Belt Labs launched the marketplace called Boredjobs, claiming that it will list all 10,000 BAYC NFTs on its website for brands to browse through and indicate interest in hiring for campaigns.

The Bored Ape Yacht Club gave its owners a fantastic opportunity to utilize the IP rights of the NFTs they purchased. Unfortunately, they did not provide them with an instruction manual on how to put them to work. Bored Jobs is creating that instruction manual.”

Tether has cut its holdings of commercial paper by 58% to $8.5 billion, with a further reduction to $3.5 billion expected at the end of the month as it seeks to tackle speculation about the quality of support for its dollar-pegged USDT token. The company held $20.1 billion of commercial paper in May.

According to an update on Tether’s website, it aims to bring the figure down to zero as it diversifies its holdings into U.S. Treasury bonds. The market cap of Tether’s USDT stablecoin has plunged to $66.1 billion from $82.2 billion since May due to an increasing amount of user redemptions.”

Longterm Indicators Suggest Potential Bottom

1 July

The SEC rejected Grayscale’s application earlier Wednesday, citing concerns about market manipulation, the role of Tether in the broader bitcoin ecosystem and the lack of a surveillance-sharing agreement between a “regulated market of significant size” and a regulated exchange, echoing concerns the regulator has expressed for years in rejecting other spot bitcoin ETF applications.

In the filing, Grayscale simply asks the U.S. Court of Appeals for the District of Columbia Circuit to review the SEC’s order. Essentially, the company will argue that the SEC has to allow products that are like other products already trading, in this case bitcoin futures ETFs. Verrilli told reporters earlier in June that the SEC’s approval of futures ETFs indicate the underlying market must be seen as reliable.

Grayscale supports and believes in the SEC’s mandate to protect investors, maintain fair, orderly, and efficient markets and facilitate capital formation – and we are deeply disappointed by and vehemently disagree with the SEC’s decision to continue to deny spot bitcoin ETFs from coming to the U.S. market.”

See Also: New spot Bitcoin ETF launches at Euronext Amsterdam Exchange
See Also: Messari Research: DCG’s Barry Silbert Wins From SEC ETF Stalemate, but Investors Lose
See Also: Grayscale’s legal challenge to SEC sparks response from the community

“While it is hard to assess how much more deleveraging still needs to happen, the bank said, its indicators suggest the process is already well advanced. Multiple failures among companies in the industry should not surprise given the backdrop of deleveraging and the 70% drop in digital asset market capitalization since November, the report says.

The failure of 3AC is a manifestation of this deleveraging process, the note says, adding that the process seems well advanced, ‘making the bottom formation process in crypto markets more volatile.’ Bitcoin (BTC) miners are another source of stress for crypto markets, JPMorgan said, given the pressure to sell their tokens to deleverage or to cover the cost of their operations.

JPMorgan identifies two reasons to suggest that the cycle may not be very protracted: Stronger crypto companies with more robust balance sheets are stepping in to help contain contagion, and the continued healthy pace of venture capital (VC) funding, an important source of capital for the digital assets ecosystem.

See Also: Genesis Faces ‘Hundreds of Millions’ in Losses as 3AC Exposure Swamps Crypto Lenders: Sources
See Also: Singapore Central Bank Censures Three Arrows Capital for Alleged Misleading and False Disclosures
See Also: FTX Close to Buying BlockFi for Just $25M
See Also: FTX Passed on Deal to Purchase Celsius Due to Deficient Balance Sheet: Report

European Union (EU) policymakers have struck a deal on landmark legislation to regulate crypto assets and service providers throughout the bloc’s 27 member nations. The legislative package sets up requirements for crypto issuers to publish a kind of technical manifesto called a “white paper,” to register with the authorities and to keep proper bank-style reserves for stablecoins.

Lawmaker Ernest Urtasun tweeted that the deal would include a cap on large stablecoins that become widely used as a means of payment, meaning that they can’t exceed 200 million euros of transactions per day.

MiCA has been broadly welcomed by the industry because it can increase credibility, promote adoption by conventional banks and offer crypto companies a single license to operate across the bloc.

Those who are in this space are thinking of being innovative will now do it in a way that sits within our regulation rather than in the Wild West.

The legislative deal comes as U.S. lawmakers consider rules of their own, particularly for the stablecoin market. It also follows hot on the heels of controversial anti-money laundering measures that the EU agreed to impose on crypto service providers Wednesday.”

See Also: Biden Official Says US Government Could Pass Stablecoin Rules by End of Year
See Also: Hurry Up With Crypto ID Checks, FATF Tells Countries
See Also: DeFi Shouldn’t Be Regulated, Crypto Advocates Tell UK Regulator

“Meta, formerly known as Facebook, has begun rolling out NFTs for some U.S. creators on its flagship social network. Facebook is starting with Ethereum and Polygon NFTs but will soon add support for NFTs on Solana and Flow.

According to the post, users will have a “digital collectibles” tab on their Facebook profiles where they can showcase their NFTs. Users will be able to connect their cryptocurrency wallets to their Facebook profiles. They’ll also be able to turn their NFTs into Facebook posts. Collectors will also be able to share their NFTs as augmented reality stickers.”

See Also: Music Streaming Company Napster To Launch Its Own Token On Algorand

For the riskiest class of crypto assets, which includes those that aren’t backed by conventional reserves or asset-pegged stablecoins that aren’t satisfactorily stabilized, there would be an exposure limit set at 1% of Tier 1 capital, or the core capital held in a bank’s reserve. For large banks like JPMorgan Chase (JPM), 1% of Tier 1 capital can amount to billions of dollars.

This would imply, for example, no large exposure limits on cryptoasset where there is no counterparty, such as bitcoin.

The Committee seems to have softened its position on crypto holdings where the bank is able to insure against its risk after a receiving a barrage of complaints that its previous approach was too cautious. Under the new plan, lighter rules would apply to cryptos that have an equivalent liquid derivative such as an exchange-traded fund, given the possibility to “hedge” exposures.

The committee is seeking comments on the plans by the end of September.”

See Also: Societe Generale Selects Swiss Crypto Custody Specialist Metaco for Security Token Push

“The asset dropped 5.5% in the past 24 hours, and is on track for a record 40% monthly decline. Speaking at the ECB meeting, Powell said he was more concerned about the challenge posed by inflation than about the possibility of higher interest rates pushing the U.S. economy into a recession.

Is there a risk we would go too far? Certainly, there’s a risk. The bigger mistake to make – let’s put it that way – would be to fail to restore price stability.

About a week ago, his comments suggested rate hikes could soften before next year.”

See Also: After 8 years dumping billions of XRP, Jed McCaleb’s stack runs out in weeks