CoinDesk Crypto

The Chicago Mercantile Exchange (CME), the largest U.S. regulated market for bitcoin futures, has been sounding out cryptocurrency traders to gauge their interest in a listing of futures and options for the Ethereum blockchain’s native tokens.

• Darius Sit, founder and chief information officer at Singapore-based QCP Capital, told CoinDesk in an interview that CME had asked his firm whether it might be interested in trading ether (ETH) derivatives on the exchange.
• Ether is the second-largest cryptocurrency by market capitalization, at $41 billion.
• A CME Group spokesperson declined to comment when reached by CoinDesk, adding that “We don’t comment on whether or not we’re developing any products.”
• The CME has become one of the leading venues for institutional investors to bet on bitcoin, following the launch of a futures contract in late 2017 and options earlier this year.
• Partly due to the explosive development of decentralized finance (DeFi) this year, there has been rising demand from traders for ether derivatives that can be used to make leveraged bets on price moves or simply to hedge.
• For now, the biggest venues for trading ether futures are on non-U.S. exchanges led by OKEx, Huobi and Binance, according to the data firm Skew.
• CME previously launched an Ether-Dollar Reference Rate in May 2018 along with an Ether-Dollar Real Time Index, but as recently as June, the exchange told CoinDesk that it had “no plans to introduce additional cryptocurrency products.”
• Vishal Shah, founder of bitcoin crypto derivatives exchange Alpha5, told CoinDesk in a Telegram message that he sees CME ether derivatives as “overdue.”
• The chatter around CME’s rumored Ether products launch also comes after U.S. regulatory authorities recently brought a series of civil and criminal charges against popular derivative exchange BitMEX.

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• Open Interest in CME Bitcoin Futures Slides as Market Sapped by Surging DeFi

Ethereum’s success drives imitation. 

Just take a look at the latest report from the crypto-industry publication DappRadar: In the third quarter of 2020, Ethereum accounted for 96% of the total transaction volume over decentralized applications, including the blockchain-based trading and lending networks that have exploded in popularity in recent months. 

Prices for ether (ETH), the Ethereum blockchain’s native token, have nearly tripled in 2020 to about $350. Such returns make better-known bitcoin’s 52% year-to-date gain look paltry.   

Related: Money Reimagined: Fixing the Internet’s Big Flaw

CoinDesk is preparing for the invest: ethereum economy virtual event on Oct. 14 with a special series of newsletters focused on Ethereum’s past, present and future. Every day until the event the team behind Blockchain Bites will dive into an aspect of Ethereum that excites or confuses us. Today’s introduction was written by markets editor Bradley Keoun.

But success has brought a slew of problems, such as network congestion that has slowed down transaction processing and pushed up average fee rates to record levels. 

Ethereum’s 2.0 upgrade is supposed to boost processing speeds to 1,000 to 4,000 transactions per second, but for now the grumbling abounds. “Scalability has been a critical issue for Ethereum,” the analysis firm IntoTheBlock noted this week in a blog post. 

All this creates an opening for competitors that are nowhere near ready to concede Ethereum’s first-mover advantage as the dominant smart-contract blockchain.

Related: First Mover: Bitcoin Hits $11K as Square Exposes $2.3T Corporate Money Pot

The list of challengers isn’t short. In no particular order, there’s Tron, EOS, Neo, Polkadot, Algorand, Cardano and Avalanche, among others. According to the data firm Messari, no fewer than 17 of these blockchains have tokens that trade, with market values of at least $100 million each. 

Over the past year, Zilliqa’s ZIL token has returned the most, gaining 73% versus ETH. On the other end of the spectrum, EOS’ EOS tokens are down 56% in ether terms.

Some rivals aren’t looking to take on Ethereum per se, but are keen on stealing lucrative parts of the franchise. 

Radix DLT says it’s one such firm – a blockchain built with the express purpose of becoming a home for the fast-growing cryptocurrency subsector of decentralized finance (DeFi). 

CEO Piers Ridyard told CoinDesk in an interview this week that Ethereum’s one-size-fits-all model probably doesn’t cut the unique technical requirements of DeFi, and that’s crucial if operators are going to scale their platforms to the point where they could plausibly start to challenge big banks and Wall Street trading firms.    

Ridyard is scheduled to appear on a virtual panel on Thursday, Oct. 14, at CoinDesk’s invest: ethereum economy conference, alongside Roham Gharegozlou of Dapper Labs. CoinDesk tech reporter Will Foxley is hosting. It’s at 5 p.m. Eastern time. 

Ridyard said he’s not worried about Ethereum breaking away. The industry still has a long way to evolve, and there’s plenty of time to catch up or overtake the market leader. 

“Technology moves at a breakneck speed and mind-numbingly slow pace at the same time,” Ridyard said. “Fundamentally we are still in the concrete-pouring phase of the industry.” 

Featured panel

The Fees Are Too Damn High: DeFi Pushes Ethereum to Its Limit
Ethereum has delivered many mind-boggling innovations – some by design, others out of necessity. With DeFi pushing the ecosystem, existing infrastructure is being maxed out. Can Ethereum 2.0 address these pain points? Is this the opportunity for so-called “Eth Killers”? We assess this critical fork in the road as Ethereum looks to level up.

Join MakerDAO’s Rune Christensen, NEAR Protocol’s Illia Polosukhin and Framework Ventures’ Michael Anderson for a live stream starting at 9:30 a.m. ET.

$1B BTC
At invest: ethereum economy on Oct. 14, we will address the ramifications for investors as decentralized finance takes the crypto world by storm. 

In a run-up to the event, our two-part CoinDesk Live: Inside the Ethereum Economy virtual miniseries introduces trending narratives we will break down at the main event: Why all the hype behind yield farming and food-inspired tokens? Should investors take them seriously or are they a fading trend?

Whether it’s wBTC, renBTC or tBTC, tokenized bitcoin is the hottest thing on Ethereum right now. A phenomenon that hardly existed at the beginning of this year has pushed the total value locked in bitcoin past $1.3 billion. 

On Oct. 12, CoinDesk markets reporter Zack Voell discusses the yield farming phenomenon with Matt Luongo of Thesis, Jeff Garzik of Bloq, Loong Wang of Ren Project and Kiarash Mosayeri of BitGo.

Watch Bitcoin’s $1 Billion Crop: Why Hodlers Are Harvesting Yield on Ethereum on Oct. 12, streaming on CoinDesk.com, Twitter and YouTube.

Ethereum 101

Non-fungible tokens (NFTs) are the latest decentralized tools to send the Ethereum economy into warp speed. NFTs are ways to append real-world or digital objects to a blockchain, usually Ethereum. 

First brought to public consciousness in 2017 with the success of CryptoKitties, the sector is still largely focused on the goofy and surreal – there’s a booming art world, gaming sector and now even a place to itch your NSFW desires. 

Brady Dale was the first to break down why and how NFTs got roped into the decentralized finance craze. 

NFTs meet DeFi

NFTs have not captivated investor attention until quite recently because lending, borrowing and risk management – what we now call DeFi – have taken up all Ethereum’s oxygen in 2020. So Ethereans largely lost interest in NFTs there for a while – and who could blame them? You could buy them and sell them, and sometimes games would come together, but they seldom held players’ attention for very long. There were more dynamic markets to game; art’s fine but money is money.

Even when there had been buzz, some projects would rise up only to fade away, revealing a weakness in the NFT specification. CryptoStrikers, for example, a sports memorabilia project launched during the World Cup is long gone (soccer-focused Sorare has emerged in its wake).

Why is the marriage of non-fungible tokens (NFTs) and decentralized finance (DeFi) happening now? It’s debatable but you can make an argument that it comes back to DeFi’s favorite robo-advisor for yield: Yearn.Finance.

When the DeFi gateway created Y.Insure, a way to do KYC-free insurance on any crypto asset, it used NFTs to represent the policy with insurers. So, once reminded of ERC-721’s existence by DeFi’s top Chad, the industry ran with it. 

That’s the short story, the long story involves the financialization of these tradable assets. 

Financialization
As much as people like owning expensive stuff in crypto, they like owning stuff they can sell whenever they want even more (call it a liquidity fetish). NFTs had managed to be expensive but they had not managed to be liquid, not until DeFi-thinking intervened.

The stranger products are emergent phenomena of that financialization. Brukhman gave the example of Ark Gallery, which is a DAO for CryptoPunks. The punks were made pre-ERC-721 and have become quite valuable as early, cool and rare (there are only 10,000 such punks, each completely distinct). Ark allows people to crowdfund a punk (owning a fraction of the token) and then voting on whether or not to sell it if there’s an offer.

If there is a successful offer, everyone gets a proportionate share of the payment, based on how much they own. This has made CryptoPunks trade at ever-higher prices, allowing more people to feel like they had a piece of one. It’s clear that the spikes in volume have gone much higher this year when viewed on NFT data site NonFungible.com.

NIFTEX has taken that even further. Launched early this year with funding from Digital Currency Group (CoinDesk’s parent company), NIFTEX started off creating indices for NFTs, such as digital real estate or digital cards. But the real innovation kicked off when the firm fractionalized expensive NFTs into what it calls shards (really, just ERC-20 tokens – fungible slivers of previously singular digital assets).

The shard system works somewhat like what Ark Gallery does, except only someone who holds one of the ERC-20 tokens that represents partial ownership of an item can make an offer. The offer automatically succeeds if it fails to receive enough objections in two weeks, with a clever strategy built in to punish low-ball bids.

NIFTEX did its first fractionalization in May and, like Ark, the firm is seeing a lot more liquidity. Shard holders own a fractionalized, extremely rare Axie Infinity card called Almace that saw over 1,000 ETH transacted in its first week after sharding. Joel Hubert, one of the two co-founders, estimated its liquidity all year would have been more like 300 or 400 ETH in a few trades, without sharding.

On NonFungible, Axie Infinity shows appreciably more dollars getting transacted even if the volumes are only bumped up slightly. 

“I like where we’re at because Ethereum is all about experimentation,” Hubert said.

The larger point to all of this is that content is finding a path to fair remuneration on the internet. 

Added Flamingo’s Desai, “When you start talking about how content creators are paid, that’s where DeFi comes in; and when you start talking about property of creators, that’s all NFTs.” 

The ledger

While NFTs are usually written off as merely game pieces, like all decentralized technologies they have the power to bring financial services to the un- or underbanked. Just as the technology transcends particular blockchains, so too can it move beyond borders. 

Leigh Callon Butler, a CoinDesk columnist and director of the consulting firm Emfarsis, wrote about an NFT game Philipinos turned to for making money during the coronavirus shutdown. (This excerpted essay was published first in August.)

Fun and games

In the Philippines, one popular blockchain-based game is even providing pathways out of poverty and helping spread the word about novel technology. Created by Sky Mavis, a Vietnamese startup, Axie Infinity is a decentralized application (dapp) on the Ethereum blockchain where players breed, raise, battle and trade adorable digital critters called Axies.

Ijon Inton, an Axie player from Cabanatuan City, which is about 68 miles north of Manila in the province of Nueva Ecija, first learned about it in February of this year when his friend stumbled across an explainer video on YouTube. Intrigued by the “Play to Earn” element of the game, he decided to give it a go. 

“At first I just want to try its legitimacy, and after a week of playing I was amazed with my first income,” said Inton, who is currently earning around 10,000 PHP ($206) per week from playing the game around the clock. 

Inton soon invited his family to play, too, and after a few weeks, he also started telling his neighbors. A crypto trader since 2016, Inton helped his friends set up a Coins.ph account so they could buy their first ETH and get started. Now, there are more than 100 people in his local community playing to earn on Axie, including a 66-year-old grandmother.

The COVID-19 crisis, which has confined people to their homes and limited the usual opportunities to earn an income, combined with the compelling nature of the Axie game itself, has encouraged people who might not usually play with dapps to do just that. 

“To a crypto investor, gaining $300 or $400 a month might not mean that much, but for these people it means the world,” said Gabby Dizon, the Filipino co-founder of mobile app development company Altitude Games. “It’s food on the table, it’s money for their families and it’s saving them when they cannot even leave the house during this pandemic.”

There are a number of ways to make money with Axies. For new players, the most common method is by earning the utility token, small love potion (SLP), and selling it via a liquidity pool at the decentralized trading platform, Uniswap. Issued as a reward when Axies win battles, SLP is in demand because it’s required to get a couple of Axies in the mood to breed. 

Chatting with me via Zoom, Inton explains how earning SLP became his full-time job. Before COVID-19, the plan was to move to Japan and take up a new career as a trainee butcher. This is a common story for many Filipinos. Faced with a lack of job opportunities, they are forced to leave their families and seek employment abroad. 

Inton was due to fly out in May. But now, with international travel suspended, he is stranded back home in the province. Behind him, I can see his wife nursing their baby in one arm, and in the other she’s playing one-handed Axie on her mobile phone. Each day they play around 20 hours combined, taking it in shifts. 

She does four hours in the afternoon and another six around midnight, while he plays in the morning for eight hours and another two before bed. Together, they can rack up around 1,500 SLP per day, while sharing the caring duties for their three children aged six, four and 18 months. Currently, SLP is trading for under 2 PHP, but on June 8 it went as high as 11 PHP. 

For more seasoned players, or those with greater risk appetite, higher returns can be made by trading the Axies themselves. Inton has dabbled in this space, breeding Axies and selling them for as much as 2,000 PHP ($41). Just last week, two very rare Axies were sold for 60 and 90 ETH. The highest price ever fetched for a single Axie currently sits at 110 ETH. 

To put this kind of money into perspective: Since the first round of  quarantine was enforced on the main island of Luzon, national unemployment has risen to an all-time high at 17.7% (compared to 5.1% a year ago) and GDP shrank 16.5% for the same period. 

Further, with more than 100,000 overseas Filipino workers repatriated, the Asian Development Bank has estimated remittance losses somewhere between $31.4 billion and $54.3 billion this year. Last year, remittances made up over 10% of Philippine GDP – acting as a crucial lifeline for poor families, especially during a crisis. 

At stake

Back to the theme of Brad Keoun’s introduction: the competition between various smart contract blockchains. Ethereum is certainly the dominant player, but it would be a mistake to see all alternative base layers as vying for the same pie. 

Brady Dale covered the run-up to the Ready Layer One conference last spring, which sought to find common ground between the base layers.

Base layers

Togetherness is the message of Ready Layer One, a conference put together by the Web3 Foundation, Near, Cosmos, Tezos, Protocol Labs and Polkadot, all entities involved in building new blockchains designed to serve as the primary layer for distributed applications. Other blockchain projects may yet join.

The website describes the virtual gathering as follows: “Think of it as the intersection between a hackathon, a conference, a MasterClass seminar and a vaguely anarchist festival for developers and builders of a decentralized web.”

Ready Layer One reflects a big-tent approach to blockchain gatherings, not unlike CoinDesk’s own Consensus, which is also going virtual this year. While most gatherings tend to be protocol-specific, Ready Layer One is taking a more agnostic approach.

The event represented a combined effort to galvanize those already in the ecosystem to work on some of their shared problems together. CoinDesk recently reported on the idea of blockchain interoperability as a vision in which there will be “one network, many chains.”

“We think of blockchain technology as a public good to build a more open and innovative world, but it’s unclear yet what technologies and set of trade-offs really works,” Illia Polosukhin, a co-founder of NEAR, said.

Featuring two of the best-known interoperability projects, Cosmos and Polkadot, Ready Layer One reflects a real-world example of at least part of the industry betting that a rising tide will lift all boats.

Chris Ghent, from the marketing team at TQ, an organization working to advance the Tezos blockchain, said, “We don’t need people to commit to one thing but to commit to blockchains [in general].”

The target audience for the event is developers, and there’s no cost to attend. Participants just need to demonstrate some skin in the game either by showing they’ve already done blockchain work or by participating in the testnets, hackathons, staking demonstrations and other open calls issued by the organizing protocols.

Hands on
“The founding projects, they all have stuff that’s ready to go,” Zaki Manian, co-founder of a Cosmos-oriented staking company called Iqlusion said. “You can build with it and play with it right now.”

TQ’s Ghent sounded a similar note, saying the pitch really is to draw in what he called “qualified tinkerers.”

“If I want to build something on Cosmos, and Cosmos dies, can I build a similar thing on NEAR?” Manian said by way of example. The answer, he thinks, is yes, and if Ready Layer One can show that to developers, then those devs will see less risk in choosing to build on any of the Layer 1 networks.

There’s also going to be an element of dealing with cross-chain challenges, according to Ashely Tyson, who is helping to organize the event on behalf of the Near protocol.

“There are a few topics that cross all of the protocols that we’re going to be compiling themed workshops and mainstage talks around,” Tyson said. Before the world shut down, Near had been organizing small gatherings to discuss some of these issues, such as standards for using existing open source technology (like WebAssembly) in a blockchain context and efficiently keeping interoperability in mind.

There will be some updates on these topics and also calls for developers to get involved in research and development that should benefit all the projects.

Blockchains have potential but no one disputes that it’s not yet fully realized. 

Poloshkin spoke to frustrations that the technology is not really ready to help in the current crisis. “The technologies we are all working on have an ability to help and change things in the coming months and years. But we are still far from the state where it can be used by the mass market,” he said.

Top shelf

Employees walk
Coinbase has lost 60 people from its 1,200-person staff after an updated mission statement from CEO Brian Armstrong sparked fierce debate over how companies should respond to today’s charged politics. In a companywide memo obtained by CoinDesk, Armstrong informed employees that 5% of the company’s workforce had accepted the severance package offered last week. The deadline for employees to signal their interest in the package was Wednesday, and Armstrong said he expects the number to be higher after a “handful of other conversations” are completed. 

Crypto framework
Thursday, U.S. Attorney General William P. Barr announced the release of “Cryptocurrency: An Enforcement Framework,” a roadmap for policing the cryptocurrency landscape. The framework provides a comprehensive overview of the emerging threats and enforcement challenges associated with the increasing prevalence and use of cryptocurrency, Barr said. “Despite its relatively brief existence, this technology already plays a role in many of the most significant criminal and national security threats our nation faces,” said Associate Deputy Attorney General Sujit Raman, chair of the Cyber-Digital Task Force, which wrote the report. 

Bitcoin bites back
Bitcoin broke through $11,000 on Friday, reaching its highest price in almost three weeks. The rise comes a day after payments company Square announced it had put 1% of its total assets into the largest cryptocurrency by market cap. The rally to $11,000 marked an upside break from the past two week’s range of about $10,500 and $10,800, a range the cryptocurrency held despite news of the KuCoin exchange hack, U.S. regulators bringing criminal and civil charges against BitMEX and President Donald Trump’s announcement he would end talks with Democratic lawmakers over a new fiscal stimulus package.

Core CBDC principles
A group of seven central banks along with the “central bank for central banks” has released a report setting out the “core principles” for how national digital currencies can help implement monetary policies. Prepared by the central banks of Canada, the U.K., Japan, Sweden and Switzerland, as well as the Federal Reserve, the European Central Bank and the Bank for International Settlements (BIS), the report states CBDCs should work alongside cash and other current payments, support “wider policy objectives” and “do no harm” to monetary and financial stability, and “promote” innovation and efficiency. Meanwhile, the Dutch central bank gave its first approval to a crypto exchange.

Lightning strikes
A vulnerability in LND versions 0.10.x and below has been disclosed to the Lightning Labs team, according to engineer Conner Fromknecht in the Lightning Network developer channel Thursday. In light of the disclosure, the firm is urging node operators to upgrade to versions 0.11.0 or higher as soon as possible. No known exploitations of the vulnerability have been found to date, but “circumstances surrounding the discovery resulted in a compressed disclosure timeline,” Fromknecht said. The vulnerability was “partially” disclosed with a detailed publishing of the findings promised Oct. 20.

Quick bites

• Binance UK Director Departing After Less Than 6 Months (Ian Allison/CoinDesk)
• Blockchain Goes to College (Jeff Wilser/CoinDesk)
• Brave Is Now the Top-Rated Browser on Google Play Store (Will Heasman/Decrypt)
• New Ethereum Fee Model Has Some Miners Crying Foul: Survey (Will Foxley/CoinDesk)
• CryptoKitties, NBA Top Shots move onto Coincheck exchange (Adrian Zmudzinski/Modern Consensus)

Who won #CryptoTwitter? Related Stories

• Blockchain Bites: Square’s $50M BTC Investment, MetaMask’s 1M Users, BitMEX’s New CEO
• First Mover: Bitcoin ‘Comatose’ Under $16K for Rest of 2020, While Ether Traffic Eases

The vice president of business and data at Coinbase is leaving the company over its new “apolitical” mission.

• Dan Yoo explained in a LinkedIn post that his departure was because of the Oct. 7 deadline to express interest in a severance package for employees not comfortable with CEO Brian Armstrong’s recent blog post.  
• Yoo said he would stay at the company through the end of the year, if necessary, to help manage his transition out of the company.
• On Thursday morning California time, Armstrong sent a memo to employees telling them 60 employees – or 5% of the company’s workforce – had taken the severance package. He later published a blog post about it. 
• A Coinbase spokesperson did not immediately return a request for comment.

Read More: 5% of Coinbase Employees Take Severance Offer Over ‘Apolitical’ Stance

Related Stories

• 5% of Coinbase Employees Take Severance Offer Over ‘Apolitical’ Stance
• Reading Between the Lines of Brian Armstrong’s Mission Memo
• Coinbase’s ‘Mission’ Violates the Spirit of Bitcoin
• Huobi, Dragonfly, Coinbase Invest $500K in New DEX With Alternative Oracle Solutions

Japanese financial group SBI Holdings has announced it is moving into security token offerings (STOs), with a first sale of tokenized stock to take place at the end of October.

• In a news release Friday, the company said its subsidiary SBI e-Sports Co., Ltd. will issue 1,000 shares of common stock, with SBI Holdings as the underwriter.
• The STO will be conducted on a blockchain platform called Ibet from Boostry – a Nomura Holdings-owned company that specializes in digital security infrastructure.
• SBI Holdings further said it may go on to launch a business managing public offerings of digital corporate bonds through SBI Securities, another subsidiary of the SBI Group.
• SBI Securities may also take on business related to holding STOs for assets such as real estate, fine arts, and intellectual property, citing copyrights for games and movies as examples.
• This would allow investors to own smaller shares of such assets, the company said.
• SBI said it views use cases of blockchain technology such as STOs as “core technology” of fintech and that it’s focusing on building business lines in the field.
• SBI Holdings recently agreed to acquire crypto exchange TaoTao, and is already a partner of U.S.-based blockchain payments tech company Ripple, having launched a joint venture to offer a cash transfer app called Money Tap.
• Earlier this year, the firm gave shareholders the option to receive the Ripple-linked XRP cryptocurrency as a benefit.

Also read: Japanese Crypto Exchange TaoTao Agrees to SBI Purchase After Binance Talks End

Related Stories

• China’s Central Bank, Major City to Hand Out $1.5M in Digital Yuan
• BitMEX CTO Released in US After Payment of $5M Bond
• Dutch Central Bank Gives First Approval to Digital Asset Exchange
• Ripple Enters Lending With XRP Credit Lines to Fund Global Payments

Despite bitcoin’s rally to three-week highs, some analysts remain cautious and want to see the cryptocurrency topple key resistance at $11,200 before calling a bullish revival.

• The biggest cryptocurrency by market value has risen by 3.5% to levels above $11,000 in the past 24 hours, confirming an upside break of a narrowing price range represented by trendlines connecting Sept. 19 and Oct. 1 highs and Sept. 8 and Sept. 23 lows.
• Bitcoin is currently trading near $11,050 – up 6% from lows below $10,400 seen earlier this month and the highest level since Sept. 20, according to CoinDesk’s Bitcoin Price Index.
• While the recovery and the range breakout looks impressive, chart analysts and traders say $11,200 is now the level to beat for the bulls.

• “We consider the breakout of the Sept. 19 high of $11,200 to be a more significant catalyst for further upside,” Lennard Neo, head of research at Stack Funds, told CoinDesk. He added that the price range of $10,000 to $11,200 may hold until more clarity surfaces going into November U.S. elections.
• Bitcoin’s rejection near $11,200 on Sept. 19 was followed by a four-day sell-off to $10,200. In other words, the cryptocurrency established a lower high (marked by a circle in the chart above) at $11,200 – a bearish pattern.
• As such, a break above $11,200 would be more credible evidence of a bullish breakout, as pointed out by Neo.
• Meanwhile, Simon Peters, a crypto market analyst at investment platform eToro, said bitcoin needs to hold or establish a new base above $11,000, in which case it could make a move toward the next psychological hurdle at $12,000.
• That’s because bitcoin failed multiple times in mid-September to absorb selling pressure above $11.000.
• And while Neo and Peters remain cautious, Phillip Gillespie, CEO of the over-the-counter liquidity provider B2C2 Japan is foreseeing a pick up in volatility in the near term, as U.S. elections, a large systematic risk even, are scheduled for Nov. 4.
• “If we weren’t weeks away from the U.S. election, I would think we have a bullish setup in bitcoin,” Gillespie said while sharing his view on Thursday’s triangle breakout.
• Disclosure: The author holds small positions in bitcoin and litecoin.

Also read: Bitcoin Options Volume on CME Jumps 300% as Traders Take Bullish Bets

Related Stories

• First Mover: Bitcoin Hits $11K as Square Exposes $2.3T Corporate Money Pot
• Bitcoin Tops $11K for First Time in Almost 3 Weeks
• Lightning Vulnerability Discovered; LND Node Operators Urged to Upgrade ASAP
• Market Wrap: Bitcoin Surges on Square News to $10.9K; December Ether Options Pile Up

Payments company Square’s announcement that it would put some $50 million, or 1% of its assets, into bitcoin has touched off speculation that more corporations might do the same. 

Jack Dorsey, the Twitter CEO who also helms Square, is a longtime bitcoin bull so it wasn’t a huge surprise that his company would put some of its corporate liquidity into the cryptocurrency. He’s following the path of MicroStrategy CEO Michael Saylor, who has invested at least $425 million of the company’s assets in bitcoin. 

None other than Changpeng “CZ” Zhao, CEO of Binance, the world’s largest cryptocurrency exchange, tweeted a question: “Who’s going to be the 3rd public company to hold #bitcoin in treasury?” Guesses included Twitter, Tesla, Apple, Warren Buffett’s Berkshire Hathaway, even the burger chain Wendy’s.

Related: Bitcoin Must Now Beat $11.2K for Bull Revival, Say Analysts

“It’s a bit surreal to see gigantic corporate entities now going knee-deep in bitcoin,” Mati Greenspan, founder of the foreign-exchange and cryptocurrency analysis firm Quantum Economics, wrote to subscribers on Thursday. 

One clever, enterprising soul even ginned up a spreadsheet to keep track of the corporate purchases and published it as a new website, bitcointreasuries.org: 

Companies in the Standard & Poor’s 500 Index of large U.S. stocks have a combined $2.3 trillion in cash and short-term investments. So a 1% across-the-board allocation to bitcoin would amount to $23 billion of purchases. That’s just over 10% of bitcoin’s total market capitalization, currently about $200 billion. 

A big bullish investment thesis for bitcoin is that large institutional investors are on the verge of diving into cryptocurrencies as an asset class, led by money managers like Fidelity Investments that have embraced the new technology and digital-asset markets. 

Related: Bitcoin Tops $11K for First Time in Almost 3 Weeks

Now it seems like corporate purchases might add to that buying pressure.  

Dorsey tweeted out a “whitepaper” to his 4.7 million followers explaining just how Square had come to buy its bitcoin — noting that the transparency was intended “so others can do the same.” 

“To maintain transaction privacy and price slippage on execution, treasury purchased the bitcoin over-the-counter with a bitcoin liquidity provider that we currently use as part of Cash App’s bitcoin trading product,” according to the whitepaper. “We negotiated a spread on top of a public bitcoin index and executed trades using a time-weighted average price (TWAP) over a predetermined 24-hour period with low expected price volatility and high market liquidity, in order to reduce risks associated with cost and pricing.”

Got that, corporate treasurers?  

Bitcoin Watch

Bitcoin has jumped over 3% in the past 24 hours to set a three-week high above $11,000.

• The move has confirmed a contracting triangle breakout on the daily chart.
• Even so, some analysts remain cautious and want to see the cryptocurrency take out resistance at $11,200 before calling a bullish revival.
• “We consider the breakout of the Sept. 19 high of $11,200 to be a more significant catalyst for further upside,” Lennard Neo, head of research at Stack Funds, told CoinDesk. He added that the price range of $10,000 to $11,200 may hold until more clarity surfaces going into November U.S. elections.
• The rise comes a day after payments company Square announced that it had put 1% of its total assets into the largest cryptocurrency by market cap.
• Prices hit $11,023 at 11:05 UTC – the highest since Sept. 20, according to CoinDesk’s Bitcoin Price Index.
• The rally to $11,000 marked an upside break from the past two week’s range of about $10,500 and $10,800.

– Omkar Godbole

Token Watch

Tether (USDT), Solana (SOL): Tether launches on Solana, the “web-scale” blockchain, designed to compete with Ethereum and hopes to increase its transaction speeds while lowering costs. 

Bitcoin (BTC): Billionaire investor Chamath Palihapitiya sees bitcoin as insurance policy against central banks and governments acting irresponsibly.

What’s Hot

Crypto payments firm Ripple branches into corporate lending with line of credit to fund cross-border payments (CoinDesk)

Central-bank digital currencies should work alongside cash, do no harm to financial stability, BIS says (CoinDesk)

BitMEX CTO Reed released in U.S. after payment of $5M bond (CoinDesk)

Ethereum fee-reduction proposal struggles to win consensus backing as miners signal disapproval according to a new survey (CoinDesk)

Crypto trading app Uphold launches service allowing traders to buy and sell 50 U.S. stocks at any time of day (Decrypt)

Amdax digital-asset exchange says it’s first crypto service in Netherlands to register with central bank (CoinDesk)

Decentralized exchange CoFiX raises $500K from investors including Huobi, Dragonfly, Coinbase, with plan for new oracle solution (CoinDesk)

Analogs The latest on the economy and traditional finance

Pelosi, leader of opposition Democratic party in U.S. House, said Thursday she wouldn’t support financial assistance for airlines in standalone bill, insists on broader aid package (CNBC)

U.S. government-supported passenger railroad Amtrak could axe 2.4K jobs without new government bailout, needs $4.9B (Reuters)

Phillippines broadband provider raises $523 million through IPO, country’s largest since 2016, as pandemic spurs greater Internet usage (Bloomberg)

India’s economy will contract by 9.5% in the fiscal year through March due to COVID-19 measures, central bank says (Nikkei Asian Review)

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The director of Binance UK, Teana Baker-Taylor, is leaving the cryptocurrency exchange after a relatively brief, half-year stint in the role.

A spokesperson for Binance confirmed to CoinDesk that Baker-Taylor will depart “in a few days,” adding: “We would like to thank Teana for her hard work and achievements leading Binance UK and wish her all the best for the future.”

Josh Goodbody, Binance’s director of growth and institutional business, will take on responsibility for the U.K. arm following Teana’s departure, the spokesperson said. Goodbody, a lawyer by training, joined Binance in January of this year from rival exchange Huobi Global, where he looked after Europe and the Americas. 

Related: Dutch Central Bank Gives First Approval to Digital Asset Exchange

“It’s been my privilege to help shape the Binance UK strategy and product development,” said Baker-Taylor in an emailed statement to CoinDesk. “I’ve enjoyed working within the innovation-focused culture Binance is known for and I will always be grateful to have had the opportunity to work with an industry leader during this exciting time in crypto’s growth.”

A former HSBC banker, Baker-Taylor joined Binance in May of this year, less than six months ago. Prior to that she was the executive director of Global Digital Finance, a crypto regulation and policy trade association based in the U.K.

She was hired to spearhead Binance’s plans to open a crypto exchange in London regulated by U.K. regulator, the Financial Conduct Authority (FCA). 

Baker-Taylor isn’t the only high profile crypto personality to leave Binance in recent months. Former ConsenSys partner Ajit Tripathi who led banking and payments partnerships, as well as the Binance Charity Foundation in the region, has also left the organization. 

Related: Winklevoss-Founded Crypto Exchange Gemini Hires Former Morgan Stanley Exec

Tripathi declined to comment to CoinDesk.

Also read: Binance Alliance With Japanese Crypto Platform Abandoned

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Bitcoin broke through $11,000 on Friday, reaching its highest price in almost three weeks.

• The rise comes a day after payments company Square announced that it had put 1% of its total assets into the largest cryptocurrency by market cap.
• Prices hit $11,023 at 11:05 UTC – the highest since Sept. 20, according to CoinDesk’s Bitcoin Price Index.
• The rally to $11,000 marked an upside break from the past two week’s range of about $10,500 and $10,800.
• The cryptocurrency remained fairly steady above $10,000 over the past two weeks, despite news of the KuCoin exchange hack, U.S. regulators bringing criminal and civil charges against BitMEX, and President Donald Trump’s announcement he would end talks with Democratic lawmakers over a new fiscal stimulus package.

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• Market Wrap: Bitcoin Surges on Square News to $10.9K; December Ether Options Pile Up

The People’s Bank of China and a district of Shenzhen are to hand out 10 million digital yuan (worth around $1.5 million) as “red envelope” gifts to citizens.

• The initiative comes as another pilot of the in-development digital currency, which has been in trials with commercial entities and state-owned banks.
• Red envelopes are a traditional way of gifting cash in China on holidays or for special occasions such as weddings.
• According to a report from Sina.com.cn, the pilot will see 50,000 successful applicants each receive 200 of the digital yuan.
• They can be spent at 3,389 stores that are set up to transact in the digital currency.
• Anyone living in Shenzhen can apply for the gift from Oct. 9.
• The pilot is being help by the central bank in partnership with Luohu District, Shenzhen, which is funding the effort.
• The report suggests the pilot is an indication that the digital yuan is close to being launched.

Also read: China Central Bank Official Reveals Results of First Digital Yuan Pilots

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The former chief technology officer of the troubled BitMEX exchange has been released from custody after a bond for $5 million was paid in the U.S.

• The news was made public in a document from the District Court of Massachusetts, first reported by The Block.
• In the document, Reed pledged to appear in court and comply with sentencing or risk the loss of the bond.
• He was arrested in Massachusetts on Oct. 1, as the U.S. Commodities Futures Trading Commission (CFTC) and the Department of Justice both announced charges against BitMEX, one of the biggest crypto derivatives trading platforms, and its senior executives.
• The charges include offering illegal trading of derivatives to U.S. retail investors and violating the Bank Secrecy Act.
• Thursday, BitMEX’s parent firm 100x Group announced that its CEO Arthur Hayes and Reed – both founders – had both stepped down from their management positions following the charges.
• Greg Dwyer, the head of business development, would take a leave of absence, the exchange said.

Also read: Crypto Trading Platform BitMEX ‘Attempted to Evade’ US Regulations, CFTC, DOJ Charge

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A group of seven central banks along with the “central bank for central banks” has released a report setting out initial principles for how national digital currencies can help implement monetary policies.

• Issued Friday, the report – “Central bank digital currencies: foundational principles and core features” – was prepared by the central banks of Canada, the U.K., Japan, Sweden and Switzerland, as well as the U.S. Federal Reserve, the European Central Bank and the Bank for International Settlements (BIS).
• It sets out several “core principals” for central bank digital currencies (CBDCs) and how they should be designed.
• Firstly, a CBDC should work alongside cash and other current payment types “in a flexible and innovative payment system.”
• Secondly, it should support “wider policy objectives” and “do no harm” to monetary and financial stability.
• Thirdly, it should “promote” innovation and efficiency.
• In the report, the group says that, while central banks have been providing money to citizens for hundreds of years, “the world is changing.”
• In an increasingly digital world, central banks have started researching the benefits and risks of offering a “general purpose” digital currency as a way to “evolve” and pursue public policy objectives.
• The group has now agreed that to move to an issuance of a CBDC, a nation must meet the three core criteria.
• “A CBDC robustly meeting these criteria and delivering the features set out by this group could be an important instrument for central banks to deliver their public policy objectives,” the report states.
• While the group pledged to continue with research and collaboration on this topic, it said that study is not a commitment to any actual issuance.
• In a separate report Thursday, the Bank of Japan said it would move on to tests looking at the technical feasibility of the core functions and features required for CBDC. That proof-of-concept may then be followed by a pilot program “if necessary.”
• South Korea’s central bank also said this week it would conduct tests of a digital won through 2021.
• The sudden spate of announcements from global central banks regarding CBDCs comes as China appears to be fast moving closer to a launch of its digital yuan.
• The People’s Bank recently revealed some of the results of real-world tests of the initiative, indicating that 3.1 million digital yuan transactions had been made in a commercial setting, for an amount worth $162 million.

Also read: ‘It’s Something We’re Studying’: Deputy Treasury Secretary Discusses US CBDC Plans

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• CBDC Design Needs to Address Risk to Users, Says Bank of Canada

A group of seven central banks along with the “central bank for central banks” have released a report setting out initial principles for how national digital currencies can help implement monetary policies.

• Issued Thursday, the report – “Central bank digital currencies: foundational principles and core features” – was prepared by the central banks of Canada, the U.K., Japan, Sweden and Switzerland, as well as the Federal Reserve, the European Central Bank and the Bank for International Settlements (BIS).
• It sets out several “core principals” for central bank digital currencies (CBDCs) and how they should be designed.
• Firstly, a CBDC should work alongside cash and other current payment types “in a flexible and innovative payment system.”
• Secondly, it should support “wider policy objectives” and “do no harm” to monetary and financial stability.
• Thirdly, it should “promote” innovation and efficiency.
• In the report, the group says that, while central banks have been providing money to citizens for hundreds of years, “the world is changing.”
• In an increasingly digital world, central banks have started researching the benefits and risks of offering a “general purpose” digital currency as a way to “evolve” and pursue public policy objectives.
• The group has now agreed that to move to an issuance of a CBDC, a nation must meet the three core criteria.
• “A CBDC robustly meeting these criteria and delivering the features set out by this group could be an important instrument for central banks to deliver their public policy objectives,” the report states.
• While the group pledged to continue with research and collaboration on this topic, it said that study is not a commitment to any actual issuance.
• In a separate report Thursday, the Bank of Japan said it would move on to tests looking at the technical feasibility of the core functions and features required for CBDC. That proof-of-concept may then be followed by a pilot program “if necessary.”
• South Korea’s central bank also said this week it would conduct tests of a digital won through 2021.
• The sudden spate of announcements from global central banks regarding CBDCs comes as China appears to be fast moving closer to a launch of its digital yuan.
• The People’s Bank recently revealed some of the results of real-world tests of the initiative, indicating that 3.1 million digital yuan transactions had been made in a commercial setting, for an amount worth $162 million.

Also read: ‘It’s Something We’re Studying’: Deputy Treasury Secretary Discusses US CBDC Plans

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• ‘It’s Something We’re Studying’: Deputy Treasury Secretary Discusses US CBDC Plans
• South Korea’s Central Bank to Test Digital Currency in 2021
• Inside the Estonian CBDC Experiment That Could Shape the Digital Euro
• CBDC Design Needs to Address Risk to Users, Says Bank of Canada

A cryptocurrency service operating in the Netherlands has become the first such entity to register with the country’s central bank.

• Per a company press statement on Wednesday, the Amsterdam Digital Asset Exchange (AMDAX) said the registration with De Nederlandsche Bank (DNB) meant it could now go ahead and process crypto transactions.
• The firm will also be allowed to store and provide custody of digital assets under the European Union’s (EU) newly implemented AML5 guidelines that came into effect on May 21.
• Those guidelines, which some argue are killing crypto firms across the country, passed the Dutch Parliament earlier this year.
• Amsterdam-based AMDAX said it will support private investors with portfolios beginning at 2.5 bitcoin (about $27,000 or €23,000 at press time).
• The Dutch implementation of the regulations is very strict, usually including additional criteria for client assessments and for tracing the origin of money users want to invest.
• DNB “justly applies” these regulations, said Valentino Cremona, co-founder and director at AMDAX.
• With bitcoin often being associated with crime, the market needs a “clear legal framework,” Cremona said.
• The exchange’s registration with the central bank demonstrates to investors that cryptocurrency is “a mature asset class, not for criminals, but for smart investors,” he added.

See also: The Netherlands’ AMLD5 Interpretation Appears to Be Killing Crypto Firms

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Ripple, the payments startup with a multibillion-dollar valuation, an IPO in the cards and a complex relationship with the XRP cryptocurrency, is branching out into the lending business.

• On Friday, the Silicon Valley-based fintech unveiled its Line of Credit for customers using its On-Demand Liquidity (ODL) service, per a company blog post.
• “This is our first time testing a product offering in the lending space,” a company spokesperson confirmed to CoinDesk. “We may decide to build out a more robust offering in the future.”
• According to Ripple, the credit line will enable small-to-medium enterprises to expand their business where they would otherwise face “stalled growth,” inhibiting their ability to compete with larger companies.
• Those companies using ODL on RippleNet, a network of payment providers, will be able to buy XRP from Ripple on credit and will be charged a fee on the amount borrowed.
• The service is designed to facilitate lower-cost financing for cross-border payments compared to traditional means and has been trialed by RippleNet customers via a pilot program, the company said.
• ODL uses XRP as a “bridge currency” to facilitate cross-border payments. For example, a Canadian business that needs to pay a supplier in Israel but can’t find a foreign exchange dealer willing to exchange loonies for shekels can instead convert the money into and out of XRP, quick snap.
• In that same example, the credit line means that the Canadian firm doesn’t have to front the money – it locks in a rate at the time of payment and then repays Ripple “when it’s convenient,” the company says.
• Ripple holds 6.2 billion XRP (worth about $1.55 billion at current prices). Its stash accounts for 6% of the total XRP supply when counting both the 45 billion in circulation and 48.6 billion in escrow. The company periodically sells XRP into the market.

See also: Ripple Chairman Says Firm Could Leave US if Regulatory Environment Doesn’t Change

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A vulnerability in LND versions 0.10.x and below has been disclosed to the Lightning Labs team, according to engineer Conner Fromknecht in the Lightning Network developer channel Thursday. In light of the disclosure, the firm is urging node operators to upgrade to versions 0.11.0 or higher as soon as possible.

• No known exploitations of the vulnerability have been found to date, but “circumstances surrounding the discovery resulted in a compressed disclosure timeline,” Fromknecht said.
• The vulnerability was “partially” disclosed with a detailed publishing of the findings promised Oct. 20.
• Lightning Labs – one of three major implementations of the Lightning Network – released its newest v0.11.1-beta on Oct. 1.
• Lightning Labs did not respond immediately to a request for comment.

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Crypto exchange bitFlyer Japan announced Wednesday that its assets under custody exceeded 161.8 billion yen ($1.5 billion) in August, the highest level in two years.

• According to the announcement, the rise in bitcoin price and the exchange listing four new crypto assets at the end of last year led to the increase in assets under custody, or the total value of financial assets the firm manages for its clients. 
• In the period from December 2019 through now, bitFlyer Japan listed XRP (XRP), Basic Attention Token (BAT), Stellar Lumen (XLM) and Nem (XEM) on its exchange.
• CoinDesk Japan reported that according to latest statistics from the Japanese crypto asset trading industry, the physical transaction volume of domestic cryptocurrencies was down this year: July (in-kind trading) was approximately 604 billion yen, well below the 1.1 trillion yen recorded in July 2019.
• Earlier this year, bitFlyer conducted an internet survey which revealed that during the first half of the calendar year, most people who opened new accounts with the exchange were in their 20s. 
• Midori Kanemitsu, a market analyst at bitFlyer, explained in the same report that the attitude towards bitcoin had changed significantly as global monetary easing progressed during the COVID-19 pandemic, shifting the cryptocurrency from an investment target to an asset class that institutional investors can hedge against inflation.
• The exchange’s bitcoin rewards program also hit a record high last month.

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Crypto exchange bitFlyer Japan announced Wednesday that its assets under custody exceeded 161.8 billion yen ($1.5 billion) in August, the highest level in two years.

• According to the announcement, the rise in bitcoin price and the exchange listing four new crypto assets at the end of last year led to the increase in assets under custody, or the total value of financial assets the firm manages for its clients. 
• In the period from December 2019 through now, bitFlyer Japan listed XRP (XRP), Basic Attention Token (BAT), Stellar Lumen (XLM) and Nem (XEM) on its exchange.
• CoinDesk Japan reported that according to latest statistics from the Japanese crypto asset trading industry, the physical transaction volume of domestic cryptocurrencies was down this year: July (in-kind trading) was approximately 604 billion yen, well below the 1.1 trillion yen recorded in July 2019.
• Earlier this year, bitFlyer conducted an internet survey which revealed that during the first half of the calendar year, most people who opened new accounts with the exchange were in their 20s. 
• Midori Kanemitsu, a market analyst at bitFlyer, explained in the same report that the attitude towards bitcoin had changed significantly as global monetary easing progressed during the COVID-19 pandemic, shifting the cryptocurrency from an investment target to an asset class that institutional investors can hedge against inflation.
• The exchange’s bitcoin rewards program also hit a record high last month.

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Bitcoin is flashing green as Square converts some of its cash to crypto while ether options traders are making lots of bets for December expiration.

• Bitcoin (BTC) trading around $10,890 as of 20:00 UTC (4 p.m. ET). Gaining 2.1% over the previous 24 hours.
• Bitcoin’s 24-hour range: $10,532-$10,962
• BTC above its 10-day and 50-day moving averages, a bullish signal for market technicians.

Bitcoin’s price popped Thursday, led higher almost immediately following the announcement that payments firm Square had invested $50 million to purchase 4,709 BTC. The development pushed the price per 1 BTC to as high as $10,962 before settling to $10,890 as of press time. 

Read More: Square Puts 1% of Total Assets in Bitcoin in Surprise $50M Investment

Related: The Market Reacts to Square’s $50M Bitcoin Buy

“News that Jack Dorsey’s Square has purchased about $50 million worth of bitcoin is a definite positive that appears to have driven markets higher on the back of positive sentiment,” said Guy Hirsch, USA managing director of multi-asset brokerage eToro. “Dorsey has long been an advocate of the largest cryptocurrency, and this move reaffirms his bullish stance, and Square’s.” The stock price of Square (NYSE: SQ) also rose Thursday, in the green 1.8% at the close of trading today.

“Seeing traditional institutional firms such as Square invest into bitcoin to hold on their balance sheet after a publicly traded company such as MicroStrategy purchased $250 million worth of bitcoin as a ‘hedge against inflation’ brings significant credibility to bitcoin,” said Michael Gord, chief executive of trading firm Global Digital Assets. “The CEO of MicroStrategy even went so far as to call bitcoin superior to cash”. 

If indeed these investments are a bet against fiat, the U.S. Dollar Index (DXY), a measure of the greenback versus a mix of other currencies, is one metric to watch. Though it has picked up since a late-August low, it’s still in the relative doldrums for 2020 and was flat, in the red 0.02% as of press time Thursday.

The positive market sentiment has certainly translated into higher-than-average bitcoin daily spot volume. Major exchanges already have $332 million in volume so far Thursday, higher than the $284 daily average in the past month.

Related: Square Puts 1% of Total Assets in Bitcoin in Surprise $50M Investment

While bitcoin volume is up Thursday, volatility remains low. In the options market, six-month at-the-money (ATM) volatility, the difference between option strikes to the price of bitcoin, is at 65%. The last time it was that low was back on July 31.

“The buy pressure from institutional investors is increasing, so we are seeing a nice ramp up,” said Marc Fleury, CEO of Two Prime, a crypto asset management firm. “We seem to be entering an era of a low-volatility bull market.”

Lots of ether options for December expiration

Ether (ETH), the second-largest cryptocurrency by market capitalization, was up Thursday trading around $351 and climbing 3.3% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

Read More: As DeFi Deflates, Ethereum Users Get Reprieve From Soaring Fees

Ether options traders are heavily betting on the asset’s price at the end of the year. Over 473,500 ETH in open interest is set for expiration on Dec. 25, which is approximately $166,023,00 worth of options at Thursday’s spot prices.

Vishal Shah, an options trader and founder of derivatives exchange Alpha 5, says traders started piling up ether options positions for December a while ago. “It really started gearing up with DeFi a few months back,” he said. There’s two main reasons for the options bets, Shah added. “It’s either a levered play on DeFi doing well, or as a tail hedge against impermanent losses,” he said. Impermanent loss is when an investor contributes to a liquidity pool and can temporarily be worse off than actually just holding the asset due to protocol imbalances.

Other markets

Digital assets on the CoinDesk 20 are mostly green Thursday. Notable winners as of 20:00 UTC (4:00 p.m. ET):

• chainlink (LINK) + 6.4%
• bitcoin cash (BCH) + 5.7%
• tezos (XTZ) + 4.2%

One notable loser as of 20:00 UTC (4:00 p.m. ET):

• eos (EOS) – 0.46%

Read More: BitMEX CEO Arthur Hayes Leaves Role After US Charges

Equities:

• Asia’s Nikkei 225 closed in the green 0.96%, boosted by investor optimism after U.S. President Donald Trump tweeted support for further economic stimulus.
• Europe’s FTSE 100 ended the day climbing 0.53%, led higher by gains in telecom firm TalkTalk Group, up 17% amid talks of a shareholder takeover.
• In the United States the S&P 500 ended the trading day up 0.80% as policymakers continued talks on fresh economic stimulus.

Commodities:

• Oil was up 3%. Price per barrel of West Texas Intermediate crude: $41.23.
• Gold was in the green 0.37% and at $1,894 as of press time.

Treasurys:

• U.S. Treasury bond yields all fell Thursady. Yields, which move in the opposite direction as price, were down most on the two-year, dipping to 0.147 and in the red 8.5%.

Related Stories

• First Mover: Bitcoin ‘Comatose’ Under $16K for Rest of 2020, While Ether Traffic Eases
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Ethereum miners are signaling their disapproval of a technical proposal advocated by top Ethereum developers, a new survey shows.

Eight of the nine mining projects partaking in a community survey on Ethereum Improvement Proposal (EIP) 1559 had a negative impression of the proposal, with seven of the nine saying they would refuse to implement the EIP if it were included in a future hard fork.

EIP 1559 swaps Ethereum’s current bid-based transaction market for a set fee, BASEFEE, with a small tip for miner compensation. The EIP gained steam over the summer months as the cost to send even a basic transaction broke $10 multiple times. 

Related: JPMorgan’s Blockchain Lead Is Now in Charge of Ethereum-Based Interbank Information Network

Read more: Ethereum Developers Consider New Fee Model as Gas Costs Climb

The survey included 25 Ethereum projects, with most choosing to remain anonymous, Tim Beiko, ConsenSys product manager and survey implementor, said in the Medium post. The survey lacked participation from exchanges or wallets, according to Beiko.

Overall, positive and negative responses both garnered 42% of the vote, with the remainder being neutral or having no opinion.

First proposed in 2018 by Vitalik Buterin, among others, EIP 1559 is expected to make the blockchain’s fee market more predictable and relieve congestion.

Related: Ethereum Is the Frontier of Financial Innovation

What EIP 1559 does not do is promise lower transaction fees. Miners would still garner profits under the new model, but they would be restricted compared to the current setup as the BASEFEE would be burnt to the network. Doing so would add a deflationary mechanism to the Ethereum network’s native currency, ether (ETH).

Unhappy Ethereum miners

Yet, Ethereum miners have the most to lose from the proposal becoming the new standard because transaction fees would be limited to a smaller range. It’s never been more lucrative to be a miner, with profitability hitting all-time highs throughout 2020, according to BitInfoCharts.

“It has been a very misleading EIP, and a majority of the supporters are some Twitter thought-leaders (sic) who believe it will moon the price. lol,” BitFly technical writer Butta said in a private message to CoinDesk. BitFly’s Ethermine is the second-largest Ethereum mining pool by hashrate, according to Etherscan.

Conversely, the largest Ethereum mining pool, Sparkpool, is in favor of the change, according to statements made to CoinDesk in June. Sparkpool did not return a request for comment by press time.

Post-Berlin hard fork

As of now, Ethereum developers are still kicking the tires on the EIP. They will not include it until after the Berlin hard fork, which has yet to be scheduled for execution after it was postponed in June.

Read more: Ethereum Developers Delay Berlin Hard Fork to Stem Client Centralization Concerns

Moreover, the survey and EIP 1559 developer call Thursday morning raised separate concerns over the EIP itself. While miners are worried about their pocketbooks, decentralized applications (dapps) worry about implementing the EIP, its effectiveness and changes to developer tooling. 

Some Ethereum clients such as Nethermind and Besu have begun implementing the EIP on testnets. But other clients, including Geth and OpenEthereum, are waiting for a finalized specification before releasing the EIP on testnet.

Related Stories

• First Mover: Bitcoin ‘Comatose’ Under $16K for Rest of 2020, While Ether Traffic Eases
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Pantera Capital, a cryptocurrency investment firm known for its blockbuster bitcoin returns, has been on the upside when investing in startups, though the returns have been falling below or closer to other types of equity investors.

The venture funds Pantera Capital raised in August 2013 and August 2014 have returned 46.5% and 15.9% from their inception to September 2019, respectively, according to firm data obtained by CoinDesk. The returns underperform index funds most retail investors can buy into and outperform venture funds limited to smaller pools of accredited investors.

Read more: Pantera Crypto Funds Report 100% Returns Amid DeFi Craze

Related: Pantera Crypto Funds Report 100% Returns Amid DeFi Craze

Up to September 2019, the S&P 500 index, for example, has returned, adjusted for inflation, 62.6% over the first Pantera venture fund and 40.8% over the second Pantera venture fund. United States funds included in the 2019 Cambridge Associates Venture Capital Index have returned on average 12.08% on a five-year timescale and 14.55% on a 10-year time scale.

Why the drop?

Paul Veradittakit, a venture partner at Pantera Capital, attributed the dramatic gap in performance to the different focus and size of the funds. The closely aged funds’ returns slid as the second fund ramped up investments in 36 companies and counted in diverse companies building mostly supplemental cryptocurrency products — a more than fourfold rise from the first fund’s eight companies dedicated to cryptocurrency services catering to the bare essentials. 

While the first Pantera venture fund has invested in digital asset developers like Ripple Labs and basic exchanges and payment processors like Bitstamp, Xapo, Circle and Ripio (formerly known as BitPagos), the second venture fund has invested in exchanges with peripheral financial instruments like cryptocurrency options broker ErisX, scattered cryptocurrency platforms that include Shapeshift, Abra, Brave, Civic, Starkware, BitOasis and BitPesa, and even another cryptocurrency fund manager, Polychain Capital.

Read more: Pantera Crypto Hedge Funds Are Losing Double Digits, Bitcoin Fund Is Up 10,000% to Date

Related: Ex-Pantera Partner’s New Crypto Fund Is ‘Not for the Faint of Heart’

Information was not provided on Pantera Capital’s third venture fund, which has raised $164.7 million as of August, just slightly under a $175 million ceiling sought since 2018. But if strategy and volume is any indication, the third Pantera venture fund has mirrored the approach of the second fund, putting more money into ErisX, Starkware and at least 16 in-the-weeds companies. Among these newer startups are The Block, a cryptocurrency research site; and Bakkt, a New York Stock Exchange corporation-connected bitcoin futures exchange.

In all, Pantera Capital’s assets were valued at over $448 million in financial filings this year, covering $249.3 million in the venture funds. The venture funds take at least $50,000 and $100,000 sums from investors and spend about $1 million to $3 million on 10% to 20% equity stakes in seed-stage investments. For Series A venture investments, Pantera Capital commits somewhere from $3 million to $8 million to 3% to 15% stakes in companies.

Hits and misses

Exits – mergers, acquisitions and listings on public stock exchanges – are how venture capital funds realize returns, positive or negative, on their investments, depending on company financials and investment timing. The seven-year-old cryptocurrency investment firm has had 14 exits make $66 million on $16 million of capital invested in its venture companies, according to the firm data dated to this month a year ago. 

While not counted in realized returns, companies that do not exit still contribute to a venture fund’s value. All companies considered by last September, Pantera Capital grew the value of capital in the first venture fund from $12 million to $92 million, in the second venture fund from $26 million to $41 million.

Read more: Crypto M&A and Fundraising Dropped Sharply in 2019: PwC Report

In the first fund, the venture data says Pantera Capital in 2018 took away $50.5 million from a $9.2 million investment and 6% stake in Bitstamp when 80% of the bitcoin exchange sold to Belgian investment holding company NXMH. Pantera Capital also stands to make $22.3 million from the remaining 20% Bitstamp equity should it be bought, making it one of the fund’s more lucrative investments.

Less remarkable than the Bitstamp exit, the second Pantera venture fund drew in one of its notable exits in Korbit – $6 million from a $603,205 investment –  when the Korean digital currency exchange was acquired in 2017 by Korean gaming developer NXC Corp.

Unlike the second fund, the first Pantera venture fund has not had a company end in a bankruptcy or a closure that did not involve a buy-out. At least two cryptocurrency apps backed by the second fund have shut down, bringing its value down along with them: Basis, a $133 million-funded coin that planned to back itself with fiat currency, and TruStory, a crowd-sourced crypto-offering fact-checking site that raised $3.3 million. 

Exits with unknown returns

Five other acquisitions have also contributed to Pantera’s venture returns, but the data does not specify how much money they made, if any. Acquired in the first fund was promotional site Earn.com. In the second fund, there were security token issuer Harbor, trading platform Paradex and virtual currency portfolio tracker Blockfolio. The third fund invested in Blockfolio again and the digital currency brokerage Tagomi.

What is known is that two of the acquisitions, Harbor and Earn.com, sold for around or below the respective $38 million and $121 million they raised, suggesting some investors may have lost money or written them off. Many investors backed Earn.com when it was a bitcoin mining chip producer, 21 Inc., a business model and name that was subsequently scrapped and rebranded. Virtual currency exchange Coinbase in 2018 acquired Earn.com for about $100 million and Harbor sold for around $38 million to cryptocurrency custodian BitGo in 2019.

Read more: Coinbase In Talks to Buy Bitcoin Startup Earn.com

On the flip side, Blockfolio sold at significant premiums for some investors from the $17 million it raised and Paradex’s acquisition was profitable for most, if not all, investors, according to investor data from other sources seen by CoinDesk. Coinbase bought Paradex in 2018 for more than its seed-only funding, and it added Tagomi for about $150 million in May. Cryptocurrency derivatives trading market FTX Exchange purchased Blockfolio for about $150 million in September.

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