CoinDesk Crypto

The total value of Grayscale’s flagship Bitcoin Trust (GBTC) increased over $1.6 billion in the first six months of 2020.

• The New York-based crypto investment firm said the dollar value of total assets in GBTC went from $1.87 billion at the end of 2019 to $3.5 billion by the end of Q2 2020 – an increase of 90%.
• The disclosure came in a quarterly report filed with the Securities and Exchange Commission (SEC) last Friday. GBTC was successfully registered with the regulator in January.
• Grayscale is part of Digital Currency Group, CoinDesk’s parent company.
• Per the filing, the bitcoin held in GBTC increased by 125,531 to nearly 387,000, a $1.15 billion increase in value based on bitcoin’s spot price on June 30.
• The remaining increase came from the fact the bitcoin price moved from $7,200 on Dec. 31 to nearly $9,200 by the end of Q2.
• Grayscale previously said Q2 2020 was its best quarters on record, having raised a total of $906 million from investors and bringing the total raised amount in H1 to $1.4 billion across its product range.
• Inflows into GBTC came to $751 million in Q2.
• GBTC’s assets under management were worth $4.7 billion, according to Grayscale’s website at press time.

See also: First Mover: The Logic Behind Three Arrows’ $200M Grayscale Bet

Related Stories

• Ex-NYSE Broker Accused of Running $33M Crypto Scam Pleads Not Guilty
• Asset Manager NYDIG Raises $5M for Third Bitcoin Fund in 2020
• Appeals Court Backs Coinbase in Bitcoin Gold Fork ‘Breach of Contract’ Lawsuit
• Bitcoiners Launch Cryptocurrency Relief Fund Following Beirut Explosion

The Linux Foundation, which supports open-source innovation in blockchain tech, launched the Linux Foundation Public Health Initiative (LFPHI) at the end of July. The LFPHI’s goal is to promote the use of open source by public health authorities, which can be scrutinized by anyone, to fight not just COVID-19 but future pandemics as well. 

Among the seven core members of the LFPHI are Tencent, Cisco and IBM. The initiative is supporting two exposure notification projects, “COVID Shield” and “COVID Green,” with the aim of improving interoperability across initiatives in different jurisdictions. 

Based on the Google and Apple Bluetooth notification systems, those apps notify people when they’ve been in close contact with someone diagnosed with COVID-19. These open-source apps are built using the Apple and Google protocol for notifications, but the apps themselves are transparent and therefore more trustworthy than closed apps, where there is no insight into the code driving them.

Related: Privacy Group Slams California Bill That Would Put Health Records on the Blockchain

Dan Kohn, general manager of the new initiative, sees open-source technology as necessary for a privacy-respecting exposure notification app, but not solely sufficient. 

“It is totally possible to create an app that’s horrible for privacy that is open source,” said Kohn. “But what open source does is it stops you from just claiming that it respects privacy, because any expert could check on that.”

In other words, the system can be not only privacy-respecting, but provably-privacy respecting. 

See also: From Australia to Norway, Contact Tracing Is Struggling to Meet Expectations

Related: TikTok and the Great Firewall of America

Apple and Google rebranded their Bluetooth protocols as “exposure notification” after initially calling them “contact tracing.” The digital tools are meant to aid the process of human contact tracers, not replace them entirely. 

Since the pandemic hit, groups around the world have rushed to develop exposure notification apps, but in many instances concerns about privacy, effectiveness and a lack of trust have led to low levels of public adoption. Australia’s contact tracing app has seen minimal use and featured bugs that limited its effectiveness. Norway paused the use of its contact tracing app over privacy concerns by its own data protection authority. 

In the U.S., an uneven federal response to the pandemic has left states to fend for themselves, and public health authorities face cuts and a lack of funding. 

“The public health infrastructure in the U.S. has been radically under-invested in for the last 20 years,” said Kohn. “Now there’s understandably billions of dollars flowing into that space, and as a neutral open source organization, we hope to help monitor and shape some of those investments in ways that ensure they’re interoperable,” or compatible.

See also: For Contact Tracing That Preserves Privacy, Focus on Incentives

Interoperability would mean that different state-level apps in the U.S. could communicate information and data with each other.

The two LFPHI exposure notification projects are open source and meant to help develop back-end operability between different apps. 

Another tool LFPHI is introducing and continually refining is a dashboard where contact tracing and exposure notification apps are tracked. The dashboard breaks down apps by whether they use Bluetooth or GPS location tracking (which is generally considered more privacy-invasive than Bluetooth), whether apps are open source and whether they’re provided by a public health authority, among a number of other categories. The tool is one of the few comprehensive databases working to track these apps in this way. 

The TCN Coalition, a global group of technologists that was working to support the development of cross-compatible privacy-preserving exposure notification apps, was absorbed by the LFPHI as part of its launch. 

See also: COVID-19 Tracing Apps Have to Go Viral to Work. That’s a Big Ask

Jenny Wagner, former executive director of the TCN Coalition and now head of LFPHI’s Implementers Forum, said, the U.S. needs to have more apps based on the Apple and Google protocol, given they’ll then be compatible with each other. And it needs better communication.

“One of the things that we don’t know much about yet, because we haven’t had the chance to experiment, is what is the messaging to really catch these as public health tools,” she said. “The same way that your seatbelt helps you, it’s a public health tool within a car. That’s how we need to be thinking about these apps on people’s phones.”

As the world grapples not just with the COVID-19 pandemic but potential future ones, initiatives like LFPHI offer one way to coordinate and build out responses to new pandemics that might arise. 

“The biggest challenges around exposure notification are not the technology,” said Wagner. “The cryptography is advanced, but it’s solvable. The servers are just going to be servers. The piece that’s most important for this technology to really work out is going to be public adoption and public perception.”

Related Stories

• What People Who Aren’t Bullish on Bitcoin Still Like About It
• Zephyr Teachout: Take Back the Economy From Economists

New York Digital Investments Group (NYDIG) has raised just under $5 million for yet another bitcoin investment vehicle.

• The Manhattan-based asset manager informed the Securities and Exchange Commission (SEC) Monday it had raised funds for its new NYDIG Bitcoin Fund in a private placement.
• Per its Form D filing, 56 investors have now committed to the fund – NYDIG has not disclosed the fund’s net asset value.
• The Bitcoin Fund, which will allocate combined commits into a series of investments, launched in July 2019 with 6 investors who invested a total of $1.45 million at the time.
• The $5 million is just the initial raise, the fund is still open to additional commits.
• The SEC counts private placements as exempt offerings as securities aren’t publicly available and are generally only sold to accredited investors.
• NYDIG has held a New York BitLicense since 2018 – Benjamin Lawsky, the BitLicense’s architect, joined the company nearly a year before.
• Monday’s raise will be the third securities offering NYDIG has held this year.
• The asset manager raised $190 million for a similarly-named NYDIG Institutional Bitcoin Fund LP in July, and $140 million for a Bitcoin Yield Enhancement Fund the month before.
• It’s unclear what differentiates the funds from one another.

See also: Standard Chartered to Launch Institutional Crypto Custody Solution

Related Stories

• Appeals Court Backs Coinbase in Bitcoin Gold Fork ‘Breach of Contract’ Lawsuit
• Bitcoiners Launch Cryptocurrency Relief Fund Following Beirut Explosion
• Coinbase Exits Industry Lobbying Group in Protest Over Recent Unspecified ‘Decisions’
• Elliptic Hires Former Revolut CFO as It Prepares for Asia Expansion

A California appeals court has ruled in favor of U.S cryptocurrency exchange Coinbase over its decision not to support the Bitcoin Gold hard fork in 2017.

• Ruling at the state’s First Appellate Court (Division One), Judge Ethan P. Schulman agreed with the summary judgment of a prior trial court that was decided in favor of Coinbase, according to a court document filed on Monday.
• Plaintiff Darrell Archer first filed the lawsuit against Coinbase on March 27, 2018, alleging the exchange had violated its contract agreement with users over its stance on the Bitcoin Gold hard fork.
• Coinbase told users it would not support the fork because the project would not release its code to the public and that, as such, it was considered a “major security risk,” per the filing.
• Archer also alleged Coinbase had retained control over the bitcoin gold (BTG) cryptocurrency resulting from the fork for its own benefit during that time.
• In a hard fork of this nature, a blockchain is split off to form a new chain (sometimes with new features) and a new cryptocurrency.
• In the case of Bitcoin Gold, Bitcoin was forked, creating BTG tokens equal in number to those owned by holders on the original chain.
• While investors are automatically awarded their new duplicate holdings if they held their bitcoin in their own blockchain wallets, exchanges decide whether to support the fork and pass new coins onto customers holding assets on their platforms.
• Archer – who held 350 bitcoin on Coinbase at the time of the fork – followed up his original complaint with an amendment alleging Coinbase’s “failure and refusal” to pass on the BTG represented breach of contract, negligence and conversion (a civil law version of theft).
• On the breach of contract claim, the trial court concluded that Archer had failed to establish the existence of an agreement by Coinbase to provide bitcoin gold to him following the fork.
• The conversion claim failed because the existing agreement did not grant the rights for Archer to the new coins, and did not require Coinbase to support the bitcoin gold fork.
• To rule otherwise would place the “duty” on exchanges of having to support all bitcoin forks, the judge said, quoting a similar ruling in the state of Georgia.
• For the third cause of action, negligence on behalf of Coinbase, the trial court had rejected Archer’s claim based on the “economic loss rule,” which the court held ruled out liability for negligence based on contractual obligations.
• The appeals court has now upheld the original ruling that Coinbase’s agreement with Archer contained no part requiring Coinbase to provide services for cryptocurrencies from third parties.
• Carlton Fields attorney Drew Hinks commented in a Twitter thread late on Tuesday that the case may establish precedent and has implications over the future definition of cryptocurrency as property.

Also read: Coinbase Exits Industry Lobbying Group in Protest Over Recent Unspecified ‘Decisions’

Related Stories

• Asset Manager NYDIG Raises $5M for Third Bitcoin Fund in 2020
• Bitcoiners Launch Cryptocurrency Relief Fund Following Beirut Explosion
• Market Wrap: Bitcoin Stumbles to $11,300; USDC Lending Rates Skyrocket
• Coinbase Exits Industry Lobbying Group in Protest Over Recent Unspecified ‘Decisions’

When Avanti Financial hinted at a new bank-issued digital asset late last month, it was scant on details.

“Avit has no analog,” Avanti CEO Caitlin Long said at the time. “It is a digital asset. Blockstream is our technology partner. We’re not going to announce anything more than that. One could presume that the Bitcoin blockchain will be involved.”

According to Long, the Avit can be thought of as commercial bank money or programmable electronic cash that can be exchanged for a dollar but is not pegged to the U.S. dollar like a stablecoin. It’s also not a security token, or a digital representation of an investment that’s expected to generate returns.

Related: First Mover: After Falling 65% This Year in Bitcoin Terms, Do ‘Stablecoins’ Need a Rebranding?

The Avit represents one of several bank-led innovations in the digital asset space. With Goldman Sachs considering its own stablecoin issuance, Sygnum issuing a stablecoin tied to the Swiss franc and other experiments, Avanti has joined a growing list of banks that want to compete with startups on digital assets.

However, Long said she believes stablecoins are not the ideal digital asset for trying to bring fiat into the crypto world.

Read more: Wyoming-Based Avanti to Open in October With a New Bank-Issued Digital Asset

Unlike cash, stablecoins are generally issued as intangible assets, which means they aren’t physical or don’t derive their value from contractual claims like stocks and bonds do. Because of this, they have uncertain legal enforceability. Circle and Coinbase, the creators of the USDC stablecoin, acknowledge USDC transactions may not be legally enforceable in the coin’s terms of service.

Related: BCB Group Teams With Circle to Offer EU Institutions USDC Stablecoin Settlement

When stablecoins aren’t issued as intangible assets, they exist under Article 8 of the Uniform Commercial Code, which requires they have intermediaries. Paxos is only able to issue its paxos standard (PAX) stablecoin without a middleman because Paxos is a registered trust company.

Avit will be issued under a different portion of U.S. federal and state law that Long would not name because Avanti has a patent pending for the Avit’s design.

Read more: BCB Group Teams With Circle to Offer EU Institutions USDC Stablecoin Settlement

While stablecoins are considered “property” by the Internal Revenue Service, Long said it is likely Avit will be treated as cash by the IRS and a “cash-equivalent” by accountants, making it easier for companies and individuals to use Avits without negative financial consequences.

However, Avits wouldn’t function like digital dollars or central bank digital currencies, Long added.

“We’re a second layer down,” she said. “It’s just bank money that happens to be issued on a blockchain.”

Bitcoin rails?

According to Blockstream CEO Adam Back, the asset will be issued on Liquid – a network developed and overseen by Blockstream that is meant to move bitcoins around more quickly than the Bitcoin blockchain itself. Assets on Liquid can be traded in atomic swaps, or smart contracts that allow for exchanging assets without an intermediary. In the traditional world, ACH payments to an exchange take several days to settle.

Users outside of an Avit transaction also cannot see the number of coins that were transferred or the type of coins that were transacted, but they can see the total supply of Avits issued, Back said. Avit would be the first time a bank had issued a digital asset on Liquid, he added.

Read more: In First ‘Pure Crypto’ Hire, Silvergate Bank Recruits Blockstream Liquid Network Exec

Avanti and the Wyoming Division of Banking will also see transaction details because of the Bank Secrecy Act, Long said.

“I don’t think the Bank Secrecy Act is Constitutional,” she said. “It does have significant overreach. However, we’ve also made it very clear that we will 100% comply with the law.”

While Avanti’s first announcement of Avit is a plan centered on Liquid’s Bitcoin sidechain, the bank also plans to release an Ethereum version of Avit and to support other protocols that have customer demand, she said.

“So it’s not exclusively one protocol for risk management purposes,” she said. “We will have multiple protocols upon which assets can be issued and the customer can choose.”

Stable reserves

While Avit would not be pegged one-to-one to the U.S. dollar – because it’s a new digital asset, not a digital representation of a real-world asset – the currency would be 100% backed by a reserve of traditional U.S. assets. (The bank requires a reserve of liquid traditional U.S. assets for all the assets it custodies.)

In this way it resembles target2, the real-time gross settlement system run by the European Central Bank (ECB), said Stefan Loesch, director of tokenization firm eFractio and a lecturer at Cyprus’ University of Nicosia.

The ECB system fully collateralizes all of the euros it moves around so it can settle large transactions instantly instead of at the end of the day.

Read more: ‘Game-Changer’ Retail Digital Currency Now European Central Bank’s Focus, Board Member Says

Loesch said the Avit will effectively become a dollar equivalent if the bank provides an easy pathway for it to be exchanged for a dollar. In this way, Avit would represent a certificate of deposit or a unit that is redeemable at any time against the U.S. dollar.

Avanti is also aiming to reduce the credit risk on the collateral backing the Avit, Long said. Avanti will likely denominate its Avit collateral in Federal Reserve deposits and U.S. Treasurys, which are higher-quality liquid assets than what would be held at a lesser amount as capital reserves at a bank that does fractional reserve banking.

“They don’t have to hold a hundred cents on the dollar,” Long said, referring to banks that lend.

Related Stories

• Binance Says Licensed Entities Can Now Use Its Stablecoin After Watchdog Approval
• Russia’s Sberbank Launches Blockchain on Hyperledger, Mulls Stablecoin in 2021

Bitcoiners have quickly mobilized to raise relief funds following an explosion that wreaked havoc in Beirut last week. The campaign comes as the Lebanese banking system remains in crisis.

• A group of Lebanese expats in Europe organized the Crypto Disaster Relief For Beirut Explosion fund, spreading the word on Instagram.
• The site’s tagline: “Embracing Cryptocurrency services to bypass Lebanon’s corrupted financial system.”
• This requires manual liquidity, with the help of over-the-counter traders on the ground, to fund local nonprofits like Beit el Baraka and Baytna Baytak, which are both helping people displaced by the blast to find food and shelter.
• Palestinian professor and author Saifedean Ammous, who lived in Lebanon for many years, is also fundraising for Beit el Baraka, plus the Lebanese Red Cross. He has raised several thousand dollars worth of bitcoin so far.
• The nonprofit Kilna Ya3ne Kilna (which means “All for All”) is also crowdfunding with bitcoin for relief efforts, delivering food and hygiene kits to families in need.

Read more: How Bitcoin Fits Into Lebanon’s Banking Crisis

Related Stories

• Market Wrap: Bitcoin Stumbles to $11,300; USDC Lending Rates Skyrocket
• How Much Ether Is Out There? Ethereum Developers Create New Scripts for Self-Verification
• Coinbase Exits Industry Lobbying Group in Protest Over Recent Unspecified ‘Decisions’
• Elliptic Hires Former Revolut CFO as It Prepares for Asia Expansion

As the bitcoin market sees red, DeFi opportunities in stablecoin trading have some borrowing rates exploding to double digits.

• Bitcoin (BTC) trading around $11,342 as of 20:00 UTC (4 p.m. ET). Slipping 4% over the previous 24 hours.
• Bitcoin’s 24-hour range: $11,299-$11,943
• BTC below its 10-day and 50-day moving averages, a bearish signal for market technicians.

Heavy sell volumes on spot exchanges such as Coinbase caused a fall in bitcoin’s price to as low as $11,299 Tuesday. Profit-taking is one driver of the dip, according to Chris Thomas, head of digital assets for broker Swissquote. “There are naturally some traders looking to take short term profits here, which is driving us lower,” Thomas told CoinDesk. 

Read More: Bitcoin Rally Stalls as Increasingly Correlated Gold Drops Below $2K

Related: Bitcoiners Launch Cryptocurrency Relief Fund Following Beirut Explosion

Katie Stockton, a technical market analyst for Fairlead Strategies, says there are signs the bitcoin market in the short term may be headed even lower. “Bitcoin has seen upside follow-through on the back of its breakout above important resistance in the $10,000-$10,055 area,” Stockton said. “There are some signs of short-term exhaustion, however, that suggest a pullback could unfold over the next week.” 

Traders were hitting the sell button on economic hedges Tuesday. Gold was in the red 5.6% and at $1,913 as of press time. Over the past month gold remains up, having gained 6.4%. Meanwhile, bitcoin has appreciated 22%. 

Andrew Tu, an executive at crypto quant training firm Efficient Frontier, says a temporary bearish market for bitcoin won’t last, despite price dumps. “If the market faces exhaustion, we could see a larger correction,” he said. However, a positive news cycle will eventually bring another rally, Tu noted. “With all the positive news surrounding bitcoin, as well as the recent altcoin pumps, it is clear that the market sentiment is highly positive.”

Read More: MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’

USDC opportunities skyrocketing dYdX rates

Related: Some Traders Now Taking Bets Ether Will Break $1K by December

The second-largest cryptocurrency by market capitalization, ether (ETH), was down Tuesday trading around $378 and slipping 4% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

Read More: Alchemy Goes Public With Developer Platform in Bid to Grow DeFi 

The decentralized finance, or DeFi, lending and trading platform dYdX is seeing a jump in borrowing rates on its platform. It’s currently over 11.7% on average, a high not seen since its competitor lender Compound’s emergence in late June, ushering in a wave of interest in DeFi overall. 

The catalyst for rising rates on dYdX are derived from the USDC stablecoin, which has seen its borrowing rate jump as high as 25% this week. 

DeFi observer “Ceteris Paribus” noted on Twitter that borrowed USD coin (USDC) is being used by traders for quick arbitrage opportunities. In this instance, a trader took advantage of stablecoin tether’s (USDT) price relative to USDC on trading platform Uniswap and borrowed from dYdX. This caused lending rates to jump outrageously as it soaked up the supply of loanable funds; the trade likely involved trading USDC for ether, then trading ether for tether because it is more liquid than trading USDC for USDT outright. The two stablecoins are both supposed to be priced close to one U.S. dollar, but supply and demand on individual exchanges may cause prices to fluctuate. 

“Trader had $45,000 USDC, borrowed another $405,000 on dYdX to give them $450,000 USDC,” reads the tweet. “Traded that $450,000 USDC for $492,000 USDT on Uniswap. Traded $492,000 USDT for $492,000 USDC on Curve. Paid off $405,000 dYdX loan. Started with $45,000 USDC, ended with $87,000 USDC, and paid $2,000 in fees.” 

Thus the arbitrage opportunity, although risky, would net a trader $40,000 on just $45,000 of crypto collateral, a profit of nearly 89% in a short amount of time.

Other markets

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

• bitcoin gold (BTG) + 4.4%
• iota (IOTA) + 3.1%
• tezos (XTZ) + 1.4%

Read More: Chia Network Raises $5M to Rival New Crop of DeFi-Friendly Base Layers

Notable losers as of 20:00 UTC (4:00 p.m. ET): 

• basic attention token (BAT) – 8%
• zcash (ZEC) – 7.5%
• 0x (ZRX) – 5%

Read More: Ethereum Classic’s Terrible, Horrible, No Good, Very Bad Week

Equities:

• Asia’s Nikkei 225 ended the day up 1.8% after a three-day weekend, boosted by pharmaceutical company Eisai, which rose 13.7%.
• Europe’s FTSE 100 closed in the green 1.7% as hopes of a coronavirus vaccine breakthrough boosted economic optimism.
• The United States’ S&P 500 lost 0.80% as late session declines in tech stocks including Apple and Netflix pushed the index into the red Tuesday.

Read More: Riot Blockchain Mined 508 Bitcoin in Q2

Commodities: 

• Oil is down 1%. Price per barrel of West Texas Intermediate crude: $41.52

Read More: Falling 65% This Year in Bitcoin Terms, Do ‘Stablecoins’ Need a Rebranding?

Treasurys:

• U.S. Treasury bonds all climbed Tuesday. Yields, which move in the opposite direction as price, were up most on the two-year, in the green 9.8%.

Read More: India May Be Starting Its Biggest Bitcoin Bull Run Yet

Related Stories

• How Much Ether Is Out There? Ethereum Developers Create New Scripts for Self-Verification
• Bitcoin Rally Stalls as Increasingly Correlated Gold Drops Below $2K

Anti-censorship tools saw an uptick in popularity in Belarus, the Eastern European country whose citizens have been protesting for three days after contested presidential elections over the weekend.

Residents have been protesting the results of the election Sunday night, which 26-year incumbent Alexander Lukashenko reportedly won in a landslide. Many people believe the results were rigged and that leading opposition candidate Svetlana Tikhanovskaya was the winner.

As people took to the streets and some factory personnel went on strike, internet access went down nationwide. At the same time, electronic payments have been working, the Russian newspaper Komsomolskaya Pravda wrote.

Related: After Tumultuous Election, Belarus Goes Offline

Lukashenko denied pulling the plug, and the major Belarussian internet provider Beltelecom said its infrastructure was overwhelmed. On the third day of protests, people reported losing mobile internet connections and shared rumors cell phone services were the next to be cut. 

‘At times shut off’

Locals have still been able to use the internet using virtual private networks (VPNs), and the Telegram messenger app remained intermittently accessible. Telegram CEO Pavel Durov wrote on Twitter the company “enabled our anti-censorship tools in Belarus so that Telegram remained available for most users there.” 

“However, the connection is still very unstable as Internet is at times shut off completely in the country,” Durov added. 

Telegram became one of the main coordination tools for protesters. Over one million people are now following the NEXTA channel, which is posting updates of the protest activities in real time.

Related: Free Speech vs. Cancel Culture: Reasons for Optimism

In the meantime, people discovered new tools for getting around the blocked communication channels. Beyond VPNs, residents are using proxy services such as Psiphon, an open-source lightweight proxy server from the Citizen Lab and the University of Toronto.

Before Aug. 8, Psiphon saw zero connections from Belarus – today it reports over six million. In just two days, Belarus became the world leader in using Psiphon, followed by Iran and Saudi Arabia, according to the company’s own data.

People have been also sharing information on how to use VPNs, Psiphon and other tools, and organizing groups to test new open-source options to see what’s working. Some paid VPN providers offered limited free traffic to users in Belarus, including atlasVPN and TunnelBear. 

Selective blocking

Before the election, local newspaper Brestskaya Gazeta reported the secretary of the Security Council of Belarus, Andrei Ravkov, told presidential candidates on July 30 that internet access might be blocked in case of “provocations” during the elections.

Cybersecurity expert Alexey Lukatsky believes the Belarus authorities might have disrupted internet connectivity in the country deliberately. In Belarus, all internet connections are concentrated in the hands of a few providers, so it’s not hard to pull the plug, Lukatsky said. 

“Knowing how various countries have been blocking access to the internet during elections, I would suggest that it’s not the issues with the infrastructure but a deliberate decision to block access,” he added.  

He also said the fact that people are still able to use VPN and proxy services proves that the authorities did not just unplug the whole country from the global internet. 

“If that’s a total block or an infrastructure failure, proxies won’t work. But if it’s the government blocking particular websites via internet providers, VPNs and proxies help get around that,” Lukatsky said. 

In case of a total shutdown, only access to satellite internet will help, or the custom-designed connection routes via neighboring countries using mobile service and WiFi, Lukatsky said. The former is expensive and the latter requires some tech skills.

The U.S. State Department condemned the violent crackdown on the protesters in Belarus. During the protest marches in Minsk and other cities of the country, people have been beaten by the riot police, detained by the thousands and one protester was killed.

Related Stories

• Jack Dorsey Has Floated Decentralized Fact-Checking at Twitter. Here’s What That Could Look Like
• Activists Document Police Misconduct Using Decentralized Protocol

Deribit has started listing ether (ETH) options with strikes above $1,000, and some traders are now betting the cryptocurrency will reach that price by year’s end.

Over 3,470 contracts – worth $1.3 million – of ETH 1,120 call options have been traded for December 2020 and March 2021 expiry this month. These trades were executed on the Panama-based Deribit exchange, the world’s largest crypto exchange by options trading volume. It is the first exchange to offer options for strikes above $1,000, which went live on Aug. 1.

”Volumes have been decent and open interest [open positions] is over 2,500 contracts already, indicating some traders believe ETH can potentially show a price move of over 180% in five to seven months,” Luuk Strijjers, COO at Deribit, told CoinDesk.

Related: Market Wrap: Bitcoin Stumbles to $11,300; USDC Lending Rates Skyrocket

Ether is trading near $390 at press time, representing a 200% gain on a year-to-date basis. The impressive price rally and expectations for continued DeFi-led bull run could be driving the activity in the deep out-of-the-money options.

Read more: Deribit Reports Daily Record $539M of Bitcoin Options Traded, More Than Double Prior High

An option gives owners the right, but not the obligation, to trade an underlying asset at a set price and date. Calls give its owners the right to buy the asset while puts give their owners the right to sell.

Open interest in ether’s options market has exploded this year, increasing 2,585% from $14 million to $376 million, according to data provided by Skew.

ETH options as a forecasting tool

Related: How Much Ether Is Out There? Ethereum Developers Create New Scripts for Self-Verification

Options market data is widely used to identify support and resistance levels and potential trends in prices. For instance, Kyle Davies, co-founder of Three Arrows Capital, tweeted Monday that $14,000 is a key hurdle for bitcoin, which, if breached, could pave the way for $20,000. That’s because there is notable open interest buildup in options at $14,000 strike and negligible activity in higher strikes.

In ether’s case, however, open interest in strikes above $1,000 is too small to draw any conclusions about the investor bias. At press time, there are 2,541 contracts open at the strike price of $1,120. That’s a meager 0.3% of the total open interest of 878,104 contracts spread across multiple expiries, according to data provided by Deribit.

“I wouldn’t make much of the existing open interest of 2,500 contracts on these strikes. Almost every strike from $40 to $880 has that as minimum interest,” said Vishal Shah, an options trader and founder of Polychain Capital-backed derivatives exchange Alpha5.

This relatively low number of transactions reflects the fact that the options market as a whole sees a low probability that ether will trade at $1,000 or greater by the end of December. The probabilities are calculated with the help of the Black-Scholes formula, which is based on metrics such as call option prices, strike prices, the price of the underlying asset, time left for expiry and the risk-free interest rate.

Read more: Open Interest in Ether Options Jumps to New Record High

Traders use an option’s delta, which measures the sensitivity of the option’s price to changes in the underlying asset’s price, as an estimated probability for a given option to expire in-the-money or make profit on expiry. Call options at $1,120 strikes will expire in the money if the spot prices settle above $1,120 on the day of the expiry. Owners at that strike only see a profit if ether trades above that price plus the cost of the option.

At press time, the delta of the $1,120 call option expiring in December is 0.11. In other words, the probability of ether rising above $1,120 on or before Dec. 25 is 11%. Similarly, delta of the $1,120 March expiry call option is 0.18. Meanwhile, data provider Skew calculates a mere 5% probability of ether trading above $1,000 before New Year’s Day.

Also, the $1,120 call expiring in December has the same probability as the put option at $300 strike. It means the odds of bitcoin ending the year 22% below today’s price is similar to prices ending 187% higher from the current price.

“That tells you something about expectations,” said Shah, adding, “the ETH options market is not big enough to drive the price of the underlying.” Indeed, global options volume of $22.9 million is just 2% of the spot market’s volume of $11.7 billion.

Not just directional plays

Lastly, traders rarely take outright directional bets or naked long positions in deep out-of-the money options like the $1,120 call. “It’s more likely to be a hedge or part of a more elaborate strategy such as volatility or relative value plays,” Denis Vinokourov, head of research at London-based BeQuant, a cryptocurrency exchange & institutional brokerage. told CoinDesk in a Telegram chat.

Nevertheless, open interest buildup, delta and other option market metrics are good indicators of sentiment and become more reliable with the growth in the size of the market.

Related Stories

• Alchemy Goes Public With Developer Platform in Bid to Grow DeFi Ecosystem
• Market Wrap: Bitcoin Tests $12K; DeFi Debt Outstanding Hits Record

Ethereum and Bitcoin advocates have engaged in spirited Twitter exchange since Friday to answer an ostensibly simple question: What’s the total supply of ether?

It’s not quite clear where the question originated. But providing one agreed-upon value for Ethereum’s native currency, ether (ETH), proved contentious enough to warrant new code.

“Adding a proper total supply command to the client seems like a low-cost and reasonable thing to do,” said Ethereum co-founder Vitalik Buterin in the Ethereum R&D Discord channel last Friday. 

Related: Market Wrap: Bitcoin Stumbles to $11,300; USDC Lending Rates Skyrocket

Multiple independent developers jumped on the opportunity to set the “world computer’s” supply schedule straight.

The coin supply brouhaha takes place in the context of Bitcoin’s more-easily verifiable coin supply, thanks to the gettxoutsetinfo command, which every Bitcoin node can execute to calculate the current supply. Due to its distinct design features, Ethereum lacked such a command, hence the impetus behind independent developers writing code to calculate its supply.

The total supply of ether is 111,562,994 as of publishing time, according to Messari. (The firm pulls data directly off the blockchain, Messari director of research Eric Turner told CoinDesk.)

Ether, bitcoin and verifiability

The verifiability of assets is both a strong and novel feature of blockchains. Only rough supply counts exist for other assets such as gold or dollars. The supply of a given cryptocurrency, on the other hand, can be parsed down to the exact unit. This is valuable for modeling or auditing, among other reasons.

Related: Some Traders Now Taking Bets Ether Will Break $1K by December

Bitcoin proponents – notably Kraken developer Pierre Rochard – recently pointed out that Ethereum had no simple method for verifying the supply of its native unit. 

Bitcoin’s value and perception as “digital gold” emphasizes its supply characteristics – namely scarcity – moreso than Ethereum, which aims to serve as a developer platform for decentralized financial applications. 

Read more: Bitcoin and Gold: Evaluating Hard-Cap Currencies in Times of Financial Crisis

Indeed, many Ethereum community members were dismissive of the supply question. “I don’t give a shit about the supply,” said Augur co-founder and early cryptocurrency investor Jeremy Gardner on Twitter. 

Beyond simply running the numbers, however, an additional concern voiced after the fact was the difficulty of running a full Ethereum node. Users who run their own nodes can “self-verify” not only the number of ethers in existence but also the validity of transactions on the Ethereum network. 

Self-verification is a popular social concept, as well as an ethical touchstone, for Bitcoin proponents. The argument mainly relies on the ease of bootstrapping a Bitcoin node. Running an Ethereum node, on the other hand, is a much more time- and memory-intensive undertaking, one that’s led to the emergence of a small class of infrastructure service providers. 

Read more: Ethereum 2.0 Testnet Medalla Goes Live With 20,000 Validators

Ethereum community members are more dismissive of running a full node based on arguments from Buterin in the project’s early days. Ethereum 2.0 developers are also shooting for self-verification via lightweight clients made possible through Proof-of-Stake (PoS).

Third-party scripts

As attention paid to the supply discussion on Twitter grew, Ethereum developers started building scripts to calculate the supply. 

Developers were quick to note that many data sites posted wrong figures because of faulty modeling of coin issuance.

In Ethereum, many third party-scripts fail to calculate a few complexities such as uncle or nephew blocks and burner addresses, cryptocurrency educator Andreas Antonopoulos said in a tweet.

Bitcoin developers have often made similar mistakes, Casa CTO Jameson Lopp tweeted. Lopp said many scripts fail to take into account block rewards, called the coinbase, left unclaimed by miners.

Regardless, Ethereum does have one actual supply figure even if it has been difficult to locate, Geth team leader Péter Szilágyi said in a tweet. If it did not, Ethereum wouldn’t work.

“Ethereum has multiple client implementations, so a supply bug in one would instantly break consensus,” Szilágyi said.

Related Stories

• Alchemy Goes Public With Developer Platform in Bid to Grow DeFi Ecosystem
• Bitcoin Rally Stalls as Increasingly Correlated Gold Drops Below $2K

Coinbase has withdrawn from industry lobbying group the Blockchain Association. The move comes a day after crypto exchange rival Binance.US joined the group.

• “Recent decisions made by the association and its board seem at odds with the association’s mission,” a Coinbase spokesperson told CoinDesk without elaborating on those decisions. 
• “We believe that decisions made now have the potential to irreparably impair the credibility of the Association and make it increasingly difficult for it to achieve its goals and those of its members,” the spokesperson said.
• With the departure, Coinbase vacates its founding seat on the Blockchain Association’s eight-person board and membership in the 24-strong organization, now down to 23. 
• As first reported by Fortune’s Jeff Roberts, Coinbase’s Tuesday departure is closely linked to another group’s Monday arrival: Binance.US.
• The U.S. affiliate of international exchange powerhouse Binance competes with Coinbase for American crypto investors’ accounts.
• Though Coinbase refused to name Binance.US publicly, a board resignation letter obtained by The Block indicates the disagreement does indeed stem from membership disputes.
• “Recent weeks have demonstrated to us that the Blockchain Association is not interested in the membership criteria we had worked to establish to underpin the mission of this organization,” Coinbase’s Hermine Wong wrote to lobbyist chief Kristin Smith.
• In a tweet response that also avoided naming Binance.US, the Blockchain Association defended its membership practices. 
• “The Blockchain Association believes that bringing all of the major companies, investors, and innovative projects together from this young and growing industry is the only way to achieve meaningful and lasting policy and regulatory goals,” it said in a tweet.
• Binance.US declined to comment.

Related Stories

• Elliptic Hires Former Revolut CFO as It Prepares for Asia Expansion
• Coinbase’s Existing $8B Valuation Means It Doesn’t Need an IPO, Lawyer Says
• Bison Trails Now Supports ‘Flow’ Blockchain From CryptoKitties Maker Dapper Labs
• MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’

MicroStrategy bets $250 million on bitcoin’s safe haven thesis. Indian crypto is booming. And David Marcus has a new role at Facebook.

Top shelf

Banks buying
“Major U.S. banks might be willing to support cryptocurrency services – with just a bit of additional guidance from the Office of the Comptroller of the Currency (OCC), their federal regulator,” says CoinDesk’s regulatory reporter Nik De. This follows the OCC issuing an open letter in July saying nationally chartered banks could custody crypto. In public responses, 12 banks, including U.S. Bank and PNC, have expressed interest in providing such services.

MicroStrategy goes macro
In what could be significant validation for bitcoin’s “safe haven” thesis, Nasdaq-listed MicroStrategy purchased 21,454 bitcoin on Tuesday, effectively shifting its inflation hedging strategy entirely into digital assets. The purchase was worth a cool $250 million. “This investment reflects our belief that bitcoin, as the world’s most widely adopted cryptocurrency, is a dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash,” said CEO Michael J. Saylor.

Related: Blockchain Bites: Inside Cosmos, Bitcoin at $200B, DeFi Surges

India rising
“India’s crypto trade volumes have soared since the Supreme Court of India lifted banking restrictions for exchanges in March,” report Leigh Cuen and Shuai Hao. According to Paxful, a leading peer-to-peer trading platform, India is now among the five fastest-growing bitcoin user groups in the world.

No good week
“Ethereum Classic developers were still licking fresh wounds late last week when yet another 51% attack was launched against their blockchain early Thursday morning,” reports Will Foxley. “As the bits settle, the proof-of-work blockchain’s future remains in question more than ever.”

BSN abroad
The Blockchain-Based Service Network (BSN), a Chinese state blockchain infrastructure project, has an English language website for dapp developers. “BSN touts that it is one of the few cross-chain infrastructure networks where developers can use the network’s internet services for different blockchains under a standardized development environment,” says CoinDesk’s David Pan.

Quick bites

The U.S. Department of Agriculture is bullish on blockchain-based supply chains. (CoinDesk)

Related: Crypto Long & Short: 51% Attacks and Open-Source Value

What is Ethereum’s total supply? Bitcoiners say Ethereans don’t know. (Decrypt)

Frank Chaparro unpacks why “fintechs are diving into the crypto market – but crypto firms aren’t diving into fintech.” (The Block)

Belarus lost internet access amid protests over its presidential election last weekend. (CoinDesk)

Facebook’s David Marcus has a new role besides co-founding Libra. (CoinDesk)

Markets

Omkar Godbole has the latest on bitcoin holding steady and gold falling back:

“Bitcoin’s recent price rally has shifted to a sideways meander, possibly taking cues from gold’s drop from record highs,” he writes. “The cryptocurrency is trading in the general range of $11,600-$11,900 for the fourth straight day. Meanwhile, the precious metal is trading near $1,988 at press time – down 4.2% from the record high of $2,075 reached on Friday. Both assets have recently developed a relatively strong positive correlation. As such, gold’s decline may have applied the brakes to bitcoin’s rally from lows near $9,000.”

Opinion

10 Reasons Quant Strategies for Crypto Fail
“Despite the attractive characteristics of crypto assets for quant strategies, crypto poses unique challenges for quant models and the reality is that most quant strategies in crypto fail,” says Jesus Rodriguez, CEO of IntoTheBlock, a market intelligence platform for crypto assets. Quant strategies may be perfect long term but for now, he says, most of those “proven effective in traditional capital markets are likely to not work as well when applied to crypto assets.”

The Fourth Era of Blockchain Governance
CoinDesk columnist Stephanie Hurder argues that blockchain projects need sophisticated, future-proofed governance regimes to attract corporate actors. “Enterprise use cases not only require cross-platform development but also frequently undergo rigorous, multi-year planning cycles. Enterprises considering deploying blockchain solutions want to know how various platforms and their governance designs function in sum, so they can minimize unnecessary uncertainty and deliver on their project goals.”

Podcast

“China and the U.S. trade high-profile sanctions, but the real impact is showing up in banks and on the Hong Kong stock market,” says Nathaniel Whittemore in the latest edition of The Breakdown.

Who won #CryptoTwitter?

Related Stories

• Money Reimagined: Warnings From an Argentine Tragedy
• Blockchain Bites: Goldman’s Hire, Ether’s Options, Bitcoin’s Patronage

Blockchain analysis firm Elliptic has hired former Revolut CFO David MacLean as its new finance chief.

• The London-based crypto tracer said in a Tuesday announcement that MacLean will lead Elliptic’s financial and personnel operations as it expands into Asian markets and scales globally.
• MacLean most recently was CFO for British fintech Revolut. He previously worked with the U.K.’s Metro Bank, insurance firms Sompo Canopius and Catlin, and Barclays Bank, according to his Linkedin profile.
• MacLean “will have an important role in shaping Elliptic’s future as it innovates in crypto blockchain analytics and establishes an Asia presence,” Elliptic CEO Simone Maini said in a press statement.
• MacLean was also named to Elliptic’s board.

Related Stories

• Coinbase’s Existing $8B Valuation Means It Doesn’t Need an IPO, Lawyer Says
• Bison Trails Now Supports ‘Flow’ Blockchain From CryptoKitties Maker Dapper Labs
• MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’
• Blockchain to Play ‘Essential Role’ in Farming Supply Chains, Says US Government

Binance said reports Liechtenstein authorities blocked a deal to put its CEO, Changpeng Zhao, on the board of a now-defunct bank are unfounded.

On Monday, Swiss newspaper Inside Paradeplatz reported Liechtenstein’s Financial Market Authority (FMA) had rejected an application in July by Union Bank to put Zhao on its board in a bid to rescue the company from imminent liquidation.

But speaking to CoinDesk, a Binance spokesperson denied a deal had been blocked by the FMA and that there was no application to bring the exchange on as a major shareholder of Union Bank. “Binance did not try to invest, and did not try to put CZ on the board,” they said in a Telegram message.

Related: Binance Says Licensed Entities Can Now Use Its Stablecoin After Watchdog Approval

In a statement, Binance’s CFO Wei Zhou said it had not tried to acquire Union Bank nor put anything in front of the FMA for approval.

Binance’s spokesperson, however, declined to comment on whether reports covering the deal were factually inaccurate.

See also: Binance Launching Crypto Exchange in the UK

Local media reported in 2019 that Union Bank laundered funds from a sophisticated scheme tied to Venezuela’s state oil company. As a result, its chief executive was forced to leave and the bank was left scrambling trying to find new backers.

Related: Travala.com Adds Agoda Hotels, Posts Record July Revenue as Crypto Payments Soar

According to Monday’s report, which has been picked up by other outlets, Binance planned to use some of its crypto reserves to invest through a local entity, funding the bank’s pivot to become a platform for cryptocurrency investors.

The FMA was reportedly concerned with the deal’s complexity as well as Binance’s apparently uncooperative attitude in providing necessary information. It also transpired that a local partner, who had guaranteed the funds in question were clean, had apparently been suspected of fraud.

Per Inside Paradeplatz, the deal was blocked by the FMA in mid-July. On Monday, Union Bank put a note on its website saying it had entered voluntary liquidation. Although it didn’t disclose specifics, the note says the board had, in vain, tried to put the bank’s activities under a new “anchor shareholder” who would provide funds necessary so the bank could meet the minimum capital threshold.

See also: DEX Aggregator 1inch Raises $2.8M From Binance Labs, Galaxy Digital and More

An FMA spokesperson told CoinDesk it assessed prospective shareholders on their reliability and financial soundness as well as whether approving the deal would likely increase the risk of money laundering and terrorist financing.

The FMA said it does not comment on individual cases.

Related Stories

• SEC Wants to Start Scrutinizing Binance Chain Transactions
• Binance Australia Is Actually Run by an Entity Linked to TravelbyBit

Blockchain infrastructure startup Alchemy, which helps decentralized finance (DeFi) projects run or access nodes, just launched its full suite of products to the public, after a two-year closed beta serving teams including MakerDAO and Kyber Network. 

DeFi projects like MakerDAO, 0x and others all use Alchemy’s solutions to access Ethereum blockchain data, rather than run their own nodes. Alchemy CEO Nikil Viswanathan said more than 70% of top Ethereum applications and more than $2.8 billion worth of assets locked in DeFi rely on Alchemy for access to blockchain data. 

“We’ve replaced all the infrastructure providers for most of them,” Viswanathan said, referring to “hundreds” of Ethereum startups that pay for Alchemy’s software services. One such user, Dapper Labs CEO Roham Gharegozlou, said in a press statement his startup relies on Alchemy for “managing infrastructure,” plus “enterprise-grade tools and support,” so the team can focus on shipping code. 

Related: DEX Aggregator 1inch Raises $2.8M From Binance Labs, Galaxy Digital and More

It appears as though most Ethereum startups use one of three infrastructure providers, if not all three of them. For example, Infura, the rival service provider partially owned by Ethereum co-founder Joe Lubin, offers a similar API service. Bison Trails is the other major player in the Ethereum infrastructure trifecta.

Developers pay startups like Infura and Alchemy for access to distant hardware (typically managed by Amazon or Google) and tools to easily use blockchain data. This isn’t a “don’t trust, verify” approach, but it does make it easier for startups to focus on serving retail users. 

Read more: Alchemy Notify Wants to Simplify Blockchain UX With a Single Push

“Right now, building with blockchain, it’s like trying to build a skyscraper with a hammer and a shovel. Alchemy is bringing the construction equipment so it’s easier to build things,” Viswanathan said. “We are a pipe to a decentralized network, there are other pipes and people can use whatever pipes that they want.”

Related: Chia Network Raises $5M to Rival New Crop of DeFi-Friendly Base Layers

From his perspective, having a remote-first company with deliberate redundancy offers a type of decentralization, albeit one divorced from bitcoin’s full stack of self-sovereign aspirations. 

Behind the scenes

Viswanathan said his startup facilitated roughly $7.5 billion worth of on-chain transactions over the last year, from exchanges to loan platforms.

That may, in part, be thanks to the fact the startup attracted well-connected investors like Coinbase Ventures, which also invested in Bison Trails. 

“As the de facto standard in blockchain, Alchemy already powers the most sophisticated teams,” investor Paul Veradittakit of Pantera Capital said in a press statement.

Read more: Alchemy Launches Product to Help Developers Monitor Blockchain Apps

Even after an explosive year of growth, it’s not hard to imagine all the teams responsible for the DeFi ecosystem fitting in a single university lecture hall. In fact, both Alchemy co-founders graduated from Stanford University and attracted investment from their alma mater as well.  

By making some of these services free to the public, Viswanathan said he aims to diversify the DeFi ecosystem. 

“Our mission is to make blockchain development accessible to every developer,” Viswanathan said, describing the newly public beta. “Now anyone can sign up and use the same tools powering the biggest companies in crypto.”  

Related Stories

• Market Wrap: Bitcoin Tests $12K; DeFi Debt Outstanding Hits Record
• ParaFi Invests and Begins Staking in Bitfinex Spin-Out Exchange

Launched by software engineers from Porsche and NEAR Protocol, 1inch has raised $2.8 million in a funding round led by Binance Labs.

The platform was launched at the ETHGlobal hackathon last year as a liquidity aggregator connecting multiple decentralized exchanges (DEXs). This summer, it reported passing $1 billion threshold in the total volume of tokens going through its smart contracts.

Investors in its funding round, announced Tuesday, also included Galaxy Digital, Greenfield One, Libertus Capital, Dragonfly Capital, FTX, IOSG, LAUNCHub Ventures and Divergence Ventures. Loi Luu, founder of Kyber Network, and Illia Polosukhin, co-founder of NEAR Protocol, also participated.

Related: Alchemy Goes Public With Developer Platform in Bid to Grow DeFi Ecosystem

The startup was founded by its CEO, Sergej Kuntz, a software engineer at German luxury car maker Porsche (and about to leave to go full time for his crypto projects), and CTO Anton Bukov, a former smart-contract developer at NEAR blockchain protocol.

1inch provides swaps between ERC-20 tokens (an Ethereum standard), pulling liquidity from exchanges including Uniswap, Kyber, Bancor, Mooniswap (also founded by Kuntz and Bukov) and others.

See also: DeFi-Focused Derivatives Platform Hedget Raises $500K in Seed Funding

“When we thought of making an aggregator, there were about five big DEXs on the market, with significant price differences,” Bukov told CoinDesk. “First, we created a website showing the best prices, but then figured out we need to split orders between different DEXs to get better prices than each one of those DEXs offered.”

Related: Chia Network Raises $5M to Rival New Crop of DeFi-Friendly Base Layers

According to market data provider CoinGecko, 1inch is currently facilitating over $20 million in trades daily. And the firm doesn’t plan to stop there. There are currently about 17,700 wallets registered on 1inch, according to the startup. The newly announced investment will fuel 1inch’s team expansion (it now counts 16 people), new products development and marketing.

See also: Bitcoin’s Stolen Revolution

The project aims to ride the wave of the decentralized finance (or DeFi) “gold rush” and perhaps even become the first DeFi unicorn out there, Kuntz said. In the coming months, 1inch is planning to release its own token and provide liquidity mining, or yield farming, on Mooniswap.

“DEX aggregation is a critical building block that co-enabled the most recent DeFi boom. It allows executing large order sizes at low slippage rates. 1inch has become the de facto interface for trade execution in DeFi, with aggregate volumes surpassing $1 billion,” Binance CEO Changpeng Zhao (CZ) said in a statement for 1inch press release.

Related Stories

• Market Wrap: Bitcoin Tests $12K; DeFi Debt Outstanding Hits Record
• ParaFi Invests and Begins Staking in Bitfinex Spin-Out Exchange

Coinbase’s multibillion-dollar valuation means a rumored plan for a direct listing makes a lot more sense than an initial public offering (IPO), argues the managing partner of a legal firm.

• In a piece for Bloomberg Law, Louis Lehot of L2 Counsel said Coinbase was “archetypal for the sort of company that might consider a direct listing.”
• Sources speaking to Reuters last month said Coinbase had begun the process of a direct listing – the exchange has so far declined to comment and a public valuation isn’t known.
• In an IPO, a company creates shares for underwriters – typically investment banks – to distribute to its institutional network that sells on the public market. In a direct listing, the company sells shares to the public, cutting out underwriters.
• Coinbase would likely gain little from an IPO, Lehot said. It already has an $8 billion valuation, a recognized brand and a strong following: A roadshow ahead of an IPO would likely do little to drum up further enthusiasm.
• In fact, the exchange has more downside risk with an IPO, Lehot said: Underwriters can mark down Coinbase’s valuation to sell more shares and maximize fees, a practice that has cost newly public companies tens, even hundreds of millions of dollars.
• L2Counsel’s website says it is a California legal firm that takes companies from the startup stage to the point of an IPO.
• Thomas Kuhn, a macro analyst at Quantitative Economics, agreed with Lehot’s sentiments, telling CoinDesk that Coinbase was rejecting a model that put companies at the underwriters’ mercy.
• Past enthusiasm for tech stocks and the lack of equity exposure digital asset industry means there is already “significant interest” for Coinbase to go public, he said.
• Furthermore, an exchange that has listed assets on its own platform would likely be “quite comfortable with the pricing and market mechanics” of a direct listing anyway, he added.

See also: A Crypto Derivatives Exchange Is Getting a Nasdaq Listing in Q3

Related Stories

• Bison Trails Now Supports ‘Flow’ Blockchain From CryptoKitties Maker Dapper Labs
• MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’
• Blockchain to Play ‘Essential Role’ in Farming Supply Chains, Says US Government
• Australian Woman Jailed for Theft of More Than 100,000 XRP

Chia Network, led by BitTorrent creator Bram Cohen with the aim of creating a programmable money platform, just raised another $5 million in an equity round led by Slow Ventures.

Despite the resurgence of token sales this summer, Cohen said the plan since 2018 has been to go the IPO route and rely on venture capital until the token launch. Meanwhile, the team is focused on gamifying early-stage contributions to attract a Chia-centric developer community. 

“We’ve now finished that format so if you generate plots today and put the resources into building those they will still work the day mainnet goes live,” Cohen said, describing how the Chia Network uses “plots” of empty computer space instead of proof-of-work mining like bitcoin.

Related: DEX Aggregator 1inch Raises $2.8M From Binance Labs, Galaxy Digital and More

This latest equity round included Collab Crypto, IDEO and returning investors like Naval Ravikant. The startup has now garnered roughly $16 million in total venture capital since it launched in 2017, according to Cohen, who added the startup will use the funds to grow the team. 

Layer 1

Gavin McDermott of IDEO said his firm has confidence in this yet-to-be launched blockchain because Chia creators are “early internet pioneers” who already “achieved significant milestones in terms of public node participation,” currently estimated at over 1,430. 

Jill Carlson of Slow Ventures said she is looking forward to the mainnet launch, scheduled for later this year, even though Layer 1 blockchain projects have “largely fallen out of favor within the venture capital community,” which are now generally focused on decentralized finance (DeFi) and decentralized applications (dapps). 

“There are a lot of exciting projects happening in those areas as well,” Carlson said of DeFi. “But we believe that much of the most exciting innovation is still occurring in new and soon-to-launch base protocols.”

Related: Market Wrap: Bitcoin Tests $12K; DeFi Debt Outstanding Hits Record

Read more: Bram Cohen: ‘Getting Rich Is a Terrible Metric of Success’

Like many crypto startups in 2020, the Chia team is focused on DeFi applications. Cohen said Chia is poised to capture Ethereum’s market share by offering comparable DeFi functionality in 2021, while Ethereum may still struggle to scale. Chia President Gene Hoffman added, “It’s as functional as Ethereum. It might force you to do a different way than Ethereum, but there are reasons why.”

The Chia team aims to make money using traditional business-to-business offerings, even though the technology is being built through a hybrid open source model. Hoffman said the goal is to get “vertical vendors” like Paxful or banks interested in these tools and services rather than making a mass market play directly through retail. 

See also: Coronavirus Second Order Effects and Improving on Bitcoin With BitTorrent Creator Bram Cohen

Hoffman also said he is already exploring opportunities with several prospective clients, including government agencies, for live pilots when the network launches in several months. 

“That market [government agencies] is feeling pressure from the China blockchain initiatives,” Hoffman said. “[Banks] are concerned about having to route all their transactions through Manhattan. … They too understand they want the positives of an open network that can still use types of decentralized identity.”

Related Stories

• ParaFi Invests and Begins Staking in Bitfinex Spin-Out Exchange
• Market Wrap: Bitcoin Trudges Past $11.7K as DeFi Lending Rates Gyrate

Blockchain infrastructure-as-a-service firm Bison Trails now allows users to build upon the Flow network from CryptoKitties creator Dapper Labs.

• Announced Tuesday, Bison clients will be able be able to tap into Flow’s “multi-role” blockchain architecture, which aims to offer a scalable platform as the foundation for future games, apps and digital assets.
• Unusually, Flow has five specialized node types that perform specific roles within the ecosystem across “collection,” “execution,” “consensus,” “verification” and “access.”
• The firm claims that using its system rather than sharding brings the network better speed and data throughput.
• Bison Trails users on Flow will be able to take part in the validation of block transactions associated with the network.
• Users delegating to Bison Trails’ enterprise validators on Flow can also divide their stake equally among four types of participation nodes.
• This will make it easier to earn staking rewards regardless of inflation rates on the different node types, Bison Trails said.
• Joe Lallouz, Bison Trails CEO, said Flow’s multi-role architecture and resource-oriented programming would “be an asset to the industry at large.”
• Dapper Labs is best known for developing the popular CryptoKitties, a crypto collectibles app in which users breed and trade digital pets, and more recently the basketball-themed NBA Top Shot.
• Top Shot, currently in private beta, recently raised $12 million in a funding round led by National Basketball Association stars Spencer Dinwiddie and Andre Iguodala, among others.
• NBA Top Shot runs on Flow. Dapper Labs previously used Ethereum but pivoted over scalability issues experienced as CryptoKitties’ popularity soared.

Read more: NBA’s Spencer Dinwiddie, Andre Iguodala and More Join Dapper Labs $12M Funding Round

Related Stories

• Coinbase’s Existing $8B Valuation Means It Doesn’t Need an IPO, Lawyer Says
• MicroStrategy Buys $250M in Bitcoin, Calling the Crypto ‘Superior to Cash’
• Blockchain to Play ‘Essential Role’ in Farming Supply Chains, Says US Government
• Australian Woman Jailed for Theft of More Than 100,000 XRP

Castle Rock, Colo.-based cryptocurrency miner Riot Blockchain reported earnings for the June quarter Monday, noting a decrease in mining revenue from a year ago.

• The company mined 227 bitcoins in the second quarter of 2020, down 28% from 2019 when Riot reported 316.19 mined bitcoins. In 2019, Riot switched to mining bitcoin exclusively, said Jeff McGonegal, CEO of Riot Blockchain. Previously, the company also mined litecoin and bitcoin cash.
• Quarterly mining revenue from mining was $1.9 million, down nearly 20% from a year ago when the company reported $2.4 million in quarterly mining revenue.
• “We’re strong believers in the macroeconomic fundamentals underlying bitcoin,” McGonegal said in email correspondence with CoinDesk.  
• Riot reported a current mining capacity of 357 petahash per second, up more than 250% from 101 petahash per second last year.
• Despite an increase in mined bitcoin and the cryptocurrency’s more-than-200% rally from March lows, Riot’s cash and cryptocurrency corporate liquidity dropped from $18 million last year to $16.4 during the June 2020 quarter.
• Riot shares were trading hands at $4.12 at Monday’s close, down 3% from the daily open. They’ve risen 40% since August 1.

Update (August 11, 19:56 UTC): This article has been updated to reflect 227 bitcoins mined in the Q2, not 508 as was previously reported. Current mining capacity was also updated to 357 petahash per second instead of 556.

Related Stories

• Mining Stocks Are Beating Bitcoin in a Bullish Cryptocurrency Market
• Riot Blockchain Ends Week Up 29%, Hits 2020 High Ahead of Q2 Earnings Report
• Bitmain Delays Bitcoin Miner Shipments by Three Months as Co-Founders Battle On
• The 2020 Rainy Season Is Tougher Than Ever for China’s Bitcoin Miners