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With the price of  bitcoin jumping to fresh 2020 highs last month, those running the digital currency’s underlying infrastructure are pondering the consequences. Namely, the routing node operators at the heart of Bitcoin’s Lightning Network are busily bracing for the curious new users that usually come with a bull run. 

Bitcoin’s Lightning Network promises faster and cheaper payments, without the occasionally crazy fees associated with the underlying Bitcoin network. 

Read more: What Is Bitcoin’s Lightning Network?

Related: Someone Just Paid a $9,000 Fee for a $120 DeFi Transaction

The platform is still new, in Bitcoin time, having launched for real payments in 2018. As such, it has its kinks. Developers still call using it “reckless,” because it’s new enough that it may be hiding bugs that could lead to loss of funds. Would the network be able to handle an influx of new users suddenly jumping to the Lightning Network?

Whether it can or not, those who run routing nodes are busily preparing for such a scenario. 

Bitcoin Lightning “routing” nodes are the ones tasked with passing on payments through the network, until they reach their destination. Many operators of Lightning routing nodes are beefing up their nodes to make sure they can help to support a sudden increase in users.

Why use the Lightning Network?

But first, why would Bitcoin users move to Lightning?

Related: Bitcoin’s Lightning Network Is Getting a Marketplace for Payment Channel Liquidity

One word: Fees. Bitcoin fees are now higher than they’ve been in more than two years, reaching an average of $13 per transaction. With Lightning, users can avoid these fees. 

“Higher bitcoin prices go hand in hand with higher transaction fees for on-chain payments,” Tudor Iova, Lightning routing node operator and founder of BTCfactura, told CoinDesk. He also noted he has seen more users tapping Lightning as fees have risen. 

Read more: Bitcoin Transaction Fees Rise to 28-Month High as Hashrate Drops Amid Price Rally

In contrast, Lightning payments usually cost less than a cent, making the payment method more and more attractive as fees rise. 

That said, setting up a Lightning channel – a means for sending Lightning payments – requires a Bitcoin transaction. It’s kind of like a one-time setup fee for creating a Lightning account. 

Say Alice puts $50 into a Lightning account and pays a $3 fee. Once that’s done, she can make as many transactions as she needs with that $50 – like 16 transactions for 16 cups of coffee. 

With the Lightning Network, fees for each transaction will be negligible, averaging roughly a satoshi, worth a fraction of a cent. 

Dodging bitcoin fees

Channels are the lifeblood of the Lightning Network. They’re also the means by which Lightning routing nodes pass along payments to others. 

But, again, creating such channels requires on-chain transactions, which can be expensive when the network is congested. More transactions in the Bitcoin “mempool” – a waiting area for transactions – means higher fees.

Lightning routers are actively scouting out the best times to open channels. “We’re all watching the mempool very closely to find opportunities to open Lightning channels inexpensively as the extra space in blocks dries up completely,” said pseudonymous Lightning routing node operator Jestopher. 

Jestopher expects the block space to become more scarce when (and if) a bull run commences. This happened last week, for instance, after the price shot up.

Another point routers are keeping in mind is that fees are usually lower on the weekends, when users are sending fewer transactions.

Lightning routers are busy learning and researching the best ways to tackle these issues, so that if a bunch of new users flock to the network, payments will remain smooth. 

“What we are doing, and suggesting our users do, too, is to opening channels on weekends, when the fees peak off. Later, during the week, you can use Lightning payments and avoid horrendous [fees]. Else you can end up paying a fee that is higher than the price of the goods purchased,” Iova said. 

Building liquidity and connections

Routing nodes are also open channels with a variety of peers designed to reduce failed transactions and to make the overall network more robust so payments don’t fail for users. 

“We are preparing ourselves for a bull run by opening new channels and improving our Lightning node connectivity to other nodes, in order to make it possible for users to use our node Transylvania for payments and routing, when necessary,” Iova said. 

The other trick is that once a Lightning channel is open, that’s not necessarily the end of the struggle. “Lightning requires lots of liquidity management, which is unfamiliar to most folks outside of Wall Street,” Jestopher said.

In short, it’s not enough to just put money into the Lightning Network; the money needs to be moved to the right spots in order for a routing node to build a path that can be used to send payments for users. Not to mention, every time a payment is made by a routing node, this liquidity is moved around. So, routing nodes need to constantly be managing where the coins are.

In fact, there’s an entire Telegram channel “LN mutual balanced channels” devoted to helping fellow Lightning users find peers and liquidity for their channels. Jestopher recently created a poll there asking fellow routing-node operators what they’re doing to prepare for a bull run. The most votes went to “consolidating liquidity into fewer, larger channels” and “opening channels to routing peers” to build more connections with the network.

Read more: Bitcoin’s Lightning Network Is Getting a Marketplace for Payment Channel Liquidity

“I think the shared goal is to find out how to operate routing nodes in a sustainable way where we don’t have to clog up the mempool when it gets expensive,” Jestopher said, pointing to Lightning Loop and ThunderHub as helpful tools for boosting liquidity where needed. 

Startup Lightning Labs also released a new marketplace Monday for buying and selling liquidity, an innovative way of addressing this issue. 

Thousands of new users?

Even if many Lightning routers are preparing, some think the network is already equipped for more action.

“I think the Lightning Network is already capable enough to support thousands of new users,” Bitfinex CTO Paolo Ardoino told CoinDesk. The cryptocurrency exchange runs both the second and third largest Lightning routing nodes on the network and was one of the first exchanges to support Lightning payments. 

“Spinning up new nodes and interconnecting them with others is not a very complex job, so I believe that with the growth of the user base we’ll definitely see a strengthening of the Lightning global network. I think our Lightning Network node and in general, the Lightning Network global network of routing nodes will be able to cope with an increased demand,” Ardoino added.

Iova had a similar view. 

“I think the Lightning infrastructure is a bit underestimated, and many people think it can’t cope with the traffic, [it’s] not reliable enough or it can handle only micropayments. Well, things are changing in this part of the network,” he said, pointing to public Lightning network data showing that 2020 brought in a 50% increase in the number of nodes.

Related Stories

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• Bitcoin Transaction Fees Rise to 28-Month High as Hashrate Drops Amid Price Rally

A “permanent Dropbox” launches in beta on Arweave today. 

“Arweave is the only crypto that’s claiming to be permanent data storage so there’s no other place that I could have built this,” ArDrive founder Phil Mataras said in an interview. 

The new file sync app lets users pay a fee once, depending on the price of Arweave tokens, and have their data (documents, photos, videos) live forever on the web, without a data cap or fear of censorship.

Related: New York Lawyers Propose Toolkit for Keeping ‘Decentralized’ Blockchains Honest

“We have a good use case because everyone understands it,” Mataras said. “When you look at a lot of these blockchain apps, especially the new DeFi applications out there, it’s hard for people to understand let alone use.”

Arweave operates on the same idea as the recently launched decentralized file storage and content distribution network Filecoin, but with further ambitions toward a permanent and “virtually unlimited” digital Library of Alexandria. 

Read more: Arweave 2.0 Gets File Storage Project One Step Closer to Its ‘Library of Alexandria’ Dreams

Arweave founder and CEO Sam Williams added that a permanent Dropbox is an obvious use case of the network. The difference is when you upload a piece of information on Dropbox today, its business model may change in a decade or two, so what happens to that stored data from 2020? 

Related: Filecoin Launch Finally Brings $200M ICO to Fruition

“With ArDrive, the system never changes,” said Williams. “It’s kind of like Ethereum’s ‘code is law’ philosophy, except for web services.” 

At this stage, ArDrive is only for users who already hold Arweave tokens to upload their data. Mataras said in the next six months, the team is building fiat on-ramps as a way to expand ArDrive’s user base. 

“We want to make it really easy for anyone to swipe a credit card, buy a block and start uploading their files,” he said. 

Mataras added that a desktop application of ArDrive for Mac, Windows and Linux will be released in December and a mobile app will follow in the first quarter of 2021.

Read more: Filecoin, But Forever: Arweave Raises $5 Million to Build Out ‘Permaweb’

Arweave, which launched in June 2018, currently has 350 apps running on the network. The protocol announced Profit Sharing Tokens this summer that allows companies on Arweave to mint their own assets. Since then, 26 projects on the network now have their own tokens.

Related Stories

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Bitcoin has now doubled its price in 2020, after surging early Thursday to above $14,900 for the first time since 2018. 

The cryptocurrency appeared to get a lift from the likeliest outcome of this week’s U.S. elections, where a Democratic president is blocked from passing major initiatives (like tax cuts) by a Republican-controlled U.S. Senate. That could imply more monetary stimulus from the Federal Reserve, where Chair Jerome Powell is expected to announce no new actions Thursday after a two-day meeting this week but could signal a willingness to do whatever’s needed to keep the economy and markets on track. 

Investors are “favoring bitcoin as a hedge against political risks,” Lennard Neo, head of research for the cryptocurrency-focused firm Stack Funds, told clients in a weekly newsletter. 

Related: Bitcoin Breaks $15K as Investor Numbers Peak

In traditional markets, stocks rallied globally, Treasury yields dropped, the dollar declined and gold strengthened as investors reacted to the growing likelihood that a U.S. government led by former Vice President Joe Biden might struggle to enact tax cuts, pushing more of the onus of financing new Treasury debt onto the Federal Reserve.

Market moves

Pundits on Wednesday picked apart this week’s U.S. election results as previously too-close-to-call states got called. President Donald Trump, suddenly eyeing the all-too-real prospect of being labeled a loser, started mounting legal challenges wherever possible.

And bitcoin? It took a victory lap. 

Worries that election uncertainty might lead to a sell-off in the largest cryptocurrency were quickly replaced by bullish enthusiasm that some form of stimulus, whether fiscal or monetary, would ultimately push up prices for bitcoin, seen by many investors as a hedge against inflation.

Related: Election Bets Drive Fee Spike at Predictions Platform Polymarket

The cryptocurrency has doubled this year as the Federal Reserve pumped more than $3 trillion of freshly printed money into global markets. The Standard & Poor’s 500 Index of U.S. stocks, by contrast, is up just 6.6%.  

The return dynamic could come into sharper focus Thursday as Fed officials release a statement on this week’s two-day, closed-door monetary-policy meeting. No major actions are anticipated, but Jerome Powell is expected to reiterate a pledge that the U.S. central bank stands ready to support markets if needed to kindle an economic recovery from the devastating toll of the coronavirus. 

“The policy announcement tomorrow will likely affirm their accommodative stance going forward, focusing on the status quo, and avoid creating policy uncertainty in the immediate wake of the election,” Denis Vinokourov, head of research for the cryptocurrency prime broker Bequant, told First Mover in an email.

On Wall Street, traditional markets staged a relief rally Wednesday as Trump’s Democratic challenger, Joe Biden, widened his lead in the race, with apparent victories called in Michigan and Wisconsin.

Bitcoin also appeared to benefit, which makes sense given that Biden has pledged to push for at least $5 trillion of new government spending on initiatives related to education, housing, health care, paid leave and infrastructure. Ostensibly the Treasury Department would have to borrow money to pay for the agenda, and the Fed would likely have to print money to finance the extra debt. 

Gridlock, with a split Congress that stonewalls major legislative initiatives, is viewed by many investors as the most halcyon environment for business continuity, and perhaps a bulwark against Biden’s proposed tax increases. 

“Since members of Congress are the ones in charge of government spending, the puppet that sits as figurehead of the nation tends to play a side role in both fiscal and monetary policy,” Mati Greenspan, founder of the foreign-exchange and cryptocurrency analysis firm Quantum Economics, told clients Wednesday in a note.

What’s less clear is whether a spending bill, which the Fed says is needed to promote a speedy economic recovery, could get passed during the next couple months if Trump loses. The Republican-controlled U.S. Senate proved unwilling to pass a big economic stimulus package over the past month even with Trump agitating for a deal. 

“If Biden ekes out a win, Trump will have little incentive to push through a deal for another round of stimulus, which could cause markets to sell off in the short term,” the digital-asset analysis firm Messari wrote Wednesday in a note. “This sell-off could bleed into bitcoin.”

That’s if Trump agrees to go quietly – hard to imagine given his track record of combativeness.

“Trump is now tweeting about how his lead ‘magically’ disappeared, setting the stage for a contested election which would likely spell further volatility ahead,” according to Messari.

The American electorate might be ready for respite from the drama. Bitcoin appears to have plenty of energy.  

Bitcoin watch

Bitcoin has surged to around $14,720, the highest since January 2018, representing over 100% gains on year-to-date basis.

While Joe Biden was in the lead in the U.S. presidential race, Congress is heading toward a split, meaning the much anticipated fiscal stimulus could be smaller than previously expected.

“We may not know what a post-election stimulus may look like, but investors continue to believe that the Fed will keep printing money at a pace that favors bitcoin’s finite supply,” John Kramer, a trader at crypto liquidity provider GSR, told CoinDesk.

The cryptocurrency’s convincing break above the June 2019 high of $13,880 has shifted the focus to the record high of $20,000 reached in December 2017. That’s because there is very little resistance between $13,880 and $20,000.

That said, the rally is looking overstretched as per technical indicators such as the 14-day relative strength index. While an overbought reading does not imply a bearish reversal, it often yields a pause or a temporary pullback. The rising 10-day simple moving average (SMA) is the support to watch out for in the short-term.

– Omkar Godbole

Read More: Bitcoin Jumps Above $14.5K, Taking 2020 Gains to Over 100%

What’s Hot

Ethereum 2.0 deposit contract goes live, in key milestone for blockchain network’s “proof-of-stake” upgrade (CoinDesk)  

Coinbase crypto exchange goes on hiring spree in Japan (CoinDesk) 

Unit of crypto exchange ErisX gets OK from U.S. commodity regulators to clear fully collateralized swaps (CoinDesk) 

“Over the next five years, most crypto firms will become banks and bank will become crypto firms” (CoinDesk) 

Sam Bankman-Fried, CEO of FTX exchange where TRUMP and BIDEN futures trade, gave $5.2M to Biden’s presidential campaign, WSJ Says (CoinDesk) 

Russian hydropower giant and aluminum producer En+ opens bitcoin mining farm in Siberia (CoinDesk) 

Someone just paid a $9K fee for a $120 DeFi transaction (CoinDesk)

Analogs The latest on the economy and traditional finance

Bank of England boosts bond-buying program by bigger-than-expected £150B ($195B) as U.K. central bank floods economy with cash (Bloomberg)  

China could impose 200% duty on Australian wines as punishment for alleged dumping (South China Morning Post) 

Tweet of the Day Related Stories

• Someone Just Paid a $9,000 Fee for a $120 DeFi Transaction
• Cryptocurrency CEO Donated Second-Largest Amount to Joe Biden’s Campaign

Decentralized predictions platform Polymarket has passed DeFi protocol SushiSwap to become the fourth-highest blockchain project in terms of fees generated.

According to Cryptofees, the platform is averaging over $100,000 in daily takings and currently trails behind first-place Bitcoin, Ethereum (second) and DeFi protocol Uniswap (third).

The rise is partly due to excitement around the U.S. election, which has seen Polymarket users taking punts on bets ranging from “Will Trump win the 2020 U.S. presidential election” through to “Which party will win the state of Georgia.”

Related: First Mover: Bitcoin Likes Biden (and Fed’s Powell) as Price Approaches $15K

“I think us being top 4 of fee-generating blockchain apps, literally anything blockchain-related, is insanity,” said Shayne Coplan, Polymarket founder and CEO. “Just in this election cycle alone we have seen our volume surpass $10 million, which is a lot higher than we expected in such a short time frame.”

Since going live on Ethereum’s Layer 2 transaction scaling sidechain Matic and a product launch 4.5 months ago, Polymarket’s liquidity providers have done “extremely well” in terms of fees generated, according to Coplan.

While competitors such as PredictIt and Electionbettingodds went offline during the vote count on Wednesday Polymarket remained live throughout the entire election process.

“There’s a lot of services out there, there’s a lot of volume but what are people really paying for?” he said. “What are people really getting the most value out of where they are willing to pay fees to some market operator?”

Related: Cryptocurrency CEO Donated Second-Largest Amount to Joe Biden’s Campaign

See also: Predictions Platform Polymarket Raises $4M From Polychain, Naval Ravikant and More

“Polymarket had live markets for a handful of swing states and had accurately forecasted and priced the outcome of a lot of these,” Coplan noted. “It stands to show the significance in the social news cycle in market-based data and market-based journalism.”

Related Stories

• Bitcoin Jumps Above $14.5K, Taking 2020 Gains to Over 100%
• $14.1K: Bitcoin Breaks New 2020 High With US Election Still Undecided

A crypto market participant has accidentally paid a fee 80 times the transaction value while executing a swap on the DeFi liquidity protocol Uniswap.

• About 14 hours ago, the address “0xe6e2e0cf5d2686d73abd7d3ba24f46ad5eb31819” – claimed by Reddit user “ProudBitcoiner” – swapped 0.2955 wrapped ether (WETH) for 531 chi gastoken (CHI) (worth $120) on Uniswap and paid 23.5172 ETH ($9,430 at time of writing) in transaction fees.
• Mining pool Ethermine processed the transaction and collected the windfall fee, which was way higher than the current average of 0.0022 ETH ($1.07).
• Often users manually offer a higher-than-average fee in a bid to get their transactions processed quickly. As such, the system is prone to human errors such as typing mistakes.
• In this instance, ProudBitcoiner said in a Reddit post that they had mistakenly quoted 200,000 in the “Gas Price” input field, instead of the “Gas Limit” field, and ended up paying far above the current 31 Gwei gas price.

• Gas refers to the internal pricing unit for running transactions on Ethereum and is denoted in Gwei. One Gwei is equal to a billionth of an ether.
• The gas limit is the maximum amount of gas provided for a transaction.
• According to the Reddit post, the user has contacted Ethermine for help over the error.
• Further highlighting the care needed when manually setting fee rates, in June, an unknown wallet holder paid around $5.2 million in fees for two ether transactions.

Aalso read: Ethereum 2.0 Countdown Begins With Release of Deposit Contract

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• Crypto Exchange Coinbase Is on a Hiring Spree in Japan
• Cryptocurrency CEO Donated Second-Largest Amount to Joe Biden’s Campaign
• FTX Looking to List ‘Beacon Chain’ Ether as Deposit Contract Goes Live
• Market Wrap: Bitcoin Jumps to $14.2K; Ethereum Gas Usage Grows 113% YTD

Cryptocurrency exchange Coinbase is hiring in Japan, years after first saying it planned to launch services in the country.

• According to a tweet by the exchange’s CEO, Brian Armstrong, Coinbase has “a number of open roles in Japan,” and is asking others to put forward candidates.
• Per the company’s website, various roles are up for grabs in the capital Tokyo across IT, data, finance and accounting, legal, marketing and communications, customer experience, and international expansion.
• In March 2020, Coinbase became a second-class member of the Japan Virtual Currency Exchange Association, a self-regulatory organization approved by Japanese regulator, the Financial Services Agency (FSA).
• U.S.-based Coinbase has been eyeing a Japanese arm of its platform from as early as 2016 and has an entity in the country.
• The company previously said it was confident it would receive the country’s mandatory operating license from the FSA in 2019, though that has not yet happened, according to the watchdog’s website.
• CoinDesk reached out to Coinbase to ask if the flurry of new job positions heralds the launch of trading services in Japan sometime soon, but did not receive a reply by press time.

See also: Coinbase to Launch Crypto Debit Card in US for Retail Spending

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• Binance Recovers $344K From Scam DeFi Project Launched on Its Platform
• Bitcoin Dips as Trump Threatens to Stop Vote Counting

Sam Bankman-Fried, the CEO of cryptocurrency derivatives platform FTX, made the second-largest donation to Joe Biden’s presidential campaign, according to details revealed in The Wall Street Journal on Oct. 28.

• The Hong Kong-based CEO gifted Biden’s campaign a total of $5.2 million, behind only former New York Mayor Michael Bloomberg’s $56 million donation.
• Biden received $79.5 million from his top 100 donors, compared to Trump’s $75 million.
• While vote counting is still underway, the edge in donations may have proven effective in pushing Biden first over the finish line, although at press time it’s still too early to say who’s won for sure.
• Bankman-Fried is a member of the wealthiest Democratic super PAC, Future Forward, which includes Facebook co-founder Dustin Moskovitz and former Google CEO Eric Schmidt.
• The fund also includes Kathryn Murdoch, daughter-in-law of media mogul Rupert Murdoch, and Patty Quillin, wife of Netflix co-founder Reed Hasting, according to a report by the New York Times.
• Future Forward was on pace to spend more than $108 million on television ads in support of Joe Biden in October, hoping to turn the tide among last-minute swing voters.
• Other CEOs who donated larger amounts to Biden’s campaign include Seth Klarman ($3 million) and Michael Sacks (around $1.7 million). Both are hedge-fund managers.
• CoinDesk reached out to Sam Bankman-Fried who declined to be interviewed for this article.

See also: FTX Raises ‘TRUMP’ Futures Margins as Price Suggests Lower Expectations of Election Win

Related Stories

• Crypto Exchange Coinbase Is on a Hiring Spree in Japan
• Bitcoin Jumps Above $14.5K, Taking 2020 Gains to Over 100%
• $14.1K: Bitcoin Breaks New 2020 High With US Election Still Undecided
• First Mover: Just Another Day for Bitcoin as US Election Slides Into Discord, Division

Bitcoin’s price rally is powering on despite the U.S. elections being as yet undecided.

• The top cryptocurrency by market value jumped to a 33-month high of $14,558 soon before press time, taking the year-to-date gains to 101%, according to CoinDesk’s Bitcoin Price Index.
• The cryptocurrency has notched up a 38% rally in the last four weeks alone.
• Prices did suffer a minor pullback from $14,000 to $13,520 during Wednesday’s Asian trading hours after President Trump’s victory in Florida and other key states appeared to reduce the odds of a bigger fiscal spending package under Democrat Joe Biden’s leadership.
• The decline, however, was quickly reversed and the cryptocurrency resumed its uptrend from October lows near $10,400, possibly on expectations for continued Fed stimulus.
• “We may not know what a post-election [fiscal] stimulus may look like, but investors continue to believe that the Fed will keep printing money at a pace that favors bitcoins finite supply,” John Kramer, a trader at crypto liquidity provider GSR, told CoinDesk.
• The central bank is unlikely to cut down or halt the liquidity-boosting bond purchases intended to lift inflation and has pledged to keep interest rates low for sometime after inflation rises above the 2% target.
• The central bank is expected to reiterate the dovish bias later today and may express a willingness to do more if the election results in a prolonged period of uncertainty for the economy and markets.
• ” If there is social disorder because of a Trump win, the Fed prints. If the election result is a blue wave and taxes rise, the dollar falls because the Fed prints more, and more, and more,” Bill Noble, chief technical analyst at Token Metrics, a cryptocurrency research company, said.
• According to reports, Democrat Joe Biden has inched closer to the White House, however, the jury is still out on elections with President Trump filing lawsuits in key states seeking to pause postal vote counts.
• Disclosure: The author holds small positions in bitcoin and litecoin.

Also read: Bitcoin Is Good for PayPal, but Is PayPal Good for Bitcoin?

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• Market Wrap: Bitcoin Jumps to $14.2K; Ethereum Gas Usage Grows 113% YTD
• $14.1K: Bitcoin Breaks New 2020 High With US Election Still Undecided

En+, one of the largest aluminium and power producers in the world, is venturing into crypto mining.  

En+ decided to enter the crypto space after some experimentation in the field, the firm’s chief financial officer, Mikhail Khardikov, told CoinDesk via a spokesperson. Three years ago the company got mining firm BitRiver as a client, selling power to its farm in Bratsk. 

BitRiver owns the largest mining venue in Russia, hosting about 100 megawatt worth of clients’ ASICs on a farm near the Bratsk hydropower plant in Siberia. The firm is also looking to expand to neighboring regions with the blessing of the local authorities. The partnership with En+ will add to the future growth.

Related: Ethereum Fees Plummeted 65% in October Following DeFi Volumes Back to Earth

The public company is a rare example of a large, mainstream industrial firm entering the crypto world. In this case, it seems like a natural fit: En+, owning four major hydropower plants in Russia’s Siberia, is producing about 7% of the country’s electricity and has resources to become one of the leading players in the market. 

Read more: A New Company Claims It’s Opening the Biggest Mining Farm in Russia

Industrial powerhouses like En+ entering the space might change the current power balance in the global crypto mining industry, where China’s domination is reportedly diminishing and countries like the U.S., Russia, Kazakhstan and Canada are trying to win larger shares of the market.

Ambitious alliance

Now, En+ and BitRiver have partnered to run a new farm, with En+ holding a 80% stake and BitRiver 20% in the joint venture, they said. The venue, located not far from BitRiver’s existing site, will initially offer 10 megawatts of power for miners who would choose to keep their ASICs there, with the potential to expand to 40 megawatts.

Related: Technician Used Airport’s Computers to Mine Ethereum in Italy: Report

“Our main business is combining the production of electricity and aluminium, which allows for turning electricity right into aluminium production, instead of selling it via the power grid [to consumers]. Data centers, especially for the mining farms, are an even more attractive way of turning electricity into a product,” Khardikov said.

He added that En+ is happy to see more miners as its clients, and is offering to locate their farms in the direct vicinity of the firm’s power plants. “We have venues with electricity infrastructure readily available, from smaller ones for 10-30 megawatts, to larger ones for 100-120 megawatts,” Khardikov said. 

Read more: A Russian Company Is Opening a Mining Farm in the Arctic

According to him, En+ is actively lobbying the interests of the crypto industry in Russia and is talking to both the government and market participants, in hopes of better crypto regulation in the country. 

“A reasonable regulation of the [crypto] space will help develop other sectors of the economy as well, such as energy generation and other industries,” Khardikov said.

As for BitRiver, the partnership will help it grab an even bigger share of the market, BitRiver CEO Igor Runets told CoinDesk. 

“We’re planning to grow the capacity of our data centers significantly in 2021, and partnering with the largest private hydropower company in the world is important to achieve this goal,” he said. The new status of being a partner, rather than a client, of En+, will help reduce costs and build a better relationship with the electricity provider, Runets added.

Political entourage

Apart from the potential scale of the new mining enterprise, En+ getting into crypto is interesting for another reason: The company’s largest shareholder, Oleg Deripaska, is the second Russian billionaire to publicly dip his toes into crypto and blockchain. Last year, Vladimir Potanin announced a project to tokenize the metals his company, Nornickel, is producing in Russia.  

Deripaska was sanctioned by the U.S. in 2018 for being one of the Russian oligarchs who are close to the country’s authorities and “profit from this corrupt system,” U.S. Treasury Steven Mnuchin said at the time. 

Read more: Digital Ruble ‘Promising,’ Pilot Likely in 2021, Says Bank of Russia Chief 

Deripaska’s companies, including En+, were sanctioned as well. The sanctions on En+ were lifted in 2019, when Deripaska’s stake in the company was reduced – he now owns 44.95% of the company. 

In the meantime, the current regulatory trends in Russia are far from optimistic: After President Vladimir Putin signed into law a measure defining crypto as taxable property, the country’s Ministry of Finance suggested amendments that might prohibit crypto mining in Russia altogether.

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Wasabi Wallet, the privacy-focused bitcoin software wallet, has set a broad timeframe for the release of Wasabi Wallet 2.0. The goal is not only to make the wallet easier to use as more people start adopting bitcoin, but also to implement the privacy improvements of the WabiSabi protocol, including making CoinJoins automatic by default. 

In a blog post laying out the launch timeline of the wallet, Wasabi announced the updated version would get a full UI (user interface) rewrite and user experience improvements, as well as make a CoinJoin easier for your average user. At the moment the team is in the midst of first steps for all three of these developments. While the most likely timeline for release is nine months, it could take as few as three or as many as 14. 

The post also said manual coinjoining will be a thing for “power-users only.” 

Related: Blockstream Is Working on Simpler, More Private Multi-Sig Bitcoin Transactions

Read more: Wasabi Wallet Is Revamping Its CoinJoin Design to Allow Bitcoin Mixing With Differing Values

“Wasabi adds complications to traditional Bitcoin wallet workflows with its manual coinjoining process and its mandatory coin control features,” said Adam Ficsor, Wasabi co-founder and lead researcher, in an email to CoinDesk.

“To improve upon these we’re planning to make coinjoining automatic by default and build upon the realization that coin control is mostly friction when the user would like to spend conjoined coins, so we should be able to introduce a simple send for that.”

Automatic CoinJoins

A CoinJoin is a method for bitcoin (BTC) users to make their payments harder to track by combining multiple payments from multiple senders into a transaction, muddying the ability of third parties to see who paid whom.

Related: Market Wrap: Bitcoin Jumps to $14.2K; Ethereum Gas Usage Grows 113% YTD

Ficsor said his plan currently is that at wallet creation, users would be asked if they want the wallet to take care of CoinJoins or whether they’d prefer to do it manually, as is the case now. Users would also set a privacy target (Ficsor tossed out levels such as none, some, high and Snowden) and then everything would happen automatically from there. 

“CoinJoins would be done while the wallet is open (and even when it isn’t) so all the user would have to do is use its wallet like a normal bitcoin wallet,” said Ficsor. 

He did say that while this is his plan, the final product could turn out differently based on what the team learns along the way. 

How WabiSabi improves on CoinJoins

In the original Wasabi Wallet, there were limits to the functionality of CoinJoins. 

My colleague Colin Harper wrote about some of these earlier this year:

“For this to work effectively, each user in a CoinJoin transaction must send a minimum amount of bitcoin to the mixing pool (e.g., 0.1, 0.01, etc) so as to ensure that they receive the same output as other users when the CoinJoin is complete,” Harper wrote. “If recipients don’t receive the same amount of bitcoin at the end of a join as other users in the mix, the transactions could be easily de-anonymized by blockchain surveillance.”

Read more: Europol Names Privacy Wallets, Coins, Open Marketplaces as ‘Top Threats’ in Internet Crime Report

Typically, the coordinator of a CoinJoin also has insight into a user’s information, that could allow them to link inputs to a user. 

WabiSabi, which will launch with the Wasabi Wallet 2.0, works to address some of these limitations by allowing users to input different amounts of BTC, independent of what other participants put in – which, let’s be honest, is how most people spend money. The coordinator role will still exist. 

How this helps the average user

Ficsor said for average users the only uncomfortable thing they might experience with Wasabi Wallet 2.0 is that it may take a while until CoinJoins happen. This means if the users receive coins to their wallets, then it’d be automatically coinjoined in the background, and that may take a while. If users are in a hurry and want to spend their money before it’s coinjoined, they would have to utilize the manual coin control tab and figure it out, given spending non-coinjoined coins without coin control is “privacy suicide,” according to Ficsor. 

“That being said, I think in 99% of the cases there will always be coinjoined coins to spend from, so this wouldn’t really occur that often.”

Related Stories

• Crypto.com: We Got the Highest Ratings on Privacy, Security Based on US Standards
• $14.1K: Bitcoin Breaks New 2020 High With US Election Still Undecided

With Bitcoin’s long-awaited Taproot upgrade on the horizon, the engineers at Blockstream are working on a new scheme to improve multi-signature transactions. 

These transactions, which require signatures from more than one private key to authorize spends, will stand to benefit from Taproot. This upgrade implements Schnorr signatures into Bitcoin’s codebase, a cryptographic signature scheme that will make creating and executing smart contracts easier on the network. 

In a post-election day blog post, Blockstream engineers Jonas Nick and Tim Ruffing lay out a new multi-signature design that would reduce the technical complexity of multi-signature transactions in a way that still preserves privacy. 

Related: Market Wrap: Bitcoin Jumps to $14.2K; Ethereum Gas Usage Grows 113% YTD

Nick and Ruffing, alongside French National Security Agency member Yannick Seurin, published a cryptographic e-journal on this MuSig2 design that is currently undergoing peer review.

Read more: Bitcoin’s Future: Exactly How a Coming Upgrade Could Improve Privacy and Scaling

‘Non-interactive signing’

MuSig2 combines the strengths of the two leading multi-signature designs without sacrificing trade-offs.

Bitcoin’s oldest multi-sig trick, the ‘CHECKMULTISIG’ OP-code, for instance, requires less communication from the signers of a multi-sig transaction but is less private than the MuSig1 multi-signature scheme, which improves user privacy at the expense of adding extra steps to the signing process.

Related: Crypto.com: We Got the Highest Ratings on Privacy, Security Based on US Standards

Specifically, MuSig1 requires the parties in a multi-signature transaction to communicate in multiple rounds to approve a transaction.

MuSig2 would retain all the privacy guarantees of MuSig1 while only requiring two rounds of communication between signers to approve a transaction (e.g., Alice generates a 2-of-3 multi-signature transaction she sends to Bob for approval; Bob signs the transaction, sends it back to Alice and the transaction is approved).

Read more: Bitcoin Developers Still Divided on Specifics of Taproot Activation

“It offers the same functionality and security as MuSig1 but makes it possible to eliminate almost all interaction between signers. With MuSig2, signers need only two rounds of communication to create a signature, and crucially, one of these rounds can be preprocessed before signers know the message that they want to be signed,” the blog post explains.

Besides improving general multi-signature wallets, MuSig2 could stand to benefit Lightning Network privacy and improve so-called threshold signatures that are often used by exchanges and custodians for fund storage.

If Taproot is adopted in the coming months, then Blockstream will replace the MuSig1 standard with MuSig2 in a code library for Schnorr signature schemes. The post also hints that Blockstream’s Liquid sidechain may run the Taproot code early to test the multi-signature scheme before it is ready for deployment on Bitcoin’s mainnet. 

Related Stories

• $14.1K: Bitcoin Breaks New 2020 High With US Election Still Undecided
• First Mover: Just Another Day for Bitcoin as US Election Slides Into Discord, Division

The U.S. Department of Justice (DOJ) announced Wednesday it had seized some $24 million in cryptocurrencies from a scheme that defrauded “tens of thousands of Brazilians” of over $200 million.

• According to the DOJ announcement, the seizure was made after a request from Brazil for help with a large cryptocurrency fraud case that Brazilian federal police had dubbed “Operation Egypto.”  
• Several individuals, including local Marcos Antonios Fagundes, were charged as part of the scheme, which operated between August 2017 and May 2019.
• Fagundes allegedly operated an unregistered financial institution to hold the cryptocurrencies he and his compatriots took from victims, and is charged with violating money laundering and securities laws violations.
• The cryptocurrencies appear to have been held in the U.S., the DOJ said.

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Will an active secondary market emerge for ether (ETH) locked into Ethereum 2.0’s deposit contract? 

That’s the question on the tip of most every trader’s tongue Wednesday after the release of the deposit contract by the Ethereum Foundation.  As of press time, that contract holds some 5,000 ETH worth $2 million.

Read more: Tokenized Staked ETH Will Replace ETH – And That’s a Good Thing

Related: Ethereum 2.0 Countdown Begins With Release of Deposit Contract

Launching a derivatives market for beacon chain ether would provide liquidity for investors who can’t move out of staked positions. That’s because the deposit contract is a one-way bridge until at least phase 1 of Eth 2.0, also known as Serenity.

Yet, some exchanges such as FTX are looking at launching markets for “Beacon chain ether” (BETH) or tokenized staked ether, or ether that has been staked in the Eth 2.0 deposit contract. In doing so, a second ether asset could appear.

Beacon chain ether

One-way traffic into Eth 2.0 was a design decision made to stop the formation of a second tradable ether asset, Ethereum Foundation researcher Justin Drake said in a tweet. Indeed, Ethereum co-founder Vitalik Buterin questioned who would provide liquidity for a token representing staked ether. “Just moving ETH over to the Eth2 chain has zero profit,” he said.

But that reasoning wouldn’t necessarily stop exchanges from, say, spinning up a token functioning as an IOU for staked funds, Coin Metrics co-founder Jacob Franek spelled out in another tweet thread. (The idea has even stronger legs when one considers the decentralized finance (DeFi) token boom this summer.)

Related: Ethereum Fees Plummeted 65% in October Following DeFi Volumes Back to Earth

He said a secondary market for staked ether tokens would only be as deep as the amount of ether locked in the deposit contract. Its trading quality would also be dependent on whether market makers began actively trading the theorized asset.

The value of the token itself would be tied not only to the underlying inflation rewards stakers receive – between 8% and 15% annually – for depositing ether in the Beacon chain, but also to the inherent risks from trading a product on top of the ever-under-construction Eth 2.0 blockchain.

For example, penalties for failing to validate the new chain affect ether deposits. Those penalties would, at some point, affect how the staked ether token would trade.

Read more: Ethereum 2.0 Countdown Begins With Release of Deposit Contract

“The security concern is the principal agent problem because the people taking the financial risk are no longer the ones making the blocks and the people validating the blocks have no direct financial risk, only indirect,” independent cryptocurrency researcher Hasu told CoinDesk in a Telegram message.

A staked ether secondary market would probably be tied to the amount of ether held at a centralized exchange for staking. That could open up some exchanges to security concerns, Hasu said, who characterized the asset as “staking derivatives or staking securities or securitized stake.”

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The U.S. District Court of Colorado entered a judgment on behalf of the Commodity Futures and Exchange Commission (CFTC) against a Ponzi scammer on claims he and his company raised half a million dollars for cryptocurrency investments, which instead went to personal uses, the CFTC announced Wednesday.

• Breonna Clark, otherwise known as Eliot Clark or Alexander Pak, and his firms, Venture Capital Investments Ltd. (VCI) and The Life Group, were charged with raising $534,829 from 72 victims, promising to invest funds in bitcoin, altcoins and foreign currency contracts.
• Instead, $450,302 in funds went to personal uses, including the purchase of a BMW.
• The order requires VCI and Clark to pay $450,302 in restitution, a monetary penalty of $450,302 and the CFTC’s costs. Additionally, the defendants are now banned from registering with the CFTC and trading in any CFTC-regulated markets.

Read more: CFTC Sues Alleged Crypto Ponzi Scammer for $500K Theft

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• Election 2020: What’s at Stake for the Crypto Industry

Bitcoin is making gains during the U.S. presidential election uncertainty while Ethereum’s gas data is highlighting a DeFi decline.

• Bitcoin (BTC) trading around $14,061 as of 21:00 UTC (4 p.m. ET). Gaining 2.2% over the previous 24 hours.
• Bitcoin’s 24-hour range: $13,545-$14,232
• BTC above its 10-day and 50-day moving averages, a bullish signal for market technicians.

Bitcoin’s price made gains Wednesday, hitting as high as $14,232 around 17:00 UTC (12 p.m. UTC), according to CoinDesk 20 data, after a brief dip in earlier trading. 

Read More: Bitcoin Dips as Trump Threatens to Stop Vote Counting

Related: $14.1K: Bitcoin Breaks New 2020 High With US Election Still Undecided

“Bitcoin has recovered from its post-election drop, crossing the $14,000 level once more,” said John Kramer, a trader at crypto market making firm GSR. “The asset has done a good job of going its own way all year, vastly outperforming stocks.” 

Bitcoin is up 90% versus the S&P 500’s comparatively paltry 4.5% performance in 2020.

Stocks are up Wednesday despite the lack of a confirmed winner as yet in the U.S. presidential election. “Equities are unmoved by the uncertainty, rallying in the face of two possible outcomes,” GSR’s Kramer added. 

• The Nikkei 225 ended the day in the green 1.7% as positive economic data out of Asia is signaling economic expansion.
• Europe’s FTSE 100 closed up 1.6% as tepid manufacturing data from October trounced investors’ concerns about Trump’s premature declaration of election victory.
• In the United States the S&P 500 climbed 2.2% as tech stocks made gains despite apprehension over the presidential election.

Jason Lau, chief operating officer for San Francisco-based cryptocurrency exchange OKCoin, said he is not convinced that bitcoin’s jump Wednesday has anything to do with the election’s outcome. “While all eyes are on the election, it’s too early to attribute bitcoin’s gains to it in terms of the macro policy impact from either candidate,” Lau told CoinDesk. 

Related: First Mover: Just Another Day for Bitcoin as US Election Slides Into Discord, Division

Cryptocurrency analysts are also keeping an eye on the U.S. Dollar Index, a measure of the greenback’s strength against a basket of other currencies, which is up 0.15% as of press time. “The dollar downtrend is due to resume,” said Bill Noble, Chief Technical Analyst at Token Metrics. 

Bitcoiners, as is often the case, remain bullish nevertheless.

“Too many people believe the election can stop the crypto uptrend,” Token Metrics’ Noble said. “A strong desire for economic freedom and the emergence of inflation drives the uptrend in crypto. Those trends are in motion, and they will remain in motion regardless of who occupies the White House.” 

“My opinion is BTC will go up regardless of who wins this election in the short- to mid-term,” noted Alessandro Andreotti, an over-the-counter crypto trader.

One signal for bullish sentiment: Overnight, over 6,700 CME bitcoin futures contracts traded (33,500 equivalent BTC), 75% more than what has been observed year to date and more than double the volume observed since launch, according to a representative from CME.

Ethereum gas up, fees down

The second-largest cryptocurrency by market capitalization, ether (ETH), was up Wednesday trading around $400 and climbing 4.6% in 24 hours as of 21:00 UTC (4:00 p.m. ET). 

Read More: Ethereum 2.0 Countdown Begins With Release of Deposit Contract

Usage on Ethereum, in terms of total gas, has grown 113% in 2020 so far, from 37,252,588,523 on Jan. 1 to 79,617,868,730 on Tuesday. 

Meanwhile, fees on the Ethereum network, required to conduct transactions and interact with decentralized finance, or DeFi, continue to be lower. On Nov. 1, average transaction fees dipped as low as 0.00229753 ETH.

Ben Chan, vice president of engineering for oracle provider Chainlink, says this data suggests despite the growth in 2020, there is currently less demand on the Ethereum network as interest in DeFi has seemingly waned. “What this could mean is people are less urgent to get transactions in, they’re willing to wait longer,” he told CoinDesk.

Other markets

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

• zcash (ZEC) + 2.4%
• orchid (OXT) + 1.5%
• litecoin (LTC) + 1.5%

Notable losers:

• monero (XMR) – 3%
• 0x (ZRX) – 2.2%
• bitcoin cash (BCH) – 1.2%

Read More: Razor Network Raises $3.7M to Prove There’s Room for More Oracles in DeFi

Commodities:

• Oil was up 2.1%. Price per barrel of West Texas Intermediate crude: $38.93.
• Gold was in the red 0.24% and at $1,904 as of press time.

Treasurys:

• U.S. Treasury bond yields fell Wednesday. Yields, which move in the opposite direction as price, were down most on the two-year bond, dipping to 0.145 and in the red 15.9%.

Related Stories

• Nearly $1B in Bitcoin Moves From Wallet Linked to Silk Road
• Bitcoin Dips as Trump Threatens to Stop Vote Counting

Eris Clearing LLC, the clearing arm of Eris Exchange, has won the Commodity Futures Trading Commission’s blessing to provide clearing services for fully collateralized swaps in addition to its existing business of clearing digital currency products.

• Eris Exchange, better known as ErisX, is a Chicago-based crypto futures provider that was the first to launch ether futures after receiving CFTC approval in May this year.
• Also in May, the firm received a BitLicense from New York financial regulators.
• Volumes on ErisX bitcoin and ether futures have remained consistently low since early this year.

Read more: ErisX Announces Launch of First US Ether Futures Contracts

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U.S. federal prosecutors are seeking a substantial prison sentence for Robert Farkas, one of the co-founders of crypto project Centra Tech, which garnered multiple celebrity endorsements for its initial coin offering (ICO) in 2017. Farkas later pleaded guilty to fraud. 

In a sentencing submission filed with the U.S. District Court for the Southern District of New York on Oct. 30, federal prosecutors said that “a substantial sentence of imprisonment would be reasonable and just in this case,” noting Farkas participated in a scheme that directly caused losses of tens of millions of dollars in funds from hundreds of victim investors. 

In June, Farkas had pleaded guilty to charges of conspiring to commit securities and wire fraud brought in relation to the fraudulent ICO. 

Related: Third Centra Tech Founder Pleads Guilty to ICO Fraud

As part of the scheme, Farkas, along with the two other founders, Sohrab Sharma and Raymond Trapan, pitched investors on a “Centra Card” crypto debit card purportedly issued by Visa or Mastercard. They also claimed to have 38 state money transmitter licenses and a CEO who, they said, attended Harvard. In a report from June, prosecutors said tnone of those claims were true. 

While the sentencing submission notes Frakas has requested home confinement and community service, the prosecutors said in the document this would be insufficient given the nature and seriousness of his crimes. 

Endorsed by multiple celebrities including former professional boxer Floyd Mayweather, who later settled charges brought by the U.S. Securities and Exchange Commission, the Centra Tech project raised $25 million in its ICO and was one of many such projects that exploited the nascent nature of such offerings for illicit personal gain. 

The document also said a “substantial sentence of incarceration is also necessary to serve the sentencing goals of adequately deterring criminal conduct.” 

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• US Prosecutors Ask to Pause SEC Action Against Alleged Crypto Scammer

The Federal Trade Commission (FTC) said it is sending PayPal payments totaling more than $470,000 to people who lost money to two pyramid schemes involving cryptocurrencies.

• According to the FTC, the defendants promoted Bitcoin Funding Team and My7Network, which falsely promised that participants could earn large sums of money by paying cryptocurrency such as bitcoin (BTC) or litecoin (LTC) to sign up.
• However, Bitcoin Funding Team and My7Network were pyramid schemes that depended on the recruitment of new people to make money. Most of the participants in the schemes failed to recoup their initial investments, the FTC said.
• As part of the settlement, the FTC will send 7,964 refunds through PayPal beginning on Nov. 5. The average refund is about $59.
• The more than $470,000 in payments follows agreements by the scheme’s principals who agreed in 2019 to pay more than $500,000 in total under terms of the settlement.

Read more: FTC Settles With Promoters of Multi-Level Marketing Crypto Scheme

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Cryptocurrency exchange and finance platform Crypto.com, said Wednesday a third-party auditor has given it high ratings on privacy and security, based on a set of standards developed by a unit of the U.S. Department of Commerce. 

According to Crypto.com, auditor SGS performed the assessment and found the platform has the highest rating, “Adaptive (Tier 4).” 

• The privacy and security frameworks used to assess Crypto.com’s measures have been developed by the National Institute of Standards and Technology (NIST), an agency of the Department of Commerce. 
• The Hong Kong-based platform added it recently surpassed 5 million users. 

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Predictive markets rollicked with U.S. ballot counting. Two more crypto payments cards are expected to market. Nearly $1 billion worth of BTC moved from a long-dormant wallet potentially connected with the shuttered Silk Road exchange. 

Top shelf

Staking begins
Ethereum 2.0’s deposit contract is now live, as of 15:00 UTC. According to developer Afri Schoedon, the deposit contract (a bridge between the forthcoming proof-of-stake (PoS) blockchain and the current proof-of-work (PoW) mainchain) is the first physical implementation of Eth 2.0 for everyday users. On a practical level, Ethereum stakers can now begin depositing the 32 ether (ETH) required to stake on Eth 2.0. Once 16,384 validators have deposited funds equivalent to a total of 524,288 ETH into the contract, the Beacon chain – the spine of Ethereum 2.0’s multiple blockchain design – will kick into action in what is called the “genesis” event of Ethereum 2.0. That event is expected within the next few weeks.

On the road again
A wallet possibly belonging to early dark net market Silk Road moved almost $1 billion worth of bitcoin early on Wednesday, according to blockchain intelligence firm Elliptic. Nearly 70,000 BTC were transferred to an unknown wallet. This is the first transaction from the address since 2015 when it transferred 101 BTC to BTC-e – a now-shuttered cryptocurrency exchange allegedly favored by money launderers, per the post. “These funds likely originated from the Silk Road,” Tom Robinson, co-founder of Elliptic noted in a LinkedIn post, adding that the coins may have been moved by imprisoned Silk Road operator Ross Ulbricht or a Silk Road vendor.

Related: First Mover: Just Another Day for Bitcoin as US Election Slides Into Discord, Division

Crypto cards
ZenGo, a wallet company, will be the latest to join Visa’s Fast Track program, with plans of launching a crypto-integrated payment card for the U.S. in early 2021. Using multi-party computation (MPC), ZenGo’s wallet, and eventual card, will allow users to convert their cryptocurrency into fiat so it can be spent in the Visa network and withdrawn from ATMs – without having to put their cryptographic keys into third-party custody. Visa’s Fast Track program has previously sponsored Bitcoin’s Lightning Network and rewards app Fold. Separately, China’s UnionPay, the world’s biggest credit and debit card company, has teamed up with a Korean payments firm to offer its Paycoin cryptocurrency for an upcoming virtual card offering.

Difficulty drop
Bitcoin’s mining difficulty dropped by more than 16% in its latest programmatic adjustment, the largest percentage decrease since the advent of ASIC mining machines in late 2012. Now at its lowest level since June, a drop in difficulty, preceded by the end of China’s rainy season, bitcoin miners are expected to see increased profits. Margins “for efficient miners will significantly widen,” John Lee Quigley, director of research at HASHR8, wrote, adding that less efficient miners will be able to mine profitably again. Mining difficulty is a measure of the amount of resources required to compete for mining fresh bitcoin, which changes roughly every two weeks based on changes to the total estimated hashpower consumed.

Layer1 lawsuit
Bitcoin miner Layer1 Technologies is being sued by a co-founder who claims he invested millions of dollars and was then forced out of the firm. In a complaint filed in the U.S. District Court in the Western District of Texas Pecos Division, the plaintiff, Jakov Dolic, claims he co-founded Layer1 with its CEO Alexander Liegl, with the assumption the firm would be able to raise $50 million from investors for a bitcoin mining facility. Though the investments never arrived. Dolic said he invested $16.24 million of his own funds to purchase a power substation as well as a further $3.5 million to expand the power facility – and now says the funds should be refunded, per a contractual agreement.

Quick bites

• An Australian senator said blockchain technology could help facilitate “one touch” government and tighten financial regulation. (CoinDesk)
• Telegram will pay some $620,000 in legal fees after conceding defeat in its copyright lawsuit related to the messaging apps “GRAM” token ticker. (Decrypt)
• Hong Kong plans to ban retail investors from buying crypto. (Modern Consensus)
• Blockchain analytics firms have privacy advocates worried. (CoinDesk)
• Atari token falls 70% just days after public sale concludes. (Cointelegraph)
• Binance said has recovered nearly all $345,000 worth of cryptocurrencies stolen in an October scam that launched on its Binance Smart Chain. (CoinDesk)

Market intel

Fees flee
Ethereum miners’ income more than halved in October as DeFi mania dropped off. Ethereum users paid $57.49 million in transaction fees in October – down 65% from September’s record monthly tally of $166.39 million, according to data source Glassnode. Further, the maximum “gas” price declined from 5.18 million gwei to 0.6 million gwei in October, according to data source Bitquery. “Transaction costs declined as volumes on decentralized exchanges dropped, reducing demand for network’s bandwidth,” Alex Mashinsky, CEO and founder of crypto lender Celsius, told CoinDesk. Trading volume on decentralized exchanges fell by nearly 25% to $19.4 billion in October to register the first monthly decline since April.

At stake

Related: First Mover: 11 Election Talking Points on Bitcoin as TRUMP Futures Point to Loss

What happens to the prediction markets?
With the U.S. presidential election hanging in the balance, one thing has become clear: The primary sources for predictive election analysis – mainstream media and pollsters – will see their worth and trust degrade following a significant miscalculation leading up to Nov. 3.

What was predicted to be a possible blowout election for former Vice President Joseph Biden has turned into a nail-biting count in a few swing states. With clear “paths to victory” giving way to “toss ups,” many in the crypto industry turned their attention to predictive markets instead. The theory hinges on the bet that those with “skin in the game” (re: cold, hard cash) might yield greater insight.

In the lead up to the election, CoinDesk reported that volumes on decentralized crypto prediction markets boomed. Polymarket, a non-custodial platform where users place bets in the dollar-backed stablecoin USDC, saw volumes surge from zero to almost $3 million in a three-week span. Other crypto-based platforms, like YieldWars and Augur also began attracting attention, after long periods of dormancy.

Of course, the interest in trustless betting occurred amid a greater surge in use of centralized platforms like PredictIt. More than $1 billion had been locked into various prediction markets seeking to determine who will enter the Oval Office come January.

In the tumult of state-by-state ballot counts, prediction markets saw many take bets that President Donald Trump would keep his office – reversing a trend that previously favored Biden.

Noted industry venture capitalist Nic Carter tweeted last night that “trump is way overpriced at 68c” on FTX’s in-house prediction market. $TRUMP, a bet that the U.S. president would prevail ultimately crossed $.80 before tanking by press time.

All this is to say, election oddsmakers are just as fickle as the polls, though in different ways. In an election where crypto largely stayed out of the picture – both as a matter of candidate mandates and as a figure of political contributions – betting markets are just another alpha-seeking avenue.

Prediction markets are more entertainment than anything, Carter said over Telegram. “Generally though they are a useful albeit lossy compression of news, especially in volatile situations that are hard to parse (like last night).”

“Betting markets are not great barometers. I went to several PredictIt meet-ups in 2016. The big guns were daytraders who just wanted to day trade more. There is no secret sauce there. Sometimes they’re right, sometimes they’re wrong, but oracular they are not,” NBC News reporter Ben Collins weighed in.

Even less certain? The future of decentralized prediction markets.

YieldWars’ pseudonymous co-founder, Owl, previously told CoinDesk that the sudden rise in trading volume was to be expected, given the weight of the election. Though it’s unclear if this will last. 

“Crypto-based prediction markets should be flourishing on blockchain right now but have failed to deliver up to this point. The election has breathed life into prediction markets but what is going to happen when it ends? Are people going to be as enthusiastic about them?” Owl said.

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