CoinDesk Crypto

The next generation of the gig economy could look more like decentralized finance (DeFi) than Uber.

Announced Thursday, Braintrust, a tech talent marketplace that will essentially be owned by the IT freelancers and companies using it, has raised an $18 million strategic growth round, bringing its total funding to date to $24 million.

Employing a system of blockchain-based tokens to align the incentives of users and keep fees low, Braintrust boasts a nice mix of seasoned Silicon Valley VCs and crypto heavyweights like Pantera, Multicoin and Galaxy Digital. Notable joiners on today’s round are Omidyar Technology Ventures, the original online marketplace builders.   

Related: Ethereum Layer SKALE Launches Mainnet Phase 2 With $78M Already Staked

San Francisco-based Braintrust is another example of how the core tenets of DeFi’s multi-billion dollar science experiment can be applied to real-world use cases. Unlike the often vague “utility” of ICO tokens that were sold in the billions back in 2017, Braintrust is focused on solving the liquidity problem encountered when establishing two-sided marketplaces. 

Braintrust’s solution reflects the pooled flexibility and decentralized governance of protocols like Compound Finance, on which some of its software is based.

Read more: This Startup Is Forking Compound to Make Hiring More Efficient

Stepping back, Braintrust CEO Adam Jackson is a veteran at building two-sided marketplaces, including an e-commerce platform acquired by Intuit, an automotive marketplace acquired by Advanced Autoparts and another called Doctor on Demand. The common denominator is how expensive it can be to build liquidity into these networks in order to make them fly, and the effect this can have further down the line. 

Related: CipherTrace Outlines Regulatory Gray Zones Plaguing Booming DeFi Sector

“The typical playbook from eBay, all the way up to the gig economy players we see now is you raise hundreds of millions if not billions of dollars, and use that money to subsidize one or both sides of the marketplace,” said Jackson. “You’re essentially paying people to show up.”

And the way this typically plays out is the investors, who are the owners of the marketplace, sooner or later start taxing the network, turning up the fees. This then starts to erode the network effects of the business, said Jackson, creating divergent incentives between the operators of the service and the people who make a living there.    

The depressing nadir of this is encapsulated in the iniquities of Uber; the sort of stuff that has effectively lowered the minimum wage in the U.S., said Jackson. 

“While five guys in San Francisco became deca-billionaires, a third of all Uber drivers live below the poverty line, some of them even live in the cars they drive,” he said. “So I wanted to figure out how we could create a marketplace that is owned and controlled by its users, instead of investors who just want to tax it.”

Non-profit protocol

Jackson describes Braintrust as a “labor protocol” in the same way that Ethereum is a smart -contract protocol. As such, it’s more like a non-profit, a kind of public good, he said, upon which other businesses and use cases will flourish, rather like the composability, or the Lego-like functionality of building with DeFi. 

“Our business model with Braintrust involves lowering the fees to almost zero. We charge talent zero; we charge clients 10%, that’s just meant to kind of pay our bills and sustain us,” Jackson said. “By lowering fees to zero, you enable a whole new class of big transactions that could never touch a place like Upwork, because the fees are too high.”

Likewise, the project’s tokenomics are confined to governance and voting decisions (there will be a free issuance of tokens to Braintrust users in the middle of next year). The tokens are simply a way to get millions of users across the world on the same page because you can’t have someone in Ukraine or in India custody a share of a Delaware C-corp, said Jackson.

“A blockchain-secure token is a perfect value-capture incentive and governance instrument to replace a share of stock,” Jackson said. “And when I say replace, I don’t mean a financial token, there’s no dividend.”

Once the Braintrust community of freelancers is up and running, they will be able to use their tokens to vote on proposals such as fee levels, categories of work to be added, standards for allowing workers to join and so on.  

Braintrust’s token voting system is a fork of the governance framework created by DeFi money market Compound Finance, actually using some of the same code. (Compound CEO Robert Leshner is a close ally and advisor to the project.)

Jackson pointed out that he started Braintrust well before DeFi was a thing, but said the comparison is apt. 

“What DeFi figured out was how to use a token as an incentive mechanism to bootstrap liquidity in a two-sided marketplace – DeFi’s lend and borrow,” he said. “We’re doing the same thing, using a token to bootstrap liquidity in a two-sided marketplace. Ours is labor and clients.”

An ill wind

Following a two-year incubation and armed with a $6 million seed round, Braintrust’s private beta was just getting off the ground when the COVID-19 pandemic hit. 

“We thought we were toast,” said Jackson.

But after “a terrible few months,” clients started calling back, with more and more large firms accepting that working remotely was becoming the norm. “So that has become a big tailwind,” Jackson said. “Our Q3 was two times our pre-COVID financial plan for marketplace transactions and that has brought us to this fundraising round we are announcing.”

In terms of numbers, Jackson said Braintrust currently has several thousand testnet token holders and a waitlist of 40,000 for when the service goes public next year. There’s also an impressive roster of 50 or so Fortune 100 clients.

“We just won a job at NASA, where we have a group of engineers building software that will track packages to and from the International Space Station,” said Jackson. “We’re building car software for Porsche, insurance shopping software for Blue Cross Blue Shield. So these are big jobs. It’s not like a logo on a website.”

The thing that’s attracting big enterprise players like Porsche and Nestle are the low fees, Jackson reiterated, and not some kind of tech wizardry.

“It’s not because we are building on a blockchain,” he said. “These guys don’t give a shit about that.”

Related Stories

• Why Hardnosed Bitcoiners Can Learn to Love DeFi
• Record $166M Ethereum Fees Last Month Were 6 Times Bigger Than Bitcoin’s

The Reserve Bank of Australia (RBA) has told the country’s largest stock exchange to develop its blockchain-based trading platform without further delay.

• In a public statement Thursday, the RBA and the Australian Securities and Investments Commission (ASIC) told the Australian Stock Exchange it should replace its aged Clearing House Electronic Subregister System (CHESS) in a safe but timely manner.
• This comes days after ASX told shareholders it was yet again delaying the launch of its blockchain-based trading system.
• Having confirmed it was replacing CHESS in December 2017, ASX originally planned to launch the new system in Q1 2020.
• This was pushed back to August 2021 and delayed again this year until 2022, with the exchange citing disruption from the pandemic.
• Both the RBA and ASIC told ASX getting the new system up and running was imperative for improving the overall performance of Australia’s financial system as well as bolstering investor’s confidence.
• In a public reply, ASX said further delays were justified to ensure the DLT-based system was able to meet peak capacity.
• ASX had seen an “extraordinary increase in activity levels” during the initial sell-off in mid-March and said it wanted to ensure its new system was able to handle this sort of capacity from the day of launch.
• The new implementation timetable will be released later this month.

See also: ASX Under Pressure to Further Delay Rollout of DLT Settlement System

Related Stories

• Ethereum Layer SKALE Launches Mainnet Phase 2 With $78M Already Staked
• Malta Disputes Crypto Arbitrage Hub Arbitly’s Registry Claims
• European Central Bank Moves to Trademark ‘Digital Euro’
• eToro to Offer Staking Rewards for Holders of TRON and Cardano

The U.S. Commodity Futures Trading Commission (CFTC) and federal prosecutors are charging crypto trading platform BitMEX with facilitating unregistered trading and other violations.

The CFTC announced Thursday that BitMEX, CEO Arthur Hayes, company owners Ben Delo and Samuel Reed, and corporate entities HDR Global Trading Limited, 100x Holding Limited, ABS Global Trading Limited, Shine Effort Inc Limited and HDR Global Services (Bermuda) Limited allegedly offered U.S. customers illicit crypto derivative trading services.

Similarly, Audrey Strauss, the acting U.S. Attorney for the Southern District of New York announced that Hayes, Delo, Reed and Gregory Dwyer (BitMEX’s first employee) were being charged with violating the Bank Secrecy Act and conspiracy to violate the act. Reed has already been arrested; the others remain at large, an SDNY press release said.

Related: CFTC Charges Firm With Illegally Providing Leveraged Trading of Crypto, Gold

“One defendant went as far as to brag the company incorporated in a jurisdiction outside the U.S. because bribing regulators in that jurisdiction cost just ‘a coconut,'” said Assistant FBI Director William Sweeney Jr. in a statement. “Thanks to the diligent work of our agents, analysts, and partners with the CFTC, they will soon learn the price of their alleged crimes will not be paid with tropical fruit, but rather could result in fines, restitution, and federal prison time.”

In a press release, the CFTC alleged that BitMEX received some $11 billion in bitcoin deposits and made more than $1 billion in fees, “while conducting significant aspects of its business from the U.S. and accepting orders and funds from U.S. customers.”

The CFTC charged BitMEX with executing futures transactions on an unregistered board, offering illegal options, failing to register as a futures commission merchant, failing to register as a designated contract market, failing to implement proper know-your-customer rules and other counts, according to an attached legal filing.

BitMEX, which has reportedly been under investigation by the CFTC since at least July 2019, implemented mandatory KYC in April of this year.

Related: A New Bill Proposes to Put US Crypto Exchanges Under a National Framework

“BitMEX touts itself as the world’s largest cryptocurrency derivatives platform in the world with billions of dollars’ worth of trading each day. Much of this trading volume and its profitability derives from its extensive access to United States markets and customers,” the filing said. “Nevertheless, BitMEX has never been registered with the CFTC in any capacity and has not complied with the laws and regulations that are essential to the integrity and vitality of the U.S. markets.”

The CFTC is looking for a permanent injunction prohibiting the defendants from entering into any transactions “involving ‘commodity interests,'” soliciting funds for purchasing or selling commodity interests and applying for registration with the CFTC.

In addition, the agency wants the defendants to disgorge profits; provide full restitution to its customers; pay civil penalties; and rescind “all contracts and agreements” with any customers if those agreements violate the law.

“As a derivatives market regulator that supports innovation and ingenuity, it is imperative that we actively police trading platform activity and remove the bad apples so that legitimate, law-abiding marketplaces can flourish,” said CFTC Commissioner Brian Quintenz in a statement. “We will not stand for any participant brazenly flouting our rules. I look forward to the successful resolution of this matter and the beneficial impact it will have in this market by holding those who deliberately ignore the law accountable.”

BitMEX was not immediately available for comment.

Read the full CFTC complaint below:

Read the full SDNY indictment below:

Related Stories

• Tassat Gains CFTC ‘No-Action’ Relief Ahead of Eventual Bitcoin Swaps Contract Listing
• CFTC Alleges 4 Individuals Defrauded Customers in $1M Bitcoin Trading Scheme

Ethereum developers will take a second whack at a final Ethereum 2.0 “dress rehearsal” after the first, Spadina, failed due to “critical peering issues,”  Ethereum Foundation researcher Danny Ryan said in a tweet Wednesday. 

• The second testnet, named Zinken, will launch Oct. 12 at 12:00 UTC.
• Ryan said he is “primarily looking for a clean client release process and minimal headaches for users” with Zinken.
• The dress rehearsal testnets were created to give Ethereum stakers another practice run at moving ether (ETH) into the Eth 2.0 deposit contract, a necessary step before the new blockchain can start working.
• Spadina hit a snag due to “configuration parameters” with Prysmatic Labs’ Prysm client, the team said in a post-mortem.
• “We lagged behind in terms of taking Spadina seriously, having a detailed checklist, and overall having a release ready before the genesis event,” the team said.
• Ryan added the dress rehearsal’s load was tilted unfavorably toward Prysm, which took on the lion’s share of the testnet’s users.
• The same issue – stakers picking Prysm over the four other available Eth 2.0 clients – also presented itself during August’s Medalla testnet.

Read more: The One-Way ETH ‘Burn’ That Will Kick-Start Ethereum 2.0

CoinDesk’s invest: ethereum economy is a fully virtual event Oct. 14 exploring the ramifications for investors of the sweeping changes underway within the Ethereum ecosystem. Learn more.

Related: Ethereum 2.0 Developers Launch Spadina, a Three-Day Practice Testnet

Related Stories

• The One-Way ETH ‘Burn’ That Will Kick-Start Ethereum 2.0
• The ‘Hot Swap’ Plan to Switch Ethereum to Proof-of-Stake Explained
• What Is DeFi?

Nearly $8 billion were added to the aggregate supply of stablecoins in the past three months, nearly doubling the industry’s supply of crypto dollars from $11.9B at the end of Q2 to just below $20B on Wednesday, according to Coin Metrics data.

• “2020 seems to be the year of stablecoins,” said Paolo Ardoino, CTO of Tether, the company behind the largest stablecoin by market capitalization, tether, in a private message to CoinDesk.
• Since this time last year, the supply of stablecoins has exploded by more than 1,200 percent.
• In May, the total stablecoin supply passed $10 billion for the first time, as CoinDesk reported, closing Q2 just below $12 billion. Aggregate supply closed Q3 at $19.87 billion, nearly breaking above $20 billion on Sunday, according to data from Coin Metrics.
• In addition to supply growth, Q3 saw stablecoins grow across multiple blockchains as Tether added support for both OmiseGo and Solana protocols. USDC, the second-largest stablecoin by market capitalization, expanded to the Algorand network, as CoinDesk reported.
• USDC also joined tether as the only stablecoins with market capitalizations greater than $1 billion after adding $1.5 billion since the end of June.
• According to Ardoino, the primary drivers of growth in the past quarter were the “explosion of decentralized finance (DeFi)” and a growing number of hedge funds and over-the-counter trading desks moving funds to tether for “faster arbitrage and reactions to market movements.”
• Whether this stablecoin growth will continue is hard to predict, Ardoino said. But as the utility of stablecoins like tether continues to expand, he expects overall growth to continue for at least the next few months.

Related Stories

• Bitfinex Launches Tether-Settled Perpetual Contracts Based on European Equities
• Crypto Long & Short: The OCC’s Stablecoin Statement Is a Seed of Financial Innovation
• The Biggest Story in Crypto: The Stablecoin Surge and Power Politics
• OCC’s First Issued Guidance for Stablecoins Brings More Questions

The European Central Bank (ECB) has applied for a trademark on the phrase “digital euro,” according to a Bloomberg report.

• Bloomberg confirmed that ECB lawyers at the German firm Bock Legal applied for the European Union Intellectual Property Office’s “digital euro” trademark on Sept. 22. It has not yet been granted.
• Officials have not actually committed to issuing a digital euro quite yet. Eurozone central bankers say they continue to study the issue, even as an alternative to cryptocurrency.
• European Union member countries and banks are nonetheless gearing up in anticipation of a digitally native euro becoming a reality.

Related Stories

• Australia’s Central Bank Tells ASX to Push on With Delayed DLT Trading Platform
• eToro to Offer Staking Rewards for Holders of TRON and Cardano
• Record $166M Ethereum Fees Last Month Were 6 Times Bigger Than Bitcoin’s
• DeFi Buzz Drove Record $12M Earnings This Summer, Says Ethereum Miner HIVE Blockchain

A lot of crypto investors like to think of bitcoin as a bet on higher inflation, or as a futuristic hedge on some imagined economic-armageddon scenario – Gold 2.0, as they say.

Lately, it’s looking more like Gold 2x: As bitcoin heads into the final months of 2020, the largest cryptocurrency’s 2020 investment returns are twice those of the yellow metal. 

Bitcoin gained 50% in the nine months through September versus gold’s 25%, during a year when a global pandemic ravaged economies and prompted central banks to print trillions of dollars. Many investors, while acknowledging that recessions are usually deflationary, say the extra flood of money could eventually send consumer prices spiraling higher.

Related: Bitcoin Posts Biggest Monthly Price Loss Since March

And bitcoin’s performance looks especially stark when compared with the Standard & Poor’s 500 Index, which has returned 3.5% this year. A gauge of the bond market’s performance is up 19%.

CoinDesk’s Bradley Keoun and Daniel Cawrey rounded up commentary from nine crypto analysts and investors going into the rest of the year. Global conditions could get better, or worse still, but the analysts are pretty bullish.

They may be wrong, and the billionaire investor Warren Buffett has said that bitcoin has “no value,” but the tone is strikingly different from the skepticism that many Wall Street analysts now express toward the lofty valuations in stock and bond markets. 

Denis Vinokourov, Bequant: The market is testing the upper bounds of its recent range and, with the absence of fresh macro news flow that could dampen the risk on sentiment, bitcoin may just find enough momentum to break through the $11,000 price level and, more importantly, stay there. Open options interest continues to show signs of recovery.

Related: Why Hardnosed Bitcoiners Should Learn to Love DeFi

Charlie Morris, ByteTree: The vast majority of bitcoin’s past gains coincided with periods of a flat or weak dollar. The implication is that bitcoin is likely to be a powerful hedge against U.S. dollar weakness. How likely is that? Quite likely given it is Fed policy.

IntoTheBlock: There are two areas of strong resistance for bitcoin based on on-chain data. The first one is the current resistance it is facing around the $11,000 mark, where 626K BTC has been bought by 1.17 million addresses. This creates resistance from many of these addresses looking to close their positions to break-even. After that, there is another similar resistance level between $11,400 and $11,700 as shown in the graph above. The good news is that past these resistance levels, there is likely to be less selling pressure past $12,000.

Matt Blom, Diginex: Despite the propensity to buy, hold and not move bitcoin, the network remains buoyed by growth. The only thing going sideways in bitcoin is the price.

Jason Lau, OKCoin: Bitcoin’s price momentum is still positive, with its pullbacks leaving higher highs. This is signaling a possible further continuation of this upwards move. Bitcoin perpetual swaps funding rates have started turning positive. This indicates that investors are more willing to go long at current price levels.

George McDonaugh, Keld van Schreven, Kr1 Plc: We are currently seeing some correlation [involving] bitcoin, other digital assets and movements in the equity and gold markets. We expect the trend of strengthening balance sheets and diversification into bitcoin to continue as the world’s monetary policies shift evermore towards unbridled money printing and higher inflation.

QCP Capital: The key support from the early month lows of $10,000 on BTC and $310 on ETH both saw substantial buying demand. This prevented any cascading short gamma selling into quarter-end, which had been our fear if those levels broke.

Constantin Kogan, BitBull Capital: We’re seeing a spike in activity by new participants coming into BTC not yet reflected in price. It doesn’t happen often. This is what traders call a divergence. In this case the trend looks more bullish.

Patrick Tan, Novum Alpha: While it may be tempting to subscribe to the notion that bitcoin will represent a safe haven in times of instability, there’s little evidence to support that view – especially since gold, tech stocks and bitcoin have all tracked each other closely this year. A further round of stimulus, or a smoother than expected political transition, could pave the way for bitcoin to move higher as politicians get past electing and get back to spending.

Bitcoin Watch

Bitcoin is trading in the narrow range of $10,600 to $11,000 for the seventh straight day. 

The long-term sentiment remains bullish, as evidenced by a continued decline in the number of coins held on cryptocurrency exchanges – a sign of investors shifting to holding strategies. 

In the short run, the cryptocurrency could continue to take cues from the U.S. dollar and stock markets.

“We can’t ignore the greenback’s breakout from its recent consolidation and expect a continued rally in the dollar to weigh over BTC,” said Matthew Dibb, CEO of Stack Funds.

The cryptocurrency fell by over 7% in September, confirming its biggest monthly decline since March as the oversold dollar index rose nearly 1.8%. Bitcoin, gold and S&P 500 have moved largely in the opposite direction to the dollar index since March. 

– Omkar Godbole

Token Watch

Ether (ETH): Record $166M Ethereum fees last month were six times bigger than bitcoin’s. 

SushiSwap (SUSHI): Collateral locked into “vampire mining” protocol plunges to $354M from $1.4B a few weeks ago.  

Trump tokens (TRUMP): Prices for FTX crypto exchange’s “futures contract” tracking U.S. president’s chances of staying in office slide after this week’s presidential debate.  

Chainlink (LINK), Loopring (LRC), Compound (COMP): DeFi system MakerDAO (MKR, DAI) community votes to add support for Chainlink’s LINK, Loopring’s LRC and Compound’s COMP.  

What’s Hot

Diginex stock goes live on Nasdaq following $50M in SPAC and private funding (CoinDesk)

Talos, institutional-grade conduit to crypto ecosystem, emerges from stealth mode to serve brokers, custodians, exchanges and over-the-counter trading desks (CoinDesk)

Hive Blockchain says DeFi buzz led to record fees in quarter ended Sept. 30, with a 50% year-over-year increase in ether mined to 32K ETH (CoinDesk)

Canaan Creative, publicly traded maker of cryptocurrency mining computers, suffered its fourth straight stock-price decline in the third quarter (CoinDesk)

Compound’s Leshner says the “pace of people trying new things is the highest it’s ever been” as DeFi enters “lightspeed era” (CoinDesk)

BitFlyer cross-border initiative allows European traders to access bitcoin/Japanese yen trading pair (CoinDesk)

Twitter CEO Jack Dorsey tweeted his disapproval of Coinbase CEO Brian Armstrong steering his company away from corporate activism (CoinDesk)

With the first Trump–Biden debate now smoldering behind us, the betting markets have picked their winner and it isn’t Donald Trump (CoinDesk)

The U.S. Securities and Exchange Commission has ordered Salt Lending to offer investors refunds for its 2017 initial coin offering (ICO) (CoinDesk)

Analogs The latest on the economy and traditional finance

American Airlines and United Airlines have begun the process of instigating 32,000 furloughs or temporary leave as hopes for further economic stimulus fades fast (Reuters)

Speaker of the House Nancy Pelosi and Treasury Secretary Steven Mnuchin did not reach a deal for coronavirus stimulus on Wednesday and instead want to do some more talking (CNBC)

U.S. Federal Reserve is set to bar big banks from share buy backs while having to cap their dividends under the new regulator’s policy (Reuters)

The U.S. has banned palm oil imports from Malaysia’s largest producers over concerns of forced labor and sexual assualt (SCMP)

Biden and Trump both vowed to support the electric vehicle industry during the 2020 presidential debate on Tuesday (CNBC)

Tweet of the Day Related Stories

• Record $166M Ethereum Fees Last Month Were 6 Times Bigger Than Bitcoin’s
• DeFi Buzz Drove Record $12M Earnings This Summer, Says Ethereum Miner HIVE Blockchain

It’s one game down and as many as six to go in this year’s NBA Finals, and while the unusual season has kept fans outside the arena Dapper Labs is hoping to let them own a piece of on-court action.  

Announced Thursday, Dapper Labs is rolling out its blockchain-based collectibles game, NBA Top Shot, to the public. Currently in its beta version and developed in partnership with the National Basketball Association, Top Shot will also be available to U.S.-based Samsung users on the Galaxy app store.

Built using non-fungible tokens (NFTs) minted on the purpose-built Flow blockchain, Top Shot lets users collect, showcase and trade in-game “moments” which capture moves made on the real court. 

Related: Thirst Traps Explode on NFT Platforms, With Predictably Controversial Results

For instance, a user can purchase a moment based on a James Harden dunk and showcase it, sell it or swap it for, say, a Steph Curry three-pointer.

The platform has managed to build a strong following under an invitation-only beta. Rolled out in May after scoring financial backing from a handful of NBA stars, the platform has since invited 17,000 users on board, recorded 58,081 transactions and raked in $2 million in revenue, according to data shared with CoinDesk. 

Gameplay options coming soon

NFTs are unique digital tokens that allow the issuer to embed identifying information about the item (be it fine art, selfies or a basketball clip) into the token’s smart contract while also maintaining a corresponding ownership ledger on the blockchain. 

The embedded identifying information provides protection against the duplication of such items, and the ownership record ensures that users can verify who owns what and carry out transactions. 

Related: The Inevitable Marriage of Yield Farming and NFTs, Explained

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

While Top Shot’s current interface uses NFTs to combine trading cards with digital clips, Dapper Labs also said it is developing a more immersive experience within Top Shot called “Hardcourt.” 

“It’s a 3D game where you control players on a basketball court,” Roham Gharegozlou, CEO of Dapper Labs, said in an interview. He explained that once a user has put together their team of desired players for the game, they could then use the “moments” they own to upgrade their players’ abilities. 

“If I have a bunch of LeBron [James] dunks, I can train my Steph Curry to be as good at dunking as LeBron by equipping him with a lot of LeBron moments,” he said.

Read more: Dapper Labs–USDC Integration Helps NBA Collectibles Game Clear $2M in Revenue Since June

By adding this immersive interface to its platform, Dapper hopes to attract more mainstream users that have largely stayed away from the NFT-enabled gaming world. 

“It’s a high graphical experience, because all of our user research showed that that’s what mainstream fans want to see,” said Gharegozlou, adding:

“Crypto fans would be OK with a trading card game or fantasy sports thing. But to actually go mainstream and have a game that tens of millions of people play every day, you need to kind of make it look as good as all the options that are out there.” 

Dapper Labs said Hardcourt is under internal testing and is slated for release toward the end of Q4. 

Notably, Top Shot allows users to make payments using both fiat (through credit cards) and cryptocurrencies. Even though credit cards and crypto payments make up equal shares of the platform’s revenue, credit cards account for three-quarters of all transactions made, according to data shared by Dapper Labs.

Related Stories

• Christie’s to Auction Bitcoin-Inspired Artwork, Associated Non-Fungible Token
• The Fast-Growing NFT Market Is Problematic Yet Promising

The exploding decentralized finance (DeFi) space is now firmly on the radar of regulators and concerns are growing that it could become a magnet for criminal or nefarious activity, according to blockchain analytics provider CipherTrace.

DeFi has grown from a science project into a $11 billion market, one in which there appears to be almost zero know-your-customer (KYC) provision and a considerable risk of potential manipulation.

DeFi is such a young space, it’s hard to tell whether the sort of money-laundering activities typically associated with cryptocurrency mixing services will migrate there. But preliminary findings after the recent KuCoin hack suggest this new generation of decentralized exchange (DEXs) could be added to crypto mixers as an attractive service for crooks, said CipherTrace CEO Dave Jevans.

Related: Why Hardnosed Bitcoiners Should Learn to Love DeFi

“I think there’s a lot of concern that these platforms can be used as effectively the next generation of money-laundering mixing services,” said Jevans. “If I can put my stuff into a DeFi contract, it gets mixed up with other people’s money when it comes back out. Because there’s no tracing and there’s no KYC, it effectively is operating as an old-school crypto money-laundering service.”

In the case of the KuCoin hack, the thieves used five DEXs – Uniswap, Kyber Network, DEX.AG, Tokenlon, and 1inch.exchange – and have so far sold over $17 million in tokens that could be frozen by the owners of their respective projects, according to analysis by crypto sleuthing service Elliptic.

Read more: Ocean Protocol Forks to Retrieve Tokens Stolen From KuCoin Exchange

But while these DeFi services are acting as a useful layer to exchange tokens, they are not actually covering the hacker’s tracks at this stage, said Elliptic co-founder Tom Robinson.

Related: Record $166M Ethereum Fees Last Month Were 6 Times Bigger Than Bitcoin’s

“The hacker isn’t using DEXs to hide their tracks, they’re doing it so they can sell their stolen tokens,” Robinson said via email. “The token issuers (Tether, Ocean Protocol, etc.) are freezing accounts or reversing transactions associated with the stolen funds in order to aid their recovery. So the hacker needs to convert them into something like ether, which is much less likely to be taken from them.”

On mixers

Speaking hypothetically, there are some other interesting reasons why DeFi could benefit potential money launderers, said Jevans of CipherTrace. Ironically, interacting with a smart contract (computer programs that run on top of blockchains, and on which DeFi is based), could provide a layer of safety and security for the hacker, Jevans said.

“Because these are contracts, it’s much harder to get ripped off,” said Jevans. “Some of the mixing services, when they get sufficient volume, they pull an exit fraud and just basically stop working. That’s the way a bunch of these guys make money; they’ll charge low fees on mixing and wait until there are a few tens of millions in the hopper, then they just take off.”

Another risk for criminals using crypto mixers is the chance the service itself gets busted by law enforcement and the funds are seized. 

Read more: ‘Inherently Borderless’: Acting OCC Chief Talks Crypto, State Licenses and DeFi

“We’ve seen a number of seizures and arrests. Well, if your money was in there at the time, I assure you, you’re not getting it back,” Jevans said.

And despite the fact that gas fees on Ethereum-based DeFi apps are becoming ridiculously high, it’s still cheaper than using a mixer, Jevans added.

“Mixers are expensive,” he said. “DeFi platforms present less risk and the fees are less, too. In my view, a DeFi platform is also better because you’re mixing your bad funds with a lot of good funds,” Jevans said, adding:

“I would argue that mixers – and this is just my opinion – have a disproportionately high amount of criminal activity going through them. Whereas DeFi has a lot of people who want to get in on the next investment trend.”

DEXs are very different from mixers because the flow of funds through them is clear to see on the blockchain, said Robinson of Elliptic.

“Mixers are used to break the blockchain trail by making it difficult or impossible to link incoming funds to outgoing funds,” Robinson said. “In contrast, this is very easy to do with DEXs – the operation of the smart contract is auditable on the blockchain, so the incoming transaction in one asset and the outgoing transaction in another asset, are clear to see.”

No KYC

DeFi platforms contribute a particular black spot on the overall crypto KYC landscape, the general topic of the report released Thursday by CipherTrace. But DeFi is undoubtedly on the regulatory radar, as evidenced by recent comments from U.S. Securities and Exchange Commission (SEC) crypto czar Valerie Szczepanik. 

“We’ve seen [DeFi] projects that are subject to vulnerabilities, attacks, hacks, manipulation,” Szczepanik said at the Parallel Summit on Sept. 18, 2020. “We’ve seen structures that purport to enable users to lend money, earn interest, borrow money, exchange, take positions; these are all financial activities and they are likely subject to various laws already, including securities law, potentially banking and lending laws – definitely AML/CTF laws.”  

So are DeFi platforms thinking about adding KYC at any point in time? Jevans doesn’t think so.

“From what we have experienced over the last couple of months is that they don’t want to have anything to do with KYC,” Jevans said. “They just say they are writing software and, while they get beneficial funds from it, they are not ‘operating’ it. But it’s interesting to see what the governance of the platforms is, which often happens to be from venture capital-backed companies.”

Read more: DeFi Is Just Like the ICO Boom and Regulators Are Circling

Indeed, the CipherTrace report suggests this could be an avenue a regulator like the SEC might pursue, especially when faced with a U.S.-domiciled firm like Uniswap inhabiting a kind of decentralized lacuna. 

“While the operations of DeFi exchanges are decentralized, the scale of the governance decentralization varies greatly. For instance, Uniswap – located in San Francisco – has received venture investment capital from Andreessen Horowitz and Union Square Ventures,” states the CipherTrace report. 

Andreessen Horowitz and Union Square Ventures did not return requests for comment by press time. 

“So there is a place to go if you are a lawmaker or a regulator,” said CipherTrace’s Jevans. “At the end of the day, all of the governance is centralized by a for-profit company.”

Related Stories

• DeFi Buzz Drove Record $12M Earnings This Summer, Says Ethereum Miner HIVE Blockchain
• MakerDAO Adds Chainlink, Compound, Loopring as Collateral Options

Multi-asset exchange eToro is launching a new service that will offer rewards for “staking” tokens, beginning with TRON and ADA.

• The trading platform announced Thursday that the service, one of the first to offer staking for Cardano’s native ADA token, will go live later this month.
• eToro will effectively execute the staking on behalf of its users.
• Compared to proof-of-work protocols, which rely on miners running powerful computer hardware to confirm transactions, proof-of-stake (PoS) networks rely on the users themselves to stake, or lock up, their tokens and provides rewards for confirming transactions.
• eToro’s service is aimed to make staking more accessible for everyday users, the firm said in a statement. The exchange will email reports to users showing how much income they’ve made on a monthly basis.
• A spokesperson told CoinDesk the service will be free of charge for eToro clients.
• The number of fully functioning PoS networks is growing. Cardano, which has a market cap of $3.25 billion, launched its “Shelley” staking protocol in late July.
• The month before, Coinbase Custody announced plans to offer secure Cardano staking sometime in Q4 2020.

See also: DeFi Meets Universal Basic Income With Just-Launched Project From eToro

Related Stories

• Record $166M Ethereum Fees Last Month Were 6 Times Bigger Than Bitcoin’s
• DeFi Buzz Drove Record $12M Earnings This Summer, Says Ethereum Miner HIVE Blockchain
• Australia to Spend $575M on Tech Including Blockchain to Boost Pandemic Recovery
• Twitter’s Dorsey Calls Out Coinbase CEO for Ignoring Users’ ‘Societal Issues’

Bitcoin faced selling pressure in September as the U.S. dollar rose against major currencies for the first time in six months.

• Bitcoin fell by over 7% over the period, the biggest monthly percentage decline since March, according to CoinDesk’s Bitcoin Price Index.
• Back in March, prices fell by nearly 25% as the coronavirus-induced crash in the global equity markets triggered a global dash for cash, sending the dollar higher.
• Bitcoin’s latest monthly decline is again accompanied by an uptick in the greenback.
• The Dollar Index (DXY), which tracks the greenback’s value against majors, gained nearly 1.8% in September – the first monthly rise since March.
• “BTC seems to be sensitive to a stronger dollar in the short term,” Mike Alfred, CEO of Digital Assets Data, told CoinDesk in an email.
• Bitcoin has moved largely in the opposite direction to the DXY since the coronavirus crisis slammed markets in March.

• The top cryptocurrency by market cap, bitcoin rallied from $3,867 to $12,400 in the five months to mid-August before falling back to $10,000 last month.
• Heading the opposite way, the DXY topped out at 103.00 in March and fell to a 16-month low of 91.75 in August. The index rose back above 95.00 last month.
• The S&P 500, Wall Street’s equity index, and gold have moved more or less in lockstep with bitcoin over the past 6.5 months.
• However, these correlations may be coincidental, according to Alfred – that is, the dollar has been influencing price action in the major markets as well as bitcoin.
• The Federal Reserve’s massive liquidity injections drove the dollar lower in the second quarter and the majority of the third quarter, yielding a rally in all major assets priced in the greenback.
• As such, the DXY’s corrective bounce in September put pressure on bitcoin, gold, and equities. The greenback looked at its most oversold in nearly 40 years during August.

Looking forward

• Long-term sentiment remains bullish, as evidenced by a continued decline in the number of coins held on exchanges – a sign of investors shifting to holding strategies.
• In the short run, the cryptocurrency could continue to take cues from the U.S. dollar and the stock markets.
• “We can’t ignore the greenback's breakout from its recent consolidation and expect a continued rally in the dollar to weigh over BTC,” said Matthew Dibb, CEO of Stack Funds.
• Additional bearish pressure may emerge from potential outflows from tech-heavy stocks and the Nasdaq, Dibb added.
• According to a tweet from chart analyst and trader Josh Rager, bitcoin’s late September recovery from $10,000 to $10,800 has kept the bullish price structure intact.
• Rager now foresees a green month for markets in October ahead of the U.S. elections.
• At press time, bitcoin is trading near $10,888, up 1.93% on the day.

Also read: Bitcoin May Return to Center Stage After Ethereum’s White-Hot Summer

Related Stories

• First Mover: Nine (Bullish) Bitcoin Predictions for Final Months of (Awful) 2020
• Why Hardnosed Bitcoiners Should Learn to Love DeFi
• Market Wrap: Bitcoin Retests $10.8K; Total Value Locked in DeFi Hits $11B
• First Mover: Chainlink’s Sorry September Returns Shows DeFi Hysteria Deflating

Blockchain services firm Diginex has become the first crypto exchange operator to list on Nasdaq. The stock went live Thursday morning under the EQOS ticker symbol, a nod to the firm’s EQUOS.io trading platform.

• Diginex’s back-door listing came through a merger with a special-purpose acquisition company (SPAC) called 8i. 
• After raising private capital and redeeming shares of the SPAC, the company now has $50 million in capital for strengthening its balance sheet and investing in the business.
• Diginex CEO Richard Byworth said he expects a mix of global retail and institutional investors to buy shares. Over time, he expects the majority of Diginex shareholders to be U.S. investors because of the Nasdaq listing.

Read more: Diginex Going Public Is About More Than a Nasdaq Ticker Symbol

Related Stories

• KuCoin Maintains Wallet Freeze as Hackers Begin Laundering Stolen Crypto
• Bitcoin Balances on Exchanges at 2-Year Low and That May Be a Bullish Sign
• Over $150M Drained in KuCoin Crypto Exchange Hack
• Russian Web Censor Tells Binance It’s Been Blacklisted – Three Months Late

In the latest effort to smooth a path for buttoned-up investors, Talos, an institutional-grade conduit to the crypto ecosystem, is emerging from stealth mode to serve brokers, custodians, exchanges and over-the-counter (OTC) trading desks.

The platform started out in 2018 and is backed by an impressive list of investors including Autonomous Partners, Castle Island Ventures, Coinbase Ventures and Initialized Capital. 

Over the past year or so, Talos has been quietly onboarding a core group of capital market participants so that the platform can make its debut in a revenue-generating state, said Anton Katz, the firm’s co-founder and CEO.

Related: This Ethereum Startup Is Building a ‘DeFi Firewall’ for Institutional Investors

“It’s not that we were really hiding, but it’s just that we come from a capital markets background and would tend to shy away from talking about things before they are ready; when you’re selling to institutions that can be frowned upon,” Katz said in an interview. “Now I think we have reached a good point, working with a good set of customers and the platform is in a more mature state.”

Talos provides tools to support clients through the full trading lifecycle, from price discovery through to clearing and settlement, the company said.

Read more: Behind ‘Prime Broker’ Buzzword Lies a Complex Strategy Game for Crypto Firms

“One of the biggest keys to widespread institutional adoption of digital assets is a technology infrastructure that unites all market participants and gives them the confidence to operate at scale,” Arianna Simpson, founder of Autonomous Partners, said in a statement. “That is exactly what Talos has built, and we are excited to help them realize their ambitious launch and growth plans.”

Institutional herd 

Related: Bequant, Now in Crowded Prime Brokerage Race, Adds Signature Bank Integration

The last couple of years have seen much talk about an institutional herd moving imminently into crypto; how has this landscape changed in that time and have these expectations been met?

“I think it’s important to keep in mind that the institutional sector does not have an on/off switch,” said Katz. “It’s not like they’re either in or out. There are really a couple of different groups of institutions, some of them are a little bit more risk-averse, some of them less, and what we are seeing right now are less risk-averse players becoming the early adopters.”

Read more: This Ethereum Startup Is Building a ‘DeFi Firewall’ for Institutional Investors

The design requirements for crypto platforms are quite different from regular capital markets, Katz explained. On the pre-trade side of things, when compared to capital markets the data being collected for crypto is a lot less reliable and has to be collected in multiple places and cleaned properly. 

In terms of trading there are things like a treasury management aspect, so moving capital between different exchanges, which again is something that doesn’t really exist in capital markets. While on the post-trade side, capital markets are much more secure and standardized.

“I would say you don’t have to be as defensive when you’re building your platforms in capital markets as you do in crypto,” said Katz. “The precision that you need with every single trade, it calls for completely different system design.”

Related Stories

• Institutional Trading House ErisX Joins Silvergate Exchange Network
• Crypto Lender Nexo to Enter Prime Broker Race, Enlists Chainlink for Audits

Ethereum miners earned over six times more in fees compared to those working on Bitcoin in September.

• Glassnode data shows Ethereum’s total transaction fees stood at an all-time high of $166 million for the month – far more than the $26 million taken in Bitcoin fees.
• Ethereum fees long trailed those on Bitcoin, but have been on a tear over the past few months as surging interest in DeFi led to record transaction volumes.
• Fee revenue on Ethereum first outpaced Bitcoin’s in June – the same month decentralized lender Compound released its governance token and kick-started the DeFi mania.

• As the DeFi space picked up momentum, the difference between Ethereum and Bitcoin fees has increased from only $10 million in June to well over $70 million by August.
• Thursday’s data shows the fee disparity between the two protocols practically doubled to $140 million in September.
• Monthly Ethereum fees were just $1.5 million at the start of 2020.
• This coincides with total value locked (TVL) in DeFi, which first broke the $1 billion in February but surged over the summer to well over $11 billion, according to DeFi Pulse.
• HIVE Blockchain cited DeFi as a major contributing factor when reporting it earned approximately $12 million in fees in the second fiscal quarter, 30% up from Q1.

See also: DeFi Summer; Bitcoin Fall

Related Stories

• First Mover: Nine (Bullish) Bitcoin Predictions for Final Months of (Awful) 2020
• CipherTrace Outlines Regulatory Gray Zones Plaguing Booming DeFi Sector
• eToro to Offer Staking Rewards for Holders of TRON and Cardano
• Why Hardnosed Bitcoiners Should Learn to Love DeFi

HIVE Blockchain has reported its best-ever quarter, as the mining firm raked in record fees from the frenzied activity in decentralized finance (DeFi) over the summer.

• The Toronto-listed mining company released its unaudited results Thursday, saying it mined a total of 32,000 ether (ETH) and 121,000 ethereum classic (RTC) in the second fiscal quarter ending Sept. 30.
• Per CoinDesk's price data, that comes to nearly $11.8 million for mining ether, and a further $664,000 for ethereum classic – approximately $12.4 million at time of writing.
• The figures represent a near 30% increase from the 25,000 ETH that HIVE mined in the first quarter and a 50% increase on the same quarter in 2019.

• HIVE said it currently costs around $150 to mine a single ether. Based on September’s average ether price of $343, the company made approximately $193 in gross profit.
• Going by the amount processed across the fiscal quarter, HIVE – which expanded its ETH mining capacity by 20% in March – made roughly $614,000 from ether.
• HIVE attributes its bumper quarter to the fees charged over the summer, when surging interest in DeFi led to record transaction volumes on Ethereum.
• As fees for processing transactions increase with volume, miner revenue increased considerably over the summer.
• CoinDesk reported last month that miners made an estimated $16 million in a single day for confirming DeFi-related transactions on Ethereum.
• Before the announcement, HIVE shares closed 5% down yesterday at 0.35 CAD ($0.26).

See also: Ethereum Transaction Fees Set a Record Once Again as DeFi Becomes Even Pricier

Related Stories

• Record $166M Ethereum Fees Last Month Were Six Times Bigger than Bitcoin’s
• Australia to Spend $575M on Tech Including Blockchain to Boost Pandemic Recovery
• Twitter’s Dorsey Calls Out Coinbase CEO for Ignoring Users’ ‘Societal Issues’
• MakerDAO Adds Chainlink, Compound, Loopring as Collateral Options

Australian Prime Minister Scott Morrison has announced that the federal government has set aside nearly A$800 million (US$575 million) to invest in digital technologies as part of its coronavirus recovery plan.

• Morrison announced the news Tuesday, saying that the funding is aimed to help the country’s businesses recover from the economic effects of the COVID-19 outbreak, as well as create more jobs.
• While Australia hasn’t been hit as badly as nations like the U.S. and India by the virus, it’s still seen around 27,000 cases and nearly 900 deaths in total, according to its official figures.
• After seeing growth for a record 30 years, the coronavirus has now tipped the country into a recession as lockdowns sent spending spiraling.
• The US$575 million investment, to be concreted in the 2020 budget, is part of Morrison’s plan to bounce back from the pandemic.
• In the announcement, he sets out that varying amounts will be spent on different prongs of the plan, including:
• $256.6 million on a digital identity solution that will make it easier and more secure to interact with government services (and later, the private sector).
• $419.9 million to fully implement the Modernising Business Registers (MBR) program.
• $22.2 million will go to help small businesses utilize digital technologies through tools and training made available under the Australian Small Business Advisory Service.
• Blockchain technology gets a specific mention with a $6.9 million initiative that will see two pilots aimed to cut business compliance costs.
• Other prongs include the accelerated rollout of 5G and industry trials of the technology, a “regulatory technology commercialisation initiative” to improve compliance and support digital technology companies, and an effort to mandate the adoption of electronic invoicing by 1 July 2022 for government agencies.
• “The Plan supports Australia’s economic recovery by removing out-dated regulatory barriers, boosting the capability of small businesses and backs the uptake of technology across the economy,” the prime minister said in the announcement.

Also read: Ex-Employee at Australian Science Agency Avoids Prison After Mining Crypto on Supercomputers

Related Stories

• Record $166M Ethereum Fees Last Month Were Six Times Bigger than Bitcoin’s
• DeFi Buzz Drove Record $12M Earnings This Summer, Says Ethereum Miner HIVE Blockchain
• Twitter’s Dorsey Calls Out Coinbase CEO for Ignoring Users’ ‘Societal Issues’
• Blockstack’s Clarity Smart Contracts Will Source Data From Chainlink Oracles

Twitter CEO Jack Dorsey tweeted his disapproval of Coinbase CEO Brian Armstrong steering his company away from corporate activism.

• Armstrong wrote in an open letter published Sunday that Coinbase had “an apolitical culture,” and that the exchange would not engage in “broader societal issues” or entertain employee discussions about it.
• After the letter, Armstrong circulated a company-wide memo informing Coinbase employees that if they did not like the policy they could take a “generous” severance package instead.
• Twitter CEO Dorsey responded that by the very act of being a crypto exchange, Coinbase was already activist by definition and there’s no point in pretending otherwise.
• “Bitcoin (aka ‘crypto’) is direct activism against an unverifiable and exclusionary financial system which negatively affects so much of our society. Important to at least acknowledge and connect the related societal issues your customers face daily. This leaves people behind,” Dorsey tweeted.
• The back and forth comes at a time when tensions in the U.S. are boiling over with COVID-19, civil unrest and now a heated presidential race between incumbent President Donald Trump and former Vice President Joe Biden.

Read more: Coinbase Offers Severance Package to Employees Unsatisfied With ‘Apolitical’ Mission

Related Stories

• Blockstack’s Clarity Smart Contracts Will Source Data From Chainlink Oracles
• SEC Alleges Big-Talking Florida Crypto Investor Defrauded Clients of $6.8M
• BitFlyer Opens Japanese Bitcoin Market to European Traders
• Data Management Startup Fluree Unlocks $1.5M Air Force Contract With Latest VC Raise

A U.S. judge ruled Wednesday that Kik violated securities law when it raised $100 million via a token sale in 2017.

Judge Alvin Hellerstein, a U.S. district judge for the Southern District of New York, wrote that in his view, Kik’s “token distribution event” (TDE) satisfied the three prongs of the Howey Test, referring to the Supreme Court case used as a standard for determining whether the sale of something is a securities sale. The Securities and Exchange Commission (SEC), which filed the suit against Kik last year, maintained that the messaging platform’s Kin token sale was an unregistered securities offering while Kik claimed it was not.

“Kik concedes that its issuance of Kin through the TDE involved an investment of money by which participants purchased or acquired Ether and exchanged Ether for Kin. Thus, the parties agree that the first element of the Howey test is satisfied,” he said in the 19-page ruling. “The parties dispute whether the second and third elements are satisfied. I hold that that they are.”

Related: SEC Alleges Big-Talking Florida Crypto Investor Defrauded Clients of $6.8M

Initial coin offerings (ICOs) and token sales have been treated as unregistered securities sales for the most part by the SEC, which has filed suits against numerous startups and companies, including Telegram, another messaging company that raised a mammoth $1.7 billion.

Many of these cases use Howey, which says something might be a security if there is an investment of money in a common enterprise, with the expectation of profit, primarily from the efforts of others.

Judge Hellerstein wrote Wednesday that Kik “extolled Kin’s profit-making potential,” satisfying one of the prongs, and that Kik “pooled proceeds from its sales of Kin in an effort to create an infrastructure for Kin, and thus boost the value of the investment.”

Read more: The SEC Case Against Kik’s ICO Appears Strong, Experts Say

Related: SEC Orders Salt Lending to Offer Refunds to Investors in Its $47M ICO

This satisfies another prong, he said.

In a statement, Kik CEO Ted Livingston said he was “disappointed in this ruling,” and that the company is considering its options, including a potential appeal.

“To be clear, Kik has always supported the Commission’s goal of protecting investors, and we take compliance seriously. In preparing for the sale of Kin, Kik retained sophisticated counsel (both in the United States and internationally) to analyze the law as we understood it, and we continue to believe that the public sale of Kin was that of a functional currency and not a sale of securities,” he said.

Read more: The 8 Biggest Bombshells From the SEC’s Kik ICO Lawsuit

Livingston added that the ruling would not impact kin.

Kik general counsel Eileen Lyon took aim at the SEC in a statement, saying the agency “should engage in proper rulemaking, including the opportunity for public commentary, rather than force our industry to hunt for regulatory clues among the SEC’s conflicting statements, Commissioner and staff speeches, no-action letters, closed-door meetings with the SEC and nonprecedential settlements.”

The parties have until Oct. 20 to file either a joint proposal for providing relief to Kik’s investors, or a document explaining their positions on how to proceed.

Related Stories

• SEC Seeks Trial of Swedish National Over Alleged Fraud That Took $3.5M in Crypto
• SEC Won’t Take Action Against Compliance-Focused Digital Security Exchanges

The MakerDAO community has voted to add support for a trio of new tokens for the decentralized finance (DeFi) loans that generate DAI stablecoins.

Vaults are now open for deposits of Chainlink’s LINK, Loopring’s LRC and Compound’s COMP. Community members pitched proposals to add the tokens this summer and voted for their integration via Maker’s on-chain governance platform this week.

Counting this new crop of collateral options, MakerDAO has added 11 new DAI vault pairs this year. The other tokens, MANA, WBTC, ZRX, KNC, TUSD, PAX, USDC and USDT, were added partly in response to DAI losing its $1 peg, as the extra collateral was meant incentivize collateralizing more DAI to drive its price down.

Related: Market Wrap: Bitcoin Retests $10.8K; Total Value Locked in DeFi Hits $11B

In a recent bid to rectify DAI’s peg instability during DeFi’s yield farming craze, the Maker community voted in a proposal to lower the collateralization requirements for DAI’s primary USDC vault to pump more DAI into the market. Since the proposal’s implementation, DAI’s price has dropped to $1.01.

Speaking to CoinDesk about proposals to keep DAI’s peg steady, MakerDAO founder Rune Christensen said there is “no other option but to onboard more collateral.”

Currently, USDC is the most popular collateralization option for DAI with 372 million USDC locked. 

Read more: ‘No Other Option but More Collateral’: The Short- (and Long-) Term Fixes for Dai’s Broken Peg

Related Stories

• DeFi Summer; Bitcoin Fall
• Blockstack’s Clarity Smart Contracts Will Source Data From Chainlink Oracles
• First Mover: Chainlink’s Sorry September Returns Shows DeFi Hysteria Deflating

Encryption startup NuCypher has finished distributing its network’s native token, NU, to over 2,000 prospective node operators who staked more than $125 million worth of ether (ETH) during the month of September. NuCypher’s system will hit Ethereum’s mainnet on Oct. 15.

Primarily marketed as a solution for developers building decentralized applications (dapps), NuCypher helps firms encrypt data before they upload it to decentralized storage networks, while also retaining control over who can read the data once its uploaded (using an advanced form of flexible cryptography called proxy re-encryption). 

On the other side, participants who run the network’s nodes earn fees in return for performing cryptographic functions and maintaining the network. To participate, nodes need to stake NuCypher’s token, NU. The company needed a way to distribute NU to entities it might reasonably expect to participate once it goes live, and the solution it came up with was called “WorkLock.”

Related: Thirst Traps Explode on NFT Platforms, With Predictably Controversial Results

Under NuCypher’s WorkLock token distribution program, participants looking to run nodes were required to lock in a minimum of 5 ether (worth roughly $2,000 depending on when the ETH was committed). It also requires the staked ETH stay locked for a minimum of six months, starting the day the mainnent launches. The onerous collateral requirement levied on aspirant node operators was meant to dissuade users from claiming NU tokens and not participating in the network.

While participants can choose to stay or leave with their escrowed ETH after the six months pass, if they attempt to withdraw earlier or act maliciously, they would have to forfeit the staked ETH. 

Read more: Polychain, Bitmain Back $10.7 Million SAFT for Encryption Startup NuCypher

“What it allows you to do is stake or escrow ETH into this WorkLock smart contract. You lock it up for six months from mainnet launch and that grants you this new stake that you can use to operate a new NuCypher node,” co-founder MacLane Wilkison said in an interview.

Related: First Mover: Chainlink’s Sorry September Returns Shows DeFi Hysteria Deflating

Last October, NuCypher announced the completion of a  $10.7 million token sale from investors such as Polychain Capital, Bitmain, CoinFund, Arrington XRP Capital, Notation Capital and others.

Wilkinson founded the company alongside Michael Egorov, who also founded the popular automated market maker for stablecoins Curve.

Related Stories

• Kadena Looks to Capture DeFi Energy With New Decentralized Exchange
• First Mover: Binance CEO Sees Future in DeFi While Bitcoin Volatility Turns Minuscule