CoinDesk Crypto

DeFi deflated.

That was the story in cryptocurrency markets in September as prices tumbled for digital tokens from “decentralized finance” (DeFi), the fast-evolving arena of blockchain-based lending and trading platforms.

Chainlink, which supplies data feeds to DeFi systems, saw its LINK token fall 42% month to date, the worst return among digital assets in the CoinDesk 20.

Related: Reef Finance Raises $3.9M for Cross-Chain DeFi on Polkadot

The DeFi market correction came at a time when traditional markets also were hit hard by growing anxiety over the increasingly contentious U.S. presidential elections in November and resurgent coronavirus cases in the U.S. and Europe, according to Anil Lulla, co-founder of the cryptocurrency research firm Delphi Digital.

It was a reality check after DeFi’s ebullient August during which traders speculated that the emerging sector would reap fast revenue growth buoyed by well-received debuts of DeFi protocols. Tokens mooned from Aave’s LEND to Yearn.Finance’s YFI and Spaghetti’s PASTA. Total collateral locked in DeFi rocketed to $9 billion at the end of August from $2 billion at the start of July. It is currently at $11 billion.  

The slowing rate of growth in September translated to a sell-off in DeFi tokens. 

“If you look at August, crypto came off probably with one of the best months of performance ever,” Lulla said. “So I don’t think it’s unusual to see a breakdown, a little dip like this.”

Related: DeFi ‘Vampire’ SushiSwap Still Hemorrhaging Liquidity

The DeFi tokens’ monthly swings were bigger than for bitcoin (BTC), which slid 7.9% in September, after a 2.6% rise in August. 

Matthew Hougan, global head of research at Bitwise Asset Management, noted that LINK’s decline followed a 10-fold rise in the 12 months through August. The token is still the best-performing digital asset the CoinDesk 20, up 458% year-to-date.  

“That’s the crypto shuffle,” Hougan told CoinDesk in an email. “I don’t think anything has fundamentally changed about the story or the investment case. The DeFi market got a little bit ahead of itself and now it’s resetting.”

CoinDesk’s Zack Voell reported Tuesday that some crypto traders are shifting funds from alternative tokens into bitcoin in a bet that the largest cryptocurrency, with a market capitalization of about $200 billion, might prove a better bet over the next several months. And CoinDesk’s Omkar Godbole reported that data from the cryptocurrency options markets suggest that ether, the native token of the Ethereum network which serves as the backbone of DeFi, might start to take its cues from bitcoin’s price direction.

Bitcoin closed Tuesday at $10,836, setting a record of 65 consecutive daily closes above $10,000, the longest period in history. 

The Norwegian crypto research firm Arcane Research also noted that the number of daily active addresses on the Bitcoin blockchain surged last week to its highest level since January 2018.

“This is a healthy sign and shows that the adoption and use of bitcoin is increasing,” the newsletter wrote.

– Muyao Shen

Bitcoin Watch

Cryptocurrency analysts are daring to venture into a categorization of bitcoin that would have been unthinkable a few years ago: That historically volatile bitcoin prices now be above $10,000 to stay. 

“It is safe to say that the leading cryptocurrency has established itself as a 5-digit cryptocurrency this year,” the Norwegian digital-asset analysis firm Arcane Research wrote Tuesday in a weekly report. 

Bitcoin has now had 65 consecutive daily closes above $10,000, a record, and over the past six days the largest cryptocurrency has stayed in a tight range between roughly $10,600 and $10,800. 

Diginex’s Matt Blom wrote Tuesday that he sees price-support levels at $10,500, with “more solid support” at $10,350. Barring that, the next level of $10,150 would likely be “well defended by the bulls, should we reach it.” 

So the logical question is whether prices can sustainably break above $11,00 and maintain that higher plateau. 

“Once the markets make up their mind direction-wise, we usually expect some sort of breakout from the short-term ranges,” Greenspan wrote. “None looks more ready for this than bitcoin right now.” 

– Bradley Keoun

Token Watch

Yearn.finance (YFI): Governance deployment error that temporarily charged an additional fee of 5% for each withdrawal instead of the originally set 0.5% has been fixed.

Ethereum (ETH): Ethereum 2.0 developers have launched yet another testnet, this time to give on-boarding stakers a dry run before the launch of network upgrade later this year.

Zcash (ZEC): Gemini exchange adds “shielded” withdrawals of privacy token.  

Cosmos (ATOM): Coinbase adds 5% staking rewards on blockchain-interoperability project’s tokens. 

Uniswap (UNI): Trading volume on decentralized exchange has declined over the course of September. 

What’s Hot

Traders using crypto derivatives and automated market maker HoneySwap to get liquidity in Reddit’s MOON tokens (CoinDesk)

Coinbase CEO Armstrong to staff: If you don’t like our “culture shift,” here’s a severance package (CoinDesk)

Hybrid blockchain platform Kadena plans to launch a new multi-chain decentralized exchange in hopes of wooing business from congestion-plagued Ethereum-based rivals (CoinDesk)

Analogs The latest on the economy and traditional finance

Fed stimulus helped push up total U.S. household net worth to all-time high in Q2 (Lyn Alden Investment Strategy)

ECB to consider inflation overshoot in echo of Fed strategy (Bloomberg)

Conference Board’s consumer confidence index jumps most for a month in 17 years as stocks rally (Reuters)

Chinese yuan posts strongest quarter versus dollar in more than a decade (WSJ)

Negative real interest rates seen “as far as the eye can see” (WSJ)

JPMorgan Chase will pay a $920 million to resolve probes from three federal agencies for role in manipulating global metal markets and Treasuries (CNBC)

Disney to cut 28K jobs as pandemic hits theme-park, cruise-line and retail businesses (Bloomberg)

Tweet of the Day Related Stories

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• Is Reddit’s MOON Token Really 2,000x Bigger Than the Global Economy?

As the limitations and costs of running decentralized finance (DeFi) apps on Ethereum continue to ride high, a growing list of projects are lining up on competing blockchains.

Adding to this trend, Polkadot-based Reef Finance has closed a $3.9 million seed funding round for its cross-chain suite of DeFi services, the company announced Wednesday. Included in the round were NGC Ventures, AU21 Capital, QCP Capital, Kenetic Capital and Woodstock Fund.

Reef aims to solve the high technical barrier investors face when attempting to participate in DeFi, said Reef Finance CEO Denko Manceski, not to mention doing away with gas fees on Ethereum that are currently running at near-record highs.

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

“The average retail investor entering the DeFi landscape is confused,” said Manceski. “They don’t know the names of the projects or how to keep up with the best strategies and stay safe and well-diversified. They have to go through, like, five different websites and use different [user interfaces] made by different vendors. It’s overwhelming. And while you do this, you’re missing out on different opportunities.”

Read more: Polkadot-Based Acala Raises $7M as DeFi Grabs Land on Another Blockchain

To remove the headache from a typical DeFi user experience, Reef offers a kind of one-stop shop, combining a global liquidity aggregator, yield farming aggregator and asset-management product, said Manceski.

So far, Reef has partnered with Polkadot projects like Plasm, a dapp platform on Substrate; and Crust Network, an incentive layer for decentralized storage. The company said it also plans to integrate with leading oracle service providers including Chainlink and Bluzelle. 

Related: DeFi ‘Vampire’ SushiSwap Still Hemorrhaging Liquidity

“The Holy Grail of decentralized asset exchange is seamless interoperable movement of assets along the paths of least resistance, and Reef is attempting to address this challenge by building on top of Polkadot,” Kenetic Capital partner Jehan Chu said in a statement.

Related Stories

• Compound, Gauntlet Founders Raise $4M for New DeFi Scout Fund
• So Now They’re Hacking DeFi Protocols Before They’ve Even Launched?

The crypto industry, with its questionable carbon footprint, now has a convenient way to showcase its green cred on a verified (rather than trusted) basis.

But that raises a tricky question: The likes of Amazon and Google, whose processing largely takes place within directly owned and controlled data centers, are able to contract clean energy with relative ease and precision. But who do you ask for if you want to make Bitcoin greener? 

Announced Wednesday, Energy Web, a non-profit focused on decentralized approaches to decarbonizing the grid, wants to show how a large blockchain platform can switch to a zero-carbon footprint. To start with, the organization is teaming up with San Francisco-based Ripple and the XRP Ledger Foundation.

Related: World’s Biggest Meat Processor to Tackle Amazon Deforestation Using Blockchain Tech

Ripple’s support of this venture is intended to open the door to other blockchains with more energy-intensive operations like Bitcoin, said Jesse Morris, Energy Web’s chief commercial officer.

To make all this possible, the non-profit has released an open-source app called EW Zero that makes it easy for individuals, businesses or even entire blockchain ecosystems to make the transition. This initial deployment uses energy attribute certificates (EACs) from renewable energy sources to decarbonize electricity, the companies said.

“Blockchains are a massive energy hog and a lot of that electricity is not coming from wind, solar, hydro or other sustainable facilities,” said Morris. “So we have been thinking for a while now about how we could help the crypto industry decarbonize blockchains, given the distributed nature of the technology.”

First, Ripple

In the case of Ripple, a 500-person fintech company focused on crypto-powered banking, there is an obvious starting point when it comes to reducing the firm’s carbon footprint. Moreover, Ripple uses a consensus system quite unlike Bitcoin’s proof-of-work (PoW) mining, an algorithm that by definition must burn through a ton of electricity. (At last count, the top five PoW blockchains currently use up to 170 terawatt-hours (TWh) of electricity per year – more than the state of New York.) 

Related: Market Wrap: Bitcoin Clings to $10.4K; Ether in Smart Contracts Highest Since 2016

As such, bitcoin isn’t really comparable to something like pre-mined XRP running on Ripple, which many would argue comprises much more of a centralized system.

Presented with these observations, Ken Weber, Ripple’s head of social impact, said in this case it would be beneficial to put technology-based tribal differences aside and adopt more of an “all in this together” approach.

Read more: Can Bitcoin Survive the Climate Change Revolution?

“It’s early days for all these currencies, which right now have a tiny share of global finance, but further down the line [green energy adoption] is gonna be much more difficult to reverse engineer,” said Weber. “We wanted to help make it easy to adopt these practices. This is not a proprietary wish on Ripple’s part; it’s a whole system wish. As with other social change movements, the idea is not to make anybody feel bad or shamed, but to give them a means to do this that is reasonable, beneficial and participatory.”

Crypto ESG

Alex de Vries, the founder of Digiconomist, which identifies trends in cryptocurrencies, said carbon offsetting is happening at the level of crypto exchanges looking to do business with traditional financial institutions that follow environmental, social and corporate governance (ESG) mandates.

“Ripple is leveraging the fact that people associate heavy energy consumption with blockchains, but that’s only really proof-of-work,” said de Vries. “With Bitcoin, you’re talking about an extreme carbon footprint of 300 kilograms per transaction. I haven’t done the math on Ripple, but it’s gonna be closer to a Visa transaction, which is 0.4 grams per transaction.”

Read more: Hyperledger Conference Shows Where Blockchain Can Fight Global Warming

Nonetheless, this is a step in the right direction for a relatively young industry that could become one of the first to be carbon-neutral, said Energy Web’s Morris. In the same way that large corporates use certificates to decarbonize complex supply chains, blockchain users can purchase certificates from different places around the world (EW Zero also uses a blockchain system to track and account for these certificates). 

“Imagine in the future having a wallet interacting with some blockchain, and as a part of that wallet you can actually increase your transaction fee just a bit and you’ve just contributed to decarbonizing the blockchain by purchasing a certificate somewhere,” said Morris. “Or if you are a bitcoin miner in a mining pool, you’re also able to use this application to directly purchase certificates in a specific part of the world.”

The impetus to give this is a go is two-fold, said Energy Web CEO Walter Kok.

“Firstly, on the supply side, it will be useful to hook up existing green energy producers already servicing Bitcoin, which might have an overcapacity of green energy,” Kok said, adding: 

“The other part won’t happen overnight, but in the end, everybody wants to be assured they are contributing to a better world. So let’s get to the point where we can say with confidence that all blockchains, including Bitcoin and all its miners, produce in a green way.”

Related Stories

• YouTube Ignored Warnings About XRP ‘Giveaway’ Scams, Ripple Says
• Australian Payments Firm Sues Ripple for Use of PayID Trademark

DeFi trading protocol SushiSwap, which threatened to sap the life out of rival Uniswap just two weeks ago, is still losing crucial liquidity.

• Data from DeFi Pulse shows total value locked (TVL) in SushiSwap has dropped nearly 8% in the past 24 hours.
• TVL represents the dollar value of the tokens locked into a protocol’s smart contracts. While not universally accepted, it’s generally considered a key success metric for decentralized finance (DeFi) projects.
• This is particularly true for automated market maker (AMM) exchanges, such as SushiSwap and Uniswap, which rely on users depositing tokens in order to provide liquidity and create the trading experience.
• As such, Wednesday’s figures don’t make for good reading; SushiSwap has been on a near-uninterrupted decline since mid-September when its creator made off with, and then returned, the dev fund.
• After hitting an all-time high of $1.4 billion on September 12, Sushi’s TVL fell by two-thirds to nearly $490 million just a week later.
• While that rate of decline has shallowed, TVL has still fallen a further $130 million to $354 million in the past nine days.
• Wednesday’s drop of nearly $50 million is the biggest since TVL fell by $100 million on September 21.

• This marks a significant change in SushiSwap’s fortunes, which just weeks ago looked to supersede Uniswap after it took $830 million in vital liquidity.
• However, a $500 million UNI airdrop and concerns over SushiSwap’s founder saw most of that liquidity bounce back to Uniswap.
• Indeed, from just $430 million in TVL in mid-September, Uniswap has made a dramatic snapback, becoming the first protocol to break the $2 billion milestone this week.
• In the past 24 hours, Uniswap’s TVL has risen by approximately 2%.

See also: UNI Market Cap Rebounds $120M as Rest of Crypto Market Falters

Related Stories

• Reef Finance Raises $3.9M for Cross-Chain DeFi on Polkadot
• Compound, Gauntlet Founders Raise $4M for New DeFi Scout Fund
• French Authorities Arrest 29 Suspected of Using Crypto to Fund Extremists in Syria
• Coinbase Offers Severance Package to Employees Unsatisfied With ‘Apolitical’ Mission

“I would call this the ‘moving fast as hell’ era,” Robert Leshner said of decentralized finance (DeFi) right now.

CoinDesk spoke to Leshner, founder of the Ethereum-based money market Compound Labs, and Tarun Chitra, of crypto financial modeler Gauntlet Network, about the new fund they are running together.

It’s the second fund created by Leshner’s firm, Robot Ventures, and it has secured $4 million in funding, led by Galaxy Digital with additional participation by Coinbase co-founder Fred Ehrsam’s Paradigm.

Related: Reef Finance Raises $3.9M for Cross-Chain DeFi on Polkadot

Scout funds act as seed investors but with ties to institutional funds, helping the larger entities get an early read on opportunities for later rounds. Robot Ventures was first announced in April 2019.

Read more: Bain Capital and Ripple’s Xpring Invest in DeFi Founder’s ‘Scout Fund’

“It’s quite hard to understand which ones make sense and don’t make sense,” Chitra said, because it can be difficult for those who aren’t in the trenches to assess the quality of a project’s relevance. “We can serve as the bridge.”

Chitra and Leshner bring complementary skill sets to the space. Leshner is the one who set up a DeFi company and brought it to a market-leading position. Tarun, as Leshner put it, “is probably the lead quant within DeFi and has done a lot of the structuring of token distributions and economic analysis for probably every project you’ve heard of.”

Related: DeFi ‘Vampire’ SushiSwap Still Hemorrhaging Liquidity

Quipped Leshner: “He’s the brains, I’m the brawn.”

Chitra said DeFi today has a clear advantage over traditional high-end trading desks that won’t even consider creating a derivative for less than millions of dollars. DeFi is cranking out new derivatives every day, completely upending the model. This is what big investors want to get some kind of exposure to.

Read more: Why DeFi on Ethereum Is Like Algorithmic Trading in the ‘90s

“I think it feels a little bit like when traditional markets turned electronic in the ’90s, when people were able to, like, start their own exchange in their backyard, and those over time congealed into the current modern trading ecosystem,” Chitra said. “I think [DeFi] will converge to a happy medium that replaces a lot of traditional investment banking functions.”

Other large operations might need to get in soon or miss out on an unusual moment.

“When I started Compound there was like three things that would call themselves DeFi projects,” Leshner said. “This is the lightspeed era of DeFi, where one week feels like one year. The pace of people trying new things is the highest it’s ever been.”  

Related Stories

• So Now They’re Hacking DeFi Protocols Before They’ve Even Launched?
• Investors Flock to India’s DeFi Scene Months After Central Bank Ban Overturned

In a major operation on Tuesday, French police arrested 29 people suspected of funding Islamist extremists in Syria using cryptocurrency.

• As reported by ABC News on Wednesday, the operation was an attempt to crack a complex scheme of terrorist funding said to have been masterminded by two French extremists who have been residing in northwestern Syria and have still not been apprehended.
• The 29 people arrested for questioning from across France are suspected of funding terrorist activities as part of an elaborate financing network.
• Two of the 29 are suspected of being key in the cyber-financing system and for providing logistical aid to keep the network – active since last year – running.
• The network was discovered by Tracfin, a French economy ministry that tracks fiscal fraud, terror financing and money laundering.
• Hundreds of thousands of euros are suspected to have been supplied through the network benefiting members of al-Qaida and the Islamic State group still holding out in the region.
• According to ABC’s report, the network members in France purchased cryptocurrency coupons and transferred the details by secure messaging to jihadis in Syria.
• The French prosecutor’s office detailed that a score of people in France would regularly buy the coupons worth between €10 to €150 euros (US$11 to $165), which were credited to accounts opened by jihadis abroad and then cashed out on an exchange platform.
• France initiated its investigation in January when Tracfin detected the Syrian network.

See also: US Woman Gets 13 Years in Jail After Funding ISIS With Cryptocurrency

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• Coinbase Offers Severance Package to Employees Unsatisfied With ‘Apolitical’ Mission
• Overstock Short Sellers Fall Short as Judge Gives Digital Dividend Claims Short Shrift
• Coinbase Launches 5% Staking Rewards for Cosmos’ ATOM

A token for rewarding content on a specific Reddit forum now has the unusual honor of being thousands of times bigger than the entire global economy … kind of.

MOON, a community token for the r/Cryptocurrency subreddit, technically has a market cap of over $2.88 septillion (that’s 24 zeroes) at press time. That dwarves the global economy which, as per data from the World Bank, came to approximately $133 trillion in 2019.

So on paper, a four-month old token, designed to reward good content on a subreddit, has “mooned” to become 2,000 times bigger than the value of everything else humanity has ever made, ever.

Related: Bitcoin Has Been Less Volatile Than Tesla Stock for Months

But before you start thinking that the end is nigh, this astounding number is just a market quirk.

Built on Ethereum’s Rinkeby testnet, MOON wasn’t initially tradable on secondary markets, which made it difficult to pin down a price. But users soon devised a workaround.

See also: Reddit Seeks Scaling Solution for Ethereum-Based ‘Community Points’

It works like this: MOON holders go to a site called xmoon.exchange and convert their tokens into xMOON – a type of derivative product. They can then trade these on HoneySwap – a type of automated market maker exchange similar to Uniswap – for xDAI, another derivative that can be freely converted for the widely traded and highly liquid Dai stablecoin.

Related: On-Chain Data Suggests Ether Investors Bought September Dip

Using this route, MOON holders can determine a dollar-denominated value for their tokens. At the time of writing, HoneySwap was offering 10.5 xMOONs for an xDai. Assuming a 1:1 conversion with Dai, users can exchange one MOON token for 0.095 DAI.

Data from CoinGecko shows Dai is currently worth $1.01, landing MOON with a price of just under $0.096. And, with Etherscan currently showing a supply of 30 septillion MOON tokens, that has magnified the token’s theoretical market cap to the $2.88 septillion figure.

See also: UNI Market Cap Rebounds $120M as Rest of Crypto Market Falters

Of course, this doesn’t mean the global economy is now 2,000 times bigger than it was earlier this month. Most of this value remains unrealized. Should more subreddit contributors decide to convert their MOON holdings into Dai, the exchange rate will fall massively, driving the token, and its market cap, down to a far more realistic value.

Further, the massive number seen on Etherscan does conflict with the planned supply indicated on Reddit’s page introducing the token. That suggests tokens will be limited to 350 million by 2035.

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The U.S. Securities and Exchange Commission (SEC) is demanding the trial by jury of a Swedish national for his alleged involvement in an international fraud that raked in millions in cryptocurrency.

• According to a complaint filed Tuesday in New York’s Eastern District Court, the securities watchdog is seeking damages on behalf of “thousands of retail investors” from Roger Nils-Jonas Karlsson, 46.
• Karlsson “enticed and defrauded” his victims through his purported company Eastern Metal Securities (EMS) by promising “astronomical returns” on their investments, the SEC alleges.
• It further claims neither Karlsson nor EMS were ever registered with the commission, and neither had qualified for an exemption to registration.
• Specifically, from around November 2012 through to June 2019, the SEC alleges Karlsson operated a fraudulent scheme called a “Pre Funded Reversed Pension Plan.”
• During that time Karlsson used multiple fake identities to deceive investors, including some from the deaf community, out of millions of dollars.
• The plan promised a large payout that was tied to the value of gold if victims made an initial investment of $98, but, per the complaint, no such plan existed and no payouts occurred.
• In total, Karlsson is alleged to have fleeced 2,200 victims from 49 U.S. states, the District of Colombia, Puerto Rico, and 45 other countries, netting himself $3.5 million via payments in bitcoin and other digital assets.
• Misappropriated funds of around $1.5 million were used to purchase real estate in Thailand, his country of residence before being extradited to the U.S. to face charges.
• The SEC asks the court that Karlsson be restrained along with other members of the alleged fraud.
• The regulator further seeks that Karlsson’s “ill-gotten gains” should be handed over, along with prejudgment interest and additional penalties.

See also: SEC Won’t Take Action Against Compliance-Focused Digital Security Exchanges

Read the court document in full below:

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A Chinese video site copycat raised $2.1 million via an initial exchange offering in August 2019 – but it appears this last resort wasn’t enough to save the company from falling apart.

On Sept. 24, the Shanghai Yangpu District Court disclosed an Aug. 31 ruling that video streaming company Dilidili has infringed the trademark of Nasdaq-listed Bilibili and must pay a fine of nearly $500,000.

The ruling followed a separate notice by the Shanghai Minhang District Prosecutor in July, which ordered the arrest of Dilidili’s founder for copyright infringement.

Related: China State Media Make Rare Reports Calling Crypto 2020’s Best Performing Asset

The years-long case has drawn widespread attention  among Chinese mainstream media given Dilidili’s outright copy-and-paste from Bilibili, which is China’s hit video site for streaming licensed Japanese anime content.

The episode is also an example of a failed attempt by Chinese companies to use the concept of cryptocurrency and blockchain decentralization to rejuvenize their businesses.

Founded in 2010, Bilibili.com has grown into one of the top video sites in China. It specializes in streaming licensed Japanese animation that targets China’s Generation Z population. Bilibili reportedly has some 170 million monthly active users.

Bilibili went public on Nasdaq in March 2018 with a raise of $483 million. Earlier this year, Sony invested another $400 million in Bilibili and acquired over 4% of its stakes.

Related: China Sees Advantages in Being First on New Digital Currency ‘Battlefield’

The dispute between Bilibili and Dilidili started in 2015, when Dilidili was created with a name that appeared to be mimicking the incumbent.

Soon after its creation, Dilidili had allegedly downloaded more than 3,000 episodes of Japanese animation from Bilibili and then uploaded it to its own platform for free viewing so that it could monetize the traffic, according to the Shanghai prosecutor’s arrest order.

In January 2019, Bilibili brought a lawsuit against Dilidili and demanded some $4.3 million as damage claims due to Dilidili’s alleged trademark and copyright infringement. 

In a notable pivot, Dilidili tapped into the 2019 frenzy of cryptocurrency initial exchange offerings (IEO) in order to build a blockchain-based community governance ecosystem.

Dilidili launched its token, DILI, on the ethereum platform and did the IEO on Chinese exchange Gate.io in August 2019.

According to Gate.io’s announcement on Aug. 28, Dilidili achieved its goal of raising $2.1 million by selling 1.5 billion DILI, although the total subscription orders it received from Gate.io users were worth over $70 million. The trading started on the same date with a starting price of $0.00143 per DILI.

But soon after trading began, several news reports emerged online with accusations of Dilidili running an illegal fundraise since China has banned token-based fundraising activities.

The price of DILI on Gate.io has since plunged by over 90% to just $0.000253. 

Also read: Binance CEO Says He Fully Expects DeFi to Cannibalize His Crypto Exchange

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“If Bitcoin is decentralized, who funds its development?” This longstanding question, historically answered by the quiet work of volunteer Bitcoin developers, now has a new response: a website that allows Bitcoin users to pledge payment for protocol upgrades.

The brainchild of Pierre Rochard, BitcoinACKs aggregates pull requests for protocol improvements from the Bitcoin Core GitHub (in coder vernacular, “ACK” means that a proposal or change passes muster). 

The website has been around for a couple of years, but Rochard just rolled out a new feature: a pledge option that allows users to commit funding to a specific protocol improvement and pay developers once that improvement is merged into Bitcoin Core.

BitcoinACKs: a product of the scaling wars

Related: Market Wrap: Bitcoin Holds at $10.7K; Uniswap Volume Drops

BitcoinACKs was born from the 2017 scaling wars, Rochard told CoinDesk. The bedlam of online debates over block size increases and Segwit made Rochard realize that a well-organized, transparent repository of Bitcoin’s development was necessary, for both Bitcoin’s builders and its consumers.

“After the 2017 scaling drama I decided to get more informed about the Bitcoin open-source development process and see if I could find ways to be helpful. One challenge I had was finding pull requests with specific criteria I was interested in taking a look at: pull requests that were old but had good reviews, pull requests that had been rejected by reviewers, etcetera,” he told CoinDesk. 

Read more: SegWit Goes Live: Why Bitcoin’s Big Upgrade Is a Blockchain Game-Changer

“There are 13,600 closed pull requests and 388 open ones. For most contributors this is an intractable amount of data to digest! A second challenge was that all of the data related to pull request discussions is siloed on GitHub, and I wanted a local copy to query quickly and with SQL. That’s when I decided to build BitcoinACKs.”

A way to track pull requests, pay for Bitcoin developments

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

The website aggregates pull request comments from developers on GitHub to help developers stay on top of a pull request’s status. On the site, each request is accompanied by its upvote and downvote count, the pull request’s author, the date the request was created, who has reviewed it, when the last commit was made in the repository, and whether or not the request has been merged into a Bitcoin Core library for deployment in a protocol update. 

With this latest update, Rochard has included a “pledge” feature whereby anyone can pledge to pay contributors for their work on specific pull requests. These pledges can be paid out via Lightning or on-chain payments processed through BTCPay Server. 

Those funding development will be able to choose which developer they want to pay for a given pull request, and Rochard told CoinDesk that there are no penalties or enforcements for holding a user to their pledge; it’s up to the user to decide when/if they want to pay out a pledge based on whether or not they are satisfied with the work. 

If too many users flake on payments, though, Rochard said he’ll take actions to mitigate such bad behavior. This could involve using discrete log contracts to create smart-contract ensured settlement. In this case, if a user pledges funds to a developer for a pull request, when the request is merged successfully, this result is revealed to the smart contract to release payment.

Skin in the game

BitcoinACKs’ crowdfunding mechanism is a first in Bitcoin’s open-source landscape. Before, you could sponsor individual developers, but you couldn’t directly fund individual upgrades.

Rochard’s tool makes this possible with its bid to drive Bitcoin’s development with free-market principles by aligning user desires with developer incentives.

“To me, BitcoinACKs is how all work should be done: limit orders (pledges) are put in by capital owners, workers create value, and the capital owners send cash directly to the workers. If a capital owner starts spoofing (unfairly reneging on pledges), they get kicked off the platform. If workers don’t create value, then they don’t get paid.”

Read more: Summer 2020 Is Funding Season for Open-Source Bitcoin Development

This quid pro quo gives its users an avenue to express their desires for the Bitcoin protocol’s development while giving developers another source of revenue. 

BitcoinACKs, then, opens a new, developing frontier for both average users and developers. Usually, open-source funding has been the realm of cryptocurrency exchanges or other Bitcoin-related companies. These actors will often offer six-figure lump-sum grants to independent developers to fund their work, as we’ve seen from Kraken, Square Crypto and others. 

Now, these high-rolling sums can be matched – if not in kind, then at least in spirit – by the smaller-sum contributions of the Bitcoin community. Rochard emphasized that this model could even help fledgling devs get eyes on their work by sponsoring a bounty for their own pull requests. 

User pledges vs. corporate grants

Ultimately, Rochard sees BitcoinACKs as another building block for bankrolling Bitcoin development. It’s the complementary hand shovel to the corporate grant’s bulldozer, facilitating focused, feature-specific work where the grants allow for more general, developer-specific labor.

“I think corporate grants work great for funding a specific subset of open source work: independent, self-directed work. It’s funding a public good that has positive externalities on the ecosystem, and I think every profitable business should be doing it. 

“BitcoinACKs is for funding targeted, specific outcomes. For example, perhaps your business needs a specific API feature, rather than asking for favors or hiring full-time contributors, it’s more convenient to put a bounty on it.”

At press time, 11 pull requests have received pledges ranging from 10,000 satoshis to over 2 million satoshis (or “sats” – a micro measurement of bitcoin wherein 100,000,000 sats equals 1 BTC). The two most popular projects, a Bitcoin Improvement Proposal for taproot and another for encrypting messages between Bitcoin nodes, have received pledges of 2,010,116 sats (~$214 or 0.02010116 BTC) and 1,241,210 sats (~$132 or 0.0124121 BTC) respectively.

Related Stories

• First Mover: Binance CEO Sees Future in DeFi While Bitcoin Volatility Turns Minuscule
• Binance CEO Says He Fully Expects DeFi to Cannibalize His Crypto Exchange

Coinbase CEO Brian Armstrong sent his employees a letter telling them to get in line with a new company “culture shift,” offering those unwilling to do so a “generous separation package.”

• Armstrong sent the letter, which CoinDesk obtained, to Coinbase employees on Wednesday, stating the time has come to have a “difficult conversation” over his recent clarification of Coinbase's mission.
• A person close to the situation and speaking under condition of anonymity confirmed the letter was real and said Coinbase recognized certain employees weren’t comfortable with the new direction.
• Armstrong wrote that Coinbase had “an apolitical culture” in an open letter published Sunday that said the exchange would not engage in “broader societal issues” or entertain employee discussions about these issues.
• Those employees unhappy with the new direction have been informed they can take up a separation package because “life is too short to work at a company that you are not excited about.”
• The packages includes four months severance for employees who have been at the exchange less than three years or six months for longer-term employees.
• Coinbase will also offer six months of health insurance through the U.S. government’s COBRA program.
• Armstrong said that he acknowledged “many” were still processing the “cultural shift” and offered to answer questions in an ask-me-anything forum slated for Thursday.
• Coinbase’s CEO also said employees have until Oct. 7 to submit a form to begin the process of severance should they chose to do so.
• Beyond that date, it will be assumed that everyone at the company agrees with the new company direction, the letter reads.
• “It doesn’t mean you have to agree with every aspect,” Armstrong said, “but you should be at least able to disagree and commit to making this new direction a success.”

See also: Coinbase Has Drawn a Line in the Sand for Its Activist Employees

Read the full letter below:

Related: Overstock Short Sellers Fall Short as Judge Gives Digital Dividend Claims Short Shrift

Related Stories

• Coinbase Launches 5% Staking Rewards for Cosmos’ ATOM
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Overstock.com and its former leader Patrick Byrne have prevailed over the dividend-doubting short sellers who cried foul (and filed suit) over the e-commerce site’s issuance of a digital security.

• On Tuesday, U.S. District Judge Dale A. Kimball tossed the federal class action first filed last September by short sellers who claimed they’d been hosed by Byrne.
• The suit had been challenged by defendants as “meritless” when they called for its dismissal in May.
• Plaintiffs accused Overstock of fraudulently pumping its stock with misleading financial projections and by promising to issue a digital dividend to shareholders via its tZERO subsidiary, an alternative trading system for digital securities.
• That digital security’s originally planned six month lockup would have put the squeeze on short sellers unable to cover their positions. In their original filing in U.S. District Court, plaintiffs called it a “secret plot” by Byrne to exact “revenge” on short sellers
• But if the plot was one for revenge, then it was hardly a secret: Judge Kimball said the digital dividend’s “broad media coverage” undercuts plaintiff’s claims that Byrne or Overstock “deceived anyone,” according to Law360.
• While Byrne’s very public hatred of short sellers is rivaled perhaps only by Elon Musk, Judge Kimball said that’s neither here nor there, because Overstock had a “legitimate business purpose” for issuing its digital security.
• “Overstock was trying to transition from being a traditional online retailer to a blockchain technology business. The dividend was a creative way to strengthen that transition,” Judge Kimball said.

Related Stories

• Coinbase Launches 5% Staking Rewards for Cosmos’ ATOM
• Kadena Looks to Capture DeFi Energy With New Decentralized Exchange
• KuCoin Maintains Wallet Freeze as Hackers Begin Laundering Stolen Crypto
• Regulated US Exchange Gemini Now Offers Confidential Zcash Withdrawals

As bitcoin struggles to hold the $10,700 price range Uniswap’s September volume set records but appears to be declining.

• Bitcoin (BTC) trading around $10,757 as of 20:00 UTC (4 p.m. ET). Slipping 1% over the previous 24 hours.
• Bitcoin’s 24-hour range: $10,621-$10,924
• BTC above its 10-day moving average but below the 50-day, a sideways signal for market technicians.

Bitcoin’s price dropped a couple of hundred dollars as a spate of selling took the world’s oldest cryptocurrency to as low as $10,621 on spot exchanges such as Coinbase, recovering to $10,757 as of press time. 

Katie Stockton, analyst for Fairlead Strategies, says cryptocurrencies like bitcoin are affected by traditional markets, particularly equities, which are considered “risk-off” or liquid assets that can easily be sold during a market slide. 

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

“Bitcoin has been attuned to the day-to-day moves in risk assets, but the end result of the intraday volatility is a consolidation phase on the chart,” said Stockton. “Short-term momentum has improved with equities, so I expect the consolidation to give way to a move that leaves support near $10,000 intact.” 

Global equities markets are weak today, either flat or down:

• Asia’s Nikkei 225 closed flat, in the green 0.12% as Japanese investors remained pensive ahead of Tuesday’s U.S. presidential debate.
• Europe’s FTSE 100 ended the day slipping 0.51% as the U.K. and European Union signaled they are still a ways off on finalizing Brexit negotiations.
• In the United States the S&P 500 slipped 0.30% as a resurgence of coronavirus cases in New York City helped to lead negative sentiment Tuesday.

Michael Gord, chief executive officer of crypto trading firm Global Digital Assets, senses a bearish mood for the crypto markets. “Bitcoin might get over $11,000 for a short period this week, but with a big exchange like KuCoin being hacked over the weekend I expect this week to have a more bearish sentiment with retail investors,” said Gord. “Institutional investors, on the other hand, might be taking this buying opportunity to buy cheaper bitcoin.” 

Read More: KuCoin Maintains Wallet Freeze as Hackers Begin Laundering Stolen Crypto

Related: Regulated US Exchange Gemini Now Offers Confidential Zcash Withdrawals

Several stakeholders in the crypto market see a lack of yields coming from traditional markets as a sign cryptocurrency has a place in uncertain times.  

“We are moving into a period of stagflation – stagnant growth and inflation – which creates a steepening of yield curves in the fixed income world,” said Chris Thomas, head of digital assets for Swissquote Bank. 

Indeed, U.S. Treasury yields have dropped in 2020 – the two-year maturity is at its lowest yield in over 10 years.

“I have a customer leaving bonds for bitcoin. I look at that as very bullish,” said Henrik Kugelberg, a Sweden-based over-the-counter crypto trader. “Bonds that are supposed to be the safest bet there is to actually make a buck on your invested money now all of a sudden seems less attractive than bitcoin.”

Uniswap volume dips

Ether (ETH), the second-largest cryptocurrency by market capitalization, was down Tuesday trading around $356 and slipping 1.5% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

Read More: Bitcoin May Return to Center Stage After Ethereum’s White-Hot Summer

Uniswap has had a stellar September, with the decentralized exchange, or DEX, having a record $953 million in volume on the very first day of the month. Since then, however, volume has declined. 

Toward the end of Tuesday, volume was $312 million, lower than September’s $468 million daily average.

“Uniswap is by far the most successful decentralized trading venue, some days rivaling its centralized counterparts,” said Brian Mosoff, chief executive of Ether Capital. 

However, volume doesn’t mean everything for a DEX: Mosoff points to Uniswap’s Tuesday record-high of $2.29 billion in liquidity, which is the depth, or availability, of assets traded on the DEX, as a metric traders should also consider.

”Liquidity has just reached a new all-time high on Uniswap – this means that asset pricing is becoming more competitive and because of this it may capture the majority of trading volume once speculative activity abates,” Mosoff added.

Other markets

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

• zcash (ZEC) + 5.7%

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

• orchid (OXT) – 10.3%
• chainlink (LINK) – 8.3%
• 0x (ZRX) – 8.2%

Read More: Traders Rotate to Bitcoin Expecting a Quiet Q4 for Altcoins

Commodities:

• Oil was down 3.7%. Price per barrel of West Texas Intermediate crude: $39.03.
• Gold was in the green 0.86% and at $1,896 as of press time.

Treasurys:

• U.S. Treasury bond yields all fell Tuesday. Yields, which move in the opposite direction as price, were down most on the two-year, dipping to 0.123 and in the red 4.5%.

Related Stories

• First Mover: Binance CEO Sees Future in DeFi While Bitcoin Volatility Turns Minuscule
• Binance CEO Says He Fully Expects DeFi to Cannibalize His Crypto Exchange

Coinbase is expanding its staking rewards program to include Cosmos’ ATOM token. Starting Tuesday, users will automatically begin earning 5% annually on their ATOM holdings.

• ATOM is only the second cryptocurrency to join Coinbase’s nearly year-old rewards program, after tezos (XTZ) kicked off the service in 48 U.S. states last November.
• With the addition of ATOM, Coinbase is making staking available to eligible customers in the U.S., Britain, France, Spain, Netherlands and Belgium. The same geographies (except for Belgium) were covered in an expansion of XTZ rewards in May. 
• Coinbase projects the staking yield around 5% based on historical rewards rate data. The San Francisco-based exchange said it will pay out ATOM rewards every seven days. XTZ payouts arrive every three.
• Cosmos, an interoperability project meant to connect blockchains and their native tokens, has been gaining steam in recent months. CoinDesk reported in August that Cosmos blockchain technologies have been used to “secure” $6 billion in crypto assets.
• Coinbase first listed ATOM in January 2020.

Read more: Cosmos’ Founding Team Broke Up Early This Year. The Project Didn’t

Related Stories

• Kadena Looks to Capture DeFi Energy With New Decentralized Exchange
• Coinbase’s New Policy: Anti-Woke or Just a Joke?
• KuCoin Maintains Wallet Freeze as Hackers Begin Laundering Stolen Crypto
• Regulated US Exchange Gemini Now Offers Confidential Zcash Withdrawals

Hybrid blockchain platform Kadena plans to launch a new multi-chain decentralized exchange (DEX) in hopes of wooing business from congestion-plagued Ethereum-based rivals.

Called Kadenaswap, the new DEX, unveiled Tuesday and set to debut late this year, will attempt to skirt Ethereum’s surging gas fees and perennial network congestion (caused in part by the explosive success of Uniswap) by providing decentralized finance (DeFi) traders with an alternative platform that Kadena President Stuart Popejoy claims can handle high volumes.

• Popejoy told CoinDesk his DEX will have no problem processing 480,000 transactions per second sitting atop Kadena’s public blockchain, launched early this year.
• Further, he said Kadena’s existing bridge infrastructure, which currently facilitates cross-chain KDA token transfers via the Pact smart contract language, can easily port over to the coming DEX.
• “We already have production code with fully decentralized bridges, and so that creates an interesting opportunity to think of a multi-protocol, multi-venue DEX,” Popejoy said.
• Kadenaswap will incentivize DEX market makers to spread their token pools “across the board” in a bid to ensure adequate cross-chain liquidity, said Popejoy.
• Popejoy said Kadena is not fazed by the Ethereum network’s oft-delayed protocol upgrade, Ethereum 2.0. Popejoy claimed that key stakeholders have long ago lost faith in the self-styled world computer’s attempted reboot.

Related Stories

• Coinbase Launches 5% Staking Rewards for Cosmos’ ATOM
• KuCoin Maintains Wallet Freeze as Hackers Begin Laundering Stolen Crypto
• Regulated US Exchange Gemini Now Offers Confidential Zcash Withdrawals
• Investors Flock to India’s DeFi Scene Months After Central Bank Ban Overturned

Canadians are on the cusp of financial sovereignty. As fears of impending inflation and economic uncertainty take hold, individuals and corporations alike have turned to bitcoin.

California beefed up its financial regulator, Bitpanda closed a notable raise and some investors say “alt-season” is over. 

Top shelf

Brokerage raise
European crypto brokerage Bitpanda has raised a $52 million Series A led by Peter Thiel’s Valar Ventures, to be put to use expanding the company’s payroll and adding a variety of products. Next year the Vienna-based firm intends to expand to “all kinds of asset classes” including stocks. In an interview, the firm’s co-founders told CoinDesk’s Leigh Cuen France, Spain and Turkey were among the fastest-growing crypto markets out of the roughly 34 countries the platform serves.

Regulator reprised
California Gov. Gavin Newsom signed a bill on Friday that increases the scope of the state’s financial regulator. Renamed the Department of Financial Protection and Innovation, the agency is now equipped with “new tools to shape the regulation of virtual currency” and enhanced abilities to crack down on unlicensed or deceptive financial services and products. The new law will also create an Office of Financial Technology Innovation to engage with emerging financial products such as cryptocurrencies and a division to oversee markets. 

Related: First Mover: Binance CEO Sees Future in DeFi While Bitcoin Volatility Turns Minuscule

Hard fork
Artificial intelligence and data service Ocean Protocol has suspended its old contract on the Ethereum blockchain and hard-forked its project, following the $150 million KuCoin hack. On Sunday at 22:00 UTC, Ocean Protocol announced it had migrated from its old token address to a new one to thwart the KuCoin hacker’s attempts to offload 21 million OCEAN tokens worth some $8.6 million. “Moving contract addresses has effectively blacklisted the hacker’s stash of OCEAN tokens. But it also raises questions of the project’s true immutability if the protocol can be effectively hard-forked in one weekend,” CoinDesk’s Will Foxley reports.

Corporate statement 
Coinbase CEO Brian Armstrong published a blog Sunday calling the company “mission focused,” with the underlying message that it won’t engage on political or social topics outside its domain of open finance. That said, employees are expected to pursue social activism in their own time. CoinDesk’s Paddy Baker reports the blog has “split the crypto industry straight down the middle,” with many commending the public stance while others deem it regressive. For instance, Boost VC’s Adam Draper said focusing on a “unified mission” was the only way to achieve its goals. Others in the Twitterverse have called the message out-of-touch, and a way to downplay issues that directly affect employees’ lives.

Maker doubts?
A class-action lawsuit alleging the Maker Foundation and others knowingly misrepresented the risks of investment has been sent to arbitration. The case centers around plaintiffs who claim to have incurred six-figure losses during the “Black Thursday” crash in mid-March and allegations that Maker’s stewards misrepresented the security and collateralization of the platform. The DAI stablecoin is over-collateralized, they argue. In an order last Friday, Judge Maxine Chesney granted a motion by the Maker Foundation to refer the case to the American Arbitration Association as specified in a clause in the foundation’s terms of service.

Quick bites

• Closing Decentralized Marketplace OpenBazaar Gets Lifeline (Jeff Benson/Decrypt)
• Silvergate Bank: How Deep Is the Moat? (Matt Yamamoto/CoinDesk)
• Binance CEO Sees Future in DeFi While Bitcoin Volatility Turns Minuscule (First Mover/CoinDesk)
• Avalanche, the latest staking network to launch, already has more than $1 billion staked (John Dantoni/The Block)
• MESE.io brings stock trading to the unbanked (Leo Jakobson/Modern Consensus)

At stake

DeFi v. CeFi
In an exclusive CoinDesk interview, Binance CEO Changpeng “CZ” Zhao said he fully expects decentralized finance (DeFi) to cannibalize his own crypto exchange. 

Related: Blockchain Bites: DeFi Meets NFTs, TSLA Beats Bitcoin in Volatility, Uniswap Breaks $2B

“Our mission is not to build a CeFi exchange,” Zhao said in an interview with CoinDesk’s Muyao Shen, using a shorthand term for centralized finance. “Right now it is one of our larger businesses that support our growth. But over the long term, we want to push decentralization.”

Zhao’s comments reflect the growing competition between centralized exchanges and their more community-driven alternatives. Faced with quick-moving projects that can iterate week to week, Zhao is tasked with evolving the world’s largest crypto exchange (by volume) to something that can meet the moment. 

At a micro-scale this battle played out between Uniswap, a venture-backed automated market maker (AMM), and its upstart clone Sushiswap, which features a governance token. As reported, Uniswap responded to the challenger by integrating its own governance token – a means to spreading the wealth among its community members. 

Uniswap is part of the DeFi ecosystem currently threatening exchanges like Binance, Huobi and Coinbase. In recent months, Binance has been targeting the DeFi ecosystem as a growth sector. 

“The company’s new foray into DeFi, Binance Smart Chain, attempts to replicate some of the features of the Ethereum blockchain that have proven fertile for developers building decentralized, blockchain-based trading and lending applications that theoretically could one day challenge traditional lenders and Wall Street trading firms,” Shen reported. 

But building decentralized systems is difficult. The Binance Smart Chain is run by only 21 nodes and the majority stakeholder of its native BNB tokens remains Binance.

Zhao said this comparatively centralized structure was to better compete with Ethereum. 

“So in my mind, I’m never worried about the business model,” Zhao said. “I’m always much more worried about if we have users using the product. There’s always multiple options for business models, so the key is to build something that’s useful.”

Market intel

Alt-season?
Some digital asset traders say they’ve been rotating funds out of alternate cryptocurrencies (altcoins) into bitcoin (BTC) in anticipation of the leading cryptocurrency significantly outperforming the entire crypto market for at least the next several months. CoinDesk’s Zack Voell reports bitcoin is down so far in September, dropping more than 10%. Still, bitcoin became “under owned” during the DeFi craze, according to Kyle Davies, a prominent DeFi investor and co-founder of Three Arrows Capital, and likely correction is due to follow. Kevin Zhou, co-founder of San Francisco-based Galois Capital, outlined a similar theory. 

Tech pod

Latest testnet
Ethereum 2.0 developers have launched yet another testnet, this time to give on-boarding stakers a dry run before the launch of Eth 2.0 sometime this fall. The testnet, called Spadina, follows the official Ethereum Foundation’s Medalla testnet which launched in early August and will only be in use for the next three days while Eth 2.0 stakers practice joining the network with the testnet. “The main objective is to give us all another chance to go through one of the more difficult and risky parts of the process – deposits and genesis – before we reach mainnet,” Ethereum Foundation researcher Danny Ryan blogged.

Op-ed

Rethink
CoinDesk Executive Editor, Operations & Strategy Pete Pachal penned a response to Coinbase CEO Brian Armstrong’s recent public statement and the division his “mission-focused” stance has stirred. “Armstrong’s position isn’t a message to Silicon Valley heavyweights to turn back the clock on employee “wokeness” – it’s an open letter to every other corporate leader, urging them to connect the dots between the political positions they might be taking and the central mission of their companies. And if the result is a picture they don’t like, rethink,” Pachal writes. 

Stability?
Shiv Malik, author and head of growth at Streamr, thinks crypto needs a euro-pegged stablecoin. The U.S.’ recent social and political upheavals are placing serious strain on the dollar’s future hegemony. “And if America is so precariously balanced between further prosperity and potential disaster, so, too, rests the fate of the U.S. dollar for the rest of the world. Just the issue of U.S. Treasury debt issuance alone has had professional money managers warning this month that the U.S.’s reserve currency status is under threat,” he writes. 

Who won #CryptoTwitter? Related Stories

• Crypto Long & Short: The OCC’s Stablecoin Statement Is a Seed of Financial Innovation
• Blockchain Bites: Crypto Tax Switcheroo, Stablecoin Confusion, the Post-Capitalist Plunge

Permission.io is a platform that pays users in ASK tokens for engaging with, or even looking at, ads. Built on a fork of the Ethereum blockchain, the Permission platform incentivizes users to grant advertisers and other merchant participants access to their time and data in a peer-to-peer way. 

Over the past 12 months, the startup has raised $5 million through a token pre-sale, and recently closed another round of funding that put the company at $47 million raised through equity financing. And since the platform came out of beta a few weeks ago, it has over 450,000 users, according to the company. 

“Our model is all about advertisers being able to pay individuals directly through crypto, where advertisers’ return on their investment will go up dramatically,” said Permission CEO Charlie Silver. “Everybody’s happy and everybody wins. The user is now being compensated for what typically, today, companies like Google and Facebook are being compensated for.”

Related: Regulated US Exchange Gemini Now Offers Confidential Zcash Withdrawals

See also: Twetch Launches Encrypted Messaging, In-Chat Payments on BSV Blockchain

Data ownership: How users give Permission

The idea of shifting the benefits of ads back toward users and advertisers rather than middle men isn’t necessarily new. The Brave browser, for example, has let its users choose whether or not to turn on their rewards token system in exchange for viewing ads since its official launch in 2019. 

Silver, while complimenting Brave’s leadership in the area, is quick to point out how Permission is different. He said Brave is purely a browser that collects no data, contending the ads people are served are random.

Permission, on the other hand, allows people to be served ads through their “behavioral data.” Behavioral data means ads are served based on activities such as brand interactions and content consumption. 

Related: New Blockchain Program Aims to Counter Fake Viewer Data, Scam Ads

“By the end of the year, users will have access to a feature called ‘MyData,’ which will allow them to input specific data points around preferences that will create even more precise ad targeting, and also restrict the ability of brands to reach users that aren’t interested in their products,” said Silver. 

Silver said this tool will allow users to directly revoke or manage their data, with Permission acting as an agent for this data rather than a middle man.

All data generated through Permission, regardless of source, is anonymized on the advertiser end, according to SIlver. While Permission will know which data is tied to a person (for the purpose of awarding ASK Coins) advertisers won’t be able to link it to an individual. 

See also: Tor Project Launches Membership Program to Boost Agility, Funds

The startup has integrated with the payments provider CoinPayments, which is accepted by over 3,000 merchants and retailers, to enable people to use various cryptocurrencies like ASK for online purchases. 

When you sign up for Permission, you earn some ASK for doing so. You’re then free to go throughout the platform and “shop and discover product videos that would be of interest to you,” according to Silver. 

Tailored advertising: How merchants get Permission

There are two ways that merchants can connect with customers through Permission. First, Permission hosts its own Shopify store where it lists all the participating merchants in its program. 

Second, Permission enables merchants to install its plugin on their own Shopify store sites.

“We’ve built plugins for Shopify and Magento, so e-commerce merchants can simply install a plugin, which will allow them to offer ASK on their site and reward their customers,” said Silver. “So on Permission we’re working to show the efficacy of this kind of permission-based ad delivery.”

For example, a shoe store on Shopify could plug into Permission and display its ads in the Permission marketplace, reward people with ASK for viewing tailored advertising, and then let people purchase their goods in the Permission.io marketplace, using ASK. 

To test this, I logged onto Permission.io (I earned 100 ASK for doing so), and was taken to the marketplace dashboard, where a number of ads were displayed to me. One was for a pair of steel-toed sneakers, and I clicked on it.

After watching a 30-second video of someone jumping around in the sneakers and having their steel toe-protected foot rolled over by a car, I earned 100 ASK.

At this point I only had 200 ASK in my wallet, but if I were to complete enough tasks and earn enough ASK, I could spend it on these sneakers, foregoing U.S. dollars. 

See also: Social Engineering: A Plague on Crypto and Twitter, Unlikely to Stop

“While we will promote those stores on our platform, ultimately we’re looking to help eCommerce merchants drive traffic and conversion to their own stores,” said Permission CTO Hunter Jensen. “By installing our plugin, users will interact with the merchant’s store but will be able to earn ASK along the buying journey.”

Silver said he thinks the Permission model is a key part of data ownership and sovereignty, based around the user, rather than companies like Google and Facebook. 

“Our goal is to really build what we call the permission economy, where millions of websites are offering their users ASK to engage with them on various levels,” said Silver.

Related Stories

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With the U.S. elections just five weeks away, the crypto market’s focus looks to be shifting back to bitcoin and away from ether and the Ethereum ecosystem.

• The spread between the six-month implied volatility (IV) for ether (ETH) and bitcoin (BTC), a measure of expected relative volatility between the two, fell to a 2.5-month low of 4% over the weekend, according to data source Skew. 
• The metric has declined from 21% over the past four weeks.
• The spread’s reduction indicates that the market doesn’t expect a lot of dispersion between the two coins and foresees ether trading in line with bitcoin in the near term.
• Implied volatility is the market’s expectation of how risky or volatile an asset would be over a specific period and is driven by net buying pressure for options and historical price volatility.

• “The decline could signal a change in market leadership back to bitcoin after a couple of months focus on the Ethereum complex,” Skew’s CEO Emmanuel Goh told CoinDesk.
• Bitcoin has matured as a macro asset since the beginning of the coronavirus crisis in March.
• As such, it could lead the price action in crypto markets in the run-up to and following the Nov. 3 U.S. presidential election, which could be the most contentious in recent decades and have a significant impact on traditional markets.
• The six-month ether-bitcoin IV spread rose sharply from 0.9% to 15% in July and reached a high of 21% in mid-August, as the decentralized finance (DeFi) boom boosted interest in ether.
• The total value locked in the DeFi platforms, most of which are based on Ethereum’s blockchain, quadrupled to over $8 billion in July-August and recently rose to record highs above $11 billion, according to DeFi Pulse.com.
• As such, ether options drew greater demand than bitcoin, leading to a rise in volatility spread. Options are hedging instruments that give holders the right to buy or sell an asset at a predetermined price.
• “ETH volatility had gone to a premium due to increased demand for options at higher prices. That demand is now subduing a bit, and leading to a mean reversion in the ETH-BTC volatility spread,” Vishal Shah, an options trader and founder of Polychain Capital-backed derivatives exchange Alpha5, told CoinDesk in a Telegram chat.
• The ether-bitcoin one-month realized correlation coefficient has also risen back to 0.80, having declined from 0.90 to 0.57 in July-August, as per data provided by Skew. A coefficient of 1.0 means two assets are perfectly correlated while 0.0 means they are not correlated at all.
• At press time, bitcoin is trading at $10,750, having faced rejection near $11,000 on Monday, according to CoinDesk’s Bitcoin Price Index.
• While ether has rallied by 58% this quarter, bitcoin has gained just 18%.

Also read: Bitcoin Has Been Less Volatile Than Tesla Stock for Months

Related Stories

• First Mover: Binance CEO Sees Future in DeFi While Bitcoin Volatility Turns Minuscule
• Binance CEO Says He Fully Expects DeFi to Cannibalize His Crypto Exchange
• Market Wrap: Bitcoin Hits $10.9K; Ether Options Signal Short-Term Volatility
• Why Bitcoin’s Longest Run Above $10,000 Matters

KuCoin left its customers’ accounts on lockdown Tuesday as the exchange’s weekend hackers continued to slosh around millions of dollars in stolen cryptocurrency.

• Transaction tracing twitter account Whale Alert flagged 18.4 million XRP tokens ($4.5 million) flowing into a “hack wallet” on Tuesday morning eastern time.
• Hackers routed 17 million of that haul into a sub-wallet less than an hour later. Shortly after that, four batches of roughly four million tokens apiece flowed into yet more sub-wallets, where they appeared to sit at press time.
• The XRP is only a drop of the $281 million in cryptocurrencies (especially bitcoin, Tron tokens, Stellar tokens and Ethereum tokens) that tracing firm Elliptic estimated was stolen from KuCoin over the weekend.
• Ethereum-based tokens in particular dominate the haul. Hackers made off with $150 million total in tether, chainlink and other Ethereum-based tokens, Elliptic said.
• The hackers have largely failed to sell those tokens on closely guarded centralized exchanges which quickly flag and often block hacked funds.
• Still, by Monday, Elliptic said that hackers had already flipped millions of stolen tokens for $7.5 million in ethereum (ETH) on decentralized exchanges (DEX) Kyber Network and Uniswap.
• Elliptic, which is now eyeing that ETH, said in its Monday blog post that the laundering will likely continue on DEXs.
• KuCoin maintained its post-hack deposit and withdrawal freeze well into Tuesday. It began cancelling previously scheduled programming (including a trading competition) as a result.

Related Stories

• Regulated US Exchange Gemini Now Offers Confidential Zcash Withdrawals
• Investors Flock to India’s DeFi Scene Months After Central Bank Ban Overturned
• SEC Won’t Take Action Against Compliance-Focused Digital Security Exchanges
• $28M MakerDAO ‘Black Thursday’ Lawsuit Moves to Arbitration