Crypto Briefing

$165 Million Bitcoin Moved to Ethereum after Uniswap’s UNI Token Launch

Sat, 19 Sep 2020 13:05:36 GMT

WBTC (Wrapped Bitcoin) added 10,800 tokens 24 hours after UNI token launch, taking the amount Bitcoin locked in DeFi to $1.2 billion. High returns on Bitcoin-specific pools is another impetus for the mass move.

The Uniswap Effect

Wrapped Bitcoin is tokenized BTC issued on Ethereum. Launched in January 2019, WBTC had a relatively slow growth until the explosion of DeFi’s yield farming. WBTC has surpassed $800 million in locked value, adding Bitcoins worth $500 million since August.

Total Value Locked in WBTC Source: DefiPulse

Uniswap is the leading decentralized exchange (DEX), which is leaving centralized exchanges like Coinbase behind.

The WBTC-ETH pool on Uniswap has become a significant source of attraction as it is one of four pools on Uniswap with added UNI token incentives.

Currently, the WBTC-ETH pool is the largest pool on Uniswap in total liquidity at $391 million. This amounts to a staggering 900% increase since Sept. 17. The relative volume of other WBTC pools on Uniswap paints a clear picture of the source of the demand.

While the WBTC-ETH pool 24-hour volume is close to $40 million, it is zero for the other WBTC pools.

WBTC Liquidity on Uniswap Source: Uniswap Info

New UNI-incentivized pools will not be added for the next 30 days within the governance grace period. This indicates that the expansion of the pool is likely to continue.

The other pools which qualified for yield farming UNI include DAI-ETH, USDT-ETH, USDC-ETH. These pools expanded by 880%, 136%, and 142%, respectively, since the announcement.

Bitcoin on Ethereum

The total value of BTC locked in smart contracts is $1.25 billion, at the time of writing.

Bitcoin pools and vaults are gaining more traction due to their high returns, causing an increase in the amount of minted WBTC, renBTC, and sBTC on Ethereum.

Tokenized Bitcoin is an ERC-20 token whose value is backed by actual BTC locked in the specific smart contracts. Tokenized BTC is compatible with DeFi platforms built on Ethereum.

RenBTC on Curve accounts for 18% of the total deposited value, just short of $1 billion. The yEarn Finance vaults’ annual returns for Curves’ sBTC LP comprising RenBTC, WBTC, and sBTC is around 30%. Whereas, the other two cryptocurrency-based vaults on Ether and Link project a yearly growth of 1.73% and 2.24% only.

Recently, Curve also added a new HBTC pool to its decentralized exchange platform. But the pool has only added $1,300 worth of HBTC in the one week of launch.

The liquidity mining returns on DeFi platforms increases the incentives for holding Bitcoin. However, these carry additional smart contract risks that come with the potential loss of actual Bitcoins backing the token.

Forced liquidation, loss of tokens, technical glitches, and theft are some of the few risks that come with Bitcoin minted on Ethereum.

DeFi’s Obsession With "Fair Launches” Is The Death of Innovation

Sat, 19 Sep 2020 12:24:11 GMT

Fair launches are now the hottest trend in DeFi, but poorly aligned incentives may mean the industry trades true innovation with short-term gains.

Fair for Who?

It’s hard to believe SushiSwap launched less than a month ago. The Uniswap fork had an accelerated boom-bust cycle with copious amounts of controversy, drama, and twists.

But the greatest impact of SushiSwap was popularizing the concept of “fair launches.

Uniswap raising $11 million from eminent VC funds didn’t sit well with the community. Specific individuals believed in the spirit of decentralization, indicating that all protocols should adhere to a broad public distribution of tokens.

Community members were drawn to SushiSwap because 90% of all tokens would be given to liquidity providers (LPs). These same people harbored disdain for Uniswap because the team raised capital and put off a token launch.

Their reasoning was simple: Uniswap was being greedy by refusing to issue a token.

A token would allow DeFi community members to share in the protocol’s upside. Others argued that it would have been greedy to ask the team that built Uniswap from scratch and bootstrapped it into a potential Coinbase-killer to give up their share in the upside.

In the end, Uniswap was redeemed on two levels.

First, SushiSwap’s “developer fund” ended up becoming Chef Nomi’s (SushiSwap creator) personal retirement fund. If it weren’t for widespread anger and a potential doxxing, the pseudonymous creator would’ve walked away with funds earmarked to improve SushiSwap.

Second, Uniswap eventually did launch a token – and the distribution was fairer than most blue-chip DeFi protocols.

Still, fair launches, as they are currently defined, will be the death of development incentives.

If a person can make $14 million in a week just by forking two years of someone else’s hard work, why would any developer buckle down and build something fresh?

he Reality of Fair Launches

There are, of course, fair launch outliers. Cream Finance appears to be one such exception. The project is a fork of Compound but has somewhat established itself through new features.

Cream has lending and borrowing for more assets than Compound, implemented a new interest rate model, and gives fees earned by the protocol back to users (Compound doesn’t). This kind of fork makes sense. Though it leverages Compound’s base code, it adds new functionality to it.

But the majority of fair launches have a single goal in mind: make more money off investors’ greed. Crypto is undeniably in a bull market, and this has many users hunting big profits rather than true innovation.

The darkest side of fair launches, however, is the effect they could have on developers.

Imagine the founder of a new, cutting edge DeFi protocol. They’ve spent the last two years of their lives pouring blood, sweat, and tears into their product. In the name of decentralization and transparency, the founder makes all of the code open source.

On the token front, they issue 60% of tokens to the community through liquidity mining rewards. The founder sells 20% of their tokens to a group of investors to fund the hiring of employees and expenses for development, testing, auditing, marketing, and operations. The rest of the tokens are then distributed amongst the founder and the core team.

A month after the mainnet launch, operations are running smoothly. That is until an anonymous Internet character forks the protocol. Moreover, they say that giving the community a mere 60% is unfair. Instead, their fork will issue 95% of all tokens to the community while keeping 3% in the treasury and 2% for themselves.

The community hails the anonymous character as a harbinger of “true” decentralization for their perceived lack of greed. What some people seem to miss is that 2% of the tokens for forking code and playing a marketing game is not the same as pouring years of one’s life into something trailblazing and keeping a 20% reward.

At a $50 million market cap, that’s either $1 million for a week’s work versus $10 million for years of work. Not to mention, that $10 million doesn’t include the expenses incurred by the founder to get the project up and running.

Innovation Costs More than Money

Fair launches are a message that founders shouldn’t raise money from investors to bootstrap operations, because, for some reason, that’s unfair.

There’s nothing wrong with forking a protocol and building a new design into it. At the very least, that helps test a new version of the same protocol in the marketplace to gauge demand for such a service.

But forking a protocol and making no changes beyond a larger allocation for the public serves little purpose other than making a handful of users a bit richer.

If DeFi users turn to these so-called fair launches to make a quick buck, it could result in a mass exodus of developers from the ecosystem. And without the builders, the DeFi industry will have a much bigger problem moving forward.

Leading DeFi Chefs Rescue Dying Insurance Protocol With $25,000 Grant

Sat, 19 Sep 2020 11:43:43 GMT

Like Sushiswap, leading players in the DeFi sector have taken over insurance protocol SAFE, which suffered a setback due to early dumping and the inexperience of developers.

Making Peace to Save Decentralized Insurance

The opening statement from the project’s lead developer, Insurance Chef announcing the migration from SAFE to COVER reads:

“As the creator of SAFE, I acknowledge that mistakes were made in my handling of the SAFE token launch.”

Additionally, Azeem Ahmad, a co-founder of the previous protocol, will step away from the new project. Andre Cronje, the founder and creator of yEarn Finance, has offered a $25,000 grant to Insurance Chef, the co-creator of SAFE protocol.

Insurance Chef, a final year college dropout, received a grant of $25,000 and five Ether from Andre Cronje, the founder and curator of yEarn Finance, for building the COVER protocol. The new DeFi chef also received an undisclosed grant from Blue Kirby, also of yEarn Finance.

The complete details of the tokenomics have not been disclosed yet, only the promise of an “incredible product.”

The liquidity on COVER protocol referred to as risk exposure of the insurance mutual, will enable users to obtain COVER governance tokens. Risk exposure is the maximum potential loss that the insurance providers incur if the risk associated with these insurances materializes.

The developers have also coined a new term for liquidity mining of COVER called “shield farming.” With the new shield farming protocol, the creators have better aligned the incentives for farming and holding COVER tokens to avoid a dump of unrelated farmed assets, like with SAFE.

🛡 Shield mining for all Nexus Mutants #NexusMutants 💪 https://t.co/aFakU8O6P4

— HUGE KARP of Nexus Mutual 💪⛓🐢 (@nxm_memes) September 18, 2020

COVER protocol has also added two new core developers who will be working on the project alongside Insurance Chef.

The list of advisors to the project include Andre Cronje, Blue Kirby, Sam Bankman-Fried, the founder and FTX exchange and Serum, and Ivan Martinez, a prominent developer among crypto circles.

The expected launch date of the beta testing platform is Nov. 1, 2020. Only time will tell if the decentralized insurance protocol can finally take wings.

Flamingo Will Make Ethereum-NEO Multi-Chain Yield Farming Possible

Sat, 19 Sep 2020 00:24:36 GMT

NEO-Incubated DeFi project Flamingo Finance has announced a new feature, called Flamincome, that would allow crypto investors to earn interest by yield farming on NEO and Ethereum simultaneously.

Cross-Chain Yield Farming on Ethereum and NEO

Flamincome will work much like other yield farming platforms and aggregators in its first stages where users will be able to invest their tokens and earn income. The team suggests yields will be similar to those on yEarn Finance and other mainstream yield aggregators.

However, Flamingo differentiates itself in one big way—Flamincome will allow users to simultaneously earn revenue on multiple blockchains. By contrast, Ethereum-based yield farming platforms are limited to an “inward growing ecosystem,” the company claims.

In practice, this means that users will be able to stake Ethereum’s ERC-20 tokens as “original assets,” receive NEO-based nTokens as “pegged assets,” and earn revenue on both.

Flamingo Prepares To Launch

Flamincome is scheduled to launch Sept. 25. Even so, the app is already getting attention. NEO founder Da Hongfei has endorsed the app, stating that Flaming has an “unprecedented design” and a “brilliant design for crosschain DeFi kickoff.” He also believes that Flamingo will benefit NEO itself. By supporting assets in this way, Flamingo will “elevate NEO’s value as the digital assets protocol.”

NEO has long aimed to compete with Ethereum in the DeFi space, but its efforts have not been widely recognized. Its top DeFi apps are Nash and Switcheo, two DEXes that do not provide nearly as many revenue opportunities as Ethereum’s multitude of choices. Regardless of which blockchain has more merits, yield farming remains a high-risk investment. Investors should consider their options carefully before they select a platform to invest on.

VeChain’s Utility Expands Through China, Indicators Flash Buy

Fri, 18 Sep 2020 21:03:20 GMT

VeChain made headlines following a strategic partnership in China that could help them onboard thousands of businesses to its traceability solutions platform, VeChainThor.

The Crowd Goes Wild as VeChain Aims for Mass Adoption

The number of VET-related posts on different social media networks exploded over the past few hours, according to data from LunarCRUSH. Roughly 6.7 million social engagements were recorded in the last 24 hours, representing a 600% increase. More importantly, more than 69% of all the social interactions have been bullish about VeChain.

VeChain Social Engagement by LunarCRUSH

The rising chatter around VET across different social media networks appears to be related to one focal point: The blockchain startup announced that it has officially joined China’s Animal Health and Food Safety Alliance (CAFA) as a council member.

VeChain is set to be the only public blockchain technology provider in the alliance, providing technical and infrastructural support for the creation of a “from-farm-to-table traceability system” across the country.

“By using VeChain ToolChain, all enterprise members of the alliance will be capable of logging key processes of food products onto the blockchain in an immutable and secured way, bridging trust between consumers and the enterprises. Traceability can start from cultivation, processing, packaging, logistics, to retail and more, which perfectly assists CAFA’s vision of providing consumers with safe, high-quality and healthy food of animal origin,” reads the announcement.

By adding more organizations to its traceability solutions platform, the VeChain Foundation seems to be staying true to its long-term roadmap. This could be one of the reasons why investors have given VET their vote of confidence.

Sitting on the Cusp of a New Bull Rally

The sudden spike in buying pressure behind VET seems to have helped validate the optimistic forecast that the TD sequential indicator signaled last week. This technical index presented a buy signal in the form of a red nine candlestick on the 3-day chart. The bullish formation came after the 50% correction that saw this cryptocurrency drop from a yearly high of $0.023 to a low of $0.011.

Now that a green two candlestick is trading above the preceding green one candle within the 3-day chart, VeChain could be about to start a new upward countdown and possibly reach new yearly highs.

VET/USD on TradingView

IntoTheBlock’s “In/Out of the Money Around Price” (IOMAP) model adds credence to the bullish macro outlook. This on-chain metric shows that there aren’t any significant supply barriers ahead of the supply chain management token. The only area of interest that could hold rising prices at bay sits between $0.017 and $0.019.

Here, roughly 3,000 addresses had previously purchased nearly 14 million VET. Within this price range, holders may try to exit their underwater positions, putting a stop to VeChain’s uptrend. But if demand is significant enough, prices could bust through this hurdle and retest August’s high of $0.023.

In/Out of the Money Around Price by IntoTheBlock

On the flip side, the IOMAP cohorts show a prominent supply wall that could absorb some of the selling pressure. Approximately 4,000 addresses are holding 89 million VET between $0.013 and $0.015. These holders will likely scoop up tokens if prices fall below their buy price, allowing the altcoin to continue rising. Given these numbers, the odds currently favor an optimistic long-term outlook on VET.

Despite Cautiously Rising, On-Chain Data Says Bitcoin Is Due for a Steep Correction

Fri, 18 Sep 2020 14:20:28 GMT

The pioneer cryptocurrency continues trending upward despite mounting uncertainty in the market. While data shows Bitcoin has more room to go up, different metrics suggest that a correction may come before it advances further.

Bitcoin Rises Steadily, Aiming for $11,400

Bitcoin appears to have broken out of an ascending triangle that was forming on its 4-hour chart following the 19% drop seen at the beginning of September. Slicing through the x-axis of this consolidation pattern suggested that BTC was poised to surge over 7% to reach a target of $11,400.

Such a bullish target was determined by measuring the triangle’s highest points and adding that distance to the breakout point.

BTC/USD on TradingView

While prices have been steadily rising over the past few days, one particular on-chain metric indicates that nothing will prevent the flagship cryptocurrency from achieving its upside potential.

IntoTheBlock’s “In/Out of the Money Around Around Price” (IOMAP) model shows no significant supply barriers ahead that would obstruct a further advance towards $11,400. But moving past this hurdle will likely be difficult as 1.2 million addresses purchased over 720,000 BTC around this price level.

In/Out of the Money Around Around Price by IntoTheBlock

Regardless of the optimistic outlook, Santiment’s holder distribution chart reveals that large investors have taken advantage of the upward price action to realize profits. The behavior analytics firm recorded a significant decline in the number of addresses with millions of dollars in Bitcoin, colloquially known as “whales.”

Signs of a Retrace Before Further Gains

Over the past week, the number of addresses holding 1,000 to 10,000 BTC dropped substantially. Roughly 11 whales have left the network or redistributed their tokens, representing a 0.5% decrease in such a short period.

The sudden downturn in the number of large investors behind Bitcoin may seem insignificant at first glance. But when considering they hold between $11 million and $110 million in BTC, the spike in selling pressure can translate into millions of dollars.

Bitcoin Holder Distribution by Santiment

The TD sequential indicator adds credence to the probability of a potential downswing before the uptrend continues. This technical index presented sell signals in the form of a green nine candlestick on BTC’s 1-day and 12-hour chart.

The bearish formations forecast a one to four daily candlestick correction, which may see Bitcoin retest the x-axis of the ascending triangle previously mentioned.

BTC/USD on TradingView

It is worth mentioning that when assets break out of an ascending triangle, they usually retrace and retest the x-axis before surging to reach the target given by this technical formation. Therefore, a downswing towards the $10,600 may serve as an opportunity for sidelined investors to get back into the market and propel prices higher.

The IOMAP cohorts support this thesis since they show that Bitcoin sits on top of stiff support that may absorb some of the selling pressure in the event of a correction.

Living in America? Don’t Forget to Leave Some UNI Tokens for the IRS

Fri, 18 Sep 2020 12:00:30 GMT

Uniswap brought Christmas early this year, as the decentralized exchange (DEX) announced the UNI token airdrop to all of its liquidity providers (LPs).

Nevertheless, before spending it all, don’t forget to leave a slice for the IRS.

Capital Gain Tax or Income Tax?

Gains on cryptocurrencies entail a capital gain tax because digital assets are seen as property. However, mechanisms in DeFi have brought a change to that.

While crypto investors incur capital gain and loss taxes from the appreciation in the price of the cryptocurrencies held, direct earnings in DeFi are recognized as income and taxed as such.

Let’s take the example of Uniswap. Fees earned on Uniswap is the same as rent or interest income for individuals. If an LP earns $100 in fees, these earnings will be counted as regular income of $100. It does not matter at what price the digital asset is sold in the future.

This applies to all yield farming earnings.

Hence, UNI tokens distributed yesterday must be accounted for as income per their market value when they were claimed.

Income Tax on UNI Token Distribution

Out of one billion tokens, 15% of UNI was distributed to liquidity providers, users, and SOCKS redeemers/holders.

At $3 a token, Uniswap’s airdrop comes out to $450 million worth of free money for users. At an average income tax rate of 24%, the IRS would make $108 million if every recipient were based in the United States, which is not the case.

In the U.S., the percentage of income tax is calculated based on the total income of an individual, and varied rates apply beginning from 10% to 37%. The fiat amount of the tokens claimed from the DEX will determine the tax on the earned income.

For instance, an individual earning roughly $50,000 per year falls in the 22% category, according to American tax laws. Users are thus required to keep aside at least $200 to $300 (depending on the price of UNI at the time it is claimed) for the IRS.

Moreover, while 400 UNI tokens were distributed to all the users that ever used the DEX, liquidity providers and SOCKS redeemers/holders earned even more.

Of the total 150 million UNI tokens, about 49 million were distributed to LPs and SOCKS users depending on the liquidity amount and time for which liquidity was held on Uniswap pools before Sept. 1, 2020.

Instead of selling, if users hold their tokens in anticipation of future market gains, the IRS will account for those as capital gains or losses tax. It will be calculated from the price of UNI at the time of spending/selling subtracted from the price it was claimed for free.

Was The Uniswap Airdrop Fair? Dharma, 1inch.exchange Have a Few Suggestions

Fri, 18 Sep 2020 10:46:50 GMT

DeFi wallet Dharma is spearheading a proposal for Uniswap to expand the scope of its token airdrop to addresses that used the DEX indirectly. While rewarding all of Uniswap’s users is an optimal scenario, certain drawbacks make this tough to enact.

Two Sides to the Uniswap Airdrop

While DeFi users reveled in joy at the sight of 400 free UNI tokens, DEX aggregators and their customers are displeased with the airdrop. Uniswap’s distribution was designed to provide every address that interacted with the network 400 UNI.

But this was only for users that directly interacted with the DEX’s smart contracts.

Unfortunately, users of aggregators like 1inch and Paraswap weren’t eligible for the airdropped reward. Aggregators use proxy contracts to tap into Uniswap’s liquidity, which means their users never directly interacted with the contracts.

Dharma, a product that makes it easy for users to interface with DeFi, is leading the charge to rectify this “oversight.”

1/ We'd like to congratulate the @UniswapProtocol team and applaud $UNI's distribution, rewarding early users and supporters.

However, the distribution unfortunately excludes a subset of Uniswap users, including Dharma users, due to what we believe was an unintended oversight.

— Dharma (@Dharma_HQ) September 17, 2020

Nadav Hollander, CEO of Dharma, submitted a proposal on the Uniswap governance forum to consider rewarding addresses that used Uniswap via proxy contracts. In the thread, 1inch CEO Sergej Kunz sounded support for the proposal, saying, “we provided huge volume to Uniswap and our users are now asking for the UNI token.”

It’s a fair point. Aggregators have been a boon to DEXes like Uniswap, bringing in more users and utilizing the exchange’s liquidity. The best-case scenario is for all users of Uniswap to equally take part in the upside.

However, this is not simple to execute.

According to Hayden Adams, inventor of Uniswap, rewarding all users that interacted with Proxy contracts would result in Dharma and DEX aggregator users receiving a minuscule share of the reward. The real winners would be arbitrageurs, who use a similar structure to interact with Uniswap.

If the proposal were to go through voting, the platform’s newly-elected governance community would need to approve the transfer of tokens from the community treasury to Dharma, 1inch, and other whitelisted projects.

As always, two prevailing precedents play out depending on the result of the proposal. If the vote fails, it sends a message to projects building on Uniswap that the community doesn’t value them and that retroactive decisions will not fly.

If it does go through, builders and indirect users will be loyal to Uniswap, but it opens the door to more such retrospective action. There are merits and drawbacks on either side. All that’s left is for the community to put the proposal to vote and decide the future course of action.

EOS’s Top Block Producer Has Endorsed "One Token, One Vote”

Fri, 18 Sep 2020 10:27:19 GMT

EOS Nation, currently the leading block producer for EOS, has announced that it supports an upgrade called “1 token, 1 vote.” The feature is designed to reduce voting malpractices on the blockchain.

EOS Nation Announces Support

Yves La Rose, CEO of EOS Nation, announced support for the EOS blockchain via Voice on Sept. 13, stating: “I have been waiting for this for a very long time. EOS Nation supports 1T1V.”

La Rose clarified in an interview that EOS Nation does not support 1T1V unconditionally, and that it actually opposed it until recently. He says that “1T1V, in a vacuum, is a really bad idea” and that the feature could have an effect that is opposite of what is intended. That is, 1T1V could “cement” certain block producers in their position.

Instead, EOS Nation supports the change for diplomatic, forward-looking reasons: the company believes that 1T1V will reduce conflict in the community.

La Rose also recommends implementing 1T1V in combination with an improved staking pool and incentive model, something that has not been fully implemented yet.

Will 1T1V Solve Problems?

At the moment, the main problem in EOS voting is the fact that exchanges have custody of their customers tokens, providing them with disproportionate voting power.

Other controversies have involved voter collusion between block producers and sockpuppet accounts in which a single entity runs more than one EOS node. “One token, one vote” redistributes voting power in a way that doesn’t favor those entities.

There is plenty of support for the plan. Block.one executives Dan Larimer and Brendan Blumer have both expressed support for the change. Larimer has recently stated that part of the feature has already been coded and that a roll-out plan is in place. Much of the community is also calling for 1T1V or alternate models.

It is not clear how much opposition exists. Some block producers and exchanges would not benefit from 1T1V being implemented, but apart from EOS Nation, few have vocally opposed it.

Though block producers have remained largely silent, their stance is critical—block producers must ultimately agree to 1T1V in order for the feature to be activated on the EOS blockchain.

Coinbase, Binance List Uniswap’s UNI Token in Just One Day

Fri, 18 Sep 2020 09:15:21 GMT

Several major exchanges have listed Uniswap’s UNI governance token after the project launched the coin yesterday, marking one of the fastest mass token listings in crypto history.

Which Exchanges List UNI?

Coinbase was the first major exchange to list UNI on Coinbase Pro, adding support just hours after the listing. Binance and its American counterpart, Binance.US, have listed the coin as well. So have Gate.io, KuCoin, OKEx, Bithumb, and Huobi.

Some exchanges, including Huobi and Gate.io, have even launched UNI-based derivative products and perpetual swap contracts alongside their standard UNI listings, aimed at high-risk investors.

Over 25 exchanges list the UNI token at the moment.

Why Do Exchanges Support Uniswap?

No exchange has fully explained its enthusiasm for Uniswap’s new token. The most likely explanation is fee revenue: UNI has already generated over $1.8 billion in trading volume, making it the eighth most-traded cryptocurrency by volume.

Exchanges have, presumably, collected thousands of dollars in trading fees.

Some exchanges also have a specific relationship with Uniswap. Coinbase says that it has invested in Uniswap’s development company, Universal Navigation Inc. OKex, meanwhile, says that it “collaborate[s] with participants in [DeFi],” though it does not acknowledge an explicit partnership with Uniswap.

That fact that Uniswap has quickly attracted listings is a sign that centralized exchanges and DeFi exchanges can provide benefits to one another. That is, centralized exchanges may attract new crypto investors to DeFi platforms like Uniswap, while DeFi tokens can provide centralized exchanges with a revenue source.

Coinbase may be the exchange most interested in decentralized finance: it announced plans to list several other DeFi tokens in June and July, and has announced guidelines for projects that want to see their tokens listed on the exchange.

Ethereum Fees Spike After Uniswap’s UNI Token Launch

Thu, 17 Sep 2020 20:40:09 GMT

After announcing the launch of its new governance token, Uniswap became the most valuable DeFi projects within hours. The decentralized exchange launched its token last night, catching the entire DeFi community off-guard—a move that resulted in major problems for the Ethereum network.

Uniswap Launch Clogs Up Ethereum

The rush to claim the Uniswap tokens allocated to users caused massive congestion on the Ethereum network. When the anomalous transaction fees that have occurred throughout the year were excluded from the calculation, last night’s spike represented a new record high for transaction fees on Ethereum. According to data from cryptocurrency analytics company Glassnode, the total amount spent on miner fees jumped from $100,000 to $900,000 in less than an hour.

Hourly transaction fees on Ethereum following Uniswap’s UNI launch. (Source: Glassnode)

Data from BitInfoCharts showed that the median transaction fee on Ethereum increased over 152%, jumping from $2.13 on Sep. 16 to $5.37 at press time.

Eye-Popping Interest Pushes Gas Fees to Yearly High

And it’s not only the transaction fees that have skyrocketed during last night’s UNI craze. Glassnode reported that the median gas price on Ethereum saw an equally dramatic spike last night. The company’s data showed that gas prices reached levels as high as 700 gwei at one point during the night. According to Etherscan’s gas tracker, the average gas price runs around 490 gwei, while prices above 540 gwei are considered to be high.

The median gas price on Ethereum on Sept. 17. (Source: Glassnode)

The UNI craze has also made Uniswap by far the largest gas consumer on the Ethereum network. Uniswap’s three addresses, the token distributor, the router, and the UNI token address, accounted for around 35% of the total gas consumed on the network, on-chain data from Etherscan showed.

Top four gas consumers on Ethereum in the past 24 hours. (Source: Etherscan)e

Teller DeFi Credit Score Lender to Include Yield Farming

Thu, 17 Sep 2020 18:22:26 GMT

Teller Finance plans to launch a decentralized non-custodial undercollateralized lending platform with yield farming features. The platform will enable liquidity providers to earn TLR and COMP when they participate as lenders through interest rates.

Capital investments will be locked for three months and result in rewards vested over the same period of time. Institutional investors are given a $10 million capacity and can only earn 1% of the total TLR supply. Teller already sourced $8 million worth of liquidity in DAI and USDC from institutional investors and DeFi Alliance.

Regarding TLR, 29 million tokens (29%) have been allocated for public distribution over the first 12 months of operations. Initially, all decisions will be made by the Teller Labs founding team; however, once the platform reaches maturity and wider distribution of the governance token, Teller will shift to a community-based proposal system.

Robert Leshner, the founder and CEO of Compound said:

“The Teller Protocol is resolving an essential problem for DeFi. Namely, lowering the barrier to entry for new DeFi users by pricing out risk, and reducing the industry’s need for collateralized debt positions,” said Robert Leshner, founder and CEO of Compound.

It is difficult to predict how the crypto community will accept this project, primarily because of the unsecured loans and borrowers’ ability to flake on their debt. Looking at Teller’s whitepaper, there’s no mention of legal protections for lenders, making it a significant risk for investors.

Blockchain Developer? The Web3 Foundation Will Pay You to Build on Polkadot

Thu, 17 Sep 2020 16:02:21 GMT

The Web3 Foundation, Polkadot’s equivalent of the Ethereum Foundation, announced a wave of funding for projects creating infrastructure and development tools for the ecosystem. With this move, Polkadot is ensuring future developers and users have a better experience building on the protocol.

Get Paid to Build on Polkadot

Creating sound infrastructure is a pre-requisite for a healthy blockchain network. Most smart contract platforms have a not-for-profit organization that helps fund the development needed for this infrastructure. Polkadot is no exception.

The Web3 Foundation is beginning its first-ever grants program. The categories being funded include infrastructure deployment, operations projects, and software development proposals. While this means DeFi projects cannot apply yet, teams building interoperability solutions, like SnowFork, are eligible.

Redspot (testing and development environment), Centrifuge and Substrate client (API provider), Polkascan (blockchain explorer), and Encointer (identity protocol) are the first four teams to submit their proposal for funding to the Web3 Foundation.

Teams building tools for Polkadot are strongly urged to apply for a grant to build out their idea.

Though excluded from this round, DeFi projects on Polkadot have had little funding issues these days. Acala, a Maker-like competitor, just raked in $7 million round of seed capital to build out its network.

But the importance of infrastructure funding cannot be understated. Building a robust application layer is essential, but without an equally strong infra layer, applications will not scale. Hence, the foundation’s decision to place foremost focus on funding this sector initially is in the best interest of Polkadot.

Nexus Mutual Just Ran Out of DeFi Coverage, Here’s Why

Thu, 17 Sep 2020 12:59:36 GMT

In less than a fortnight since the Sushiwap saga, recent revelations around the SAFE token liquidity mining and NXM collapse has left the DeFi Community reeling. Now, due to the latest yield farming venture, Nexus Mutual has run out of insurance.

Though the story appears complex at first glance, yield farming, greed, and poorly-aligned incentives played a crucial role in this latest episode.

NXM Develops Secondary Demand

Nexus Mutual is a member-owned insurance mutual which provides coverage against catastrophe in the crypto space. The coverage is specifically focused on smart contract vulnerabilities. For instance, a full year’s cover of 10 ETH on a smart contract like yEarn’s Vaults products would cost around 1.2% or 0.123 ETH.

NXM tokens, Nexus Mutual’s native asset, are used as liquidity for the coverage, which earns returns from the insurance profits.

The developers took firm measures to eliminate speculation on the price of the token, as its price is determined by a formula that gauges the performance of the mutual.

It is measured by the amount of the claims made (causing a reduction in price) or coverage bought (which fuels a rise).NXM token is only available on Nexus Mutual platform for members after KYC verification.

However, DeFi chefs soon got around that rule as well. Thanks to Andre Cronje, the founder and curator of yEarn Finance, interested parties can use yEarn’s yInsure platform to earn non-KYC insurance underwritten by Nexus Mutual.

The insurance contracts were also made available on Rarible as Non-Fungible Tokens (NFTs). The sale and purchase of yNFT tokens on Rarible created a secondary market for reselling the coverage.

The issuance of wrapped NXM (WNXM) was another monumental step for the DeFi insurance market. Also known as Nexus Mutants, WNMX is the non-KYC version of the original NXM token. This allowed listing of Nexus Mutants (WNXM) crypto exchanges like Binance, Huobi, Uniswap, Balancer, etc.

While the value of WNXM is pegged against NXM, its total market capitalization is calculated separately because they are different tokens.

Later, DeFi chefs associated yield farming incentives to the demand for NXM.

Yield Farming Incentives

Shortly after yNFT and WNXM took off, another pseudonymous developer by the handle of Insurance Chef introduced yieldfarming.insurance.

It is a DeFi platform for staking yNFT tokens obtained from yInsure or Rarible, and Nexus Mutuats (WNXM). These two tokens act as liquidity provider (LP) tokens on the platform, which is then used to yield farm SAFE tokens.

SAFE token is the governance token for yieldfarming.insurance.

yInsure NFT's are now top 7 in volume sales on @opensea 🔥

Are you keeping your yield farming tokens $SAFE with yInsure NFT's?https://t.co/WGebJo2tzO @iearnfinance pic.twitter.com/0rmCtFMLnr

— JuanSnow (@Juan_Snow1) September 14, 2020

While Nexus Mutual does not cover SAFE contracts, all covers bought via yNFT and WNXM that are staked for SAFE liquidity mining are covered by Nexus.

Hence, the circle of demand is now complete. DeFi chefs successfully conjured up a decentralized version of the insurance market backed by Nexus Mutual.

NXM and SAFE Price Action

Soon the yield farming incentives got the better of a greedy market. Reportedly, users staked $36 million WNXMin only five hours after the launch of yieldfarming.insure on Sept. 13.

The opportunity cost of staking of WNXM was far greater with an annual percentage yield (APY) of 2% over NXM’s average of 0.9%.

Cronje even implored the liquidity miners to sell their actual insurance contracts in small amounts on Rarible to serve its real purpose of providing smart contract insurance.

As these tokens boomed, and both Nexus Mutual and the decentralized version of the insurance market was booming, users began dumping their SAFE tokens.

On Sept. 14, Insurance Chef celebrated $100 million staked on the protocol after just one week. Meanwhile, farmers were waiting to liquidate their SAFE tokens.

It was at the break of Sept. 15 when the dump from highs above $4000. At this time, the did not know about a civil war brewing; it was just DeFi business as usual.

SAFE Token Price Action from Sept. 14 Source: CoinGecko

This was mostly due to a lack of incentive to hold the SAFE tokens. The domino effect dragged the price of NXM along with it as well.

SAFE lost 96% of its value from its high on Sept. 14, declining from a high of $4,450 to less than $140 on Sept. 16.

NXM also gained 40.1% on Sept. 14 with a high of $72 as the demand for the insurance kept growing. Following its high on Sept. 14, NXM crashed 37.6% to $43.

WNXM/USDT 4-Hour Chart on Huobi. Source: TradingView

The final decline in the price of the tokens began early on Sept. 16, when more news of the scuffle between SAFE token’s developer and the project’s lead investor came to light.

Blame Game

There are two sides to this story. One from the pseudonymous college student InsuranceChef who is the lead developer of the protocol, and the other is Azeem Ahmed, the investor who helped Insurance Chef kickstart the project.

Hasty decisions by both entities led to them to accidentally lock up 10,000 SAFE tokens in the smart contract, forever.

This was because of an incorrect deployment of the fourth pool for the SAFE token in Balancer.

Excerpt from their Conversation Shared by Azeem. Source: Medium

Behind the scenes, the two individuals were also scheming against each other and waiting to blow up publicly. A tweet by Insurance Chef of the initiation and then the splitting of the chain marked the end to the one-week-old project, according to Azeem. He tweeted:

“Then this dumb nugget killed the whole project and lost people millions with a single tweet. Remember we just launched 2-3 days ago, with NO product, here’s what we jammed on so far.”

Later, Insurance Chef called a vote to migrate the SAFE tokens to a new blockchain and raised talks of blacklisting Azeem and rolling back transactions from Azeem’s wallet.

On the other hand, Insurance Chef accuses Azeem Ahmed of being dishonest and dumping his SAFE tokens on the market. Azeem had already made millions off with SAFE protocol in the early phase of the yNFT secondary market launch on Rarible.

Azeem responded with elaborate proof that babbles out a tale of inexperience, destroying a promising new endeavor.

How to Save SAFE Now?

ChefNomi of SushiSwap dumped on the market before the liquidity migration from Uniswap and left the project amid development.

Coming back to SAFE, the yieldfarming.insurance platform is now similarly left hanging. Moreover, it has an additional burden of 10,000 tokens locked out of its total supply of 80,000 forever.

With SushiSwap, Sam Bankman-Fried, the founder of FTX crypto exchange and Serum, became the savior and steered the successful migration. Now, another leading DeFi analyst believes that someone can help SAFE rise from its ashes as well.

The one who builds from this ashes will be known for long. The idea itself is powerful. Creating value.

— mini Blue Kirby // YFI🔥 (@minibluekirbyfi) September 16, 2020

Blue Kirby is also moderating a truce between Azeem and Insurance Chef to renew the project development.

The rollercoaster ride that SAFE and NXM took in the past week is becoming the norm in DeFi.

Phemex Exchange Meets DeFi Bulls, Launches Perpetual Contracts for YFI and LEND

Thu, 17 Sep 2020 10:04:07 GMT

Cryptocurrency and derivatives exchange Phemex has listed seven new perpetual contract trading pairs: ADA/USD, ALGO/USD, COMP/USD, DOT/USD, LEND/USD, YFI/USD, BCH/USD.

Each pair is a linear contract quoted and settled in USD that can be traded with up 20x leverage.

Six of these coins are exciting DeFi projects carefully selected by the Phemex team. These will allow Phemex users to participate in the increasingly dominant DeFi space. As with all of its perpetual contracts, the exchange charges market takers a 0.075% fee, while market makers receive a 0.025% payment as an incentive to provide liquidity.

With the addition of these seven new pairs, Phemex now offers a total of 14 perpetual contracts including a non-crypto GOLD/USD asset. Phemex also offers nine spot trading markets.

If users subscribe to their low-cost premium memberships, they can trade on these spot markets without any commission fees.

Since launching at the end of 2019, Phemex has already established itself as one of the top ten best derivative exchanges according to CoinMarketCap. Their incredible growth is likely due to the experience of their core developers and founding team. The company is led by talented Morgan Stanley veterans.

Their goal is to bridge the traditional financial industry with the cryptocurrency industry. An objective that they continue to approach by constantly and consistently releasing better products and services.

A great example of their commitment is the exclusive bracket order function they recently released. Although this tool was common with traditional financial exchanges, Phemex is the first crypto exchange to offer such a function. The company also plans on adding other legacy assets such as stocks, minerals, forex, and much more in the future.

Cardano Looks Poised for Further Losses, On-Chain Metrics Show

Thu, 17 Sep 2020 07:19:43 GMT

The hype around Cardano’s staking rewards continues to fade, as multiple technical and on-chain metrics struggle to hold up inflated ADA prices.

Bumpy Road Ahead of Cardano

Cardano suffered a significant correction following Shelley’s mainnet launch in late July.

Since then, ADA’s price dropped over 45% to reach a low of $0.085 recently. Despite the significant losses incurred, different technical and on-chain metrics suggest that the smart contracts’ token has more room to fall.

For instance, when looking at its 4-hour chart, ADA appears to have broken out of a symmetrical triangle in a downward direction. The distance between the initial high and low of this technical pattern forecasts that the so-called “Ethereum killer” could plummet another 10%.

Under such circumstances, a further increase in the selling pressure behind ADA might see prices make a lower low of $0.080.

ADA/USD on TradingView

The downward trend in network growth adds credence to the bearish outlook. Since Sept. 3, the number of new daily ADA addresses has steadily declined. Roughly 11,000 addresses were joining the network daily around that time.

This number has dropped to 4,600 a day, representing more than a 58% drop.

The downward trend in network growth is a red flag for price growth in the near future. Usually, a sustained decline in network growth is a leading indicator of deteriorating prices. The lack of newly-created addresses tends to affect the regular inflow and outflow of tokens in the network, and hence liquidity.

Cardano’s New Daily Addresses by IntoTheBlock

In the event of a steeper decline, IntoTheBlock’s “In/Out of the Money Around Price” (IOMAP) model estimates that there are not any significant supply barriers underneath Cardano. Given the lack of support walls, ADA could be on its way down to reach the target presented by the symmetrical triangle previously mentioned.

In/Out of the Money Around Price by IntoTheBlock

That said, the bullish outlook cannot be taken out of the question due to the cryptocurrency market’s unpredictability.

The IOMAP cohorts show that if buy orders begin to pile up, Cardano bulls may have difficulty pushing prices above $0.096. Here, approximately 22,000 addresses had previously purchased over 2.4 billion ADA.

These holders are likely more inclined to exit their currently underwater positions as prices rise, keeping an advance at bay. Therefore, it will take an enormous amount of buying pressure to send prices higher.

Given these numbers, the odds currently favor a pessimistic short-term outlook on ADA.

Kraken Becomes the First Crypto Exchange to Obtain Banking Charter

Thu, 17 Sep 2020 06:46:20 GMT

Kraken has obtained the approval to conduct many traditional banking services alongside operating as a crypto exchange. Wyoming has granted the license under Special Purpose Depository Institution (SPDI), specially formulated for cryptocurrency businesses.

Kraken Customers to Enjoy Special Privileges

Wyoming is the only American state to include the SPDI charter in its banking laws. An SPDI is a specialized custody bank that can perform all activities of a bank, except for making loans from customer deposits.

The SPDI banks are required to maintain a 100% reserve of their FIAT deposits.

The bank’s new name is tentatively Kraken Financial. Kraken also introduced a new logo to build its new brand image.

A banking charter now gives Kraken an entry into the federal payment infrastructure. In the future, users will share their Kraken Financial account numbers to receive salaries, pay bills, or transfer money.

It also allows the company to issue financial securities bundling digital assets. Hence, a mutual fund built on Bitcoin and Dogecoin is not far. This bank could very well be a crypto user’s dream.

Imagining what's now possible.

"Marmota Bank. Providing a full suite of services to @marmotcoin holders everywhere."

A guy can dream

— Preston Byrne (@prestonjbyrne) September 16, 2020

Kraken users can now obtain cryptocurrencies directly from their accounts. Hence, eliminating the need for separate crypto and banking accounts. It marks a major breakthrough in the retail adoption of cryptocurrencies.

Uniswap’s Governance Token Is Live, With Generous Community Allocation

Thu, 17 Sep 2020 05:32:39 GMT

Uniswap has announced a native governance token, UNI, which has become the most valuable DeFi token in just two hours. In one fell swoop, Uniswap has dismissed its “fair launch” competitors and is on the path to building a community.

Token holders will now govern the Uniswap protocol, and 67% of all tokens will be given to the community.

Will Uniswap Wave Off Competition?

Many believed there was a glaring hole in Uniswap. The leading theory was that Uniswap wouldn’t be able to build a loyal community owing to its lack of governance token.

The platform hit back at these claims and has presumably killed many of its competitors in the process. The premier DEX announced its governance token, in a sudden move that caught the DeFi community off guard.

However, the most shocking part is the 67% allocation to the community, while 33% is reserved for investors, team members, and advisors. Uniswap used the community-focused token distribution in its favor to capture the mass majority of attention from DeFi users.

Source: Uniswap

A quarter of the community allocation has been distributed to retrospective LPs, which rewards loyal users who helped make the protocol. The remaining portion of the community’s share of tokens will be distributed via liquidity mining in the following pools: ETH/DAI, ETH/WBTC, ETH/USDC, ETH/USDT.

Large centralized exchanges like Binance and OKEx have already listed the UNI token. It’s quite likely to be the biggest token launch of DeFi this year.

Uniswap is by far the most successful DEX primitive, consistently facilitating more trading volume than Coinbase. With a native token to align the community, the exchange’s network effect will only grow.

MicroStrategy Outperforms Nasdaq Composite After $175 Million Bitcoin Purchase

Wed, 16 Sep 2020 12:14:38 GMT

MicroStrategy (NASDAQ: MSTR) stocks rose over nine percent as their CEO revealed the company had purchased another $175 million in Bitcoin. The investment makes up part of the firm’s strategy to diversify the company’s cash holdings.

MicroStrategy Turns to Bitcoin to Protect Value

MicroStrategy has made a large purchase of Bitcoin for the second time in two months.

Its first purchase was in August when it diverted around $250 million worth of cash holdings to assets like stocks, silver, gold, and Bitcoin.

Now, with another $175 million Bitcoin purchase, the Delaware-based software company has demonstrated even more trust in Bitcoin as a store of value. The company’s Bitcoin holdings now stand at 38,250.

Public filings with the SEC indicate the company may exceed holdings in Bitcoin above $250 million.

On September 14, 2020, MicroStrategy completed its acquisition of 16,796 additional bitcoins at an aggregate purchase price of $175 million. To date, we have purchased a total of 38,250 bitcoins at an aggregate purchase price of $425 million, inclusive of fees and expenses.

— Michael Saylor (@michael_saylor) September 15, 2020

Markets Respond Favorably

MicroStrategy’s move seemed to have pleased market participants, as the company’s stocks jumped over nine percent while the NASDAQ Composite (IXIC) sat at just over one percent gains.

Competitor IT services companies saw minor movements. Cognizant (NASDAQ: CTSH) was up around 1.2 percent, Citrix Systems (NASDAQ: CTXS) was up under one percent, and Infosys (NYSE: INFY) was up less one percent.

MicroStrategy’s intention was capital preservation, with company CEO Michael J. Saylor saying of their first Bitcoin bet that the cryptocurrency was:

“A dependable store of value and an attractive investment asset with more long-term appreciation potential than holding cash.”

Early signs are that investors agree.

Will It Catch On?

With famed investor Paul Tudor Jones’ Tudor BVI’s investment in Bitcoin futures in May, money managers and corporations swimming in cash have effectively been given the green light to make investments in Bitcoin for its capital preservation properties.

Jones’ approval provides cover to institutions to make similar moves.

While there has yet to be a large-scale migration to digital assets, the market’s response to MicroStrategy’s decision could indicate that betting on Bitcoin may be appealing to investors who would never openly bet on BTC.

Japanese Crypto Exchange Sues Binance for Role in $63 Million Bitcoin Hack

Wed, 16 Sep 2020 11:56:53 GMT

In 2018, hackers stole digital assets worth $63 million in Bitcoin, Bitcoin Cash, and Monacoin from the Japanese crypto exchange, Zaif. The plaintiff now argues that Binance is partly responsible for platforming the laundering of $9.4 million in stolen funds.

Binance’s Negligence?

Seven counts have been lanced at Binance in the United States District Court of California concerning the hack in 2018, as first reported by Coindesk.

Fisco cryptocurrency exchange, which took over Zaif’s business after the hack and reimbursed its customers, is the complainant in the case.

Due to Bitcoin’s transparent ledger, it was not difficult to trace the movement of the stolen funds. Soon after the hack, public analytic firms and Zaif employees traced a significant portion of the hack back to the following address 1NDyJtNTjmwk5xPNhjgAMu4HDigtobuls, which belonged to Binance.

Fisco claims Zaif had informed Binance of the hacked BTC inflows, giving the latter ample time and opportunity to freeze the accounts.

However, Binance’s failure to cooperate with Zaif allowed the hackers to process 1,451.7 BTC, worth $9.4 million at the time, through various smaller accounts and trades on Binance.

Crypto Briefing has reached out to Binance for clarifications on the case and the reason for their inaction. They have yet to respond.

The plaintiff Fisco and the originally hacked exchange Zaif are based out of Japan. Binance is registered in Malta and has a dozen other offices around the world, including California.

Fisco has brought the case to Californa, saying that it is home to Binance’s principal operations and also to many of the victims of the Zaif hack.

Fisco seeks damages from Binance for the $9.4 million routed through the exchange along with interest and fair compensation, the details of which will be discussed in the trial.

Lax Policies Promote Money Laundering

The case filing reports that Binance has become a haven for crypto criminals due to its liberal know-you-customer (KYC) and anti-money laundering (AML) policies.

The two Bitcoin withdrawal limit allows non-KYCed users to withdraw more than $20,000 at current prices. For comparison, the withdrawal limit for “starter users” on the American exchange Kraken is $5,000.

The case filing also cites that in 2019, the exchange facilitated the laundering of roughly $750 million obtained from illicit activities.

The amount of damages is relatively small for Binance, which is reported to have crossed $1 billion in cumulative profits within the first three years of its launch. However, the questions raised are troubling for cryptocurrency users.