Celsius Network founder gifts wife 15 million CEL tokens

Alex Mashinsky has gifted his wife Krissy 15 million CEL tokens worth $20 million for her birthday

The founder of the crypto payments network Celsius has gifted his wife a large portion of the token supply, reducing his own enormous stake in the process.

Celsius CEO Alex Mashinsky gifted wife Krissy 15 million CEL tokens as a birthday present, worth an estimated $20 million at today’s prices.

The move has shifted the balance of the top CEL token holders list, as observed by Twitter user ‘Kevin – HODL’ (@Crypto_Flippin). Mashinsky is still at the top but now his wife would be the third largest token holder according to the list.

The community have been pondering the token shift with one twitter user called ‘bitcoin_giraffe’ stating;

“What concerns me more is the amount that he has. It puts a whole new definition to whale.”

The move seems a little unusual as under marital law (unless there is a pre-nuptial agreement) she is entitled to half of Mashinsky’s assets anyway. Krissy Machinsky runs a company called USA Strong which uses blockchain to ensure products claiming to be made in America actually are.

Celsius, which completed a successful Initial Coin Offering in March 2018 valued at $50 million, is a centralized crypto credit platform with a mobile app that allows users to earn interest on stablecoins and a number of cryptocurrencies.

The platform borrows from one set of clients and issues crypto collateral backed loans to institutional clients while collecting the difference in interest. 80% of the returns generated is paid to members and the community, and 20% goes to Celsius.

It is essentially DeFi style lending with regulatory compliance and CEO Mashinsky in control.

In June 2020, Celsius completed a $20 million fund raise from the crypto community. Mashinsky did not inform private equity holders about the gift. According to the official website it has processed over $8.2 billion in loans, has over 200k active users, and almost $1.6 billion in community assets.

CEL token prices have been performing well recently and hit an all-time high of $1.38 on October 10 according to Coingecko. Since the beginning of the year, CEL tokens have surged 880% to their current price of $1.33. There is currently a circulating supply of 361 million tokens out of a total of 695 million.

High DeFi yields could threaten ETH 2.0 staking participation: ConsenSys

The latest Q3 DeFi report from ConsenSys expresses concern about DeFi’s threat to ETH 2.0 staking

The rise of DeFi and high yielding liquidity provision opportunities could act as a barrier to participation in staking when ETH 2.0 Phase 0 finally launches according to a new report.

The ConsenSys Q3 DeFi Report has taken a deep dive into emerging trends and warns that staking on Ethereum’s forthcoming Beacon Chain may be limited by better earning opportunities on decentralized finance protocols.

ConsenSys believes it’s likely that Phase 0 of the ETH 2.0 upgrade will launch before the end of the year. ConsenSys developer Ben Edgington said last week the launch of the ETH 2.0 deposit contract is imminent and the Beacon Chain genesis could occur within the next six weeks.

This will not offer any scaling improvements just yet, but will enable staking opportunities for those holding 32 ETH or more though the new proof-of-stake consensus mechanism.

However, there are some drawbacks: ETH holders will need to lock up their funds in a deposit contract for a variable return and, more disconcertingly, a currently unspecified amount of time.

Given an increasing number of DeFi protocols competing for liquidity with greater returns for Ethereum holders, the report warned it could leave, "ETH 2 without the threshold of staked ETH required to render it sufficiently secure and decentralized.”

"It is not unreasonable to worry that ETH holders would (at best) wait to see how early staking returns compare to DeFi returns, or (at worst) decide altogether not to 'risk' locking up ETH until Phase 1.5 (which is likely at least a year away) in case another similar bull run occurs in the meantime."

ConsenSys anticipates that DeFi providers and protocols could offer liquid tokens that represent the value of investor’s staked ETH.

This token would be easily redeemable or used as collateral for other protocols whereas ETH staked on Beacon Chain is effectively locked away for the period.

‘Hyperinflation’ DeFi coins hit the hardest in crash: Report

A large number of DeFi governance tokens are still way down from their peaks as farmers take profits.

Many high inflation decentralized finance tokens are still correcting despite Bitcoin’s push to new yearly highs.

Research by IntoTheBlock suggests that DeFi token prices and protocol metrics have diverged significantly since September. Total value locked has dropped around $1 billion over the past few days but remains near its all-time highs.

Token prices are still in the red, however, and many have slumped over 50% from their previous highs. The report claims that this divergence is likely due to a shift to a risk-off environment as investors have decided to lock in profits.

It emphasized that many investors have become cautious of high supply inflation for tokens in a space that is still in its infancy. The high supply inflation tokens hit the hardest include Compound, Balancer, MCDEX, Curve, and mStable, all of which have dropped by at least 60% since the beginning of September.

“This demonstrates that while liquidity mining can fuel supply-side demand, it can also lead tokens to suffer from setbacks akin to depreciation arising from hyperinflation.”

Overall Ethereum-based DeFi governance tokens have declined by approximately a third from $7.5 billion to $5.07 billion in terms of market cap just in the last month.

Stablecoins and versions of wrapped Bitcoin continued to grow their market capitalizations which further confirms that yield farmers have shifted out of high-risk DeFi tokens into lower yield generating assets which also have lower volatility.

The report suggests that the catalyst behind the DeFi farming frenzy, Compound Finance, may also have instigated the correction since it provided the inflection point for such rapid growth.

Following the COMP token launch, hundreds of clones and forks were spawned, each with their own governance tokens and yield farming pools and initially at least, many saw liquidity and token prices grow until the markets started to crash in September.

”Governance tokens, particularly those with high rates of inflation through liquidity mining, have retraced considerably since.”

The much hyped Yearn Finance token has also taken a huge hit. According to IntoTheBlock’s DeFi app, most YFI addresses that acquired the token over the past two months are now "out of the money." YFI has declined almost 70% since its peak of $44K on September 13.

Some DeFi protocols have reacted to this apparent investor exodus with Compound and Pickle reducing their supply emission while Aave has enabled staking in a "safety module" which acts as a reserve mechanism against liquidity shock.

The research concluded that these price swings and large pullbacks are normal for such a nascent market and DeFi tokens only represent a tiny amount (less than 2%) of the total crypto market capitalization.

On a positive note, it stated that the DeFi sector continues to move forward despite the token crash and there is a lot of room for growth as these systems become scalable and adopted.

WordPress content can now be timestamped on Ethereum

A WordPress plugin allows publishers to timestamp content on Ethereum for immutability and copyright protection

A plugin for the WordPress web publishing platform now enables users to timestamp content on the Ethereum blockchain.

The plugin can help with copyright issues, proof of who created a piece of content, and to reassure readers it has not been altered. WordPress currently powers around 37% of all websites and has a 60% share of the CMS market.

Amsterdam-based WordProof made the announcement at the London BlockDown 2020 3D virtual blockchain conference on October 22.

Timestamping is important because it provides a unique fingerprint, or hash, for the latest version of the content which has been added to the blockchain. This provides proof that the owner of the content created it, and it has not been edited or tampered with. Additionally, the website has proof of publishing time, which can be used for potential copyright conflicts.

Head of Product at WordProof, Jelle van der Schoot, stated the company's vision is to be the most user-friendly timestamping tool for use across all content management systems and e-commerce platforms. WordProof also supports EOS and Telos.

"Adding support for Ethereum marks an important step towards achieving this goal, so we’re excited to welcome the Ethereum community!"

Crypto is increasingly being integrated into WordPress. In April 2020 a blockchain startup incubator called Draper Goren Holm, unveiled the first DEX plugin for the CMS platform. The plugin allows website owners to feature a built in DEX that allows users to exchange between crypto tokens and stablecoins.

The official WordPress site itself already has three pages of plugins categorized as crypto. The most popular include a crypto payments portal with over 10,000 active installations, and a crypto price ticker widget with over 7,000 active installations.

Funds locked in DeFi surge $1B as analyst tips post-election bull run

Crypto collateral locked in DeFi protocols has surged to an all-time high over $12 billion.

Following a six week cooling-off period for the majority of decentralized finance protocols, the DeFi bulls are back in action as total value locked surges to new record highs.

The amount of crypto collateral locked across various DeFi protocols has hit a new all-time high of $12.3 billion according to DeFi Pulse.

In just 48 hours, over one billion dollars has been added to the total USD value, although precise figures vary on other analytics platforms such as Coingecko and Coinmarketcap.

TVL on Coingecko’s tracker reports it to be around $11.6 billion. The increase follows Bitcoin reaching a new 2020 high of $13,200 on October 21, which was prompted by the PayPal crypto payments news.

Coingecko reports the total DeFi market capitalization — as distinct from TVL — for all tokens, including the DeFi-adjacent Chainlink, is at $14.3 billion. That's an increase of $2 billion in the DeFi marketcap over the past 48 hours.

DTC Capital head, Spencer Noon argues that the bull market for decentralized finance will soon enter round two:

Noon commented that many yield farmers have simply moved back to BTC after making months of solid gains and he tipped the election as the catalyst for a second DeFi boom:

“The likely inflection point for DeFi Bull Phase 2 is the election, where there are multiple outcomes that would be favorable for risk assets.”

The PayPal news and general upturn in crypto markets has resulted in numerous DeFi coins making solid gains in the past 24 hours including Airswap, Aave, Synthetix, and Curve.

A factor driving TVL is the increase in the prices of DeFi tokens used for staking, including Ethereum, as many of the liquidity pools are ETH based. Over the past 48 hours, Ethereum prices have increased 12% to reach a six week high of $415.

But according to Messari’s DeFi Returns Index, which measures performance of the top 46 DeFi assets, many DeFi tokens are still down over 40% over the past month. The biggest losers include tokens from Meta, bZx, Augur, SushiSwap, Swerve, and Curve.

Central bank digital currency could ‘threaten’ Bitcoin says CZ

Binance boss Changpeng Zhao aired his views on CBDCs adding that Bitcoin could be under threat if a more advanced currency was launched

Changpeng Zhao, the enigmatic chief executive of Binance, believes a central bank digital currency that’s designed well enough could become a threat to Bitcoin. 

In a video interview with Fortune senior writer Jeff Roberts, he was asked how the People’s Bank of China’s digital yuan initiative would affect the crypto industry.

Zhao responded that any blockchain or digital currency would be good for the industry overall as it legitimizes digital assets and broadens awareness. He added that while there is currently a race between major countries to launch one, most CBDCs are likely to be more restrictive initially but will evolve over time.

When asked directly about the threat to Bitcoin, CZ responded that very few CBDCs would have the same freedom as Bitcoin and they would be highly centralized and controlled. However, over a longer term he cautioned:

“If there is a government pushing another cryptocurrency that’s even more open, more free, has less restrictions than Bitcoin, and is faster and cheaper to use, then that would threaten Bitcoin. But that is good for the industry, it’s just something better than Bitcoin, and would replace it.”

He added that it wouldn’t be a bad thing as it would be similar to web language HTML5 replacing HTML4.

When asked whether Binance had any intentions of launching a yuan-based stablecoin to complement the existing stablecoins on the exchange, CZ stated that it would not be coming anytime soon. He added that there were too many restrictions regarding capital flight from China.

Interest in CBDCs has grown in 2020, with mixed views. German politician and executive board member of the country's central bank, Burkhard Balz, stated recently that a digital Euro would be a threat to the financial system if used as a store of value.

The U.S. does not seem in a hurry to launch a digital dollar but Morgan Creek Digital co-founder Anthony Pompliano argues that the U.S. will fall behind China if it doesn’t act soon.

Will PayPal’s crypto offer turn into a tax nightmare?

U.S. capital gains tax laws are likely to catch out many new users of PayPal's cryptocurrency payments system

The news that payments company PayPal will support cryptocurrencies has given the industry a major boost — but there are tax implications that are little understood by crypto noobs.

PayPal users will soon be able to use digital assets as a funding source for purchases at its 26 million merchants worldwide. The company has almost 350 million active users worldwide and Alex Mashinsky, the CEO of crypto lending platform Celsius, has predicted the integration could result in “millions of new users” getting into crypto.

Unfortunately, they could face a tax nightmare arising from the volatile nature of crypto assets and the tax reporting requirements.

According to the Internal Revenue Service (IRS), digital assets such as Bitcoin are treated like property, not currencies. This means that every time you sell, exchange or dispose of a cryptocurrency to buy something else, that becomes a taxable event. PayPal’s press release states that it will be acting as an exchange in addition to a payments gateway;

“Consumers will be able to instantly convert their selected cryptocurrency balance to fiat currency, with certainty of value and no incremental fees.”

However, it will not allow cryptocurrencies to be taken off the platform and sent to a bank, or back to the wallet from which they came. Selling crypto within PayPal triggers a taxable event as does using the crypto to buy anything, as PayPal converts the funds into fiat first before paying the merchant.

Because Bitcoin and crypto assets are volatile, users will be liable for significant capital gains tax   on the amount the asset has gained between the time it was acquired and spent.

That’s not a problem as long as users keep records and put tax aside — but most new users are unlikely to understand the tax implications and requirements. Gains and losses ultimately need to be reported on IRS Form 8949 and submitted with your tax return each year, according to Cryptotrader.tax.

It used an example of buying a new TV from one of PayPal's merchants using 0.1 BTC as payment. The consumer would incur a capital gain (or loss) depending on the value change of that 0.1 BTC since they first purchased or acquired it. Let's say the 0.1 is now worth $1000 more than when you bought it:

"You must report this gain on your tax return, and depending on what tax bracket you fall under, you pay a certain percentage of tax on the gain"

PayPal explained that it will be participating in relevant 1099 tax information reporting for users, but said that individuals are responsible for their own tax affairs:

“It is your responsibility to determine what taxes, if any, apply to transactions you make using your Cryptocurrencies Hub. You can access your transaction history and account statements through your PayPal account for purposes of determining any required tax filings or payments”. 

It is likely that the U.S. tax authorities will request access to user account information to see which users should be reporting gains.

Initially, PayPal will only offer its new crypto payments services to U.S. account holders, but it could be rolled out globally next year.

The U.K. also has similar capital gains tax implications and HMRC (Her Majesty's Revenue and Customs) began actively chasing crypto traders in late 2019. Australian cryptocurrency traders and investors are also subject to capital gains taxes and even income tax if they earn digital assets. Reporting is required in both countries.

Peer-to-peer NFT sales surge as average purchase price increases 7X

The total lifetime NFT volume on the Ethereum blockchain alone has exceeded $120 million.

Non-fungible tokens and digital collectibles have been selling like hotcakes over the past couple of months as volumes on peer-to-peer marketplaces surge.

From NFTs representing NBA finals moments to crypto industry character cards, the total lifetime NFT volume on the Ethereum blockchain alone has exceeded $120 million, according to crypto research firm Messari.

Messari’s research tracked the demand for NFTs, which includes digital art, collectibles and in-game items, over the third quarter. It found the cumulative number of users who interacted with peer-to-peer NFT marketplace OpenSea surpassed 25,000, and that the platform saw a record $2 million in total volume in September;

Some of the most popular items on the marketplace include cards featuring popular crypto industry insiders such as Uniswap’s Hayden Adams and Ethereum founder Vitalik Buterin.

The average NFT purchase price has also significantly increased over the third quarter reaching an average of $161, which is the highest since the early days of CryptoKitties in 2017 and seven times the historical average. Messari stated:

“Average spending on NFTs has beaten the historical average of $23 for 150 consecutive days.”

The research noted that digital art marketplace Rarible had launched its own liquidity mining incentives in the third quarter which caused volumes to surge to more than $10 million as traders bought and sold NFTs to earn RARI tokens.

Non-fungible token maker, Dapper Labs, has also had a highly successful week with its NBA Top Shot collectibles which have been selling out within minutes. The most recent set called "The Finals" included nine rare moments from the 2020 NBA finals which culminated with a Los Angeles Lakers win.

The sets of digitally verified rare collectibles, including trading cards and digital clips, sold for $230 per pack. When launched, The Finals sold $163,530 worth of NFTs in roughly two mins and the top buyers spent over $5,000 each on NFTs, according to cryptoslam.io.

A recent blog post noted that almost 8,600 NBA collectibles have been sold P2P for a combined sum of around $330,000 over the last two weeks.

NBA Top Shot, launched in full earlier this month after clocking over $2 million in revenue in private beta.

Peer-to-peer NFT sales surge as average purchase price increases 7X

The total lifetime NFT volume on the Ethereum blockchain alone has exceeded $120 million.

Non-fungible tokens and digital collectibles have been selling like hotcakes over the past couple of months as volumes on peer-to-peer marketplaces surge.

From NFTs representing NBA finals moments to crypto industry character cards, the total lifetime NFT volume on the Ethereum blockchain alone has exceeded $120 million, according to crypto research firm Messari.

Messari’s research tracked the demand for NFTs, which includes digital art, collectibles and in-game items, over the third quarter. It found the cumulative number of users who interacted with peer-to-peer NFT marketplace OpenSea surpassed 25,000, and that the platform saw a record $2 million in total volume in September;

Some of the most popular items on the marketplace include cards featuring popular crypto industry insiders such as Uniswap’s Hayden Adams and Ethereum founder Vitalik Buterin.

The average NFT purchase price has also significantly increased over the third quarter reaching an average of $161, which is the highest since the early days of CryptoKitties in 2017 and seven times the historical average. Messari stated:

“Average spending on NFTs has beaten the historical average of $23 for 150 consecutive days.”

The research noted that digital art marketplace Rarible had launched its own liquidity mining incentives in the third quarter which caused volumes to surge to more than $10 million as traders bought and sold NFTs to earn RARI tokens.

Non-fungible token maker, Dapper Labs, has also had a highly successful week with its NBA Top Shot collectibles which have been selling out within minutes. The most recent set called "The Finals" included nine rare moments from the 2020 NBA finals which culminated with a Los Angeles Lakers win.

The sets of digitally verified rare collectibles, including trading cards and digital clips, sold for $230 per pack. When launched, The Finals sold $163,530 worth of NFTs in roughly two mins and the top buyers spent over $5,000 each on NFTs, according to cryptoslam.io.

A recent blog post noted that almost 8,600 NBA collectibles have been sold P2P for a combined sum of around $330,000 over the last two weeks.

NBA Top Shot, launched in full earlier this month after clocking over $2 million in revenue in private beta.

Tether volume hits $600B as it attempts to take on Bitcoin as crypto’s benchmark

Tether accounts for a huge percentage of transactions and is taking on Bitcoin and Ethereum in a variety of ways

The latest data from analytics providers suggest that cumulative Tether transaction volume has just surpassed $600 billion as it begins to dominate crypto exchange trading.

On-chain analytics provider Glassnode has revealed that Tether transaction volume increased by around 20% over the past 30 days to reach that new cumulative milestone.

It should be noted, however, that this is a cumulative figure and not the daily transaction volume which is closer to $35 billion according to an average from Coingecko and Coinmarketcap.

The same two analytics providers report Bitcoin’s daily transaction volume at between $20 and $25 billion which gives Tether a clear lead for this metric.

In terms of supply, USDT has grown by almost 300% since the beginning of this year when there were just 4 billion in circulation. Today, that figure is just below $16 billion according to the Tether Transparency report. The ERC-20 standard still dominates the USDT supply with almost 65% of all Tether living on the Ethereum blockhom.

Additionally, analytics provider Skew noted that futures contracts based on Tether have now caught up with those based on Bitcoin. It said there was:

“Strong growth in USDT-margined futures contract this year, now almost on par with BTC-margined contracts on a daily basis,”

Other metrics for the world’s most popular stablecoin have also strengthened. Tether only accounted for only a tiny fraction of the trade volume in 2017, with the benchmark Bitcoin commanding over 50% of trades and fiat taking the rest. But in the plague ridden year of 2020, the situation is very different with as much as 70% of exchange trade volume denominated in USDT pairs.

Earlier this week, it was reported by Bloomberg that Tether’s market capitalization could actually surpass Ethereum’s by 2022. Currently, Tether’s market cap is around 38% of Ethereum’s but further growth for both is expected. In response to the report, Tether CTO Paolo Ardoino stated;

“Tether once again proves itself to be one of the most trusted assets in the crypto space.”

The stablecoin has achieved a number of major milestones this year, and it has all come during an ongoing court case with the New York Attorney General over the backing of the digital dollar. With Tether now interwoven into the fabric of the entire cryptosphere, there’s a lot riding on the outcome of that case.

Alarming growth of difficult-to-detect ‘Lemon Duck’ crypto mining botnet

A crypto mining botnet called Lemon Duck is spreading through Windows 10 computers, infecting users through fake Covid-19 emails.

Since the end of August, cybersecurity researchers have identified increased activity on a crypto mining botnet called “Lemon Duck”.

The botnet has been around since December 2018, however a big jump in activity over the past six weeks suggests that the malware has infiltrated many more machines in order to harness their resources to mine the cryptocurrency Monero.

Research carried out by Cisco's Talos Intelligence Group, suggests that Lemon Duck infections are unlikely to have been detected by end users, however power defenders such as network administrators are likely to have picked it up.

Crypto mining malware can cause physical damage to hardware since it leaches resources by running the CPU or GPU constantly in order to carry out the mining process. This will cause an increase in power consumption and heat generation which, in severe cases, could lead to a fire.

Increase of activity caused by Lemon Duck. Source: blog.talosintelligence.com

Windows 10 computers are targeted by the malware which exploits vulnerabilities in a number of Microsoft system services. The malware has been spread through email with a Covid-19 related subject and an infected file attached. Once the system has been infected it uses Outlook to automatically send itself to every contact in the affected user's contacts list.

The spurious emails contain two malicious files, the first is an RTF document with the name readme.doc. This exploits a remote code execution vulnerability in Microsoft Office. The second file is called readme.zip which contains a script that downloads and runs the Lemon Duck loader.

Once installed, the sophisticated software terminates a number of Windows services and downloads other tools for stealth connections to the rest of the network. Lemon Duck has also been known to infect Linux systems, but Windows machines are the primary victims.

The malware mines Monero since it is anonymous by design and very easy to obfuscate. The researchers did not elaborate as to who was behind Lemon Duck though it has been linked to other crypto mining malware called “Beapy” which targeted East Asia in June 2019.

Last month, Coinbase wallet users were targeted by new Android malware designed to steal Google Authenticator codes.

One billion ZIL staked in first few hours as Zilliqa embraces DeFi

A billion ZIL have been staked in a few hours as Zilliqa embraces staking rewards, governance tokens, and a new DEX .

The official launch of Zilliqa’s non-custodial staking platform on its mainnet has seen more than a billion tokens staked within a few hours.

Zilliqa is a high-performance and secure blockchain platform for enterprises and next-generation decentralized applications. In June, KuCoin and Binance were announced as exchange staking partners but now token holders are able to stake directly into the smart contract without having to go through a third party intermediary.

Staking will enable ZIL holders to participate in governance voting as the platform strives to become more decentralized, as well as earn rewards.

The platform has introduced a new fungible token (NFT) to the network called governance ZILs, or gZIL, which will be earned alongside staking rewards in ZIL. Zilliqa estimated annual staking returns of around 6% if 80% of the circulating supply, currently 10.5 billion ZIL, is staked.

For every 1,000 $ZIL earned as staking rewards, 1 gZIL will be issued. Additionally, there is a secure staking portal called Zillion which streamlines the process by allowing third-party wallets to connect.

The platform also launched a decentralized exchange and token swapping protocol called Zilswap on October 5, which enables re-staking of previously earned rewards, or pooling ZIL to generate liquidity for yield farming rewards. President and Chief Scientific Officer of Zilliqa, Amrit Kumar noted the embrace of DeFI, saying:

“We are thrilled to be joining the ranks of some of our most innovative peers, as we continue to build out future-fit DeFi offerings.”

ZIL token prices have not reacted positively to the launch, however, and fell around 4.5% in the 24 hours to the time of writing. Like many altcoins, ZIL is still down 90% from its all-time high in May 2018.

Reserve Bank of Australia still researching the CBDC it says it doesn’t need

The Reserve Bank of Australia is continuing to explore how to design and operate a CBDC.

The Reserve Bank of Australia has revealed it’s continuing to research a central bank digital currency (CBDC) less than a month after stating that there was no need for one.

The RBA also revealed it is considering the possibility of a more targeted “wholesale” CBDC.

Speaking at the University of Western Australia Blockchain, Cryptocurrency and Fintech Conference, Tony Richards — the Head of Payments Policy at the RBA — stated:

“We will be continuing to consider the case for a CBDC, including how it might be designed, the potential benefits and policy implications, and the conditions in which significant demand for a CBDC might emerge.”

Richards added that the public policy case for issuing a general purpose or retail CBDC in Australia is still to be made. According to reports in mid-September, the RBA was highly skeptical and did not believe there was a strong policy case for issuing a CBDC at the time.

Richards added that while Bitcoin and other cryptocurrencies are based on public blockchains, this would not necessarily be the case for a CBDC which may be developed using a permissioned and centralized digital ledger.

The RBA is also looking at a number of factors that could help shape a potential CBDC, continued Richards, such as whether it would be account-based or token-based, and whether it could be used offline.

Richards also revealed that separate to the central bank’s work monitoring cases for a retail CBDC, it is conducting research on the technological and policy implications of a potential wholesale CBDC which would be accessible to a more limited range of financial entities.

Richards stated that the Bank has an open mind on CBDCs and will continue to monitor developments in this area, adding;

“If some jurisdictions do move towards full implementations of CBDC, there will be many central banks like us who will be closely watching,”

The comments come as China ramps up its own digital currency/electronic payment (DCEP) testing by distributing a total of 10 million digital yuan ($1.5 million) to Shenzhen residents.

Uniswap proposal under fire for enabling Dharma to ‘take over governance’

Dharma’s Uniswap governance proposal risks giving it too much power, according to critics in the community.

Decentralized exchange Uniswap is currently undergoing its first governance vote, which was submitted by open-source lending protocol Dharma. But a number of community members have raised concerns that if successful, the proposal will hand Dharma too much control over the future direction of Uniswap.

The proposal, for which voting ends on October 19, suggests a reduction in token governance and quorum thresholds. This potentially gives the top holders — of which Dharma is one — significant power over decisions regarding Uniswap.

Currently, Uniswap governance requires proposal submitters to hold 1% of the total delegated UNI supply (10 million tokens), with a quorum of 4% (40 million UNI) required to pass a proposal. Dharma has proposed to lower these thresholds to 0.3% and 3% respectively.

A recent blog post written by community member David Felton — better known as Hiturunk in the Uniswap Discord channel — delves into why the proposal could be bad for decentralization. He argues that Dharma already has significant voting power and controls 15 million UNI in one address alone. He says this presents a threat to Uniswap’s sovereignty even without the proposal passing.

If passed, quorum could be achieved through just the top two delegates — Dharma and blockchain simulation platform Gauntlet, which have a combined total of almost 30 million UNI between them, That's enough voting power to achieve the minimum quorum.

Felton said the proposal "will so powerfully entrench them in Uniswap governance they might as well just outright own the DEX" and issued a call for it to be voted down:

“We strongly encourage all holders of Uni to vote ‘NO’ on this proposal to keep the quorum as the developers intended it.”

But stopping the proposal is a big task at this stage with over 30 million total votes in favor already and just 625,000, or 2%, against according to the voting tracker.

While there appears to be support at present for this proposal, some figures such as DeFi blog DeFiPrime, suggest that things should be changed after it has passed:

“I support Dharma's proposal, but I think that the voting cartel they created to overcome Uniswap's default threshold need to be dissolved right after the proposal passed.”

DeFi Watch founder Chris Blec claims to have been blocked by Dharma after questioning the motives behind the proposal.

He added that they should drop the DeFi label if they want to join the centralized exchange club.

“A company like Dharma with clear business interests should not have this level of control over Uniswap decisions. This power should be delegated to USERS. Not corporations.”

Dharma itself stated their belief the change would be beneficial to good governance. "We believe this proposal will help foster a vibrant Uniswap governance process," and said that it "achieves the goal of making governance more accessible, while still ensuring that Uniswap governance is not subject to unilateral deleterious actors."

Uniswap founder Hayden Adams, appears to simply be happy the first governance proposal is up for voting:

“Huge milestone for @UniswapProtocol decentralized governance!!!”

Uniswap has come under fire recently over centralization concerns when on-chain analytics provider Glassnode reported that centralized exchange Binance holds enough tokens (26 million) to make a significant difference to the outcome of a proposal vote.

Cointelegraph has contacted Dharma for comment and will update this story with their reply.

Experts weigh in: Is DeFi dead or is it still the future of finance?

The current DeFi ecosystem's trajectory is reminiscent of the ICO boom.

As the majority of DeFi related tokens continue to beat a retreat from their peaks this year, industry experts have weighed in on whether the decentralized finance bubble has burst, or if it will rise from the ashes.

Top quality projects like Chainlink, Aave and Synthetix have fallen by half since their all time highs, while some of the clone protocols have dropped by 95% or more.

There are also signs that some crypto collateral is starting to get liquidated and withdrawn from DeFi protocols as double digit yields start to dwindle. The total value locked across all platforms has declined by 9.3% since its all-time high in late September according to DeFi Pulse.

Cosmos co-founder, Ethan Buchman, stated that DeFi is a huge step forward for democratizing access to financial products, but added that most protocols carry a considerable risk that is not always obvious.

Unaudited and compromised smart contracts are high up on that risk list, and there have been several exploits this year. Additionally there have been flash loan and arbitrage attacks that have resulted in the loss of funds. Several DeFi platforms have been affected including bZx, Yam Finance, Bancor, dForce, Balancer, and more recently Soft Yearn.

Nicholas Pelecanos, head of trading at NEM, referenced the Yam Finance bug and its subsequent collapse as evidence that DeFi is still very much in its infancy, with the infrastructure and processes still in the experimental phase. He added:

“DeFi is currently on the knife’s edge in terms of its capacity to handle capital and could easily fall into a bubble.”

Scammy projects and pump and dump schemes, or ‘rug pulls’ as they’re termed in the industry, also became common in the midst of the DeFi hype. There have been several examples of token prices getting pumped up only to dump a few hours later.

Popular crypto analyst, Josh Rager, recently reported on how much he had lost in a DeFi rug pull:

Yield hopping is another aspect that suggests the emerging DeFi sphere is built for speed and not for sustainability. It appears that the same collateral is being moved from protocol to protocol as yield farmers, or ‘degens’ as they’re termed in the industry, chase that latest hot DeFi food token.

This was clearly evident with the SushiSwap boom, which deliberately attracted liquidity from Uniswap, only to lose it all again when the latter launched its own UNI token and liquidity pools. The UNI token itself is now more than 60% off its highs.

CEO of Blockdaemon, Konstantin Richter, likened the DeFi boom to the ICO bubble;

“The recycling of money and leverage creating crazy pumps seemingly out of nowhere certainly rhymes with what we saw in 2017.”

He added that the massive APY figures of 1000% or more for yield farming are unsustainable which means most of these experiments are likely to fail. However he said the ones that survive have a real shot at being the future of finance.

At a panel at LA Blockchain Summit this week, FTX CEO Sam Bankman-Fried suggested the DEX volume boom, that even saw Uniswap overtake Coinbase last month, is not sustainable. He said that as soon as the outsized incentives for using non-custodial DEXes falls away, so will the volume. By this he is referring to the yield farming opportunities and governance token distribution mechanisms.

Jason Wu, CEO and co-founder of Definer.org, stated that the market is more mature now than during the ICO boom, and the future of the industry will be largely impacted by the introduction of ETH 2.0, and a regulated way to bring DeFi to the mainstream. He concluded;

“With the influx of capital in the DeFi space, projects are building more applications for the next generation of financial networks. The DeFi mania we see in the market right now is therefore helping in our mission to transform the world of money.”

Experts weigh in: Is DeFi dead or is it still the future of finance?

The current DeFi ecosystem's trajectory is reminiscent of the ICO boom.

As the majority of DeFi related tokens continue to beat a retreat from their peaks this year, industry experts have weighed in on whether the decentralized finance bubble has burst, or if it will rise from the ashes.

Top quality projects like Chainlink, Aave and Synthetix have fallen by half since their all time highs, while some of the clone protocols have dropped by 95% or more.

There are also signs that some crypto collateral is starting to get liquidated and withdrawn from DeFi protocols as double digit yields start to dwindle. The total value locked across all platforms has declined by 9.3% since its all-time high in late September according to DeFi Pulse.

Cosmos co-founder, Ethan Buchman, stated that DeFi is a huge step forward for democratizing access to financial products, but added that most protocols carry a considerable risk that is not always obvious.

Unaudited and compromised smart contracts are high up on that risk list, and there have been several exploits this year. Additionally there have been flash loan and arbitrage attacks that have resulted in the loss of funds. Several DeFi platforms have been affected including bZx, Yam Finance, Bancor, dForce, Balancer, and more recently Soft Yearn.

Nicholas Pelecanos, head of trading at NEM, referenced the Yam Finance bug and its subsequent collapse as evidence that DeFi is still very much in its infancy, with the infrastructure and processes still in the experimental phase. He added:

“DeFi is currently on the knife’s edge in terms of its capacity to handle capital and could easily fall into a bubble.”

Scammy projects and pump and dump schemes, or ‘rug pulls’ as they’re termed in the industry, also became common in the midst of the DeFi hype. There have been several examples of token prices getting pumped up only to dump a few hours later.

Popular crypto analyst, Josh Rager, recently reported on how much he had lost in a DeFi rug pull:

Yield hopping is another aspect that suggests the emerging DeFi sphere is built for speed and not for sustainability. It appears that the same collateral is being moved from protocol to protocol as yield farmers, or ‘degens’ as they’re termed in the industry, chase that latest hot DeFi food token.

This was clearly evident with the SushiSwap boom, which deliberately attracted liquidity from Uniswap, only to lose it all again when the latter launched its own UNI token and liquidity pools. The UNI token itself is now more than 60% off its highs.

CEO of Blockdaemon, Konstantin Richter, likened the DeFi boom to the ICO bubble;

“The recycling of money and leverage creating crazy pumps seemingly out of nowhere certainly rhymes with what we saw in 2017.”

He added that the massive APY figures of 1000% or more for yield farming are unsustainable which means most of these experiments are likely to fail. However he said the ones that survive have a real shot at being the future of finance.

At a panel at LA Blockchain Summit this week, FTX CEO Sam Bankman-Fried suggested the DEX volume boom, that even saw Uniswap overtake Coinbase last month, is not sustainable. He said that as soon as the outsized incentives for using non-custodial DEXes falls away, so will the volume. By this he is referring to the yield farming opportunities and governance token distribution mechanisms.

Jason Wu, CEO and co-founder of Definer.org, stated that the market is more mature now than during the ICO boom, and the future of the industry will be largely impacted by the introduction of ETH 2.0, and a regulated way to bring DeFi to the mainstream. He concluded;

“With the influx of capital in the DeFi space, projects are building more applications for the next generation of financial networks. The DeFi mania we see in the market right now is therefore helping in our mission to transform the world of money.”

BNP Paribas and Curv unveil highly secure method to transfer security tokens

A Proof of Concept security token transfer involving BNP Paribas and Curv could lead to integrated crypto custody solutions.

Securities services provider BNP Paribas has just completed a Proof of Concept with cloud based crypto wallet provider Curv, to demonstrate a highly secure way to transfer security tokens.

The security token was transferred using Curv’s advanced cryptography which utilizes a concept called multi-party computation (MPC). The institutional grade technology enables transactions to be securely signed in a mathematically-proven, distributed way.

The move is a step towards an integrated custody solution that combines both traditional and regulated digital assets, according to Bruno Campenon, Global Head of Financial Intermediaries at BNP Paribas.

The PoC was carried out to demonstrate that tokenized securities can be transferred swiftly, securely, and transparently on the blockchain. It used an ERC-1400 security standard token, which has a far stricter set of technical requirements, for the demonstration.

A Proof of Concept could be described as a realization of a certain method or ideas to demonstrate its feasibility. It is often considered as a milestone on the way to a fully functioning prototype, in this case a secure enterprise grade crypto custody solution with a mathematically secure transfer system.

Curv, not to be confused with DeFi protocol Curve, provides secure crypto custodian services on a cloud based wallet. Its MPC technology eliminates the concept of private keys and single point of failure by signing each and every transaction in a secure, distributed way to protect against cyberattacks and insider collusion.

Co-founder and CEO of Curv, Itay Malinger, stated that global financial players like BNP Paribas play a vital role in the digital economy:

“To do so they require a secure and scalable infrastructure to deliver competitive custody products to their customer base.”

Founded in 2018, Curv is headquartered in New York and is being adopted by traditional financial institutions, digital asset managers, exchanges, and OTC desks. BNP Paribas provides multi-asset post-trade and asset servicing solutions for traders and corporate clients in 35 countries.

75 crypto exchanges have closed down so far in 2020

Crypto exchanges are disappearing at a fast rate this year.

As least 75 crypto exchanges have closed down due hacks, exit scams or simply disappeared for unknown reasons so far this year. 

According to the Crypto Wisser Exchange Graveyard five of the exchanges, including Hotbit, FinexBox, and WCX, were labelled as scams, and four including Altsbit, and Nerae, were flagged as being hacked.

In total 31 were shut down voluntarily while 34 were labeled as ‘MIA’ for disappearing with no explanation. Dutch exchange NLexch, and Chilean Chilebit were the only two flagged as being shut down by their respective governments in 2020.

There are some macro trends which help explain why so many smaller exchanges are failing. The growth of DeFi and the rise of decentralized exchanges in 2020 has put the final nail in the coffin for many smaller operations.

Regulatory pressure has also increased since the early days of the industry and many exchanges simply haven’t been able to keep up with the requirements. Hacks and scams are also cited as growing issues for exchanges.

The latest two high profile exchanges to have a cloud over their futures are BitMEX and KuCoin.

Following the filing of criminal charges against BitMEX executives last week for banking regulation violations, crypto security firm Chainalysis has labelled the exchange as "high risk".

The security company issued the warning to a number of its high profile clients including government agencies, banks and exchanges, informing them that any exchange with criminal charges brought against it should be considered high risk.

Some traders also seem wary of BitMEX’s future viability, with more than $500 million worth of BTC withdrawn from the exchange between September 30th and October 3rd according to Coin Metrics.

The Singapore based KuCoin exchange suffered a $200 million hack in late September, but it has scrambled to reassure users by issuing a number of security updates delving into the incident to provide transparency. The most recent announcement was updated on Oct. 6 as the company continues with audits into the various assets affected.

Crypto exchanges are not the only entities disappearing however. Acording to deadcoins.com there are also almost 2,000 altcoins and tokens that no longer exist.

$1B in Wrapped Bitcoin now being audited using Chainlink’s ‘Proof of Reserve’

Wrapped Bitcoin is now even safer with Chainlink oracles checking custody wallets every ten minutes.

Wrapped Bitcoin custodian BitGo has adopted Chainlink’s Proof of Reserve mechanism in order to boost the transparency and auditability of the tokenized asset for DeFi protocols.

The functionality, which is currently live on testnet, enables Ethereum-based dApps to completely automate the burden of auditing wBTC. The move comes as the amount of Wrapped Bitcoin on Ethereum approaches $1 billion in value, or the equivalent of over 92,500 BTC.

The mechanism negates the need to rely on manual off-chain processes such as audit reports. It streamlines the process in a trustless and censorship resistant manner which gives further credibility and security to the tokenized version of Bitcoin.

Wrapped Bitcoin custodian BitGo announced the Chainlink collaboration on Oct. 1, adding this meant  DeFi applications could now receive definitive on-chain proof regarding the fully backed collateralization of wBTC.

The Proof of Reserve contract will access a decentralized Chainlink oracle to check the balances of BitGo custody wallets for wBTC every ten minutes, which is the average time between BTC blocks. If there is a deviation from a set threshold the oracle will push an update on-chain to reference the new balance.

Chainlink nodes will continually monitor the contract off-chain, but only update it on-chain when events change the balance such as the minting or burning of wBTC. User funds can also be protected — for example, a money market can check wBTC collateralization before executing a lending or borrowing action. The announcement added;

“This feature can be especially beneficial for decentralized applications that utilize wBTC as collateral to secure other digital assets.”

This has the overall effect of increasing user trust in the asset and protecting against unexpected events in decentralized finance markets. Chainlink protocol co-founder, Sergey Nazarov, told Forbes;

“I think the concept of Proof of Reserve generally is really about proving that an underlying asset somewhere is in a certain state. And that proof is actually very fundamental to how financial systems work.”

He used the 2008 financial crisis as an example of how there was a disconnect between the actual underlying value of an asset and the market.

Bitcoin in its native form doesn’t work well with DeFi which is largely Ethereum based. Wrapping it, or tokenizing it in ERC-20 form, has become immensely popular this year as yield farming opportunities have emerged on an almost daily basis.

According to btconethereum.com, there is currently 125,300 BTC, or $1.33 billion worth, tokenized for use on Ethereum. Of this total, which has increased by 970% over the past three months, wBTC accounts for 76%.

Are ‘social tokens’ the next big thing?

Creators and influencers have a new way to monetize their efforts and reward their loyal followers.

Social tokens — or tokens backed by the reputation of an individual, brand, or community — are gaining traction and some believe they could be the next big thing in the cryptocurrency community. 

But what are they, and why are artists, musicians and social media influencers rushing to tokenize their efforts in order to gift, or sell them, to followers?

Social tokens are a little different to the slew of DeFi liquidity farming tokens that have appeared over the past couple of months. They are built around an “ownership economy” principle with the premise that a community will be more valuable tomorrow than today.

Creators can monetize their work as an non-fungible token (NFT), or social token, and supporters can give something back to show their loyalty. Influencers minting their own tokens to offer them as rewards, or sell them for additional revenue.

Cooper Turley from Audius explained in Bankless today:

”Social tokens provide a means of not only sharing financial upside with their favorite creative but also enables tiered, tokenized access based on active contributions.”

For example, artist Laura Driskill runs a popular Instagram channel and produces Autonomous Sensory Meridian Response (ASMR) videos to aid in relaxation and sleep. She has now created her own ERC-20 social token called TINGLE for her followers to buy in exchange for further interaction or purchasing merchandise.

Grammy award winning artist RAC, aka André Allen Anjos, has just announced a token created with Zora, a platform for artists, creators, and brands to craft their own markets. The token will be distributed to subscribers of various associated platforms and used to unlock access to various perks and exclusive content. RAC stated:

“Crypto enables communities to capture the value they create instead of being monetized by preexisting platforms and $RAC is an active experiment pushing the envelope on these primitives.”

A startup based in New York called Roll has taken things a step further by offering to mint Ethereum-based branded digital tokens, or “social money”, for influencers and creators.

There are around 160 social tokens currently offered on Roll and the number is growing as everyone from rappers to NBA stars to entrepreneurs experiment with this latest method of monetizing content and incentivizing community loyalty.

Tokenomics vary depending on the objectives of the creator but they all have one thing in common; participants all have financial exposure and share in the growth.

Are ‘social tokens’ the next big thing?

Creators and influencers have a new way to monetize their efforts and reward their loyal followers.

Social tokens — or tokens backed by the reputation of an individual, brand, or community — are gaining traction and some believe they could be the next big thing in the cryptocurrency community. 

But what are they, and why are artists, musicians and social media influencers rushing to tokenize their efforts in order to gift, or sell them, to followers?

Social tokens are a little different to the slew of DeFi liquidity farming tokens that have appeared over the past couple of months. They are built around an “ownership economy” principle with the premise that a community will be more valuable tomorrow than today.

Creators can monetize their work as an non-fungible token (NFT), or social token, and supporters can give something back to show their loyalty. Influencers minting their own tokens to offer them as rewards, or sell them for additional revenue.

Cooper Turley from Audius explained in Bankless today:

”Social tokens provide a means of not only sharing financial upside with their favorite creative but also enables tiered, tokenized access based on active contributions.”

For example, artist Laura Driskill runs a popular Instagram channel and produces Autonomous Sensory Meridian Response (ASMR) videos to aid in relaxation and sleep. She has now created her own ERC-20 social token called TINGLE for her followers to buy in exchange for further interaction or purchasing merchandise.

Grammy award winning artist RAC, aka André Allen Anjos, has just announced a token created with Zora, a platform for artists, creators, and brands to craft their own markets. The token will be distributed to subscribers of various associated platforms and used to unlock access to various perks and exclusive content. RAC stated:

“Crypto enables communities to capture the value they create instead of being monetized by preexisting platforms and $RAC is an active experiment pushing the envelope on these primitives.”

A startup based in New York called Roll has taken things a step further by offering to mint Ethereum-based branded digital tokens, or “social money”, for influencers and creators.

There are around 160 social tokens currently offered on Roll and the number is growing as everyone from rappers to NBA stars to entrepreneurs experiment with this latest method of monetizing content and incentivizing community loyalty.

Tokenomics vary depending on the objectives of the creator but they all have one thing in common; participants all have financial exposure and share in the growth.

StrongBlock launches DeFi protocol but token prices slump 70%

A new DeFi protocol has been launched rewarding node operators to improve public blockchain performance, but token prices have tanked

Just-launched DeFi protocol StrongBlock has announced the integration of Chainlink oracles — however its native token’s price tumbled 70% today. 

The platform, founded by former members of the original EOS core team, was launched on Sept. 29. StrongBlock says that low quality and insecure blockchain nodes can be unreliable and provide erratic market data, especially if they get out of synch. The protocol’s core concept is to shift the emphasis away from rewarding validators, to rewarding node security, as a way to improve public blockchain performance.

Bitcoin Cash evangelist, Roger Ver, gave the project a shout out:

Mining rewards are in the form of Ethereum and Chainlink tokens and StrongBlock announced Sept. 30 it had integrated Chainlink’s price oracles for LINK/ETH and ETH/USD to determine the prices of its own token called STRONG.

With a total supply of 10 million STRONG, around 4.89 million have been allocated to the shareholders, founders, and team. A third of this allocation was unlocked along with the DeFi protocol launch and it appears some are being dumped. Following an initial surge from $180 to $275, STRONG prices have tanked over 70% today to $66 according to Uniswap.info.

StrongBlock, launched its Blockchain-as-a-Service platform in February 2020, and selected the Ethereum network due to the network effects of the blockchain hosting the majority of DeFi platforms. The move has raised eyebrows however, as it was founded by members of the original EOS core team and Block.one company executives.

CEO and co-founder of StrongBlock, David Moss, acknowledged that Ethereum is the heart of DeFi at the moment, and that EOS does not have as much support at present. The protocol is looking for existing and new Ethereum full nodes to be listed in order to start earning mining rewards. A guide was published on September 24 to advise on the requirements of getting a node listed on the protocol.

Chainlink up 30% following six-week downtrend and developer selloff

A Chainlink developer address appears to have been offloading tokens and putting downward pressure on prices. But things are looking up.

Following a six week downtrend from its all-time high, LINK has rebounded 30% in the past 24 hours after a reported developer selloff resulted in downward pressure on the oracle protocol token’s price.

The strong rebound in the Bitcoin price, a sea of green among DeFi coins and a new Chainlink partnership announcement have all contributed to the price increase.

Chainlink’s native token had fallen over 60% from its peak of $20 mid-August, bottoming out at crucial support levels around $7.50 on Thursday, September 24. The six week downtrend appears to have been been accelerated by multiple sales of large chunks of LINK from what UK crypto publication Trustnodes reports is the dev address.

This 'dev address' has been selling batches of 500,000 tokens, worth approximately $4.8 million per batch at current prices, regularly over the past six months. The frequency of sell-offs increased after LINK hit its all-time high last month. The address shows several outflows to a Binance address but then the trail goes cold.

There are around 26 million tokens remaining in this address, worth an estimated $258 million at current prices.

Image - Etherscan.io

Since its peak, LINK market capitalization has declined from more than $7 billion to around $3 billion currently, however it remains one of the best performing crypto assets this year surging over 1000% from January 1st to its all-time high. At current prices, it is still up 450% since New Year’s day.

The selloff has dropped prices back to a crucial support level and the ‘Link Marines’ appear to have chosen this point to load up again. The $7 to $8 price zone was where LINK held in July before its epic run up to $20. A return to that level this week has catalyzed buying pressure as traders eyed a long overdue bounce yesterday.

That bullish momentum mounted resulting in a surge of 30% in less than 24 hours as LINK prices topped out at $10 a few hours ago. Since then, prices have retreated a little and are currently hovering around $9.80.

Chart - Tradingview.com

The price bump came hours after Chainlink announced a partnership with travel company Travala.com. LINK has been integrated as a payment method on the crypto friendly hotel booking platform and token holders can book accommodation in over 2.2 million hotels and homes in 230 countries.

Bitcoin’s momentum may have also had an effect. The king of crypto is well known for its capacity to move the rest of the market and it too bounced off support at $10,250 with a gain of 5% in push to $10,750 over the past 24 hours.

DeFi projects rush towards Layer 2 as Ethereum clogs up

Leading DeFi protocols are rushing to implement Layer 2 to ease the burden of high gas fees.

Decentralized finance (DeFi) protocols are racing to implement Layer 2 scaling solutions as Ethereum gas fees skyrocket and the network struggles under the demand.

Popular DeFi platforms including Uniswap, Aave, and Synthetix are gettin closer to rolling out the scaling solutions.

Synthetix, an on-chain synthetic assets protocol that tracks the value of real-world assets, is upgrading September 24 to a primitive version of L2 scaling.

According to a blog post by founder Kain Warwick the 'Fomalhaut' upgrade is the first phase of L2 migration to Optimistic Ethereum. It's an incentivized testnet aimed at alleviating gas costs for small SNX stakers who have faced fees in the hundreds of dollars to collect weekly rewards.

A second upgrade called 'Deneb' is due on September 29 which also includes measures to reduce gas fees. Warwick added said:

“Both of these releases are direct responses to increased gas costs due to Ethereum congestion. Some of the changes are stop-gaps while we transition to Optimistic Ethereum but included in these two releases is the first step towards L2 Synthetix.”

The hybrid approach to L2 will likely take Synthetix through to the end of the year, he concluded. Optimstic rollups is a Layer 2 solution that scales Ethereum smart contracts and dApps up to 2000 transactions per second.

The world’s leading DeFi DEX, Uniswap is also working on a major upgrade with Uniswap V3. When asked earlier this year, Uniswap founder, Hayden Adams, said that V3 would ‘fix everything’ implying that L2 may be a big part of the upgrade.

There is already a basic demo of the L2 version of the token swap protocol running at unipig.exchange. Unipig was launched in October 2019 in collaboration with Optimistic rollups.

London based lending protocol Aave, which is the second most popular DeFi protocol in terms of total value locked, is preparing the launch of version two of the platform which will streamline operations in order to reduce transaction fees.

In a blog post last month, Aave stated that its 'aTokens', which are minted to represent crypto collateral assets on the platform, will integrate EIP 2612 for gasless approvals. The Ethereum Improvement Proposal (EIP) enables transactions involving ERC-20 operations to be paid using the tokens themselves rather than gas accruing ETH.

"The short term objective is to push on the aToken adoption, and Aave is actively researching on bringing them to L2."

The post did not give further details on which L2 solutions it would be adopting or a time frame for the launch of Aave v2.

Bitcoin FUD and negative social sentiment typically precede a bounce

Social media sentiment for Bitcoin has slumped to two year lows which is good for those wanting to go against the crowd.

On-chain analytics provider Santiment asserts that Bitcoin and crypto assets tend to bounce when social sentiment indicates there is a lot of fear, uncertainty and doubt, which suggests that now is a buying opportunity.

According to its Bitcoin weighted social sentiment against price chart, this is exactly what is currently going on. Since its weekend lows, Bitcoin prices have recovered around 2.4% to current levels.

It added that this is what has been happening since early September when markets plunged $60 billion in terms of total market capitalization.

“This is exactly what we've been seeing for #Bitcoin, #Ethereum, and many #altcoins following the early September”

The analytics provider added;

“Generally, the best buy opportunities in crypto come when the average trader is down, both psychologically and financially. This is what our metrics currently indicate,”

Following the early September slump, when there was also a lot of negative social sentiment, Bitcoin recovered around 12% to top out over $11k, and the same could happen again.

This latest plunge a couple of days ago has resulted in a much smaller drop off for Bitcoin prices with just 7.5% lost to its low of $10,300.

Santiment added that Bitcoin's weighted social sentiment on Twitter continues to hover around near two year lows indicating that there are a lot of doubters in the price level, keeping support at the mid-$10k zone. This would be good news for whales, the report added, which tend to go against the crowd.

There was a similar opportunity with Ethereum where sentiment is also close to two-year lows.

The metric is derived using a machine learning model on a large Twitter dataset containing over 1.6 million tweets which are ranked as positive or negative.

The analytics provider also referenced another metric called MVRV which is a ratio that calculates the average profit and loss of different holders to determine whether a coin is currently over or under bought. It indicates that more people are currently down which could be a good entry point as there is an average return of negative 3.5% for traders over the past 30 days.

Additionally, the Bitcoin Fear and Freed Index has now dropped into the fear zone at 43 which confirms the findings.

Trader and Blockroots co-founder, Cantering Clark, stated that the current situation could be shaping up as a bear trap and Bitcoin could be seeing relief in the near future;

“If you ask me, that looks like an optimal way to set up a trap for any systematic shorts that would get the green light at that point.”

Bitcoin investor Lark Davis says that regardless of what crypto markets are doing, September is usually a bad month for stock markets and Bitcoin’s correlation could lead to some rocky weeks ahead;

At the time of writing, Bitcoin was trading at $10,500, up 0.5% on the day but down 2.7% on the week.

Developer reveals ‘biggest unsolvable Lightning attack vector’

Larger payment channels on Bitcoin’s Lightning network could be exploited according to an independent developer

Independent Bitcoin Lightning developer, Joost Jager, has outlined an exploit of the micro-payments network that could result in channels being compromised with very little effort and negligible cost.

However, he said he’s hard at work on a possible solution.

Jager specifies that the attack could be carried out on wumbo channels, which essentially allow larger transactions between mutually agreeing parties on the Lightning network.

A wumbo channel removes the limit to the total amount of Bitcoin that can be held in a regular Lightning channel — which is around $1,760 worth at today’s prices. It also removes the approx. $450 limit to how large an individual payment can be.

Jager said the wumbo channels can be exploited because the channel cannot hold more than 483 hash and time-lock contracts (HTLCs) at any time regardless of its capacity. So a malicious actor sending 483 micro-payments to themselves, and holding on to the HTLCs is enough to incapacitate a channel for up to two weeks.

The developer demonstrated that this could be achieved by using the maximum route length to add loops and more contracts to quickly reach that total for just a small initial outlay, 5.8 million satoshis in this example.

If the script kid is lucky, they only need to send 54 payments to get it done. A single tiny channel takes double-digit amounts of Bitcoin out of business.

He added that he had started a new firewall for Lightning nodes project called Circuit Breaker to address this problem. When asked whether this 'griefing attack' is the biggest unsolved attack vector on LN today, he added;

That depends on how you define biggest. There are other attacks that can make you lose money which seems worse. But this one is one of the biggest in terms of not knowing how to solve it.

With wumbo channels a user can signal that they want to send more BTC than the regular limits and find a node that is willing to receive. Regular Lightning users sending micropayments will not be affected but it is a much better option for business and enterprise payments.

Wumbo channels are growing in adoption and Bitfinex has been the latest to announce support for them;

The word “wumbo” comes from a cartoon series called SpongeBob SquarePants, and refers to the idea that two parties need to agree to ‘wumbo’ together for the transaction to take place.

Ledger wallet upgrade can prevent ‘dusting attacks’

Cold wallet maker Ledger adds more privacy protection to its software suite

Hardware wallet maker Ledger has recently upgraded its software suite to include more privacy and control over crypto transfers to help prevent ‘dusting attacks’.

A dusting attack is where a malicious actor sends small amounts of Bitcoin to a wallet to break the privacy of users for further attacks.

Ledger Live version 2.11.1 introduces a new feature called Coin Control which gives users the ability to adjust transaction settings to include more privacy or optimal fee usage.

The announcement added that the feature works through its ability to manage Hierarchical Deterministic (HD) wallets, or multiple different Bitcoin addresses. Now, users can select the addresses they want to use for transactions using Coin Control instead of the previous default First-in, First-out (FIFO) method of automatically using the oldest address.

This matters because it prevents third parties tracking those transactions through tiny amounts of BTC, called dust, which are worth less than the transaction fees. This dust can be used to trace the identity of the owner through analysis since these tiny unspent transaction outputs (UTXOs) can accumulate. A large scale dusting attack was carried out on Litecoin users in August 2019.

Ledger stated that with Coin Control, users can simply choose to not use this tiny UTXO, adding;

“As such, they cannot track any movements. In short: it can be a game changer when it comes to your privacy.”

Other features on the software upgrade include an optimization of the network fee structure by allowing users to choose UTXOs with higher value, thus reducing the byte size of the transaction. It also has the ability to select specific addresses for transfers should there be a need to keep payments separated.

Reddit users applauded the upgrade with one adding;

“This will make dust attacks useless. Also having the ability not to include small inputs when fees are high is great. I've been waiting for this feature. Thumbs up!”

Others asked for more functionality such as the addition of TOR, which is open-source software that facilitates anonymous communications. The addition of personal nodes was also requested as some users have trust issues when using a centralized company like Ledger.

Tether market cap increases almost 4X in 2020 to $15 billion

Tether supply surges to $15 billion but it could still be a house of cards

The surging DeFi sector has resulted in a mass minting of Tether in 2020 — including $3B last month alone — which has pushed its market capitalization over $15 billion.

At the beginning of the year there was just over $4 billion USDT in circulation, and today that figure is over $15 billion. DeFi has been the driving force behind the Tether mining machine as more and more liquidity pools are based on stablecoins. It was reported that Tether’s average daily transfer value had exceeded that of PayPal late last month as demand for the stablecoin continues to surge.

Tether made the milestone announcement and pointed out that last month the market capitalization has increased by billions more:

An infographic from Flipsidecrypto.com depicts the movements of Tether between users and exchanges this month. The main centralized exchanges still account for the lion’s share of USDT trade with Binance and Bitfinex holding around $2 billion between them.

Image - flipsidecrypto.com

According to the Tether Transparency Report, the amount of UDST on Ethereum has now increased to over $10 billion, or almost two thirds of the entire supply. There is currently around $4.2 billion on Tron and $1.3 billion circulating on Omni.

Late last month, Tether conducted a billion dollar token swap from Bitfinex to Binance as reported by Cointelegraph. The swap was initiated because Binance had a surplus of $1 billion USDT based on the TRON blockchain and wanted to trade it for the equivalent amount of Ethereum-based Tether.

On September 15, another swap was initiated by Tether as demand for the ERC-20 version of the stablecoin exceeds that of other networks, such as Tron.

However there are ongoing moves to shift Tether transfers onto other networks from Ethereum as gas fees continue to cripple the network. Over the past month USDT has been made available on the Layer 2 OMG Network and launched on the high speed Solana blockchain.

Meanwhile some in the crypto community are still calling for a full audit which will determine whether there are $15 billion real dollars and assets backing up the stablecoin, or the whole thing is a house of cards.

The truth may be revealed as part of the ongoing Tether lawsuit in New York. The Office of the Attorney General (OAG) filed a letter on September 8 which asked for disclosure of financial documents. The lawsuit concerns allegations that Bitfinex had ‘lost’ around $1 billion in customer funds and used Tether reserves to mask the imbalance. Tether and Bitfinex have rejected the lawsuit as baseless.

‘Price of Tomorrow’ author says Bitcoin is a ‘lifeboat’ amid financial turmoil

Escalating debt and inflation could result in years of stormy weather for global economies

Renowned entrepreneur and author, Jeff Booth, has endorsed Bitcoin as a ‘“must have” investment in times when central banks are exacerbating the escalating debt problem.

The comments came in a tweet thread discussing the notion that central banks believe they can somehow escape a massive debt problem by exponentially adding more debt.

Author of "The Price of Tomorrow", a book about deflation, Jeff Booth pointed out that even before the COVID-19 pandemic threw fuel on the fire, global debt was $250 trillion in a global economy worth around $88 trillion — and $185 trillion of that total debt had been added in the last 20 years. According to usdebtclock.org the U.S. tops the list for national debt with over 10% of the global total, and an ever ballooning figure of $26.7 trillion

“The unwind in whatever form it takes is going to be brutal,” he predicted. Booth believes the only two choices left are grim with the first being governmental default on global debt through a deflationary depression, which would include a banking system collapse, or default through hyperinflation, which appears to be starting already with mass money printing.

Continuing this narrative, Booth added;

“In my humble opinion - Bitcoin is a "must" Not just for your wealth but as a lifeboat.”

The comments come in an inflationary environment. In late August, U.S. Federal Reserve Chair Jerome Powell announced that the central bank would no longer treat inflation as a primary threat to economic growth.

On Wednesday, September 16, he revealed the Fed brass had decided that short-term interest rates would remain targeted at 0%-0.25% for years to come while inflation may be allowed to exceed its 2% threshold if deemed necessary.

The FED, like most central banks, remains free to change the goalposts regarding what they consider to be acceptable and unacceptable rates of inflation. This includes the ability to print trillions of dollars in the name of stimulus measures. Governments essentially need to debase their currencies in order to erode the debt mountain they have created.

Jeff Booth is one of many Bitcoin proponents calling attention to the current banking issues, which appear to echo what happened in 2008. His book "The Price of Tomorrow" is a stark warning about two dangerous economic trends which, in his opinion, are largely being ignored. It asserts that technology and price deflation will cause lasting widespread unemployment, while the global economy is underpinned by an unstable mountain of debt. With that in mind, Bitcoin may be one of the few remaining ‘lifeboats’ available.

Bitcoin sentiment at record lows … Does it mean the price will go up?

Social media sentiment for Bitcoin has slumped to a two year low yet technical indicators are still saying ‘buy’

A number of metrics indicate that social and trading sentiment for Bitcoin is still low despite its price breaking above $11,000 a couple of hours ago.

On-chain analytics provider, Santiment has revealed that weighted social sentiment for Bitcoin is at its lowest level for two years. The metric takes into account the overall volume of Bitcoin mentions on Twitter and compares the ratio of positive vs. negative commentary on the platform.

Social sentiment surged a few months ago when Bitcoin started its strong recovery following the mid-March pandemic induced market crash. However, for most of May, June, and July, when the asset was consolidating in the low $9k range, it fell into negative territory again.

The analytics provider noted that counter intuitively, negative sentiment at extremely low levels correlates with price rises, whereas extreme highs correlate with price retracements.

Bitcoin reached a 2020 high of $12,400 in mid-August, but has failed to top 2019’s peak of $13,800 leading a number of analysts to assert that the lower high on the long time frame indicates that we are not in a bull market just yet.

Another market sentiment gauge is the Bitcoin Fear and Greed Index which is currently showing a neutral reading of 48 at the time of writing. This metric is derived from a combination of factors such as volatility, market momentum and volume, social media interaction, market dominance, and current trend.

For most of August the index was in the "extreme greed" zone around 80 as Bitcoin traded in the high $11k range. Its lowest levels unsurprisingly were in March and April when "extreme fear" gripped global markets.

Popular charting platform Tradingview also has its own sentiment indicators for the asset derived from a number of technical indicators. On the daily and weekly views they are flashing buy signals whereas things are more neutral on the shorter time frames.

Bitcoin has been largely correlated to stock market movements for much of this year, however, the ‘September effect’ is a term that has come about because it is a historically weak month for stock market and cryptocurrency price returns (as Kraken pointed out in its most recent update). This could be reflected in social sentiment as reported by Santiment.

At the time of writing, Bitcoin was still trading just above $11k, a gain of 2.8% on the day and almost 8% on the week.