Monday, April 1, 2019

Stepping into staking

April 1, 2019	View in browser

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Today's top reads

Stepping into staking
Bithumb's inside job
Q1 recap: Alt season
R.I.P. to the ICO

This week's poll: Have you sent a lightning network payment?
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Market update

COIN	PRICE	7-DAY
BTC	$2543.43	- 38.5%
ETH	$76.52	- 46.12%
XRP	$0.192	- 38.4%
LTC	$46.52	- 23.4%
EOS	$2.46	- 41.1%

1. Stepping into staking

So institutional staking is getting its wings. Last week, Coinbase announced that is going to expand its custody business to offer staking for digital assets running on proof-of-stake (PoS) networks.

Why? Because institutions with massive holdings in these PoS-specific coins usually have to incur a high amount of risk if they want to get a return on their staked coins. Plus, since Coinbase already has 60 institutional clients with over $600 million assets under custody, it's a reasonable next step.

Here's how they'll do it:

It starts with Tezos. In the beginning, Coinbase will only offer staking for XTZ but plans to build support for other PoS projects as well.
Cold storage. Though staking requires some coins to be held online, Coinbase will use its own coins and keep client's coins offline, safe in cold storage.
Don't forget Coinbase's cut. Since Coinbase is taking the risk, it's obviously going to take a cut. That fee could fall anywhere from 20-25%, leaving clients with an average return of about 6.6% annually on their staked XTZ.

Actually, we should have seen this coming. In January, Coinbase Ventures participated in a $4.5 million Seed Round for Staked - a startup focused on staking for institutional investors.

But...Staked doesn't offer custody services. So now that Coinbase has custody services and staking, it is yet again beating its chest above competitors.

Bottom line: Coinbase Custody clients can start squeezing more returns out of their PoS assets through staking.

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2. Bithumb's inside job

$13 million EOS is gone after Bithumb was hacked last week. The hack comes almost a year after the South Korean exchange was hacked for $30 million in various cryptos - but that wasn't from an inside job.

According to a statement from Bithumb, all of the stolen cryptocurrency "is owned by the company, and all members' assets are under the protection of a cold wallet."

So how did it happen? Well, the hack happened in a series of transactions that ended up moving a total of 3.07 million EOS from the exchange's "hot" wallet to the theif's address.

But wait, shouldn't the wallet be secured by multiple people? Apparently not. CoinDesk Korea reported that although many exchanges manage EOS wallets with secure, multisig systems, Bithumb only used a single key - making it even more likely to be an inside job.

Can we all agree? Even though no "user" funds were stolen in this case, can we just agree that keeping money on centralized exchanges is a bad idea precisely for this reason?

3. Q1 recap: Alt season

And that's a wrap. The first quarter of 2019 is in the books and though Bitcoin hasn't made any significant moves lately, altcoins seem to be engulfed in a joyride.

According to Messari, 24 altcoins including major projects like Binance Coin (BNB), Tezos (XTZ), Ontology (ONT), Basic Attention Token (BAT), and more have posted gains that surpass 100% in the last 90 days.

What does it mean? Who knows, but here are some other stats you should know about the market's latest alt season:

Bitcoin dominance has dropped. As a result of a sneaky altseason, Bitcoin dominance has dropped from 51.71% to 50.1% in the first quarter to give way for the altcoin market.
Searches for "altcoins" spiked. In the 12-month view of Google Trends, searches for "altcoins" spiked to a relevancy score of 39 in March after bumming along for five consecutive months.

But don't get too excited. Despite having an impressive first quarter, most altcoins still sit over 70% lower than their all-time highs. As a lone warrior, only Binance Coin boasts single digits being less than 8% away from its all-time high.

4. R.I.P. to the ICO

Initial coin offerings (ICO) might be dead. Either that or they are just to returning what would be normal levels had we not had 2017's crazy run-up.

According to the Wall Street Journal, ICOs raised a mere $118 million in the first quarter of this year. That's over 58 times less than the healthy $6.9 billion founders brought home in the same time period last year.

Two reasons for the stumble:

Negative sentiment from bear market feels.
A very real fear of regulator action against non-compliant ICOs.

Adding insult to injury, the report cites that out of 2,500 projects that ICO firm TokenData tracked from 2017 forward, only 15% of projects trade higher than the original issuance price.

It's simple: Bear market + regulatory action = less investors spending money willy-nilly.

5. You should also know

Omise, the company behind the OmiseGo (OMG) token, was acquired by Thailand's richest company for more than $100 million.
New research released by Binance is proposing that prediction market Augur faces a design flaw attack on one of its contracts.
The U.S. Securities and Exchange Commission is beefing up its team as it looks to hire a "crypto specialist" attorney advisor.

6. A fifth got kitties

From last week's poll, 21.3% of respondents answered that they have owned or currently own a CryptoKitty. Yes, we're talking about digital cats a.k.a. the groundbreaking crypto collectible that popularized the non-fungible ERC721 token in a gamified manner.

Did you know? The world's most expensive CryptoKitty was sold last September for a whopping 600 Ethereum (ETH) that was worth around $170,000 at the time.

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P.S. Happy April Fools' Day! The market isn't melting, take a look for yourself.