Blockchain Bites: Will BTC Ever See 10,000% Returns Again?

Also: MakerDAO users hosed and BTC's dollar-led doldrums

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September 24, 2020 By Daniel Kuhn If you were forwarded this newsletter and would like to receive it, sign up here.  Top shelf MakerDAO has voted not to compensate victims of the "Black Thursday" flash crash, a former Pantera partner is launching a new crypto-focused hedge fund and bitcoin may be headed to the doldrums as the U.S. dollar rises. Decentralized governance MakerDAO will not compensate victims of March 12’s “Black Thursday” flash crash that left some of the decentralized finance (DeFi) platform’s investors out $8.33 million, according to a vote that closed Tuesday. Large MKR holders dominated the vote as only 38 unique votes (8.74% of MKR holders) were cast, CoinDesk’s Will Foxley reports. In March, market making bots exploited a flaw and were able to buy ETH at near-$0 prices, as the entire crypto market tanked, thereby liquidating many collateral positions. Investors lobbied the community for partial compensation denominated in the platform’s MKR governance token. The Maker community had initially voted in early April to refund sunken investors.  Data markets Taking cues for DeFi, Ocean Protocol has teamed with Balancer Labs to create the first automated market maker (AMM) for data . “Our goal is to unlock this data economy with data marketplaces, connecting the buyers and sellers of data. These can be individual humans, families, small companies, large companies, cities, nations, etcetera,” Ocean founder Trent McConaghy said. The decentralized market approach aims to make pricing data easier, by allowing anyone to discover, price and trade using a variety of cryptos like Ocean’s native token (OCEAN) or other cryptos like ether (ETH) or dai (DAI). Global south JBS, the biggest meat packer globally by sales, plans to use blockchain technology to stem deforestation caused by cattle suppliers in the Amazon. The Brazilian company will monitor all of its meat suppliers on a blockchain system by 2025, saying current monitoring efforts enable its suppliers further down the chain to potentially "launder" meat from cattle raised on illegally cleared ground. Meanwhile, to the north, Venezuela has legalized crypto mining but only under the direction of the government. All mining activities must be registered and carried out through an official National Digital Mining Pool, a centralized pool that will keep the government in control of disbursing profits. This comes as Iran continues to clamp down on crypto mining – despite its citizens’ growing reliance on the borderless technology. Banking the unbanked FastBitcoins has partnered with prepaid voucher giant Flexepin to expand to 14 countries in Africa. Announced Thursday, the deal also expands FastBitcoins’ coverage to some 20,000 point-of-sale locations in Australia where Flexepin is based, as well as across Canada and Europe. Flexepin caters to users who want to make online payments without using credit or debit cards. It also supports mobile money payments in Africa, opening the possibility of exchanging prepaid vouchers for bitcoin and accessing the larger global financial system.  Fintech, meet crypto Visa's Global Fintech Lead, Terry Angelos, told Forbes cryptocurrency companies had shown a "significant interest" in working with them. And they, them. Visa is currently "onboarding" 25 crypto companies,"at various stages of development," through its fast track program and other methods. This is in addition to other major firms like Coinbase, Visa is working with. Meanwhile, Coinbase announced it has hired former executives from Venmo, Adobe and Google to VP roles on its product, engineering, and design & research teams.  CoinDesk Research CoinDesk Research continues its webinar series on Bitcoin's fundamental metrics with two episodes on UTXO-based analyses. UTXOs, or unspent transaction outputs, are fundamental components of Bitcoin's distributed ledger that can shed startling light on investors' behavior and positions.  On Sept. 29 at 10:30 a.m. ET, Lucas Nuzzi from Coin Metrics will present charts and insights on the market-value-to-realized-value (MVRV) ratio and the spent output profit ratio (SOPR). Register to join How to Value Bitcoin: UTXO-Based Fundamentals. Quick bites This Ethereum Startup Is Building a ‘DeFi Firewall’ for Institutional Investors (Ian Allison/CoinDesk) Different Cars, Same Radio Presets: Daimler Blockchain Venture Lets Settings Follow Users (Jaspreet Kalra/CoinDesk) Iran Is Ripe for Bitcoin Adoption, Even as Government Clamps Down on Mining (Sandali Handagama/CoinDesk) $1 Billion in Bitcoin Options Expire Friday. Here’s What It Means (Robert Stevens/Decrypt) Bureau of Fiscal Service launches next phase of blockchain study focused on grant payments (Aislinn Keely/The Block) At stake Bitcoin returns? For early bitcoin investors, like those at the maverick hedge fund Pantera Capital, heart pounding returns may seem like a thing of the past.  Founded in 2003 by Dan Morehead, Pantera was originally focused on global macro hedge fund investments. A decade later, the firm switched its focus exclusively to the world of crypto.  This appears to have been an auspicious move. Its first bitcoin fund, opened in late-2013, has rallied by over 10,000%. Such returns on BTC now appear beyond the pale. MicroStrategy’s Michael Saylor has sunk close to half a billion dollars of his firm’s treasury into bitcoin, not as a venture investment, but as a means to beat inflation. He told CoinDesk’s Danny Nelson that MicroStrategy is prepared to hold BTC for the next 100 years.  Paul Brodsky, a former partner at Pantera Capital, also appears skeptical that bitcoin will see another breakout rally. He believes that bitcoin is too easily accessible, its derivatives market too established and its network too energy-demanding to offer massive investor upside. Though he hasn’t soured on crypto broadly.  Brodsky is opening a new hedge fund, called PostModern Partners, aimed at volatility plays across cryptocurrencies and traditional assets. Set to open in 2021 the fund is seeking high-risk, high-return blockchain investment opportunities, CoinDesk’s Nelson reports.  While it isn’t clear precisely what assets might have Brodsky’s eye, PostModern’s organizational documents reads, “we believe there are greater scaling opportunities in Proof-of-Stake tokens.”  Market intel Dollar-led doldrums he U.S. dollar is showing signs of life and a continued breakout could weigh over bitcoin, which surged amid the greenback’s sharp sell-off this summer. Bitcoin (BTC) is currently trading at $10,320 – up nearly 2% from Wednesday's low of $10,140. The dollar index (DXY), which tracks the greenback's value against major fiat currencies, has broken above its two-month-long range of 92.00-94.00. CoinDesk’s Omkar Godbole reports the dollar and bitcoin (like other assets including gold, and increasingly stocks) are inversely correlated, meaning a rise in one might cause a downside in the other. Tech pod Version 2 Parity Technologies has released the second version of its blockchain building kit, Substrate 2.0, CoinDesk’s Will Foxley reports. The new release gives developers additional tools to customize a blockchain “precisely for your application or business logic,” a blog post reads. Parity Technologies is the developer of the Polkadot blockchain with ambitions for developing a Web 3.0, undergirded by a meshing of various blockchains running on a “tooling kit” called Substrate. The latest code update includes 70 composable “modules” for blockchain architects to build and modules to bring off-chain data onto the blockchain. Internet 2030 Jill Carlson, a CoinDesk columnist, co-founder of the Open Money Initiative and investor with Slow Ventures, writes about a future where there are multiple “yous” floating around the internet, deputized to do your bidding. This op-ed excerpted below is part of CoinDesk's "Internet 2030" series about the future of the crypto economy. It is going on 9 p.m., but noonday sun continues to stream through the windows. You’re tired. You look out longingly at the palm trees and roller skaters lining the Santa Monica beach outside the office. “Alright, I’m done. I’m logging out for the night,” you say as you look up at your coworker, sitting across the large, clean, bright white conference room. You are one of the last ones working into the evening tonight. “Goodnight!” waves your colleague with a smile, her hair and makeup, as usual, looking as immaculate as it did when she showed up that morning despite the wear of a 12-hour workday. One of the perks of the new reality. You wave back and as you do, you let your hand continue up to your head where your hand meets the virtual reality headset strapped around your face. You pull the headset off, blink several times, and rub your face. You feel slightly sick as you always do upon removing it. We weren’t meant to be looking at 12k resolution screens all day. You sit back in your chair in the semi-darkness of your studio apartment. The light rain characteristic to Oregon this time of year is patting down on the roof and rolling down the outside of the window next to your bed. No sunshine or palm trees here. You stand up, grab one of the frozen dinners that work sends you out of the refrigerator and throw it in the microwave. It’s such a relief to be out of the office. Today was particularly taxing. Not the work, so much. There is a lot of that but it is fine. No, the hard part is always walking on eggshells all day among other members of staff. Today, over lunch, the conversation steered into relations with China, tax policy, as well as the continued civil unrest in Norman and Knoxville and now New York again. Every conversation seems to lead back to politics but the discussions have long since ceased to be interesting. Everyone just repeats the same few statistics and catchphrases they hear on the same few podcasts. At least, you think to yourself, the avatar helps to handle some of the pressure. Back five years ago, before the advent of the virtual office, when it was all still run on video calls, you had to continually adjust your face depending on the topic at hand. Smile and bobbing your head up and down or else arranging a look of thoughtful, grave, or sympathetic contemplation depending on the sensitivity of the subject. Now your avatar handles it all for you. CoinDesk’s “Internet 2030” series examines the future of the medium and what role blockchain and crypto will play in it with content and conversations on the future of the decentralized web. If you are interested in submitting an op-ed for the series, please reach out directly to daniel@coindesk.com.  Podcast corner Incentive loops Corey Hoffstein, Chief Investment Officer of quantitative research and investment fund Newfound Research LLC, joins the latest episode of The Breakdown to discuss how the Federal Reserve, passive investing and volatility-correlated strategies have joined to create a market incentive loop that is causing markets to aggressively react to exogenous shocks.  Who won #CryptoTwitter? ATTENTION: Scammers have been sending fraudulent emails with links to sites disguised to look like coindesk.com. If you are in doubt about a link, type https://www.coindesk.com directly into your browser; do not copy and paste. Remember, if something seems too good to be true, it probably is. Blockchain Bites A newsletter from CoinDesk See previous editions Copyright © 2020 CoinDesk, All rights reserved.  Our mailing address is:  250 Park Avenue South New York, NY, 10003, US  Want to change how you receive these emails? You can update your preferences here.