Is YAM Mashed?

Record Eth Fees, Token Sale Reboot, Uniswap Surges

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August 13, 2020 By Daniel Kuhn If you were forwarded this newsletter and would like to receive it, sign up here.  TOP SHELF Ethereum users are paying through the nose while miners profit. Coinbase is offering bitcoin-backed loans and nearly a quarter of the Tor Network may be compromised by a crypto-loving scammer.  AT STAKE Has YAM been mashed?  The memetic token project which launched on Tuesday and crashed on Wednesday – erasing nearly $60 million in value – announced itself to the world as an “experimental protocol mashing up some of the most exciting innovations in programmable money and governance,” in a Medium post.  Liquidity providers piled into YAM tokens, developed by Yam Finance, in an attempt to make a quick profit before catching the hot potato.  Profits would be derived from YAM’s elastic supply schedule, which was programmed to keep the token close to the value of U.S. dollars by creating or destroying tokens at set intervals, called a rebase.  It was this very mechanism that contained a bug that destroyed the harvest, disabling the project’s on-chain governance feature.  The first version of YAM launched as the “second purely decentralized DeFi project after Yearn Finance,” according to Cointelegraph’s Joseph Young. And this position has led to varying opinions about the value of the dead project.  Compound’s Jake Chervinsky tweeted, “This was an extraordinary governance experiment.”  But Avalanche’s Emin Gun Sirer thinks purely speculative projects – “YOLO coins” – detract from DeFi’s attempt to “accomplish things not possible in the traditional finance world.” Record Fees Transaction fees and miner’s profits are soaring on the Ethereum blockchain. Yesterday evening the average fee per ether transaction reached $6.04, according to Blockchair, the highest level since 2015. Median transaction fees sit near historic highs of $3. The increase in fees and ether’s jump in price has driven the daily profitability of Ethereum miners to levels not seen in 27 months – increasing profit margins for most mining equipment above 90%. Data from BitInfoCharts shows that the daily profitability for Ethereum miner operators is at $5.8 per 100 megahashes second (MH/s) of computing power – a level not seen since early May 2018. Crypto Credit Line Coinbase will allow U.S. retail customers to borrow fiat loans against as much as 30% of their bitcoin holdings, without filling out an application or going through a credit check. The exchange is setting conservative parameters on the product, according to CoinDesk’s Nathan DiCamillo, capping credit lines at $20,000 per customer and offering an interest rate of 8% for bitcoin-backed loans with terms that are a year or less. Coinbase claims it will keep the bitcoin at the exchange without reinvesting it. Tokens, Take Two Token sales are back, reports CoinDesk’s Leigh Cuen. Ava Labs, Polkadot and NEAR protocol – all potential alternatives to Ethereum – are among the most prominent crypto projects to raise tens of millions of dollars within the last month. But this isn’t a play-by-play of 2017. Token founders now prefer ongoing sales with controlled distribution conducted over exchanges like CoinList, Gate.io and Binance. Still, not all Layer 1s are interested in token sales. Bram Cohen’s Chia Network recently raised $5 million in an equity round led by Slow Ventures, ahead of an IPO. Torn Network? A single malicious entity controls 23% of all exit nodes used on the anonymous internet provider Tor Network and is using its position to steal bitcoin and other cryptocurrencies, according to pseudonymous cybersecurity analyst "nusenu." The Tor Network is a popular way to anonymize web traffic by shielding user’s IP addresses. The hacker is using a position as a major exit relay host to decrypt websites, giving them unrestricted access to traffic passing through their servers. It's unclear how much cryptocurrency has been stolen and whether the malicious agent is engaged in other attacks. Bitcoin for Business Nigerians are turning to bitcoin to bypass hurdles imposed on trade with China. Business owners and laymen, restricted by banking limitations and sanctions, are using bitcoin for frictionless trade, reports CoinDesk contributor Alyssa Hertig. All this trade with bitcoin is happening behind the scenes. “Businessmen and women on the ground aren’t exactly eager to publicize that they’re using bitcoin for international trade. For one, the legality of cryptocurrency is fuzzy in the region,” she writes.  QUICK BITES Sirin Labs founder was sued over $6 million in unpaid factory bills related to the Finney Blockchain Phone (CoinDesk) The Stacks Foundation is dipping into 100 million Stacks tokens reserve to pay grants (CoinDesk) Kazakhstan wants to put a 15% tax on Bitcoin miners (Decrypt) Mexico is a booming crypto market you may not have considered (CoinDesk) First Mover: Ethereum faces inflation problem as gas fees soar (First Mover/CoinDesk) MARKET INTEL Volumes Up Uniswap trading volume notched its fourth consecutive record monthly high two weeks into August, surpassing $1.76 billion in volumes. The record-setting volume comes amid a continued speculative frenzy over new and experimental decentralized financial applications, causing volumes across all decentralized platforms to soar. In the past 24 hours, Uniswap reported $213 million in volume, accounting for more than 60% of all decentralized exchange volume, according to Dune Analytics.  Link Cap Chainlink (LINK) is now the fifth largest crypto by market capitalization, surpassing bitcoin cash (BCH). At press time, LINK stands at $5.76 billion compared to BCH's $5.30 billion in total market value with a 24-hour volume clocking in at $1.05 billion versus BCH's $83.7 million. Market capitalization is a tenuous indicator, found by multiplying the total number of coins or tokens in circulation multiplied by its spot price, but has become the go-to metric to rank crypto projects. OPINION Myths Debunked Marcelo M. Prates, a lawyer at the Central Bank of Brazil, writes that central bank digital currencies (CBDCs) are “a conceptual type of money that hasn’t yet been created, except for some limited prototypes. But myths surrounding CBDCs are already piling up.” He debunks four of the most common misunderstandings. PODCAST How Much? Supplygate, the debate that sprung up this weekend, was about more than Ethereum’s total supply of coins. It’s one more front in the battle over narratives between the communities behind the two largest blockchains, according to NLW. WHO WON #CRYPTOTWITTER 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.

Ready bags? Start walking. XLM and XRP launch programs to benefit their holders and EOS gets slapped around by the SEC one more time

Complex transaction on Ethereum blockchain netted $40K profit on $45K investment

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August 13, 2020 By the CoinDesk Markets Team Edited by Bradley Keoun If you were forwarded this newsletter and would like to receive it, sign up here.  TODAY: Prices: Bitcoin (BTC) $11,525 (-2.11%) | Ether (ETH) $384 (-2.19%) So-called stablecoins like tether and USDC are $1 tokens, but their prices can fluctuate on exchanges based on demand. One complex DeFi transaction appears to have netted a trader an 89% profit in a matter of minutes. What's Hot: India is bullish on bitcoin, the traders betting ether could pass $1,000 in 2020, and how to succeed at investing. WHAT'S HOT? Ripple is determined to make a stand, compensating from its own pockets for the price decline, with the newest redistribution package. If you own Stellar, you own a share of the 5 BLN XLM released on the network for the latest staking marathon. In the SEC vs EOS battle, it seems that Block1 takes another one for the team and forfeits 100 million EOS, somehow in favor of the current holders. – Sebastian Sinclair, Reporter   MARKET MOVES In digital-asset markets, stablecoins like tether and USDC are supposed to represent $1 of value. But their prices often fluctuate on the pubescent trading platforms of decentralized finance, or DeFi.  So cryptocurrency traders are now apparently devising strategies to profit from slinging stablecoins in these fast-growing but often janky and thinly traded markets. In one Aug. 10 transaction on the Ethereum blockchain, a trader appears to have used a series of transactions in tether and USDC on the decentralized cryptocurrency exchanges Uniswap, Curve and dYdX to net a tidy $40,000 profit off a $45,000 initial investment. That works out to an 89% gain in what was likely a matter of minutes.  The whole transaction can be seen on the website Etherscan, used to access data recorded on the Ethereum blockchain. Here’s that looks like: Screen grab of transactions used in Aug. 10 stablecoin arbitrage trade. (Etherscan) What happened was this: 1) Trader started with roughly $45,000 in USDC tokens and borrowed another $405,000 on dYdX, for a total of $450,000 in USDC.  2) Exploiting temporary differences between the stablecoins’ face value of $1 and quoted prices, the trader was able to use Uniswap to exchange the $450,000 of USDC for $492,000 of USDT.  3) Trader swapped $492,000 of USDT for $492,000 of USDC on Curve.  4) Trader paid off the $405,000 loan from dYdX and had $87,000 USDC remaining.  5) The transactions cost about $2,000 in fees.  6) Trader netted $40,000 profit on $45,000 of initial capital. And here’s a diagram, courtesy of CoinDesk’s managing editor for markets, Lawrence Lewitinn: Schematic of Aug. 10 stablecoin arbitrage trade using DeFi. (Etherscan, CoinDesk)  The transaction drew eyeballs on Tuesday from flabbergasted (and perhaps admiring) Twitter users. At first glance, the strategy appears similar to prior exploits of these largely untested DeFi systems, such as in June when a hacker drained $500,000 from the liquidity provider Balancer.  But this week’s operation appears legal, merely a 2020 version of a classic arbitrage strategy used across Wall Street and cryptocurrency markets every day.   Not bad for a few minutes of work. But just imagine how long it took for someone to figure this out.    – Daniel Cawrey, Senior Markets Reporter TWEET OF THE DAY BITCOIN WATCH BTC: Price: $11,525 (BPI) | 24-Hr High: $11,771 | 24-Hr Low: $11,138 Trend: Bitcoin's bullish long-term trend looks to be on a summer holiday this week, with prices languishing beneath the psychological price level of $12,000. Yesterday's 7.3% rejection from around $12,000 to a low of $11,137 hints at further downside risk on larger time frames backed by decreasing levels of weekly trade volume. Bitcoin's weekly chart reveals the possibility of a sell-off for September – historically a bearish month for the world's largest cryptocurrency by market cap. For example, based on data from the last three years, bitcoin has experienced losses between 20 and 36% in September after a peak in August.  The recent rejection at overbought levels near 70.00 on the relative strength index (RSI), a tool used by traders to judge market exuberance, could lead to a deeper pullback. Immediate support stands at the former resistance level near $10,500 with long-term support hanging at $8,650 along the 50-period moving average on the weekly chart. A short-term push by opportunistic buyers could drive prices to retest $12,000 once more. However, failing to cement a new yearly high could result in a longer-term pullback as bitcoin heads into its historically poor month.   – Sebastian Sinclair, Reporter   Disclaimer: The information presented in this message is intended as a news item that provides a brief summary of various events and developments that affect, or that might in the future affect, the value of one or more of the cryptocurrencies described above. The information contained in this message, and any information liked through the items contained herein, is not intended to provide sufficient information to form the basis for an investment decision. The information presented herein is accurate only as of its date, and it was not prepared by a research analyst or other investment professional. You should seek additional information regarding the merits and risks of investing in any cryptocurrency before deciding to purchase or sell any such instruments. First Mover 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.

Binance deep dive 🕵️ / Coinbase ⚠️ resignation / CoinShares recommends 4% 😳 allocation

Reporter claims the Blockchain Association's admittance of Binance.us on Monday caused Coinbase's resignation on Tuesday

Inside.com Part of   Network August 12, 2020

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One scathing letter from Coinbase's Hermine Wong, delivered in resignation from the prestigious Blockchain Association, prompts today's in-depth notes on the world's most profitable cryptocurrency exchange. If you haven't joined us yet at Inside Premium, give us a $0 (free!) 14-day try today by clicking the unlock button within today's article. Enjoy! Aaron

Market Watch Bitcoin $11,559 7 day: unch Ethereum $383 7 day: -3.7% XRP $0.281 7 day: -7.5% Prices as of 1:15 p.m. ET

Binance says a local newspaper misreported its conduct regarding Liechtenstein's Union Bank. The local news report claimed that CEO Changpeng Zhao was attempting to overtake the bank before its imminent liquidation. The claims: CFO Wei Zhou says that Binance has not tried to acquire Union Bank nor applied to Liechtenstein's Financial Market Authority for approval. Binance's spokesperson declined to comment on whether the article was factually inaccurate. Why is Liechtenstein important? Liechtenstein is an affluent tax haven and a strategic banking center due to its proximity to Switzerland. GDP per capita in Liechtenstein exceeds $173,000. Nearby is the Swiss canton of Zug's Crypto Valley, home to the Ethereum Foundation and other multi-billion dollar cryptocurrencies like Cardano (ADA) and Datum (DAT). Banks in Liechtenstein custody cryptocurrencies, including Mason Privatbank Liechtenstein AG and Bank Frick. They also have access to SWIFT, the world's largest bank wire network. Coindesk

Coinbase has resigned from the Blockchain Association. The Blockchain Association is the crypto industry's most prestigious and influential policy group in Washington DC. Was it because of Binance... ...and why it matters. In today's Inside Crypto Premium, we dive deep into the controversial history of Binance with its wealthy U.S. customer base. We go far beyond today's report about the Blockchain Association and ask questions dating back to 2018. Nowadays, Binance claims to restrict U.S. customers to its more restrictive Binance.us operations, that has not always been the case. For more on the billions of dollars that have flowed between the U.S. and Binance's offshore operations, start your 14-day $0 (free!) trial today. READ BINANCE HISTORY

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CoinShares CSO Meltem Demirors CoinShares releases its August bitcoin research report, recommending a 4% portfolio allocation to bitcoin. The 4% carve-out comes from an otherwise typical 60/40 (60% equities, 40% bonds) portfolio; generic model portfolios do not generally constitute personalized investment advice. Key research findings: CoinShares does not identify particular catalysts, instead pointing to general financialization trends like more order management systems, insured custody solutions, prime brokerages, options, futures, and Exchange Traded Products (ETPs). CoinShares claims that the proportion of investors holding bitcoin for more than 12 months has doubled since 2012. CoinShares also rationalizes bitcoin's price drop during March's coronavirus panic. Coinshares claims that leverage levels were abnormally high, $500m of bitcoin-collateralized loans were auto-liquidated, and forecasts that "liquidation cascades" will happen again. CoinShares manages approximately $700m in assets and sponsors several ETPs listed on European exchanges. Its investments include MenaPay, Paradigm, Blockdaemon, Zabo, Arwen, Globacap, Fold, and Kaiko. Its most frequently interviewed executive is CSO Meltem Demirors. Coinshares

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Quick Hits: The natural resources trading subsidiary of Mitsubishi has launched a blockchain platform to facilitate trade confirmations and invoices between counterparties. Revolut customers held $121m worth of cryptocurrencies in 2019. The latest DeFi "meme token" is YAM by Yam Finance. Ex-NYSE broker Michael Ackerman pleads not guilty to charges of running a $33m crypto scam. Coin Metrics initiates a new quarterly publication focusing on "key stakeholders," transparency, and other difficult-to-find supply metrics for cryptocurrencies. The People's Bank of China will launch its Central Bank Digital Currency (CBDC), which it calls its Digital Currency Electronic Payment (DCEP), in the Hong Kong Bay Area comprising Guangdong, Hong Kong, and Macau. The fittest athletes in the world swear by CBD. See what they're using here.* *This is a sponsored post

Written and curated by wide-eyed bitcoin watcher since $1, Aaron Wise. Streaming headline junkie, Associated Press fanboy, eye-strained news terminal watcher, 2017 founder of Cryptocurrency Newsfeed. Temporarily based in Florida while awaiting the construction of cryptopia.  Editor Edited by Eduardo Garcia in New York. Eduardo is a graduate of the Columbia Journalism School M.A. Science program and writes regularly for the New York Times Climate Fwd: newsletter. In one of his previous lives, Eduardo worked as a Reuters correspondent in Latin America for nearly a decade.

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