Crypto News

  • MicroStrategy's Bitcoin Investment Thesis

    Amidst all of the DeFi volatility, drama and excitement, Bitcoin has started to seem rather boring. Its price is more or less flat to where it was a year ago and you can’t even farm Yams with it. While some have started to view Bitcoin as a useless digital rock, someone did find an interesting use case for it. This week, more details surfaced around how MicroStrategy CEO Michael Saylor convinced the board of a publicly traded company to allocate nearly all of the company’s $500M cash position to bitcoin. Michael Saylor Saylor graduated from MIT in 1987 and founded Microstrategy at the age of 24. MicroStrategy is a “Business Intelligence” company, which basically creates software that allows companies to use their own data to drive decision making. Interesting side note - Saylor, like any good 90’s internet entrepreneur, also bought a bunch of internet domains and was the guy who ultimately sold Voice.com to Block.One (EOS) for $30M. MicroStrategy’s’ $500M Problem To most people, having $500 million in cash doesn’t sound like a problem. Up until recently, it wasn’t for large corporations either. There was a time before the ‘08 financial crisis when the risk free rate of return on cash was 5% a year. This means a company could sit on $500M, earn $25M a year for doing nothing, and have cash on hand for a rainy day. Fast forward to today, when the risk free rate of return has plummeted to 0.69% due to loose fiscal policies (money printer go BRRRR) alongside inflating asset prices, and it’s a different story. In Saylor’s own words, “we just had the awful realization that we were sitting on top of a $500 million ice cube that’s melting.” Cash is Trash So what’s a corporation to do with a $500M melting ice cube? It turns out it’s not that easy to unload half a billion dollars in a short amount of time. You could buy back half a billion of your own company’s shares. For a company like MSTR, Saylor estimated that would take 4 years. Time MiscroStrategy didn’t have. You could buy real estate. However, commercial real estate prices have collapsed post COVID while property owners still believe their assets are worth what they were in January. In other words, good luck getting a fair market price. You could buy blue chip equities. Amazon, Apple, Google, Facebook. However, your risk is symmetric. They can each fall 50% just as easily as they can go up 50%. That left Saylor with silver, gold, Bitcoin, and other alternative assets. A move the company announced it was exploring on a July earnings call. A Bold Purchase Saylor ultimately wanted something that could either get cut in half, or go up by a factor of 10. An investment akin to what buying Amazon or Apple in 2012 was. In other words, asymmetric risk. As a student of technological history, Saylor observed that the winning strategy over the last ten years has been to find some kind of “digitally dominant network” that dematerializes something fundamental to society. Apple dematerialized mobile communications. Amazon dematerialized commerce. Google dematerialized the process of gathering information. Something Saylor noted was common to all recent 10X opportunities is buying when they’ve achieved $100B+ marketcaps and are ten times the size of their next biggest competitor. As Bitcoin is the dominant digital network dematerializing money that’s 10x the size of any cryptocurrency competing to be a store-of-value (not counting ETH here), it fit the bill. Making the purchase With the thesis in place, the next thing Saylor had to do was get everyone at MicroStrategy to sign-off on the unorthodox decision. To do this, he simply made everyone go down the same Bitcoin rabbithole that most people in the industry have gone down. He made everyone at the company watch Andreas Antonopoulous videos, read The Bitcoin Standard, watch Eric Vorhees debate Peter Schiff and listen to Pomp and NLW podcasts. With no strong detractors, MicroStrategy turned to execution. They first put $250M to work purchasing 21,454 BTC in August and another $175M (16,796 BTC) in September for a total $425M and 38,250 BTC. What’s fascinating is that MicroStrategy was able to open such a large position without really moving the market or anyone even taking notice. This speaks to just how liquid of an asset BTC has become. To acquire the September tranche of BTC, Saylor disclosed that they traded continuously for 74 hours, executing 88,617 trades of .19 BTC every 3 seconds. One for the history books Skeptics noted that shares of MSTR have been on the downtrend since 2013, which is the real reason behind MicroStrategy’s bold move. Regardless, the move has interesting implications for the company’s shareholders. As TBI observed, MicroStrategy is now both a software company and with ⅓ of its marketcap in Bitcoin, a pseudo Bitcoin ETF. At the time of writing, MSTR is up 20% on the week. Only time will tell if history looks back on this move as a brilliant strategic decision or a massive corporate blunder. In the short term, it scores a massive win for Bitcoin’s digital gold investment thesis. Billionaire hedge fund manager Paul Tudor Jones is in. A publicly traded corporation has made Bitcoin it’s primary treasury asset. As CFOs and fund managers around the world undoubtedly take notice, one has to wonder, who’s next? PS - I based a lot of this article on Pomp’s interview with Michael Saylor, which I recommend giving a listen. This initially appeared in the Messari daily newsletter: subcribe here
    Source: Connor Dempsey — Published: 2020-09-18T14:40:00Z

  • The Sushi Chronicles

    From the Messari Daily Newsletter: subscribe It’s been described as the world’s first legal billion dollar heist. However, it wasn’t a bag of cash that was stolen. It was liquidity. The SushiSwap drama has all of the makings of a Michael Lewis novel, featuring a sci-fi corporate takeover that would make T. Boone Pickens blush. In typical crypto fashion, it all played out at breakneck speed full of twists and turns featuring cartoon Pandas and 11th hour heroics. Even for many deep in the DeFi weeds, the whole sage is difficult to follow. Here, I’ll aim to unpack what went down as simply as possible. From Compound to YFI, to Sushi This all kicked off when Compound Finance launched its liquidity mining program back in June. In exchange for lending and borrowing assets on Compound, and bootstrapping Compound’s money markets users received COMP tokens. Total value locked in Compound skyrocketed along with the price of COMP and people took notice. The next phase came after Yearn Finance introduced the idea of a “fair launch” to liquidity mining. Where Compound was VC backed with early tokens going to the team and early investors, Yearn creator Andre Cronje allowed anyone to earn YFI tokens by locking capital into Yearn. No tokens were allocated to himself or outside investors and all tokens were distributed to users who farmed YFI. Backed by this clear, community first mindset, YFI’s market cap went from $0 to $1B in six weeks. Next came the memecoins. Yam.Finance, Ham.Finance, Spaghetti Money. Like YFI, these protocols all conducted “fair launches” that yielded governance tokens in exchange for staking certain assets in their contracts. Unlike Compound and YFI, which put user’s capital to productive use by provisioning liquidity, these memecoin protocols didn’t actually do anything useful. They were mainly zero-sum games where early participants who could acquire the tokens for free via liquidity mining, hype them up and then dump them on suckers on the open market before the bottom fell out. When SushiSwap was announced, it sounded like just another useless memecoin. In the two weeks following, it would prove to be much more. Forking Uniswap We’ve referred to memecoins like Yam.Finance as frankenstein coins because they’re created by forking elements of different protocols. Copy and paste some code from YFI and a complex stablecoin called Ampleforth and you get a ponzi-scheme like digital vegetable. SushiSwap however, made waves when it announced in late August that it would be forking Uniswap: the decentralized exchange at the heart of the DeFi craze. SushiSwap’s announcement detailed plans for essentially copying and pasting Uniswap’s code and adding a token on top of it: SUSHI token. The idea being to create a more community owned Uniswap that rewarded early liquidity providers for their crucial role in bootstrapping the exchange. While SushiSwap followed the standard memecoin playbook (fork protocol + add meme token), it came with an interesting wrinkle: a planned “liquidity migration” that would send shockwaves throughout the DeFi community over the ensuing two weeks. The AMM King The script becomes difficult to follow without understanding the basics of Uniswap. Uniswap is a specific type of decentralized exchange (DEX) called an automated market maker (AMM). Where other DEXs like 0x employ an orderbook model that matches buyers with sellers, AMMs use pools of liquidity that are always willing to buy or sell a pair of assets. For example, if you have some DAI and ETH lying around, you can commit it to a Uniswap DAI/ETH pool. In return, Uniswap gives you an LP token (liquidity provider token). As Uniswap users exchange ETH for DAI and vice versa in the ETH/DAI pool, your LP tokens allow you to collect trading fees. Those same LP tokens also allow you to redeem your liquidity whenever you want. Uniswap has thrived in an environment where new tokens are coming out of the woodwork. Where centralized exchanges require deep interest and liquidity to support a new token, Uniswap’s model can support a long tail of assets. They simply need a handful of liquidity providers willing to commit those tokens to a Uniswap liquidity pool. The beauty of Uniswap is that no one needs to ask anyone’s permission to participate and add tokens to Uniswap liquidity pools. While its LP tokens are essential for Uniswap to function, it has no overarching governance token. In an industry full of useless tokens designed to enrich founders and early investors, Uniswap had long been celebrated for this tokenless model. In the new DeFi wild west, this would prove to be an attack vector. The Panda Chef Drinks Your Milkshake The person behind SushiSwap came in the form of a pseudonymous PandaChef going by the name Chef Nomi. Chef Nomi and SushiSwaps’ plan hinged on copying and pasting Uniswap’s code and adding stronger incentives for liquidity providers via a governance token ($SUSHI). Where Uniswap paid a .30% fee solely to liquidity providers, SushiSwap would pay .25% fee to liquidity providers with the remaining .5% would then be converted into $SUSHI and distributed back to existing SUSHI holders. The idea being to reward early liquidity providers for their role in building out SushiSwap’s liquidity. Additionally, 10% of every SUSHI distribution would be put aside in a “development fund” (this fund becomes key later on). The way you acquire SUSHI? Take your Uniswap LP tokens and stake them to a SushiSwap contract. So if you took the LP tokens you received from committing your DAI/ETH to Uniswap and staked it to SushiSwap, you’d be rewarded with SUSHI tokens. Uniswap LPs answered the call and staked $1.6B Uniswap LP tokens to SushiSwap. This actually had the effect of bringing more liquidity to Uniswap as people committed capital to Uniswap in order to receive LP tokens they could stake on SushiSwap to receive more SUSHI. This is where the liquidity migration comes into play. Recall that LP tokens represent underlying liquidity on Uniswap - DAI/ETH in our example. Up to this point, your DAI/ETH still sits on Uniswap while our LP tokens are locked into SushiSwap, yielding SUSHI tokens. When Chef Nomi’s liquidity migration kicked in, your LP token would be redeemed for the underlying ETH/DAI on Uniswap and migrated to SushiSwap. In other words, this was a clever way for SushiSwap to essentially drink Uniswap’s milkshake. The Panda Chef pulls the rug Chef Nomi’s plan was in motion and DeFi alchemy was on full display as newly incepted SUSHI tokens went from $0 to over $10. SUSHI token was even listed by centralized exchanges Binance and FTX. Early participants were able to make millions by selling their SUSHI tokens to speculators on the open market. Then, as DeFi token prices started to plummet heading into Labor Day Weekend, Chef Nomi threw in a plot twist. Remember that development fund where 10% of newly minted SUSHI was placed? Chef Nomi was in sole control of it and on September 5th, he sold $14M of it for ETH and then pocketed it. The price of SUSHI tanked 70%. Chef Nomi claimed he was doing it for the good of the community and that by dumping his SUSHI, price would no longer be a distraction and he could concentrate on the migration. The newly formed Sushi community were not having any of it and twitter was ablaze with outrage. Enter SBF Many thought this spelled the end of the SushiSwap experiment. But regardless of SUSHI’s plummeting price, there was over a billion dollars of value locked into SUSHI and a ton of vested interest. The problem was that Chef Nomi was in sole control of SushiSwap's code. From the chaos emerged Sam Bankman-Fried: CEO of trading firm Alameda Research and FTX, which is one of the exchanges that listed SUSHI. Sam took to Twitter and laid out a plan for Chef Nomi to hand over his keys to the Sushi kingdom so the migration could continue as planned. While Sam didn’t outright suggest Nomi hand the keys directly to him, that’s exactly what the Panda chef did. On September 6th, Chef Nomi transferred the admin keys to Sam and faded back into obscurity (or so it seemed). Since having the admin keys in the hands of one person is what landed SushiSwap into trouble in the first place, Sam’s plan was to put the keys into a multi-sig contract. Multi-sig contracts require multiple people to sign-off before making changes. This would prevent say, one person from dumping the entire SUSHI development fund on the open market. To determine who would be able to have access to the multi-signature contract, an election was held via popular vote by SUSHI holders. In addition to Sam, Compound Finance founder Robert Leschner, The Block’s Larry Cermak, and CMS Holdings (prop trading firm) were elected among others. Crisis was averted and the Sushi community had successfully shook off Chef Nomi’s betrayal. The migration was on. Game On On September 9th, the migration went into effect. Anyone staking Uniswap LP tokens on SushiSwap would have their token’s underlying liquidity redeemed and migrated over to SushiSwap. Returning to our example, with the migration live your Uniswap LP tokens would be redeemed for the underlying ETH/DAI and moved off Uniswap to SushiSwap. You’d then be given SushiSwap LP tokens and continue collecting trading fees plus new SUSHI token. Simple right? This mechanism drained half of Uniswap’s liquidity. SushiSwap went from having $810M Uniswap LP tokens staked to $1.2B in total value locked across multiple pools of liquidity. A good portion of Uniswap’s milkshake had been consumed. Source DeFi Pulse SushiSwap TVL post liquidity migration: Source: SushiSwap Protocol Analytics The Liquidity Wars are here This whole saga didn’t spell any real disaster by Uniswap by any means. As Cami Russo pointed out (who’s Defiant newsletter coverage I leaned on a lot here), the amount of liquidity in Uniswap actually grew throughout the entire fiasco. It does showcase a new kind of battlefront that’s only possible in the world of open source code and composability. Uniswap is the product of four years of work as well as a healthy amount of venture funding. In this new frontier, a cartoon panda and a community backed by mercenary capital can commandeer a billion dollars worth of hard earned liquidity with some clever token incentives. Liquidity is not a moat when capital can move at the speed of the internet. Welcome to the wild wild west that is DeFi. PS - In yet another plot twist, as we were writing this, Chef Nomi returned all of the ETH, now worth $14M to the Sushi treasury in an effort to rejoin the community. You can’t make this stuff up.
    Source: Connor Dempsey — Published: 2020-09-11T18:00:00Z

  • An Inside Look at US Crypto Exchange Listings

    With the markets running hot, crypto exchange listings have seemingly become a catalyst for price movements. It’s almost 2017 all over again. The trend is readily apparent when looking at Coinbase’s most recent additions. Nearly every new listing has seen a substantial boost in price on the day Coinbase announced it was opening its digital doors and turning on the frothy faucets of sweet liquidity. NMR tripled and COMP doubled on their announcement days. Even ALGO’s intraday increase of 21% was nothing to sneeze at. The lone exception was Coinbase’s most recent addition, UMA, as it fell alongside the rest of the market over the last few days. Onlookers should also note that UMA was up 230% in the week leading up to its announcement, which may have been a byproduct of its coincidental involvement in SushiSwap. The real beneficiary Token projects aren’t the only ones that benefit from these listings. The exchanges often see a boost in trading volume (where they make their money) and user accounts. New coins open the doors to new crypto tribes communities that otherwise can’t see the world outside of their bags. Exchanges can also boost their own portfolios and offer themselves an avenue to liquidity should they have a crypto-focused venture arm. Coinbase, in particular, has taken advantage of its proximity to specific projects. Four of the last six Coinbase listings have been in Coinbase Venture’s portfolio. Coinbase isn’t the only exchange that has capitalized on this DeFi-inspired market. The other major US exchanges, Kraken and Binance.US, have picked up their rate of new listings, adding six and twelve new assets since June, respectively. Even Gemini, the most conservative of the bunch, has increased its offerings by 75% this year. All are on pace to best their total listings from 2019. This trend will likely continue, especially if the market doesn’t cool down anytime soon, and assets on the waiting list could present an enticing investment opportunity. While investors can’t know what asset a crypto exchange will list next (ignoring insider trading), there are some signals amidst the noise. Fortunately, fellow Messari analyst Mason has already analyzed how to wade through the crypto content swamp to pinpoint potential opportunities. He also compiled the liquid portfolios for these exchanges (where applicable) and their listing considerations: Coinbase Ventures portfolio Coinbase listing considerations Coinbase Custody supported assets Binance Labs portfolio Gemini Custody supported assets One should also monitor the assets in exchange portfolios that aren’t trading yet under the assumption exchanges will support them soon after launch. It took Coinbase only a few months to list COMP and CELO after these tokens became transferable. Coinbase Ventures’ illiquid assets that are closing in on a mainnet or token launch include Near Protocol (in pretend mainnet), Coda (mainnet launch due at the end of 2020), The Graph, BloXroute, and Spacemesh (mainnet launch expected in 2021). Deja vu? In some ways, this year’s “Exchange Pump Phenomenon” resembles that of 2017. Like the last bull run, international exchanges have beaten US-based exchanges to the punch by mass listing DeFi tokens. Legal ramifications aside, US exchanges are missing out on a potential opportunity by not supporting tokens like YFI that boast a highly dedicated community. Generating early liquidity is critical as it can often determine whether an exchange becomes the preferred destination for traders. Listings have the potential to bring this liquidity. But waiting to act can jeopardize one’s future market share. In the case of YFI, Binance has risen to the pole position and now holds nearly 15% of the total YFI supply. Since roughly 70% of YFI supply is actively staking, the limited amount remaining might make Binance difficult to unseat. Source: Nansen Despite the mild similarities to 2017, this time around is decidedly different. Crypto exchanges are no longer competing amongst themselves. The rise of Uniswap and similar protocols have made decentralized exchanges (DEXs) an actual threat to current dominance shared by centralized exchanges (CEXs). CEXs were previously the primary destination for crypto users. They’ve now increasingly become a simple on-ramp for DeFi applications. More efficient crypto gateways could further disrupt their already dwindling dominance.
    Source: Wilson Withiam — Published: 2020-09-04T14:30:00Z

  • DEXs Threaten Centralized Exchange Dominance as Share of Total Volumes Exceed 5%

    Having eclipsed 5% of total crypto volume, decentralized exchanges (DEXs) are now seriously threatening the dominance held by centralized exchanges. Last month, over $12 billion was traded, with daily volumes increasing every day. This growth has been in large part due to DeFi governance tokens and food-based memecoins, whose demand can be described as nothing short of a frenzy. And unlike the days of the ICO and their close cousin the IEO, the initial source of liquidity for these tokens is on DEXs. To put this into perspective, the recently launched SUSHI token has done over $150 million on Uniswap in a single day. That’s more than several of the top exchanges do across all of their pairs. Source: Messari There are questions as to the sustainability of many of these experiments but regardless they validate the product-market-fit of DEXs as the primary avenue for newly launched assets. To be more specific, it’s not all DEXs that are facilitating this volume. Looking closer at the volume composition, it’s clear there has been a heavy skew towards automated market markets (AMMs) which have accounted for the vast majority of growth as they now comprise 92% of total DEX volume. Uniswap is leading the way with over 62% of total DEX volume. Its permissionless nature, simplicity, and deep integration into DeFi have allowed it to consistently and increasingly dominate the landscape. Meanwhile, Curve and Balancer are beginning to carve their niche as they facilitate 17% and 9% of total DEX volume, respectively. The former provides extremely low slippage for stablecoin and wrapped bitcoin transactions, while the latter offers variable weight pools enabling pool creators to tweak parameters as they see fit. It’s clear AMMs are winning out over the order book model we see in traditional finance and on centralized exchanges. Enabling any token holder to earn a return on their capital has proven to be an incredibly effective means of generating much-needed liquidity in these nascent crypto markets. Even aside from the speculative fervor reminiscent of 2017 that has undoubtedly aided the recent growth of AMMs, their dominance has been a clear trend since the start of the year. Whether or not it will continue into the future will be one of the most important trends to watch going forward. For a deep dive into this, stay tuned for our upcoming Bull + Bear Case for AMMs.
    Source: Jack Purdy — Published: 2020-09-03T13:30:00Z

  • Fetch.ai Joins the Messari Disclosures Registry

    We’re excited to announce that Fetch.ai has joined the Messari Disclosures Registry. As a participating project, Fetch.ai has committed to transparency by providing regular project disclosures and updates. Fetch.ai is building a decentralized machine learning platform based on a distributed ledger, that enables anyone to share or exchange data. By decentralizing access to data, the team hopes to distribute the power of existing data monopolies. Fetch.ai’s framework is optimized via autonomous agents that categorize data semantically, geographically, or by economic features. Learn all about Fetch.ai’s history, roadmap, team, token, launch, technology, security and governance on their Messari asset profile. You can also learn more about the project at https://fetch.ai/.
    Source: — Published: 2020-09-02T14:20:00Z

  • YFI's Wild Weekend

    From the Messari daily newsletter: subscribe here Yearn.Finance has all of the makings of a great crypto fairytale. Enigmatic founder? Check. Face-melting, growth? Yep. Great memes? Oh my.  If it wasn’t already evident that Yearn Finance is crypto’s story of the year, this weekend cemented it. On Saturday, YFI’s price exceeded $37,000 with a $1B market cap, making Yearn.Finance the fastest unicorn of all-time.  For those of you struggling to keep up, which is pretty much everyone including some of YFI holders, we’ll try to get you up to speed. From Zero to Yearn At the heart of the intrigue surrounding YFI, is founder Andre Cronje. On July 16th, yearn.finance was an under the radar lending aggregator with $8M in assets under management. On July 17th, Cronje released a blog post that laid out plans for transitioning control over the yearn.finance protocol to its users via the YFI governance token. All users had to do was lend assets to liquidity pools on either Curve or Balancer through yearn.finance and they would receive YFI tokens (aka yield-farming). Cronje allocated zero tokens to himself and bypassed venture capital altogether. The beauty of this style of “fair launch” is that it gave anyone the opportunity to acquire these tokens essentially for free. In true crypto fashion, Cronje described these tokens as “valueless.” These “valueless” tokens have gone from zero to over $1 billion, good for $30,000 per token. A billion dollars has been locked (TVL) in the yearn.finance protocol by yield-hungry users. As the protocol takes withdrawal and performance fees, it’s become a cash cow, generating over $700K in profits. These “valueless” YFI tokens give holders voting rights over the protocol. These rights can be used to direct a portion of yearn.finance's $700K+ revenues to token holders. At a minuscule supply of 30,000, this has some equating owning 1 YFI to owning 1/30,000th of a decentralized hedge fund. Think about that. In just over a month, someone bootstrapped a billion dollar network simply by launching a token. The disruptive implications of this are profound and already have some calling for the “death of the crypto VC.” While that’s likely premature, it’s already led to more projects conducting fair launches and decentralizing outright from the beginning (see SushiSwap). A trend that is bound to evolve. Another thing that happens when you give something away for free and it goes from zero to $1B? People get rich. Really rich. Given that most of the participants were already heavily embedded in the DeFi ecosystem, many have shifted their focus to working on yearn.finance full time. With an army of incentivized volunteers, yearn.finance is shipping new features like crazy. As with yearn’s yield-optimizing smart contracts, all of these new features are value accretive to YFI token holders. Proceed with caution Amidst the excitement, it’s important not to forget that Andre Cronje’s twitter bio reads, “I test in prod.” At the speed in which yearn.finance is advancing and growing, something could go wrong. We don’t have to look far back into crypto history to find examples of catastrophic bugs. After going from $8M to $1B TVL in a little over a month, investors should proceed with caution. Big trees fall hard. Go deeper down the YFI rabbit hole Still confused by what yearn.finance is actually doing? Jack and Watkins's piece on DeFi aggregation serves as a solid framework for understanding YFI’s role as a capital aggregator. Watkins’s “YFI and The Industrialization of Yield Farming” details the inner workings of YFI’s rise and outlook in-depth. There’s also more free info on our yearn.finance asset profile page.
    Source: Connor Dempsey — Published: 2020-08-31T19:53:00Z

  • Investing Like Crypto Venture Capitalists

    The killer feature of cryptoassets is that anyone from anywhere in the world can participate or invest. The open nature of crypto networks has largely removed barriers that restricted early-stage investing to institutional investors like hedge funds or venture funds and allowed anyone to participate. Still, institutional investors often have dedicated teams and industry relationships that can give them an edge. Examining the portfolios of successful investors in the space can help anyone glean insights into what may be the next big trend. Examining the Portfolios of Crypto Hedge and Venture Capital Funds We’ve tracked down many of the top VC firms and hedge funds in crypto and recorded their liquid portfolios. This of course could miss equity investments or investments in networks that are not yet live. 1confirmation a16z Arrington XRP Capital Binance Labs Blockchain Capital BoostVC Coinbase Ventures Digital Currency Group Dragonfly Capital Electric Capital Fabric Ventures Huobi Capital/Exchange Multicoin Capital Pantera Capital Placeholder Ventures-AD10BC17) Polychain Capital Three Arrows Capital Union Square Ventures Winklevoss Capital For most of the screeners we’ve added Bitcoin and Ethereum because 1) most firms are invested in both assets 2) as a baseline for comparison. Examining Portfolio Liquidity Many of the firms on this list are entirely long-term investors, while some funds like Multicoin Capital and Three Arrows Capital operate as dual hedge funds/VC funds. Regardless of the strategy, liquid tokens can provide an important advantage over traditional venture funds. Funds are able to adapt and change their thesis in real-time. As DeFi grew in popularity, many crypto funds pivoted to invest in tokens that underpinned these networks or converted out of existing token projects that have seen limited adoption. Two of the most liquid portfolios are Pantera and DCG, in large part due to their overall size. Pantera Capital has one of the largest portfolios in crypto. As one of the older funds in the space, Pantera’s portfolio has investments from DeFi to web3 and smart contracts. Digital Currency Group (DCG) also tops the list in terms of quantity of investments with a decent number of their investments in liquid tokens. Other notably large and liquid portfolios include: Blockchain Capital Fabric Ventures Arrington XRP Capital Of all the portfolios we track, the most illiquid portfolio – most equity investments – is Coinbase Ventures. With over 50 venture investments, including Messari, Coinbase has under 10 liquid investments. Coinbase’s equity investment portfolio favors companies it may one day acquire, including multiple data providers, security platforms, and other Coinbase adjacent business lines. The Reversal of the Equity Investment Thesis After the 2017 bull market, token investing incurred a rough reputation and investors prioritized investing in equity rounds. Top projects like OpenSea, Uniswap, and others cemented the thesis that crypto companies could be successful without a token. This year the DeFi surge has ushered in a renewed love for tokens among investors. While some existing firms like Placeholder anticipated this trend, newer funds like Three Arrows Capital have led the charge on DeFi tokens. This isn’t to say that older funds missed out completely, but there’s a clear concentration of new funds amongst DeFi assets as opposed to Multicoin or Electric Capital with portfolios concentrated among smart contract platforms. Moreover, due to venture investing regulations, funds like Union Square Ventures have opted to invest in various funds like Autonomous Partners, BlockTower, Polychain Capital, and Placeholder Ventures-AD10BC17). Funds like A16Z (Andreessen Horowitz) have forgone their VC credentials in order to double down on crypto investments. The SEC limits VC funds from investing more than 20% of a fund in “high risk” categories, which tokens fall under. As the industry continues to push boundaries for finance and tech, the SEC will either get pressured to lift those limits or, more likely, funds will structure in ways that don’t limit their investments. New Venture Capital Funds and New Narratives Perhaps this trend will repeat where new VC firms enter to allocate capital to Web3, Decentralized Governance, and NFT/gaming, or other emerging narratives. Variant, a new fund by Jesse Walden, a former investment partner at a16z, is investing in crypto companies facilitating the “Ownership Economy”. Electric Capital which recently closed a second $110 million crypto fund has stated its team is exploring opportunities in layer one protocols, DeFi, privacy, and community-owned marketplaces. As crypto grows, more niche funds may emerge in order to differentiate themselves. Community governed fund structures like the LAO – which is working to enable retail investor participation – will surely change the dynamics of early-stage crypto investing. In the traditional venture capital ecosystem, investments made in equity are illiquid for 3-10 years (Sometimes more, looking at you Airbnb). While platforms like Carta have improved the ability to trade illiquid stock, the market is still limited to accredited investors. Public tokens could level the playing field for anyone with access to a smartphone or computer. Hopefully, this will result in better capital allocation over time and democratize an industry that has for too long been limited to the wealthy few. If there’s a portfolio that you want to see that we don’t have: Let us know on twitter at @messaricrypto Feel free to fork the screeners and modify them with our metrics including Y + 10 Marketcap, DeFi assets, transaction volume, percent change vs BTC, and more. The author(s) may hold cryptocurrencies, including those mentioned in this report. See our full disclosures page for more details.
    Source: Mason Nystrom — Published: 2020-08-25T16:31:00Z

  • Few Understand This

    Things got a bit weird this week with internet personalities shilling investments via twitter and more new meme coins than you can shake a stick at. Meanwhile, yearn.finance continues to sit at the center of the DeFi world, reaching $1B in TVL with its YFI token eclipsing the price of bitcoin. El Presidente We kicked off the week with Barstool Sports founder, Dave Portnoy, doing his best John McAfee circa 2017 impression. After being reintroduced to Bitcoin investing and the finer points of asteroid mining from the Winklevii last week, it didn’t take long before @stoolpresidente was shilling LINK and OXT to his 1.7M followers, complete with a new sponsorship from BlockFi. His attempts to pump Link and Orchid were unsuccessful, as he appears to have bought the local top. Portnoy just tweeted that he's sold all of his crypto positions at a $25K loss. Thanks for playing, Dave. View interactive chart YFI Soars As Portnoy’s holdings dumped, yearn.finance’s governance token mooned, eclipsing the price of bitcoin, peaking at over $15,000 before settling down around $14,000. While 1 YFI 1 BTC serves for great meme fodder, it's mainly a function of YFI’s small supply, which is capped at 30,000. Regardless, the ascent of YFI has been one of the most captivating stories in DeFi based on a combination of its tremendous growth and unique origin story. Yearn Finance creator Andre Cronje describes the protocol as a “yield-maximizing robot.” If, for example, you have some Dai to lend, you can send it to a yearn.finance smart contract and the robots will identify which platform (Compound, Aave, etc.) will generate the highest yield. With the ongoing yield farming craze, where protocols distribute tokens to users who interact with them, yearn.finance has become a way to automate and optimize yield farming strategies (e.g., lend Dai on Compound to earn interest + COMP tokens). So why would anyone be willing to pay between $14-15K for a single YFI token? After all, YFI tokens simply grant holders voting rights on decisions that govern the network. Well, the protocol charges a 5% performance fee and 0.5% withdrawal fees. With over $1 Billion locked in the protocol, yearn.finance is generating serious revenue. Holders of YFI tokens can vote to influence where this revenue goes. Given the limited amount of YFI tokens, some investors equate owning one YFI token to owning 1/30,000th of a yield-optimizing hedge fund (h/t Jack). Yearn.finance has also developed a strong community based on its “fair launch.” Contrary to many of the largest DeFi projects, which allocated tokens to founders, advisors and early investors, YFI tokens were equally available to anyone who used the protocol (lend/borrow on yearn, earn YFI). Given YFI’s astronomical ride from about $3 to $15,000, this has created a lot of holders with a vested interest in seeing the protocol succeed. This is evidenced by the fact that YFI holders just voted to allocate up to $500K in fees generated by the protocol towards auditing its smart contracts and other operational measures (with any remainder going to token holders). Yearn.finance and YFI is not without its risks however. Creator Andre Cronje’s Twitter bio famously reads, “I test in prod,” meaning much of YFI’s code is unaudited. Yearn.finance has been so successful that it’s inspired a litany of experiments that copy YFI’s fair launch but, as far as I can tell, don’t actually do anything useful like optimizing yields. Yams, Hams & possibly scams Yams is now on Yams version 2 and heading for version 3. Based.Money. Ham.Finance. Spaghetti Money. These are all things that exist. As with yearn.finance, these tokens were all “fairly launched,” meaning anyone can acquire their tokens via “yield farming.” To try and explain what’s actually going on, I’ll start with this original. Yams. What are these things? How does one go about farming for yams in the first place? Why would a yam farmer farm for yams to begin with? Well it’s all quite simple. To farm for Yams you simply send one of eight supported currencies to a Yam smart contract. What does it do from there? It sits there and produces Yams, of course. So you farmed some Yams. What now? You can participate in Yam governance. Oh and by the way, the amount of Yams you have is going to jump around like crazy as its supply “rebases” every day. Why does it do that? Well because part of the Yam code is based off of Ampleforth — you know, the elastic supply currency designed to maintain stable purchasing power. So is Yam a stablecoin? I’m pretty sure it doesn’t matter. Ham.Finance, Based.Money, and Spaghetti Money all come in similar flavors. They’re undoubtedly interesting experiments in governance, but unlike yearn.finance, they don’t create anything of economic value beyond producing a hybrid of a governance token and a complicated stablecoin. Mostly, they look like a complex game of chicken with early participants trying to maximize yield out of thin air with the suckers being those who actually buy these tokens on the open market. So how much interest have these governance experiments attracted? Yam had $750M TVL at its peak before a bug nearly brought the whole house down. Spaghetti Money attracted $200M in 12 hours and is headed $500M. When trying to find the TVL for Based, we were told in a Telegram group that it's “easy to find but difficult to see.” When we pressed further: While they’re fairly interesting governance experiments, the sheer size and speed in which they’re being generated is cause for alarm. The rise of Spaghetti Money even had Compound founder, Robert Leshner, calling for self-regulation. In general, there’s a growing feeling that this simply doesn’t end well.   Still confused by everything going on within the rapidly changing world of DeFi? Worry not. Few understand this. CD (More to come – Watkins will be releasing a piece early next week that explores the hidden risks of the yield farming craze more in depth.)
    Source: Connor Dempsey — Published: 2020-08-21T17:57:00Z

  • Investing Like a Crypto Venture Capitalist

    The killer feature of cryptoassets is that anyone from anywhere in the world can participate or invest. The open nature of crypto networks has largely removed barriers that restricted early-stage investing to institutional investors like hedge funds or venture funds and allowed anyone to participate. Still, institutional investors often have dedicated teams and industry relationships that can give them an edge. Examining the portfolios of successful investors in the space can help anyone glean insights into what may be the next big trend. Examining the Portfolios of Crypto Hedge and Venture Capital Funds We’ve tracked down many of the top VC firms and hedge funds in crypto and recorded their liquid portfolios. This of course could miss equity investments or investments in networks that are not yet live. 1confirmation a16z Arrington XRP Capital Binance Labs Blockchain Capital BoostVC Coinbase Ventures Digital Currency Group Dragonfly Capital Electric Capital Fabric Ventures Huobi Capital/Exchange Multicoin Capital Pantera Capital Placeholder Ventures-AD10BC17) Polychain Capital Three Arrows Capital Union Square Ventures Winklevoss Capital For most of the screeners we’ve added Bitcoin and Ethereum because 1) most firms are invested in both assets 2) as a baseline for comparison. Examining Portfolio Liquidity Many of the firms on this list are entirely long-term investors, while some funds like Multicoin Capital and Three Arrows Capital operate as dual hedge funds/VC funds. Regardless of the strategy, liquid tokens can provide an important advantage over traditional venture funds. Funds are able to adapt and change their thesis in real-time. As DeFi grew in popularity, many crypto funds pivoted to invest in tokens that underpinned these networks or converted out of existing token projects that have seen limited adoption. Two of the most liquid portfolios are Pantera and DCG, in large part due to their overall size. Pantera Capital has one of the largest portfolios in crypto. As one of the older funds in the space, Pantera’s portfolio has investments from DeFi to web3 and smart contracts. Digital Currency Group (DCG) also tops the list in terms of quantity of investments with a decent number of their investments in liquid tokens. Other notably large and liquid portfolios include: Blockchain Capital Fabric Ventures Arrington XRP Capital Of all the portfolios we track, the most illiquid portfolio – most equity investments – is Coinbase Ventures. With over 50 venture investments, including Messari, Coinbase has under 10 liquid investments. Coinbase’s equity investment portfolio favors companies it may one day acquire, including multiple data providers, security platforms, and other Coinbase adjacent business lines. The Reversal of the Equity Investment Thesis After the 2017 bull market, token investing incurred a rough reputation and investors prioritized investing in equity rounds. Top projects like OpenSea, Uniswap, and others cemented the thesis that crypto companies could be successful without a token. This year the DeFi surge has ushered in a renewed love for tokens among investors. While some existing firms like Placeholder anticipated this trend, newer funds like Three Arrows Capital have led the charge on DeFi tokens. This isn’t to say that older funds missed out completely, but there’s a clear concentration of new funds amongst DeFi assets as opposed to Multicoin or Electric Capital with portfolios concentrated among smart contract platforms. Moreover, due to venture investing regulations, funds like Union Square Ventures have opted to invest in various funds like Autonomous Partners, BlockTower, Polychain Capital, and Placeholder Ventures-AD10BC17). Funds like A16Z (Andreessen Horowitz) have forgone their VC credentials in order to double down on crypto investments. The SEC limits VC funds from investing more than 20% of a fund in “high risk” categories, which tokens fall under. As the industry continues to push boundaries for finance and tech, the SEC will either get pressured to lift those limits or, more likely, funds will structure in ways that don’t limit their investments. New Venture Capital Funds and New Narratives Perhaps this trend will repeat where new VC firms enter to allocate capital to Web3, Decentralized Governance, and NFT/gaming, or other emerging narratives. Variant, a new fund by Jesse Walden, a former investment partner at a16z, is investing in crypto companies facilitating the “Ownership Economy”. Electric Capital which recently closed a second $110 million crypto fund has stated its team is exploring opportunities in layer one protocols, DeFi, privacy, and community-owned marketplaces. As crypto grows, more niche funds may emerge in order to differentiate themselves. Community governed fund structures like the LAO – which is working to enable retail investor participation – will surely change the dynamics of early-stage crypto investing. In the traditional venture capital ecosystem, investments made in equity are illiquid for 3-10 years (Sometimes more, looking at you Airbnb). While platforms like Carta have improved the ability to trade illiquid stock, the market is still limited to accredited investors. Public tokens could level the playing field for anyone with access to a smartphone or computer. Hopefully, this will result in better capital allocation over time and democratize an industry that has for too long been limited to the wealthy few. If there’s a portfolio that you want to see that we don’t have: Let us know on twitter at @messaricrypto Feel free to fork the screeners and modify them with our metrics including Y + 10 Marketcap, DeFi assets, transaction volume, percent change vs BTC, and more. The author(s) may hold cryptocurrencies, including those mentioned in this report. See our full disclosures page for more details.
    Source: Mason Nystrom — Published: 2020-08-20T13:33:00Z

  • YAM farmers are betting $400 million on a successful v2

    YAMs took the DeFi world by storm last week after announcing the launch of their token economic experiment that combined a fluctuating supply asset with a fair launch through liquidity mining. To everyone’s surprise, this experiment amassed $750 million locked up as opportunistic traders looked to capitalize on outsized yields. In an interesting turn of events, a bug was found that rendered the governance process obsolete preventing updates from being made, an implied death sentence for the short-lived project. But is there more than meets the eye here? Source: Dune Analytics After the community seemed to have thrown in the towel, a good portion of the funds remained locked in the contracts. Not only that but over the course of a few days doubled to over $400 million making it the 7th largest by total-value-locked. So despite the protocol not functioning as intended, its evident that people still believe there is value in using funds to farm YAMs. In fact, people are even buying them on the open market as the price is even up 60% in the last 24-hours. Why would anyone do this? The YAM team released a migration plan that outlined a process for redeploying the protocol that includes a 1:1 migration of old tokens to the new ones. Therefore, anyone that believes there is value in a fully community-owned, rebasing asset with a built-in treasury can capitalize on that belief by partaking in the failed v1 to share in the potential upside of v2. Whether that upside is driven by the short-term profit of yield-farmers looking to make a quick buck at the expense of others or if this experiment can actually become a useful financial primitive remains to seen. But one thing is for certain, these experiments are not going away. Money is a great motivator and people are making a lot of it. One can only hope we’re not increasing the risk of a DAO-like hack that brings the system to its knees.
    Source: Jack Purdy — Published: 2020-08-18T13:00:00Z

  • Corporations & Casinos

    From the Messari daily newsletter: Subscribe here The major themes of this week can be broken down into the divergent paths between Bitcoin and Ethereum’s DeFi ecosystem. Bitcoin put on its best boardroom suit and tie, while DeFi went from Decentralized to Degenerate Finance. Let’s start with Bitcoin. Bitcoin Last week, Matt Walsh was one of the first to pick up the fact that MicroStrategy, a $1.2 billion Nasdaq listed software firm, announced it would be diversifying some of its cash holdings into bitcoin. On Tuesday, MicroStrategy revealed that it wasn’t placing a small bet but rather, allocating half of their cash reserves to the tune of $250,000,000 into BTC. If the first major corporation holding bitcoin as a cash reserve asset wasn’t enough of a watershed moment, MicroStrategy CEO Michael Saylor’s comments on what led to the decision was the icing on the cake: “MicroStrategy observed distinctive properties of bitcoin that led it to believe investing in the cryptocurrency would provide not only a reasonable hedge against inflation, but also the prospect of earning a higher return than other investments.” For an asset that’s notoriously hard for new investors to wrap their heads around, having it articulated in a way that other corporate decision makers can understand is substantive. One has to wonder if other CFOs are readingthis news and mulling over their BTC allocation strategies. Either way, these are the narratives that bull markets are built on. Meanwhile, in DeFi.... Everyone’s getting hilariously rich off yield farming Yams and you’re not. Source: DegenSpartan The 2017 vibes continued in DeFi land this week as new developments continue to bubble up at an exhausting pace. If ICOs were the fuel for the last crypto hype cycle, 2020’s early accelerant of choice appears to be DeFi liquidity mining programs. For those of you not keeping score at home, liquidity mining is an activity where users of a DeFi protocol are compensated in that protocol’s native token for interacting with it. Compound kicked off this trend with its COMP token to great effect back in June, as new users flooded the Compound platform to lend and borrow assets and earn COMP tokens in return. Other projects took notice and have followed suit. Yams They say the brightest stars burn out the fastest, as was the case with Yam Finance. In a matter of 48 hours, the root vegetable-themed DeFi protocol accrued $750M in TVL (total value locked), sending Yam tokens to a peak of $160 before a fatal bug was discovered, ultimately sending Yam tokens to $0. $750K in the Yam treasury remains locked indefinitely. Yam Finance is essentially a frankenstein of other DeFi protocols that launched a liquidity mining program that incentivized users to lend eight different tokens on the platform in order to earn Yam tokens. It wasn’t long before the Yam experiment was moving billion dollar markets as people scrambled to buy and borrow assets supported by Yam’s liquidity mining program. COMP alone jumped over 50% and lending rates tripled as borrowers got desperate. Tokens were soaring and yam memes were flying, until the music stopped when a major bug was found in the 10-day old unaudited smart contract. Without getting too far into the weeds, this bug basically started flooding the market with Yam tokens to the point where the protocol became ungovernable(too many Yams to reach quorum on future changes). Efforts were made in vain to save the young protocol but the yamage was done. But fret not; stay tuned for Yams II: Return of the Yield. Curve Finance While the Yam fiasco seemingly came out of left field, there was another controversial token launch surrounding the much more established Curve Finance. Curve is an automated market maker that’s already been generating $100M+ in weekly volume, second only to Uniswap. Jack noted that Curve’s governance token was already on the horizon, but its launch came earlier than expected. Last night, Twitter became abuzz with the realization that an anonymous account paid 19.9 ETH to deploy the contract for the CRV token, which was apparently publicly visible in the project’s Github repo. First, a Curve developer called it a scam, but following an audit from the team, the contract was verified as legitimate. The Curve token was launched and calamity ensued. Amidst the confusion and inconsistent messaging from the Curve team, some sophisticated users started interacting with the prematurely deployed contract to earn CRV tokens. While the exact identity of these sophisticated users is unknown, Dash pre-mine comparisons followed, and overall, a sour taste remains. Closing Thoughts  All in all, the two bull narratives of 2020 are only getting louder and stronger. The case for Bitcoin as an inflationary hedge and sound investment is being articulated with crystal clarity by influential people outside of our crypto bubble. Meanwhile, speculative fever is alive and well within DeFi, as these financial protocols multiply and innovate at a rapid clip. The levels of complexity and coordination within DeFi is astounding. This stands in stark contrast to the billion-dollar vaporware that reigned supreme in crypto’s last bull cycle. However, as evidenced by Yam Finance, the stakes have been raised, and many feel that it’s simply a matter of time before the next DAO-style blowup occurs, incinerating millions, or perhaps billions, along with it… In other words, get your popcorn. -CD
    Source: Connor Dempsey — Published: 2020-08-14T15:45:00Z

  • CoinMarketCap Launches Earn Program with Band

    CoinMarketCap has launched an educational program very similar to Coinbase Earn. The campaign will last for eight days, with $160,000 worth of BAND tokens evenly distributed to each eligible qualified user who successfully completes the quiz after watching a short series of engaging and educational videos. During an On The Brink podcast in February 2020, Founder of Coinbase Earn, Balaji Srinivasan reported that the Earn program contributed to hundreds of millions of dollars in sales. Further, Srinivasan stated that a large majority of Coinbase Earn users purchase more cryptoassets after viewing the educational videos. Why it matters: With the crypto bull market picking up, exchanges are on a race for customers again. To date, the Coinbase Earn program has arguably been one of the most effective customer acquisition tools in crypto. Binance – who recently acquired CoinMarketCap – is looking to copy this widely successful marketing strategy. More exchanges will likely partner with tokens to offer similar marketing partnerships in the near future. New projects will once again seek to maximize their marketing funnel and user base through token distributions, airdrops, and other incentives. Education rewards are better than airdrops because they require a user to perform a small amount of work.
    Source: Band Protocol — Published: 2020-08-13T19:35:00Z

  • The Current State of YAM

    Three days after the launch of YAM, a bug in the rebasing contract has minted far more YAM than intended and has permanently disrupted the governance module. This bug flooded the protocol reserve during the second scheduled rebase, and given Yam’s governance model, it has made it impossible to reach a quorum necessary for any governance action. Meaning no governance action is now possible, and the funds in the treasury are now locked for good. Initially, when this bug was discovered, the team believed that it would be possible to save the project if they were able to achieve a quorum for a bug fix proposal before the bugged rebase was set to occur. However, shortly after the bug-fix was proposed, based on the consultation of security experts, it became apparent the rebase bug would interact with the governance model and prevent the proposed bug fix from succeeding. The treasury of $750k remains locked indefinitely as a result of this bug. Yam will continue to run on Ethereum with support for the contract in its current state, but governance actions can longer modify the contract. It is highly recommended that any funds in the YAM/ yCRV Uniswap V2 pool be removed, as funds in the pool will remain unsafe in perpetuity. None of the assets staked on the smart contract outside of the YAM/ yCRV pool were at risk or lost due to this bug. The total value locked in the smart contract is currently at $250 million down from its high of 750 million. The YAM team is already moving on to the next steps after officially calling it quits, announcing they will be setting up a Gitcoin grant to coordinate a community funded audit of the YAM contract. Contingent on the success of the Gitcoin grant funding, they plan to support the Launch of YAM 2.0 via a migration contract from YAM. Why it matters YAM was a 10-day old unaudited smart contract that was able to accrue $750 million in TVL (10% of DeFi’s market cap) in 36 hours before a fatal bug caused its fall. If the bug had put that TVL at risk it would’ve been extremely detrimental to DeFi and the Ethereum ecosystem on a similar scale to the DAO hack. The sheer value that YAM was able to accrue in such a short time frame is yet another indicator of the level of excitement in the DeFi market. Investors are venturing far out on the risk spectrum, willing to put millions into an untested project to capture maximum returns.
    Source: Yam Finance Blog — Published: 2020-08-13T15:30:00Z

  • VC Funds are Racing to Fund Decentralized Derivative Platforms

    As the DeFi narrative continues to dominate crypto discourse and token prices continue to surge, venture capital funds are actively looking to fund projects working on building decentralized derivative platforms. Much of the activity in DeFi has been on more plain vanilla lending and exchange platforms, however, these projects are looking to create more exotic products to replicate the success of derivative exchanges such as BitMex. Over the past two weeks alone, there have been five funding rounds for these types of projects bringing the total to eight over the last year. This funding comes from some of the largest and most active funds in crypto including Polychain, Pantera, FBG, Dragonfly Capital, and more. Most of these projects are yet to launch while others like Opyn are starting to gain traction having traded over $50 million in notional volume. Futureswap launched its alpha a few months ago but closed it early due to interest exceeding the team's expectations. Another sign of the increased interest towards decentralized derivatives can be seen in the token price of the few projects actively trading. FinNexus and Auctus (not listed above) have seen 30-day returns of 300% and 200%, respectively. As more of these projects launch tokens, it wouldn't be surprising to see other investors looking to get similar exposure as these "blue-chip" VCs either by participating in liquidity mining programs or outright purchasing these tokens once they're available.
    Source: Jack Purdy — Published: 2020-08-10T22:00:00Z

  • NBA Top Shot Beta Numbers and the Flow Blockchain’s new $12m fundraising round

    The developers behind CryptoKitties, Dapper Labs announced a new $12 million fundraising round which includes several high profile NBA players like The Brooklyn Nets' Spencer Dinwiddie and Garrett Temple, the Miami Heat's Andre Iguodala, Los Angeles Lakers' JaVale McGee, and Aaron Gordon from the Orlando Magic. The funding will go towards the continued development of the Flow blockchain network which is specifically designed for blockchain-based gaming. "Blockchain technology has the potential to revolutionize consumer ownership on the internet," said Andre Iguodala Additionally, Dapper Labs has released some of the early stats behind its beta app NBA Top Shot, a digital card collecting and trading marketplace. NBA Top Shot will have future applications, but for now, only supports trading and collecting of digitally scarce NBA "moments". To date, Dapper Labs has sold $1.2 million worth of digital NBA cards on Flow, and The Block reports that NBA Top Shot has distributed 22,000 packs, and has transferred more than 14,000 cards. Additionally, the app – which is currently invite-only – has more than 900 active users. "Blockchain is going to fundamentally alter the financial industry and have a major impact on consumers," said Spencer Dinwiddie Why it matters: Blockchain-based gaming has yet to take off, partially because of scalability and latency issues. The Dapper Labs team is well versed in blockchain games and has built two of the most successful games/collectibles in CryptoKitties and CheeseWizards. The launch of NBA Top Shot will be the team’s first shot – pun intended – at a mainstream consumer application for non-crypto natives. There are several high profile NBA players backing this project which helps elevate the potential success of this crypto application. The soft launch also times perfectly with the NBA season which has recently re-launched.
    Source: prnewswire — Published: 2020-08-06T17:45:00Z

  • Oracle coins among the top performing cryptoassets in 2020

    The oracle problem is one of the most well known problems in crypto. How do blockchains bridge the gap between the on and off-chain worlds? In theory oracles will occupy a critical role in sending and receiving data between smart contracts and the real world. However, while the need is clear, the addressable market while presumably large is nebulous. Nevertheless, the idea has been enough to launch oracle tokens to some of the highest market caps of any cryptoassets. Oracle coins are among the top performing assets in crypto in 2020. Many oracle tokens appear to be anchored to the price of Chainlink as a comp, which is worth multiples of its competitors. The relative valuation comparison alone has been enough to drive oracle tokens up thousands of percentage points year-to-date. While none have quite developed the fervent community Chainlink has, many like Band Protocol have employed Chainlink’s strategy of announcing a ton of project integrations and partnerships, and they’ve been rewarded for doing so. Are the long-tail of oracle tokens some of the most compelling relative value plays in crypto or is the entire section dramatically overvalued?
    Source: Ryan Watkins — Published: 2020-08-06T17:00:00Z

  • Uniswap total website visits grew 15x in July

    Uniswap experienced a record-setting month this past July on multiple accounts. On July 27 Uniswap trading volume reached $120 million and the decentralized exchange saw nearly day-over-day growth of liquidity provided to the platform. Additionally, people are searching for Uniswap like never before. Uniswap went from 90,000 visits to 1.42 million in a single month. Uniswap trade volume and liquidity for those same dates also grew significantly. Uniswap volume 7x over the same timespan June 20th: $6.2m July 20th: $43.7m Liquidity on the DEX doubled June 20th: $37.5m July 20th: $86.6m Currently, Uniswap V2 and V1 have combined liquidity of over $200 million and a shared trading volume of $67 million, although most now come from Uniswap V2. Uniswap V2 continues to undergo a successful transition of volume and liquidity which is not a given in a decentralized world. Uniswap is experiencing breakout velocity of the rocket ship variety. If last month's numbers – in searches, volumes, or liquidity – continue at even a fraction of the pace, Uniswap is primed to have a sweeping end to the quarter and an even wilder Q4 of 2020.
    Source: Uniswap — Published: 2020-08-06T02:47:00Z

  • Square reports $875 million in Bitcoin purchases for Q2 2020, up 186% from last quarter

    In an early release of its quarterly financials, Square reported it purchased $875 million Bitcoin in Q2 2020. This total marks Square's highest quarterly Bitcoin purchases ever, besting last quarter by 186%. The company netted $17 million of bitcoin gross profit, which also marked a quarterly best, up 143% from Q2. Square has now purchased more than $1.5 billion in Bitcoin over the last twelve months. Why it matters: Square continues to be one of the most crypto-friendly financial institutions. It is not only a significant source of new inflows to Bitcoin, but the company also gives back to the public good that is Bitcoin through its Square Crypto initiative. The company said it benefited "from an increase in bitcoin actives and growth in customer demand." This increase in demand makes sense considering Q2'20 was an eventful quarter which saw Bitcoin rise from the depths of Black Thursday, receive validation from Paul Tudor Jones, reach its third halving event, and hit a new yearly high in price. Square's best quarter yet is another sign there's strong momentum in the crypto markets.
    Source: Square — Published: 2020-08-05T00:30:00Z

  • Crypto.com launches token swap amid concerns from token users

    Crypto.com, a cryptocurrency payment platform and exchange, is conducting a token migration from the current MCO token to a new CRO token. The window to swap tokens began on August 3 and will close on November 2. The crypto.com platform and services will no longer support MCO tokens following the closure of the swap period. MCO holders can only complete this token swap through the crypto.com app. Users currently holding MCO on an exchange will have to create a crypto.com account if they do not have an existing account. Creating an account includes mandatory KYC verification. The migration exchange rate is 1 MCO rate to 27.6439 CRO, with a 20% bonus for users that swap before September 2 (Effective exchange rate of 1 MCO: 33.1726 CRO). The 20% bonus offered to MCO holder was almost immediately priced into MCO markets through traders arbitraging the swap bonus, as only minutes after the announcement of the migration MCO price rose over 20%. The rapid appreciation in value will hurt MCO holders’ bottom line as they swap their token for CRO due to the fixed swap rate. As the swap details were released, many within the community expressed concerns over the dilution of existing token holders’ share of the crypto.com total supply. As well as the 4x dollar value increase in minimum tokens held to be awarded bonuses based on their tier structure (New tier structure included below). Crypto.com has stated that MCO holders currently staking will be grandfathered into the tiers they were staking at before the token migration. When token holders decide to stop staking, they will be compensated for the updated tier amount in CRO. Why it matters Crypto.com with a marketcap that puts in the top ten of all cryptocurrency has stayed off the radar for most people, this swap has the potential to increase general awareness and attention around the platform. Crypto.com is the latest in a long line of projects to opt for a token swap amid the rebound in markets the past few months, the outcome of these token swaps may determine how other projects plan to leverage the emerging bull market.
    Source: MCO Swap Guide — Published: 2020-08-04T20:30:00Z

  • Ethereum 2.0 multi-client testnet Medalla is now live

    The official multi-client testnet for the long-awaited first phase of Ethereum 2.0 is now live. Ethereum developers expect the testnet, named Medalla, to be the final testing stage before the mainnet launch of Ethereum 2.0, barring any setbacks. If no problems arise, the Beacon Chain could arrive as soon as November, according to developer Afri Schoeden. Why it matters: According to Ethereum 2.0 researcher Danny Ryan, the testnet, named Medalla, will run five different clients at genesis: Teku, Prysm, Nimbus, Lighthouse, and newcomer Lodestar. Core developers have been adamant that Ethereum’s second iteration would benefit from having multiple production-ready clients at launch. The current Ethereum network is overly reliant on a single implementation, Geth, which has almost an 80% share of the client market and is causing some concern among core developers. Ethereum 2.0 is a chance for developers to address what may have gone wrong the first time around. The Beacon Chain and Ethereum’s transition to Proof-of-Stake (PoS) is a long time coming. But ever since the Ethereum Foundation started rolling out multi-client devenets (three in total), progress on Ethereum 2.0 has appeared to pick up steam. A November launch date for Phase 0 is becoming more realistic, which would be yet another catalyst in what has been a red hot year for ETH as of late.
    Source: Bitfly — Published: 2020-08-04T14:00:00Z