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Top shelf
China sees its digital yuan as a "new battlefield," DeFi's Curve has a new dividend program and a yet-to-launch platform is pursuing an "Initial DEX Offering."
‘New battlefield’ China’s central bank gave an inside look into its motivations for developing a digital currency (CBDC) for retail and governmental use. In a commentary published by China Finance, a local magazine, People’s Bank of China (PBOC) officials said its DCEP (digital currency electric payment) system is essential in weakening the dollar's role in international finance and could open a "new battlefield" between nations. The DCEP has been in development for six years – during which the government has filed 130 related patents – and is now in testing at banks and corporations in a number of regions.
DeFi dividend Curve, the third largest DeFi project by “total value locked,” has instituted a new dividend program for holders of its governance token, CRV. CoinDesk’s Brady Dale reports that trading fees on the platform now will be split between liquidity providers (LPs) and veCRV holders, a form of escrow token that users obtain by staking their CRV to the voting contract. Each trade on the platform incurs a 0.04% trading fee, which has totalled between $70,000 and $150,000 per day last week, based on daily volumes in the $400,000,000 range. “We’ll start moving towards a cashflow-based protocol because the numbers are too sweet to not do it,” Curve founder Michael Egorov told CoinDesk in an email.
Crypto mining Three Iranian power plants will allow cryptocurrency miners to buy energy directly from their facilities, in a bid to create new revenue streams. A Thermal Power Plant Holding Company (TPPH), which owns and operates plants all across Iran, executive said, “the necessary equipment has been installed in three power plants of Ramin, Neka, and Shahid Montazeri, and the auction documents will be uploaded on the SetadIran.ir website in the near future.” Iran recognized crypto mining as a legitimate business activity in July 2019. An estimated 1,000 mining licenses were issued in the first six months under the new rules.
IDO? APY.Finance, a yet-to-launch DeFi yield farming aggregator, has completed a $3.6M seed funding round joined by Arrington XRP Capital, Alameda Research, Cluster Capital and CoinGecko. The automated investment service will use the cash to develop and audit its platform, which will offer opportunities to earn yields across a variety of DeFi products in a “in a risk/reward optimized way,” according to its press release. APY.Finance said it’s targeting mid-October for a full-scale rollout of its platform, and has plans for a public sale of its governance token, APY, in what its calling an "Initial DEX Offering" this month.
How to Value Bitcoin: Addresses In the second episode of CoinDesk Research's webinar series on Bitcoin fundamentals, we unpack a novel accounting method used in Bitcoin and explore how entities are represented and transact on the network.
Philip Gradwell, chief economist at Chainalysis, and CoinDesk Research will walk through the structure of Bitcoin addresses and wallets, how exchanges operate and how ownership data and transaction data can be interpreted by investors.
Suspicious circumstances Cryptocurrencies are often dismissed in the circles of traditional banking and finance for their associations with crime. Earlier this year, the New York Times’ crypto reporter, Nathaniel Popper, penned the article “Bitcoin Has Lost Steam. But Criminals Still Love It.” Implicit in the article: What else could unstoppable, non-state backed money be used for but crime?
Frequently absent from the discussion is the role that the dominant banking infrastructure plays in the world of crime. This weekend, Buzzfeed peaked behind the hood.
According to thousands of documents compiled by the Financial Crimes Enforcement Network (FinCEN), a U.S. watchdog, and seen by Buzzfeed, potentially trillions of dollars of dirty money are flowing through the world’s largest banks.
From 2011 and 2017, the banks’ internal compliance teams reported to FinCEN thousands of suspicious activity reports (SARs), or activity deemed out of the ordinary and potentially fraudulent. SARs are just the concerns of compliance officers and not necessarily evidence of fraud.
The files show Deutsche Bank flagged a total of $1.3 trillion, JPMorgan approximately $500 billion and Bank of America another $384 billion. BNY Mellon underlined a total of $64 billion in 325 separate SARs filed with FinCEN, making it the second-most-frequent filer in the leaked documents, CoinDesk reporter Paddy Baker wrote.
Further, between 2012 and 2015, nine big banks paid approximately $20 billion in fines for money laundering, Bloomberg reported.
While at least one of the SARs related to the multi-billion dollar OneCoin crypto project, determined to be a pyramid scheme by investigators, the report is a reminder that banks, too, aid and abet criminal behavior.
Market intel
Selling pressure Bitcoin is facing selling pressure Monday amid coronavirus-led risk aversion in the stock markets, CoinDesk’s Omkar Godbole reports. The cryptocurrency is trading near $10,650 at press time, down 2.9% on the day, having faced rejection near $11,000 earlier on Monday. This follows a decline in European stocks and U.S. stock futures amid news of worsening pandemic conditions across Europe. Bitcoin could suffer a bigger drop if the risk aversion worsens, triggering a dash for the U.S. dollar, as happened in March. Meanwhile, resistances are seen at $11,000 and $11,183 (Sept. 19 high).
Op-ed
Kraken open CoinDesk’s Director of Research Noelle Acheson thinks Kraken’s application to become the U.S.’ first crypto bank is not a repudiation of its founding values, but an indication that the world is adapting to crypto. “The SPDI [Special Purpose Depositary Institution] is a new type of bank charter that was created with the crypto industry in mind. A new set of definitions and protections was drawn up to take into account crypto asset characteristics. A state passed financial legislation for the crypto industry,” she writes in the latest Crypto Long & Short newsletter. You can subscribe here.
Internet 2030
Pooja Shah is the product lead for the Filecoin Project. The article excerpted below is a part of the Internet 2030 series, a look at the future of the internet and our digital lives.
Web 3.0 When Satoshi Nakamoto invented Bitcoin in 2009, we began to envision decentralized finance as an alternative to traditional banking. A little more than a decade later, we are starting to see that technologies behind Bitcoin can be used to create a fully reimagined internet – one that leverages our collective computing capacity, data and devices to become far more powerful and resilient than it is today.
To say the internet has created astounding pathways for opportunity and success is an understatement. It has democratized access to information, created boundless economic opportunities and connected people worlds apart. In 1990, fewer than 1% of the world’s population was online. Thirty years later, that number has jumped to 59% of the world’s ever-growing population. Even narrowly defined, the internet today contributed 10% of the U.S. economy. It is undoubtedly one of the most important technologies ever invented.
In a few years, all companies will need to rethink their operating models to treat their users as crucial partners from the start. Proprietary platforms might start to become open-source protocols. Companies’ sustained competitive advantages will come from product and technological superiority but also from user loyalty and trust. To succeed, companies will need to move toward more open services with plentiful value capture opportunities for users along the way.
Instead of relying on trusted intermediaries to coordinate users, Web 3.0 systems use mechanisms such as cryptographic proofs and economic incentives to guarantee users that the system is working as expected. As a result, Web 3.0 networks are trustworthy, yet decentralized. And because these projects succeed only if their users cooperate, their creators have strong incentives to align with their users’ best interests.
Instead of extracting value from their users, Web 3.0 networks will capture value by creating opportunities for them. In this way, Web 3.0 protocols essentially turn the economic incentive structure of today’s internet on its head.
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
Investors expect With Ethereum 2.0’s much-anticipated move to Proof-of-Stake getting closer, CoinDesk Research Analyst Christine Kim spoke with Ethereum developer Danny Ryan and Liz Steininger, CEO of blockchain security company Least Authority on what users and investors should expect.
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Blockchain Bites: DeFi's Dividend