Crypto Guides, Knowledge & Insights

Why did the DeFi Money Market shut down?

TL;DR Breakdown　　Defi Money Market halts operations.　　Users have to redeem their mTokens before it drops to 0% by February 10.　　Its shutdown has potential consequences for other asset tokenization projects.　　In one of the most shocking moves in recent times, Defi Money Market, also known as DMM, announced that it would be shutting down its operations. The digital asset project has said this was necessary due to the regulatory inquiries, marking the end of one of the pioneer projects seeking to bring real estate tokenization projects to the blockchain network.　　For those who dont know what the DMM protocol is all about, a brief introduction is in order. The Defi Money Market protocol is a project created to solve the instability and volatility of the Defi ecosystem. It seeks to encourage mass adoption of crypto and decentralized finance by making it more stable and trustworthy.　　This would be achieved by using real world assets as collateral for DMM assets. All the underlying assets are overcollateralized, ensuring that they will always generate more liquidity than the asset it is collateralizing which led many enthusiasts to label the project a game-changer. It also provided tokens with more than 6% interest rate and it is secured by

2021-02-10Deep Dive

St. Louis Federal Reserve Says 3 Risks Hold DeFi Back From “Paradigm Shift”

Key Takeaways　　DeFi is exposed to risks such as coding errors, operational security, and the interdependence of different projects.　　If DeFi can overcome these risks it could lead to a “paradigm shift” throughout the financial sector.　　The cautious endorsement of DeFi by a U.S. central bank could be a major step forward in the acceptance of DeFi.　　The St. Louis Federal Reserve published an article on the risks and opportunities in DeFi. If the technology can overcome three key hurdles, it has the potential to overhaul the entire financial sector.　　They include DeFis operational security, smart contract execution risk, and interprotocol dependency.　　The Risks in DeFi　　Smart Contract Execution Risk　　Nearly $100 million was lost to DeFi hacks and exploits last year alone, with DeFi hacks accounting for 50% of all crypto-related attacks, and the sector is still under threat today.　　Most DeFi hacks have been due to smart contract coding errors and oversights. Hackers commonly use a series of flash loans to build up a large amount of collateral and then target exploits in several ways, such as manipulating the exchange rate of a protocols liquidity pool.　　Operational Security　　The St. Louis Fed outlined a teams operational security as an issue, highlighting the potential for human error.　　The staff could

2021-02-10Deep Dive

Bitcoin Cash Upgrades Won’t Cause Permanent Forks

Bitcoin Cash developers have assured the cryptocurrency community that the blockchain is unlikely to undergo a chain split when it undergoes its next upgrade on May 6, 2021.　　Bitcoin Cash Wont Split In May　　Cameron Lee, a musician who accepts Bitcoin Cash in his online storefront, asked developers if there will be a split during the blockchains next upgrade in May.　　He noted that the community endured Bitcoin Cashs 2018 hard fork, in which a faction split off to create a new blockchain called Bitcoin SV led by Craig Wright. Bitcoin Cash also withstood the Infrastructure Funding Plan(IFP) controversy in 2020, in which a faction led by Amaury Séchet attempted a similar split.　　Bitcoin Cash developer Josh Green responded by stating that future splits are unlikely. He noted that it would be “difficult for a split to happen at this point,” as an alternate node team would need to deliberately advocate for change and gain a significant share of Bitcoin Cashs mining power.　　“For anybody other than BCHN, [that is] an uphill battle,” he noted, adding that users can be confident that there will be no split in May.　　Paul Wasensteiner, Executive Director of the Bitcoin Cash Association, added that the goal is to have no

2021-02-09Deep Dive

Russia Looks to ‘Tighten Control’ over Crypto Traders with New Tax Measures

Crypto industry experts in Russia have warned that government agencies are gearing up for a regulatory drive that will see it “tighten control” over crypto, enforcing tough new tax protocols and enhancing its monitoring of transactions.　　Per media outlet RIA Novosti, industry sources have claimed Moscow wants to force all traders to submit annual tax declarations outlining the details of their transactions with cryptoassets.　　The State Duma is poised to vote on a bill that will force individuals or companies working with “digital assets” to pay corporate income tax or personal income tax on their earnings and submit details of their transactions if these are worth over USD 8,000 over the course of a tax year.　　But experts told the media outlet that the tax authorities will seek to police tax declarations using information gathered from crypto exchanges. The Central Bank, said legal experts and executives from the Garantex and Alfacash exchanges, is planning to force trading platforms to submit data on their clients transactions, and tax authorities will have access to these.　　And the experts also added that the government plans to step up its monitoring of transactions conducted by Russian citizens and residents on overseas trading platforms.　　The authorities appear confident that they

2021-02-09Deep Dive

CME saw nearly 400 ETH futures contracts traded on first full market day

CMEs ether (ETH) futures product saw 388 contracts traded on its opening day, according to Tim McCourt, CMEs Managing Director and Global Head of Equity Products.　　Thats about 19,400 ETH, or $33 million. “The response to Ether has been overwhelming,” said McCourt.　　Monday marked the first full trading day of CMEs ether (ETH) futures product, with initial trading having begun at 6:00 PM ET on Sunday.　　The derivatives exchange first announced plans to launch ETH futures in mid-December. The contracts — each representing 50 ETH — are cash-settled and based on the CME CF Ether-Dollar Reference Rate — the platforms price discovery mechanism for ETH. Theres a minimum block trade of five contracts.　　McCourt disclosed the first days metrics on a forthcoming episode of The Scoop. He detailed the road to launch and how ETH futures fit into CMEs broader product roadmap.　　The ETH product joins CMEs bitcoin futures product, a popular offering for those looking for exposure. Open interest hit nearly $1.5 billion in December.　　The bitcoin futures product saw nearly 1,000 contracts traded on day one, according to McCourt. Adjusting for market cap and other metrics between the two cryptos, McCourt said hes very encouraged by the launch numbers.　　McCourt said theres already pressure for

2021-02-09Deep Dive

Ex-OCC Chief Brooks Calls Tesla’s Bitcoin Buy a Bit ‘Scary’ for Rest of World

The debasing of global currencies is why companies like Tesla (TSLA) and MicroStrategy (MSTR) are investing in bitcoin and that should be troubling for the rest of the world, former acting U.S. Comptroller of the Currency Brian Brooks said Monday on CoinDesk TV.　　“For people who are invested in bitcoin its exciting news,” said Brooks, who left the OCC last month. “For people who are looking at the rest of the world its actually a little bit [of] scary news.”　　Brooks was responding, in part, to Teslas announcement Monday it has invested $1.5 billion in bitcoin and would be looking to acquire more digital assets. That news sent the price of bitcoin to a new all-time high.　　The former acting comptroller noted the U.S. money supply has risen 25% since the start of the pandemic and will be up 40% compared with a year ago once the most recent round of stimulus is done in the next few days.　　“Thats crazy, right？” Brooks asked. The way inflation works is the more of asset you have the less valuable it is. That would explain why a lot of institutions want to have bitcoin sitting in their treasury because its a lot more stable source of

2021-02-09Deep Dive

Binance Labs backs Polkadot ecosystem with $2.4m investment in Plasm Network

Binance Labs has led a $2.4 million Series A funding round for Polkadot-based smart contract platform, Plasm Network.　　Plasm Networks funding round is the first investment made using Binance Labs $10 million fund to support projects in the Polkadot ecosystem. Plasm is a leading parachain candidate on Polkadot supporting Ethereum and Layer-2 scaling solutions.　　Binance Labs is the venture capital and incubator arm of crypto exchange giant Binance. In December 2020, Binance Labs led a $12 million funding round for MATH, a multi-chain assets hub behind MathWallet. In August of the same year it made a strategic investment in decentralized streaming protocol Audius.　　According to the announcement, Binance Labs investment will enable Plasm Network to develop on-chain governance, build a bridge between the Polkadot and Ethereum networks, and accelerate research and development.　　Plasm also raised money from notable crypto-notables HashKey, LongHash, Digital Finance Group, and PAKA Ventures.　　Polkadot is a high-throughput blockchain network that uses a multi-chain approach to achieve greater scalability than networks built on top of a single blockchain.　　Wei Zhou, head of Binance Labs, praised the network for its recent achievements, stating;　　“We have been very impressed by Plasm Networks growth since its launch. The first parachain connected to the Rococo-V1 Parachains Testnet is

2021-02-09Deep Dive

Apple Should Create Crypto Exchange and Buy Bitcoin, Says RBC

Apple Inc. should follow in Tesla Inc.s footsteps, but by getting into cryptocurrencies, not electric vehicles, according to RBC Capital Markets.　　The iPhone maker could create a sizable new market for growth if it were to develop its Apple Wallet into a crypto exchange, said analyst Mitch Steves.　　“The wallet initiative appears to be a clear multi-billion dollar opportunity for the firm (potential for well over $40 billion in annual revenue with limited Rs comments come at a time when companies have been showing more interest in Bitcoin and other cryptocurrencies. Notably, Tesla invested $1.5 billion in Bitcoin and indicated its interest in accepting the cryptocurrency as a form of payment Monday. That helped send Bitcoin prices up as much as 16%, cresting $44,000 and hitting a record. Tesla rose 1.3% on Monday.　　While Apples biggest cryptocurrency opportunity would be in building an exchange, it could also consider adding Bitcoin or another digital currency to its balance sheet, RBC wrote. “This would send even more users to Apple Exchange,” Steves said, and would likely further boost Bitcoin prices.　　Earlier on Monday, Hyundai Motor Co. and Kia Motors Corp. said they werent in talks with Apple to develop an autonomous vehicle. While analysts have been

2021-02-09Deep Dive

South Korean Central Bank: Build Legal Boundary Between CBDCs & Crypto

The South Korean central bank – the Bank of Korea (BOK) – wants Seoul to draw a line between central bank digital currencies (CBDCs) and cryptoassets, and hopes the government will make an eleventh-hour adjustment to a key crypto law that promulgates next month.　　The BOK made its recommendation in a new report that comprises input from experts from a range of different sectors and examined the legality of a CBDC issuance under existing legal frameworks.　　Leading legal academics from Seoul National University and Hanyang University took part in the project.　　And the reports authors, per ZDNet Korea, concluded that the most important matter that the BOK should consider should it issue a CBDC was to ensure that “as a legal currency, [a CBDC] must have the same status as” banknotes and coins “in terms of issuance and legal weight.”　　The authors added that the terms of the new law do not seek to make a distinction between crypto and CBDCs. They urged lawmakers to set out a legal distinction before the regulation comes into force by adding new CBDC clauses – even though the nation is still a long way off digital won issuance.　　The authors wrote,　　“Under current legislation, virtual assets issued by institutions

2021-02-09Deep Dive

Polestar Leverages Blockchain For More Ethically Produced Electric Cars

In an article on The Next Web (TNW), the electric vehicle manufacturer Polestar put forth its plan on how it will use Blockchain in an ethical way to produce its electric car batteries.　　Most people would imagine that electric cars will bring sustainability and far less of an environmental carbon footprint. This certainly is the case but electric car manufacturers do have to tread carefully, especially where their batteries are concerned.　　One of the raw materials needed for electric batteries is cobalt. It should be of real concern then to electric car manufacturers that cobalt mines present serious problems to the health of the miners that work in them.　　A report published earlier last year highlighted the plight of children, particularly in the Republic of Congo. The report stated that 35,000 children were “mining cobalt in toxic conditions”.　　Blockchain provides a perfect solution to this predicament. Given that it provides an immutable register of transactions on the supply chain, it can be used to track the source of materials and help to enforce regulation on extraction, processing, and transportation.　　Frederika Klarén, Polestars Head of Sustainability said:　　“It was important to us to start with cobalt when piloting this innovative technology. We need many tools to fight

2021-02-09Deep Dive

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