Category Archive : Blockchain News

sam-bankman-fried:-the-crypto-whale-who-wants-to-give-billions-away

Sam Bankman-Fried: The crypto whale who wants to give billions away

Like many people in crypto, Sam Bankman-Fried is in it for the money. As the founder of quant trading firm Alameda Research, exchange FTX and DeFi protocol Serum, the curly haired 28-year-old has amassed a $10 billion fortune in just three years in the industry.

Unlike most people in crypto though, he’s building up a fortune in order to give half of it away. An ‘effective altruist’ he’s essentially robbing from the rich, via his preternatural crypto trading strategies, in order to give to the poor. 

“Maybe without the robbing part,” he says. “In the end my goal is to have as much impact as I can, however that is. And right now, I think that’s flowing through donations, so figuring out how I can be able to make as much as I can and donate as much as I can.”

SBF, as he’s sometimes referred to, has been walking the walk for some time now. He spent a couple of months as the director of development at the Centre for Effective Altruism in 2017 and before that, gave away half of his income during his stint on Wall Street. He plans on giving away around 50% of his crypto billions too — but only after he’s finished reinvesting in his ever-expanding empire.

He does donate to causes as they come up however. He was the second largest donor to President Joe Biden’s campaign, after former New York mayor Michael Bloomberg, tipping in $5.2 million.

“I was excited about the impact it might have. I basically thought that it mattered what happened in the election.”

Also, the FTX Foundation launched recently. It’ll give away 1% of the platform’s fees and match user donations dollar for dollar up to $10,000 a day. In its first couple of weeks the Foundation has raised more than $2M, mostly in user contributions, with users able to vote on the recipient charities from a carefully curated list.

The old bean bag

SBF’s growing public profile was given a shot in the arm when he was named on Forbes 30 Under 30 finance list for this year. “I’m honored,” he says. “I tend to be fairly forward looking instead of backward look and so it was cool for a bit but it sort of wore off pretty quickly.”



He also came in at number three in the recent Cointelegraph Top 100.

Famous for sleeping on his bean bag at his Hong Kong office so he never misses a trade, and it seems a key reason SBF makes more money than anyone else is that he’s barely ever off the clock. 

“I’m at the office, well usually 24 hours a day. I’ll sometimes just nap on a beanbag here and obviously shoot the shit with coworkers and sometimes with people online, but mostly its work.”

He doesn’t have a girlfriend or even see many people outside of work, though he makes time to speak with his family back in the U.S. “a few times a week on the phone.” It’s safe to say SBF isn’t the type of person desperate to strike the perfect work/life balance or who even accepts that productivity decreases after the first 11 hours or so at work.

“I think that sort of narrative is substantially oversold and the brutal or inspiring truth, depending on how you think about it, is that the more you put in, the more you get out,” he says. “It’s motivating for me and it’s fulfilling, but you know, another piece of it is that, it’s how I think I can have the most impact.”

How did I get here?

The child of two Stanford Law professors, SBF discovered the Effective Altruism movement during his Physics degree at the Massachusetts Institute of Technology.

Popularized by philosophers and ethicists including Toby Ord and Peter Singer the movement is focused on pragmatic ways to help others using science and reason to ensure the benefits are maximized, rather than the good intentions and poor outcomes that characterize some charitable organizations. This practical approach also extends to a hard headed examination of the best way an individual can help.

“Imagine the amount of good that you could do working directly for some cause, versus the amount that you could do working on Wall Street and donating to it. In a lot of cases you could probably actually help them out more with the donations. And so basically I checked out Wall Street.”

Friends who’d interned at quant trading firm Jane Street Capital gave him the pathway to Wall Street, and he began working there straight after college in 2014. Why did they hire a physics major with very little financial experience straight out of school you ask? 

It turns out quant trading strategies are “super valuable” trade secrets which means no one teaches the successful ones in Uni degrees. Instead, firms recruit people with raw talent: maths whizzes or people with strong backgrounds in physics or computer science.

“What you need to know about markets, they’ll teach,” he says. He traded a variety of ETFs, futures, currencies and equities and designed an automated OTC trading system. While there he became interested in the insanely profitable arbitrage opportunities in the inefficient crypto markets and set up crypto quant trading firm Alameda Research to profit from it in late 2017.

The whale to rule all whales

Alameda Research has now grown to become one of the biggest companies in crypto with around $2.5 billion in assets under management, although as with his own fortune, SBF qualifies this with some provisos around liquid and illiquid assets.

Alameda is the Moby Dick of crypto whales, responsible for up to 10% of the cryptocurrency moving around the markets at any one time. “I think at particular times it can get up to about that fraction of the volume,” he says. “I think it averages a bit lower. It’s solidly in the group of the five to ten larger trading firms in the space.”

That means any trade Alameda takes has the potential to move markets and cause liquidations. In October last year, Alameda was widely blamed for crashing the price of YFI by shorting, though SBF has downplayed any impact. He believes that with great power comes great responsibility.

“It’s absolutely a responsibility,” he says, adding that he tries to follow the approach of TradFi quant firms. “Their role is to find profitable trades, but it’s also to provide liquidity and promote healthy markets,” he says. “The biggest duty is the duty to do no harm. And to make sure that what you do is, on the whole, promoting liquidity in healthy markets and efficient trading, as opposed to intervening in it.”

He adds that arbitrage trades, for example, can have positive impacts as it makes markets more efficient and brings down prices where there are premiums. Identifying and working out how to profit from arbitrage trades was the whole reason Alameda was founded. “One of the first big ones that we actually made some money on was Litecoin,” he recalls.

“There was a week in late 2017 when Litecoin was trading at a consistent 20% premium on Coinbase GDAX [now Coinbase Pro]. There’s sort of this idea like ‘Oh that’s cool, you just make 10% every half hour I guess you make infinity dollars?’ And of course, that’s not the answer.”

It turns out that trying to exploit the opportunity was hideously complicated and required, getting around trade size limits, and withdrawal limits of a million a day. “Especially a few years ago in crypto an enormous piece of the problem was figuring out the logistical steps,” he says.

Another arbitrage trade saw SBF and friends move up to $25M a day through a series of intermediaries and rural banks in Japan to take advantage of the famous Kimchee premium, which saw Bitcoin trading for up to a third more in South Korea’s hard to access financial system than the U.S.

But it was dealing with the legacy financial system that threw up the biggest challenges. “The single hardest part of the arbitrage, the piece that was slowest and hardest and most expensive and most frustrating was the fiat,” he says, noting difficulties getting accounts, which could then be shut at any moment, the archaic procedures and bureaucracy and insanely slow wire transfers.

“We spent five man hours per day in physical bank branches for a good solid five months, because that’s what it took to send the wire transfers,” he says, adding:

“Like got there at 10am and stayed till 1pm with multiple people there, to have all the meetings we had to have every single f–king day of the week, in order to send the same wire transfer we sent yesterday.”

This is one reason SBF is so passionate about DeFi – his vision is for it to one day replace the lumbering existing financial system. “The current payment rails are not efficient at all,” he says. There’s trillions of dollars of companies, which are just built around trying to abstract that away and you end up with this incredibly complex web of shit to make it usable for most people. They’re running on systems that are old and not designed even with the internet in mind.”

Crypto influencer

For many people SBF sprang fully formed as a major crypto and DeFi personality during the mid-2020 DeFi boom, as he began to make an impact on Crypto Twitter. This was a deliberate move: he’d been happy to fly under the radar in 2018 because Alameda’s quant trading focus had: “Very little need for publicity, it’s sort of mostly downside.” But when he launched the innovative crypto exchange FTX in 2019 he needed to build a community around it and he stepped up to become its public face on social media.

“With FTX as a retail facing business the more customers the better. You can build the best  product in the world but if no one knows about it it’s not worth anything,” he says.

“One of the hardest and most interesting pieces has been figuring out how to get users, and increasing awareness was a big part of that.”

He seems to have figured it out as FTX became the fifth largest derivatives exchange by volume, with a $3.5 billion valuation. It’s launched a range of innovative markets, including tokenized fractional stock offerings of companies like Tesla, Apple and Amazon, as well as pre-IPO trading in Coinbase.

He’s also using his wealth and influence to try and overcome what he sees as the biggest blocker preventing the wide scale adoption of DeFi. He believes that Ethereum, including Eth2 can’t scale enough to allow crypto and DeFi to replace the existing financial system. DeFi can currently handle about 10 transactions per second, with second layer solutions enabling a few thousand TPS.

“This is an absolute hard, immoveable barrier, in terms of growth,” he says. “DeFi just literally cannot grow as an ecosystem until that is addressed. And so no long-term plan that doesn’t address it is viable. […] That is just fatal.” Even Eth2’s goal of 100,000 TPS isn’t enough for what SBF has in mind.

“If your goal is to scale to 100 million or a billion users, […] if you want to have the upside of an application that might grow to the scale of the largest applications in the world, it needs to be able to scale up to about a million transactions a second. And so you can just sort of cross off the list permanently with no recourse and not even needing to consider any other factor, any scaling solution that doesn’t get there, if that’s your goal.”

That’s what led him to become one of the most vocal proponents for Solana, a blockchain that can currently process 65,000 TPS and whose team claim it can eventually scale up to astonishing levels: 710,000 TPS on a 1 gigabit link or 28.4 million TPS on a 40 gigabit link.

He founded the Serum DEX on Solana and launched the SRM cryptocurrency in August 2020. Bankman-Fried say you can see Solana’s benefits in Serum’s on chain order book matching engine and fees of “100th of a penny to send an order and trades happen in seconds.”

“So you get a lot of juice out of having the higher throughput. And that’s really helped scale up that product base quite a bit. To the point where I think that, you know, our best guess is that, probably Serum DEX in six months of operation has, has consumed more transactions than all of the Ethereum blockchain in history.”

Ethereum’s network effects mean he faces an uphill battle getting DeFi projects and users to migrate to Solana. Even after he was handed control of SushiSwap by Chef Nomi, he was unable to convince the community to port over. “It ended up being way harder than we thought to get the existing projects to port over and way easier to just have new projects built,” he explains, adding:

“We would still be super excited for them to have an outpost on Solana. I think they still may at some point. But I also think that Serums’ gonna march on either way. In the end, like, I sort of want to have the best products and users, you know, however it gets there.”

(Following our interview, a new proposal emerged to build a version of SushiSwap on Solana and Serum, potentially called Bonsai.)

Although SBF says the network effects of having so many interconnected applications built on Ethereum are substantial, he points out that eventually each project will have to “migrate and break composability and tooling with the existing options” in order to switch to layer-two, Eth2, or some other scaling solution. In terms of user numbers he says ETH’s network effects are overstated.

“The other part is that while the current DeFi user base is super devoted, super important and powerful, it’s not that large. Daily active users, I think it’s in the tens of thousands. I think FTX probably has more daily active users than all of DeFi combined.”

SBF’s plan appears to be to embed the Solana blockchain as infrastructure in apps where it’s invisible to most users, in order to onboard millions into DeFi. At the start of 2021, Alameda led a $50 million funding round to embed DeFi style tools in Maps.me, a European offline mapping application with 140 million users. It’ll have a multi-currency wallet with staking and swapping facilities built on Solana. FTX’s purchase of Blockfolio may follow a somewhat similar strategy.

“I think it’s gonna be a really cool product and powerful product suite for the app,” he says of Maps.me. “I’m super excited about it. I think it might really kickstart adoption.

tokenization-of-assets-is-not-taking-off,-but-it-really-should

Tokenization of assets is not taking off, but it really should

For years, experts have been talking about how tokenization — the act of creating a digital representation of an asset on a distributed ledger — of a financial or real asset can unlock trillions in illiquid assets, giving retail investors access to investments with previously high minimum capital requirements thanks to fractional ownership or settle trades on a distributed ledger instantly. 

But if we investigate the current tokenization offerings, none is truly taking off and attracting the masses. If the theoretical advantages are true, millions of investors must be onboarding on exchanges that offer tokenized assets. However, this is not the case.

What is the problem of most tokenization offerings?

Let us take the example of tokenized equity to showcase the current issues and hurdles. The tokenization lifecycle of an equity consists of multiple steps. The first is the legal structuring followed by the minting (creation) of the tokens, in most cases with ERC-20 tokens on the Ethereum blockchain. Contrary to many beliefs, minting is one of the easiest parts of tokenization — the bigger challenges follow. As the purpose of the equity tokens is to be traded, we need to have a marketplace. With this comes the questions of token custody, liquidity, settlement and regulatory compliance.

If we look at the current service providers in this space, there is nearly no one who can offer all the steps of issuance, custody, marketplace, liquidity, settlement, etc. in one integrated offering. This has some major implications for why tokenization is not taking off — namely, that issuers and investors must deal with multiple service providers. Most probably these service providers are also located in different jurisdictions, which adds a whole new dimension to it, as equity tokens should ideally be able to be traded internationally just like traditional equity. And that is not possible as regulation differs from country to country.

Another major problem of tokenization marketplaces is liquidity. Currently, there is very low liquidity on tokenized marketplaces if we are to look at the trading volumes while the volumes of cryptocurrencies are currently reaching new all-time highs on a weekly basis. A reason for this is that the few exchanges that are on the market cannot attract enough investors. The easiest solution to solve this issue is for tokenized asset marketplaces to be connected to traditional exchanges and to leverage their customer base as they already have the desired liquidity.

This is only possible if the UI/UX is equal to traditional exchanges, and the investors do not see and interact directly with the blockchain. If investors need to set up their own wallet and deal with the blockchain directly, then we will never see a big inflow of mainstream investors into tokenized assets, as this makes the whole process more difficult and inconvenient, which is the exact opposite of the end goal.

A good UI/UX is very important in tokenization offerings as opposed to crypto applications such as DeFi platforms, where the UI/UX may not be the best. But despite the fact that the product is revolutionary, the masses are unwilling to deal with tokenization because it’s inconvenient and not seen as a groundbreaking innovation.

Another big topic in tokenization is regulatory clearance. If we continue with our example of tokenized equity, there is the question of how to deal with a digital representation of a security. In most jurisdictions, a token is not a security by itself. Rather, the token just represents the right to own the equity, but the equity still also exists in its “traditional” form. In other jurisdictions, however, there is even less clearance.

While tokenization is without question one of the most promising use cases of blockchain technology, the current setup is in most cases worthless, as it renders things more complicated rather than effective. To change this, we need a clear regulatory environment, such as in Switzerland, for example, to integrate all elements of the tokenization lifecycle into one offering, and have a “traditional” UI/UX for the investors. If we can get these three elements right, there is nothing to stop tokenization to become a major game-changer and open many new asset classes to the market. I believe that tokenization marketplaces should partner up with traditional exchanges to offer liquidity, especially for tokenized equity.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Darius Moukhtarzadeh is in the sales and clients team of Sygnum Bank. Sygnum is a digital asset bank that received a Swiss banking license from the Swiss Financial Market Supervisory Authority in August 2019. Prior to Sygnum Bank, Moukhtarzadeh worked for Ernst & Young in blockchain consultancy and for several startups in the Swiss Crypto Valley.

alameda-research-doubles-down-on-maps.me,-invests-$40-million-in-oxygen

Alameda Research doubles down on Maps.me, invests $40 million in Oxygen

How much are 140 million users worth? 

After a $50 million direct investment in travel app Maps.me earlier in the year, Alameda Research has announced today a $40 million investment in decentralized finance protocol Oxygen, a Solana-based lending platform that will plug into the app. 

Similar to lending protocols such as Aave and Compound, “Oxygen will first offer borrow-lending services via pools, in which users will deposit their assets and leverage Serum’s on-chain infrastructure to lend according to their desired terms. Users can also simultaneously lend to generate yield while borrowing against their portfolios,” reads the announcement.

While the specifics are hard to come by on official channels, Oxygen also boasts a host of planned features including cross-chain integrations with Ethereum-native protocols like Aave and Yearn, options writing, and fully decentralized governance. The protocol is currently in the Alpha stage with the largest debt pool listed at $1,000.

Alameda Research was joined in the round by investment firms MultiCoin Capital, Genesis Capital and CMS Holdings. 

“Oxygen will be the most sophisticated and elegant risk management tool in DeFi – with a strong team, growing liquid ecosystem and large potential user base we believe this is the next step in mass adoption,” said Alameda Research CEO Sam Bankman-Fried of the acquisition.

Users, users, users

The $40 million investment comes after a $50 million investment in Maps.me Alameda Research announced in January. Combined with the $20 million Oxygen CEO Alex Grebnev reportedly paid to acquire Maps, the team has now invested into the app at a rate of over $.78 cents for each of Maps’ reported 140 million users. 

While many in the crypto community found the initial investment puzzling — it remains unclear if users of a travel app want or need DeFi functionality — Grebnev believes the user numbers are key to unlocking long-term value:

“Currently, DeFi space has at most circa 1 million users. How much would the Oxygen/Maps ecosystem be worth if Maps.me’s 140 million registered users started leveraging the protocol / platform?”

Part of the user-focused strategy might be a result of Grebnev’s previous efforts with Oxygen. In 2018, he launched a peer-to-peer lending service with the same name, but demand and product-market fit failed to materialize. He lists a number of potential reasons:

“First, it was a business model that didn’t scale – non-custodial peer to peer borrowing / lending of individual assets with no matching engine. Second, the market went down 80% from the time when we started working till 6 months later when we were ready to launch. Third, institutional demand which everybody was expecting – didn’t come through. We decided to pause the project.”

Embedded (de)finance

With Maps.me and a new version of Oxygen looking to replicate prime brokerage services, Grebnev is hoping for a different outcome. He says that internal research indicates that 47% of current Maps.me users “want financial services.” He points to similar user-jacking efforts that are common among tradfi companies. 

“Embedded finance is a big theme. Take QuickBooks introducing bank accounts. Or Apple offering credit cards. Companies leverage their userbases to offer relevant financial services,” he said.

What’s more, in the context of tradfi user-acquisition, the aggregate $110 million Alameda Research and Grebnev have invested into the travel app may actually be a bargain:

“These transactions enabled us to build an ecosystem that integrates DeFi tools with a user base of more than 100 million registered users. It took PayPal 20 years and billions of USD to get to 300m users. It took Revolut 5 years and hundreds of millions to get to 12 million registered users.”

Oxygen’s OXY governance token is currently available to select presale participants. The token will have an IEO on March 11th, following which it will be available on FTX, BitMax, and Serum DEX, per Grebnev.

hedera-makes-inroads-in-africa-as-standard-bank-group-becomes-node-operator

Hedera makes inroads in Africa as Standard Bank Group becomes node operator

Standard Bank Group has become the first African node operator on the Hedera network.

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Hedera makes inroads in Africa as Standard Bank Group becomes node operator

Standard Bank Group — Africa’s largest bank by assets — has partnered with enterprise-grade distributed ledger technology project Hedera Hashgraph.

According to a joint announcement, the African banking giant now joins other major corporations like Google, LG, and IBM as a member of the Hedera Governing Council.

Standard Bank will also become a Hedera node operator, the first in Africa with a focus on utilizing DLT to ease bottlenecks in cross-border trade on the continent.

Across Africa, innovations in domestic payment rails have created faster and efficient transaction systems. However, this advancement is yet to translate to the cross-border payment transaction scene with stablecoins already identified as having the potential to solve these issues.

For Ian Putter, head of DLT and blockchain at Standard Bank Group, the partnership with Hedera is part of the bank’s focus on utilizing decentralized technology to improve cross-border trade in Africa.

Putter told Cointelegraph that the bank views DLT as a viable base-layer for supporting cross-border in Africa and also connect the continent to partners in major markets like China, adding:

“We have completed [proofs of concept] have solutions in production and are partnering with these parties to scale and exploit these cross-border trade solutions. A key focus for us is to continue exploration and experimentation with this technology as it rapidly evolves, through partnerships and leveraging existing solutions to speed up implementation and scaling.”

Putter highlighted the growing interest in central bank digital currencies, or CBDCs, as a pointer to the potential for DLT-based technology to disrupt the global business process.

According to Hedera CEO Mance Harmon, Africa is poised to occupy a leading role in DLT utilization, telling Cointelegraph:

“With services like M-Pesa already widely used, we see a willingness for African companies to embrace new technologies like blockchain and distributed ledger technology to meet the changing needs of their customers. In addition to financial services/DeFi, we also see strong interest from companies in the region in leveraging DLT for use cases in healthcare, energy management, identity, and supply chains.”

solana-(sol),-cosmos-(atom)-buck-the-trend-to-hit-new-highs-after-protocol-upgrades

Solana (SOL), Cosmos (ATOM) buck the trend to hit new highs after protocol upgrades

Bitcoin’s (BTC) sharp correction below $45,000 sent shockwaves throughout the entire market for a second day and many altcoins are fighting to hold the gains they’ve accrued since the start of the year. 

Two exceptions to the current downturn are Solana (SOL) and Cosmos (ATOM), which have both managed to experience minor price breakouts following recent bullish developments for each project.

Data from Cointelegraph Markets and TradingView shows that SOL and ATOM saw initial price dips in the early trading hours of trading on Feb. 23 but both were able to quickly bounce back and outperform the wider market for the day.

Solana receives a boost from DeFi integrations

Solana price broke out on Feb. 22 when Raydium, the first automated market maker (AMM) for the Solana blockchain, was launched. The AMM platform enables faster trades, shared liquidity and new ways for token holders to earn a yield.

The release of Raydium helps to bring the SOL ecosystem one step closer to being a viable competitor for DeFi on Ethereum (ETH ) as traders desperately seek out ways to escape high transaction costs on the network.

Evidence of its growing influence can be found in a recent proposal from SushiSwap codenamed ‘Bonsai,’ which seeks to integrate the SUSHI ecosystem with Solana as a way to mitigate high fees on the Ethereum network.

Although the proposal is still in the early stages and needs to be approved via a community vote, traders responded positively to the news and this may have helped SOL price bounce back and make a new all-time high at $15.88.

SOL/USDT 4-hour chart. Source: TradingView

If approved, SushiSwap users will be able to manage their yield farms and conduct token swaps on the Solana blockchain. The team also said that Bonsai is expected to be live on testnet by the end of Q1, 2021.

VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for SOL on Feb. 22, prior to the price rise. 

The VORTECS™ score, exclusive to Cointelegraph, is an algorithmic comparison of historic and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.

Cointelegraph Markets Pro – VORTECS™ Score (green) vs. SOL price

As seen on the chart above, the VORTECS™ score for SOL reached a high of 83 on Feb. 22, shortly before the price spiked to new a new all-time high.

Stargate helps propel Cosmos higher

The recent bullish outlook for Cosmos is partially due to the recent Stargate update which includes the much-anticipated Inter-Blockchain Communication (IBC) protocol, an interoperability layer for Cosmos blockchains.

The IBC will allow projects like Kava (KAVA) and Band Protocol (BAND), which were built with the Cosmos Software Development Kit (SDK), to easily interoperate and bridge tokens across other blockchains on the Cosmos network. Eventually, the network is expected to work with separate protocols like Binance Smart Chain.

On Feb. 22, ATOM price dropped by 35% to $15.07 but the protocol upgrade news and dip-buying by bulls pushed the price back to $19.83.

ATOM/USDT 4-hour chart. Source: TradingView

Interoperability is rapidly becoming a key feature for blockchain ecosystems that want to survive the current market landscape, and it appears that the Stargate release has provided quite the boost for Cosmos.

The IBC allows projects from across the Cosmos ecosystem to be utilized in the rapidly evolving DeFi sector, bringing a new level of functionality to projects like Kava and Band protocol.

Future integrations with protocols like Binance Smart Chain will further expand token utilization, and ATOM is well-positioned for further upside as blockchain technology increasingly becomes mainstream.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

altcoins-nurse-double-digit-losses-as-bitcoin-bulls-fight-to-retake-$49k

Altcoins nurse double-digit losses as Bitcoin bulls fight to retake $49K

Another wave of selling pressure hit the cryptocurrency market on Feb. 23 as Bitcoin struggles to reclaim the $49,000 level.

Data from Cointelegraph Markets and TradingView shows that Bitcoin fell under intense pressure in the early trading hours on Tuesday and this pushed the price of BTC as low as $44,927 before buyers arrived to stop the descent.

The majority of altcoins and DeFi tokens are now even deeper into their double-digit losses and Bitcoin (BTC) price has dropped by more than $10,000 in the past 48 hours. 

BTC/USDT 4-hour chart. Source: TradingView

At the time of writing, BTC is trading at a price of $48,600, which reflects a 11% decrease for the day but according to Cointelegraph analyst Marcel Pechman, pro traders have looked to buy the dip and opened new leveraged long positions.

Today’s market downturn has overshadowed several positive developments for the cryptocurrency ecosystem, including the news that Bitfinex and Tether have settled their case with the Office of the New York Attorney General and agreed to pay $18.5 million for damages to the state of New York. Both parties also agreed to submit to periodic reporting of their reserves.

Interest in the first Bitcoin ETF in North America has also continued to explode as the Purpose Bitcoin exchange-traded fund has grown to $564 million in assets under management just five days after the fund was launched. Filings also show that the fund added 2,251 BTC being added to the fund on Feb.23.

Pullbacks are a sign of a healthy market

Despite the market-wide carnage, many crypto traders and professional investors view the current pullback as a necessary break that allows overbought assets to retest key underlying support levels.

As pointed out by Twitter user ‘Bitcoin Archive‘, corrections like these are par for the course and were commonplace during the 2017 bull market which had “9 dips between 20-40%”. Despite these reoccurring deep corrections the market still increased by “20 times from its previous all-time” high over the course of 2017.

Significant BTC price pullbacks during the 2017 bull run. Source: Twitter

Summing up how that relates today and where BTC is headed, Bitcoin Archive stated:

“We are now sitting on 2.35x the previous cycle ATH OF 20k. This rally is just getting started”

Traditional markets rebound

Traditional markets also faced early selling pressure on Tuesday morning but they were able to climb back into the green shortly after Federal Reserve Chair Jerome Powell reaffirmed that the Fed will maintain the current accommodative policies, including keeping benchmark rates near zero and asset purchases at the current pace of $120 billion per month.

By the closing bell the S&P 500 and Dow managed were up 0.13% and 0.50% respectively, while the NASDAQ closed down 0.50%.

Altcoins take a beating with recent high flyers hit the hardest

Bitcoin’s $13,000 drop over the past 48-hours has taken a heavy toll on the altcoin market and many of the recent high-flying DeFi tokens took the brunt of the damage.

Daily cryptocurrency market performance. Source: Coin360

Crypto.com Coin (CRO) saw a 33% pullback and Binance Smart Chain’s Venus (XVS) DeFi protocol saw its price drop 24% to trade at $58.63.

A select few projects were able to buck the trend and post positive gains on Feb. 23, as new announcements about blockchain interoperability-related projects provided a well-needed lift to tokens focused on layer-2 and cross-chain transactions.

Solana (SOL) rose 11.23% to trade at $14.94 after the release of its new automated market maker protocol Raydium. Fantom (FTM) price also rallied by 24% after the team announced a collaboration with Yearn.finance and the rollout of a cross-chain bridge to the Ethereum (ETH) network.

BTC/USD daily chart. Source: Coin360

The overall cryptocurrency market cap now stands at $1.44 trillion and Bitcoin’s dominance rate is 62%.

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Layer-2 race heats up as Loopring (LRC) price gains 430% in 2021

Loopring’s increasing DEX volume and token price show the project is emerging as one of the leading layer-two solutions working to address the high gas fees on the Ethereum network.

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Layer-2 race heats up as Loopring (LRC) price gains 430% in 2021

Cross-chain bridges and layer-two solutions have become an important topic of conversation in recent weeks as protocols compete to offer the best solution to skyrocketing transaction costs on the Ethereum network. 

While a lot of the focus in decentralized finance (DeFi) has been on the creation of a sprawling multichain ecosystem following the recent emergence of Binance Smart Chain and Avalanche, those who wish to stay on Ethereum have turned to layer-two solutions like Loopring as their preferred method of escape.

A recent report from Delphi Digital has identified Loopring’s decentralized exchange (DEX) as one of the top layer-two contenders, as it has already settled $590 million in volume in 2021.

Loopring daily volume vs. AMM percentage vs. Orderbook percentage. Source: Delphi Digital

As shown above, the decision to launch an automated market maker (AMM) as part of Loopring v3 led to increased engagement on the platform, and it accounts for 60% to 90% of Loopring’s total volume.

Gas prices on the Ethereum network began rising in late December 2020, and this coincided with an increase in the number of unique wallet addresses interacting with Loopring. This suggests that a number of Ethereum users had already migrated to Loopring’s second layer to escape high fees on the mainnet.

The number of wallets interacting with the Loopring DEX. Source: Delphi Digital

The analysts at Delphi Digital did offer a word of caution, as Loopring’s native LRC token currently accounts for more than 40% of the nearly $250 million in total value locked (TVL) on Loopring v3.

For comparison, UNI comprises 3.4% of the TVL on Uniswap, while SUSHI accounts for 6.5% of TVL on SushiSwap. While the dominance of LRC in Loopring’s TVL has been on the downtrend, and this figure needs to reduce further in order to show a healthy amount of liquidity for other tokens.

DEX fees bring added value to Loopring

One area where LRC beats out UNI and SUSHI is in the price-to-sales ratio, with LRC currently having a ratio of approximately 155, while the value is less than 6 for UNI and SUSHI.

Data from Cointelegraph Markets and TradingView shows that the price of LRC has increased more than 430% since Jan. 2, going from $0.165 to a high of $0.89 on Feb. 12. The altcoin also hit a new record trading volume at  $1.23 billion on Jan. 5 as the layer-two AMM liquidity mining incentives were being initiated.

LRC/USDT 4-hour chart. Source: TradingView

Despite the recent hype around cross-chain solutions that harken back to the “Ethereum killer” days, it would be wise to note that the largest DeFi protocols on Ethereum are committed to the network through the adoption of layer-two infrastructure like Optimism and zk-Rollups.

Loopring’s decision to focus on scalability rather than attract users is now paying off as ERC-20 token holders come to the project’s working solution willingly.

What is yet to be determined is whether a large amount of liquidity will follow suit or wait for layer-one DEXs like Uniswap to deploy on Optimism as a way to help reduce transaction costs.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

us-education-department-promotes-putting-student-records-on-blockchain

US Education Department promotes putting student records on blockchain

The COVID-19 pandemic has exposed flaws across various sectors. As a result, a number of government departments are evaluating blockchain-based systems as possible solutions for challenges involving multiparty workflows, record-keeping, transparency and more. 

For example, the United States Department of Education recently provided funding for the launch of the “Education Blockchain Initiative.” Referred to as the EBI, this project is led by the American Council on Education — an organization that helps the higher education community shape effective public policy — and is designed to identify ways that blockchain can improve data flow between academic institutions and potential employers.

Determined to seek out new technology solutions, ACE announced the “Blockchain Innovation Challenge” at the end of 2020 to find projects capable of reinventing the U.S. education and employment ecosystem. The challenge specifically focused on helping underserved populations that have been hit the hardest by the pandemic.

Louis Soares, chief learning and innovation officer of ACE, told Cointelegraph that as a whole, the higher education sector has been impacted financially by the economic downturn. This has resulted in a decline in student enrollments, placing even more pressure on educational budgets that now require a digital approach:

“Higher education is learning to operate in a new technology-enabled environment. We must explore different ways of creating connections between education and work. This includes finding new approaches to credentialing (and hiring) that leverage the potential of emerging technologies to improve communication among education and training organizations.”

Blockchain gives students control over their credentials

According to Soares, blockchain technology can help empower students by providing them with control over their educational records like degrees and transcripts. This is especially important for allowing seamless transitions to occur when a student transfers schools, or for those who are seeking employment and need to show credentials.

A document from the Education Department states that educational records are generally located at the school a student attends or has attended. It further notes that if a student has transferred schools, those records “may” transfer with the student, but some “may” remain at the school. As such, there are a number of challenges present for students who must obtain their personal records.

The Blockchain Innovation Challenge devoted $900,000 to help solve this problem and announced four Phase 1 winners on Feb. 11. According to Soares, the winning teams — from Arizona, Nebraska, Texas and Utah — showed potential for using blockchain and distributed ledger technology to streamline the sharing of educational records.

For example, one of the winning teams was the UnBlockEd project, which leverages a blockchain-based system to address inequitable transfer credit recognition issues. The project is led by the University of Arizona and the Georgia Institute of Technology, along with various technology providers and academic institutions.

Greg Heileman, vice provost for undergraduate education at the University of Arizona, told Cointelegraph that UnBlockEd empowers students by giving them self-sovereignty over their learning records. Heileman noted that this is achieved through a decentralized identity management system that allows students to control who has access to their learning records, or transcripts:

“We are working to build out a minimally viable product (MVP) that will clearly demonstrate the feasibility of our approach. This MVP will demonstrate how a student in a degree program at any college/university in the State of Kentucky can efficiently transfer to any other program at any other college/university in the state.”

Specifically, Heileman explained that a “degree roadmap” will be constructed to show students how to transfer their prior credits to those in the receiving program. To ensure this, UnBlockEd leverages Fluree, a decentralized data platform that stores secure, verified, reusable data.

Brian Platz, co-CEO of Fluree, told Cointelegraph that Fluree allows for data to be held privately by individuals, yet it also lets other parties view that information. As such, different groups can issue credentials, while those receiving the information can verify the data is accurate:

“This solves the data reusability problem. We use a private blockchain to tokenize data and validate a series of rules that guarantees information adheres to those rules. This is like a smart contract, but heavily data oriented.”

Blockchain solves data transfer inefficiencies

The solution being built by UnBlockEd is extremely important for a number of reasons. For instance, according to a study by the Government Accountability Office, students will on average lose the equivalent of one semester of course work with each transfer.

Heileman further shared that out of 23 million students in higher education, about 35% of them will transfer at least once, and 11% will do it twice during their academic career. He also pointed out that community colleges are disproportionately functioning as a primary entry point for students from historically underrepresented ethnic groups and low-income families. “To put it mildly, transfer articulation is a structural inequity in higher education. Our hope is that the UnBlockEd project will reduce the extent of this inequity,” Heileman commented.

Another winning project came from Texas Woman’s University. This initiative aims to establish a consortium of institutions throughout the North Texas region via a shared credentialing platform. The platform would allow students to store and send their educational records to colleges and employers across North Texas.

Fluree also helped power the Lifelong Learner Project, which aims to develop a digital wallet for teachers to store and access their credentials, certifications and learning resources. This aims to enable teachers to share these verifiable credentials with entities such as state licensing systems, human resources departments and learning management systems.

Implementing is the next step

While each of these projects takes an innovative approach to solving challenges related to educational data sharing, implementing these initiatives will likely take some time.

For instance, Platz explained that there is a supply-and-demand side when it comes to blockchain-based projects. He pointed out that while universities and educational groups can issue students digital credentials, employers are not yet requesting them: “We are still building ecosystems around this involving education and government standards.”

Fortunately, Platz noted that the new administration of President Joe Biden shows potential for implementing new technology standards focused on blockchain and other emerging technologies that can provide benefits. It’s also encouraging to see that other countries have started to store educational certificates and records on blockchain networks.

Matla, for example, was one of the first countries to announce that all educational certificates will be kept on a blockchain. Furthermore, the Massachusetts Institute of Technology, or MIT, created a pilot program in 2017 to issue blockchain-based digital certificates to graduates. While this may be, an MIT Media Lab blog post explaining lessons learned from the project noted that an important takeaway has been that blockchain is a complicated technology and that there are still very few people who understand it.

crossing-the-crypto-chasm:-paving-the-way-to-mass-adoption

Crossing the crypto chasm: Paving the way to mass adoption

Since its inception in 2009, cryptocurrency has become both a cultural and financial phenomenon. As news headlines tout its ever-increasing exchange values and disruptive potential, investors and banking experts have gone into a frenzy. And yet, while digital money is on a lot of people’s minds, there is still a lack of understanding about what it is and what it can do among mainstream consumers.

This is because cryptocurrency is a discontinuous or disruptive innovation, and its adoption demands significant consumer behavior changes and the infrastructure of supporting businesses. In order to succeed and get closer to the point of mass adoption, cryptocurrency as a product needs to create a bandwagon effect and build momentum so that it becomes a de-facto standard. This process is called a technology adoption lifecycle, and media plays an essential role in it. The crypto industry needs a marketing model that can effectively publicize its continuous changes and innovations.

The chasm

In his 1991 book Crossing the Chasm, Geoffrey Moore explains that every disruptive technology must pass through five stages of adoption: In the first stage, innovators tinker with new technologies; in the second, early adopters discover it; in the third and fourth stages, an “early majority” and a “late majority” — the two biggest groups — hop aboard; and in the final stage, the “laggards” arrive.

Plaguing the adoption process is what Moore calls “the chasm.” The chasm separates the early adopters from the early majority because the demands of these two groups are often vastly different. Unable to gain a foothold in the mainstream, new technologies will fall into the chasm and perish. Anyone who has ever studied the culture of Silicon Valley has probably seen some version of Moore’s schema dozens of times. If it seems more relevant now than before, it’s because it explains the adoption of cryptocurrency so aptly.

The recipe for mass adoption

How do new technologies cross the chasm? According to Moore, they have to connect with the early majority. These first consumers are hungry for information about the new tech: how it works and how it can change people’s lives. Most importantly, they need a story told in their own language to overcome their skepticism.

Without a compelling story, the new technology is unlikely to reach the early majority of adopters. This is where media professionals get into the game. They are the ones who weave that story and educate the public. As Moore sees it, they play a more important role in the industry than many people think.

Crossing the crypto chasm

In the early 2010s, cryptocurrency’s revolutionary potential was understood by a core group of cypherpunks and cryptography enthusiasts. But for the vast majority, it was an enigma — if it was known at all.

That began to change in 2015 as crypto pioneers and technologists developed alternate crypto assets, such as Ether (ETH). Between 2017 and 2020, digital cash was scooped up by early adopters. And in 2020, cryptocurrency had reached a critical juncture: It was on the road to the so-called “Big Scary Chasm.”

The first chasm it crossed was in 2017. Full of promise, it turned early adopters into enthusiasts and enthusiasts into visionaries. The new technology could no longer be dismissed: It seemed to foreshadow a great leap forward, a future whose economy would look radically different. And like a killer app that takes the world by storm, it went public in a big way — with an initial coin offering.

In 2020, large institutions, such as PayPal, Square, MicroStrategy and JPMorgan, spearheaded cryptocurrency’s bull run, while retail investors — who found it easier than ever to buy Bitcoin (BTC) — fueled the momentum. But in order to continue its rise and to shift from the early majority to the late majority, cryptocurrency still needs to demonstrate its viability on a mass scale.

Related: Will PayPal’s crypto integration bring crypto to the masses? Experts answer

According to Moore, for a new technology to break into the mainstream, it needs to find a beachhead. Crypto has certainly found its own: consumers looking to make fast and cheap cross-border transactions without third-party intervention. As it happens, many of these consumers live in countries with economic and political instability, which explains why Bitcoin is booming in places, such as Argentina, Iran, Turkey and Nigeria.

Sounds like crypto is on the right track to adoption? There are still risks, though. Sales-driven companies that pursue the whole crypto market, but lack customer and product focus, can easily fall afoul of the dreaded chasm.

Fighting its way into the mainstream

So, what’s the recipe for mass adoption? New customers need to know why they should buy into the crypto market, and how — this is why at this stage of the market, developing a robust communications strategy in place is crucial.

Vigorous marketing campaigns show us the value and significance of new products. In the case of cryptocurrency, media must take a three-pronged approach: explaining digital cash in terms that everyone can understand, getting influential thought leaders to back it, and acquainting customers with the competition, primarily banks, the Federal Reserve and equities — those intent on squashing cryptocurrency.

Moreover, if crypto as a product wants to acquire pragmatic customers, those who are on the edge of the technology adoption lifecycle, it needs to take into account that these customers want to buy from a market leader with a strong reputation. That is why establishing thought leadership is the key in any communication strategy.

Still not sure whether the crypto industry should focus on communications? Well, the process has already started, and it will likely snowball from here, gaining momentum as more opportunities to invest in cryptocurrency emerge.

In the coming months, we expect to see big developments in the industry, like major banks launching crypto custody services, brokerages opening up access to crypto products, new retailers accepting digital cash, and big institutions launching applications on public blockchains.

But perhaps the most important change will be in how we talk about cryptocurrency, where the conversation will shift from Why should I invest? to Why aren’t we already invested?

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Anastasia Golovina is a communications specialist with extensive experience in crypto projects. She has managed communication for various crypto startups in the U.S. and Europe, such as Ledger, Celsius Network, Algorand, MEW, Bitfury, Waves and others. Her specialties include media relations, crisis communications and community management.

the-united-arab-emirates-chase-crypto-and-blockchain-adoption

The United Arab Emirates chase crypto and blockchain adoption

For a long time, the United Arab Emirates has been one of the most progressive crypto countries in the world. For example, government-owned licensing firm Kiklabb allows clients to pay for their visa and trade license fees via various digital assets to the Dubai Financial Services Authority, which announced its decision to work on a holistic crypto regulatory framework as part of its 2021 business plan.

In fact, as a result of Dubai’s crypto-friendly policies, Ripple, a firm that has recently been in murky waters with the United States Securities and Exchange Commission, announced its decision to open an office in the region. Furthermore, the UAE and Saudi Arabia are reportedly working on a joint central bank digital currency research initiative that has been dubbed “Project Aber.”

Commenting on why the UAE is fast becoming the destination of choice for some crypto/blockchain startups, Mazdak Rafaty, managing partner for Ludwar International Consulting FZC, told Cointelegraph:

“If you ask anyone from the tech and startup sector anywhere in the world about the speed of regulations of the authorities, you will get the same answer: ‘It could definitely be faster.’ However, UAE has always been a pioneer in the adoption of new technologies and building support regulatory frameworks for their development.”

He further opined that blockchain as a novel disruptive tech was recognized very early by UAE regulators, as a result of which many governmental organizations were instructed not only to facilitate its development but actually utilize its advantages within a comprehensive e-government strategy.

Lastly, Rafaty added that while blockchain adoption was swift, cryptocurrencies definitely took more time to understand, utilize and regulate. Even in terms of crypto adoption, Abu Dhabi was one of the first regions to introduce a well-thought-out framework for exchanges and different types of tokens back in 2018.

The UAE already has the base

At a time when many countries are still struggling to formulate comprehensive strategies to adopt crypto-enabled technologies in a streamlined fashion — with some even looking to implement blanket bans — the UAE is seemingly laying the foundation for a digital ecosystem.

Providing his insights on the subject, Mohammed Abbas, co-host of the Dubai Global Blockchain Congress, told Cointelegraph that many projects, such as decentralized ride-sharing platform Drife and blockchain-based fantasy sports ecosystem DeFi Eleven, have been able to attract interest from the private offices of UAE’s Royal Families as well as other big-name players, such as San Francisco-based VCs like the Draper Walled Garden, adding:

“In a bid to set the pace and become a leader in blockchain technology, UAE launched Blockchain Strategy 2021 — pursuant to which 50% of government transactions will have been conducted using blockchain technology by 2021. This, in turn, will further attract talent and spur innovation in this region.”

Similarly, on the subject, Marwan Alzarouni, CEO of Dubai Blockchain Center, opined that the UAE — Dubai, in particular — has always been forward-thinking and fast-moving when it comes to any futuristic technology, with cryptocurrencies and blockchain being no different.

He highlighted that Dubai launched its “Blockchain Strategy 2020” in 2016 and is already achieving its goals. Alzarouni further pointed out that when it comes to cryptocurrency regulations, the UAE Securities and Commodities Authority issued its regulation in 2020, which was swiftly followed by the country’s central bank revealing the Stored Value Facilities regulation, which seeks to provide clarity as to how crypto and other digital assets may be used as a stored value when purchasing various goods and services.

The aforementioned regulations are quite in-depth and seem to help to position the UAE as a leader in the cryptocurrency adoption space. Not only that, but it also stands to provide a solid foundation for startups and investors in the UAE with the right and safe environment in which to operate.

The UAE regulatory difference

Elucidating his thoughts on why the UAE regulatory landscape is different than most other nations today, Abbas pointed out that the Know Your Customer, Anti-Money Laundering and Counter-Terrorist Financing laws that are currently in place in the region are progressive when compared to those of other “global financial hubs.”

On the subject, Saeed Al Darmaki, co-founder of Alphabit crypto fund, told Cointelegraph that the UAE has been forward-looking with its adoption of crypto-enabled technologies for a long time, with the Arab powerhouses’ regulatory outlook looking very positive at the moment, adding:

“Regulated crypto exchanges will launch in the next few months. With ESCA regulation, local banks should be more open to crypto transactions on local bank accounts. Incubators and accelerators are supporting crypto companies here now and will continue to do so. The government is very supportive of blockchain technology.”

A similar sentiment is shared by Austin Alexander, managing director for the MENA region of the cryptocurrency exchange Kraken, who believes that to date, the UAE has been among the most proactive locations globally in regulating cryptocurrency. In this regard, he pointed out that Abu Dhabi Global Markets was one of the first regulatory jurisdictions to draft a framework from the ground up specifically for digital asset exchanges, adding:

“No regulations are perfect, and as crypto businesses launch and expand in the UAE, the FSRA or other regulators may come to find that there is room for improvement. That being said, the UAE is clearly establishing itself as one of the world’s most forward-thinking governments in regard to cryptocurrency and innovative industries broadly.”

Are locals supportive?

On the subject of how the local UAE population views the country’s tech-friendly stance, Rafaty opined that most residents have acknowledged the government’s blockchain initiatives. However, he did add that it will be some time before these projects actually start to bear fruit.

Additionally, he also shared that on the crypto side of things, most of his private and professional contacts in UAE are, to some degree, involved and/or invested in various crypto and altcoin offerings thanks in large part to the bullish growth that has happened in the sector over the course of the last few months.

Similarly, Alexander believes that UAE residents and businesses tend to embrace new innovation more enthusiastically than most, and cryptocurrency has been no exception. However, he added that for some time now, UAE residents have had some difficulty investing in digital assets, as there have been few legitimate local gateways for crypto exchange, adding:

“This has delayed adoption and reduced the ability for local businesses to build on the technology. With recent new regulations onshore that will help to further foster innovation, we should soon see access to virtual assets increase markedly. With domestic virtual asset markets in the UAE, which have been the missing piece of the puzzle until now, we should see a massive boom in economic growth surrounding virtual assets.”

Lastly, Abbas believes that local residents and businesses in the UAE have quickly warmed up to the utility of the blockchain ecosystem and have been looking at cryptocurrencies as not just another financial instrument for monetary gains but also as a means to exchange and settle transactions among users operating within this domain.

In his view, the barriers for entry are getting lower by the day and that soon, mainstream retail crypto offerings will flourish within the country. “UAE is probably the only country that has been able to host some of the largest blockchain summits and bring crypto pioneers, think-tanks and investors on a common platform to address the global issues concerning financial inclusion and neo-banking solutions”, Abbas added.

Some of the the interviewees have participated in the Global Blockchain Congress in Dubai on Feb. 9, hosted by Agora.