Day: February 2, 2021

Robinhood CEO Unintentionally Makes the Case for DeFi

by Decrypt

In brief

  • Robinhood last week halted trading for certain stocks due to cash flow issues.

  • The trading platform’s CEO today called for real-time settlements to address the problem.

  • That’s what decentralized finance does.

Last week, citing cash flow issues, trading app Robinhood temporarily halted users from buying popular stocks such as GameStop and AMC as Reddit-using day traders drove up trading volumes and prices hit record highs.

Robinhood’s CEO wants consumers to know he’s just as upset about the stoppage as they are.

In a blog post today entitled “It’s Time for Real-Time Settlement,” Robinhood CEO and co-founder Vlad Tenev proposed a change in industry regulations that would allow securities trades to settle near instantaneously, meaning money would change hands in minutes rather than days. Though he never mentions decentralized finance (DeFi) or blockchain technology, that’s exactly what such technology allows. 

“There is no reason why the greatest financial system the world has ever seen cannot settle trades in real time,” Tenev wrote.

Tenev finds fault in particular with the securities clearinghouse system. A clearinghouse is an intermediary that matches buyers to sellers, collects payments, and finalizes trades. The current system, overseen by the Securities and Exchange Commission and the private Depository Trust and Clearing Corporation, requires a two-day settlement period.

“Investors are left waiting for their trades to clear, and the clearing brokers have their proprietary cash locked up, until the settlement is final days after the trade,” Tenev wrote. “The clearinghouse deposit requirements are designed to mitigate risk, but last week’s wild market activity showed that these requirements, coupled with an unnecessarily long settlement cycle, can have unintended consequences that introduce new risks.”

In contrast to traditional financial settlement, blockchain-based decentralized finance applications disintermediate trading. As a result, the trades on a DeFi platform settle quickly.

“Decentralized exchanges on Ethereum, like Uniswap and SushiSwap can’t be censored, and settlement can occur as quickly as a block can be mined (about 13 seconds),” Tom Bean, founder and principal of margin trading platform Fulcrum, told Decrypt. “Recent events show the need to modernize the antiquated technology and processes in place in traditional financial markets. TradFi is just playing catchup to what DeFi solved a long time ago.”

Rob Rosenthal, CEO of blockchain project RevPop and a former Goldman Sachs VP who specializes in clearinghouses, told Decrypt that it’s possible for clearinghouses and real-time settlements on a blockchain to co-exist—and that RevPop was created to address just such an issue.

“The systems in traditional finance are indeed antiquated,” he said. “Atomic record keeping with a decentralized guarantee fund (or even an atomic clearing house that employs a traditional guarantee fund model) solves this problem!”

Robinhood needed multiple cash infusions in the last week totalling $3.4 billion—not because it was doing poorly, but because it didn’t have enough on hand to cover all the trades. It also borrowed money from banks to raise the cash needed to get stock trading up and running.

Even so, it’s still maintaining share limits on five stocks that remain popular: AMC Theatres, Express, GameStop, Naked Brand Group, and Nokia.

That hasn’t stopped members of the House Financial Services Committee, including Chairwoman Maxine Water and Alexandria Ocasio-Cortez, from calling for investigations into Robinhood’s trading halt.

Tenev made it clear he wants everybody to get together and work it out. 

“The industry, Congress, regulators, and other stakeholders need to come together to deploy our intellectual capital and engineering resources to move to real-time settlement of U.S. equities,” he wrote. “Technology is the answer, not the oft-cited impediment.”

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China’s BSN to Add Support for Cosmos (ATOM)

by Btcmanager

China’s Blockchain Services Network (BSN) has revealed plans to integrate the pemissioned version of Cosmos (ATOM) into its platform. The BSN’s primary objective is to foster blockchain adoption as well as interoperability between various private distributed ledger technology (DLT) networks, according to a Ledger Insights report on February 2, 2021.

Cosmos (ATOM) Live on BSN 

While the Chinese government have since shut its doors against public cryptocurrencies such as bitcoin (BTC), the Asian giant, however, remains focused on being a global leader in the blockchain technology ecosystem.

In the latest development, the nation’s Blockchain Services Network (BSN), is set to offer support for the permissioned version of Cosmos (ATOM), a distributed ledger technology (DLT) network that aims to make it possible for various blockchains to exchange data in a seamless manner.

Per the team, the permissioned version of the Cosmos network is dubbed WenChang Chain named after the Hainan province city. The BSN pilot project was first conducted in October 2019 and it officially went live in April 2020, with a primary mission of making it possible for small and medium enterprises (SMEs) to adopt blockchain technology in a frictionless and cost-efficient way.


Interoperability Across Blockchains 

Commenting on the addition of Cosmos, Yifan He, Executive Director of BSN and CEO of Red Dat Technology reiterated that the success of the project is a significant achievement for China’s blockchain ecosystem.

“BSN’s Open Permissioned Blockchain (OPB) initiative is a major milestone for China’s blockchain development. China had been longing to embrace public chain technologies for years but there wasn’t an effective way to do so because the regulators are not a fan of cryptos. We are working hard to foster interoperability across all blockchain ecosystems. BSN’s OPBs will interoperate with traditional permissioned frameworks within the BSN platform and other OPBs outside the system.”

Described as an Internet of blockchains by its creators, Cosmos (ATOM) is dedicated to fostering an ecosystem of DLT networks that can share data and value in a frictionless way. 

At press time, the price of Cosmos’ native cryptocurrency, ATOM is up by 10.45 percent in the past 24-hours, trading at $8.91, with a market cap of $1.86 billion, as seen on CoinMarketCap.


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Why a GameStop-Inspired Mania Is Unlikely in China’s Stock Market

by Coindesk

Could GameStop-style short-selling speculation show up in China’s stock market? 

Last week’s market frenzy in the U.S. may have inspired China’s crypto community to make more bets ondogecoin (DOGE) and bitcoin (BTC), but even the boldest traders are unlikely to try stirring up that kind of short-selling speculation in Chinese stocks.

“The Chinese financial regulators are closely monitoring who are trading what in the Chinese stock market. Retail investors involved in large-scale malicious shorting could be put in jail,” said Jason Wu, CEO of crypto-learning firm DeFiner. 


“The market cap of the crypto market in China is extremely small compared to the Chinese stock market, so all the authorities’ eyes are on the disruptors of the stock market,” Wu added.     

The China Security Regulatory Commission (CSRC), the top financial watchdog in the country, has been closely monitoring short-selling activities since a massive crash in 2015.    

On the Shanghai exchange, one-third of the value of A shares, which are stock shares of mainland China-based public companies, was wiped out within a month back then, and more than half of the listed companies filed for a trading halt to prevent further losses. 


While the cause of the historic drop remains unclear, some of the most prominent economists blamed short-sellers for the crisis. Short sellers bet a stock they sell will drop in price.

“It is the margin trading and short-selling that killed the bull market before the [2015] market crash,” Shuwei Liu, researcher at the Finance Research Institute of Central University of Finance and Economics, said in a July 7, 2015, op-ed titled, “Chinese Stock Short Shellers Should Be Heavily Punished.”  

“The A shares are still an emerging market. The CSRC does not have the ability to get the leverage tools under control,” Liu wrote then. “Under these conditions, we are giving the illegal A shares short-sellers a weapon by opening up short-selling.” The CSRC allowed the margin trading and short-selling system in March 2010. 

The central bank accused foreign financial institutions of market manipulation by shorting large quantities of Chinese stocks, implying the U.S investment bank Morgan Stanley caused some of the troubles in the Chinese stock market. 

“While Chinese retail investors could technically carry out shorting stocks on a small scale, there is no way the financial regulators would let anything like the GameStop short squeeze happen to the Chinese stock market,” DeFiner’s Wu said. 

It would be logistically challenging for Chinese retail investors to organize a GameStop campaign. A key player in the GameStop story is the social media platform Reddit, where anonymous users can meet and discuss shorting strategies on undervalued stocks. 

The majority of 177 million Chinese retail investors, who hold 28.6% of the total Chinese stock market value, communicate with each other in groups on domestic social media platforms like WeChat, QQ or Weibo, where moderators can censor “illegal content” on the platforms. 


“Unlike many tech-savvy crypto traders, many retail stock investors do not have VPN or any other kind of access to encrypted messaging apps such as Telegram or Signal,” Wu said. “I can’t imagine a large group of people would be allowed to talk about shorting stocks on a public forum such as Zhihu,” the Chinese answer to Reddit.     



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Will Amazon’s New CEO Embrace Crypto?

by Decrypt

In brief

  • Jeff Bezos is stepping down as Amazon CEO.

  • He’ll be replaced by Amazon Web Services CEO Andy Jassy.

  • Jassy launched AWS’s Amazon Managed Blockchain service.

Jeff Bezos, the founder of online retail giant Amazon, announced today that he will step down as CEO later this year. Andy Jassy, who currently leads the corporation’s cloud computing subsidiary, Amazon Web Services (AWS), will take the reins in Q3.

Under Jassy’s leadership, AWS introduced Amazon Managed Blockchain, a service for developers looking to build in Hyperledger Fabric or Ethereum (Preview) without supplying their own hosting or hardware.

As the CEO of America’s biggest tech company, Jassy may want to look at integrating cryptocurrency payments.

Jassy’s enthusiasm for blockchain tech isn’t boundless. At a 2018 AWS keynote, he said, “We just hadn’t seen that many blockchain examples in production or that couldn’t pretty easily be solved by a database.” Therefore, instead of building an Amazon blockchain, Jassy directed energy toward Amazon Quantum Ledger Database. Like blockchains, it makes claims to transparency, immutability, and cryptographic security. Unlike blockchains, it relies on a “central trusted authority.”

But this isn’t 2018. Jassy will take control of the world’s third-largest company at a time when corporations are increasingly looking for ways into crypto, not blockchain. 

Facebook has spearheaded the Diem Association as it eyes a tokenized payments system that will work across its various social media platforms. Twitter CEO Jack Dorsey has relied on the work of cryptocurrency veterans to jumpstart a decentralized social media standard.

Given Amazon’s status as the United States’ top online seller, its stance on crypto is hugely relevant for cryptocurrency adoption. In 2014, Overstock.com became the first major US retailer to accept Bitcoin. It’s since been joined by companies and organizations as diverse as Wikipedia and KFC. But no one gets as many eyeballs—and wants to facilitate seamless payments—as much as Amazon.

While users of Purse.io can shop with Bitcoin or Bitcoin Cash in Amazon, a complete integration of crypto payments would provide users with payment options beyond their checking and credit card accounts. 

PayPal, which isn’t directly integrated to Facebook, has already taken baby steps toward integration with payments. Last year, it integrated cryptocurrency purchases on its platform. Alternatively, Amazon has the clout, just as Facebook does, to create its own token.

Easier said than done. As BitPay’s director of product, Sean Rolland, told Decrypt in November, “To directly take Bitcoin as a method of payment, Amazon would have to build processes and procedures to accept, hold and manage Bitcoin and thousands of other cryptocurrencies.”

Moreover, he said, “They would have to assume the inherent market volatility risks associated with holding crypto on their balance sheet and selling crypto to/through a crypto exchange in exchange for fiat currency.”

Still, Jassy is an innovator. As the founder of AWS, he saw that Amazon could dominate outside of retail by owning the infrastructure. Now, as the incoming CEO of the parent company, one of the key questions he’ll face is whether the company should ride the Web3 wave.

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This ‘NFT’ Web Domain Just Sold for Record-Breaking $84,000

by Decrypt

In brief

  • Namebase is a startup that facilitates access to Handshake, a decentralized domain name service.

  • Jehan Chu, an investor, just bought Handshake’s .nft domain through Namebase.

  • He paid $84,000, or approximately 680,000 HNS tokens.

Jehan Chu, a Hong Kong-based crypto investor, says he purchased the top-level domain name “.nft” from the decentralized naming service Handshake. 

Namebase, a startup that streamlines the process of purchasing and selling domain names through Handshake, says it helped Chu buy the “.nft” top-level domain for $84,000, or about 680,000 in the Handshake blockchain’s native token, HNS. The price tag for the “.nft” domain makes it a record purchase, according to Namebase CEO Tieshun Roquerre.

In a tweet, Chu revealed that he’s also an investor in Namebase.

And since .nft is a top-level domain (like .com or .net), Chu can now issue as many subdomains as he wants.

Handshake offers an alternative to the traditional DNS (domain name service) that’s been the dominant website naming system since the early days of the internet. Domain names, like decrypt.co, eliminate the need to memorize specific IP addresses, but they’re also overseen by central authorities (like ICANN). Everything ending in “.com,” for example, is registered through a company called Verisign.

Handshake aims to put the entire naming process on its own blockchain. The 100,000 most popular domains (as determined by the Amazon-owned internet analytics company Alexa) are off-limits for now, but unlike ICANN, Handshake allows you to register any other domain you want via auction. These can be longer than traditional domain names, and involve special characters like emojis (the bidding for .🧙‍♂️ ends in six days!).

One potential drawback is that domain names registered through Handshake can’t actually be accessed through mainstream browsers (at least, not without a workaround), since they live exclusively on Handshake’s blockchain.

That could change, though: the crypto-friendly privacy browser Brave has already implemented access to IPFS domains, which provide similarly “censorship-resistant” websites, and according to an old tweet from the CEO, the company has at least thought about supporting Handshake.

But for now, domain names like .nft may still feel like investment opportunities rather than practical purchases.

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Band, Loopring (LCR) and Cream secure a slice of DeFi with new partnerships

by Cointelegraph

The U.S. dollar lost about 7% of its value in 2020, while Bitcoin rallied about 300% during the same period. As Bitcoin’s institutional adoption increases, United States companies may start to diversify their treasury with other stores of value, and Bitcoin (BTC) stands a good chance to garner a portion of it.

Crypto market data daily view. Source: Coin360

Ark Invest’s latest report, “Bitcoin: Preparing for Institutions,” shows that even a paltry allocation of 1% by companies from the S&P 500 could boost Bitcoin’s price by $40,000. However, analysts at Ar believe that the allocation is likely to be in the range of 2.5% to 6.5%, which “could impact bitcoin’s price by $200,000 to $500,000.”

Even as Bitcoin’s price consolidates and readies for the next leg up, several altcoins have been rising, backed by strong fundamentals and investors’ high expectations of their upcoming products. Let’s look at three such tokens today.