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Compound Treasury Launches Borrowing for Institutions

by Blockchain NewsSeptember 15, 2022

Compound Treasury, an institutional DeFi yield platform backed by the Compound Finance protocol, announced on Wednesday a launch of a new crypto loan service that enables institutions to borrow from the platform using digital assets as collateral.

Accredited institutional investors can borrow US dollars or USD Coin (USDC) from the platform using Bitcoin, Ether, and supported ERC20 tokens as collateral.

Institutions will pay interest on their loans, generating yield for the DeFi users whose stablecoins Compound lent out.

Compound Treasury’s borrows and loans are managed by smart contracts, this means the entire position is transparent to the public (a clear difference from the centralized lenders).

Borrowing is offered with an open-ended term and no repayment schedule, providing clients with the flexibility to draw liquidity and repay balances as they see fit–for as long as they (borrowing) remain overcollateralized, Compound said.

The firm said the liquidity to support these loans is provided by Compound Treasury clients and the Compound Protocol. The collateral put up by borrowers will remain in the platform’s wallet for increasing transparency and the safety of customers’ funds.

DeFi Appears Defying Bear Markets

The development shows that Compound is trying to grab the market share of the institutional crypto borrowing business that recently stunned centralized competitors like Celsius Networks, Voyager Digital, BlockFi, among others.

The new borrowing service comes as a response to the leverage-tinged disaster that shook centralized crypto lending firms three months ago when their loans to Three Arrows Capital and others went bust.

The recent crash in the crypto markets had all sorts of ripple effects across different areas of the market. The DeFi lending market was one of the segments that was severely tested.

Some of the most prominent protocols that have been heavily hit include Terra, Celsius, and Three Arrows Capital, among others, as well as Anchor (ANC) – the once-popular crypto savings platform powered by Terra – whose total value locked (TVL) has dropped 99% in June.

However, there exists a small sector within DeFi (the likes of DeFi lending protocols that allow users to trade, borrow, lend, and invest without the need for centralized intermediaries) that has shown signs of resilience despite periods of stress.

DeFi lending protocols such as AAVE and Compound have continued to see healthy demand in both lending and borrowing activities of institutions. This is evidenced by the continued growth in total demand for loans.

This healthy demand comes amidst traditional financial institutional investors demanding greater exposure to DeFi. Several crypto hedge funds and venture capitalists have expressed interest in digital assets due to opportunities to participate in DeFi ecosystems.

The main reason for interest in digital assets is their high potential upside. The higher risk-adjusted returns being gained from DeFi lending protocols make sense for investors in the current inflationary environment.

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Russian Crypto Startup InDeFi to Launch Ruble Stablecoin following DAI Model

by Blockchain NewsSeptember 15, 2022

InDeFi, a Russian crypto startup founded by the former owner of Russia’s National Standard Bank, Alexander Lebedev, has announced plans to introduce a ruble-pegged stablecoin on the Ethereum blockchain.

Sergey Mendeleev, the Co-founder and CEO of InDeFi, made such revelations on Wednesday, September 13, at the Blockchain Life conference in Moscow.

Mendeleev, the founder of the Garantex cryptocurrency exchange, which was sanctioned by the U.S. Treasury in April, said that the new stablecoin project has nothing to do with the Bank of Russia’s digital ruble.

Mendeleev said the InDeFi’s crypto ruble will be decentralized, and one InDeFi token will be equal to one ruble fiat currency.

He further stated that a trial version of the stablecoin with minimal features is available for testing and feedback.

“The coin will not only make it easier for Russian citizens to access international cryptocurrency exchanges but also, after changes in legislation, provide transactions with foreign counterparties via crypto,” Mendeleev said on stage.

He explained that the crypto ruble will follow the model of MakerDAO’s DAI algorithmic stablecoin. This means that the issuance of the ruble stablecoin will be performed by a decentralized smart contract with over-collateralization.

In MakerDAO’s system, users lock Ether (ETH) in a smart contract and take out loans in DAI stablecoin. The loans are backed by the Ether collateral locked in the smart contract escrow.

Mendeleev acknowledged that recently InDeFi has not been performing well, just like any other DeFi project on the falling market. He mentioned that the DeFi startup is looking for new forms of business and apps to diversify and stabilize its operations.

“Just imagine, it would be as easy to trade ruble on DEXes as USDT, for example,” he said, referring to decentralized cryptocurrency exchanges and Tether, the largest dollar stablecoin by market cap.

Last year, Lebedev and Mendeleev introduced InDeFi, a service that offers loans in stablecoins.

Why Russia Now Embracing Cryptocurrency

Last week on September 6, Russia initiated talks with several friendly countries about launching clearing platforms for cross-border settlements in stablecoins.

Deputy Finance Minister Alexey Moiseyev revealed that the country is exploring stablecoins to make payments with friendly nations.

According to Moiseyev, Russia is working with a number of countries to create “bilateral platforms” with “tokenized instruments” to avoid using U.S. Dollars and Euros.

The Deputy Finance Minister did not mention which countries they are working with nor specify what the “tokenized instruments” would be pegged to.

In July this year, Putin signed a law banning Russian citizens from using digital assets to make payments. However, last week, the Deputy Finance Ministry disclosed that the country expects to resolve issues related to cross-border payments in cryptocurrencies this autumn session.

The West heavily sanctioned Russia after it invaded Ukraine in February. As a result, Russia’s access to the Dollar and Euro markets has been limited and it is hitting the country’s economy hard.

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Tagged : Crypto / DAI / INDEFI / Ruble / Russia / Stablecoin

Opinion: The Merge- Key Questions to Answer

by Blockchain NewsSeptember 15, 2022

Now that Ethereum’s Merge is upon us, it’s time to delve into some of the issues and answer some of the questions that often come up about crypto’s biggest event of the year.

Will The Merge hasten institutional adoption of Ether?

In crypto lore, there is a great event that has long been foretold: the arrival of “the institutions” — like pension funds, corporate treasures, and dare I say, sovereign funds. There are already a few of these entities that hold some crypto, but there are many more sitting on the sidelines.

Those entities that do hold crypto, which include ETFs in Canada, Fidelity Investments, and the nation of El Salvador, have been focused on Bitcoin (BTC). “BTC, the largest cryptocurrency by market cap, is the gateway — and indeed the only stop — for many institutions that ventured into the cryptocurrency market. As of June 2022, 6.47% of all [B]itcoin that will ever exist is held by institutions,” CoinDesk reports.

After The Merge, will Ether (ETH) also be bought up by institutions? Well, in our August report in partnership with Nansen, Bybit analysts concluded that there was “no consensus” among the smart money and institutional investors surveyed regarding their attitude toward short-term trading around The Merge. Instead, our analysts found that “smart money” wallets (which include institutions and market makers) were more likely to accumulate ETH with the intention of holding long-term.

Note that the wallets we surveyed are already active in the crypto markets. As for the rest of the institutions, if their Bitcoin investments serve them well, then it won’t be long before they examine another crypto asset.

How long will it take for ETH to become deflationary?

Since the implementation of proposal EIP-1559 in August 2021, Ethereum has been burning a portion of its ETH transaction fees. However, due to the large amount of ETH being issued to pay miners for securing and validating the network, even with the burn, ETH supply has still been slightly inflationary over the past 12 months, according to data from ultrasound.money.

The Merge will change that by drastically reducing the amount of ETH issued while keeping the burn rate in a similar range. Ethereum researcher Justin Drake has created a sheet that estimates three different scenarios for the supply of ETH post-Merge.

Taking Drake’s most conservative calculations, the blockchain will need to issue a maximum of 963,000 ETH per year to pay validators who secure and run the network. The annual fee burn amounts to 1.5 million ETH. The result? Well, ultrasound.money suggests the supply of ETH will soon become deflationary by 1.5% per year.

Take these numbers with a pinch of salt as they are based on the average network fees from the last 12 months, which have been significantly higher than they are at present. With macroeconomic headwinds forecast to last a while, it may take some time for Ethereum to manifest these predictions.

Will ETH ever overtake BTC as the largest cryptocurrency by market cap?

This question has been debated for so long in crypto circles that it’s been given its own name: “the flippening”. The Merge is just one of a series of upgrades planned for Ethereum. And if they are all successful, the future network’s power could flip Bitcoin.

But it’s still very much hypothetical at this time, so I’m not betting the family farm on it just yet. To sober up, let’s take a look at some historical data.

If you plot ETH’s market cap against that of BTC, then it’s clear that ETH has been moving strongly against BTC’s dominance as of late. On the other hand, historically, we have seen ETH make very strong moves against BTC but each time it has topped out in the 50-55% range, which is where we find ourselves today.

Whether or not “this time is different” — as they say — is up for debate.

About Author

Nathan Thompson, lead tech writer for Bybit

Disclaimer: Nothing herein should be construed as investment advice, or any offer, or solicitation to offer, or recommendation, of any DeFi product.

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Tagged : Blockchain / Ethereum / Merge / Opinion

SWIFT Payment System Embraces Blockchain Technology

by Blockchain NewsSeptember 15, 2022

The Society for Worldwide Interbank Financial Telecommunication (SWIFT) is making a targeted move to integrate blockchain technology in a bid to drive efficiency in some of its international financial operations.

As reported by Bloomberg, citing a post from the body, the payment enhancement will be in collaboration with Symbiont Inc, a blockchain startup with innovative fintech solutions.

The SWIFT blockchain pursuit will be used to create “efficiencies in communicating significant corporate events,” like dividend payments and mergers, SWIFT said in its post.

SWIFT presents one of the most robust financial messaging infrastructures for companies worldwide. The platform helps encode a message that can easily be understood by members signed up on its platform. The SWIFT system currently has over 11,000 users spread across 200 countries.

The collaboration with Symbiont, as well as Vanguard, Citigroup, and Northern Trust, will see SWIFT automate corporate action workflow using Symbiont’s technology platform, Assembly. The connections through Assembly will make the system more accessible, functional, and faster with the aid of its embedded smart contracts.

“By bringing Symbiont’s Assembly and smart contracts together with SWIFT’s extensive network, we’re able to automatically harmonize data from multiple sources of a corporate action event,” said Tom Zschach, chief innovation officer at SWIFT. “This can lead to significant efficiencies.”

The deal brings together the compatibility of SWIFT’s technology with Symbiont’s blockchain tech footing to take global transaction communications a step further.

SWIFT plays a vital role in the movement of funds around the world. Notably, the platform has not been immune to attacks as it has suffered targeted breaches in the past. Blockchain technology may be able to compete with and perhaps solidify the existing security infrastructures of the SWIFT body.

SWIFT came into more prominent limelight when the war in Ukraine broke out. The private organization sanctioned Russia, cutting off Russian banks from accessing the SWIFT system and thus the global financial sector. With its targeted efforts into blockchain technology, the payment processing system is on pace to enhance the platform’s overall performance.

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Tagged : Blockchain / Swift / SYMBIONT / Technology

Ethereum Classic Hash Rate Surges 200% Ahead of Ethereum Merge

by Blockchain NewsSeptember 15, 2022

According to data from mining pool 2miners, Ethereum Classic’s hash rate has experienced a 200% growth in the last 30 days, jumping to now at its all-time high of 64 TH/s from 30 TH/s on August 15.

Ethereum Classic has hit an all-time high hash rate of 65.49 terahashes per second (TH/s), having grown more than 40% during September ahead of The Merge.

Hash rate refers to the computational power used to mine a cryptocurrency on a proof-of-work blockchain. Cryptocurrencies such as Bitcoin, Ethereum Classic, and Ether (before the merge) use a proof-of-work system, which requires lots of powerful computers and energy to process transactions.

Today, Ethereum is set to make its long-awaited shift from its proof-of-work consensus to an energy-friendly proof-of-stake blockchain consensus mechanism.

Ethereum’s move to shut down its proof-of-work consensus is set to leave Ether miners with potentially nothing to do. So, miners have announced their intent to migrate to Ethereum Classic, amongst several other proof-of-work blockchains.

These miners plan to mine Ethereum Classic and other compatible coins like Ravencoin. According to 2Miners, mining on Ethereum Classic and others like Ravencoin and Ergo is the “safest post-Merge strategy” at least in the first few days after the Ethereum Merge event.

“Currently, the most profitable coins after Ethereum are Ravencoin, Firo, Cortex, Ergo, Aeternity, Beam, Bitcoin Gold, Ethereum Classic, and Callisto,” 2Miners elaborated.

The Merge Getting Ready

The mass migration of crypto miners to Ethereum Classic has been one of the major driving forces pushing its hashrate to reach new highs.

As a result, the Ethereum Classic’s native cryptocurrency (ETC) was also up by 7.53%, trading at $38.12 at the time of writing.

In July, AntPool, a mining pool based in China and owned by Bitmain, signalled support for Ethereum Classic and injected a $10 million investment in the ecosystem. Ethermine, the world’s largest Ether (ETH) mining pool, also announced support for Ethereum Classic.

Ethereum Classic’s algorithm, Ethash is compatible with equipment used for mining Ethereum. Due to this, ETC can be mined using the same GPU and ASIC machines designed for Ethereum mining.

Ethereum is about to change its consensus from proof of work to proof of stake, an update called The Merge. The upgrade is estimated to take place around 4:23 UTC on Thursday, late into the evening of September 15.

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Tagged : Ethereum / Ethereum Classic / ETHEREUM MERGE / Hash Rate / MINING ACTIVITY