At least half of the nodes on the Cardano network fell down for a short period of time over the weekend, according to reports from stake pool operators (SPO) and users of the cryptocurrency. An abnormality caused fifty percent of Cardano nodes to disconnect and restart, according to a message that was published on January 22 and posted on the SPO for Telegram by Input Output Global, the engineering and research company that is responsible for the Cardano blockchain. The unexpected interruption was explained in a post by the statement that “This seems to have been caused by a transitory anomaly triggering two reactions in the node,” which said that some nodes had detached from a peer, while others had thrown an exception and resumed.
In spite of a brief drop in performance, the Cardano network was able to recover without any assistance from outside sources.
In the article, it is stated that “such temporary difficulties” were taken into consideration during the node design and consensus process, and that “the systems operated precisely as predicted.”
During the anomaly, which took place between blocks 8300569 and 8300570, it was claimed that block production continued, although it was delayed for a few minutes. The “effect was minor, comparable to the delays that occur during regular operations,” according to the report. ” Depending on the SPO that was selected, the majority of nodes automatically recovered.
At the time this article was written, the underlying problem that led to the anomaly and the subsequent node disconnections and restarts was still being investigated. According to the official notice, “We are presently researching the underlying reason for this aberrant activity and adopting more logging measures alongside our normal monitoring methods.”
Tom Stokes, who is also a Cardano SPO and the co-founder of Node Shark, said in a post on January 22 that much over half of the nodes that were listed were impacted by the issue.
In addition to that, he presented a graphic that illustrated the point at which the network sync dropped from 100% to just slightly over 40% for more than 300 reporting nodes.
According to Stokes’ chart, following the decline in performance, the network sync was able to recover to a level of around 87%, but it did not instantly return to its original level of 100%. An other SPO reported similar concerns to Stoke in a post on January 22, but said that “several SPOs experienced no effect.” “Others experienced a restart of their relays and BPs.
The SPOs, Developers, and IOG are now debugging on Discord.
There is not a fundamental reason as of now “They said that.
“Uptober” is over but as Zhu Su tweeted earlier today, the crypto market rally could extend through “Upvember, Upcember” and beyond. The month of October was stellar for Bitcoin (BTC) and Ether (ETH) primarily because each hit new all-time highs and even though the prices are consolidating now, traders are still wildly bullish.
Uptober, Upvember, Upcember
— Zhu Su (@zhusu) November 1, 2021
The steady emergence of the Metaverse is also driving excitment within the crypto sector as it promises to be one of the driving forces behind development in the cryptocurrency space. The concept of a Metaverse is also impacting the “real world”, a prime example being Facebook’s recent rebranding of to ‘Meta’.
As the market heads into the month of November and bullish expectations run hot, let’s take a look at some projects where the data hints at possible upside breakouts.
Polkadot’s parachain auctions approach
The Polkadot (DOT) network is a sharding, multichain protocol designed to facilitate cross-chain transfers of any data or asset type and the project is focused on increasing interoperability between separate networks across the blockchain ecosystem.
Data from Cointelegraph Markets Pro and TradingView shows that momentum for DOT has been on the rise over the past couple of months, with its price rising 95% from a low of $26.05 on Sept. 29 to a new all-time high at $51.57 on Nov. 1 as its 24-hour trading volume surged 135% to $2.93 billion.
DOT/USDT 1-day chart. Source: TradingView
The rising strength of DOT is largely due to the upcoming launch of the parachain auctions on the Polkadot protocol. It’s likely that traders are looking at the success of the parachain auctions that took place on Polkadot’s sister network, Kusama, and expecting the same to occur for DOT.
Polkadot’s parachain auctions have been in development throughout 2021 and the excitement surrounding their Nov. 4 launch appears to be the driving force behind DOT rallying to a new all-time high at $51.57 today.
The motion to enable parachain registration and crowdloans has passed Polkadot’s council and gone to a public referendum. If passed, parachain teams will be able to register their parachain and open their crowdloan on Nov. 4, 2021 at approx. 19:15 CET. https://t.co/5ouDWBmnvc
— Polkadot (@Polkadot) November 1, 2021
VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for DOT on Oct. 27, prior to the recent price rise.
The VORTECS™ Score, exclusive to Cointelegraph, is an algorithmic comparison of historical and current market conditions derived from a combination of data points including market sentiment, trading volume, recent price movements and Twitter activity.
VORTECS™ Score (green) vs. DOT price. Source:Cointelegraph Markets Pro
As seen in the chart above, the VORTECS™ Score for DOT began to pick up on Oct. 27 and reached a high of 80 around two hours before the price began to increase 28% over the next five days.
Revolve Games selects Chromia
Chromia (CHR) is a layer-one blockchain network that is Ethereum Virtual Machine (EVM) compatible and capable of enhancing layer-two performance on Ethereum and the Binance Smart Chain.
Data from TradingView shows that since hitting a low of $0.296 on Oct. 27 the price of CHR has surged 101% to a daily high at $0.595 on Oct. 31 as its 24-hour trading volume spiked to $371 million.
CHR/USDT 1-day chart. Source: TradingView
The surging price of CHR comes as the project’s gaming ecosystem had several positive developments, including the announcement that blockchain gaming firm Revolve Games chose Chromia to build and host its play-to-earn ecosystem, as well as the listing of the Chromia-based Mines of Dalarnia token on Binance.
Related:‘Uptober’ closes at record high in best month of 2021 — 5 things to watch in Bitcoin this week
Theta Token expands its NFT ecosystem
Theta is a blockchain-based video streaming protocol designed to operate as a decentralized network where users are rewarded for sharing bandwidth and computing resources with others on the network.
Momentum for THETA has been on the rise over the past couple of months as its NFT ecosystem has expanded and is now preparing to host the launch of Katy Perry’s NFT project in December.
The token also got a boost after it was revealed that THETA stakers will be airdropped its TDROP governance token in February 2022, with the allocation each holder receives determined by the average number of THETA staked during the evaluation period.
VORTECS™ data from Cointelegraph Markets Pro began to detect a bullish outlook for THETA on Oct. 28, prior to the recent price rise.
VORTECS™ Score (green) vs. THETA price. Source:Cointelegraph Markets Pro
As seen in the chart above, the VORTECS™ Score for THETA climbed into the green zone on Oct. 27 and reached a high of 81 on Oct. 28 around three hours before the price began to increase 42.3% over the next three days.
The overall cryptocurrency market cap now stands at $2.63 trillion and Bitcoin’s dominance rate is 43.8%.
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.
German financial regulators have approved a security token offering (STO) based on a Bitcoin (BTC) sidechain.
Germany’s Federal Financial Supervisory Authority (BaFin) has greenlighted the EXOeu token by game publisher Exordium, making local retail investors eligible to participate in the sale on Stokr, a major European digital marketplace.
German investors can invest in EXOeu via Stokr with a minimum investment amount of $100. EXOeu is the second STO ever approved for the German market on Stokr after BaFin approved an STO by parking network ParkinGO last year.
Launched in January 2021, the EXOeu security token is raising funds for the development of Samson Mow’s sci-fi MMO game Infinite Fleet. The offering has been available for investors in other European countries lik France, Luxembourg, Spain, Portugal, raising more than $7 million to date.
While many STOs are based on the Ethereum blockchain, the EXOeu token is issued via Blockstream Amp, a platform for tokenizing securities built on the Liquid sidechain of Bitcoin.
“Bitcoin is shaping payments, and it’s about time it shaped capital markets — this can be done via layer two technologies,” Stokr co-founder Arnab Naskar said, adding that Ethereum is “losing its charm” as an STO platform due to high gas fees and the uncertainty around Ethereum 2.0.
Related:Bitfinex launches security token platform regulated in Kazakhstan
According to Stokr co-founder Tobias Seidl, BaFin’s approval of Exordium’s STO marks a new milestone in cross-border blockchain-based STOs. “We see Bitcoin as a fundamental backbone of the future capital markets, which will be built on blockchains,” he said.
The news comes shortly after major crypto exchange Bitfinex announced last week that it would debut its own STO trading platform with Exordium (EXO) trading.
Eleven projects joined the race when Kusama parachain auctions started on June 15. A few more got in during the latter auctions of the first batch. With impressive gains to the tune of 900,000 KSM (approximately $180 million, at the time of writing), are Kusama auctions still fair and democratic, or is everything already decided by whales? Let’s analyze the available data and attempt to illuminate the current standings.
Where we are now
As announced on June 8, the first batch of parachain auctions on Kusama includes five events, each of them one week long. During the auction, projects are bidding in Kusama’s native token, KSM, for their parachain slots, and it requires roughly 100,000 KSM (or about $20 million) to win. To fund their bids, projects run crowdloan campaigns. A crowdloan is an innovative crowdfunding mechanism that lets ecosystem participants stake KSM for their favorite parachain candidates and get rewards in their utility tokens.
The first auction ended, and Karura — the decentralized finance (DeFi) hub of Kusama — was distinctly in the lead with an incredible bid of 501,138 KSM (about $100 million). The second auction ended just a few days ago, and there was little doubt about its winner. Moonbeam’s canary network, Moonriver (205,935 KSM staked), was steadily winning by 50% over the nearest rival, Shiden Network (100,544 KSM). In turn, the latter is overcoming Khala Network (27,474 KSM) by 73%, and it looks like an obvious leader for the third auction.
Here’s the current leaderboard:
Based on this graph, readers may conclude that the first three auctions were bought by large-scale investors for their sock puppet projects, while the real competition is around the fourth and the fifth auctions. But both conclusions are far from reality, and I will explain why.
Parathread ID 2000
The first-ever crowdloan campaign was registered for a candidate under the ID 2000 and took the first line in the list of campaigns on the Kusama network. The name of the project, Karura, is symbolic. Kusama’s logo has a bird’s shape, while Karura is a hybrid with a human torso and bird head, which is symbolic in Japanese mythology. Perhaps this is directly related, as if an established connection with Kusama could make people godlike and inevitably stand Karura creators in line with gods who rule Kusama’s being.
Karura’s crowdloan kicked off on June 11, a few days before the first auction, and no other campaign saw such enormous interest. On June 17, Karura collected an unprecedented 400,000 KSM. The total amounted to 501,138 KSM, making Karura the unconditional winner of the first auction. Let’s take a deeper look at the breakdown of the campaign’s contributions:
This data may surprise those who expected to see the severe dominance of large-scale contributions, but the distribution between retail and nominal whales looks quite organic.
Maybe just a single contribution of 46,415.89082 KSM (around $9 million) stands out among others. But there is a clear explanation: It’s coming from Kraken, which launched its interface for Kusama crowdloans to pool bets for its users. Since the data of Kraken users’ activity is publicly available, we can see how it breaks down into individual contributions:
The deposits on Kraken came evenly spread during the entire period of the campaign and we couldn’t outline any particular activity bursts. It looks like Kraken users demonstrated an elevated interest in the Karura crowdloan campaign, which was anticipated, given that Karura launched its crowdloan before others.
We can further aggregate the above tables into nominal whales (who gave more than 1 million KSM), average holders (who contributed from 50 to 1,000 KSM), and retail users (who contributed less than 50 KSM). The aggregated data looks like this:
Despite a substantial share of whales in Karura’s crowdloan (46.58%), the results still indicate extremely high activity by retail contributors. The total of 16,896 individual participants in this campaign is almost three times the number pertaining to Moonriver, the next-closest contender:
With all the positive sentiment around Karura, there are two questions left to be answered. First, without doubting its desire to make a safe bet, is it worth overpaying for the parachain slot by that much? Second, how is it planning to maintain KAR’s implied value to guarantee contributors some sort of reasonable rewards on their KSM, given that the token is not live yet and there will be inevitable selling pressure when it launches?
Whales don’t rule these waters (yet)
Interestingly enough, the overall picture isn’t changing much if we look at two other top leaders of the race: Moonriver and Shiden.
Related:Polkadot parachains full of promise, but lack of launch date raises concern
Moonriver is bringing Ethereum smart contract functionality to Kusama. The parent project is quite popular in the Polkadot ecosystem, and its sister chain saw significant demand on Kusama as well. Moonriver was clearly winning in the ongoing second auction, with 205,935 KSM contributed by a crowd of 5,977 participants:
If we aggregate data by categories of retail, average and whale participants (as we did previously for Karura), it will look like this:
We will see almost the same lineup if we consider the second-biggest contender in the current race, Shiden. Shiden is a Kusama-based sister chain of Plasm, a network for DApps supporting the Ethereum Virtual Machine and WebAssembly.
Shiden has raised 100,544 KSM from 4,192 contributors, while having 50% less than Moonriver’s bid. Here’s the breakdown of contributions and, just like Karura, the biggest single contribution comes from the Kraken exchange:
When we group by category, we will see that Shiden enjoys slightly higher attention from retail and middle-sized contributors than Moonriver, with a bit less domination by whales:
As such, the whales share an average of 48% of the contributions in these three top crowdloans. Of course, any of these projects could hardly win a slot without their support. But the impact of retail (especially mid-sized) participants is impressive — over 50% of all participants on average.
As you can see, the notion that whales bought out the first three slots is incorrect. But let’s find out how much competition is around the last two auctions for now.
Is there life on Mars?
Since it’s all clear with the first three parachains, it may seem that activity around the last two auctions should be even more intense. On one hand, there are many more projects competing for the remaining slots (there are already 10 of them and a couple more joining the competition). On the other hand, there is no single project claiming to be an unconditional leader, so uncertainty should’ve incentivized the community to support their favorites.
But when we see the actual KSM amounts contributed for these 10 remaining projects, they look quite modest. Altogether, these 10 projects have collected just around 10% of the funds raised by the top three parachain candidates. Given the 73% advantage of Shiden over its closest competitor among the 10, Khala Network, it’s very unlikely that there will be a real competition between them for the third slot.
Moreover, there is a dramatic gap in the number of contributors between Shiden and Khala Network, whose campaigns currently see the most activity in the community out of the other remaining projects (4,192 contributors vs. 1,426 contributors, respectively). The other nine contenders combined do not even have half of Shiden’s individual contributors.
Given the circumstances, is the interest around Kusama parachain auctions declining, or are there other reasons behind such modest results for these 10 projects? How will the situation develop as we approach the last of the auctions?
Looking into a crystal ball
By far, any particular forecast could be premature, given that the fourth auction starts on July 6, more than a week from now. The landscape can drastically change as we approach this auction.
Retail contributors are most likely striving to catch their last chance to participate in the major crowdloan campaigns by Moonriver and Shiden. The remaining campaigns are out of their scope for now, and their factual activity may show up closer to the last two auctions. In this sense, these major crowdloans are currently suppressing the smaller ones.
Additionally, the remaining 10 projects may have some whales or their own big allocations up their sleeves. It would be optimal for them to reveal those only when the third auction approaches its final phase. This strategy might be one of the reasons why we have yet to see as solid numbers here similar to major crowdloan campaigns.
To make further assumptions, we will group the remaining pretenders by the nature of the current participation in their crowdloan campaigns. As such, we are essentially coming to the following three groups:
Organic: The group where the distribution between retail and whale participation is similar to the distribution in the major crowdloans at its highest.
Here we can see Khala Network is the current leader among these 10 projects. KSM volume is evenly spread across user groups in these campaigns and overall distribution looks pretty healthy. There are not that many whales supporting them now, and their average contribution is around 2,700 KSM.
Monopolistic: The group where whales heavily dominate over retail participants.
Whale participation nears an even 90% in some of these campaigns amid quite moderate interest from the community and retail. On average, each whale contributed over 3,500 KSM to these crowdloans.
Democratic: The group where retail participation dominates over whales, or whales haven’t contributed anything yet.
As we can see, whales are not here yet, while most funds come from mid-sized contributors. Darwinia Crab network stands out among these projects, as it attracted the most community interest compared to others in this group.
Assuming that the retail interest will shift back to the remaining 10 projects after the third auction ends, each of these groups should follow some type of strategy to win:
Organic: They appear to be the most balanced while seeing consistent interest from both retail and whale contributors. Therefore, they should keep this level of consistency, but they need to keep in mind that both categories are extremely important for a positive outcome.
Monopolistic: Of course, it depends on the “hidden jokers” to better develop community engagement. In the end (and as we see from the experience of the top projects), retail support is crucially important.
Democratic: We don’t know if there are behind-the-scenes arrangements with whales, perhaps ones that they are keeping them secret until the right moment. If not, however, they could be in trouble. It is unlikely that their communities will carry them to the top positions by the end of the third auction. If so, the influx of new contributors will dry up, as the crowd will be avoiding the risk of missed opportunity by betting on a knowingly wrong horse.
Apparently, some projects did their homework to analyze the data behind the current campaigns. They recognized the impact of retail and mid-scale contributors, along with the importance of accumulating as many funds as possible before the fourth auction. These players are making attempts to align their strategies with these takeaways.
For example, on June 25, Khala Network — Phala’s canary network that brings confidential cloud computing to Kusama — announced an increase in its rewards on contributed KSM. Instead of 120 PHA, all contributors will receive 150 PHA if Khala Network manages to collect 30,000 KSM. It seems like the project considers the milestone of 30,000 KSM an important threshold that will let it win the slot. On top of that, it will be airdropping nonfungible token (NFT) gifts to all crowdloan participants who contributed more than 1 KSM. Altogether, these steps point out the retail focus of Khala’s campaign.
Another example is Genshiro, a canary network of Equilibrium and the second of two high-caliber DeFi platforms competing for Kusama parachains. On June 24, the day before Khala, the project announced amendments to its crowdloan campaign, including an improved reward structure where rewards for contributions under 50 KSM were doubled from 1,000 GENS to 2,000 GENS on each KSM. Additionally, participation over 50 KSM is considered large-scale now, and contributors will receive a 20% bonus, bringing rewards to 2,400 GENS on each KSM. Besides this, it decided to make 10% of the reward allocations unlock right after its parachain launch.
The bottom line
The first three parachain winners are already indisputable amid the high involvement of retail participants in their campaigns. Having said that, the outcome of the last two auctions primarily depends on the behavior of the crowd and the availability of “hidden” KSM allocations.
As we shall see, some projects like Khala Network and Genshiro are already preparing for the potentially hard competition for retail participants, as shown during the last two auctions. But eventual winners will rely on the successful combination of whale-backing and good marketing campaigns that will maintain elevated interest up until July 13.
Will the intrigue persist for the last auctions? This will depend on if the crowd’s interest and pockets get drained during the first three auctions. If so, all the competition will come down to the ordinary muscle-flexing in the whale support. Otherwise, we can expect a fascinating contest among the most qualified teams in the Polkadot and Kusama ecosystems very soon.
All the data used in this article is from the auction standings as of June 30 at 8 am UTC.
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.
Alex Melikhov is the CEO and founder of Equilibrium, an interoperable DeFi conglomerate on Polkadot comprised of a cross-chain lending platform and order book-based decentralized exchange. With over 14 years of entrepreneurial and fintech experience, Alex has been involved in the cryptocurrency world since 2013. His current project, Equilibrium, aims to solve the problem of liquidity fragmentation in DeFi.
Karura network has emerged as the winner of the maiden Kusama parachain slot auction.
According to an announcement issued on Tuesday, Karura pulled support from over 15,000 entities who staked Kusama (KSM) tokens in favor of adding the decentralized finance hub as the first Kusama parachain.
In total, Karura locked up over 5,000 KSM currently valued at $90 million based on the Kusama market price as of the time of writing. Earlier in June, United States crypto trading platform Kraken launched a parachain auction platform for users to support bids for Karura.
The first-ever @kusamanetwork parachain slot auction has been won by @KaruraNetwork with 501,137.6619 $KSM #ExpectedKarura pic.twitter.com/VjnDZPvGKR
— Dan Reecer ️⚪️ (@danreecer_) June 22, 2021
As previously reported by Cointelegraph, the Kusama council approved the first parachain slot auction a week ago. The approval was based on a tentative schedule created by Polkadot and Kusama creator Gavin Wood published a fortnight ago.
Karura is the Polkadot implementation of the Acala protocol — a decentralized finance hub that aims to be the de facto DeFi ecosystem for the Polkadot chain.
Karura, along with other projects such as Moonriver, Shiden and Kilt, has been active on the Rococo testnet with significant community participation across these protocols.
With Karura winning the first parachain slot auction, the DeFi hub is now set for onboarding to the Kusama relay chain.
Related:Another first for Polkadot as Kusama council approves first parachain slot auction
Based on Wood’s schedule, four other parachain slot auctions will take place over the next four weeks. Each weekly auction will include a two-day initial bidding period and another five days to finalize the process, with a winner emerging at the end of the seven-day cycle.
After the first five slot auctions, an audit will take place to examine the performance of the network during the process before kickstarting another round spread across five more weeks.
These slot auctions will determine the first set of parachains to be added to the Kusama relay chain that serves as a sister network for Polkadot.
Two sweltering blocks from the gated entrance of Bitcoin Miami I managed to track down a core contributor for one of the most important projects in decentralized finance (DeFi). Flanked on all sides by clueless Bitcoiners, pseudonymous Yearn Finance vault security specialist “Doggy B” chatted with Cointelegraph about the future of the yield vault protocol — the anoles scurrying by our feet just as oblivious to the alpha being leaked as the maxis chatting about Tony Hawk and Floyd Mayweather.
Describing without doxxing is a delicate exercise, but here goes: think a late Che Guevara beard, Unibomber sunglasses, and everything else giving off a pragmatically nondescript, “undercover FBI agent” vibe — except, of course, the pleasant and amiable demeanor.
In the 25 minutes it took to get through the gate, Doggy broke down protocol expansion, new products, and Yearn’s unique brainpower moat — all of which points to steady growth for a project that’s been firing on all cylinders as of late.
New chains, new products
As with many DeFi protocols, layer-2 has been a focus for Yearn’s developers and vault strategists.
“A lot of the strategists have been playing with sidechains, re-deploying vaults on sidechains,” Doggy told Cointelegraph. “The vault would still be on ETH, but it would source liquidity via a bridge from the sidechain.”
The only barrier left is that the bridges between chains can often be “flaky,” as Doggy put it — taking hours or even days to process, making traders and developers antsy. In the end, he thinks that rollup solutions are where the space will largely migrate.
“I see it as practice for more ‘intense’ layer-twos like Optimism and ZK-sync. Hopefully that’s where Ethereum is going long-term.”
He also shared that vaults are in the works that utilize decentralized exchange liquidity pool positions, a long-awaited product fraught with complications.
“We’ve been working for a while to try and get DEX strategies to work, because you have to deal with impermanent loss,” he said.
The difficulty with these positions is in limiting downside from impermanent loss, especially at times of market volatility. Options derivatives for hedging positions was one strategy initially tested, but decentralized option platforms largely lack liquidity and the pricing makes it an impractical solution.
The current working model is using liquidity from two vaults — say, ETH and WBTC — and combining them to create a DEX pool position as part of the underlying vault strategies, he said.
Regardless of the exact method, finding a workable DEX strategy is a priority given its one of the few sectors Yearn has yet to explore.
“Obviously it’s an order of magnitude more complex, but DEXes are the only vertical where it’s billions of dollars that we haven’t tapped yet.”
Growth and tokens
Aside from expanding the functionality of the vaults, Yearn joins multiple other teams in exploring new verticals and products. While the market continues to reel from a 50% drawdown across the board, DeFi protocols are shipping at alarming speed, with Sushiswap, 1inch, and Aave expanding to new chains and protocols.
However, it remains an open question as to how projects best expand from a tokeneconomic standpoint. Synthetix, for instance, is planning four new protocols which will each feature their own new token.
Doggy said the Yearn team is more conservative with the money printer.
“The idea of a token is a conceptual focal point — you can kind of rally behind it. There is something to be said if it makes sense to have, you can kind of go for it — we just haven’t found many things where it makes sense to have one, aside from printing more money.”
He pointed towards Keep3r as an example where the project called for a new token, and teased that the team might mint one for Yearn’s forthcoming insurance offering, though the decision is still being discussed internally and Doggy’s sense is that they won’t — after all, a new product could also drive value for the YFI token.
“There’s something to be said for Aave, where their token is an insurance backstop for the money market. That could drive YFI usage, drive value for YFI, without just printing new tokens. […] Andre has made some stuff, and we’re waiting for it to be production-ready.”
After the dissolution of a merger with insurance/coverage protocol Cover, Yearn has been in need of an insurance solution — along with the rest of the market. Despite users frequently requesting more coverage solutions, few products have managed to take off. The largest is Nexus with a half billion in TVL, and they may soon grow larger via a dissolution of their legal entity and a need for KYC burdens.
Doggy declined to give a guesstimate on the timeframe for when Yearn’s insurance product would launch.
“Could be in a few months, could be tomorrow,” he joked.
Hiring spree
The protocol is growing rapidly, with March serving as a banner month as the vaults brought in $4.88 million in revenues. Likewise, per DefiLlama vault TVL looks to be entering parabolic growth, eclipsing $4.3 billion and placing the protocol in the top-10 by size.
However, the metric Doggy pointed to was hiring. The team currently sits at 35 people amid a spree of new additions, with more coming on “every day.”
He noted that raw human talent is especially important for a protocol which sees a new fork on a near-monthly basis — in fact, it’s what will keep them competitive in the long run.
Kusama, sister chain to Polkadot’s platform, is ready for the rollout of parachains on the network.
Polkadot and Kusama creator Gavin Wood today said in a blog post that Polkadot was entering the fourth and final phase of its mainnet launch, which involves deploying parachains to the Kusama network. According to Wood, the development arm behind Polkadot, Parity Technologies, had released an upgrade — Polkadot version 0.9 — for Kusama, which “is now finally ready to host parachains.”
Wood said the launch of the parachains would proceed following a full external audit on the new version of Polkadot and Kusama executing “at least one successful auction involving crowdloans and hosting at least one functional parachain” in the wild. He did not provide a specific timeline, but added he expected the audit to be completed “in the near future,” with the Kusama website announcing the first of five auctions one week in advance.
“After Kusama’s first auctions complete successfully, one would expect Polkadot’s auctions to happen soon after,” said Wood.
The rollout of the Polkadot protocol has been ongoing since August, when the project launched its Rococo testnet to evaluate its planned sharding implementation based on parachains. Some expected the rollout of parachains to occur in the first quarter of 2021, but there were reportedly issues with the Rococo testnet’s stability — for example, one of its parachains was apparently stuck for more than a day.
At the time of publication, the price of Polkadot’s DOT token is $39.51, having fallen more than 2.2% in the last 24 hours.
The decentralized finance (DeFi) ecosystem continues to attract billions of dollars from cryptocurrency enthusiasts. Though the term “decentralized finance” could certainly apply directly to Bitcoin in and of itself, the growth of the DeFi industry lately refers to an umbrella of projects, mostly based on Ethereum smart contracts, that support cryptocurrency-based lending, prediction markets or other financial services.
While the emphasis on Ethereum may make it seem as if Bitcoin and DeFi don’t mix, some intriguing initiatives to merge the two do exist. However, those services will require some modifications to make them more appealing to those who use Bitcoin.
The State Of DeFi Services For Bitcoin
As the world’s leading cryptocurrency, everyone has to ask themselves if bitcoin can even benefit from newer DeFi applications. More specifically, can Bitcoin benefit from innovations being forged by the DeFi projects that the market seems to currently favor? With options such as yield generated on cryptocurrency lending and borrowing offering some potential, it seems worth exploring. But integrating BTC into these decentralized finance use cases has proven challenging.
Thanks to projects like RSK, DeFiChain and Sovryn, it is now possible for Bitcoin users to access decentralized finance solutions. There’s also Liquid by Blockstream, a sidechain that one can use to obtain L-USDT assets with bitcoin holdings and explore DeFi through services like Hodl Hodl. Through this platform, users are able to lend and borrow cryptocurrency in a non-custodial way: borrowers deposit bitcoin as collateral, which is repaid once the borrowed money is paid back in full.
As innovative or appealing as these services may appear, some still require users to wrap their bitcoin holdings (through “wrapped bitcoin,” users create an ERC-20 token with a one-to-one peg to BTC, with both assets being interchangeable), which many see as an unnecessary extra step. No one cannot deny the extra functionality of an asset like wrapped bitcoin, that does not necessarily mean people are eager to use bitcoin in a DeFi setting. As BTC already has a far more robust price than any other DeFi asset that one can “farm” (or, earn yield on), there doesn’t appear to be an immediate need to explore these options.
Better Incentives Could Help
In the current DeFi landscape, Bitcoin users do not have too many options to explore, unless they want to wrap tokens, convert to other assets or take other risks. This situation is far from ideal. But I’m convinced that there are better methods to explore, such as the liquidity provision on automated market maker (AMM) decentralized exchanges. This provides a way for users to empower themselves by picking a decentralized exchange and liquidity pair from which they aim to earn fees, instead of those fees going to centralized exchange operators. Unfortunately, finding such an exchange that supports bitcoin in its native form is nigh impossible.
In this white paper of SIL Finance, I found an exciting reward structure that might make more sense: Not only would users earn AMM fees from trading in the liquidity pool, but they would also earn native DeFi tokens. This would provide two revenue streams and, all the while, users only have to provide one type of liquidity. Reducing risks and increasing the rewards, as this application potentially could, is one way to get more bitcoin users enthusiastic about decentralized finance.
Although the white paper doesn’t mention any native BTC support, the idea could be implemented on a bitcoin sidechain like RSK, for example.
But Does Bitcoin Even Need DeFi?
As bitcoin makes for a substantial long-term investment on its own, one has to wonder if people are willing to take any risks with their BTC holdings. That said, sitting by idly while waiting for the price to go up will not suit everyone’s tastes either. Empowering users by giving them “investment options” to explore will always prove beneficial to some.
On the other hand, the DeFi industry, in its current form, is still marred by insecurity, trust issues and greed. Most people look for ways to get rich quickly through yield farming, which is an unsustainable approach. I think AMM DEXes have a far better chance of succeeding in the long run, especially compared to services with no apparent use cases. Creating a DeFi token to farm yield without offering any long-term use cases for the asset is a business model that will eventually disappear into obscurity.
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There is also the apparent increase in institutional demand for bitcoin exposure to contend with. It has taken a decade to get companies to notice Bitcoin. As this wave is now slowly swelling in momentum, launching DeFi on bitcoin may not be the most opportune. The world’s leading cryptocurrency has gained recognition as an investment and store of value, rather than as play money. The introduction and rampant use of DeFi products for bitcoin could potentially erode that image.
Conclusion
Although I find certain aspects of DeFi fascinating, I remain unconvinced that the Bitcoin ecosystem needs any of these solutions today. Granted, it could be useful to do more with my BTC holdings, but for now, I am more than content to keep the funds in a private wallet and play the long-term game.
Should any AMM DEXes eventually integrate support for bitcoin in its native form, I will gladly check out the options. That is, assuming the smart contracts are appropriately audited, the approach is non-custodial and the earnings justify the effort. If these three conditions can’t be met, there is no need to introduce decentralized finance — as we know it today — to Bitcoin.
This is a guest post by Alex Zha. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.
This week, on the “Bitcoin Magazine Podcast,” host Christian Keroles sat down with long-time Bitcoiner and co-founder of the RSK Bitcoin sidechain Diego Gutiérrez Zaldívar. RSK has been live on top of Bitcoin since 2018 and has been quietly building a fantastic ecosystem of wallets, decentralized order books, bitcoin-backed stablecoins and more. The projects being built on and enabled by RSK have been generating an incredible amount of hype in the Bitcoin community and they are all enabled by the RSK sidechain.
RSK is merge mined with bitcoin and leverages bitcoin as it’s own native currency. Bitcoin has to be pegged into the RSK chain and Zaldívar’s team is working on greatly improving the UX and wait time for a trustless peg between BTC and RBTC. Keroles and Zaldívar discussed how Bitcoiners can easily and trustlessly peg into the RSK chain and start taking advantage of all of the applications built on RSK. There are several user-friendly wallets, including Edge Wallet that allows for a non-technical user to get access to RBTC.
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In this interview, it was made very clear that Zaldívar and his team are true Bitcoiners who are building with Bitcoin’s best interests in mind. Because the RSK team is located in Argentina and throughout LATAM, it has a very close perspective on the struggles and needs of the unbanked and underbanked. RSK is building the decentralized infrastructure needed to sustain a financial system completely on blockchains.
In this episode of “The Van Wirdum Sjorsnado,” hosts Aaron van Wirdum and Sjors Provoost were once again joined by Ruben Somsen. This time, they discussed one of Ruben’s own proposals, called “softchains.”
Softchains are a type of two-way peg sidechain that utilizes a new type of consensus mechanism: proof-of-work fraud proofs (or, as Provoost prefers to call them, “proof-of-work fraud indicators”). Using this consensus mechanism, users don’t validate the content of each block, but instead only check the proof-of-work header, like simplified payment verification (SPV) clients do. By using proof-of-work fraud proofs, users do validate the entire content of blocks any time a blockchain fork occurs. This offers a security model in between full node security and SPV security.
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Somsen explained that by using proof-of-work fraud proofs for sidechains to create softchains, Bitcoin full nodes could validate entire sidechains at minimal cost. This new model might be useful for certain types of sidechains, most notably “block size increase” sidechains that do nothing fancy but do offer more transaction capacity. Van Wirdum, Provoost and Somsen also discussed some of the downsides of the softchain model.
