Cryptocurrency News

SlumDOGE millionaires: Dog tokens dominate Uniswap v3’s rankings
May 10, 2021 8:10 am

Shiba Inu token is half of the top pairing by both fees generated and total number of trades on Uniswap v3.

Despite DOGE’s dramatic crash following the highly anticipated episode of Saturday Night Live hosted by SpaceX founder and hypothetical Dogecoin CEO, Elon Musk, many dog-tokens that recently rode DOGE’s coat-tails are still up several-hundred percent in just a couple of weeks after driving billions in trade volume on Uniswap v3.

In spite of its limited utility, the self-described “experiment in decentralized spontaneous community building,” Shiba Inu (SHIB), has dominated Uniswap v3’s rankings since the DEX’s May 5 launch.

Since Uniswap v3’s launch, the WETH/SHIB pairing ranks as the top pairing by both total fee generation with $2.4 million and number of trades with nearly 57,000, beating out second-ranked WETH/USDT with $750,000 generated over nearly 8,500 trades.

WETH/SHIB is currently third by total trade volume on Uniswap v3 with $243.2 billion, ranking behind WETH/USDT’s $299 billion and WETH/USDC’s $256.7 billion.

Other tokens of little utility have similarly surged in popularity amid the dog-token trading craze, with Akita Inu (AKITA) currently ranking eighth by fee generation, fifth by total number of trades, and 13th by total volume on Uniswap v3. Dogelon Mars (ELON) also produced an impressive performance on Uniswap, ranking sixth by total number of trades and 13th by fee generation.

Cointelegraph’s Joseph Young also noted that Dogecoin was also topping the trade volume charts, with the DOGE/USDT perpetual contract on Binance Futures overtaking Bitcoin to rank as the top trading pairing on the platform.

While DOGE is up roughly 111% over the past 14 days, SHIB has gained 973%, AKITA’s is up 347%, and ELON’s price has increased 479% over the same period.

BTC could trade for $250K within five years: Morgan Creek Capital CEO
May 10, 2021 7:46 am

Morgan Creek Capital Management’s CEO predicted Bitcoin will soon rival gold by monetary value.

Morgan Creek Capital Management founder and CEO believes Bitcoin’s next market cycle could see the asset rival gold by market capitalization and trading for more than $200,000.

While appearing on CNBC’s Trading Nation on May 9, Mark Yusko compared the rapid adoption of Bitcoin to the growth of FAANG companies — Facebook, Apple, Amazon, Netflix, and Google.

“This is a network and networks grow in an exponential way. This is the fastest network in history to a trillion dollars of value, right on the heels of the FAANGs that took, you know, 15 to 20 years depending on which one you look at.”

Yusko’s price prediction is based on his assumption that Bitcoin will rival gold by “monetary value” - a concept derived from the gold standard where a country's currency or fiat has a value directly linked to gold. He stated: “If gold’s monetary value is $4 trillion, then digital gold should move up to that total.”

With BTC changing hands for roughly $59,000 and Bitcoin’s market cap at roughly $1.1 trillion at the time of writing, Yusko’s prediction suggests Bitcoin could trade for at least $235,000 in future.

The investment manager predicted Bitcoin will become the base layer protocol for the Internet of value, likening Bitcoin to Transmission Control Protocol/Internet Protocol, or TCP/IP — the standard protocol allowing computers to connect and share data across the internet.

When asked about other protocols or crypto-assets such as Ethereum, Litecoin, and Dogecoin – which have all reached their all-time highs over the past couple of days – he stated there is room for more. However, not a fan of DOGE, Yusko added:

“There are thousands of coins and DOGE is in that category that really are useless, they’re just utility tokens that have no underlying value or use case and they’ll eventually disappear.”

At the time of writing, Bitcoin was trading 1.7% higher on the day at $59,200, Ethereum was at an all-time high above $4,000, but DOGE had crashed after tagging new record highs following a mention from Elon Musk on the Saturday Night Live show.

Rari Capital allocates $26M from developer fund to compensate hack victims
May 10, 2021 6:18 am

Up to $26 million worth of Rari’s governance token may be distributed among users impacted by a hack that drained $10 million from the protocol this past weekend.

Following a $10 million exploit over the weekend, decentralized finance protocol Rari Capital is formulating a plan to compensate victims.

According to an official postmortem of the attack published May 9, the platform lost 2,600 ETH equal to 60% of all users’ funds in its Rari Capital Ethereum Pool. Rari automates yield farming by rebalancing users' funds and pools.

On May 10, Rari founder Jai Bhavnani posted an update revealing that all of the protocol’s contributors had voted to return the 2 million RGT tokens initially slated for developer incentives back to the project’s decentralized autonomous organization, or DAO, to reimburse users impacted by the hack.

While an exact distribution plan is still being discussed by Rari Capital’s developers and community, Bhavnani noted that tRGT token holders will be eligible to claim a share of the DAO’s stablecoin reserves during a May 10 community call.

The DAO currently holds 8.7 million tokens RGT worth $121.8 million, equating to roughly 1% of RGT's supply,

With the Rari Governance Token currently trading for $13.36 according to Coingecko, the total funds allocated to reimbursement are worth roughly $26.7 million at the time of writing. RGT prices dumped 44% following the hack, falling from $18 to $10 in less than an hour.

Bhavani noted the protocol was started as a fair launch project that did not sell tokens or raise money from venture capital. He added that the concept of a Rari Team has been disbanded and there are now only contributors and token holders.

The Rari Capital Ethereum Pool deposits ETH into Alpha Finance’s ibETH token as one of its yield-generating strategies. The attacker manipulated the contract to and withdraw more funds than they had deposited. A flash loan was taken out from the dYdX exchange in order to deposit ETH and make repeated withdrawals, draining the pool in the process.

The Rari Capital exploit follows several recent high-profile hacks in the DeFi sector, such as ForceDAO losing $367,000 in early April, and EasyFi losing as much as $60 million on April 20.

Rari is not the only protocol seeking to compensate its users, with cross-chain DeFi protocol EasyFi announcing that 25% of lost funds would be distributed to users immediately in the form of stablecoins, while the remaining 75% will be distributed as “IOU” tokens redeemable for EZ v2 tokens.

Ethereum continues wild run, ETH price breaks $4,000 for the first time
May 10, 2021 5:51 am

The second-largest digital asset doesn't look to be stopping its meteoric rise anytime soon.

Ether (ETH) eclipsed $4,000 for the first time on May 10, passing the psychologically significant barrier on multiple exchanges including Coinbase. The new milestone comes just a week after breaking $3,000.

ETH/USD 4-hour candle chart (Coinbase). Source: Tradingview

Last week, ETH overtook Bank of America as the 28th largest asset in the world. But at $454.49 billion as of today, ETH has now eclipsed the market cap of consumer staples giants Wal-Mart and Johnson and Johnson, and is knocking at the door of JPMorgan Chase — the largest American bank by assets under management.

Part of the rise may be linked to increasing institutional interest in the asset. This week, a Coinshares report said that institutions bought over $30 million in ETH at the end of April. Money managers are thought to now own $13.9 billion in ETH or ETH vehicles.

Likewise, there have been significant strides in adoption. Last week the European Investment Bank announced that they would be issuing a $120 million bond on the world’s largest layer-1 in collaboration with major banking entities such as Goldman Sachs. Additionally, the growth of decentralized finance — one of Ethereum’s key communities and use cases — continues at a remarkable clip.

However, the most bullish catalysts on the horizon are a pair of major infrastructure upgrades to the network: EIP-1559 and ETH 2.0. EIP-1559, now scheduled to be included in the “London” hard fork, will include an overhaul of the ETH fee structure and is expected to decrease gas costs significantly while also potentially making ETH a more deflationary asset.

ETH 2.0, in turn, will transition the network to a proof-of-stake consensus model, which is expected to decrease sell pressure and encourage holding the asset.

The remarkable run has even prompted renewed speculation that there could be a “flippening” on the horizon — a long-anticipated event among the Ethereum community where ETH overtakes BTC in market capitalization.

Binance CEO says volatility ‘is not unique to crypto’: Data shows it’s Bitcoin’s jet fuel
May 10, 2021 12:09 am

Binance CEO Changpeng Zhao said Bitcoin’s volatility is “probably less volatile” in comparison to some stocks, but data shows Bitcoin is the incontestable winner when adjusting the metric based on returns.

During an interview with Bloomberg TV on May 3, Binance CEO Changpeng Zhao suggested that Bitcoin (BTC) "is probably less volatile" than the stock prices of Apple (AAPL) and Tesla (TSLA).

Zhao argued that crypto's volatility was not unlike the stock market, adding: that "volatility is everywhere" and that "it is not unique to crypto."

However, those involved in cryptocurrency trading probably know that cryptocurrency prices fluctuate a lot more than listed trillion-dollar companies. This begs one to question whether or not Zhao is detecting a trend that some may have missed?

60-day historical volatility, BTC vs. stocks. Source: Cointelegraph

The first obvious reading from the chart above is that both Bitcoin and Tesla share different volatility levels when compared to trillion-dollar stocks like Apple and Amazon.

Moreover, stocks seem to have experienced a 60-day volatility peak in November 2020, while Bitcoin was relatively calm.

Tesla is an exception rather than the norm

Another thing to consider is that Tesla's market capitalization is $633 billion, and it has yet to post a quarterly net income above $500 million. Meanwhile, every single top-20 global company is incredibly profitable. These include Microsoft (MSFT), Google (GOOG), Facebook (FB), Saudi Aramco (ARAMCO.AB), Alibaba (BABA), and TSM Semiconductor (TSM).

The 12 most volatile $200 billion market cap stocks. Source: Investing.com

The list above shows the top-12 and bottom-12 most volatile stocks to show how Tesla's (TSLA) price swings are far off the average of other $200 billion market cap companies. The volatility seen in cryptocurrencies has been the norm, given that there is a lack of earnings, a very early adoption-stage cycle, and a lack of an established valuation model.

One doesn't need to be an expert in statistics to ascertain that the S&P 500 index performance has been pretty much stable over the past year, apart from a couple of weeks back in September and October 2020.

12-month S&P 500 performance, 5-day chart. Source: TradingView

Zhao may be the founder of the leading crypto exchange, but he doesn't personally trade. On the contrary, he actually recommends holding (HODL) instead of trading in every instance possible.

Volatility does not measure returns

Exclusively analyzing volatility presents another big problem. The indicator leaves out the most important metric for investors, the return. Whether an asset is more or less volatile doesn't matter if, on average, one asset consistently posts higher gains than others.

MicroStrategy has listed almost every currency, stock index, and S&P 500 index component, and curious analysts can compare returns and the sharpe ratio side-by-side with Bitcoin's.

As explained in the footnotes:

"The Sharpe ratio is a measure of risk-adjusted (really volatility-adjusted) returns. It is a way to measure how much return an investment generated for the risk (volatility) endured over some time horizon."
Bitcoin return and sharpe ratio vs. major assets and indexes. Source: Microstrategy

As the data clearly states, Bitcoin is the winner on risk-return metrics against every major asset and index over the past 12 months. A similar outcome also takes place when using a 5-year timeframe.

Therefore, Zhao may have simply incorrectly stated that Bitcoin's volatility is similar to the stock of trillion-dollar companies. However, when adjusting the metric based on returns, it is the incontestable winner.

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

Literally to the moon — SpaceX payload funded by DOGE plans to reach lunar orbit in 2022
May 9, 2021 11:30 pm

"This mission will demonstrate the application of cryptocurrency beyond Earth orbit and set the foundation for interplanetary commerce,” said SpaceX's Tom Ochinero.

Canada-based manufacturing and logistics firm Geometric Energy Corporation will be launching a Dogecoin-funded payload on one of SpaceX’s first rockets to the moon.

In a Sunday announcement from Geometric Energy Corporation, the company said its commercial satellite could be traveling to the moon as early as the first quarter of 2022 aboard the SpaceX Falcon 9 launch vehicle. Weighing 40 kilograms — roughly 88 pounds — the payload is designed to “obtain lunar-spatial intelligence from sensors and cameras on-board with integrated communications and computational systems.”

"Having officially transacted with DOGE for a deal of this magnitude, Geometric Energy Corporation and SpaceX have solidified DOGE as a unit of account for lunar business in the space sector," said Geometric Energy CEO Samuel Reid.

Tom Ochinero, VP of Commercial Sales for SpaceX, added:

"This mission will demonstrate the application of cryptocurrency beyond Earth orbit and set the foundation for interplanetary commerce.”

Neither SpaceX nor Geometric Energy specified how Dogecoin (DOGE) was used to fund the endeavor. The cost may refer in part to the development of the payload or include the funding to send it to the moon. 

Previous lunar missions have had significant price tags. The Chinese Lunar Exploration Program’s Chang'e 4, the last vehicle to perform a soft landing on the lunar surface in 2019, cost 1.2 billion yuan, or roughly $172 million at the time, to send a 1,200-kg lander with a 140-kg rover to the moon. NASA’s Lunar Atmosphere and Dust Environment Explorer, a satellite launched to orbit the moon in 2013, carried a payload mass of 49.6 kg at a cost of roughly $280 million, including research and development — $5.6 million per kg, not accounting for the mass at launch.

Should Geometric Energy’s satellite incur the same costs — though SpaceX's design is likely more efficient eight years down the road — the firm would need to have paid roughly $225.8 million for a 40 kg payload, or more than 388 million DOGE at the time of publication. This would represent 0.3% of the circulating supply of 129.5 billion DOGE tokens.

SpaceX founder Elon Musk has repeatedly hinted — perhaps jokingly — on Twitter that Dogecoin will be the first cryptocurrency to “literally” reach the moon. Musk’s social media activity has likely been responsible for a number of price surges for the token, which has risen more than 800% in the last 30 days to reach $0.55 at time of publication.

Cointelegraph reached out to Geometric Energy, but did not receive a response at the time of publication.

The rise of crypto charities: Elongate and Munch raise millions for various causes
May 9, 2021 10:00 pm

The cryptocurrency community is flexing its generosity amid the latest bull market, as charitable donations continue to grow.

Two unrelated cryptocurrency projects have collectively raised over $3 million for charitable contributions this month, underscoring the potential of digital assets in aiding mission-based non-profits around the world. 

Elongate, a cryptocurrency project that began as a parody of Elon Musk’s reference to the Watergate scandal, has raised $2 million for various food and general support programs via Human Relief Foundation and Give India. The latter is a Covid-19 relief effort in the South Asian country in the wake of a devastating spike in new infections.

Some of the biggest Elongate contributors are Children International, Action Against Hunger, The Ocean Cleanup, Big Green, Human Relief Foundation and Give India, among others.

“In just a month, the Elongate ecosystem has grown to change the face of charity and crypto trading,” said Hasan Aziz, the project’s chief technology officer.

Elongate also announced that its token will begin trading on BitMart Monday, May 10.

Despite starting off as a meme, Elongate has emerged as a major player in the market for crypto-based charities. The project claims to have over 400,000 holders worldwide.

Meanwhile, DeFi project Munch has raised over $1 million to aid various causes in developing nations through the GiveWell Maximum Impact Fund. Over the years, the Maximum Impact Fund has allocated tens of millions of dollars to combating malaria and other diseases in Africa.

The Munch project was able to raise the funds via Ether (ETH) transaction fees on every buy and sell order made on its platform. The transaction fee, which was 10%, was evenly distributed to its token holders and the charity.

The cryptocurrency community is stepping up in a big way to distribute its wealth to good causes. As Cointelegraph recently reported, The Giving Block has launched a new charity drive to encourage community members to donate at least 1% of their crypto holdings to charities each year. Several high-profile crypto industry veterans have already joined the initiative.

Top 5 cryptocurrencies to watch this week: BTC, BNB, ADA, LTC, LINK
May 9, 2021 7:58 pm

Bitcoin is still stuck in a predictable range below Binance Coin, Cardano, Litecoin and Chainlink have formed bullish patterns suggesting further upside in them.

Over the past week, several traders bought Dogecoin (DOGE) leading up to Elon Musk’s Saturday Night Live appearance as they expected a pump. However, the mention of Dogecoin during the monologue by Musk did not produce the rally traders were looking for and professional traders may have dumped their positions on novice traders who were expecting a breakout. 

Dogecoin dumped to an intraday low at $0.41 today, losing over 34% from the previous day’s close. Since then, the meme coin has been trying to stage a recovery and has risen to $0.54. The sharp fall in Dogecoin price shows that buying the hype, without any major fundamental reason, could result in stomach-churning volatility.

Crypto market data daily view. Source: Coin360

On the other hand, Ether (ETH) extended its up-move further, faltering just below $4,000, while Bitcoin (BTC) again fell short of the $60,000 mark, indicating strong selling on every minor rally. A few days of range-bound action in Bitcoin is a positive sign as it may set the stage for the next leg of the uptrend.

With Ether leading the altcoin charge, let’s look at the top-5 cryptocurrencies that may outperform in the short term.

BTC/USDT

Bitcoin broke above the downtrend line on May 8 but the bulls are finding it difficult to clear the hurdle at $58,966.53. The immediate support on the downside is at the moving averages. If the price rebounds off the 20-day exponential moving average ($56,387), the bulls will make one more attempt to push the price above $58,966.53.

BTC/USDT daily chart. Source: TradingView

If they succeed, the BTC/USDT pair could start its journey toward the resistance line of the ascending channel at $67,000. The price has turned down from the resistance line on two previous occasions, hence the bears will again try to defend this level. The momentum will pick up after the buyers push the price above the channel.

However, the flattish moving averages and the relative strength index close to the midpoint show a lack of bullish momentum. If the bears pull the price below the 20-day EMA, the pair could drop to $52,323.21.

A strong rebound off this level will suggest buying at lower levels and that could result in a range-bound action between $52,323.21 and $58,966.53 for a few days.

On the other contrary, a break below $52,323.21 may open the doors for a fall to the support line of the ascending channel and then to $46,985 where buyers may step in to arrest the decline.

BTC/USDT 4-hour chart. Source: TradingView

The 4-hour chart shows the bears are defending the $58,966.53 overhead resistance. If they can sink the price below the 50-simple moving average, the pair could drop to $55,000 and then to $52,323.21.

The flattish moving averages and the RSI near the midpoint suggest a balance between supply and demand. However, if the price rebounds off the current level and rises above $58,966.53, the pair could pick up momentum and rally toward the target objective at $65,012.18.

BNB/USDT

Binance Coin (BNB) is in a strong uptrend and the moving averages indicate the path of least resistance is to the upside. Although the negative divergence on the RSI is flashing a warning sign, the setup will not come into play until the price retreats and shows weakness.

BNB/USDT daily chart. Source: TradingView

If the bulls thrust the price above $680, the BNB/USDT pair may start the next leg of the uptrend that could reach $808.57. This positive view will invalidate if the pair turns down and breaks below the 20-day EMA ($592).

If that happens, the short-term traders may dump their positions, resulting in a decline to the 50-day SMA ($466). This is an important support to watch out for because the price has not closed below the 50-day SMA since Dec. 13, 2020. A break below $428 may signal that a top is in place.

BNB/USDT 4-hour chart. Source: TradingView

The 4-hour chart shows the pair is stuck between $600 and $680. The 20-EMA has started to turn up and the RSI is in the positive territory, indicating the bulls have the upper hand. If the bulls can push and close the price above $680, the pair may rally to $760.

Alternatively, if the price turns down from the current level and slips below the moving averages, the pair may correct to $600. A bounce off this level could extend the consolidation for a few more days.

ADA/USDT

Cardano (ADA) had been stuck between the $1 to $1.48 range for the past many weeks, before breaking out on May 6. This suggests the equilibrium between the bulls and the bears resolved in favor of the buyers.

ADA/USDT daily chart. Source: TradingView

That does not mean the bears have given up yet. They attempted to pull the price back below $1.48 on May 7 and today. However, the long tail on the day’s candlestick suggests the bulls have successfully flipped $1.48 into support.

If the buyers sustain the price above $1.74, the ADA/USDT pair could rally to $2 and then $2.25. This bullish view will nullify if the price turns down and slips below the 20-day EMA ($1.42). Such a move could trap the aggressive bulls, resulting in a drop to $1. A rebound off this level could keep the pair range-bound for a few more days.

ADA/USDT 4-hour chart. Source: TradingView

The moving averages on the 4-hour chart are sloping up and the RSI is in the positive territory, indicating the bulls are in control. If the buyers sustain the price above $1.75, the momentum may pick up.

Conversely, if the price turns down from the current level, the pair may drop to the 20-EMA and then to the $1.48 support. A bounce off this support could result in a tight range trading between $1.48 and $1.75. The short-term bullish sentiment may nullify if the bears sink the price below the 50-SMA.

LTC/USDT

Litecoin (LTC) has been trading inside an ascending broadening wedge pattern. Although the bears have been defending the resistance line of the wedge for the past few days, the positive sign is that the bulls have not given up much ground.

LTC/USDT daily chart. Source: TradingView

If the bulls can drive and sustain the price above $372.53, the LTC/USDT pair could start the next leg of the uptrend which could reach $400 and then $463.31. The rising moving averages and the RSI in the overbought territory suggest the path of least resistance is to the upside.

Contrary to this assumption, if the bulls fail to sustain the price above the resistance line, the short-term traders may dump their positions. That may result in a drop to the 20-day EMA ($298). A break below this support could open the gates for a decline to the 50-day SMA ($247).

LTC/USDT 4-hour chart. Source: TradingView

The 4-hour chart shows the pair is consolidating between $330.50 and $372.50. The bears have successfully defended the overhead resistance and are pulling the price toward the 20-EMA. If the price rebounds off this support, the bulls will make another attempt to resume the uptrend.

Conversely, a break below the 20-EMA could pull the price down to $330.50. A rebound off this support may extend the stay of the pair inside the range for a few more days. On the other hand, a break and close below $330.50 could signal the start of a deeper correction. The first support is at the 50-SMA and then $290.

LINK/USDT

Chainlink (LINK) is in an uptrend and it had hit a new all-time high at $51.96 on May 7. During a strong uptrend, corrections are shallow and the price tends to consolidate in a tight range before resuming the up-move.

LINK/USDT daily chart. Source: TradingView

The long wick on the May 7 candlestick showed selling at higher levels and that was followed by an inside-day candlestick pattern on May 8, indicating indecision among the bulls and the bears. However, the upsloping 20-day EMA ($42) and the RSI in the overbought zone suggest that bulls have the upper hand.

If the bulls can sustain the price above $51.96, the LINK/USDT pair could resume its uptrend. The next target objective on the upside is $66.74.

On the contrary, if the price turns down from the current level and breaks the $46 support, the pair may drop to the 20-day EMA. A strong bounce off this support will suggest the sentiment remains positive. However, a break below the 20-day EMA will indicate the short-term momentum has weakened and a drop to the 50-day SMA ($35) is likely.

LINK/USDT 4-hour chart. Source: TradingView

The 4-hour chart shows the price has broken out of the $46 to $50 range. This suggests the start of the next leg of the uptrend, which has an immediate target at $54. The 20-EMA has started to turn up and the RSI is above 67, indicating the bulls are in control.

However, if the price turns down and slips below $50, it will indicate the markets have rejected the higher levels. That may result in further selling that could pull the price down to the 50-SMA. A break below this level will suggest advantage to the bears.

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

'Dogefather' Elon Musk jokingly calls token a hustle as price falls under $0.50
May 9, 2021 7:30 pm

Though Musk's mother briefly mentioned the token during the Saturday Night Live opening monologue, the Tesla CEO followed up with an in-depth look for his Weekend Update segment.

Meme-based cryptocurrency Dogecoin, often pushed by Elon Musk on Twitter, got its moment during the Tesla CEO’s appearance on Saturday Night Live, but the shoutouts didn't drive the price to the moon.

During his opening monologue on the comedy show, Maye Musk jokingly told her son she hoped she wouldn’t be receiving any Dogecoin (DOGE) as part of her Mother’s Day gift that weekend. Though the initial mention received its share of laughs from the live audience, Musk’s appearance as "financial expert" Lloyd Ostertag on Saturday Night Live's Weekend Update segment was more in-depth, and preceded a 30% drop in the price of DOGE.

Referring to his character as the “Dogefather,” Musk said prices had been soaring for Bitcoin (BTC), Ether (ETH), and DOGE, but was jokingly unable to provide an answer to SNL cast member Michael Che’s question on “What is Dogecoin?” The guest dodged and deflected with information about the token’s history and circulating supply, but eventually said DOGE was “about as real” as U.S. dollars and referred to the cryptocurrency as a “hustle.”

Shortly after the opening monologue, the price of DOGE fell from $0.69 to under $0.50 for the first time since it had surpassed a half dollar in early May. Though it partially recovered following Musk’s “Dogefather” segment, the token fell as low as $0.43 in the last 24 hours and is trading at $0.48 at the time of publication.

Many expected Musk’s appearance on the comedy show to pump the price of DOGE after he hinted on Twitter two weeks ago that he would be starring in a sketch or as a character called the Dogefather. Tweets from the Tesla CEO and Dallas Mavericks basketball owner Mark Cuban as well as posts from retail investors on r/WallStreetBets may have been responsible for significant price surges in the token this year — the price of DOGE was under $0.01 on Jan. 1.

As elements of the crypto space are reported on mainstream media outlets, parodies like those on Saturday Night Live may reach a wider audience. The NBC show already released a rap sketch centered around the craze behind nonfungible tokens in March. In addition, Beacon Pictures is reportedly planning to produce a crypto-themed TV comedy series.

Cardano smashes new all-time high following 14% gain
May 9, 2021 6:26 pm

With a value of nearly $58 billion, ADA has flipped Tether in the market cap rankings.

Cardano’s ADA cryptocurrency surged on Sunday, bringing the smart contract platform back into elite territory in terms of market capitalization rankings. 

ADA charted 14% growth to reach $1.83 on major exchanges, marking a new all-time high. It was last seen hovering just below $1.80, having gained 14% on the day, 31% on the week and over 47% in the past month.

At current values, Cardano has a market cap of $57.8 billion, flipping Tether (USDT) for sixth spot on the market leaderboard, according to Coingecko. Cardano's market ranking could be seen as high as fifth on CoinMarketCap. 

Cardano's ADA cryptocurrency has charted significant growth in 2021. Chart: TradingView

ADA was also outperforming in Bitcoin (BTC) comparative, having risen 16% against the largest cryptocurrency. ADA remains well below its all-time high when measured in Bitcoin.

Cardano is being supported by a confluence of technical, fundamental and sentiment-driven indicators, as investors gear up for the next leg of the bull market. As Cointelegraph recently reported, the resumption of ADA’s uptrend was confirmed after the cryptocurrency breached the $1.48 resistance late last week. Price action puts the immediate upside target at $2.00, followed by $2.25.

In terms of fundamental developments, digital currency exchange Kraken announced last week that ADA staking was now available on its platform. Kraken users can now easily fund their ADA staking accounts to receive rewards of up to 6%, with payouts being delivered weekly.

The next major milestone in Cardano’s multi-year development roadmap is the Alonzo upgrade, which is set to introduce smart-contract capability on the blockchain. Input Output Hong Kong, the development arm behind Cardano, explained last month that Alonzo is being “gradually deployed to the mainnet via several testnests.” Early adopters and partners will be able to test features of the upgrade throughout May and June.

The great tech exodus: The Ethereum blockchain is the new San Francisco
May 9, 2021 4:53 pm

The blockchain shift from Ethereum to alternate chains closely resembles the exodus of tech talent from San Francisco to emerging hubs.

Remember the “Silicon Valley Tech Bubble”? In the early- to mid-2000s, the San Francisco Bay Area gave birth to some of the most storied and successful technology companies the world has ever seen. Facebook, Google, Salesforce, Twitter, Tesla, Lyft — the list itself could take up half of this article. From the palpable energy to the networking potential, one thing was certain: San Francisco was the place to be.

For many, present-day San Francisco has lost its allure. Across the city, the cost of living continues to surge. The remaining inhabitants are cobbling together money to afford the egregiously high rates and are constantly browsing Zillow to see where the grass is greener. Suffice it to say, San Francisco has become unlivable for the working class and is no longer suitable, much less ideal, for many new and existing companies. Although it gave us early tech platforms, the overcrowded, overpriced locale clings to its reputation and the memory of what it once offered.

This isn’t to bash the city of San Francisco but, instead, to highlight the allure of what is becoming San Francisco 2.0: Austin, Texas. The cheaper, sleeker city of Austin is siphoning off a high volume of San Francisco’s best companies and brightest people. Sound familiar? The blockchain community is in the midst of a similar shift.

If you’re a developer, Ethereum was your San Francisco — you had to build there. Ethereum hosts many of the most notable decentralized apps available today and truly outlined the blueprint for smart contract development. Present-day Ethereum looks very different.

Much like the city of San Francisco, Ethereum is becoming far too crowded and far too overpriced to retain its population. The limited scalability is forcing users to explore alternative options to circumvent the excessive gas prices and avoid network congestion. To maintain the analogy: Developers are looking for their Austin, Texas.

In the blockchain ecosystem, the equivalent of Austin can be seen in the likes of similarly attractive chains like Solana, Binance Smart Chain or Polkadot, to name a few. The rise of nonfungible tokens has even brought newer chains, like Flow, to the forefront as an alternative option.

New chain, who dis?

Make no mistake, although NFTs are rising in popularity, decentralized finance remains at the heart of the crypto ecosystem. Among other things, the sustained rise of DeFi brought to light two critical concepts:

  • Decentralized finance will (most likely) attract the most mainstream institutional capital.
  • Ethereum is no longer equipped to handle the scaling decentralized economy.

Related: DeFi-ing the odds: Why DeFi could rebuild trust in financial services

For this reason, alternative chains to Ethereum are receiving more developer attention than ever before. We’ve seen the likes of Polkadot, Moonbeam, Polygon, Binance Smart Chain and Solana not only challenge Ethereum but actually win over developers.

It is possible, perhaps, that instead of completely abandoning Ethereum, developers are simply test-driving these alternative chains. Maybe a developer hasn’t given up their $3,500 per month San Francisco apartment, but they’ve sublet it while renting an Airbnb in Austin.

Related: DeFi users shouldn't wait idly for Eth2 to hit its stride

Of course, the list does not end here. A multitude of other chains are gaining ground against Ethereum. Similarly, Austin is not the only hot destination; Miami, Denver and Toronto have each opened their arms to Bay Area transplants.

Long-term implications

As more developers flock to new chains in search of respite from high gas prices, it is worth questioning whether this is the new normal or merely an experimental phase.

At this moment in time, it is difficult to predict whether free agent developers are moving to new chains as a temporary means of mitigating gas prices or whether they view these chains as their new long-term homes. One thing we can say with absolute certainty is that alternative chains are threatening the development monopoly held for so long by Ethereum.

Related: Where does the future of DeFi belong: Ethereum or Bitcoin? Experts answer

Among the most telling factors will be the unveiling of Ethereum 2.0. The upgraded solution promises to increase the efficiency and scalability of the Ethereum network — alleviating the most alarming pain points of the blockchain at present.

Related: Ethereum 2.0: Less is more... and more is coming

At the same time, San Francisco had the biggest drop in rent across the country over the past several months, with costs dropping 23% early this year. San Francisco, in its own right, is trying to entice people with its own “2.0” unveiling.

Related: Eth2 is neutral infrastructure for our financial future

One question now haunts both Ethereum and San Francisco: Will it be enough?

Although the number of developers on Ethereum is a bit harder to determine, we’ve already seen the number of newcomers to San Francisco fall by 21%. If this is any indication, Ethereum may be in danger of permanently losing its clientele to alternative chains if it does not address its problem areas in the very near future.

Ethereum and San Francisco have both served as linchpins for development in their respective ecosystems. Their blueprints, in fact, are the basis on which these new and exciting alternatives are being built and modified.

As the blockchain community reshuffles and new apartment tenants unpack boxes, it begs the question: In which blockchain do you reside? Hopefully, one that offers less network traffic, lower gas fees, and can handle an influx of newcomers. If not, it may be time to consider a move.

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 Wearn is the co-founder and CEO of IDEX, a cryptocurrency exchange focused on performance and security. He has spent his career in software development, including time at a marketing analytics startup that was acquired by IBM and as an analytics project manager for Adobe. Prior to IDEX, he led the product management efforts for Amazon Logistics’ capacity planning. He has been working for crypto startups since 2014, transitioning to full-time with the launch of IDEX in 2018.
Stablecoins present new dilemmas for regulators as mass adoption looms
May 9, 2021 3:12 pm

A close look at the policy issues relating to the potential impact of stablecoins on financial systems and economies around the world.

Stablecoins present peculiar challenges to regulators. Although there is no single, agreed-upon definition of a stablecoin, the common denominator of the commonly used definitions is that stablecoins are designed to maintain a stable value in relation to a specified currency, asset or pool of such currencies/assets. They are contrasted with regular cryptocurrencies, which have no such stability mechanism and whose values tend to fluctuate, sometimes even substantially. 

Related: All risk, no gain? The vague definition of stablecoins is causing problems

Stablecoins do not denote a uniform category but represent a variety of crypto instruments that can vary significantly in legal, technical, functional and economic terms. Despite its name, it is important to stress that this asset does not guarantee stability, which depends on the specific design features and governance mechanisms.

Related: Algorithmic stablecoins aren’t really stable, but can the concept redeem itself?

Regulatory attention to stablecoins

Stablecoins have been on the rise since 2014, when the first stablecoin, Tether (USDT), was launched, and even though they have become an important digital asset in the blockchain ecosystem within a few years, they have not attracted much regulatory attention. This abruptly changed with the announcement of the Libra project in June 2019 by the Libra Association, of which Facebook is one of the founding companies.

Related: The way of the stablecoin: A journey toward stability, trust and decentralization

Almost immediately, many financial authorities around the world — including the Financial Stability Board, European Central Bank, Bank of England, United States Federal Reserve as well as the U.S. House of Representatives Committee on Financial Services — issued strong statements on Libra, where the collective sentiment was caution and concern, highlighting the serious potential risks.

Related: How Facebook Libra is seeking compliance, but may not launch by 2020

Libra’s potential to become global and access billions of users through a user-centric social network platform revealed an entirely new dimension to stablecoins. The potential impact of a global yet fast, cheap, easy, seamless payment solution through a platform that is already seamlessly integrated within the lives of the global population would be very far reaching indeed. The authorities have come to realize that this crypto asset warrants special attention, due to its potential scale, borderlessness and impact on economies and financial systems.

In the following months, many official reports and documents analyzing stablecoins were produced by bodies like the ECB, G7, FSB, Financial Action Task Force and International Organization of Securities Commissions. They mostly highlighted risks and challenges, including risks to financial stability and concerns over consumer and investor protection, Anti-Money Laundering, Combating the Financing of Terrorism, data protection, market integrity and monetary sovereignty, as well as issues of competition, monetary policy, cybersecurity, operational resilience and regulatory uncertainties.

Among the plethora of official statements and reports, the Libra Association announced a redesigned project Libra 2.0 in April 2020, and soon afterward, the coin was rebranded Diem, in an effort to distance it from the controversies surrounding Libra.

Related: New name, old problems? Libra’s rebrand to Diem still faces challenges

Stablecoins and the United States

In the United States, the Office of the Comptroller of the Currency was actively contributing to the debate, publishing three interpretive letters related to digital assets. The first letter in July 2020 concluded that national banks can hold digital assets in custody on behalf of their clients. The second letter in September 2020 concluded that national banks can hold stablecoin reserve accounts on behalf of their clients. Finally, the latest letter issued in January 2021 effectively granted permission to national banks and federal savings associations to participate as nodes in the independent node verification networks (a common form of which is a distributed ledger) and use stablecoins to facilitate payment activities and other functions.

The OCC acknowledges that, like other electronically stored value systems, stablecoins are electronic representations of currency. Instead of value being stored in a more traditional way, it is represented in a stablecoin, but this constitutes only a technological distinction and does not affect the underlying activity or its permissibility. To address potential risks, banks should act in accordance with existing regulatory and compliance requirements, while staying consistent with applicable laws and safe-and-sound banking practices.

On the other hand, in December 2020, just before the end of the U.S. Congress tenure, a draft of the Stablecoin Tethering and Bank Licensing Enforcement (STABLE) Act was introduced, which proposed significant increases in the regulatory oversight of stablecoins, requiring all stablecoin issuers to have a banking charter, be licensed by multiple federal agencies and follow banking regulations. The bill is at the early stages of the legislative process and has not been introduced to the House of Representatives yet.

Related: A nightmare on Stable Street: Centralized stablecoins may be doomed

Stablecoins and the European Union

In the meantime, the EU Commission issued a comprehensive regulatory proposal on Markets in Crypto-Assets, or MiCA, in September 2020, which aims to address potential risks to financial stability and orderly monetary policy from stablecoins, particularly those that have the potential to become widely accepted and systemic. MiCA provides a bespoke regulatory framework and establishes a uniform set of rules for crypto-asset service providers and issuers.

Related: Europe awaits implementation of regulatory framework for crypto assets

For stablecoins of significant potential, MiCA introduces more stringent compliance obligations, including stronger capital, investor and supervisory requirements. They will cover governance, conflicts of interest, reserve assets, custody, investment and the white paper, as well as provisions on authorization and operating conditions of service providers, who will need to be specifically authorized. Requirements include prudential safeguards, organizational requirements and rules on the safekeeping of funds. Additionally, more specific requirements will apply to certain services, including crypto-asset custody; trading platforms; exchange of crypto assets; reception, transmission and execution of orders; and advice on crypto assets.

MiCA is one of the most comprehensive attempts at regulating stablecoins and targets stablecoins not governed by financial regulation. The EU regulators want to leave no stablecoin outside of the regulatory framework. The offering and trading of any stablecoins that do not fall within MiCA definitions (e.g., Tether), and do not fulfill regulatory requirements will not be permitted within the EU. Denial of regulatory approval to certain stablecoin products that thrive in other jurisdictions may give rise to regulatory arbitrage.

Takeaways

Current regulatory scrutiny around the world is heavily oriented toward investigating and emphasizing potential risks. The benefits of stablecoins and the advantages of cheaper, faster and seamless payments (including cross-border remittances) are less accentuated, mostly just acknowledged.

A major regulatory challenge relating to global stablecoins is international coordination of regulatory efforts across diverse economies, jurisdictions, legal systems, and different levels of economic development and needs. Calls for the harmonization of legal and regulatory frameworks include areas such as governing data use and sharing, competition policy, consumer protection, digital identity and other important policy issues. Regulatory difficulties are compounded by a remarkable diversity in structure, economic function, technological design and governance models of stablecoins.

Stablecoins are an important piece of the puzzle for a future DLT-based digital economy, and the challenge for regulators is to ensure adequate regulatory treatment, supportive of innovation and mindful of potential risks. The potential global outreach of stablecoins magnifies regulatory tasks but also reinforces the urgency and importance of adequate regulatory considerations.

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.

This article is for general information purposes and is not intended to be and should not be taken as legal advice.

Agata Ferreira is an assistant professor at the Warsaw University of Technology and a guest professor at a number of other academic institutions. She studied law in four different jurisdictions, under common and civil law systems. Agata practiced law in the U.K. financial sector for over a decade in a leading law firm and in an investment bank. She is a member of a panel of experts at the EU Blockchain Observatory and Forum and a member of an advisory council for Blockchain for Europe.

The opinions expressed are the author’s alone and do not necessarily reflect the views of the University or its affiliates.

The rise of DEX robots: AMMs push for an industrial revolution in trading
May 9, 2021 1:54 pm

AMM-based decentralized exchanges are seeing unprecedented adoption, but are they the future of trading?

Centralized exchanges play an important role in the cryptocurrency industry. While their decentralized exchange counterparts have been growing in popularity and usage since 2020, the overwhelming majority of crypto trading volume is still concentrated on centralized exchanges. 

The supremacy of CEXs can be clearly observed in the size and popularity of trading platforms like Binance and Coinbase, which are now so recognizable and mainstream that Coinbase has recently become the first crypto company to be listed on the Nasdaq stock exchange.

Acting as a necessary bridge between fiat and crypto, centralized exchanges provide unparalleled convenience. Nevertheless, industry leaders often see these types of exchanges as one of crypto’s single points of failure. Sergej Kunz, co-founder of 1inch Network — a DeFi platform offering automated market makers and other related services — believes that AMMs will be the main competition for centralized exchanges. He told Cointelegraph:

“In the next four to five years, the DeFi industry will grow a lot. We will eliminate intermediaries, such as banks, and replace them with DeFi. In the upcoming years, 1inch is going to be ready to compete with centralized exchanges for users who swap assets a few times a day.”

Another factor fueling the interest in DEXs is the security concerns. Although malicious attacks on exchanges have become less frequent, exchanges have repeatedly proven that they are vulnerable to hacks and information leaks.

More decentralized alternatives aim to provide an answer for those concerns, and one way to do it is through the use of the automated market maker on exchanges.

The history of AMMs: From zero to hero

AMMs are the latest prominent breed of DEX protocols. They do not rely on order books like regular exchanges but instead use mathematical formulas to calculate the price of assets.

AMMs also provide liquidity from different pools, excluding the need to have another user on the other side willing to trade. Trading is done by interacting with smart contracts or peer-to-contracts, which provide the price and liquidity necessary to execute trades.

The new AMM-based DEXs greatly facilitate exchanges between crypto assets and have surged in popularity ever since the DeFi summer of 2020. The concept was first introduced by Bancor back in 2017. Vijay Garg, chief marketing officer of MakiSwap — a cross-chain AMM — explained how AMMs are revolutionizing the world of trading, telling Cointelegraph:

“AMM is going to drive the entire financial ecosystem, as they work independently without holding private keys of users and lie under less regulatory framework. Moreover, with enough liquidity, it’s faster, easy, convenient and cheap for users to trade. AMMs fundamentally alter how users swap cryptocurrencies.”

Hailed as the first true decentralized AMM, Ethereum-based Uniswap launched in late 2018 and, within several years, took the crypto world by storm due to its simple user interface and broad listing system. Right now, Uniswap is holding on to the top spot as the world’s leading DEX in terms of trading volume.

Uniswap spurred multiple “spinoffs,” one of which was SushiSwap, an AMM that launched a vampire attack and ultimately solidified itself as Uniswap’s main rival. Although SushiSwap was the first to use this method, it has since become a common practice, as protocols constantly try to leech liquidity from one another in “AMM wars.”

AMM protocols make up almost all of the total volume on DEXs and are considered an instrumental tool for the DeFi ecosystem. However, with innovation, there are always new problems and challenges that arise.

As such, new types of AMMs have now started to bloom and have been diversifying the space, where different exchanges cater to different user needs. Alex Lee, a developer at ZKSwap — a privacy-centric AMM — told Cointelegraph:

“DeFi and traditional finance aren’t much different, but DeFi requires lesser trust. AMMs, in particular, brought changes to the current financial landscape, and this can be observed in its growth.”

The different types of AMMs

Each AMM tends to have its own unique price algorithms to harness liquidity in various ways and from different sources. In the current DeFi landscape, the three most dominant and distinct AMM protocols are Uniswap, Curve and 1inch.

As the second-largest DEX in the world, Curve inherited the core design of Uniswap but specializes as the first AMM optimized for stable asset pools. As a result of its architecture, Curve minimizes the risk of impermanent losses, solves the problem of limited liquidity, and offers one of the lowest trading rates across all DEXs.

Another popular trend in the world of AMMs is aggregation. The 1inch Network has pioneered this technique to have a dominant market share in the area. This method seeks to allow its users to save on fees when making large trades on low-liquidity pools, avoiding high slippage by routering the transaction through multiple liquidity pools. Kunz told Cointelegraph: “Through our Pathfinder algorithm, deals are split across multiple DEX pools, ensuring users will be able to find the best swap rates.”

AMM downsides and risks

One of the downsides inherent to the current AMMs is impermanent loss. Whenever liquidity pool tokens fluctuate in value, an arbitrage opportunity is created that will incur losses to the pool. The larger the fluctuation, the worse the losses will be. Therefore, AMMs work better if token pairs have similar values.

Although Curve minimizes this risk, the new version of Bancor seeks to prevent the problem completely. Allowing the creation of AMMs with pegged liquidity, Bancor v2.1 was designed to mitigate slippage and help solve the issue of impermanent losses. Nate Hindman, head of growth at Bancor Protocol, told Cointelegraph:

“The Bancor protocol uses its elastic supply token, BNT, to co-invest in its pools and earn fees that the protocol uses to compensate for IL when an LP eventually withdraws their stake. An LP must be in a pool for 100 days or more to receive full protection from IL. This means that even if a token moons in price, an LP is entitled to withdraw the full value of their tokens as if they held them in their wallet.”

There are other disadvantages to trading with AMMs. On Ethereum, high gas fees have become an issue for the typical retail trader. Still, many exchanges have started to adopt layer-one and layer-two solutions to accommodate traders looking for smaller-size swaps. As Kunz stated: “The scaling of blockchain is a missing piece for further growth of the DeFi sector, but we already see some layer-two solutions by Optimism and Matter Labs, which are hopefully going to solve this in the coming months of 2021.”

Limited liquidity in some assets can also cause issues. Still, perhaps one of the most significant problems in the world of AMM trading is front-running bots that can take advantage of trades made by unwary buyers/sellers, creating faster transactions to profit from these traders.

Aleksandras Gaška, CEO of Blank Wallet — a privacy and user-centric wallet — told Cointelegraph that this issue is affecting the common AMM user. “Although tech-savvy investors can decrease their slippage or follow a DCA strategy to avoid front-running bots by buying in a few, smaller transactions, the only foolproof strategy is to allow users to use silent transactions.”

The need for privacy in DeFi

Privacy has always been a central topic in the cryptocurrency world. For example, Bitcoin and Ethereum are pseudonymous; they are also public in their nature. All transactions and addresses are exposed on the blockchain and can be viewed by anyone.

This level of transparency creates a danger for users sharing their public addresses. As such, privacy in the world of decentralized finance is becoming a highly demanded commodity. Speaking about this need, Lee told Cointelegraph:

“Market-level information should be transparent to all participants while still preserving individual privacy. And privacy is the basic right of an individual. It’s critical to keep in mind that any decentralized financial system worth having must respect the financial ownership of the individuals it serves.”

As previously mentioned, front-running bots are a big issue in the DeFi sector, and they are a direct result of the lack of privacy found in the DeFi sector, where all transactions are exposed on the blockchain. Therefore, the use of privacy-centric wallets can mitigate this issue.

The Future of AMMs

On May 6, Uniswap released its long-anticipated v3 update. Aiming to maximize capital efficiency, the upgrade was a success and, in just one day, recorded more than twice the volume that v2 saw in its first month. Despite the achievement, many users are calling the launch a flop due to the complex user interface and soaring gas fees, which are even higher than v2’s.

While most of the DeFi ecosystem resides on the Ethereum blockchain, there is a mass migration of projects, like 1inch Network joining Binance Smart Chain and other rival DApp blockchains. Uniswap and other ERC-20-based protocols might be reliant on the success of Eth2, but the future looks to be in interoperability.

It’s tempting to assume AMMs protocols will be responsible for all on-chain liquidity in the future. However, DeFi is still a maturing technology, and its innovation is fast-paced. Even if AMMs can resolve their limitations, regulatory frameworks and new technologies might present threats to their dominance.

GameStop saga paves the way for a new decentralized financial order
May 9, 2021 9:17 am

The GameStop saga may indicate a paradigm shift in the financial system or even the creation of an entirely new one.

Every significant transformation comes with a new toolset, one that is always surprising at the time and obvious in hindsight. Bitcoin (BTC), climate change and GameStop are all examples of ways in which mass action is pushing for dramatic, not evolutionary, action. We can also see that these are individual vectors of the same movement, highlighting the inefficient parts of the legacy system and the solutions driven by an aggregation of individuals with a collective belief.

What is so striking, but not unexpected, is that some of these events highlighted the opaque nature of centralized systems. They follow the recent trend of companies like Reddit, Robinhood and E-Trade restricting user access to entire platforms or specific features. The GameStop episode demonstrated how centralized systems could steer trading processes and unfairly disadvantage retail investors for the benefit of legacy institutions. Specifically, it brought to light a surprising amount of collateral requirements on brokers — such as Robinhood — by the clearing corporations. The reasoning for this was the maintenance of sufficient levels of margin.

Related: GameStop tale exposes regulatory paternalism and DeFi’s true value

Another thing that came to light is that brokers like Robinhood, Fidelity, E-Trade, Charles Schwab and TD Ameritrade engage in a much-debated practice called “payment-for-order-flow” that could lead to front running. In this process, market-making firms like Citadel Securities pay a broker a fee to access orders placed by retail traders. When bundled, these orders give market makers access to information about potential short-term, future price movements. Is there any benefit for the retail trader? As the brokerage companies state: yes, as this practice allows for commission-free trades.

Although these practices are commonplace in traditional internet and finance within a narrow context, things can get uncertain when we take a broader perspective of similar implications of censorship in other areas of our society.

In response to this broken system, viable decentralized alternatives create the precondition for a mass exodus, marking a historical curtailment of centralized structures. Decentralized finance, or DeFi, and decentralized exchanges, or DEXs, play an important part in this broader transformation, addressing the opacity inherent in legacy financial systems and the resulting disadvantages to common participants.

Related: GameStop saga reveals legacy finance is rigged, and DeFi is the answer

Can DeFi and DEX be a fair alternative to traditional finance?

The decentralized nature of blockchain technology confers censorship resistance. It thus allows for applications where the ability for centralized actors — such as Robinhood — to restrict traders can simply be designed out. The open-source and auditable nature of a decentralized ecosystem would make such moves obvious and result in the discrediting of such exchanges by its users. Thus, DEXs offer the promise of a censorship-resistant exchange function where users, regardless of retail or institutional status, can conceptually participate on a much more even playing field.

Innovation around DEXs is still in the early and experimental stages. But, it carries the potential to allow disparate participants unfettered access to a limitless world of asset exchange, not just for traditional blockchain tokens but public equities, commodities, derivatives and — yes indeed — even eventually GameStop, should the users demand it.

Related: The rise of DEXs: Fueled by DeFi and ready to disrupt the status quo

Many founders in the space say that the inequalities of traditional finance motivated them to build their part of the DeFi ecosystem. Alex Pack, the managing partner of Dragonfly Capital, said:

“The goal of DeFi is to reconstruct the banking system for the whole world in this open, permissionless way. You only get that shot every 50 years.”

In 2014, Bitcoin Foundation’s Harsh Patel published a paper titled “A block chain based decentralized exchange,” outlining how code, not institutions, could manage the trading market. The idea wasn’t new, but it came at a time when crypto markets were facing difficulties. Mt. Gox, along with many other centralized crypto exchanges, met its demise between 2011 and 2014 through hacks and loss of its users’ assets.

Related: Report on crypto exchange hacks 2011-2020

To avoid the flaws inherent in centralized exchanges, a number of entrepreneurs sought to launch DEXs, supporting what would come to be the core values of DeFi: transparency, unfettered access to trading opportunities and markets, and the option to participate in decision-making in the platforms they use through ownership of governance tokens.

Related: DeFi is the future of banking that humanity deserves

The future is decentralized

Early DEX protocols functioned by utilizing smart contracts to facilitate cryptocurrency trading in direct peer-to-peer transactions. However, challenges, including lack of liquidity and poor user experience, prevented DEXs from becoming viable platforms for users. Today, iterative and innovative DEX protocols have made considerable strides to overcome those challenges and are shaping up to have trading interfaces familiar to traditional markets. For example, traders today can buy crypto with card and bank account balances directly with fiat on/off ramps that convert fiat to cryptocurrency and vice versa.

In addition, soon-to-launch DEXs will introduce features germane to traditional markets such as market analytics, and trading tools like liquidity charts, trading volume and order book depth. These functionalities provide users with objective real-time data and insights into the trading landscape.

In this new financial system, DEXs that utilize automated market makers — like Uniswap or 1inch — generate an equal playing field for all participants. There are no brokers, clearinghouses or centralized market makers; trades are settled peer-to-peer or peer-to-protocol without arbitrators, except those codified by smart contracts. And critically, there are no different sets of rules for different groups of players.

Access is also improved. Whereas in traditional markets, it can be difficult to gain entry due to the complex requirements for accreditation, a typical DEX requires little to no private information from the user. These standards offer a benefit of pseudonymity and a measure of privacy protection that otherwise isn’t guaranteed when handing over your personal, identifiable information to a centralized broker. However, this may change with more Anti-Money Laundering laws coming to DeFi and the regulatory environment remaining uncertain. But, teams are working on solutions to address both the compliance requirements and an individual’s desire for privacy, which enables users to retain full ownership of their assets and identity rights, and grants specific permissions to businesses to verify their identity.

If the GameStop saga proves to be more than just a momentary anomaly, we might presently be witnessing the emergence of a profound change in the financial system or the creation of an entirely new one. As financial technology companies made it easier for consumers to participate in financial markets, DEXs are tackling the flaws of centralized markets. In some ways, this generation of DEXs may become the new Robinhood’s. Perhaps this is one of those moments where the people, and not institutional legacy, will define the future.

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.

Elvina Kamalova is a director of investments at Aludra Capital, a digital assets investment management firm based in San Francisco. Elvina has a background in digital assets investments, portfolio management and fintech product development. She is the recipient of the President's Volunteer Service Award, presented by former President Barack Obama. She's supported underrepresented entrepreneurs and STEM education of girls and believes in the importance of developing solutions for reducing the wealth gap and cultivating human advancement.
Dogecoin dumps following mention from Elon Musk on Saturday Night Live
May 9, 2021 6:20 am

While the crowd seemed to enjoy his performance, DOGE traders soured on Elon Musk's shout-out.

Meme cryptocurrency Dogecoin finally got its long-awaited shoutout on Saturday Night Live — but despite hodler hopes, the immediate result has been a violent dump.

First teased by entrepreneur and DOGE cheerleader Elon Musk in late April, the Tesla CEO finally mentioned the digital asset on live television tonight in his opening monologue of the sketch comedy show. The reference was a throwaway line from Musk's mother, who joined him onstage and asked if her Mother's Day gift would be Dogecoin; Musk replied that it would be. 

In the minutes afterwards, $DOGE dumped upwards of 25%, falling as low as $.50 from $.66 highs at the start of the show. It has since partially recovered, trading at $.52 at the time of publication.

An hour before the episode began, the price of DOGE sat at $.66, down from an all-time high of $.72. A pair of bearish headwinds may have shared responsibility for the pullback: Musk himself seemed to try and get ahead of the hype, urging followers in a Tweet to “invest with caution,” and a host of new data indicates that many investors may be rolling their DOGE profits into other, largecap digital assets

Additionally, Barry Silbert — the founder and CEO of Digital Currency Group, the parent company of crypto investment vehicle company Grayscale — announced a public short on DOGE via the FTX exchange. In a series of follow-up Tweets, he revealed that the position was $1 million in size, and that any proceeds or remaining funds after closing the short would be donated to charity. 

(It’s unclear if Silbert was is using “we” in reference to Digital Currency Group, one of its portfolio companies, or is simply and bizarrely using a plural pronoun in reference to himself). 

Many DOGE investors were nonetheless holding out hope for a high-profile shoutout on what looked to be a major pop culture event. NBC, the studio behind SNL, chose for the first time ever to live-stream the episode on Youtube, per the Wall Street Journal.

Even a mention could have significant impact on the price of DOGE as well: the meme currency has proven to be susceptible to price movements based on positive social media volume, and multiple studies have shown that Tweets from Musk often lead to price appreciation. A mention on an even bigger platform was thought to potentially lead to even greater gains. 

Leading into the premier of the episode, Alameda Research trader Sam Trabucco (who said in a previous Tweet that he was “studying the typical SNL episode structure to try and understand when a DOGE mention would be the most natural”) speculated that if a joke or mention didn’t come in Musk’s opening monologue, it would be “all over.”

Despite arriving during the monologue, traders nonetheless responded negatively. It remains to be seen if a DOGE-centric skit later in the show can perhaps turn the speculative asset's fortunes around.

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