When it was launched, the vision for Ethereum was simple. It was to be a smart contract platform with low fees that settled transactions occurring on other applications. That simple vision has transformed into a corporate juggernaut today. Investors and stakeholders use the venue to boost staking rewards and prices for worthless tokens. Examples include… Read More Ethereum’s Latest Bad Idea: Restaking
It is yesterday once more in the bitcoin ecosystem. The recent spike in bitcoin transaction fees has surfaced memories of similar occurrences in the past. Those fee hikes were also instigated by spurious activity on bitcoin’s network and set off a debate in its community about the size of blocks on bitcoin’s network. The Importance… Read More The Future of Bitcoin and its Transaction Fees
There was a thaw in the crypto winter yesterday, a glimmer of celebration, cloaked in schadenfreude, at the House Financial Services Committee hearing yesterday. Securities and Exchange Commission (SEC) Chairman Gary Gensler, sometimes referred to as crypto’s favorite whipping boy, testified before the committee yesterday. Crypto twitter cheered when a group of Republican Congressmen laid… Read More Notes 4/19: SEC Chief Gary Gensler’s Congressional Hearing
Are CBDCs necessary in the United States? … Read More To CBDC or Not To CBDC?
In July last year, I wrote about investor enthusiasm for Ethereum’s move to a Proof of Stake (PoS) consensus system. Traders piled into ether, the blockchain’s native token, in hopes of a big payoff close to the actual event. [There were profits, but they were taken much before the actual event]. Amidst the chilly crypto… Read More What Happens to Ether Prices After The Merge?
The murky waters of cryptocurrencies consist of many worthless tokens. The Gemini dollar (GUSD), a stablecoin issued by cryptocurrency exchange Gemini, is one of them. The token serves no purpose in crypto or outside its ecosystem. It claims to be “regulated from day one” to alleviate user concerns about a run on its holdings. But… Read More Why Does GUSD Exist?
This past week threw crypto’s banking problems into sharp relief. Silvergate Bank was arguably the biggest provider of banking services to the crypto industry and its unraveling will significantly reduce options available to crypto businesses for access to the world of mainstream financial services. As I wrote last year, three banks – Silvergate, Signature, and… Read More The Future of Crypto Banking
The mystery of Tether’s finances is slowly being unraveled. The Wall Street Journal (WSJ) yesterday published a report claiming that the stablecoin is using investment firm Cantor Fitzgerald to help manage its $39 billion treasury bond portfolio. The firm is a primary dealer in the Treasury Market, a designation that enables it to conduct direct… Read More Notes 2/12: Tether Finances, Tornado Cash Revisited
One of the reasons to invest in stablecoins is their de-pegging event. When stablecoins trade below their intended peg of 1:1 with a fiat currency, short traders can turn around and exchange them for the promised parity. In that respect, stablecoins are like money market funds. Over the years, Tether, the world’s biggest stablecoin by… Read More Shorting Tether
Along with bitcoin price, prices for Ethereum’s ether also jumped last week. Depending on your data source, the world’s second biggest cryptocurrency’s price posted weekly gains of anywhere between 13% (at Messari) to 20% (at Coinmarketcap and CoinGecko). Underlying that price increase was a corresponding surge in market valuations for tokens at liquid staking derivatives… Read More Staking Ether: A Risky Trade
Where does Tether get its revenues? Over the years, the stablecoin claims to have made redemptions worth billions of dollars. At the same time, it has made investments and loans worth millions of dollars to crypto ventures on the side. It has 42 employees, per LinkedIn. Where does it get the cash to manage… Read More Where Does Tether Get Its Revenues?
In the early days of the United States, private banks were allowed to issue money on the condition that it was backed by gold. This meant that customers could redeem their specie and notes for gold, which was considered a stable medium of exchange in an economy rife with fraudsters and hucksters issuing fake money.… Read More The Tether Redemption Conundrum
Binance USD (BUSD), Binance’s stablecoin, is among the few regulated parts of the exchange’s sprawling and mostly unregulated operations. It is issued by Paxos – a registered Trust company in New York that was a cryptocurrency exchange in its earlier avatar – and regulated by the New York Department of Financial Services (NYDFS). That stamp… Read More Notes 12/31: Binance’s BUSD: An Unstable Stablecoin
In recent months, Binance has attempted to position itself as a leader of the crypto ecosystem after FTX’s collapse. But its moves have had the opposite effect and drawn attention to problems at the world’s biggest cryptocurrency exchange by trading volume. Investors, fearful of another collapse, are pulling out their funds from the exchange, feeding… Read More Notes 12/21: Binance’s BNB Token – 1
The big news this week has been stablecoin issuer Circle’s decision to scrap its plans for a public listing through a merger with a Special Purpose Acquisition Company (SPAC). The Securities Exchange Commission (SEC) played spoilsport to the company’s plans by withholding its approval for the deal. Circle CEO Jeremy Allaire put on a brave… Read More Circle’s Mounting List of Woes
The barrage of news about FTX’s collapse means that it will take time to disentangle the many narratives emerging from it. But that hasn’t stopped many people from suggesting solutions to ride out the current crisis of confidence in crypto. One of those proposals comes from Binance chief Changpeng Zhao, an instigator of the current… Read More Can Proof of Reserves Bring Transparency to Crypto?
As a concept for collective governance, decentralized autonomous organizations (DAO) are replete with hip buzzwords and ideas. Their practical implementation, however, is clunky. The latest example is that of Ooki DAO – a margin lending platform that is being sued by the Commodities Futures Trading Commission (CFTC). The agency contends that Ooki DAO violated investment… Read More Reckoning With DAO Governance
Central bank digital currencies (CBDC) are becoming popular among countries. According to the Atlantic Council’s CBDC tracker, 105 countries, representing 95 percent of the world’s GDP, are developing digital versions of their national currency. Eighty-one countries were exploring the use of CBDCs in their economy last August. CBDC development accelerated in the aftermath of Russia’s… Read More Notes 10/4: CBDC Development, An Opening for Crypto?
At the beginning of September, bitcoin price, which has crashed by more than 60% since its high last November, was poised for further downward movement. It bucked that script. Except for a brief surge in the middle of this month, bitcoin price mostly traded sideways and stuck to a trading range of around $20,000, its… Read More What Will October Bring for Bitcoin Markets?
El Salvador’s adoption of Bitcoin as legal tender, a year ago, was considered a watershed moment by crypto advocates hankering for more recognition for the world’s biggest cryptocurrency. The tiny Central American country is the region’s fourth biggest economy and has been a dollarized nation since 2001. Proponents of the move argued that Bitcoin adoption… Read More Is El Salvador’s Bitcoin Experiment A Failure?
Controversial stablecoin Tether’s holdings of commercial paper fell and its cash and bank deposit holdings rose, according to a “reasonable engagement report” released yesterday. The report provides a breakdown of the reserves backing tokens circulating in the market. Tether claims that its holdings of commercial paper and cash and bank deposits increased by 58% and… Read More Tether’s Misrepresentations Continue In Its Latest Reserves Report