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1. 21/02/2019 09:53
A David vs. Goliath Battle Is Brewing in Ethereum Decentralized Exchange Race

A project funded by one of 2017’s largest initial coin offerings (ICOs) is facing fierce competition from a brand-new competitor funded by a modest grant.

Bancor, which raised $150 million during the ICO craze, was founded to make it easy to trade even illiquid ethereum tokens. That’s the same mission as Uniswap, which launched in November and is funded solely by a $100,000 grant from the non-profit Ethereum Foundation.

Yet, despite the fact that Bancor has been live for over a year, and that it has more resources, new data from blockchain analytics firm Blocklytics reveals the two protocols are now locked in a tight competition to programmatically facilitate ethereum trades.

Blocklytics found Uniswap first overtook Bancor in total ether trading volume on Feb. 13, when it had a daily trading volume of $541,408 – a full $196,478 more than Bancor for the day.

But Uniswap’s advantage over Bancor was not permanent.

The difference narrowed on Feb. 14 and Bancor reclaimed the lead on Feb. 15. On Feb. 17, the last day with complete data, Bancor’s $571,395 in trades amounted to $137,866 more than Uniswap’s, according to the firm’s findings, shared exclusively with CoinDesk.

The data presents only a snapshot of how the two protocols aimed at offering market liquidity have fared in recent weeks. Still, the new competition has been enough to spur notice from market observers who feel that Uniswap may offer improvements on the Bancor model, particularly in its decision not to introduce or require the use of its own ethereum token.

Robert Leshner of Compound Finance, a protocol for collateralized lending on ethereum, told CoinDesk that he’d been impressed with Bancor’s design, at least until Uniswap went live.

Leshner told CoinDesk:

“Uniswap ripped out the token and simplified the algorithm. It costs a fraction of the gas to trade, and incentivizes the community to add to the liquidity over time.”

The findings have imbued the Uniswap team with a new confidence in their approach as well, leading them to suggest Bancor wasn’t able to build a moat around its service.

Project creator Hayden Adams says Uniswap’s technology makes it easy for people who want to participate in market making to join in. “This has led to a massive growth in the liquidity pools, which allows for larger trades and a higher volume,” Adams told CoinDesk.

However, Bancor emphasizes that focusing on ethereum trading misses the larger story: Bancor’s ability to trade tokens across more than one public blockchain.

Examining the data

Nevertheless, by either metric, the research by Blocklytics shows Uniswap, a smaller, newer application has quickly become competitive in facilitating ether token trading. From the start of 2019 to now, Uniswap’s trading volume is up more than 10x, according to Blocklytics.

That said, it’s not exactly an apples-to-apples comparison.

Caleb Sheridan, co-founder of Blocklytics, told CoinDesk that the nature of these apps makes comparing them complicated. In short, they each trade between tokens by first trading into a third, more widely traded token.

On Bancor, a trade from REP to ZRX would trade REP for BNT and then BNT for ZRX. On Uniswap, ETH would be in the middle rather than its own token.

“We avoid counting the same volume more than once by treating each order as one trade regardless of how many trades the platform actually made to fulfill that order,” Sheridan said.

Although, the data compiled by Blocklytics shows that Bancor remains ahead on several other metrics. Bancor is running 76 more ERC-20 tokens than Uniswap as of this writing.

Bancor told CoinDesk it did $3.67 million in volume from Feb. 3 to Feb. 9. The analysis from Blocklytics shows it running $2.89 million in volume over that period. (Bancor declined to provide daily volume, but Blocklytics’ report does not include EOS trades.)

Additionally, much of Uniswap’s recent growth can primarily be ascribed to trades for MKR, the governance token for MakerDAO’s two-token system, with a healthy dose of DAI (MakerDao’s stablecoin) in there as well. Bancor currently sees more individual trades and hosts more accounts than Uniswap.

From Bancor’s perspective, a key value add for its automated market makers is also the fact that it aims to offer its service to more than one blockchain (today, ethereum and EOS), something Uniswap cannot do. From Uniswap’s perspective, ethereum is the only blockchain it is interested in serving, so it could muddy the waters to compare Uniswap to Bancor.

Nate Hindman, a spokesperson for Bancor, told CoinDesk in an email:

“Creating a dependency on ETH or any blockchain-level token by utilizing it as Bancor’s hub token would dramatically reduce the flexibility and reach of the network and protocol.”

ICO questions

However, the data opens up old questions about tokenized business and fundraising models, particularly how effective they can prove to be against those that do not require a new token.

Bancor, the largest token sale ever at the time, stirred controversy over its use of a token, BNT, drawing fire from prominent technologists, including researchers at Cornell University.

Nevertheless, it quickly saw adoption once its product went live, proving its thesis was right: people wanted an easy way to trade between any two tokens. Further controversy would arise when Bancor suffered a 2018 security breach. But it continued to see usage and growth.

Still, Bancor has had to continue to defend its use of a token. (For example, the Bancor team used a Twitter thread to defend its use of the BNT token last week.)

“In total 1.2 million transactions have been processed through BNT across 40,000 wallets, totaling $1.5 billion in conversions,” the company wrote. “Around 10 percent of BNT’s total supply is staked in automated market makers facilitating these conversions, making BNT one of the most active utility tokens in the world.”

Nevertheless, by either metric, the Blocklytics research shows the smaller, newer application has quickly become competitive, perhaps opening the door for competitors to emerge on Bancor that facilitate trading by using a protocol’s native token.

For now, Uniswap’s Adams told CoinDesk he’s focused on improving the usability of the service.

He wrote:

“As Uniswap gains more users and integrations the trade volume (and fees generated) will increase. This increases the profitability of providing liquidity and will likely lead to even more liquidity.”

2. 19/02/2019 23:33
Mining Giant Bitmain Posts $500 Million Loss in IPO Financial Filing

Mining hardware giant Bitmain lost about $500 million in the third quarter of 2018 amid an overall bearish market for cryptocurrency, CoinDesk has learned.

The Beijing-based company recently provided an update on its financial results to the Hong Kong Stock Exchange (HKEx), which is reviewing Bitmain’s application for an initial public offering (IPO) first filed in September.

The update showed Bitmain earned around $500 million in the first nine months of last year, on slightly over $3 billion of revenues, according to a source familiar with the situation. The filing, which is not public, does not break down the results by quarter.

However, Bitmain previously disclosed it had grossed profits of $1 billion in the first half of 2018. Subtracting that from a $500 million profit for the first nine months leaves it with a net loss of roughly $500 million for the third quarter.

The company had also previously reported $2.8 billion of revenues for the first half, so the $3 billion figure for the first nine months works out to third-quarter revenues of just about $200 million.

(Bitmain only needs to provide the nine-month figures at this stage under HKEx rules, which say that listing applicants can be no more than six months behind on reporting.)

These are the first precise figures to show the company’s reversal of fortune following the significant growth in revenues and profits over the past several years documented in the IPO application filed in late September.

When contacted by CoinDesk, Bitmain declined to comment for this article, citing its pending IPO application. After publication, the Chinese media outlet Caijing quoted an unnamed representative for Bitmain denying the report.  “The rumors are not true, and we will make announcements in due course in accordance with the requirements of relevant laws and regulations,” the spokesperson said, according to a translated version of the Caijing article.

However, Bitmain had already signaled it had fallen on harder times with layoffs and office closuresaround the world beginning at the end of the last year that affected almost every unit of the company. Its main businesses are manufacturing mining equipment and operating mining farms and pools – activities that have broadly suffered from the slump in crypto prices.

Hit to portfolio

Further, the update provided to HKEx showed Bitmain’s crypto holdings dropped in value from more than $800 million as of June 30 to less than $700 million at the end of the third quarter, the source said. This decline of more than $100 million over three months reflected the overall drop in market prices over that period.

The company’s IPO application, filed in late September, indicated that Bitmain mainly held bitcoin, bitcoin cash, ethereum, litecoin and dash, although it did not provide a breakdown of how much it held of each asset.

Since Sept. 30, all of the cryptos mentioned in that filing declined by more than 50 percent, according to CoinMarketCap.

In particular, the price of bitcoin cash, which forked off the original bitcoin network in 2017 with Bitmain’s support, declined by over 70 percent.

The nine-month financial update will not be revealed to the public unless Bitmain can proceed to a listing hearing with approvals from the HKEx before the six-month window closes on Mar. 26, the source said.

And it remains an open question whether that will happen, since, as previously reported, the HKEx is hesitant to approve applications from cryptocurrency mining equipment makers due to uncertainties about the sustainability of their profits.

UPDATE (19, February 16:10 UTC): This article has been updated to include a subsequent statement from Bitmain in Chinese media.

3. 18/02/2019 23:00
Will the Crypto Community Torch Jamie Dimon?

Will the crypto community torch Jamie Dimon?

Now, before I get “deep-stated” off social media, I need to clarify that I am most definitely speaking metaphorically here. Actual violence is never an option, kids.

I am referring to twin occurrences in the world of blockchain technology that offer competing visions of how it will develop.

The first was the widely reported news that that JPMorgan, whose CEO is the notoriously anti-bitcoin Dimon, will issue a JPM-branded digital currency, managed by its own permissioned distributed ledger, for use by its large-scale corporate and institutional clients operating within the bank’s $6 trillion daily wholesale payments operations.

The second was the growing interest within the crypto community around the Lightning Torch, an experiment launched on January 19 that’s revealing aspects of both the technical and social functionality of the nascent Lightning network. As communicated over Twitter using the hashtag #LNTrustChain, users who receive the torch’s growing pool of bitcoin are asked to add 10,000 satoshis (0.0001 BTC, or approximately 35 cents) and pass it onto someone who they trust will send the torch to someone else.

After 199 hops and only a few snafus, the torch on Friday afternoon was still alive in the hands of Meltem Demirors, Chief Strategy Officer at CoinShares, and it contained 3.35 million satoshis. Once the total reaches a hard limit of 4.39 million satoshis, or around $156, the community has resolved to donate the funds to a charity.

A tale of two ‘crypto’ projects

There you have it: One centrally managed, corporate initiative to improve global transfers for a business that moves the equivalent of almost a third of U.S. GDP every day, and a second, separate project that’s led by a decentralized community, and which, after almost a month, is yet to reach its top value of $156.

Naturally, what JPMorgan is doing is getting more attention in the mainstream press, not just because of the sums involved but also because the apparent disjuncture between Dimon’s disdain for bitcoin and the bank’s embrace of what it’s calling a “cryptocurrency” makes a good headline. (For the record, I concur with Coin Center’s Jerry Brito: JPM Coin is not a cryptocurrency.)

But notwithstanding the sophisticated cryptography and protocol design behind JPMorgan’s Quorum distributed ledger system and this digital currency implementation, I’d argue that the Lightning Torch users are working on a much bigger and more important problem.

They are mapping out the framework for a radically different peer-to-peer, instantaneous payments system that involves no intermediaries. It’s a model for global, digital cash.

That’s a much bigger deal than a bank using a distributed ledger, one that it controls, to enable large institutions it already works with to more efficiently shift money around within the same intermediated banking system.

Don’t get me wrong: what JPMorgan is doing may well unlock a huge amount of value in the massive, friction-filled world of cross-border fund movements. For the time being, multinational businesses will continue to use what they are used to: dollars and banks. When one of the biggest banks comes up with a more efficient way to send and receive dollars, why wouldn’t they use it?

But, let’s face it, trillions of dollars or not, JPMorgan, by building a system that intrinsically depends on its own intermediation, is not doing anything nearly as radical as peer-to-peer transactions in bitcoin over the Lightning Network.

The proof of that, ironically, lies in the fact that Lightning Torch is dealing in in small amounts. The overhead-heavy, trust-intensified, middleman-laden infrastructure of the banking system makes it prohibitively costly to send tiny amounts through it, regardless of whether the instrument of exchange is digital or not.

But people, if not large corporations, need to send small amounts to each other, all the time. The same will go for billions of devices on the Internet of Things. Efficient, decentralized, electronic micropayments will be vital to the online economy of the future.

It’s one reason why Jack Dorsey, CEO of Twitter, sees bitcoin eventually being the “native currency” of the Internet and why, as an investor in Lightning development company Lightning Labs, he was one of the participants in the Lightning Torch relay.

Why Lightning Torch matters

There’s no guarantee of success for Lightning, a so-called “Layer 2” solution to bitcoin’s scaling and cost challenges that achieves greater efficiency by opening smart contract-controlled, peer-to-peer payment channels operated off-chain. Some worry that the only way the technology can foster a viable global network of interlinked payment channels is for profit-making companies to take charge of ever-growing hubs in what would be a de facto centralizing solution.

That’s why experiments like the Lightning Torch relay, as trivial as they might seem to outsiders, are vital. People involved in Lightning’s development need to experience real-world functionality. This has always been the case for the evolution of bitcoin itself, which, beyond finding bugs in the code, also required community leaders and entrepreneurs to figure out the social and economic components of the overarching exchange system.

No wonder people have drawn comparisons to this event and past community initiatives to test bitcoin’s real-world value, such as Laszlo Hanyecz’s 2010 purchase of two Papa John’s pizzas for 10,000 BTC. (There’s even a nod to that with a new Lightning app that lets you buy pizza.)

These kinds of low-stakes transactions matter, both because they are a risk-minimizing way to demonstrate real-world functionality and because engaging people in all the complex aspects of exchange systems can help designers come up with better solutions.  Andreas Antonopoulos told CoinDesk that because payment routing is not yet automated, as the size of the torch gets larger, users have been challenged to find workable routes to get money to new recipients through their interlinked networks of payment channels. This will help people unearth bugs in the system until it can be more automated, he noted.

Bitcoin’s initial success in building out a real-world community of users on the basis of similarly small-scale experiments is what ultimately put cryptocurrency, and later blockchain technology, onto the radar of the world’s banks, and led them to explore aspects of that technology for their own usage – albeit by stripping out the more threatening, decentralized components.

There’s a straight line from Hanyecz’s bitcoin pizza purchase to JPM Coin, in other words.

As a community of users emerges around Lightning’s decentralized payments model, how will banks and other incumbent institutions respond?

4. 17/02/2019 20:58
Maker’s MKR Crypto Outperforms in February with 37% Gains

The ethereum-based token maker (MKR) is outperforming the broader markets with a 37 percent gain so far in February.

Ranked 16th by market capitalization on CoinMarketCap, 1 MKR was valued at 4.6 ETH on Feb. 14 – the highest level since Oct. 8 – and was last valued at 4.37 ETH. The pullback is likely associated with profit-taking following a jump to 129-day highs.

MakerDAO is a smart contract platform on the ethereum blockchain, backing the value of DAI (DAI) – it’s native stablecoin, which is backed by ether and is soft-pegged to 1 USD – through a system of Collateralized Debt Positions (CDP). This loan payment system uses ethereum’s ether (ETH) token as collateral, necessary for the governance of DAI throughout the Maker ecosystem.

Currently down 5.39 percent from its recent peak, MKR has still excelled over the month as it continued higher than the previous month’s peaks, a sign that the bearish market structure is beginning to falter.

Maker tokens are created or destroyed depending upon certain price fluctuations of the DAI coin in order to keep it as close to $1 USD as possible. The platform has been incredibly successful throughout the crypto bear market, with about 2 percent of all Ethereum now locked in MakerDAO loans.

The chart above demonstrates rampant fluctuations in MKR’s price since before the new year began, with a recent higher-high trend taking shape and the 2019 candles printing larger bodies as greater liquidity flows to the market.

Pooled Ether (PETH)

As part of the system, users pool their ether together automatically and receive DAI.

As of now, a total of 1,970,339.45 ETH are locked up in the primary Maker contract, representing roughly 1.87 percent of all 104,862,328 ETH in circulation – significantly higher than 1 percent seen in November.

DAI tends to be overcollateralized reportedly by more than 200 percent. So, for every DAI created, there is at least $2 to $3 worth of ETH stored in CDP. As a result, when ETH’s price drops, more of that cryptocurrency needs to be locked up in order to keep DAI collateralized. MKR tokens are also used to pay transaction fees on the Maker system and provide holders with voting rights within Maker’s ‘continuous approval voting system’.

Market Developments

MakerDAO made the decision recently to increase its stability fee from 0.5 percent to 1 percent in order to reduce and smooth fluctuations in DAI’s price peg of the USD, a welcome move seen by many as a positive step toward greater economic assurances and stability from the team.

Also of note Uniswap, an automated Ethereum exchange protocol overtook Ethfinex exchange this week as the number one venue for trading MKR/ETH, with over $329,000 in USD value traded over a 24-hour period.

The exchange offers a reduced price tag, while other exchanges have MKR listed at a premium, paving the way for arbitrage trading between Ethfinex and Uniswap.

Eventually over time that gap should begin to close its spread as buying on Uniswap and selling on Ethfinex will result in a price convergence in the long run, but for now, Maker has a chance to continue exceeding expectations.

5. 16/02/2019 02:46
Make Bitcoin Fun Again’: New Lightning App Lets You Buy Pizza With BTC

Over 150 people bought pizza with bitcoin this week by using the Lightning Network.

The crypto payments startup Fold, which launched the web-based Domino’s portal on Wednesday, basically makes fiat pizza purchases on behalf of hungry lightning users. Fold product lead Will Reeves put it this way:

“We’re trying to make bitcoin fun again and illustrate that lightning is at a point where it is mainstream-ready.”

The Fold web app plans to integrate lightning for all its shopping options over the next six months, including Starbucks, Whole Foods, Dunkin Donuts, Target and Uber. Since these aren’t official partnerships, the crypto startup places orders on users’ behalf and converts payments to fiat to offer a seamless experience. It remains to be seen how this will factor into the company’s revenue model once the lightning options are out of beta. (A request for comment from Domino’s was not returned as of press time.)

“The average purchase was $25,” Reeves said of the Domino’s experiment. “Since the average lightning payment is usually less than $5 so this was able to stretch the Lightning Network to higher value payments for the first time at volume.”

According to 1ML, the overall network set new record highs this week with more than 26,588 payment channels able to facilitate $2.4 million, a 39 percent increase compared to last month. Reeves said orders came in from every state across the U.S.

“It was pretty evenly spread across the country, which was great to see,” he said.

After the Fold lightning integration, Reeves said the startup plans to launch mobile versions of the Fold app for both Android and iOS. This seven-person startup, which is incubated by venture studio Thesis, is currently fundraising and looking to diversify its retail brand offerings.

Reeves said Fold currently serves 1,500 monthly users, facilitating roughly 35,000 total bitcoin transactions since launching the first version of the app in 2014. Until now, the largely bootstrapped project was funded by a small seed round from Boost VC. Looking forward, Reeves said the plan is to partner with crypto wallet startups for direct integrations.

“The largest barrier to conversion was setting up a new lightning wallet,” Reeves said, adding there were roughly 1,500 orders but only a 10 percent conversion rate because people struggled to use lightning-enabled bitcoin wallets.

“We’ve learned a lesson that in order to grow the lightning ecosystem we not only need the best products, but the best education as well,” Reeves said. “We will incorporate that into our plan going forward.”

Beyond wallet integrations, Reeves said Fold is also partnering with the custody solutions startup Casa, for a direct integration with the Casa browser extension so that hardware node owners can also use it to buy pizza.

The Fold team is hardly the only one pushing lightning toward mainstream adoption.

February 2019 also witnessed the launch of Koala Studio with its lightning-powered chess game, allowing users to wager with tiny amounts of bitcoin. Plus, lightning users have already completed 3,536 jobs through the bitcoin-centric freelance job site LND Work.

Meanwhile, Square CEO Jack Dorsey said during a recent podcast that his company’s Cash App will integrate lightning capabilities sometime in the future. The diversity of projects related to this protocol makes Reeves even more bullish for the possibilities in 2019.

 

Latest News

21/02/2019 09:53
A David vs. Goliath Battle Is Brewing in Ethereum Decentralized Exchange Race
A project funded by one of 2017’s largest initial coin offerings (ICOs) is facing fierce competition from a brand-new competitor funded by a modest grant. Bancor, which raised $150 million during the ICO craze, was founded to make it easy to trade even illiquid ethereum tokens. T... 
19/02/2019 23:33
Mining Giant Bitmain Posts $500 Million Loss in IPO Financial Filing
Mining hardware giant Bitmain lost about $500 million in the third quarter of 2018 amid an overall bearish market for cryptocurrency, CoinDesk has learned. The Beijing-based company recently provided an update on its financial results to the Hong Kong Stock Exchange (HKEx), which is reviewing Bi... 
18/02/2019 23:00
Will the Crypto Community Torch Jamie Dimon?
Will the crypto community torch Jamie Dimon? Now, before I get “deep-stated” off social media, I need to clarify that I am most definitely speaking metaphorically here. Actual violence is never an option, kids. I am referring to twin occurrences in the world of blockchain technology... 
17/02/2019 20:58
Maker’s MKR Crypto Outperforms in February with 37% Gains
The ethereum-based token maker (MKR) is outperforming the broader markets with a 37 percent gain so far in February. Ranked 16th by market capitalization on CoinMarketCap, 1 MKR was valued at 4.6 ETH on Feb. 14 – the highest level since Oct. 8 – and was last valued at 4.37 ETH. ... 
16/02/2019 02:46
Make Bitcoin Fun Again’: New Lightning App Lets You Buy Pizza With BTC
Over 150 people bought pizza with bitcoin this week by using the Lightning Network. The crypto payments startup Fold, which launched the web-based Domino’s portal on Wednesday, basically makes fiat pizza purchases on behalf of hungry lightning users. Fold product lead Will Reeves...