Author: Sam Deering

Sam Deering is a cryptocurrency enthusiast with background in computer programming. He loves to learn, share and write about anything crypto news.

Categories
Ethereum Trading

DeFi Traders Are Making Millions with Triangular Arbitrage

New research on the Ethereum blockchain has revealed at least $318M worth of ETH was made in profits through DeFi bot arbitrage trading since the beginning of 2020.

The data shows that the technique has netted at least $57M USD (47,600 ETH) in January 2021 and at least $107M USD for February 2021. Before analysing a couple of real-world cases, here is a quick primer on the theory.

What is Triangular Arbitrage?

In plain English, the price of the cryptocurrencies can vary across different exchanges and you can swap them to make a profit.

Triangular arbitrage (also referred to as cross-currency arbitrage or three-point arbitrage) is the act of exploiting an arbitrage opportunity resulting from a pricing discrepancy among three different currencies […]. A profitable trade is only possible if there exist market imperfections. Profitable triangular arbitrage is very rarely possible because when such opportunities arise, traders execute trades that take advantage of the imperfections and prices adjust up or down until the opportunity disappears.

Wikipedia

Highly-volatile new DeFi crypto markets provide market imperfections which don’t often exist in Forex exchange markets – creating opportunities for arbitrage traders.

Let’s now take a look at recent examples of Triangular Arbitrage trades.

Real Trading Example #1

This trade uses the programmable DeFi liquidty pools of Uniswap and Balancer and the 3 coins: USDC (stablecoin), OPT, and AKRO.

Triangular Arbitrage example 1 on Etherscan showing the Blockchain transactions

The trading steps:

  1. Swap USDC for OPT on Uniswap
  2. Swap OPT for USDC on Balancer
  3. Swap USDC for AKRO on Balancer
  4. Swap AKRO for USDC on Uniswap

The numbers:

  • $1,431 USDC in
  • $1,615 USDC out
  • $84 USDC profit (after $100.62 USD fees deducted)

As you can see, there was a profit made by selling on one platform, swapping and then buying on the other platform. It is also worth noting that currently DeFi transactions are fees are very high, but they still made a profit.

Real Trading Example #2

This example is slightly different to the first one, as this trade uses SushiSwap and Balancer and the 3 coins: USDC (stablecoin), ETH, and SIL (an old ICO coin called Silvar Coin).

Triangular Arbitrage example 2 on Etherscan showing the Blockchain transactions

The trading steps:

  1. Swap ETH for USDC on Balancer
  2. Swap USDC for SIL on Sushiswap
  3. Swap USDC for ETH Sushiswap

The numbers:

  • $29,938 USD worth of ETH in
  • $60,611 USD worth of ETH out
  • $8,609 USDC profit (after $22,064 USD fees deducted)

What makes this trade different is that the contract has SELF DESTRUCT sub-contracts attached where the sender continuously re-bids the same trade but at higher GAS fees to protect it from other trading bots that noticed the same opportunity. This has a bi-product negative effect on the Ethereum blockchain by have pushing up the GAS fee ridiculously high and congesting the network.

DeFi Exchanges Usage

The majority of profits are being made using Uniswap with 47% of the total trades, followed by Sushiswap 22%, Balancer 13% and dYdX 9.4%.

Image by MEV Explorer

Further Arbitrage Trade Musings

As the Ethereum blockchain is public, these arbitrage trades can be tracked and there is a website called Flashbots which has a leaderboard showing all the recent trades.

Here are some interesting ones:

  • This successful trade on Uniswap between $AKRO, $PICKLE, $CREAM, $YFI, $KP3R, $SUSHI and $YPIE turning 3 ETH into 153 ETH, with a profit of $188,867 USD (including a massive $13,021 USD transaction fee!)
  • This successful trade on Uniswap between $ETH, $UDO and $USDT turning 0.4 ETH into 59 ETH, with a profit of $78,836 (including a massive $17,667 USD transaction fee!)
  • This failed trade on Cream Finance where the sender ran out of GAS while trying to attempt an arbitrage trade. Luckily (or so) there was another trader waiting and their trade was successful in capturing the arbitrage opportunity making around $5,362 USD profit.

Averting the ETH Network Congestion Crisis

As the Ethereum community tries to improve the network, there is a proof of concept being developed to help the solve the problem of trading bots congesting the network by prioritising the transactions. If you want to contribute there is a public discussions board on Github.

Further Reading

Categories
Crypto News NFTs

You Can Now Buy Tweets as NFTs

NFT mania is in full swing, and you can now buy your favourite tweets with crypto. A project called Valuables by Cent has recently launched, allowing Twitter users to sell their tweets minted on the Matic blockchain as an NFT.

Some of the tweets have sold for thousands of dollars. Currently the most expensive tweet sold is this one by CZ of Binance.

How it Works

Anyone can make an offer on any tweet. Then it’s up to the author of the tweet to login and accept the offer. You can use a web browser crypto wallet such as metamask extension to interact with the website and claim your ETH payment, with 95% going to the tweet author and 5% going to the project as sale commission. Read more on the project FAQs.

View Tweets on the Matic Blockchain

Why Would You Pay to “Own” a Tweet?

Owning any digital content can be a financial investment, hold sentimental value, and create a relationship between collector and creator. Like an autograph on a baseball card, the NFT itself is the creator’s autograph on the content, making it scarce, unique, and valuable.

from Valuables by Cent FAQs

Whats next for NFTs?

Could people buy Tiktok’s? Plain colors? Images? Grains of sand?

Categories
Crypto News NFTs

Plain Colours NFTs Are Selling For Thousands of Dollars

Plain colours are being are auctioned as NFTs on Tezo’s blockchain in a project called tzcolors. Yes, you read that right: colours such as red, blue and purple are being sold for money as crypto tokens.

Some colours such as Platinum have sold for as much as 675 tez, which currently is around $3,700 AUD! And Twitter blue is on a starting price of 100,000 tez which will set you back around half a million Aussie dollars at the time of this writing.

There are 1690 unique colours called “tzcolors” divided in three categories: Standard, Epic and Legendary. The project is basically quoted as “an experiment to showcase the tooling of the Tezos ecosystem like Beacon, Taquito, SmartPy”.

How it works

Each colour artwork is sold in a 7 day auction. On completion, the highest bidder wins the colour and can claim it. An owner of a colour artwork can create a new auction and specify the minimum bid amount and the auction duration. Each bid additionally extends the auction end time by 5 minutes.

The colours are priced in Tezo’s coin called XTZ (referred as “tez”) with the exchange being roughly $5 AUD = 1 XTZ at the moment.

Another example: if we take a look at the “lemon iced tea” colour, it’s being sold for 10.1 tez – currently worth around $50 AUD. That’s some pretty expensive tea!

Tezos Blockchain Transaction

What are NFTs?

A Non-Fungible Token (NFT) is a special type of cryptographic token which represents something unique; non-fungible tokens are thus not mutually interchangeable. This means each colour artwork is represented by one unique token that only exists once.

NFT mania is taking off right now! Related reads:

Categories
Australia Bitcoin Gold

Perth Mint Says Gold is Far More Decentralised Than Bitcoin

Australian bullion company Perth Mint, has stated in a recent report that they think the gold market is far more decentralized than Bitcoin.

The article, written by Jordan Eliseo – Manager Investment Research at Perth Mint, explains reasons why they think Gold is better than Bitcoin.

The gold market is far more decentralized, with the precious metal mined, refined, and owned by central banks, households and investors the world over. Bitcoin on the other hand is predominately held by a small group of owners, while mining is overwhelmingly concentrated in one country.

Perth Mint “Gold vs Bitcoin” article

Some key points in the article (with some commentary):

  • “Gold breaks its price correlation with Bitcoin – since August 2020 Bitcoin has been soaring, while Gold has declined.”
  • “Gold has a multi-millennia track record as a store of value and has been the best performing asset in equity market corrections over the past 50 years. In contrast, it is far too early to say that Bitcoin is a store of wealth.”
  • “Free storage options for gold can be much lower risk than free bitcoin storage options, given the counter-party risk inherent in the latter.” The free storage with Perth Mint is for “storage with the working inventory of the mint”.
  • “Gold is a lower cost investment than bitcoin, with gold ETPs like Perth Mint Gold (ASX:PMGOLD) offering gold exposure for 0.15% p.a., versus 1-2% p.a. for existing bitcoin products.” Bitcoin ETF EBIT is at 0.75% p.a.
  • “Gold’s network effect is far stronger than bitcoin’s, best evidenced by the perpetual marketing of bitcoin itself as digital gold. Gold is not marketed as analogue bitcoin!”
  • “there seems little compelling reason for institutional investors and large corporations to include bitcoin in diversified portfolios or on company balance sheets.” Many companies have already adding Bitcoin to their balance sheets. Large fund advisors such as Kevin O’Leary have publicly said that the reason they are holding a 3% allocation of BTC because it’s as a hedge against inflation. They also hold a basket of Fiat currencies, because they hedge against each other. He also said they he has owned Bitcoin for a long time but could not do or say anything due to regulations, and he believes with the introduction of the approved ETFs, these regulations are now being adopted by large investors.
  • “Bitcoin remains under threat, both from hard forks and corruptions of the bitcoin network itself, well as thousands of other cryptocurrencies.”
  • “By the end of 2015, more than 70% of all the bitcoin that will ever supposedly be issued had already been mined, and was held by a small group of people, before 99.9% of the world had ever heard of it”
  • “Research published by Glassnode in early 2021 suggest just 71% of bitcoin is controlled by the largest 2.1% of bitcoin network entities.”
  • “Bitcoin beats gold hands down from the perspective of generating speculative returns in rapid fashion — but it is 12 times more volatile than the precious metal.”
  • “Corruptions and or degradation of the Bitcoin network itself (for example, in 2010, someone altered the network and temporarily created more than 180 billion bitcoin, while there have been at least 40 bugs detected in its short lifespan). Gold on the other hand is not a piece of software. It is an inert physical metal. It will never evolve the way the Bitcoin network can and has. It will also never degrade.”
  • “The gold market is far more decentralized, with the precious metal mined, refined, and owned by central banks, households and investors the world over.” See video below for the debate between Bitcoin and Gold.

The Bitcoin vs Gold Debate

The debate between Bitcoin and Gold has been ongoing for quite a few years now with both having pros and cons. Bitcoin has been named “the digital gold” with investors large and small adding it to their portfolios.

For those of you that haven’t seen this debate between Peter Schiff and Erik Voorhees, it’s a great watch.

Categories
Bitcoin Bitcoin Mining China Mining

Recent BTC Price Dip Linked To China Mining F2Pool Selling Off

China are shutting down some of their mining operations and mining group F2Pool, who have many mining farms in China, are transferring BTC out of their wallets frantically.

China to Ban Mining Operations

As quoted by CNBC, China’s Inner Mongolia region plans to ban crypto mining and shut down existing operations by April 2021 – due to high energy consumption.

If we take a look at the some of F2Pool mining farms locations we can see they are located in the Inner Mongolia region of China – the same place as the ban.

F2Pool Mining Farms in Inner Mongolia

As China start to head towards a cleaner ecosystem, they might ban the rest of the Chinese mining locations, and that accounts for around 65% of all bitcoin mining globally – which could have a short term impact on BTC.

F2Pool BTC Outflow

If we take a look at the data in the charts provided by CryptoQuant we can clearly see the massive outflow of BTC from F2Pool affiliated wallets.

BTC: F2Pool Affiliated Miners Outflow Source

This consistent massive outflow of BTC is not “normal” for a BTC mining pool. If we compare it to the Antpool group which has 11% share of the total BTC pools, it averages around 300 BTC outflow mark every few days. F2Pool which has 18% of the share, you would expect the outflow to be only slightly bigger, but at the moment you can see, its considerably bigger.

F2Pool Affiliated Miners Outflow – zoom in showing 14,000 BTC outflow for Feb 25

That giant outflow on Feb 21 could have sparked the the BTC dip, with futures contracts being liquidated causing a domino effect.

F2Pool Affiliated Miners Outflow – zoom in showing hourly outflow vs BTC price drop

It will be interesting to see if F2Pool release something official about closing operations in China. Stay tuned for more news.

Categories
DeFi Stablecoins

Introducing Origin Protocol, The First Stablecoin That Earns a Yield

Blockchain-powered commerce project Origin Protocol has created the OGN token (nicknamed the “Origin Dollar”) which can be staked to earn up to a 25% yield.

Using the OUSD platform you can select from 3 options OGN staking options, which you will be able to claim your OGN principal plus interest at the end of the staking period.

  1. 30 days lock-up earning 7.5% APY
  2. 90 days lock-up earning 12.5% APY
  3. 365 days lock-up earning 25% APY

In order to participate you need to use a DeFi wallet to connect and deposit your funds which will then be secured using an Ethereum smart contract. See the OGN token details which include supply and unlock schedule. Yield-generating DeFi products are brand-new and you should read the risks involved before participating.

About Origin Protocol

The team has a lot of pedigree with serial entrepreneurs including a founder of PayPal, early employees at YouTube, and engineering managers at Google and Dropbox.

Fortune Magazine’s Balancing the Ledger with Origin Protocol’s Founders

The company is projecting that blockchain ecommerce is going to be one of the fastest growing areas in the blockchain industry during the next few years.

Benefits of Origin Protocol include:

  • Lower fees – Buyers and sellers share 20-30% in savings when middlemen are removed
  • Better incentives – Everyone can own a stake in the network by contributing to its growth
  • Increased access – 2 billion unbanked people can access new markets globally
  • More resilience – Blockchain-powered commerce can’t be banned or shut down

Dshop: Blockchain-powered Online Commerce

Along with the stablecoin, Origin also introduced a new service called Dshop. It’s an e-commerce platform that can be used to create a free online store, harnessing the power of a decentralized platform and allowing customers to pay in cryptocurrencies.

It seems clear that blockchain technologies will redefine online commerce and allow both buyers and sellers to benefit from lower costs and improved infrastructure.

Categories
Basic Attention Token Crypto News DeFi

BAT Price Rises 30% on Brave Browser Building a DEX Announcement

Privacy web browser Brave are planning to build a Decentralized Exchange Aggregator which will enable its users to swap tokens using the browser.

The browser recently achieved more than 25 million monthly users, who can get rewards using the Basic Attention Token (BAT) and will now be able to receive further benefits, like discounts on transaction fees for BAT holders.

New features of the Platform include:

  • A new, native Ethereum wallet implementation, replacing the existing Crypto Wallets in Brave.
  • Redesign of the current UI with UX designed to reduce friction among accounts.
  • Mobile as well as desktop support.
  • A JavaScript Ethereum Provider API (window.ethereum) supplied to web pages by default, without the need to install a separate extension.
  • Custom experiences for DeFi and NFT use-cases.
  • Options for buying crypto with fiat payment methods such as credit/debit cards, bank accounts, and smartphone wallets.

Benefits of BAT token holders include:

  • Discounts when utilizing BAT for paying transaction fees.
  • Discounts for users that hold BAT balances in their wallet.
  • Multi-chain support with many assets and blockchains.

One of our goals is to make tokens and crypto easy to use for all of our users. The custom DEX which we plan to explore could help achieve this goal by enabling users to exchange BAT and other assets at lower fees, and with better user interface and security, by being built into Brave.

Brendan Eich, Brave CEO and co-founder

Good News for BAT HODLers

Fans, holders and HODLers of the BAT token were rewarded with a recent price jump since the announcement.

source

Decentralized Web

The new features will be the first of any web browser and will provide a new “decentralized web” for Brave users, including:

  • BAT utility for search engines.
  • Use of BAT for e-commerce.
  • Use of BAT for VPN and various private communication platforms.
  • BAT rewards for content verified on IPNS.
  • Ability to use BAT for content pinning on IPFS (file sharing).

Take a look at the BAT Roadmap 2.0 for more information.

Categories
Crypto Art NFTs Tokens

NFTs Are Selling For $1000s – Why Do They Have Value?

Digital art NFTs (Non-Fungible Tokens) are being sold for thousands of dollars on online marketplaces such as Rarible. And considering some of them are computer generated at low to no cost – why are they selling at such high prices?

An example of NFTs for sale are these Crypto Gems – which are photo realistic unique creations of digital gems handcrafted by Lux Expression.

Crypto Gems NFTs for Sale on Rarible

The price is shown in WETH – essentially a wrapped Ethereum token which has the same price of ETH, but it can be used on DeFi much more easily.

Mozambique Ruby NFT latest bid $1,205

What are Non-Fungible Tokens (NFTs)?

A non-fungible token (NFT) is a special type of cryptographic token which represents something unique; non-fungible tokens are thus not mutually interchangeable. This is in contrast to cryptocurrencies like bitcoin, and many network or utility tokens that are fungible in nature.
Non-fungible tokens are used to create verifiable digital scarcity, as well as digital ownership, and the possibility of asset interoperability across multiple platforms. NFTs are used in several specific applications that require unique digital items like crypto art, digital collectibles, and online gaming.

Wikipedia

Community Gives NTFs Value

According to billionaire investor Mark Cuban, the value of an NFT is determined by its community and the size of the artist’s following. Cuban also estimates that NFT’s adoption will grow to become a $100b marketplace used for music, photography, sports, moments, or even memes.

People seem to be buying NFTs for a variety of reasons, like:

  • “I like collecting things”
  • “It’s fun”
  • “I like the artist”
  • “I like the art itself and want to own it”
  • “I want to put the art in my virtual home in the future”
  • “There is a limited amount of them and I want to resell for a higher price and make a profit”

Celebrities Promoting NFTs

There are many celebrities promoting NFTs such as Gary Vaynerchuck and Linkin Park singer Mike Shinoda. From Gary’s perspective, NFTs will be huge, not really as investments but more as collectables.

CryptoPunks NFTs Collection

An example of auto generated NFTs are these 10,000 unique collectible avatar characters called CryptoPunks, with proof of ownership stored on the Ethereum blockchain.

At the time of this writing, some of them are selling for even $55,000 USD, arguably an insane amount of money to pay for an auto-generated image.

The source code that generates these images is on GitHub and you can see them all in the image below.

CryptoPunks image on GitHub
Categories
Banking DeFi

Mark Cuban Calls DeFi the Start of Personal Banking

In a recent video interview, the billionaire entrepreneur Mark Cuban has been digging deep into DeFi and has come to the conclusion that it could revolutionise the way we will do banking in the future.

During the interview he touched on a number of DeFi subjects including the introduction of personal banking, removing the friction of bankers, and the current highly-frustrating lengthy processes which will get replaced by DeFi platforms.

Customers Will Take the Path of Least Resistance

Cuban claimed that customers will always take the path of least resistance – when they can use DeFi just as easy as credit cards, then it will take off in adoption. We saw the same thing happen with the internet. He also mentioned that DeFi is currently very complicated to understand and has a long way to go in becoming simple enough for everyone to use.

Yield Farming: a Risky Game?

The co-host of Shark Tank believes that DeFi yield farming is a dangerous place for small investors – mainly due to the high transaction fees. He compared DeFi yield farming to a game of musical chairs, many players are liquidity chasing but the situation may be challenging when the music stops (and no one seems to know when it will).

Smart Contract Protocols Will Revolutionise the Way We Do Business

Cuban also explained that once standard DeFi protocols are established and set in place, smart contract systems can then be built, and will disrupt many industries. For example: once royalties can be managed by smart contracts then you’ll see an explosion in industries including healthcare, music, movies, photography sport and many others.

Categories
Bitcoin Market Analysis

What Caused the Recent Crypto Market Drop – Whales, Elon, Kraken

Lets take a look at what might have caused the recent drop in the crypto market – with Bitcoin dropping from around A$70k to A$60k.

Please feel free to leave comments on the Twitter thread if you think we may have missed something.

Bitcoin Whales

Big Whales (over 100 million to 1 billion dollars) transferred from unknown wallets (presumably cold storage) into crypto Exchanges on 23rd February, where they could be selling or trading in the open market – affecting the crypto prices. Here are some of the recent ones.

This news also follows some recent related news we covered, where a Bitcoin Whale Moves AU$1 Billion of BTC into Storage.

Elon Musk and Peter Shifft

In a friendly conversation on Twitter, Elon suggested that Bitcoin price might be high. Peter has been tweeting to everyone famous recently saying how much he hates Bitcoin and loves Gold. There is nothing new there, but when Elon says the price might be a bit high, that could have prompted some people to take profits. Also on a side note, Elon called Peter an eggplant emoji – which everyone found hilarious. And now it seems Peter has put it in his profile name. Haha.

Kraken BTC Sell off

Kraken is investigating the Bitcoin sell off with CEO Jesse Powell stating in a Bloomberg interview (below) that there was a massive Bitcoin sell off on Kraken in the past few days, which caused many liquidations on margin positions. He stated that Kraken might have been hit harder than other exchanges because it provides margin trading. And they would investigate why this happened…

YouTube – Bloomberg Interview with Kraken CEO

Conclusions

This recent pull back might be the first time new crypto traders have seen such a “big” drop. Having been studying this market for quite a few years now and seeing many drops before – has led me to be humble, take profits and never over extend my positions.