Category: DeFi

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DeFi Tokens Waves

DeFi Protocol Waves Surges 120% in a Week Amid New Partnerships

Developments in the crypto space never cease, and projects that continually evolve and survive in the long term are those that remain at the forefront. At the moment, it is the Waves protocol staying atop the innovation wave, and the biggest reason for its latest price increase is its just-announced partnership with Allbridge.

About Waves

Waves, launched in 2016, is a global open-source platform for decentralised applications (dApps). Based on proof-of-stake consensus, Waves aspires to make the most of blockchain, with a minimal carbon footprint. Waves’ technology stack can benefit in any use cases that demand security and decentralisation, such as open finance, personal identification, gaming, and sensitive data.

Data from TradingView suggests that the price of WAVES has rallied 120 percent since its low of US$8.28 on February 22. As it stands, WAVES is trading at US$17.99, according to data from CoinMarketCap.

Why Waves is Pumping

The recent surge of WAVES’ price can be attributed to three different factors:

  • the announcement that the protocol will migrate to Waves 2.0;
  • the partnership with Allbridge that will connect Waves with other popular blockchain networks; and
  • the upcoming launch of a US$150 million fund aimed at fostering Waves’ growth in the US.

Other DeFi tokens such as Anchor Protocol also soared this week amid a new tokenomics model.

Waves’ Partnership with Allbridge

Boosting the price of Waves is its new partnership with Allbridge, a protocol focused on facilitating the transfer of assets between all blockchain networks:

The partnership is part of the larger goal of Waves 2.0 towards universal bridge integration. The intended goal is “to create a unique bridge between Waves and supported EVM as well as non-EVM chains such as NEAR protocol, Solana and Terra”.

According to Waves developers, the goal is to have Allbridge fully integrated by the end of May.

Another DeFi token making waves is Anchor Protocol (ANC), who recently surged 50 percent following the announcement of its new tokenomics model.

Categories
Anchor Anchor Protocol Crypto News DeFi Tokens

DeFi Token Anchor Protocol (ANC) Soars 50% in a Week Amid New Tokenomics Model 

Lending and borrowing protocol Anchor Protocol (ANC) has announced its vision to become the foundational money market on the Terra ecosystem and for DeFi in general.

ANC, the project’s governance token, has rallied from a seven-day low of US$2.68 to a high of US$4.00, gaining almost 50 percent in a week.

Anchor Protocol (ANC) price. Source: CoinGecko

Anchor Protocol offers very high yields for staking, currently 19.32 percent APY on UST stablecoin deposits. This attractive APY beats most others offered in the market.

Anchor is currently the top protocol on Terra in terms of total value locked (TVL). The price rise has seen TVL reach a record US$11.21 billion, doubling in a month and breaking ANC into the top 100 cryptocurrencies by market cap.

New Tokenomics Explained

In a recent Twitter thread, Anchor said it was looking to upgrade its tokenomics. The proposal plans to introduce further economic and governance incentives for ANC investors. People who lock up their ANC tokens for between one and four years will receive increased voting power and more ANC emissions. The longer the lock-up period, the higher the voting power and ANC distribution will be.

Retrograde to Build on Terra

Anchor also announced that a new protocol, Retrograde, will be building on Terra and rolling out a new governance structure for the Terra ecosystem:

It is generally bullish news for the price of tokens to rise after the announcement of new protocols building on the network. For example, DeFi token UMA soared 63 percent following the launch of Across Protocol last November.

It is always wise to be cautious of new DeFi protocols, however, as rug-pulls are a dreaded and constant possibility. Avalanche-based Atom Protocol is an example of this, closing down only hours after it was launched last month.

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Blockchain DeFi

What is Decentralised Finance (DeFi)?

As the world of crypto expands and financial systems evolve, we need to look at one of the most important areas of emerging finance – decentralised finance, or DeFi for short.

DeFi is form of emerging financial technology based on secure distributed ledgers, similar to those used by cryptos. Essentially, DeFi removes the control that banks and other financial intuitions hold on money, financial products, and financial services, and by removing third parties in financial transactions. To gain a complete conceptual understanding of DeFi, we need to take a closer look at the difference between centralised and decentralised finance.

Centralised Finance vs Decentralised Finance

1. Centralised Finance

In centralised finance, money is kept by banks, whose overarching goal is to make more money. Centralised finance involves many intermediaries who facilitate the movement of money between parties, with each attaching their own fees for the use of their service.

To understand how this financial structure works, we use the example of buying a cup of coffee with your credit card. When you purchase your coffee, the charge goes from the merchant to an acquiring bank, which then forwards the card details to the credit card network.

The network clears the charge and then requests payment from your bank. Thereafter, your bank approves the charge and sends approval to the network, through the acquiring bank, back to the merchant. Each entity in this chain receives payment for its services because merchants must pay for your ability to use credit or debit cards.

2. Decentralised Finance

Decentralised finance eliminated the need for third-party involvement in financial transactions by allowing people, merchants, and businesses to conduct financial transactions through emerging technology. Eliminating intermediaries is accomplished through peer-to-peer financial networks that use security protocols, connectivity, software, and hardware advancements. Blockchain technologies such as those used by cryptocurrencies enable DeFi to work. Blockchains are distributed and secured databases or ledgers, and applications called dApps are used to handle transactions and run the blockchain.

Any person with an internet connection can lend, borrow and trade using software that records and verifies financial actions in distributed financial databases. Distributed databases are accessible across many locations, as they collect and aggregate data from all users and use a consensus mechanism to verify it.

Through this technology, DeFi can get rid of centralised finance models by allowing anybody to use financial services anywhere, regardless of location and who they are.

Peer-to-Peer Lending Lies at the Core of DeFi

Peer-to-peer (P2P) financial transactions are one of the key aspects behind DeFi. A P2P DeFi transaction involves two parties who agree to exchange cryptos for goods or services with a third party involved. To fully understand this, we will use the example of obtaining a loan in centralised finance. In this case, you would need the bank or another form of lender to apply for one. Should you be approved, you would pay interest and services fees for the privilege of using the lender’s services. P2P under DeFi does not mean there would be no interest and fees. It does, however, mean that you will have many more options since the lender can be from any location across the globe.

In the case of DeFi, you would make use of decentralised finance applications (dApps) to enter your loan needs, and an algorithm would match you with peers that meet your needs. You would then have to agree with one of the lenders’ terms, and you would thereafter receive your loan.

The transaction in this instance is then recorded on the blockchain, and you would receive your loan after the consensus mechanism verifies it. Then the lender can start collecting payments from you at agreed-upon intervals. When payment is made through your dApp, it follows the same process in the blockchain. Only then are the funds transferred to the lender.

Some Key Attractions of DeFi for Consumers:

  • The elimination of fees that banks and other financial companies charge for the use of their services.
  • Consumers will be able to hold their money in a secure digital wallet instead of a bank.
  • Any person with an internet connection can make use of DeFi without needing approval, thereby increasing access to financial services.
  • Funds can be transferred within minutes or seconds, so transaction times are reduced.
Categories
Bitcoin DeFi Ethereum Wrapped Bitcoin

Wrapped BTC Inflows Stall Amid Slowdown in Ethereum-Based DeFi

In further evidence of a cooling crypto market, flows of wrapped Bitcoin (wBTC) into Ethereum have flatlined since December 2021. 

While wBTC circulation has grown rapidly since its launch in late 2018, it has stagnated so far this year due to weakened interest in DeFi.

Wrapped BTC Reflects HODLers’ Demand for DeFi

In essence, wBTC is an ERC-20 token used to represent BTC on the Ethereum network, which allows BTC holders to take advantage of decentralised finance (DeFi) opportunities on Ethereum without having to sell their BTC. Currently, 66 percent of all wBTC supply is held by smart contracts.

Similar to dollar-backed stablecoins like USDC, wBTC is backed 1:1 with actual BTC. The process of minting new wBTC involves real BTC being sent by the purchaser to a merchant, who in turn sends the BTC to a custodian (in this case, BitGo). The BTC is then held in a multi-sig by the custodian and a corresponding amount of wBTC is minted on the Ethereum network.

Calm After the Storm

Since its launch and until late last year, wBTC circulation grew rapidly, more than doubling between January and December 2021, eventually peaking at just over 260,000 tokens – approximately 1.4 percent of the total Bitcoin supply. 

wBTC supply. Source: Coin Metrics

In the months since though, wBTC circulation has stagnated at around the 260,000 mark, reflecting a general weakening trend across the DeFi space. This is reflected in data from DeFiLlama, which shows the total value locked in DeFi protocols has declined to below US$200 billion, having peaked at over US$250 billion in late December.

The flattening of DeFi markets partially reflects the state of the broader market, with the total crypto market cap down some 40 percent since it peaked at nearly US$3 trillion in November 2021. It may also reflect a flight to safety after a series of high profile DeFi hacks and rugpulls, such as the US$326 million Wormhole hack and the ‘polite’ rugpull on the Avalanche network.

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Crypto News Crypto Wallets DeFi Ethereum Hackers

Journalist Reveals How She Identified 2016 DAO Hacker Who Stole 3.6 Million ETH

American crypto journalist Laura Shin, backed by research from blockchain surveillance firm Chainalysis, claims to know the identity of the hacker who drained millions of dollars’ worth of ETH from The DAO in June 2016.

Shin accuses Austrian programmer and former TenX CEO Toby Hoenisch of masterminding the US$60 million hack that precipitated the loss of 3.6 million ETH, worth close to US$10 billion on today’s exchange rate.

Hoenisch Denies the Allegations

Hoenisch has already denied Shin’s allegations, reportedly telling the former Forbes senior editor that her “statement and conclusion [are] factually inaccurate”.

The DAO was one of the world’s first decentralised autonomous organisations, serving as an open-source venture fund platform for crypto projects. It had raised 12.7 million ETH, worth around US$150 million at the time, from crowdfunding.

When it was hacked in 2016, nearly a third of The DAO’s funds were drained. Shin and Chainalysis tracked the movement of the stolen funds, which she says led her to Hoenisch.

“We identify the apparent hacker – he denies it – by following a complicated trail of crypto transactions and using a previously undisclosed privacy-cracking forensics tool,” Shin writes, revealing the tool as having been supplied by Chainalysis.

How the Hack Was Engineered

Shin says that whoever hacked The DAO swapped the stolen ETH for BTC and then sent the latter to a Wasabi wallet, which was used to scramble BTC transactions in a process called “mixing”. But Chainalysis was able to “de-mix” the transactions and trace them to four different exchanges.

Evidence revealed someone had exchanged the BTC for the privacy coin Grin, which was withdrawn to a non-custodial Grin node called “grin.toby.ai”. The name “toby.ai” had been used by Hoenisch on various social media accounts and was one of his email addresses, Shin wrote. The IP address hosting that node also hosted another node called “TenX” – the name of Hoenisch’s former company.

According to Shin, Hoenisch was aware of The DAO’s code and had written blog posts warning of potential hacks. Shin breaks down the 2016 exploit in forensic detail in her new book, The Cryptopians: Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency Craze, published this week.

In December, BadgerDAO became the latest DeFi protocol to be hit by hackers, who siphoned US$120 million worth of cryptocurrencies.

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DeFi Hackers

Avalanche-Based DeFi Protocol ‘Polite’ Rugpulls Hours After Launch

Atom Protocol (not to be confused with the Atom token from Cosmos Protocol) has rugpulled investors in the most polite way possible …

‘We Have to Close the Project, Sorry’

Atom Protocol is an Avalanche-based DeFi (decentralised finance) protocol that was shut down this week within a day of launch. At first, the protocol was receiving a lot of hype from the Avalanche community as more participants joined the network and created new nodes:

But all turned out for the worst. Within a day of launch, the developers of the Atom Protocol had left a message on Twitter saying: “There’s a problem/mistake in contracts, we can’t do anything. We have to close the project, sorry.”

Avalanche Community Blames Assure

The Atom Protocol went through a KYC (Know Your Customer) process, which basically verifies the identification of the responsible party behind a financial entity, such as banks. But a KYC is just a way to verify that the entity isn’t managed by malicious actors – it doesn’t prevent them from scamming investors.

The Avalanche community is blaming Assure DeFi, the protocol responsible for Atom Protocol’s KYC process. Assure responded by stating the community was “misunderstanding the role of KYC/verification”:

Assure went on to encourage affected users to complete a scam report, which will help it to further investigate the matter.

‘Just Be Polite About It’

This is probably the most blatant rugpull in DeFi history. So much so that some people decided to just laugh at the absurdity of the event:

Always Do Your Own Research

Neither KYC nor audits guarantee that a DeFi project is 100 percent legitimate, so the best way to proceed is to always DYOR (Do Your Own Research), and always invest only what you can afford to lose.

An audit is, however, much more reliable than a mere KYC process. On January 7, blockchain security firm CertiK identified Arbix Finance as a potential rugpull, warning users to stay away from it and its ARBX token.

Categories
Crypto News DeFi Ethereum NFTs

New Decentralised Video Platform ‘Shibuya’ Set to Launch on Ethereum Next Month

Digital artist Pplpleasr has announced she is helping to launch a decentralised video platform called Shibuya.

Pplpleasr, aka Emily Yang, is the artist responsible for last year’s Fortune NFT cover as well as the decentralised art collection platform PleasrDAO, which to date has raised US$69 million to assist in the launch of the Shibuya platform, set for March 1.

A ‘Mix of Vimeo and Netflix’

According to Pplpleasr, the project will be a mix of Netflix, Vimeo and the crowdfunding platform Kickstarter, but with a decentralised twist. Shibuya will enable its users to directly influence the platform’s content through the use of NFTs and cryptos.

Speaking at the Ethereum-focused ETHDenver conference last week, Pplpleasr said: “Shibuya is a decentralised Hollywood, where cultures and ideas meet in one eclectic and inspiring place.”

The complete version of the New York-based artist’s YouTube interview can be viewed below:

The first piece of media Shibuya will launch is “White Rabbit”, which the artist has described as containing elements of anime, the British television drama Black Mirror, and Web3. A short preview of the piece can be seen in the video above.

For users to be able to view the episodes, they must mint NFTs on Shibuya that can be staked to cast a vote on the episode’s direction. Voters will thereafter be rewarded with a White Rabbit token, which also serves as fractionalised ownership of the web series. The project has not yet accepted any outside funding but is also working with popular Polish-born NFT artist Maciej Kuciara.

More Decentralised Projects Pop Up

Last week, Crypto News Australia reported that Aave had launched its “Lens Protocol” to power decentralised social media platforms. And in January, the decentralised blogging platform “Mirror” started offering its writers a way to monetise their articles.

Categories
Blockchain DeFi Ethereum

Morgan Stanley Report Claims ETH May Lose Dominance to Competitors

In a report issued by Morgan Stanley’s wealth management global investment office, the financial services giant warns that Ethereum could lose its position as the dominant smart-contract platform as more efficient competitors emerge.

The report, entitled “Cryptocurrency 201: What is Ethereum?”, provides an in-depth analysis of the Ethereum blockchain ecosystem and summarises its relative strengths and weaknesses compared to Bitcoin.

Dominance Challenged by Faster, Cheaper Alternatives

Several vulnerabilities were identified in the report, the most significant of which was the sheer number of competitors Ethereum now faces in the smart-contract space – many of which are currently cheaper and faster. The report found that:

Ethereum faces more competition in the smart-contract market than Bitcoin faces in the store-of-value market. Ethereum may lose smart-contract platform market share to faster or cheaper alternatives.

Morgan Stanley report

Some high-profile alternatives looking to wrest market share away from Ethereum include Solana (SOL), Cardano (ADA), Algorand (ALGO) and Hedera (HBAR).

Ethereum Scalability Questioned

The second major concern identified in the report was scalability, with concerns being raised that the Ethereum network may start to buckle under the weight of its own success. If it doesn’t find ways to use its resources more efficiently, the report warns, the demands on the network may outstrip its resources:

“Ethereum’s blockchain, measured in gigabytes, is growing faster than Bitcoin’s, and its memory requirements have surpassed Bitcoin’s in half the time. Over time, Ethereum’s storage demand, unless changed, will likely outstrip its resources.”

Coming Regulation, Centralisation Raise Concerns

Additional concerns included the potential for Ethereum to be hobbled by regulation as governments around the world look to police the smart-contract and DeFi sectors and Ethereum’s relative centralisation: the top 100 Ethereum addresses currently own 39 percent of Ether (for Bitcoin that figure is just 14 percent).

This report is by no means Morgan Stanley’s first foray into crypto, having last year started offering Bitcoin to some of its wealthier investors and encouraging investors to pay attention to the metaverse, declaring it the next big trend in investing.

Categories
Australia Crypto News DeFi

New Aussie DeFi Startup Tiiik Aims to Bring Crypto to the Masses

Sydney-based DeFi startup Tiiik, which offers a digital wallet that enables investors to earn interest on DeFi products, has closed its first seed funding round for A$5.2 million:

The capital raise was led by a mix of well-known players in the Australian fintech scene, as well as some high-profile global venture capital funds. Currently Tiiik only accepts funds from Australian accredited investors, but with this new capital raise it plans to broaden its offerings and make products available to retail investors in 2023.

Simplifying DeFi for the Masses

Tiiik launched in 2021 as a one-stop digital wallet featuring saving, spending and earning capabilities all on the same single balance. The company’s stated mission is to bring the advantages of DeFi and other crypto products to Australian investors and consumers in a way that reduces the complexity of crypto behind an easy-to-use interface.

Tiiik wants to enable everyday people to access the benefits of DeFi, without the complexity that typically comes with innovative financial technology. There is a big gap in the market for a platform that can help non-tech savvy people access a new asset class that is revolutionising the way people think about money.

Erez Rachamim, Tiiik co-founder

Tiiik’s savings product will reportedly offer 10 percent yield per annum, which will accrue daily. Users will be able connect their Tiiik wallets directly to their bank accounts, which should make it seamless to deposit and withdraw funds.

Prioritising Regulatory Compliance

Unlike most other DeFi savings products, Tiiik is very keen to operate firmly within domestic regulation. It has applied to the Australian Securities and Investments Commission for a wholesale Australia Financial Services Licence, which it will need to secure before offering any products to its waitlist of eager retail investors, who already number around 30,000.

Because of its more conventional fintech approach to regulatory compliance and efforts to create a more familiar user experience, Tiiik has been referred to by some as an example of a ‘crypto-mullet’: an emerging class of companies that present as traditional fintech on the front-end but leverage crypto technologies on the back-end. 

Tiiik isn’t the first Australian-based example of a crypto-mullet – last year, fellow Aussie startup @Pay launched a buy-now pay-later platform which aimed to bridge the DeFi and e-commerce sectors.

On the back of ranking 12th of 154 countries last year on the Global DeFi Adoption Index, the launch of innovative homegrown DeFi products such as Tiiik further indicates the enthusiasm Australia has for the opportunities crypto presents.

Categories
Airdrop DeFi Markets NFTs Tokens

New NFT Marketplace X2Y2 DeFi Token Up 225% Despite Bumpy Start   

X2Y2, a new non-fungible token (NFT) marketplace, has seen its token soar 225 percent after launching a ‘vampire attack’ airdrop to attract users from OpenSea.

Following technical difficulties with the drop, the community has had some negative reactions to the way it was handled.

On February 16, X2Y2 launched its Ethereum-based NFT trading platform aiming to rival leading NFT marketplace OpenSea. In also launching a vampire attack airdrop, users from OpenSea who had spent more on their collections were eligible for more rewards and were thus lured away from the top platform.

To be eligible for the drop, users needed to have listed their NFTs on the X2Y2 marketplace:

A vampire attack is a strategic move from new marketplaces to airdrop their coins to users after they complete a set of requirements that increase attraction to their platform.

Since its launch, the X2Y2 token pumped 225 percent but is now trading at lower than its launch price:

X2Y2 price performance. Source: CoinMarketCap

Troubles with the Airdrop Cause Delay

X2Y2’s launch went through a bumpy start after some technical problems with claiming tokens stopped the airdrop for a few hours:

During this time, users criticised the platform’s decision to pause the airdrop, which could have alleviated downward pressure on the X2Y2 price. One user commented: “You have fixed the problems but you don’t resume the airdrop right away? It’s not a good look to wait around for more people to buy in to increase the price before they get dumped on prior to resuming the claiming.”

The project planned to hand out 120 million tokens, but on the day of the launch only 7 percent had been claimed before the airdrop went offline, with users who had already claimed tokens allowed to stake at a massive APY:

X2Y2 is not the only upstart NFT platform launched to challenge OpenSea. Last month, in another example of a vampire attack, LooksRare pitched its LOOKS token to reward users of the platform and hopefully attract existing users from OpenSea.