We are officially off to the races again as ETH leads the charge in a strong bullish ascent back up towards previous all-time highs after a month of sideways action. In the past week alone, ETH is up over 20 percent, reaching A$5,120 at the time of publication.
Ethereum has now beaten bitcoin’s price action for three months straight. The King of Crypto has struggled to break through the key psychological resistance level of US$50,000, while Ethereum is picking up the pace, rising by 50 percent in the last month.
ETH has climbed over 380 percent so far in 2021, with gains largely attributed to the booming DeFi and NFT sectors. Bitcoin, however, has only managed to gain 62 percent so far this year against the USD.
Here Comes DeFi Summer 2.0
Market activity and token prices are surging as altcoins, especially in DeFi, look to the upside and we welcome the announcement of DeFi Summer 2.0.
There used to be just bitcoin and altcoins. Now you’ve got bitcoin, altcoins, DeFi, NFTs, all these different things, and then within those you’ve got subcategories of gaming NFTs, JPG NFTs, collections of NFTs and real world NFTs. There are so many different things within crypto…and basically all the money does between all these different things is shift.
@ThatMartiniGuy, YouTube
Calling ‘Alt Season’
Traditionally when Ethereum breaks and Bitcoin dominance drops, money in the market flows into other cryptocurrencies. That is exactly what is starting happen as mid-caps begin to surge. The likes of Cardano, Solana, Polkadot and Kusama have all been performing exceedingly well as the sea begins to rise once again.
Fantom announced on September 1 that its network is now supported on Coinbase Wallet, which means users can access and interact with the decentralised applications (DApps) available on the Fantom mainnet. The price of Fantom token (FTM) surged by over 35 percent amid the announcement.
We're extremely excited to announce that @CoinbaseWallet now supports Fantom mainnet!
Over a million Coinbase wallet users can now send and receive FTM instantly with near-zero fees, and interact with wallets and dApps.https://t.co/4bMtd7Gbpw
Given the high performance and scalability of the Fantom network, it has attracted lots of decentralised projects, including Sushiswap, Curve and C.R.E.A.M (aka Cream Finance). The transaction count and value of digital assets locked on the network have also increased by 2,400 percent to over US$750 million since May.
With Coinbase Wallet, users are provided more options to easily participate with the fast-growing Fantom DeFi ecosystem. Additionally, the wallet can be synched with Fantom fWallet to enable users to stake and earn FTM rewards.
To set up the Coinbase Wallet, users need to:
Select Fantom Opera as Active Network on Coinbase Wallet mobile app.
Download Coinbase Wallet extension on desktop and scan the QR code using the mobile app.
Deposit FTM or supported coins to the extension.
Connect the extension to Fantom fWallet or supported DApps to explore the opportunities.
Following the announcement, the price of FTM surged from A$0.9638 to A$1.3035, which represents a +35 percent increase.
What is Fantom Token About?
Fantom is a Directed Acyclic Graph (DAG) platform that aims to address the scalability issues facing smart contract platforms. The Fantom token makes up a significant part of the network. FTM serves as the governance, staking and transactional currency of the Fantom network.
The price and market capitalisation of FTM has more than doubled over the past seven days, following a series of announcements from the team. Recently, Fantom declared a US$370 million incentive program for developers to build and grow DeFi protocols on the network.
Announcing a 370 million FTM incentive program for builders!
If you're a protocol team, we'll reward you for sustaining and increasing your TVL on Fantom.
A new report from PYMNTS (Payment News & Mobile Payments Trends) has revealed that almost six out of 10 multinationals are using at least one form of cryptocurrency and, to some extent, blockchain technology for transactional purposes.
Why Are Firms Using Crypto?
PYMNTS, in collaboration with global financial technology firm Circle, surveyed executives at 250 multinational businesses and 250 financial institutions. It seems utility is what matters most for global companies, which are six times more likely to use cryptocurrencies for transactional purposes rather than hold them as investment assets.
More than half (58 percent) of multinational firms already use or plan to use crypto to facilitate cross-border payments, and 93 percent of financial institutions believe business customers would use cryptocurrencies for both investing and transacting – and that some of them are far more interested in using cryptos than holding them.
Bitcoin and Ethereum Lead Crypto Adoption
Naturally, bitcoin is the preferred cryptocurrency for most businesses with 34 percent of firms using it. But stablecoins and altcoins are also seeing a surge in interest as 29 percent of firms report using stablecoins like USDT (Tether) and USDC. Ethereum is the most coveted and compelling currency for some multinationals – 24 percent of them are using ETH and 21 percent say they are interested in exploring its potential use cases.
It seems cryptocurrencies are heaven-sent solutions for global firms as they eliminate some of the challenges of cross-border transactions, such as banking hours and regulations. Instead, blockchain payments are fast, secure and low-cost, all key factors for crypto adoption.
What Are the Challenges of Crypto Adoption?
While cryptocurrencies and blockchain compensate for what traditional banking and financial institutions lack, they do have their challenges:
Low Throughput – Compared to payment giants like VISA or Mastercard, BTC and Ethereum mainnet TPS (transactions per second) are low. Bitcoin currently handles up to 4-6 TPS while Ethereum handles around 15 TPS. There are faster and higher TPS blockchains out there, yet BTC and ETH are the most popular among institutional investors.
Lack of Organisational Awareness and Financial Resources – A barrier to widespread adoption is the lack of financial resources to implement blockchain tech. Another obstacle is the lack of understanding among institutional leaders and organisations about the crypto space.
Reputational Problems – The crypto and DeFi (Decentralised Finance) world is full of malicious actors (fraudsters, hackers, and scammers) that stain the image of crypto. While the DeFi industry has benefited from widespread institutional adoption and other assets like NFTs, scammers have taken advantage of newcomers. There are dozens of scams out there, including influencers asking followers to send them BTC, fake trading websites, Ponzi schemes, exit scams and more.
Regulation – While the crypto and DeFi worlds were originally meant to be decentralised, crypto-friendly regulations are required if institutional adoption and crypto businesses want to grow. In Australia, the lack of clear regulation has become a major problem for the crypto community and local crypto companies. Blockchain Australia and industry-related partners have called for a better, updated framework for the crypto scene.
These hurdles are certainly challenges for financial institutions and global firms, but industry leaders are working on enhanced and powerful ecosystems to boost crypto adoption and institutional capital.
These challenges haven’t stopped institutions from diving into cryptocurrencies. As Crypto News Australiareported a week ago, global crypto adoption is up 880 percent over the past year.
Without fanfare, the US Securities and Exchange Commission has contracted a Californian blockchain analytics firm to help monitor and regulate the DeFi industry.
The contracted firm is AnChain.AI, a San Jose-based blockchain startup that focuses on tracking illicit activity across crypto exchanges, DeFi protocols and traditional financial institutions. The initial value of the contract is US$125,000, with five one-year US$125,000 options totalling US$625,000.
We're proud to work with the SEC to protect all #Crypto stakeholders in the virtual asset economy, and to contribute our technology to critical regulatory oversight efforts. https://t.co/rfdomzXspr
Moving Away From ‘Post-Incident Investigations’ to ‘Preventive’
Apart from monitoring known crypto wallets tied to hackers and bad actors in general, AnChain.AI’s predictive engine claims to identify unknown addresses and transactions that could be suspicious. This allows the firm to warn of impending risks rather than address those after the fact, a feature that dovetails with the SEC’s interests.
The SEC is very keen on understanding what is happening in the world of smart contract-based digital assets … so we are providing them with technology to analyse and trace smart contracts.
Victor Fang, AnChain.AI CEO and co-founder
SEC chairman Gary Gensler. Source: CNBC
The alliance is seen as part of a broader move towards regulating the crypto sector. SEC chairman Gary Gensler has already likened DeFi operators to “promoters” and “sponsors” who are involved in both creating and marketing their projects to the masses.
“There’s still a core group of folks that are not only writing the software, like the open-source software, but they often have governance and fees … There’s some incentive structure for those promoters and sponsors in the middle of this,” Gensler said a month ago.
Around the same time, Gensler let slip that he viewed the crypto field as being filled with “a lot of hype masquerading as reality”, adding that “Nakamoto’s innovation is real”.
Frankly, at this time [the crypto space] is more like the Wild West.
Gary Gensler, SEC chairman
Gensler’s comments are a long way from the ethos of DeFi, whose proponents envision a wholly decentralised, multi-trillion-dollar financial ecosystem where smart contracts handle payments, loans, exchanges, tradings and other services, where no physical or identification barriers exist.
Decentralised finance (DeFi) platform Cream Finance has fallen victim to an exploit, the second time the protocol has been targeted. This latest flash loan attack on August 30 stole an estimated US$19 million from the protocol.
While Cream Finance runs on Ethereum, Binance Smart Chain and Fantom, luckily the only affected market was the v1 market on the Ethereum blockchain:
C.R.E.A.M. v1 market on Ethereum has suffered an exploit, resulting in a loss of 418,311,571 in AMP and 1,308.09 in ETH, by way of reentrancy on the AMP token contract.
We have stopped the exploit by pausing supply and borrow on AMP. No other markets were affected.
According to PeckShield, a blockchain security company, the hacker made “a flash loan of 500 ETH and deposited the funds as collateral. [Next] the hacker borrowed 19M $AMP and made use of the reentrancy bug to re-borrow 355 ETH inside the $AMP token transfer. Then the hacker self-liquidated the borrow.”
The flash loan attack process. Source: PeckShield
The process was repeated 17 times, allowing the hacker to get away with around US$18.8 million.
The price of AMP token plunged more than 14 percent in the first few hours following the exploit but has been recovering since. This is the second time in six months that Cream Finance has fallen victim to an exploit.
The Importance of Reviewing DeFi Contracts
Various security and crypto experts have identified some of the major concerns surrounding the emerging DeFi market. “DeFi can be hacked for two main reasons – vulnerability in the DeFi smart contract code, or hacking the private key of the smart contract owner who has permissions to control the protocol,” said Lior Lamesh, CEO of GK8.
Lamesh added that “in order to prevent such attacks, financial institutions looking to offer DeFi services need to do two main steps: First, review the DeFi smart contract code and validate that it has no vulnerabilities; second, protect the smart contract owner’s private key at the highest level of security.”
As more institutional investors flock to DeFi and the benefits brought by the technology, it’s becoming increasingly important to review code and to ensure contracts execute as intended.
Solana’s momentum is strong as it gained almost 50 percent in the past week, hitting new all-time highs daily in a steady upward climb.
Source: Coinmarketcap
From US$30 just a month ago, Solana has now reached a top of US$114 and doesn’t seem to be slowing down any time soon. According to CoinGecko, Solana’s trading volume is currently at almost US$5 billion, with a market cap now just short of US$33 billion, coming for Dogecoin’s #7 spot, the meme coin with a current market cap of US$37 billion.
Solana solves the ‘Blockchain Trilemma’, which basically states that among the three factors of decentralisation, scalability and security, a blockchain network must sacrifice one to properly implement the other two. Solana has managed to find the answer to the issue of scalability without the need for layer-2 solutions.
Solana is a Proof of History (PoH) blockchain with much faster transaction speeds and lower transaction fees compared to Ethereum, currently the most popular smart contracts platform and blockchain of choice for the DeFi and NFT market. The Solana network boasts approximately 1,000 live transactions per second (with testnet numbers as high as 50,000 TPS).
It could soon become the choice for many dApps that will choose to build on the Solana network instead of Ethereum, which has been widely criticised for its network congestion, high gas fees, and lack of scalability. Recently launched Solana-based DEX, Mango Markets brought bullish news for Solana, as did the Degenerate Ape Academy NFT drop, a project based on Solana’s NFT marketplace, Solanart.
A newly published Global DeFi Adoption Index by Chainalysis ranks countries in terms of their grassroots DeFi adoption. The index includes the top 20 nations that have embraced DeFi along with key players and transactions driving interest in DeFi.
According to the index, Australia ranks 12th out of 154 countries.
DeFi (decentralised finance) platforms, otherwise known as protocols, are built on top of smart contract-enriched blockchains, mainly on the Ethereum network. The protocols can fulfill specific financial functions according to the smart contracts’ underlying code.
Popular types of DeFi protocols include decentralised exchanges and lending platforms. While concerns remain around DeFi’s safety and compliance obligations, it represents one of the fastest-growing and most innovative sectors of the cryptocurrency economy. Similar to our Crypto Adoption Index, the DeFi Adoption Index is designed to highlight countries with the highest grassroots adoption by individuals, rather than those sending the largest raw values of funds.
Chainalysis Global DeFi Adoption Index
DeFi has featured heavily in crypto news this month due to a series of cyberattacks in which millions were stolen. While the safety of DeFi platforms remains a concern, business is booming. At the time of writing, the DeFi crypto market cap was sitting comfortably at over US$121 billion with a total trading volume of US$10.7 billion.
Inaugural Index Works on Three Metrics
The index, the first of its kind, ranks countries according to three different metrics that aim to balance DeFi activity by wealthier individuals and richer countries. The ranking indicates that DeFi adoption is popular in countries where there are high levels of crypto adoption and use among traders and investors.
Countries are ranked according to each of the three metrics. The geometric mean of each country’s ranking in all three metrics is calculated and then the final number is normalised on a scale of 0 to 1 to assign each country a score that determines its overall ranking. The closer a country’s score is to 1, the higher its rank (see chart below).
Source: Chainalysis
The data shows that large transactions make up a much bigger share of DeFi activity, suggesting that DeFi is disproportionately popular for bigger investors compared to cryptocurrency as a whole. Transactions above US$10 million accounted for over 60 percent of DeFi transactions in Q2 2021, compared to under 50 percent for all cryptocurrency transactions.
Chainalysis data extrapolation
New Protocols Drive Rise in DeFi Projects
Data reveals that the majority of top-10 DeFi projects gained more than 20 percent in the past 30 days, with some such as THORChain (RUNE) realising gains of over 115 percent.
The surge in DeFi can be attributed to the arrival of new protocols such as DinoSwap, and the rise of Ethereum-network competitors such as Avalanche (AVAX). Both DinoSwap and Avalanche saw users flock to their networks to escape high fees on the Ethereum network.
🎉 $500M In TVL! We are very grateful to the @0xPolygon community and all of our partners for helping us achieve this huge milestone so quickly. The @DinoSwapHQ team is working hard everyday to continue expanding and providing the best farming experience. Onwards! pic.twitter.com/4h4hrSPKN4
Although the DeFi sector in Australia has proven significant growth, hesitation still exists. Crypto News Australia recently reported how a Melbourne-based crypto fund outperformed Bitcoin on its year-to-date profits, returning 119 percent compared to Bitcoin’s 19.96 percent growth.
The fund has indicated that it avoids DeFi projects, citing an investment strategy in which audited code is a must. Many DeFi projects such as Whalefarm, which uses an unaudited code, quickly crashed to zero after showing much promise. Fears over hacking due to weaknesses in code are also proving a big risk.
Despite DeFi sector growth in Australia, projects are seen as partnerships or unincorporated associations for which the Australian regulatory framework remains unclear.
Yet Australia is is proving itself a worthy adversary in DeFi, with ThorChain and Synthetix.io two of the more successful Aussie DeFi start-ups.
By Jana Serfontein, Crypto News Australia Guest Author
The price of Cardano (ADA) continues to soar as the company makes strides. The ‘Alonzo’ hard fork set for release next month, along with the unveiling of its new stablecoin Djed, is keeping Cardano on everybody’s lips.
ADA’s new stablecoin, Djed, is the first coin to eliminate price volatility using formal verification, thereby overcoming one of the biggest barriers to crypto mass adoption.
NEW BLOG: Driven by a governing #algorithm, Djed is the first #stablecoin to use formal verification to eliminate price volatility. Want to ensure #price stability? Drive #cryptocurrency use via more reliable exchange rates? 1/2
In the crypto market, volatility is a major concern and stablecoins aim to minimise this. Stablecoins are cryptocurrencies pegged to commodities, other cryptocurrencies, stocks and fiat currencies that include mechanisms to allow low price deviation from their target price. With the aid of their built-in mechanism they can remove volatility, making them excellent to exchange or store value.
Some stablecoins, such as Tether and USD Coin, lack transparency about their reserve and liquidity, thereby compromising price stability.
In an effort to resolve some of the issues surrounding stablecoins, IOG has partnered with Emurgo, and the Ergo blockchain, to work on a stablecoin contract called Djed. Emurgo is one of the three founding partners of Cardano and Ergo employs UTXO-based accounting, like Cardano.
Djed is based on an algorithmic design, which means it uses smart contracts to secure price stabilisation. Thus the coin will be useful for DeFi operations.
How It Works
Source: Input/Output Global
Djed will work by using an autonomous “central bank line” contract, consisting of the reserve, equity and liabilities. To further ensure stability, Djed will allow the contract to sell stablecoins and use the charging fees and reserve assets to maintain a target price.
IOG, the developers of Djed, assert that their stability mechanism will benefit holders of the coin as it will enable them to “boost the reserve with funds while assuming the risk of price fluctuation”.
Djed is a crypto-backed algorithmic stablecoin contract that acts as an autonomous bank. It operates by keeping a reserve of base coins, and minting and burning stablecoins and reserve coins.
Input/Output blog
Charles Hoskinson, CEO of IOG and inventor of Cardano, shared his enthusiasm for Djed, citing that the coin’s properties are “proven by mathematical theorems”.
Djed's paper is out. We already have a Plutus team working on a Prototype. Very excited for this work https://t.co/lrgqpLKP1y
The mathematical theorems will help Djed to maintain a constant peg to the central assets with lower bound maintenance, no insolvency, no bank runs, and robustness during market crashes.
Djed will launch in two versions: Minimal and Extended Djed. Minimal Djed will be as “simple, intuitive and straightforward as possible, without compromising stability”. Extended Djed will have more incentives to keep the reserve ratio “at an optimal level”, and will have more stability benefits.
Imminent Hard Fork Pushes Cardano Up 60% in Past Month
The ‘Alonzo’ hard fork, set for release on September 12, is generating much excitement among traders and investors. ADA is currently trading at US$2.52, reaching all-time highs, and is up 17.32 percent in the past 24 hours. Cardano is the third-largest cryptocurrency by market cap.
The release will enable smart-contract functionality on the Cardano network and will allow ADA to add more applications such as DeFi platforms that will allow for automated trading and lending of cryptocurrency. This move addresses one of ADA’s biggest shortfalls and will put it in a better space to challenge Ethereum.
By Jana Serfontein, Crypto News Australia Guest Author
The Poly Network drama continues as Mr White Hat is refusing to return US$141 million left on a multi-sig wallet.
Poly Network Waits for Hacker to Return Private Keys
The hacker has returned most assets, approximately US$427 million worth. But according to a recent update, Mr White Hat is holding hostage $141 million in ETH and WBTC (28,9523 and 1,032 respectively), and about 33 million USDT is frozen.
Poly says it is in constant communication with Mr White Hat on how to deal with the situation.
Aug-19 12:55:49 AM +UTC#mrwhitehat returned 96,942,063 DAI on Ethereum. 28,953 ETH and 1,032 WBTC still remain in multi-sig wallet. As we promised, 160 ETH Bounty(worth $500K) has been donated. Please check it here https://t.co/uoKB8vjyQX
This back and forth between the protocol and the hacker has outraged the community, some of whom are even accusing the Poly Network team of being behind the hack or otherwise complicit. The Poly Network addressed the community concerns in its communications, claiming it is working as fast as possible can to return the assets.
We understand there are many users and projects using Poly Network’s services, and there are users who are panicking that they might lose control of their assets, and we want to minimise the impact on them, so restoring our network and our users’ assets in a secure manner as quickly as possible is our top priority.
Having seen massive adoption from DeFi protocols, interchain scalability solution Polygon is planning to debut a decentralised autonomous organisation (DAO) with the aim of improving users’ DeFi experience while also attracting the next 100 million users to the DeFi sector.
Polygon to Bootstrap DeFi Growth Through DAO
Polygon is a Layer-2 scalability solution that targets DeFi projects on the Ethereum blockchain. In a recent announcement, the company said it had seen massive adoption and economic activity from several DeFi protocols, including Sushiswap, Curve, Aave, Balancer and others, all of which are based on Ethereum.
These projects brought along with them more than just TVL but their communities.
Polygon
In order to further streamline the DeFi experience, Polygon will be creating a DAO. The DAO will allow developers and communities to build a better DeFi and Web3 ecosystem and essentially helps onboard the next 100 million DeFi users to the Polygon network.
What is DAO?
DAO is an organisational model for DeFi that spreads the governance of a protocol or system to the community or network rather than a central body. Basically, it’s a governance system that eliminates centralisation.
Polygon says it will use part of the US$100 million #DeFiForAll Fund to accelerate the creation of the DAO system. This won’t be the first time Polygon gets involved in DAO development. Previously, the company collaborated with 0x protocol to spearhead a US$10 million DAO for projects that use 0x APIs on their network.
It’s safe to mention that Polygon is running more like life support for most DeFi projects on Ethereum. Owing to Polygon properties, QuickSwap has been able to grow into a US$1 billion TVL decentralised exchange. Forked from Uniswap, QuickSwap allows users to swap tokens at lightspeed due to Polygon’s scalability solution.
