Decentral Block Post

Automated market makers are a true public good in crypto, enabling genuinely decentralized trading 24/7 and supporting the wider DeFi ecosystems. But they’re not without a host of problems, writes digital economist and academic Christos A. Makridis.

The decentralized finance (DeFi) market has surged since 2021, growing from just over $20 billion to nearly $160 billion as of March 2022, compared with a rise in the total cryptocurrency market from $433 billion to $2.5 trillion over the same period.

While the recent crypto washout in the wake of the collapse of Terra’s LUNA and UST has caused the market value of DeFi to fall almost all the way back down to $60 billion, there is still optimism in the crypto community and the market value will largely return for major crypto assets in the months and years ahead.

Walking into Remote and Digital’s La Casa co-working space on the tropical island of Koh Pha-ngan, you wonder how anybody gets any work done. I sip a cocktail and wait for my burrito as James Brown plays in the background.

There’s a real palm tree growing at the edge of the cafe, and behind it sits shallow crystal blue water stretching off for miles, with Koh Samui’s jungle-covered mountains jutting up in the distance. Adding to the ambiance, kite surfers are getting massive air off small waves, before gently floating back to earth.

30-year-old Belgian blockchain developer Jérôme Van Vlierbergen is one of the regulars at this Ban Tai co-working space and runs his Equinox Launchpad here. He explains Koh Pha-ngan (or Koh Phangan) has a thriving crypto scene, mostly populated by digital nomads like himself.

“There are a bunch of people here that own crypto or they’re doing something with crypto — because when you have money, you like to be somewhere where it’s a nice place to live.”

Ironically, of course, you need very little money to live here. You can rent a desk at La Casa for less than $3 a day, rent a scooter to get around for under $4 a day, and rent a whole house for $500 a month. With beautiful food, postcard-style views and half a dozen other coworking spaces with gigabit internet, it’s no wonder Koh Pha-ngan has become something of a mecca for crypto digital nomads.

We ask the buidlers in the blockchain and cryptocurrency sector for their thoughts on the industry… and throw in a few random zingers to keep them on their toes!

This week, our 6 Questions go to Nikki Farb — an active investor and advisor to technology companies who is currently a venture partner at Headline, a venture capital firm.

I invest in consumer tech (with a real love for marketplaces) and Web3. I’ve invested in Consensys (MetaMask), AfterParty, Fractal, Aloft, Wander, MarketerHire, SudShare and a few others I can’t share just yet. 

Coming every Saturday, Hodler’s Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — a week on Cointelegraph in one link.

Top Stories This Week

Fed money printer goes into reverse: What does it mean for crypto?

Over the last two years or so, the United States Federal Reserve has flooded the financial system with excess liquidity — benefiting stocks, crypto and other markets as well. Now, the Fed is going in the opposite direction in order to combat inflation. In addition to raising interest rates, the central bank has begun the process of quantitative tightening (QT). It’s not entirely clear how the crypto markets will respond to the Fed’s QT efforts, but the short-term outlook probably isn’t good for risk assets.

Scott Melker, better known as The Wolf of All Streets, is a trader and crypto advocate who is far more approachable than his online handle might suggest. A former DJ, Melker operates a small crypto advocacy empire spanning YouTube videos, podcasts and a popular newsletter.

Scott Melker is open about his initial intentions in the crypto industry. “I simply came to trade and make money,” he admits, getting involved after hearing friends go on about the gold-paved streets of the blockchain world where 100x weekly returns were common. Being familiar with the more conservative movements of the stock markets since childhood, Melker was lucky to learn proper trading before entering the unregulated crypto casino.

“XRP was like a penny or something then,” he recalls. Crypto was also popular in the DJ community, something Melker attributes to the community’s risk-taking nature. He attributes his success to lucky timing in early 2016, soon cashing out his initial investment to play with his winnings.

“There was this sort of groundswell in the DJ community. They understand technology, and they’re kind of wild and speculative. That’s how I first discovered it.”

The crypto beats stopped soon enough. The 2018 bear market meant that “If you wanted to stick around, you really had to justify it to yourself, and you probably went way further down the rabbit hole to understand the importance of the movement,” Melker explains. He began to truly appreciate Bitcoin’s fundamentals and “understand the purpose of individual altcoins.”

In the precariousness of Web3 open-source code, iterative development and “move fast” ethos, things break. And through breaking, things are also made. A new project allows anyone to create a copy of someone else’s NFT, aptly named “Mimics.”

But how does Mimics work, and what does it mean for the NFT art market to have a new variety of fakes? And will it result in token standards being upgraded and improved?

I met the anonymous founder of Mimics in a “Web3” office that was brimming with software developers writing lines of code as they nodded their heads in time to deep house and sipped cups of tea.

On semi-regular occasions, I drop in to visit some local devs in the blockchain space and learn more about what they are working on. They have always been welcoming and jovial, inviting me to share in their ritualistic Friday afternoon “meme creation hour” and have a go at spinning the in-office DJ decks.

We ask the buidlers in the blockchain and cryptocurrency sector for their thoughts on the industry… and throw in a few random zingers to keep them on their toes!

This week, our 6 Questions go to Andrew Levine, CEO of Koinos Group, which is focused on accelerating the transition to a more decentralized future by helping entrepreneurial developers, entrepreneurs and enterprises build disruptive blockchain-based solutions.

Andrew leads a team of industry veterans accelerating decentralization through accessible blockchain technology. Their foundational product is Koinos, a feeless blockchain with infinite upgradeability and a proof-of-burn consensus.

Coming every Saturday, Hodler’s Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — a week on Cointelegraph in one link.

Top Stories This Week

Andreessen Horowitz closes $4.5 billion crypto fund amid market turmoil

Venture capital player Andreessen Horowitz, or a16z, has unveiled a new $4.5 billion cryptocurrency fund. The a16z fund is the fourth of its kind and more than double the amount of its third crypto investment fund. With $3 billion earmarked for venture investments and $1.5 billion for early-seed projects, the fund will look to invest in companies at various stages in their life cycle. Andreessen’s new fund provides a strong indicator that venture capital interest in the crypto market remains high despite evidence of a brutal bear market.

Stablecoins provide a false sense of security. They give the impression to the uninitiated and/or uncaring that a particular coin is pegged to the U.S. dollar, or an equivalent of the dollar in terms of value and stability, and that if you want to convert your stablecoin to dollars, you can do so easily and instantaneously. Yet, they do no such thing, as demonstrated by the recent collapse of Terra and its TerraUSD stablecoin and LUNA token and also made clear in September 2008 by the collapse of the Reserve Primary Fund money market fund during the height of the global financial crisis.

Powers On… is a monthly opinion column from Marc Powers, who spent much of his 40-year legal career working with complex securities-related cases in the United States after a stint with the SEC. He is now an adjunct professor at Florida International University College of Law, where he teaches a course on “Blockchain & the Law.” 

So, I now unequivocally state what is obvious: If you are an owner of or investor in any cryptocurrencies, you need to understand this lack of protection and safeguard the portion of your wealth held in digital assets. You can protect these assets by keeping them in cold digital wallets, on exchanges registered with the United States Securities and Exchange Commission, or with another entity regulated by the SEC, CFTC or Treasury. Even entities and exchanges with BitLicenses, such as Coinbase and Gemini, may not provide sufficient protection.

The primary use case for cryptocurrency in most wealthy countries is acquiring it and holding it, trading it, or using it in various other ways to make more money. In the developing world, where access to financial and banking systems is limited or nonexistent, innovative humanitarian organizations are piloting micro-blockchain ecosystems.

In the summer of 2021, Hope for Haiti was ready to launch a cryptocurrency pilot program to provide 150 mothers with cellphones, digital wallets and payment cards that use near-field communication technology. Each mom participating in its community nutrition program was set to receive $50 per month in cUSD for six months to spend on family essentials. A select group of local vendors was trained to use the system and poised to accept the cryptocurrency payments. On Aug. 14, a magnitude 7.2 earthquake rocked Haiti’s Tiburon Peninsula, decimating the area.

Hope for Haiti had to delay the project and immediately shifted to disaster relief. The organization received thousands in cryptocurrency donations in short order. Skyler Badenoch, Hope for Haiti’s CEO, tells Magazine: “We probably brought in a hundred grand in crypto to support our earthquake relief efforts. Whether it was $50,000 in Bitcoin from Binance Charity. [..] We were getting Ethereum donated to us. We got $10,000 in Dogecoin donated to us. It came from all over.”

In the space of a few short years, former high-school dropout cashier from Sweden Carl “The Moon” Runefelt has been transformed into a top crypto influencer who shares videos of his life of private jets, supercars and million-dollar watches that inspire his followers and annoy his critics. 

Drawing from quantum physics, he has an explanation for his unlikely success — the universe isn’t real but is merely a construction of our minds in which we are able to rearrange reality to match our wildest dreams. Despite critics and controversy, Runefelt continues on a mission to inspire his followers to live their dreams.

Law of attraction

“My parents told me that I should stop this nonsense. They said Bitcoin was shady,” Runefelt recalls. 

Runefelt, 27, came across Bitcoin and cryptocurrency in 2018 while researching ways to make money to climb out of his lowly job as a cashier. He was quickly captivated, seeing large price swings and the fact that coins that had recently peaked at $20,000 were bought for mere dollars only a few years earlier. This path seemed promising, and he committed himself to learning. 

We ask the buidlers in the blockchain and cryptocurrency sector for their thoughts on the industry… and throw in a few random zingers to keep them on their toes!

This week, our 6 Questions go to Sonali Giovino, head of communications at Defiyield, a cross-chain asset management protocol that empowers users to be a part of the DeFi ecosystem.

Sonali Giovino has been working in the crypto space since 2017 when she began holding weekly educational workshops, which lead to public speaking events on cryptocurrency and blockchain and her production of Vancouver’s first Blockchain Yacht Cruise Conference. She brings 20+ years of experience as a technical communicator to her position at Defiyield, previously holding roles in marketing, project management, business development and event coordination. She is passionate about growing the DeFi community and introducing others to asset management and has emerged as a recognizable female thought leader in the tech space as a result. 

Coming every Saturday, Hodler’s Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — a week on Cointelegraph in one link.

Top Stories This Week

Court documents reveal Do Kwon dissolved Terraform Labs Korea days before LUNA crash

Terraform Labs co-founder dissolved two of the entity’s locations in South Korea, as well as Terraform Labs Korea, just prior to the LUNA and UST collapse, according to legal documents. Although the decision to dissolve the offices was made during an April 30 shareholder meeting, the timing raised eyebrows within the cryptocurrency community. 

As one might expect, the aftermath of Terra’s implosion continued to reverberate across the market this week. South Korea’s government is looking into the situation and Do Kwon himself could be summoned to a parliamentary hearing.

The rise and fall of the Terra blockchain and family of related tokens is both one of the most convoluted and one of the most important stories happening in crypto right now.

Assembled here is a plaintext explanation of what Terraform Labs built, why it got so big, why it imploded, what it means for the markets, and what you need to know to keep yourself safe from similar projects in the future.

What exactly is Terra?

That’s a great question, and we will answer it. But first, let’s found a bank.

Our bank will do all the usual bank things, like take deposits, pay interest, enable payments and make loans. Obviously, we could restrict ourselves to only loaning out money we actually have, but that is tedious and unprofitable. So, like any bank, we will make more loans than we receive in deposits and keep only a fraction of our customers’ deposits available as cash to withdraw when they need it. The amount we will keep available as cash is 0%.

It will be fine! Since we are loaning out 100% of our reserves, we will be very profitable; and since we are very profitable, we will be able to pay very high interest rates. No one will want to withdraw! If we ever do need money, we can sell stock in our very profitable bank. When demand for our deposits grows, we can use the new money to do stock buybacks. Since everyone is confident in the value of our stock, they will know we can back up our deposits; and since everyone is confident in the demand for our deposits, they will value our stock. Nothing could go wrong.

Over-the-counter, or OTC, trading refers to any trading that is not done via an automated exchange. What exactly is OTC trading? Who does it, and why? To learn more about what an OTC desk is and how these “under the radar” exchanges operate, Magazine spoke to a few insiders to get the scoop.

The most popular conception of OTC trading revolves around massive off-market deals, like when companies such as MicroStrategy make multimillion-dollar purchases using OTC desks run by the likes of Coinbase or Kraken.

OTC trading is, however, not the exclusive domain of the rich, as it can also refer to peer-to-peer platforms like LocalBitcoins, which has been helping individuals trade BTC both in-person and via bank transfer since 2013. Even some crypto ATMs can be categorized as OTC trading, as these transactions do not always clear on an exchange. In between these two are medium-sized regional OTC desks, which facilitate purchases and sales of crypto by both individuals and companies.

We ask the buidlers in the blockchain and cryptocurrency sector for their thoughts on the industry… and throw in a few random zingers to keep them on their toes!

This week, our 6 Questions go to Dominik Schiener, a co-founder of the Iota Foundation, a nonprofit organization, and the creator of the Tangle, a permissionless, multi-dimensional distributed ledger designed as a foundation of a global protocol for all things connected. 

Dominik Schiener is a co-founder and the chairman of the Iota Foundation, one of the largest and greenest cryptocurrency ecosystems in the world. The Iota Foundation’s mission is to support the research and development of new distributed ledger technologies, including the Iota Tangle. Raised in Italy, Dominik oversees partnerships and the overall realization of the project’s vision toward the machine economy. He is a strong advocate for research-based, community-vetted, transparent developments in the cryptocurrency sector.

Coming every Saturday, Hodler’s Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — a week on Cointelegraph in one link.

Top Stories This Week

Breaking: Terra blockchain officially halted following LUNA price collapse

This week, news about the Terra ecosystem dominated the headlines after algorithmic stablecoin TerraUSD (UST) lost its peg to the U.S. dollar — and continued to crash. 

At its lowest point during the week, UST fell to around $0.13, according to CoinMarketCap. The meltdown also affected LUNA due to its symbiotic relationship with its sister asset. After reaching a high of $120 in early April, LUNA’s value plummeted this week to basically zero. 

Do Kwon, CEO of Terraform Labs, looked to impliment certain measures to right the sinking ship, as per Cointelegraph’s reporting on Thursday. Subsequent reporting showed that the Terra blockchain halted operations briefly after LUNA’s hyperinflation significantly reduced the cost of a governance attack on the network.

As I go about the Miami conference, I wonder, Aside from some of the conference speakers, where are these Bitcoin maximalists I keep hearing so much about?

When I tell the customs official I’m going to Miami for the Bitcoin 2022 conference, there seems to be a light in the man’s eyes. He peppers me with questions, even though I’d gotten up at 5 am that day to fly, and my smartwatch is telling me that my energy levels are only at 70%. The customs official has way more interest in the subject than I can handle.

Why am I going to the conference? The philosophy of the event fascinates me — it’s a Bitcoin-only conference — with the divide between Bitcoin and the rest of the cryptocurrency world growing year by year.

I don’t go into that much detail with the customs official, though. Sometimes, when I interact with too many crypto people, I forget that everyone else has paid so little attention to this space, they still use the terms “Bitcoin” and “cryptocurrency” synonymously. If I offload onto the customs official everything that’s on my mind, he’d probably think I’m autistic or drunk (or maybe both).

We ask the buidlers in the blockchain and cryptocurrency sector for their thoughts on the industry… and throw in a few random zingers to keep them on their toes!

This week, our 6 Questions go to Ming Duan, the co-founder and chief operating officer of Umee, a cross-chain DeFi hub that allows decentralized interactions between different blockchains.

Ming Duan’s knowledge of the crypto and blockchain world goes back to 2014 when she initially learned about the emerging industry through the first-ever blockchain course taught at a business school. Since then, she has developed extensive crypto investment knowledge through hands-on practice. Duan brings unique insight to Umee, having experience as both a crypto investor and builder in the ecosystem. Her goal for Umee is to build a platform where individuals can interact with different tokens and chains all in one place. While propelling Umee forward, Duan leads crypto investments at Argonautic Ventures and Fenbushi Capital. She graduated from Duke University and received her Master of Business Administration degree in 2016.