BitDigest September 2 · Issue #734

• Bitcoin can’t break $12,000 as market turning focus to ether and DEFI protocols
• The OCC is ready to release a national charter for payment companies
• Bermuda is piloting a stable coin that will act as a stimulus / assistance token

A Framework to Consider DeFi

2020 is definitely crypto’s year of DeFi, but many people I speak with are not investing in DeFi and more importantly do not really understand it and all of its application. On the most basic level, DeFi is financial applications operating automatically, without the need for human intervention, on a decentralized blockchain.On Monday, Messari shared a poll from a twitter post asking investors in Yearn ($YFI) if they actually understand what Yearn is. 38% of the respondents said “No” while only 26% said “Yes.” (I could not figure out how the other 36% voted but I guess that fits the confusion surrounding DeFi). Blocktower Capital, a leading crypto investment firm, shared their view of DeFi with me last week and I found it to be a clear and understandable framework consisting of 6 different categories that comprise crypto’s hottest investment class.  Here is an abridged version of their classification.

Each explanation below will be followed by an example of an Ethereum based protocol(s) and a Cosmos based protocol(s).

1. Stablecoins – a digital asset designed to offer price stability and backed by a reserve asset (Maker, Tether, USDC | Terra)
2. Credit Markets – digital asset loans that use smart contracts and the acceptance of collateral to authorize and secure the loan approval (Compound, Aave | Anchor)
3. Automatic Market Makers – smart contracts that create a liquidity pool of tokens automatically traded by an algorithm rather than a traditional custodial order book (Uniswap, Curve, Bancor | THORChain)
4. Oracles – Smart contracts connecting on-chain applications with off-chain data and information (Chainlink | Band Protocol)
5. Synthetic Assets – a blockchain based financial derivative whose asset value is based on the value of an underlying off-chain asset (Synthetix | Kava)
6. DAOs – decentralized autonomous organizations that function through the use of smart contracts rather than traditional hierarchical management (Aragon, DAOStack | Aragon)

The Headlines

OCC Ready to Process National Charters

www.politico.com

The Office of the Controller of the Currency (OCC) is planning to begin processing applications for national charters for payment companies in an act that would provide these companies with the ability to operate across state borders with a single set of rules.

Bermuda Piloting Stimulus Token

www.bloomberg.com

Bermuda is testing a digital stimulus token, a stablecoin, to allow holders to buy food and other essentials.

Bank of Russia Declines Proposal for Crypto Mining Pool

www.ihodl.com

Russia’s Central Bank of Russia has declined a domestic association’s proposal to launch a national crypto mining pool.

Crypto Mining Bringing $700 Million in New Investments to Kazakhstan

www.reuters.com

The Government of Kazakhstan is in talks to receive over $700 million in new investment from digital currency miners looking to establish operations in the Central Asian nation.

Shanghai District Issuing Blockchain-based Coupons

www.shine.cn

The Jing’an District of Shanghai has started offering blockchain-based discount coupons for movies, theater performances and online lessons on WeChat.

Australian Banks Digitizing Bank GuaranteesAustralian Banks Digitizing Bank Guarantees

www.afr.com

Australia’s 3 leading banks: ANZ Bank, Westpac and Commonwealth Bank have formed a new company, Lygon, that will digitize bank guarantees using blockchain technology, eliminating fraud and slicing the time it takes tenants and landlords to agree on commercial leases.

SGX Issues Digital Bond Offering and Adds Crypto Indices

www.hub.digitalasset.com

Singapore Exchange (SGX) has completed its first digital bond issuance on its new digital asset issuance platform replicating a $300 million 5.5-year public bond issue and a follow-on $75 million tap of the same issue by food and agri-business company Olam International. SGX also announced it was launching crypto indices under the under the SGX iEdge index suite, namely the iEdge Bitcoin Index and iEdge Ethereum Index, as the first batch of such indices.

Vienna Stock Exchange Adds Bitcoin and Ethereum ETPS

www.wienerborse.at

Vienna’s Stock Exchange has listed 21 Shares bitcoin and ethereum exchange traded products (ETPs) allowing investors to purchase the two digital currencies on a 1:1 basis on a national stock exchange through a regular brokerage account.

CoinShares Provides Real-Time Audit of Investment Products

www.trust-explorer-web-staging.us-east-2.elasticbeanstalk.com

CoinShares has provided a real time, third party attestation of the assets held under management across its different digital asset offerings.

Police Raid Bithumb Offices

www.cointelegraph.com

Seoul police have raided the offices of the largest digital currency exchange in South Korea, Bithumb, as part of an ongoing investigation involving the company’s Chairman Lee Jung Hoon.

Market Data

Decentralized Exchange Volume Jumps to $11.6 Billion in August

www.coindesk.com

Trading volume on decentralized exchanges in August set a new monthly record of $11.6 billion, surpassing July’s total by 158%.

Exchange, Custody and Product News

Binance Launches Smart Chain Mainnet

www.binance.com

Binance has launched Smart Chain, its Ethereum competing (and compatible), smart contract enabled blockchain that will initially offer staking for Binance’s native token BNB.

Synthetix Turns to Chainlink for Oracles

www.blog.synthetix.io

Sythetix, the leading DeFi protocol for trading asset-pegged synthetic tokens, has fully switched all of its pricing feeds and other oracles to Chainlink.