Apex Crypto News – Compound’s COMP Token Paves Way for DeFi Yield Wars
Recent events surrounding the launch of Compound’s token seem to have been noticed by many other projects in the decentralized finance, or DeFi, ecosystem.
In an interview with Cointelegraph, Framework Ventures’s co-founder Michael Anderson said that the token’s success may provide an example to follow for other DeFi projects who may start engaging in “yield farming wars.”
The result of this will be increased interest in the DeFi space as a whole, Anderson argues. Some of those effects can already be seen in skyrocketing valuations for other tokens, like Aave’s LEND and Synthetix’s SNX.
While Compound’s reward system is not the first, the token’s extremely quick success elevates it above previous examples.
Anderson compared Compound to a “mid-stage startup that’s hitting revenue growth,” which generates a lot of interest in the traditional investment world:
“You assume that operations grow and the infectivity of that revenue grows, meaning that eventually they can become, you know, as profitable as some of the big Googles and Facebooks that come through that transition.”
According to him, investors in Compound’s token are believing in “what could happen,” and how the growth of DeFi and the platform’s recognition could make billion dollar valuations realistic.
That further sets up a virtuous cycle for venture investors, who see Andreessen-Horowitz initial stake of $40 million balloon to a $2.5 billion valuation. “So what this is going to do is, it brings attention to the space, it brings assets into the DeFi space,” he added.
Decentralized exchange Balancer has already launched a similar incentive scheme and saw its valuation skyrocket. Its incentive scheme was reportedly gamed by the FTX exchange, and the project informally enacted a change to curtail this.
But despite these issues, Anderson believes that other projects will follow this strategy:
“This playbook of having the token be something that stimulates high APR to drive assets on the platform is going to be what we see for the next six, nine, twelve months, I bet.”
The sustainability of COMP yield farming entirely depends on the price of the token, which “has a long way to go [down]” before interest rates would return to average values. At the same time competition from similar incentives by platforms like Balancer “could be something that drives assets away from COMP.”
Kava, a DeFi project where Compound’s CEO Robert Leshner and Framework are both investors, appears to be poised to implement similar systems. In a conversation with Cointelegraph, lead engineer Kevin Davis said that while avoiding excessive participation is difficult, “a few factors will lead to a cool off in this market cycle, and the crazy price action of COMP won’t be representative of the farming-yield trend.”
While the reward incentives attracted many users in the short-term, Davis is unsure if enough of them will truly be interested in the governance aspect. It is also unknown how many people will remain Compound users in the long-term, which in Davis’s view is one of the main goals of the initiative.
While he believes it’s also a valid example of progressively decentralizing a platform, it is still too early to conclusively call it a resounding success:
“It still remains to be seen how much decentralization is achieved, and whether or not the Compound protocol (or the COMP token) has product-market fit in its current form.”
Money Reimagined: Crypto’s Diversity Problem
A few years ago, when MIT Media Lab researcher Joy Buolamwini was leading an interactive digital art project, she found the facial recognition technology it employed was far better at recognizing her lighter-skinned MIT colleagues.
The discovery sent Buolamwini on a mission. She founded the Algorithmic Justice League and started doing research that builds awareness about biases in software algorithms. One paper she co-authored with Timnit Gebru, the technical co-lead of the Ethical Artificial Intelligence Team at Google, found facial-analysis software had an error rate of 34.7% for dark-skinned women versus just 0.8% for light-skinned men.
Facial recognition is the tip of the iceberg. Biases are inherently present in all forms of artificial intelligence algorithms, those digital machines that increasingly run our world.
Related: First Mover: In the Cryptocurrency Markets, No Two Exchanges Are Alike
Over the years, an extreme lack of diversity in computer engineering has left white men with a disproportionately large influence over all software design. Unconscious bias – now, finally, a topic of great discussion across the United States – means they end up creating products to serve the needs of people like them, not necessarily those of others.
This is a vital issue for the algorithm-dependent cryptocurrency and blockchain industry. If this technology is to have a broad impact on the world, it must engage a wide population.
If bitcoin, for example, is to become a global currency, if it is to become a monetary standard accepted by people of vastly different backgrounds, it must be accessible and valuable for a full cross-section of those groups. And if distributed ledger technologies end up providing the data architecture in “smart cities” or enabling our health systems to manage privacy-protected data for fighting pandemics, we better make sure these platforms don’t discriminate against one group or another.
Related: First Mover: What’s Going On With Bitcoin Derivatives?
Calls for diversity like these are often met with retorts such as “bitcoin doesn’t care about the color of your skin” or “blockchains are based on math, not flawed human processes.” It’s a naive perspective. The code for the protocols that dictate each blockchain’s rules, and for the smart contracts and apps built on top of them, are written by people, not by some universal law of nature. And, in the blockchain community even more so than in tech broadly, those people are predominantly white men.
Don’t think, either, that blockchain technology is protected against bias by its preference for open-source development. A codebase can be fully accessible but if there isn’t a sufficiently wide group of skilled people reviewing and contributing to it, biases will persist.
It’s true, this technology has the potential to help people overturn some of society’s ingrained, structural injustices. As investor and active #BlackLivesMatter supporter Mike Novogratz says, “Crypto is about systems change.” But a decentralized system is only as inclusive as the platform on which it is built. There’s nothing intrinsically fair about a blockchain.
A key problem is the digital divide. Impoverished communities of color worldwide have significantly reduced access to the information tools needed to participate in blockchain and crypto development.
Addressing these imbalances is vital for crypto adoption. While it’s exciting to see usage rates grow in places like Nigeria and Venezuela during the COVID-19 crisis, we must also recognize the painful circumstances leading these people to bitcoin and stablecoins: economic breakdown, severe dollar shortages and failed public health systems. And in the grand scheme of things, those newly increased numbers are a tiny proportion of the total developing world population. We have a long way to go before we bridge the crypto divide.
A natural starting point is education. While a number of interest groups have sprung up to support the expansion of blockchain knowledge among women and people of color, the industry must do more. Funds should be dedicated to high schools and colleges serving underprivileged students about the technology and the opportunities it poses. Online courses and self-training programs should be designed for and delivered to minorities. And, of course, crypto companies should also be hiring from those communities.
Equally important, media organizations like ours and people like me who work at them must learn to identify, address and fight against our own implicit biases. The stories we write are vital to how information is absorbed about this technology. We need many more of them to be for, about and by people of color and women.
What a difference two months of COVID-19 makes.
This week, the International Monetary Fund made an interim update to the quarterly World Economic Outlook Report it originally released in April. The headline item: The IMF now expects a massive, unprecedented 4.9% decline in world economic output for 2020, versus the 3% shrinkage it previously predicted. That’s an additional loss of $1.67 trillion from what the World Bank estimated as the size of the global economy in 2019. You have to go back to the Great Depression for economic malaise on this kind of scale.
What’s just as striking, and arguably more worrying, was the accompanied forecasts for government debt as a result of this downturn. The IMF now expects net government borrowing in advanced countries to spike to 10.9% of GDP in 2020 from 3% in 2019 and that it will drop back to 5.4% in 2021.
The problem with governments’ ballooning debt levels is not the amount borrowed per se. It’s the interdependent nature of it and the geopolitical ramifications.
Unlike a person or a company, a country cannot go bankrupt. It’s a permanent entity with exclusive taxation powers and mostly exclusive money-printing power. (The latter is why proponents of Modern Monetary Theory, like new author Stephanie Kelton, argue fiscal deficits should not be viewed as a problem.) Indeed, governments right now have a compelling case – even an obligation – to borrow at low interest rates and fund the social distributions needed to keep their economy’s income levels afloat. Viewed in the isolation of one country and one government, this is one of those no-brainer moments when you focus on the problem at hand and worry about the cost later.
The problem that MMT proponents seem to gloss over is the financial system is globalized – and overly dependent on the U.S. dollar – while politics is domesticized. Governments are accountable to their citizens, not to the foreign entities that own much of their debt and that measure their wealth in a foreign currency.
Governments will naturally choose the former over the latter, helping out domestic borrowers at the cost of foreign savers by debasing their currency. And if they’re the only government with such a problem, the fallout can be limited to those foreign entities. But what happens when every major government is in the same situation? This is why some fear the nightmare of a global currency war and debt spiral, one that could seriously undermine the dollar, the currency upon which this international financial system is based.
Some people see the need for a coordinated, global debt jubilee (or forgiveness). But getting everyone to agree on the terms is almost impossible to imagine. Another outcome: The world gravitates to a new international currency system. The question is whether that happens in a controlled, top-down manner, with governments agreeing to a new framework, a la the 1944 Bretton Woods conference, or through a more unpredictable bottom-up, private-sector-led monetary revolution. The technology is coming into place for that revolution.
ECHOES OF 2008. If there’s a reason to doubt the IMF’s forecast that advanced country debt-to-GDP levels will start normalizing in 2021, it’s that there’s another shoe to drop: private debt. Unlike the financial crisis of 2008, where the culprit was retail sector lending to homeowners, this time the private sector risk lies with mountains of corporate debt accumulated over the past, low-interest rate decade. Now, as The Wall Street Journal detailed Thursday, that debt load is combining with the economic stress of COVID-19 to trigger a “wave of bankruptcies.” The structure of a lot of that debt is defined by something called a CLO, or collateralized loan obligation. Sound familiar? It’s very much like a CDO, a collateralized debt obligation, the financial instrument that sat at the heart of the prior financial crisis. It has many people worried about another systemic collapse. If that happens, there’ll need to be another round of bailouts. And if that happens, governments will need to take on even more debt.
ROME NO LONGER. For the past century, the center of global financial power lay not in Washington but to its north, in New York. Because so much global trade and financial market activity has been denominated in dollars, international payments and capital flows inevitably must pass through correspondent banks located on Wall Street. That gives those banks, and the regulators who oversee them, great power as global gatekeepers. With a say-so over what money goes where, New York state regulators wield this power to impose sanctions on countries deemed by U.S. intelligence to be rogue states and to determine what classes of activity are worthy of vital banking services. It’s why the New York Department of Financial Services is not just your average state regulator. Its influence extends beyond New York’s borders, not only into all other 49 states but overseas as well.
OIL’S CRYPTO-LIKE VOLATILITY. A tweet thread by Patrick Chovanec caught my attention. Boy, have oil prices been volatile over the past 12 years. Not quite crypto-level volatility, but pretty extreme for a commodity that’s a mainstay of the global economy. It’s all about the competing swings in demand and supply since 2008: the mix of financial crises, monetary policy-stoked speculation, the fracking revolution, Saudi Arabian political maneuvers within OPEC, and now a pandemic-fueled global economic shutdown. Who knows where crude prices will go from here? But with so much resting on them – questions of environmental sustainability, for one, but also the stability of the Middle East – crypto watchers should monitor them closely. Here’s why: The dollar’s fate as the world’s dominant currency is not insignificantly tied to the direction of oil markets because crude contracts are priced and settled in greenbacks. If oil-producing countries in sanctioned countries like Iran feel compelled by price movements to boost supply, a crypto solution that bypasses the dollar could help them do so. Alternatively, if locally sourced renewable energy usage starts to expand rapidly, the global trade in both oil and dollars will fall. The future of oil is one of many pieces in the puzzle driving a reimagining of money.
How to place a value on bitcoin? Its data is unfamiliar territory for many investors. Nearly half of investors in a recent survey said a lack of fundamental information keeps them from participating.
Cambodia Plots a Dollar-Free Future With Blockchain-Based Payments: White Paper. This is not your standard, centralized central bank digital currency project. This is a developing country’s creative, cost-effective approach to outsourcing its payments architecture to an open-source system, a method to reassert the relevance of its domestic currency.
PayPal, Venmo to Roll Out Crypto Buying and Selling: Sources. Like any great scoop, Ian Allison’s leaves me wanting more: Why now? What does PayPal have up its sleeve? Does this explain its departure from Libra? Is it related to PayPal’s newly acquired Honey? Will its wallet compete with Coinbase or perhaps with Bakkt’s merchant app? Surely, after all this time of crypto dudes pitching PayPal, it is rolling out more than another token trading app.
Blackballed by PayPal, Scientific-Paper Pirate Takes Bitcoin Donations One person’s pirate is another’s open knowledge activist. Wherever you stand on open research models, you must grapple with the fact that both blockchain-based record-keeping and cryptocurrency payments enable a more open system.
Crypto Long & Short: What Changed My Mind About Bitcoin Narratives. Those of us who’ve bought into bitcoin tend to understand the core value it represents. But articulating in a way the rest of the world can understand is a challenge. What’s the best narrative? What’s the actual story?
DOJ Indicts Founder of Anti-Money Laundering Bitcoin Project for Money Laundering. Why are there so many scammers in this industry? And can they please be at least a little more subtle?
- Money Reimagined: Crypto’s Diversity Problem
- Money Reimagined: Crypto’s Diversity Problem
Author: Michael J. Casey
Movers of the Day 26-June
Top movers of the day are Molecular Future and Hydro Protocol which has surged 17.79% since 6 pm. Molecular Future is 1.88% higher.
The crypto markets finished the day lower. Today’s crypto market movement is illustrated by an adjacent chart showing the movement of the NWSBCT Index (Blue Chips) over the past 24 hours. The non-Ethereum tokens measured by 2100NEWS DA NonEthereum Based Index (NWSOT50) ended -1.80%. The coins represented by 2100NEWS DA Coin Index (NWSCo100) ended -0.58%. Our main 2100NEWS Digital Assets Total Index (NWST1100) ended -0.72%. Bitcoin and ETher also ended the day lower: BTC -0.74%, ETH -1.05%.
To find out based on which criteria have been selected, please read the notes.
Hydro Protocol (HOT)
Hydro Protocol is a set of smart contracts used to build non-custodial ERC20 token exchanges. It’s designed for developers who want to build decentralized exchanges without having to deal with the complexity of designing, deploying, and securing smart contracts.
Top mover of the day at 18:10 is Molecular Future which has soared 30.62% since 1 pm. GameCredits has increased by 13.64% and MINDOL by 12.59%.
In the afternoon the crypto markets went down again. Since 1 pm the non-Ethereum tokens measured by 2100NEWS DA NonEthereum Based Index (NWSOT50) have fallen by 1.06%. The tokens built on Ethereum represented by 2100NEWS DA Ethereum Based Index (NWSET100) are 0.35% lower. Similarly, our main 2100NEWS Digital Assets Total Index (NWST1100) has decreased by 0.36%. Bitcoin and Ether are also lower: BTC -0.63%, ETH -0.24%.
Molecular Future (MOF)
Molecular Future is an innovative financial investment service company registered in the a one-stop digital asset investment service platform jointly invested by Molecular Group, Eaglesfund, HBCC, the XBTING Foundation, the HCASH Foundation and Collistar Capital. The project aims to provide users with the Blockchain -related investment products, institutional-level market trading software, media information, project archives and community service systems, and community service systems to correctly guide the users through the Blockchain industry.
Top movers of the day at 1 9m are MINDOL and GameCredits which has risen by 18.61% since midnight.
The crypto markets have fallen. At the same time, the 2100NEWS DA Indexes which measure the performance of different groups of tokens and coins have decreased up to 1.30%. The 2100NEWS Digital Assets Total Index (NWST1100), which measures the performance of the 1100 major crypto assets by market capitalization, has decreased by 0.75%, Bitcoin by 0.57%, and Ether even by 1.34%.
GameCredits is a global virtual currency developed together with a digital wallet for 2.6 billion gamers all over the world. Thanks to the features of these two, games and in-game items can be exchanged with more security, speed and privacy when compared with credit cards.
Top movers of the day at 8 am are GameCredits and MINDOL. DEAPcoin has surged 21.56% since midnight. The crypto markets started the day in the red but they are higher than 24 hours ago. Over the past 24 hours, the 2100NEWS Digital Assets Total Index (NWST1100), which measures the performance of the 1100 major crypto assets by market capitalization, has increased by 0.22% and Bitcoin by 0.39% while Ether has decreased by 0.29%.
The DEA Project is a blockchain-based multimedia digital entertainment platform featuring digital arts, games, and various other forms of entertainment. Their utility token, DEAPcoin was minted on 29/08/2019. Headquartered in Singapore, most of the team members are Japanese, The platform aims to protect copyrights of individual artworks by creating digital art assets that can be used in gaming. The company launched the platform “PlayMining,” where users can play games and earn points that can be converted and used in real life.
The MINDOL project aims to revitalize the Japanese subculture worldwide.
Coinbase Lists Compound’s COMP Token for Retail Crypto Traders