‘Significant’ Ethereum Rally Signals New Altcoin Season — Peter Brandt
Popular trader Peter Brandt believes that Ether (ETH) saw a significant breakout in its ETH-BTC pair on July 9. According to the veteran trader, the breakout could be a signal that a new altcoin season could occur in the near-term.
“Significant breakout in ETH-BTC with target of .03276 BTC. Most alts should gain on Bitcoin in near future.”
ETH-BTC daily chart. Source: Peter Brandt
The strong performance of alternative cryptocurrencies in recent weeks coincides with an Ether rally and the expectation that upcoming network upgrades will solve the scaling issues that plague the network during peak transaction phases.
In the past week Cardano (ADA), Kyber Network (KNC), Compound (COMP), and Chainlink (LINK) four major altcoins recorded substantial gains against the U.S. dollar, Bitcoin, and Ether.
All four cryptocurrencies had key network upgrades, product launches, or high-profile announcements which drove their values higher.
Cardano, for instance, transferred a node containing all the changes of its Shelley upgrade onto the mainnet. On July 30, a hard fork on the Cardano blockchain will finalize the highly-anticipated Shelley upgrade. This positions Cardano to rival Ethereum as an established proof-of-stake (PoS) network.
Kyber Network also rallied after the release of Katalyst. To put it simply, Katalyst allows users to stake KNC in order to participate in KyberDAO and benefit from various incentives. In theory, it is similar to the staking mechanism of Ethereum 2.0.
Crypto market research firm Santiment said:
“KNC’s top 100 non-exchange addresses have spiked since Katalyst, and it appears that the top 10 overall holders have upped their ownership of the total supply from 48.6% 48 hours ago, to 52.2% (over half) of the total supply at today’s market close.”
Kyber Network demonstrates a highly optimistic on-chain trend. Source: Santiment
The positive sentiment around alternative cryptocurrencies combined with exploding demand for decentralized finance-related tokens seems to have added to the confidence of investors.
According to data from Binance Futures, investors remain majority long on many altcoin pairs. In fact, more than 50% of traders on the platform are holding long contracts on LINK, ADA, KNC, and COMP.
Some traders predict the Ether rally will continue in the third quarter of 2020 due to a favorable market structure and currently the altcoin is testing a significant multi-year resistance level at $250. The altcoin briefly broke above this level three times in the past two weeks.
The last two times the price of ETH cleanly surpassed $250, it led to rallies to above $280 and $360.
Traders are seemingly optimistic on the near-term trend of Ether as the altcoin has weakened a key resistance level with multiple retests. This is because when a support or resistance level gets tested many times in a short period, the probability of it being broken rises.
A comparison of ETH-USD fractals. Source: Byzantine General, TradingView.com
The increasing number of altcoins enabling staking in the wake rapid growth in the DeFi sector and the expectations of an Ether rally could support a strong bullish trend in the altcoin market.
Ether trading volume has also remained relatively high throughout the past ten days as the price hovers above $240. This suggests that buyers are keen to push the price higher despite strong selling pressure at a key resistance area.
Why sharding won’t solve all Ethereum’s scalability woes
Sharding is one method that can be used to build more scalable blockchains. Amid the news of Ethereum’s long-anticipated ETH 2.0 upgrade, sharding now features frequently in the cryptocurrency news. However, not all sharding is created equally.
Although Ethereum’s sharding proposal will help to solve some of its long-standing scalability issues, it’s not necessarily a panacea that will bring it up to the same level of newer competitor platforms. These include Polkadot, which has developed a more flexible form of sharding that appears to put it ahead of ETH 2.0 before the upgrade is even implemented.
A standard linear blockchain such as Ethereum in its current state, or Bitcoin, operates in a way that requires every node on the network to process every single transaction in sequence. The security of blockchain derives from its decentralization. The more nodes on the network, the more decentralized the blockchain, and less likely it is that one or more malicious nodes can attack the network.
But this decentralization also creates the scalability challenge. The more nodes need to process transactions, the slower the network can become. For this reason, Ethereum is currently only able to handle about 15 transactions per second.
As a concept, sharding isn’t unique to blockchain. It’s been deployed in centralized systems for some time now. Essentially, it’s a partitioning method that can be applied to databases to enable parallel processing, and thus improving speed and efficiency.
So imagine a company has grown to the point that its customer database is so big, it’s slowing down the server on which it runs. The company decides to carve up the database into smaller pieces, say by geography, and store it on multiple servers to reduce the weight.
In a blockchain context, sharding becomes more challenging, because there’s a need to determine which nodes confirm which transactions. Proof-of-stake lends itself better to the concept of blockchain sharding than proof-of-work, because the stake provided by any given node can be linked directly to the value of the transactions they’re allowed to validate. As such, the ETH 2.0 sharding implementation is also dependent on a move to a PoS consensus model.
We can consider a sharded blockchain as a network of multiple chains, known as shards, processing their own transactions and relying on messaging protocols to ensure overall consensus.
Both ETH 2.0 and Polkadot operate based on a central chain. ETH 2.0 runs on Beacon Chain, which communicates with shards via its own proprietary interface. All shards in Ethereum have to use this single interface to communicate with the Beacon chain.
The need to interact in a standardized way also means there are rules about how a shard chain can change state with each block added to the chain. Effectively, every shard in Ethereum has to follow the same rules for adding blocks to be able to interface with the Beacon Chain.
This type of sharding is called homogeneous sharding. You could imagine it using an analogy of the Beacon Chain as a teacher and the shards as students. The interface connectivity rules are the rules governing assignment submission. The teacher and the students can only communicate when they speak the same language. The teacher also requires that every assignment is submitted in the same format and language each time.
Polkadot’s central chain is called Relay Chain, and the shards are called parachains. Polkadot parachains could be application-specific or be developed for particular characteristics such as security.
Rather than its own proprietary interface, Polkadot uses standard web assembly interface, widely used by developers all over the web. So a Polkadot parachain can operate according to its own rules, providing it can submit its overall state to the Relay chain using the standard interface.
Using the teacher/student analogy again, the teacher can now accept students who speak many different languages, and they can communicate freely. Students are free to write their assignments in their own language and format, as long as they submit them on time.
The additional flexibility of heterogeneous sharding means that Polkadot can interact with chains that want to use their own finalization process, using bridge parachains. So Ethereum could connect to a bridge parachain and run on Polkadot. However, Ethereum’s homogeneous sharding means the compatibility doesn’t work both ways.
Polkadot is already live on the first version of its mainnet, launched in May 2020, and work is now underway on the next phase. The ETH 2.0 roadmap is still yet to launch the first version, and it will be another two years or more before the project achieves full implementation.
A further challenge of Ethereum’s plan to implement sharding is that Ethereum is already an operational blockchain, with thousands of dApps and tokens operating on it. The ETH 2.0 upgrade is being implemented as an entirely new blockchain ecosystem using homogeneous sharding. At some point, the current Ethereum blockchain will get merged into the ETH 2.0 architecture.
This will involve a certain amount of risk for the operators of Ethereum dApps and tokens, which is already starting to become apparent. The advantage of a newer implementation such as Polkadot is that the project has been able to design its roadmap and build activities to accommodate sharding from the very beginning.
Polkadot has also developed an open-source framework called Substrate. This allows anyone to implement a parachain using an out of the box configuration, or customize particular features according to their requirements. Users can choose a programming language that suits their existing programming skills, rather than having to learn Ethereum’s Solidity programming language.
The Ethereum 2.0 upgrade has been a long time in the making, involving a long research phase with several delays to development. The challenge with such a long implementation period is that it allows other, more agile development teams to start scooting ahead. The risk now for Ethereum 2.0 is that it may become outdated before it even gets off the ground.
Author: News Bureau
Apex Crypto News – Centre Freezes Ethereum Address Holding $100K USDC
Centre, the company that issues the stablecoin USD Coin (USDC) has blacklisted an Ethereum address holding $100,000 in USDC in response to a law enforcement request. In the first of its kind, the address had a “blacklist(address investor)” function called on June 16, 2020.
It’s not yet clear the reason behind the law enforcement request, but Centre Consortium — founded by Circle and Coinbase — did release a statement confirming the blacklisting:
“Centre can confirm it blacklisted an address in response to a request from law enforcement. While we cannot comment on the specifics of law enforcement requests, Centre complies with binding court orders that have appropriate jurisdiction over the organization.”
Although Circle spokesperson Josh Hawkins, said he could not provide any specifics about the blacklisting, it appears the address could be involved in other cryptocurrency theft.
In the comment section of a different address, a user claims the owner of the blacklisted address stole other tokens from them:
“Hello unknown thief, you are in contact with this eth address 0xEeC84548aAd50A465963bB501e39160c58366692 and you stole 10,000 Loopring Coin (750 euros) from my wallet. I am now giving you a chance to send the 10,000 Loopring Coin back to me. You already know my eth address. If you do not do this, I will report you anywhere with your 2 known addresses.”
Last week USDC broke $1 billion market cap, making it the second-largest stablecoin behind Tether (USDT), and Twitter users likening stablecoins to centralized fiat currencies, suggesting what can happen to USDC can happen to any other stablecoin.
Another user stated that Dai (DAI) could fix this issue of centralized control, however they were also rebutted with the fact that DAI is backed by USDC and other centrally controlled digital currencies.
Normally funds held on the Ethereum blockchain are controlled by the address owner, however, in relation to USDC, an address can be blacklisted which restricts them from executing transactions (sending or receiving) through the USDC smart contract. Although technically reversible, Circle’s website warns that blacklisted addresses may be “wholly and permanently unrecoverable.”
This has raised concerns among the community surrounding censorship with a user lamenting on Reddit:
“Central government control and censorship is just going to get worse.”
Another user commented on Twitter saying the “C” in USDC “stands for censorable.”
Tether Blacklists 39 Ethereum Addresses Worth Over $46 Million
Tether (USDT) has blacklisted 39 Ethereum addresses worth $46 million in USDT, with 24 holding a total of over 5.5 million USDT being blacklisted this year. This revelation comes on the back of Centre’s first blacklisting of an Ethereum address holding $100,000 USDC.
Ethereum researcher at Horizon Games Philippe Castonguay used Dune Analytics to create a dashboard that tracks the number of addresses blacklisted by both Centre and Tether. The largest address holds over 4.5 million USDT and was only recently blacklisted on April 5.
39 addresses blacklisted by Tether. Source: Dune Analytics
Similar to blacklisted addresses holding USDC, Tether addresses that receive a blacklisting function are no longer able to transact with Tether, freezing any existing coins held in the address.
General counsel at Bitfinex (sister company of Tether) Stuart Hoegner told the media that Tether works with international law enforcement agencies and blacklists addresses when required:
“Tether routinely assists law enforcement in their investigations… Through the freeze address feature, Tether has been able to help users and exchanges to save and recover tens of millions of dollars stolen from them by hackers.”
Arcane Assets CIO Eric Wall stated on Twitter that the most recent freeze occured on June 14 which held 939,000 USDT received from Binance just 22 hours before the blacklisting occurred.
Aside from this, Wall added, most other freezes were purely precautionary actions:
“Most other freezes seem to have been made on Ethereum accounts either for precautionary reasons (possibly identified as scams/Ponzis) or in error/to protect others from making errors (like freezing 0x000…0001). 3 addresses were unfrozen after the freeze.”
This recent development further adds to the distrust of central organizations within the crypto world, with resistance specifically over stablecoins and their ability to be censored. One user commented on Castonguay’s Twitter post that Dai (DAI) and sUSD are the only censorship-resistant stablecoins.
Chief Ethereum Critic Buys ETH, Are Bitcoin Maxis Capitulating?
One of the biggest critic of ethereum has caved in, publicly announcing he is now buying eth after five years of bashing it.
“ETH/BTC technicals are looking bullish so I’m long. (I still think ETH has extremely problematic fundamentals),” said Tuur Demeester, a marketing guy of sorts that claims to be an economist and is known for horse blinkers support of Bitcoin Core.
He would have been kicked out of the ‘church’ even a year ago if he had said the same, but now he finds it fit to publicly announce this conversion to ethereumism.
That is probably because there appears to have been a significant shift in the attitude of bitcoin maxis as shown by Udi Wertheimer himself, who is kind of a marketing guy for Blockstream or works for them in some way or used to.
“Part of the Ethereum community 👉 @udiWertheimer,” says Joseph Delong, one of the chief priests of the now dying Bitcoin Core church.
To be fair, bitcoin maxis never had huge vitriol for ethereum, only some. They never missed an opportunity to bash it however, or to call it a scam.
But it all began to change probably when we introduced the then very nascent decentralized exchanges space that was just beginning to grow in ethereum in June 2018.
Decentralized exchanges have been a holy grail of sorts for bitcoiners since the very beginning, with blinkered bitcoiners around that time probably starting to look more and more at eth.
They’re coders, many of them, and so they probably began to see eth is a fine project at a coding level, and that there are things you can do on it which you can’t on bitcoin.
Yet some Blockstream developers we’ve spoken to, although more last year than this year, still tend to see just the letters ethereum themselves as some dirty word, but not all of them or anywhere near it.
Then there are some who more for public consumption claim ethereum has no unique point because apps don’t need censorship resistance.
They make that point far more convincingly than we’re re-telling it because obviously we think it’s nonsense as, just as an example, we’ve been raging against the discriminatory restrictions on capital formation of the Securities Act 1933 for now more than two years.
Barry Silbert, who some early ethereans blame for all things, has invested in Decentraland or did at some point, with that being an ethereum based tokenized virtual lands project.
He has probably also invested in plenty of other ethereum based projects, but this attitude change might also be because of the power and influence of the ethereum community.
Then came MakerDAO’s Dai, and Augur, and you had these dex-es, and then Compound opens the field further, and Silicon Valley grandees start paying attention, and you have things like Synthetix – which is by anon devs if we’re not mistaken cus SEC – and you get Curves and Balancers and bots and pools and now the maxis capitulation.
Then there’s the narration. Bitcoin and eth are different fundamentally because of bitcoin’s fixed limit which eth can’t implement as credibly.
Bitcoin is kind of frozen really, and it does do some practices better like backwards compatibility through softforks, and it is generally more an asset for international trade and can continue to be so because you’ll always be able to just mine it yourself.
Eth has some of those qualities as well, but bitcoin takes on central bankers while eth takes on more commercial banks because its smart contracts are beginning to perform some of the basic functions of banking, like borrowing and lending, managing deposits (pools), facilitating capital formation, enabling trading venues, and much more.
So the two were never really existential competitors, something shown clearly by market actions over the past years, but complementary networks that may look similar on the surface and in many ways they are quite similar, but they also are very different.
Meaning as far as these pages are concerned we welcome these maxis as we fundamentally share the same goal: digitizing the financial system through the still very new invention of code.