Every week, IntoTheBlock brings you on-chain analysis of top news stories in the crypto space. Leveraging blockchain’s public nature, IntoTheBlock’s machine learning algorithms extract key data that provide a deeper dive into the major developments in the industry.
This week we cover the recent regulatory approval of stablecoins in the U.S. and its implications. As well, we take a look at some fascinating insights that highlight the massive impact of Uniswap’s UNI token distribution.
Stablecoins’ role within the crypto space has become increasingly important. While they have had their controversies, they serve the need of transferring value on-chain without being prone to the same volatility of most crypto-assets.
As covered in Decrypt, the Office of Comptroller of the Currency (OCC) issued a report in which it states that they will allow American banks to hold reserves for stablecoins. While this may not sound like a breakthrough at first, it does clarify the regulatory framework regarding stablecoins in the U.S.. This is the second positive development coming from the major regulatory entity, as earlier in the summer they allowed banks to legally offer crypto custody services.
This regulatory clarification and approval incentivizes more traditional financial institutions to work with stablecoin projects. It may not happen overnight, but at some point big American banks are likely to start holding reserves backing stablecoins. With demand for stablecoins steadily growing, it would not be surprising if this happens within a year or two.
Analyzing on-chain insights, we can observe just how significant this growth has been, and have a better idea of where they may be heading in light of the recent regulatory stamp of approval. Let’s start by looking at the daily transactions volume that Tether — the largest stablecoin — processes:
In the past two years, on-chain volume recorded for Tether transactions on Ethereum has grown from $500,000 per day to over $3.5 billion per day, a 7000x increase. This has led the stablecoin to consolidate itself as the third-largest cryptocurrency by market, and to surpass the daily volumes transacted in Bitcoin and PayPal. With demand for Tether and stablecoin transactions growing at such rates, it is very likely that banks will want to start holding their collateral to benefit from this trend.
By tracking stablecoin deposits and withdrawals to and from exchanges, we can have a better idea what type of activity they are being used for. IntoTheBlock’s Net Flows indicator measures money flowing into exchanges minus the money flowing out of them to calculate the net amount entering/leaving exchanges. In the graph below, we can see that Net Flows have been consistently negative for Tether.
This points to Tether outflows from exchanges being greater than the Tether being deposited into exchanges. As a matter of fact, large centralized exchanges have seen a net outflow of $6.8 billion in Tether so far in 2020. This suggests that stablecoins are being used mainly as a transfer of value, rather than to trade crypto with them. As well, it is likely that a significant portion of this has been allocated into DeFi protocols where users are able to passively earn high yields.
With demand for Tether skyrocketing, public perception for it has improved too. By looking at IntoTheBlock’s Twitter sentiment, we can see that negative sentiment towards Tether has eased off in 2020.
In the summer of 2019, tweets that were classified as having negative sentiment consisted of a third of the total. This number has since dropped to around 5%. At the same time, the total number of mentions for Tether and positive sentiment have increased. This highlights how public perception of the largest stablecoin has changed as it’s being used more.
With the recent FinCEN files scandal disclosing $2 trillion worth of dirty money being funneled by banks, it is reasonable to believe that more transparent alternatives such as stablecoins will keep getting traction. Up until this point, most stablecoins have likely been used within crypto. The OCC’s approval for banks to hold stablecoin reserves could be a first step before more traditional institutions start using stablecoins.
Uniswap users received a pleasant surprise last Thursday when the popular decentralized exchange (DEX) distributed 15% of their UNI governance tokens to all users that interacted with the protocol prior to September 1. At an initial price of approximately $3, Uniswap airdropped $450 million worth of UNI tokens.
While airdrops in crypto are nothing new, this has thus far been the airdrop where the largest dollar amount has been distributed. Another key difference versus airdrops that took place in 2017-18 is that UNI was distributed to existing users and supporters of Uniswap, whereas most airdrops simply reward holders of another token or users of a specific wallet.
The impact of UNI release had a strong impact in the Ethereum blockchain. UNI’s distribution took Ethereum fees to a new level, approaching $1 million per hour shortly after users were able to claim their free governance tokens.
Within five hours, hourly fees nearly went 10x up, from just over $100,000 to over $900,000. This is the highest Ethereum fees have been on a per hour basis all year.
The spike in fees is due to high demand for limited Ethereum blockspace. As a result, gas fees stood between 500 to 700 Gwei for several hours, also one of the highest levels seen all year.
Despite the high fees, Uniswap users still rushed to claim their UNI tokens. This is likely the main reason why the number of ETH transactions surpassed 1.3 million the day UNI was released.
The UNI distribution marked a new yearly high in terms of Ethereum transactions, and the second highest level seen all-time. Now let’s look into activity within the UNI token.
By looking at the number of addresses holding UNI, we observe that it instantly attained widespread distribution. With over 80,000 holders within 48 hours, UNI became the second most held DeFi token only behind LEND (excluding stablecoins and oracles).
Based on Uniswap’s official announcement, there were just over 250,000 user addresses eligible to claim their free UNI. Although some of these addresses have yet to claim their UNI, it appears that most simply sold. By looking at zero balance addresses — addresses that transferred out all of their tokens on a given day — we can confirm that most UNI claimers either sold or transferred all of their stake immediately.
With $450 million worth of tokens freely distributed to previous users, it may come as no surprise that UNI sparked high Ethereum fees and transaction activity. Within a week of its inception, UNI has already amassed strong transaction activity and reached the second highest holder base out of DeFi tokens despite most users selling their tokens. Ultimately, Uniswap’s UNI release has been one of the most impactful events to occur in Ethereum in 2020.
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The views and opinions expressed in this article are the author’s own and do not necessarily reflect those of CoinMarketCap.
Author: by IntoTheBlock
Visa’s Crypto Strategy Is Driving Its Next Stage Of Growth
POLAND – 2020/03/23: In this photo illustration a VISA logo seen displayed on a smartphone. (Photo … [+] by Mateusz Slodkowski/SOPA Images/LightRocket via Getty Images)
Bitcoin was invented to disrupt existing monetary systems that many felt were too expensive and exclusionary. With this in mind, it was given a much broader value proposition than a deflationary issuance policy and hard cap of 21 million units. Through the novel use of blockchain technology, it also allows anyone to send money to a counterpart around the world in a few minutes for fractions of a dollar.
This functionality placed incumbent payment platforms such as card networks and interbank messaging systems directly in bitcoin’s crosshairs. While some firms dismissed these concerns, others saw the potential and looked for ways to derive value for their partners and shareholders.
To investigate this issue further, we recently spoke with the two Visa executives most responsible for its crypto and blockchain strategy Terry Angelos, SVP global head of fintech at Visa and Cuy Sheffield, senior director, head of crypto at Visa. The pair shed substantial light on how Visa approaches innovation and evaluates opportunities to incorporate promising technologies, such as crypto and blockchain, into its operations. They also went into significant detail on how they are approaching next generation digital assets, such as stablecoins and forthcoming assets that will be issued directly by central banks. It was a fascinating discussion that leaves one thing clear, digital assets and blockchain technology are going to be important parts of Visa’s future.
Excerpted from Forbes CryptoAsset & Blockchain Advisor.
Forbes: Can you talk a little bit about how blockchain and crypto fall within the organization and your respective roles?
Terry: The short answer is that it’s distributed. Inside of Visa, we have a number of groups that are either building products that are based on blockchain technology or engaging with clients who are involved in the crypto industry. We also have pockets in Visa Research, our B2B teams and our core network teams.
Forbes: Cuy, as Visa’s head of crypto can you talk a little about how you are approaching this new industry?
Cuy: My main role is to understand how our growing set of clients, meaning fintech companies that may be adding crypto business lines or firms that are natively crypto, can leverage Visa’s existing products. Specifically, my responsibilities fall into three buckets. First, I work closely with the partnerships team. We have close relationships with a number of the leading crypto wallets and exchanges, and we help them access our network of over 60 million merchants. As part of that mission, we work with Visa initiatives such as the Fast Track Program, where we help crypto partners that want to issue Visa credentials. Second, we partner with Visa Research to study the underlying technologies behind digital currencies. Third, we try to identify new use cases in payment flows for which digital currencies could be well suited.
Forbes: Visa recently published an article on its blog titled, Advancing our approach to digital currency, which consolidated a lot of your recent activities into one concise document. What was the impetus behind its creation and why was now the right time to release it?
Cuy: We’ve been advancing our work on digital currency, both on the product and research side, for the last two years. However, while the strategy has continued to evolve, we haven’t talked about it very much. In this vacuum, we’ve seen different narratives and speculation about our activities, so the post was primarily to articulate why Visa is investing in and spending time on digital currencies. We also wanted to lay out some of the principles that are guiding our strategy.
Forbes: Thank you for that background. Can you get a little more specific and talk about how your work in blockchain and crypto fits into this thinking?
Terry: One of Visa’s significant developments over the last few years was its evolution to becoming a “network of networks.” This means initiating and terminating transactions across multiple networks, some of which we own and others that we don’t, such as SWIFT or local ACH networks.
In that context, although we don’t do this today, we would think of interoperating with a blockchain network that we don’t control as being no different than a third-party real-time payments platform.
Forbes: How has this thinking guided your engagement with companies in the space so far?
Terry: Because we don’t think of blockchain networks as being different from a strategy perspective, to the degree that blockchain networks emerge, are legal and regulated, we can engage with them in the same way as any other network. To that end, Cuy is helping to build the product set that can interface with those networks. Consider our partnership with Coinbase (in February 2020 it became the first crypto company to become a direct Visa card issuer with principal membership). That’s an example of a Visa credential being linked to a Coinbase account, which has a store of value that happens to be in digital assets. Coinbase is ultimately doing the conversion into fiat (for the purposes of navigating our network), but you’re effectively connecting a digital asset to the Visa network.
Forbes: The Coinbase announcement made a big splash, but you’ve also partnered with other crypto payments firms such as Fold. Can you give us an idea of the number of potential partners in the pipeline? Additionally, do you onboard each of these clients in the same way or are there differences?
Terry: We are seeing significant interest in demand from crypto companies that want to work with Visa and connect their clients to our network of 60-plus million merchants. So far, we have onboarded about 25 companies from around the world that are at various stages of development. Given this diversity, our engagement with them can go down a few different paths. First, there are very large and established companies like Coinbase, which we simply treat as strategic fintech clients.
However, there is this vibrant ecosystem of crypto-native companies building directly on top of blockchains. In those cases, our Fast Track program has been a key success factor. It gives participating companies a single point of contact with the firm so that they can learn how to engage with Visa and its partners and be able to issue credentials. In fact, we have vetted partners to help them set up AML/KYC (anti-money laundering/know your customer) programs, find a bank sponsor or partner with an issuer processor, should those things be necessary.
While we are on this topic, I also want to point out that we make an internal distinction between the terms cryptocurrency and digital currency because that will help you better understand our client base. We think of cryptocurrencies as assets that are natively issued onto a blockchain, while we broadly define digital currencies as tokenized versions of fiat, such as what Coinbase and Circle are doing with USDC. Most of our crypto clients fall into the latter category.
Forbes: Is Coinbase still the only crypto company that is still a principal member of Visa?
Terry: Yes. But I think we have some that are potentially in the queue.
NOTE: In the time since the interview was conducted, Visa announced that the digital asset-based lending platform Cred joined the Fast Track program. We followed up with Visa to ask why Cred stood out as a candidate for membership. Here is their response:
Cuy: We’ve seen significant innovation in new financial services for consumers that hold digital currencies. The growth in demand for lending and borrowing of digital currencies is an example of that. We’re excited to partner with fintechs like Cred that are building new products in this ecosystem and to find new ways for Visa to improve the fiat on-ramps and off-ramps connected to those products.
Forbes: Let’s switch gears and talk about Visa’s investments in the space. You’ve made an investment in the institutional crypto custody firm Anchorage. Are there others you can disclose?
Cuy: Anchorage is the only public investment that we’ve made directly in digital assets. We think the company is providing a fundamental security infrastructure that’s going to be critical for digital currencies to be able to be developed and be used.
Forbes: Building on that, what do you look for when it comes to a crypto portfolio company? What do you hope to get out of these engagements?
Terry: If you look at our investment strategy overall, we get very excited about payment infrastructure companies (see our 2015 investment in Stripe, the payment processor). This is something that we want to focus on in the crypto world. In fact, you can think of Anchorage as digital infrastructure. Custody is one of the most important and technologically difficult things to manage for any digital currency, and it is necessary for a healthy payment ecosystem.
We can even take this line of argument further. Consider central bank digital currencies (CBDCs). There are a few ways to issue them, but one of the models we see most is where traditional banks serve as primary access points for funds. In fact, that’s exactly what’s happening in China right now with the digital yuan. So, if you are a bank in a market with a CBDC, you will need to custody the legal digital version of that currency. We think companies like Anchorage will be one of the partners that those banks would have to turn to for that capability.
Forbes: Staying on the topic CBDCs, do you see Visa playing a broader role in this new ecosystem?
Cuy: Visa engages very closely with central banks across the world on a number of different topics, with CBDCs being one that’s gaining increasing interest. We think that if a central bank is going to issue a CBDC, they will need to consider a number of the same factors that are facing private companies building tokenized stablecoins.
These include how do you make sure that it’s consumer friendly? Can you make sure that customers are able to use a wide variety of digital wallets to be able to secure, access, and spend the funds? Additionally, for the assets to have utility, they need to be accepted at merchants. All that considered, we think there’s a big opportunity for Visa to leverage our existing network and assets and expertise to add value to both central banks as they think about CBDCs, as well as to other private sector entities that are exploring these privately issued stable coins.
Forbes: You were one of the founding members of the Libra Association, which is closely affiliated with Facebook. However, you withdrew shortly thereafter. Walk us through your thought process there and more broadly how do you plan to approach consortia in the future?
Cuy: I’d point you to one of the core principles that we outlined in the blog post, which is that we see Visa as remaining currency and network agnostic. We want to support the digital currencies that our diverse set of clients demand. Therefore, part of the network of network strategy isn’t to try and just pick a winner. Rather, it’s being able to have products and services that work with many different digital currencies and networks.
Terry: If we join a consortium, it’ll be because we want to influence and help some of those principles that we believe in be executed. That said, we haven’t made any decisions to join consortiums right now and I doubt that we would join any exclusively.
NOTE: In the time since the interview was conducted, Visa joined the Chamber of Digital Commerce.
Forbes: I want to briefly touch on patents. We were excited to see that you filed for a stablecoin patent a few months ago. Are there any others you are looking into? Additionally, how does your patent strategy fit into all this blockchain work?
Cuy: A lot of the patent work has come out of Visa Research, where they are doing fundamental work around how to improve blockchain technology overall. For instance, they are looking at general themes like scalability, second-level payment channels and privacy. There’s still a lot of work to be done to improve how these technologies can be commercialized and used for mainstream payments.
Forbes: What is your outlook for 2nd level scaling technologies such as the lightning network?
Cuy: For retail payments to scale on non-permissioned blockchains, 2nd layer technologies will need to emerge. These could enable high-throughput transactions to be instantly authorized while using “on-chain” transactions for settlement. In some ways, this is how payment networks operate today: fast, instant authorizations at tens of millions of merchants, followed by payments over large-value settlement networks. There are already many open-source projects creating this layer and our research teams continue to explore these to determine their suitability for payments.
Forbes: Are there any exciting new projects coming out of the research team related to crypto?
Cuy: One area that we’ve spent time on as well is offline digital currency payments. When central banks think about CBDCs, one of the potential features that they are paying attention to is offline payments. There are a lot of technical challenges around enabling this functionality in a secure manner. So we are continuing to advance research on that front and we’ll hopefully have more to talk about in the coming year.
Forbes: Thank you both for your time.
Author: Steven Ehrlich
Bitcoin News Roundup for Sept. 23, 2020
Inside the blockchain developer’s mind: The upgradeability crisis
This is Part 1 of a three-part series in which Andrew Levine outlines the issues facing legacy blockchains and posits solutions to these problems. Read Part 2 on the vertical scaling crisis and Part 3 on the governance crisis as they go live on Sept. 24 and 25.
It is our belief that there are three fundamental problems, or crises, that are standing in the way of blockchain adoption: upgradeability, vertical scaling and governance. In this article, we are going to explore the upgradeability crisis and how computer operating systems could serve as a useful analogy that holds the secret to resolving this crisis and enabling blockchains to achieve mainstream adoption.
The most powerful concept for understanding the upgradeability problem is “antifragility.” Proposed by Nassim Taleb, antifragility is a property of systems that improve when stressed. Fragile systems can seem to be working great most of the time, but when stressed, they fall apart, or “blow up.”
Antifragility is a property that emerges from multilayered, hierarchical systems that contain fragile subunits that by breaking/dying/blowing up result in an overall healthier system. In nature, we call this process evolution. Evolution occurs when a species replaces a less successful trait with a more successful trait. In computing, we call such improvements “upgrades.”
The problem with the major blockchains we know today is that they weren’t designed to be upgraded, which means they can’t evolve. The reason why evolution is so important is that it enables systems to survive “black swans,” which are highly unpredictable events with severe consequences. Not only can antifragile systems survive black swans, they actually get better from them.
In blockchains, there are virtually no separate layers with fragile subsystems that enable healthy adaptation to stressors. Instead of designing from a perspective of humility, the creators try to present themselves as infallible visionaries who have designed a perfect system that immediately deserves a high valuation.
There is no greater proof of this than the reliance on hard forks for system upgrades. A hard fork is the opposite of an upgrade path. It is tossing out the old system and replacing it with a new one.
There is, however, a silver lining to this analysis, which is that the solution is less about breaking through technical barriers than it is about breaking through psychological barriers. We aren’t designing blockchains from first principles, but are still primarily iterating on top of preexisting architectures like those in Bitcoin and Ethereum.
There are many ways to implement a blockchain, but we often assume that the way in which these protocols implement some component of the blockchain is by default the “right way.” These protocols totally frame the way we look at these issues, leading us to create mental “maps” of the problems that were “drawn” before we had even begun exploring this new territory.
Bitcoin and Ethereum were essentially the first decentralized computers. As with any new computing paradigm, in the early stages, engineers and developers are focusing their attention on whether they can even use the technology to solve a specific problem and, if so, use it to build their application. There’s no tooling and no platforms they can take advantage of, so they have to build everything from scratch and optimize their stack for their specific application.
The end result is a monolithic piece of code powering an application designed to solve a specific problem.
These early applications can be quite successful thanks to the first-mover advantage, but when it comes to software development, the success that comes from being a first mover is illusory. The first movers in software find the features, or “behaviors,” that users will find most valuable, thereby validating the new technology.
But maintaining this advantage is nearly impossible because the application is built on a mountain of old code that few people understand or are capable of upgrading. Bugs are a nightmare to fix, and just maintaining the existing code becomes a Sisyphean task; forget improving it.
At this stage, the apps can die for any number of reasons, but the underlying cause of death is that they are fragile. The black swan that ultimately wreaks havoc on existing apps is the development of the operating system. Operating systems make it an order of magnitude easier for developers to launch the same kind of applications, with the same core behaviors featured in the first movers.
The advent of operating systems enables the technology to scale to the next level by making it easier and faster for developers to release better programs that penetrate more of the market and reach more users. Plus, it gives us another layer in the stack. Now, if one application blows up, the most critical lower layers remain unaffected.
So, problem solved, right? While first-generation operating systems provide a massive competitive advantage to the application developers who adopt the right ones, they also suffer from the same upgradeability problem of the first-generation applications. They emerge as a means of providing core features, security and a shared user base, but not to maximize upgradeability. So, they eventually become feature-bloated, complex and difficult to upgrade.
Upgrading the system requires a system reboot and reloading process that becomes longer and more disruptive the bigger and more complicated it gets. While one layer (the OS) is insulated from the mistakes made in another (the application layer), the OS itself remains fragile.
Blockchains like Ethereum and EOS were designed like these early operating systems. They provide core features, security, a shared user base and a programmable “user space” that developers can leverage to add the custom features they need to power their specific applications.
In the case of blockchains, the problems that plague first-generation operating systems are amplified due to immutability; they are constantly growing in size, which places additional stress on infrastructure and creates a distinct scaling challenge.
Further, because they are decentralized, upgrades must make their way through a governance process that ends, under the best of circumstances, in the execution of a coordinated effort in which all of the computers stop running the old software and start running the new software (a new “fork”) at the exact same time. This is far from easy, which is why calling it a “hard” fork is especially apt.
When certain changes require a hard fork, people are forced to bundle those changes because implementing them piecemeal would result in additional network downtime. This results in a “rider problem” similar to what we see in governmental systems where unrelated changes get attached to important changes. In other words, there is a centralization-in-time problem. Because every important thing must be done at the same time, and because people disagree on what is important, the moment in time when those changes must be implemented creates an attack vector.
Regardless, hard forks wind up being big, political, risky and, most importantly, they take down the network! This dramatically slows the rate of progress, and because every major blockchain works this way, the sector as a whole stagnates.
What we need is another layer beneath the operating system that enables the entire system to evolve. In operating systems, that layer is called a BIOS — a basic input/output system. But it’s important to remember that we are only using operating systems as an analogy. We need to construct this layer from first principles specifically for use in blockchains. That layer, like every other layer, must be made up of fragile subunits that can somehow “break” without blowing up the system as a whole.
The creation of the BIOS was a critical step for mainstreaming computers because it enabled developers to rapidly build, test and iterate upon the applications that would make personal computers useful to ordinary consumers.
If we want to cross that same chasm, we don’t just need a better blockchain OS, we need an operating system that is built on a BIOS-equivalent for the specific purpose of upgradeability.
We must be able to add any feature to the blockchain without requiring a hard fork. This will enable the blockchain to adapt to stressors (attacks, bugs, missing features, etc.), improve itself, and scale to meet the needs of the masses.
Until that day comes, the quality of blockchain-based applications will continue to stagnate, and the space will remain dominated by projects that might look like they are working on the surface but that aren’t being widely adopted, are inherently fragile and will one day “blow up.”
The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
Andrew Levine is the CEO of OpenOrchard, where he and the former development team behind the Steem blockchain build blockchain-based solutions that empower people to take ownership and control over their digital selves. Their foundational product is Koinos, a high-performance blockchain built on an entirely new framework architected to give developers the features they need in order to deliver the user experiences necessary to spread blockchain adoption to the masses.
Bitcoin is Eerily Copying Gold Trends; Analyst Fears Breakdown
Bitcoin is laggingly tailing the gold chart trends, and it may face trouble for its delayed correlation.
That is due to the precious metal’s latest breakdown move, wherein the price broke out of a Symmetrical Triangle pattern to the downside. Incidentally, Bitcoin is now consolidating inside a similar technical structure, and one analyst predicts it would break bearish just like gold.
“Since the COVID Crash of March 2020, it is apparent that gold has been leading Bitcoin,” the TradingView.com contributor wrote in his analysis, placing their performance against each other to prove the correlation theory.
As shown in the chart above, the Gold bull run in March 2020 started before Bitcoin. The precious metal’s consolidation move in April 2020, too, paved the way for Bitcoin’s sideways trend that began in May 2020. Even the gold’s record high appeared more than a week before Bitcoin’s yearly one.
That left the analyst with ample evidence about a potential breakdown in the cryptocurrency market. The reason is simple: Gold has done the same after breaking bearish on its Symmetrical Triangle.
A Symmetrical Triangle is a continuation pattern, confirmed by two converging trendlines forming at least two lower highs and higher lows. It means that the price would likely undergo a breakout in the direction of its previous trend – though that is not always the case.
Both Bitcoin and gold formed a Symmetrical Triangle after rallying exponentially from their mid-March nadirs.
That would have ideally resulted in a bullish continuation trend. But the breakdown move on the gold charts invalidated the upside expectations. Therefore, the metal and the cryptocurrency are now targeting lower levels for a potential pullback.
Technically, the breakout target of a Symmetrical Triangle is as much as its maximum height.
With gold breaking down, it now has a likelihood of trimming another $300 off its exchange rate – at most. Meanwhile, Bitcoin could fall by around $2,500 more, bringing its downside target somewhere near $7,800.
And the fundamentals agree.
The US dollar has lately put downward pressure on safe-haven and risky markets both. Its rebound from the two-year low reduced bids for Bitcoin, gold, and stocks, causing them all to correct lower in tandem.
A delay in the dispatching of the second COVID stimulus by the US Congress led investors spend-less-save-more strategy. Prospects of lesser-than-expected dollar liquidity increased its demand in the short-term, hurting other assets simultaneously.
Analysts think there won’t be a stimulus package until the US presidential elections in November. That would ensure Bitcoin and gold trades in sync in the coming sessions, with a downside bias.
Author: By TeamMMG
Bitcoin News Roundup for Sept. 23, 2020
Decentralized Finance (DeFi) took the crypto field by a storm in 2020. The total value locked in various DeFi protocols is just under $10 billion, at the time of this writing.
If this doesn’t sound impressive, consider the fact that this number was just about $570 million in March. In other words, the market grew by an astounding 1607%.
Much of it was led by Uniswap, being the leading automated market maker and decentralized exchange. However, as the market matures, new solutions are coming to light and some of them aim to bring more than what Uniswap’s currently offering.
One protocol of the kind is OneSwap.
OneSwap is a trading service platform based on the permissionless listing of decentralized exchanges (DEX). It also provides the good practices of automated market maker (AMM) projects, while also introducing an on-chain order book on the basis of the CFMM model to further improve the experience for AMM traders.
This particular combination provides users with the convenience of limit trading orders – something that Uniswap lacks and it also enhances the overall liquidity of digital assets.
The platform features an interactive and intuitive trading interface as well as a one-click currency issuance tool in the OneSwap Wallet which comes along with it.
Apart from the built-in wallet, the platform also comes with token repurchase and burn functionalities, on-chain governance, mining incentives, candlestick charts, and a depth map.
The public beta started on September 8th, featuring yield farming and transaction mining, while the official launch was on September 19th.
At the time of this writing, Oneswap boasts a total trading volume of more than $7.4 million since launch, where the total liquidity is around $36million.
Another important thing to discuss is the architecture of the protocol. OneSwap, deployed on each blockchain, comes with a series of capital pools. They are referred to with the transaction pair contract.
Each contract consists of three parts. Namely, these are the on-chain order book, the CPMM model which is the constant product market maker providing liquidity for that contract, and the equity tokens that record the privileges of the liquidity providers.
As soon as the liquidity provider injects digital assets in the capital pool of the given Pair contract, the latter will mint new equity tokens for the liquidity providers. The number of these tokens is based on the current size of the pool, as well as on the total amount of equity tokens that have been issued, as well as the current injections.
On the other hand, when the liquidity provider wants to retrieve their funds, the Pair contract is going to return the funds according to the corresponding proportion of the equity tokens and burn those equity tokens.
OneSwap also has its ERC20-based governance token issued on Ethereum’s network and it’s called ONES.
It’s a deflationary token and according to the whitepaper, 40% of the transaction fees that are generated on the platform will be used to repurchase and burn ONES. This happens automatically and the burn goes through the BuyBack.
In addition, the on-chain governance of OneSwap happens through proposals and community voting where users who have enough ONES tokens (more than 1% of the total supply) can bring proposals up for discussion and votes. Any user who holds the token can vote against or for the proposal.
ONES now has been listed on CoinEx, Lbank, and MXC.
In general, OneSwap looks like an interesting project to consider in the current DeFi landscape. It does bring a few new exciting features, while also coming with the expected stack of technology that users are already accustomed to.
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Author: Published 2 hours ago on September 23, 2020
By Republished by Plato