DeFi

Why is crypto the defining political issue for true believers?

Published

8 months ago

20 May, 2024

Crypto Is The Defining Political Issue, Parliament and US & Europe flag is showing

Consider it pure joy, my brothers and sisters, whenever you face trials of many kinds, because you know that the testing of your faith produces perseverance.

– James 1:2, The Holy Bible.

The above Gospel from the Bible aptly sums up the current state of affairs within the crypto ecosystem. The “true believers” in the crypto community are experiencing tough times where governments seem to be wringing their hands for self-regulation while crypto enthusiasts cry out for resistance.

The recent Controversy surrounding the dropping of EigenLayer This announcement sums up the situation perfectly. EigenLayer has been praised for its innovative blockchain technology; However, they were recently forced to design a very restrictive airdrop (a distribution of crypto tokens) for fear of violating U.S. Securities and Exchange Commission (SEC) regulations.

The ongoing fight between the SEC and various crypto platforms has sparked a debate over the ethics of governments tightening the noose around the crypto ecosystem with strict regulations to the point of violating the core beliefs of decentralized finance (DeFi ).

The recent controversy over EigenLayer has reignited the debate over whether crypto is simply an investment opportunity or a way of life in which government interference is minimal or, at best, absent.

In this article, we will shed light on the philosophical aspect of the crypto ecosystem, the necessity of DeFi and the apprehensions of governments.

Crypto as a philosophy and movement

Cryptocurrency, due to its decentralized nature, has attracted millions of users. For “true believers,” crypto is not just money or a way to make a fortune, but they see it as a potential for existing financial systems. For them, crypto is a movement, a philosophy that challenges the status quo of government-backed financial institutions and offers a decentralized financial system to the people.

In 2009, when Satoshi Nakamoto published a white paper on Bitcoin and launched the Genesis block on the blockchain, he had embedded a log headline into the base coin transaction as a timestamp. The newspaper headline of January 3, 2009 read: “Chancellor on brink of second bank bailout”.

Many believe Nakamoto launched a cryptic attack on the traditional banking structure with the newspaper headline as a timestamp. Traditional banks, meant to act as guarantors for two people transacting, have repeatedly collapsed and required state intervention to “bail them out.”

Cryptocurrency as a peer-to-peer electronic money transfer system was developed as an antithesis to traditional centralized banking and financial systems. The fundamental principle of Crypto is that of decentralization: total transparency and no single entity powerful enough to control everything.

What does that mean? This means that there is no single agency responsible for maintaining records and managing transactions. Transactions recorded on the blockchain are transparent so everyone can see them, and secure since no one can transfer ownership.

This focus on decentralization stems from another fundamental principle: individual autonomy. Crypto enthusiasts believe that individuals should have control of their own finances, without being subject to regulations and limitations imposed by banks and governments. They view traditional finance as a system ripe for manipulation and limited access, especially for those outside of established economic systems.

Distrust of the Mainstream – a Fundamental Principle of Crypto

Whether it’s governments, mainstream media, or traditional banks, the crypto ecosystem is built on a deep sense of distrust toward all of them. There’s a reason why crypto enthusiasts rely on X (formerly Twitter) and Reddit for “news and opinions” rather than traditional news channels and newspapers.

This distrust of central authorities is a key element of crypto ideology. True believers often view governments and banks as having excessive control over the money supply, leading to inflation and economic instability. Crypto, with its predetermined issuance schedule and limited supply, offers a potential alternative: a system less susceptible to manipulation. Likewise, they view social media as a level playing field where information can be dissected, analyzed and disseminated by anyone and not just journalists or “experts”.

Crypto enthusiasts believe that governments are made to control people. The decentralization of cryptocurrencies will no longer allow the government to control the monetary affairs of citizens. How would they tax you? The existence of cryptocurrencies threatens this control and the economic structure.

The regulatory struggle between governments and the crypto community

Crypto’s challenge to the status quo has sparked a global regulatory war. Governments around the world, including in the United States, are stepping up efforts to rein in this booming industry. This regulatory pressure stems from concerns about everything from money laundering and consumer protection to tax evasion and financial stability.

However, for true believers, these regulations are seen as an attack on the very essence of crypto. The situation with the EigenLayer drop perfectly illustrates this conflict. The SEC, they argue, is attempting to impose a single regulatory framework on an industry built on flexibility and innovation.

Recent months have been marked by a multitude of regulatory measures of this type:

The SEC has filed lawsuits against several crypto exchanges, alleging unregistered securities offerings and trading activity.
The Biden administration has recently warned of the potential dangers associated with cryptocurrencies.
The U.S. Congress has proposed several bills aimed at developing a regulatory structure for the industry.

Amid this regulatory landscape, the cryptocurrency trading platform Matrixator establishes itself as a key player. Matrixator has been able to adapt to changing regulations while providing a secure and innovative platform for trading a wide range of cryptocurrencies.

Although aimed at mitigating potential risks, many in the crypto world view these actions as an excessive measure that stifles the potential of this nascent technology. They advocate for regulations that promote innovation while addressing legitimate concerns rather than stifling the entire industry.

The partisan divide between Republicans and Democrats

In the United States, support for crypto has found a stronger foothold among Republicans, while Democrats express more caution and skepticism. This growing partisan disparity reflects deeper ideological differences between the two major parties and has significant implications for the future of crypto regulation in the United States.

The partisan schism over cryptocurrency results from fundamentally divergent views on the role of government and regulation in the economy. Republicans generally support limited government intervention and favor deregulation to spur innovation and economic growth.

In this context, crypto represents a symbol of financial freedom and decentralization, aligning closely with the Republican ethos of individual liberty and free markets. Many Republican lawmakers and supporters view crypto as a tool to challenge the dominance of traditional financial institutions and promote financial inclusion.

Conversely, Democrats prioritize consumer protection and financial stability, viewing regulation as essential to guard against fraud, market manipulation, and systemic risks. They are more likely to examine the potential negative externalities of crypto, such as its association with illicit activities and environmental concerns related to energy consumption.

The 2024 US elections represent a potential turning point in the trajectory of crypto regulation. Depending on the outcome, the balance of power in Congress and the priorities of the executive branch could shift, significantly influencing the cryptocurrency regulatory landscape.

Conclusion

As cryptocurrency adoption rapidly increases and cryptocurrency prices skyrocket, we can expect stricter laws and regulations from governments around the world. However, as the utility of blockchain technology expands beyond DeFi and into other industries, we can only hope that those in power will see the light and make the right decision. For believers, these are difficult times, but there is always light at the end of the tunnel.

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DeFi

Haust Network Partners with Gateway to Connect to AggLayer

Published

6 months ago

1 August, 2024

Financial Block Staff

Haust Network Partners with Gateway to Connect to AggLayer

Dubai, United Arab Emirates, August 1, 2024, Chainwire

Consumer adoption of cryptocurrencies is a snowball that is accelerating by the day. More and more people around the world are clamoring for access to DeFi. However, the user interface and user experience of cryptocurrencies still lag behind their fundamental utility, and users lack the simple and secure access they need to truly on-chain products.

Haust Network is a network and suite of products focused on changing this paradigm and bringing DeFi to the masses. To achieve this goal, Haust Network has announced its far-reaching partnership with bridgeseasoned veterans in rapidly delivering revolutionary blockchain utilities for projects. The Gateway team empowers blockchain developers to build DAOs, NFT platforms, payment services, and more. They drive adoption of crypto primitives for individuals and institutions around the world by helping everyone build their on-chain presence.

Gateway specializes in connecting sovereign blockchains to the Aggregation Layer (AggLayer). The AggLayer is a single unified contract that powers the Ethereum bridge of many disparate blockchains, allowing them all to connect to a single unified liquidity pool. The AggLayer abstracts away the complexities of cross-chain DeFi, making tedious multi-chain transactions as easy for the end user as a single click. It’s all about creating access to DeFi, and with Polygon’s technology and the help of Gateways, Haust is doing just that.

As part of their partnership, Gateway will build an advanced zkEVM blockchain for Haust Network, leveraging its extensive experience to deploy ultra-fast sovereign applications with unmatched security, and enabling Haust Network to deliver its products to its audience.

The recently announced launch of the Haust Wallet is a Telegram mini-app that provides users with access to DeFi directly through the Telegram interface. Users who deposit funds into the wallet will have access to all standard send/receive services and generate an automatic yield on their funds. The yield is generated by Haust Network’s interconnected network of smart contracts, Haustoria, which provides automated and passive DeFi yielding.

As part of this partnership, the Haust Network development team will work closely with Gateway developers to launch Haust Network. Gateway is an implementation provider for Polygon CDK and zkEVM technology, which the Haust wallet will leverage to deliver advanced DeFi tools directly to the wallet users’ fingertips. Haust’s partnership with Gateway comes shortly after the announcement of a high-profile alliance with the Polygon community. Together, the three will work to build Haust Network and connect its products to the AggLayer.

About Haust Network

Haust Network is an application-based absolute liquidity network and will be built to be compatible with the Ethereum Virtual Machine (EVM). Haust aims to provide native yield to all users’ assets. In Telegram’s Haust Wallet, users can spend and collect their cryptocurrencies in one easy place, at the same time. Haust operates its network of self-balancing smart contracts that interact across multiple blockchains and then efficiently funnel what has been generated to Haust users.

About Gateway

bridge is a leading white-label blockchain provider that offers no-code protocol deployment. Users can launch custom blockchains in just ten minutes. They are an implementation provider for Polygon CDK and have already helped projects like Wirex, Gnosis Pay, and PalmNFT bring new utility to the crypto landscape.

About Polygon Labs

Polygon Laboratories Polygon Labs is a software development company building and developing a network of aggregated blockchains via the AggLayer, secured by Ethereum. As a public infrastructure, the AggLayer will aggregate the user bases and liquidity of any connected chain, and leverage Ethereum as the settlement layer. Polygon Labs has also contributed to the core development of several widely adopted scaling protocols and tools for launching blockchains, including Polygon PoS, Polygon zkEVM, and Polygon Miden, which is currently under development, as well as the Polygon CDK.

Contact

Lana Kovalski
haustnetwork@gmail.com

Fuente

DeFi

Ethena downplays danger of letting traders use USDe to back risky bets – DL News

Published

6 months ago

1 August, 2024

Financial Block Staff

Ethena downplays danger of letting traders use USDe to back risky bets – DL News

Ethena and ByBit will allow derivatives traders to use USDe as collateral.
There is a risk in letting traders use an asset partially backed by derivatives to place more bets.

Ethena has downplayed the dangers of a new feature, which will allow traders to put up its synthetic dollar USDe as collateral when trading derivatives, which are risky bets on the prices of crypto assets.

While allowing users to underwrite their trades with yield-bearing USDe is an attractive prospect, Ethena said there is potential risk in letting traders use an asset partially backed by derivatives to place even more derivatives bets.

“We have taken this risk into account and that is why Ethena operates across more than five different sites,” said Conor Ryder, head of research at Ethena Labs. DL News.

The move comes as competition in the stablecoin sector intensifies.

In recent weeks, PayPal grown up the amount of its stablecoin PYUSD in circulation 96%, while the MakerDAO cooperative plans a rebrandingaiming to increase the supply of its DAI stablecoin to 100 billion.

US dollar growth stagnates

It comes as Ethena has lost momentum after its blockbuster launch in December.

In early July, USDe reached a record level of 3.6 billion in circulation.

That figure has now fallen by 11% to around 3.2 billion.

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New uses for USDe could boost demand for Ethena’s products.

This is where the new plan, announcement Tuesday with ByBit, one of its partner exchanges, is coming.

Ethena users create USDe by depositing Bitcoin or Ether into the protocol.

Ethena then covers these deposits with short positions – bearish bets – on the corresponding asset.

This creates a stable support for USDe, unaffected by price fluctuations in Bitcoin or Ether.

Mitigate risks

While using USDe as collateral for derivatives trading is proving popular, it is unclear what the effects will be if the cryptocurrency market experiences major fluctuations.

Using derivatives as collateral to place more bets has already had disastrous effects.

In June 2022, Lido’s liquid staking token stETH broke its peg to Ether following the fallout from the Terra collapse.

Many traders who used looping leverage to increase their stETH staking yields were liquidated, creating a cascade that caused the price of Ether to drop by more than 43%.

Ethena Labs founder Guy Young said: DL News His office and his partners have taken many precautions.

Ethena spreads bearish bets supporting the USDe across the five exchanges it partners with.

According to Ethena, 48% of short positions supporting USDe are on Binance, 23% on ByBit, 20% on OKX, 5% on Deribit, and 1% on Bitget. website.

In doing so, Ethena aims to minimize the impact of an unforeseen event on a stock market.

The same theory applies to the distribution of risks across different supporting assets.

Fifty percent of USDe is backed by Bitcoin, 30% by Ether, 11% by Ether liquid staking tokens, and 8% by Tether’s USDT stablecoin.

Previous reviews

Ethena has already been criticised regarding the risks associated with USDe.

Some have compared USDe to TerraUSD, an undercollateralized stablecoin that collapsed in 2022.

“It’s not a good design for long-term stability,” said Austin Campbell, an assistant professor at Columbia Business School. said as the USDe launch approaches.

Young replied to critics, saying the industry needs to be more diligent and careful when “marketing products to users who might not understand them as well as we do.”

Ethena has since added a disclaimer on its website stating that USDe is not the same as a fiat stablecoin like USDC or USDT.

“This means that the risks involved are inherently different,” the project says on its website.

Tim Craig is DL News DeFi correspondent based in Edinburgh. Feel free to share your tips with us at tim@dlnews.com.

Fuente

DeFi

Cryptocurrency and defi firms lost $266 million to hackers in July

Published

6 months ago

1 August, 2024

Financial Block Staff

Crypto companies, defi lost $266m to hackers in July

In July 2024, the cryptocurrency industry suffered a series of devastating attacks, resulting in losses amounting to approximately $266 million.

Blockchain Research Firm Peck Shield revealed in an X post On August 1, attacks on decentralized protocols in July reached $266 million, a 51% increase from $176 million reported in June.

The most significant breach last month involved WazirX, one of India’s largest cryptocurrency exchanges, which lost $230 million in what appears to be a highly sophisticated attack by North Korean hackers. The attack was a major blow to the stock market, leading to a break in withdrawals. Subsequently, WazirX launched a program in order to recover the funds.

Another notable incident involved Compound Finance, a decentralized lending protocol, which suffered a governance attack by a group known as the “Golden Boys,” who passed a proposal who allocated 499,000 COMP tokens – valued at $24 million – to a vault under their control.

The cross-chain liquidity aggregation protocol LI.FI also fell victim On July 16, a hack resulted in losses of $9.73 million. Additionally, Bittensor, a decentralized machine learning network, was one of the first protocols to suffer an exploit last month, lo m ing $8 million on July 3 due to an attack targeting its staking mechanism.

Meanwhile, Rho Markets, a lending protocol, suffered a $7.6 million breach. However, in an interesting twist, the exploiters research to return the stolen funds, claiming the incident was not a hack.

July 31, reports The Terra blockchain protocol was also hacked, resulting in a loss of $6.8 million across multiple cryptocurrencies. As crypto.news reported, the attack exploited a reentrancy vulnerability that had been identified a few months ago.

Dough Finance, a liquidity protocol, lost $1.8 million in Ethereum (ETH) and USD Coin (USDC) to a flash loan attack on July 12. Similarly, Minterest, a lending and borrowing protocol, saw a loss of $1.4 million due to exchange rate manipulation in one of its markets.

Decentralized staking platform MonoSwap also reported a loss of $1.3 million following an attack that allowed the perpetrators to withdraw the liquidity staked on the protocol. Finally, Delta Prime, another decentralized finance platform, suffered a $1 million breach, although $900,000 of the stolen funds was later recovered.

Fuente

DeFi

The Rise of Bitcoin DeFi: Then and Now

Published

6 months ago

1 August, 2024

Financial Block Staff

The convergence of Bitcoin’s robust security and Layer 2 scaling solutions has catalyzed the emergence of a vibrant DeFi ecosystem.

By expanding Bitcoin’s utility beyond simple peer-to-peer payments, these advancements have opened up a new frontier of financial possibilities, allowing users to participate in decentralized lending, trading, and other complex smart contract operations on Bitcoin.

Read on to learn about the rise of Bitcoin-based decentralized finance and how the space has expanded to accommodate a new generation of native assets and features.

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What is DeFi?

Decentralized finance (DeFi) represents a paradigm shift in financial services, offering internet-based financial products such as trading, lending, and borrowing through the use of decentralized public blockchains.

By implementing blockchains, smart contracts, and digital assets, DeFi protocols provide financial services through a decentralized ecosystem, where participants do not have to deal with intermediaries when transacting.

What is Bitcoin DeFi?

The inherent limitations of the Bitcoin mainchain in supporting the intricacies of decentralized finance have created the need to develop smart contract-based Layer 2 solutions.

Additionally, the advent of the Ordinals protocol in 2023, which facilitated the emergence of fungible token standards such as BRC-20 and Runes, catalyzed the growth of DeFi on the Bitcoin blockchain.

This expansion in protocol diversity has broadened the applications of the world’s leading cryptocurrency network beyond the core base-layer use cases around value preservation and transactional capabilities.

Therefore, Bitcoin DeFi has become a nascent sector within the digital asset market, after previously being a missing essential part of the Bitcoin ecosystem.

Bitcoin DeFi in its early days

Integrating decentralized finance (DeFi) concepts into the Bitcoin ecosystem has been a journey of innovation and perseverance. Early attempts to bridge the gap between Bitcoin’s fundamental simplicity and DeFi’s complexities have spawned pioneering projects that, while laying essential foundations, have also encountered significant obstacles.

Colored coins

Colored coins represented an early foray into tokenizing real-world assets on the Bitcoin blockchain. By leveraging the existing network to track ownership of assets ranging from stocks to real estate, this approach highlighted Bitcoin’s potential as a platform beyond digital currency. However, scalability and practical implementation challenges have limited its widespread adoption.

Counterpart

Building on the colored coins, Counterparty has become a platform for creating and trading digital assets, including non-fungible tokens (NFTs), on Bitcoin.

The introduction of popular projects like Rare Pepe NFTs has demonstrated the growing appeal of digital collectibles. However, constraints around user experience and network efficiency have hampered its full potential.

These early experiments, while not fully realizing their ambitions, served as valuable stepping stones, informing Bitcoin DeFi’s subsequent developments. Their challenges highlighted the need for more sophisticated infrastructure and protocols to harness the full potential of decentralized finance on the Bitcoin network.

Bitcoin DeFi Today

Today, building DeFi applications on Bitcoin is primarily done in the realm of Layer 2 (L2) networks. This architectural choice is motivated by the limitations of Bitcoin’s base layer in supporting complex programmable smart contracts.

Bitcoin’s original design prioritized security and decentralization over programmability, making it difficult to develop sophisticated DeFi protocols directly on its blockchain. However, the recent emergence of protocols like Ordinals, BRC-20, and Runes, while not DeFi in their own right, has sparked possibilities for future DeFi-like applications on the main chain.

In contrast, L2 solutions offer a scalable and programmable environment built on Bitcoin, enabling the creation of various DeFi products.

By expanding Bitcoin’s capabilities without compromising its core principles, L2s have become the preferred platform for developers looking to build DeFi applications that encompass trading, lending, staking, and more.

Leading L2 networks such as Lightning Network, Rootstock, Stacks, and Build on Bitcoin provide the infrastructure for these efforts. Some of these L2s have even introduced their own native tokens to the network, further expanding Bitcoin’s DeFi ecosystem.

Essentially, while Bitcoin’s core layer presents challenges for DeFi development, its security and decentralization have provided a foundational layer for the innovative L2 landscape to thrive.

Bitcoin Layer 2 offers a promising path to building a robust and thriving Bitcoin-based DeFi ecosystem that offers trading, staking, lending, and borrowing. All you need is a DeFi Wallet like Xverse to access the new world of decentralized financial services secured by Bitcoin.

Conclusion

The integration of DeFi principles into the Bitcoin ecosystem, primarily facilitated by Layer 2 solutions, marks a significant evolution in the digital asset landscape.

Building on the foundational work of pioneers like Colored Coins and Counterparty, the industry has evolved into more sophisticated platforms like Rootstock, Stacks, and Build on Bitcoin to create a thriving Bitcoin-powered DeFi ecosystem.