Picking out three key events from the crypto world this week;
Pros – It is going to generate awareness for crypto among the wider masses, the ‘99%’ that really couldn’t care less about crypto or decentralization or sound money or whatever, but would love any sort of freebies, or loyalty coins or anything indeed that a network like FB could distribute, propagate, or ‘airdrop’ at scale. The hope is that they get a taste of crypto through FB and then acquire a taste for the better, real stuff. Or something like that.
Cons – There are a bunch of issues. FB crypto – whether it is Globalcoin or Zuck Bucks or whatever it is called, is not really a cryptocurrency in the conventional sense. In spite of FB’s structuring a foundation to launch this, albeit with a 10m entry fee for a ‘node’, from what we know currently, it is at best something like a DPoS-based EOS (Distributed Proof-of-Stake). Also, as we discussed yesterday, for most folks convenience and UI/UX trumps everything else.
The real issue here is the stranglehold that FB could potentially have on a few different businesses – depending on how it plans to deploy its crypto currency. If used as a remittance platform over Whatsapp or FB messenger, it will literally be a cross-border Venmo or Paytm, and will immediately disrupt the payments industry. It will easily become the largest stablecoin, displacing pretty much every other stablecoin, including USDTether. Given that it already has a network, and does not really need to expend too much time and effort, network effects would kick in, folks could use it to buy and sell stuff, in the real world and within apps and for micro-services, and it would not be considered a security under the Howey test lodestone that the US SEC uses in such cases. If it just wants to reward users for liking, commenting, posting etc using this as well, driving catatonic behaviour across an already social-media saturated swathe of global population, while it would be sheer evil, it would still be perfectly legal, and it would literally win the social network war for good, potentially for a very very long time. And for those that are concerned about privacy, decentralization and all that ethical stuff, they will just be tilting at windmills for a while in such a scenario, at least until the real costs of being participants in such a system start to bite, and offset any potential gains from holding FB’s crypto.
Opportunities emerge for traders – there is definitely going to be arbitrage opportunities with FB crypto, depending on whether it is a plain old utility token or if it is a stablecoin. Or FB might even decide that it does not even need an exchange and just enable p2p transfer through its various platforms. Or it might even set up its own proprietary exchange or storefront where folks could buy/sell/trade-in FB crypto. Such an exchange would probably dwarf Coinbase, for sure.
Secondly, the news item that started doing the rounds Friday around India’s proposed crypto ban. The article, attributed to Bloomberg Quint, suggested some draconian measures, including jail time of up to 10 years and other heavy monetary penalties, for a range of activities, including buying, selling, holding, mining or in any other way dealing in crypto. It set up the local crypto channels abuzz on various media, and by evening, another news item appeared where the RBI, the Indian Central bank, declared that it knew nothing about such a proposal.
The cynical view here could be that this is just some clickbait/growth hacking from a wet-behind-the-ears journalist, eager to drive some traffic to a media paywall. The real conspiracy theory here is that this could be a ploy by Facebook, which actually had plans to launch its cryptocurrency first in India, to create some FUD around traditional crypto ( traditional crypto!), and prime the unsuspecting faithful to the FB coins that it will soon dispense in a week or so through a slick interface without any of the hassles of metamask or exchange KYCs or hardware wallets for instance!
As expected, that wise old purveyor of calm and reason, John McAfee, summed it up in his inimitable style..
Thirdly, the Apple crypto kit. This is a great step for developers, as it opens up iOS and its secure environment, combined with its seamless UI/UX to a range of crypto development efforts. This could be the boost that the DApp ecosystem needs, paradoxically.
As the Chinese proverb goes, may we live in interesting times!
And now, on to our weekly metrics watch…
Ethereum Locked in DeFi
MakerDAO still accounts for a lion’s share of ETH locked up in collateral, with more than 1.64 million of ETH locked up. Uniswap showed a strong w/w growth of 13% in ETH locked up, while dYdX and Augur have seen moderate growth. ETH locked up in Maker was flat w/w.
Lightning Network Growth:
Capacity per channel showed a moderate decline of 3% w/w. The total number of nodes also increased w/w by 1%, while the total number of channels decreased by 3%.
(For reference, some previous articles on LN, here).
Trading volumes on DEXs have increased on a w/w basis, with the average daily trading volume averaging 35k ETH for this week. IDEX remains the biggest DEX in terms of trading volume and DAI is the highest traded cryptocurrency on DEXs.
Crypto Loans Tracker:
Total loans issued on Compound for the last week stands at approx. $845k for the week, a steep decrease from $4.2 million in the previous week. WETH is the most borrowed cryptocurrency on Compound followed by DAI and BAT.
Total loans issued on Dharma Lever for the last week stands at approx. $114k for the week, a alight decline from the previous week. DAI is the most borrowed cryptocurrency on Compound followed by WETH and USDC.
DAI loans issued on MakerDAO for this week stand at ~$4.7 million, a meaningful decrease from $6.1 million last week. The total outstanding DAI debt currently stands at ~$83 million.
You can also check out last week’s Metrics Watch here.
Annotated Guide to the SEC’s Complaint against KIK by Katherine Wu
Open Money Initiative – Free Access to Finance as a Human Rightfeaturing Jill Carlson