Blocked USDC in Ethereum Address Proves Decentralization Purists Right
Also, Kyber Network upgrade, MTA tokens, Binance SNX listing.
Hello Defiers! Here’s what’s going on in decentralized finance:
- Centre blacklists Ethereum address holding $100k of USDC
- DeFi traders flood into Kyber after upgrade
- MTA tokens launch next week
- Binance lists SNX
and more.
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Blocked USDC Proves Decentralization Purists Right
This is exactly what decentralization advocates warn about: CENTRE, the issuer of USDC, has blacklisted an Ethereum address holding $100k of the tokens.
Centre called a “blacklist(address investor)” function on an Ethereum address holding USDC, effectively freezing the money in the address. The entity, which is a joint venture between Coinbase and Circle, said it was complying to law enforcement.
Image source: Etherscan
“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,” according to a company statement cited by CoinDesk.
USDC is backed at 1-to-1 with US dollars held in banks, and issuing and redeeming the token for dollars requires complying with know-your-customer procedures. Advocates of alternatives that don’t rely as much on third parties have long criticized USDC and others like it, for being susceptible to censorship and interference. The blacklisted Ethereum address, whose owner is unknown, is an example of that.
Questions on Dai
The blocked address also raises question about the most popular decentralized stablecoin Dai, as USDC is used as collateral to issue it. This means law enforcement could potentially interfere with USDC held in MakerDAO. Still, the stablecoin is just under 12% of total ETH collateral, which means Dai would likely survive the shock.
DTC Capital’s Spencer Noon made the point that only 31 addresses have ever been frozen for holding USDT out of 1.47 million (0.002%), and only 1 address has ever been frozen for holding USDC out of 182k (0.0005%).
Still, the fact that it can be frozen undermines the very point of cryptocurrencies: To provide a censorless financial system, that’s a viable alternative to the incumbent one.
DeFi Traders Flood Kyber Network After Revamp
By Sebastian Aldasoro
Almost $20M worth of $KNC has flooded into Kyber Network after the decentralized exchange’s revamp, signaling demand for DeFi tokens is still surging.
Kyber Network’s Katalyst upgrade lowers the network’s transaction fees and lets integrators set their own customized trading fees, route trades across multiple reserves. The DEX also introduced KyberDAO, which allows users to stake their $KNC holdings and participate in governance in exchange for $ETH rewards.
KyberDAO @KyberDAOOver 10,000,000 KNC staked on @KyberDAO @KyberNetwork just one day after the launch! Stake KNC, participate in governance, get ETH rewards. 🗳Visit: kyber.org 📽Tutorial: youtu.be/WBmqd5KBw2s
3:26 AM ∙ Jul 9, 2020180Likes52Retweets
Kyber Network is an on-chain liquidity protocol that enables token swaps by aggregating liquidity from three different sources, which are called reserves. Fed price reserves, which are operated by professional market makers, including Kyber itself; automated price reserves, which allow token teams and whales to provide liquidity, and bridge reserves, which bring liquidity from DEXs such as Uniswap and Bancor. Kyber also enables integrators or Dapps, such as Argent, to link to its network.
Kyber’s KNC token has rallied 40% to $1.67 since Kyber first announced the upgrade on June 29th.
The Katalyst protocol upgrade
The Katalyst protocol upgrade seeks to reduce friction to Kyber’s network of dapps, and liquidity providers. None of the liquidity providers need to hold $KNC to pay for network fees since these are now collected in each trade. Fed price reserves, or professional market makers, get 30% of network fees as an incentive to generate volume.
Kyber has dropped its fee-sharing program to allow dapps to set their own fees for each trade, which are collected in ETH and will be collected in stablecoins in the future.It also gives dapps the ability to route trades across the reserves they prefer. It also reduced network fees to 0.2% from 0.25%, though the cut doesn’t apply to bridge reserves such as Uniswap.
The KyberDAO
The KyberDAO allows users to stake their $KNC or delegate their voting power to participate in network decisions. Token holders can vote on proposals to set protocol fees and network fees distribution, which now stands at 65% for staking rewards, 30% for liquidity incentives, and 5% to buy and burn $KNC.
Users must vote on proposals if they want to receive $ETH rewards, which shows a willingness from Kyber to incentivize community participation. With the current 65% of fees assigned for staking rewards, users would receive $2.57M, taking under consideration annualized earnings of $3.96M.
New DeFi Token Set to Go Live Next Week
By Cooper Turley
mStable, a liquidity aggregator behind the mUSD stablecoin, introduced liquidity incentives to distribute MTA tokens to those depositing funds in Balancer’s mUSD/USDC pool. Next week, those liquidity providers will finally start receiving their rewards.
mStable will distribute its MTA governance token next Wednesday at 10AM EST. It’s the first project to choose Balancer over Uniswap for their primary exchange offering. $800k worth of liquidity will be added to an mUSD/MTA Balancer Pool, giving the token a base rate of $0.15 and a $15M fully diluted market cap.
tinyurl.comMeta (MTA) Genesis on BalancerA detailed look at mStable’s protocol token launch12:31 PM ∙ Jul 8, 2020124Likes35Retweets
Just over $19M mUSD has been minted since the protocol’s launch less than two months ago. Still, the mUSD/USDC pool grew to become the largest in Balancer, holding $17M as yield farmers look to snap up the latest governance token to hit the market.
Outside of governance, MTA is set to act as insurance against protocol deficits. mStable will soon unveil its EARN feature in which tokenholders can stake MTA in exchange for protocol fees and incentive rewards like native inflation.
The distribution of MTA looks to account for future protocol growth by gradually ramping up emissions throughout the remainder of 2020 and slowly scaling down over 2021 and beyond.
At launch, only 2.8% of the total supply will be circulating, 2.67% of which are being seeded as a part of the initial Balancer pool, leaving 130k MTA to be allocated as incentives from liquidity mining.
Capital Intensive
However, it’s worth noting that MTA farming appears to be one of the most capital intensive strategies in the space. Strong demand for liquidity mining suggests MTA alpha has been leaked to DeFi Twitter.
⟠ DeFi Dad ⟠ defidad.eth @DeFi_Dad@Arthur_0x MTA supply will be 100 million. Market cap BAL is $67M with $165M TVL Market cap COMP is $556M with $681M TVL MTA associated with +$10M mUSD could mean less than $$0.10-0.20/MTA. $2.5-$5 earned/wk with $10,000 is <2.6% APY. I love mStable but let’s be conscious of the numbers.7:02 PM ∙ Jul 8, 20207Likes1Retweet
As DeFi Dad illustrates in this Tweet, previous governance token distributions like COMP and BAL signal valuations correlate to TVL. Given mStable’s ~$20M TVL, yield farmers should be playing the long haul on this one, rather than expecting a quick flip come distribution.
Regardless, the token generation event and wider adoption of mStable is certainly worth keeping an eye on and given the scare supply at launch, expect to see some fireworks next Wednesday.
Binance Lists SNX Signals DeFi Token Demand
By Cooper Turley
Today, the world’s largest cryptocurrency exchange, Binance, added support for SNX - the native token fueling Synthetix’s permissionless derivatives protocol.
blog.synthetix.ioBinance lists SNXDetails about the new listing of SNX on Binance10:05 AM ∙ Jul 9, 2020322Likes80Retweets
The listing is the second DeFi token the exchange has added after COMP, solidifying centralized exchanges’ interest in the rapidly growing sector.
Averaging over $1B in 24h trading volume, the Binance listing gives Synthetix a strong secondary market for retail users, an issue which has long-plagued the project as it has lacked widespread price discovery outside of niche audiences.
Following the release of binary options, total value locked in Synthetix has surged, currently sitting at $370M at the time of writing. Now, SNX spartans are reaping rewards from the suite of liquidity incentives offered by one the communities favorite yield farming strategies.
Cryptocurrency exchange Coinbase readies stock market listing: Reuters
Coinbase Inc has started plans for a stock market listing that could come as early as this year, making it the first major U.S. cryptocurrency exchange to go public, Reuters reported, citing three people familiar with the matter.
ParaFi invests $4.5 million in DeFi lending protocol Aave: Decrypt
ParaFi, a Silicon Valley venture capital firm, announced it has invested $4.5 million in DeFi lending protocol Aave.
Detailed thread on some of the trends Ethereum watchers should expect in the coming months.
Tyler.Smith.eth @R_Tyler_Smith1/24 For those who don't spend every moment reading about #Ethereum , here is a crash course on what is about to happen in the next 6-12 months… I’m keeping the time frame tight and trying not to speculate too far into the future (maybe another thread).4:53 PM ∙ Jul 7, 2020825Likes250Retweets
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The Defiant is a daily newsletter focusing on decentralized finance, a new financial system that’s being built on top of open blockchains. The space is evolving at breakneck speed and revolutionizing tech and money.
About the founder: I’m Camila Russo, a financial journalist writing a book on Ethereum with Harper Collins. (Pre-order The Infinite Machine here). I was previously at Bloomberg News in New York, Madrid and Buenos Aires covering markets. I’ve extensively covered crypto and finance, and now I’m diving into DeFi, the intersection of the two.
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