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Gate.io Podcast | Andre Cronje: Crypto is Dead, Long Live Crypto, Moonbirds Generates $280M in 2 Days, Nansen Reports NFT market is Outpacing Cryptocurrency
2022-04-20, 08:48
This episode is brought to you by Gate.io and Linear Finance (Airdrop). In a Medium blog post, Andre Cronje returned to express his concerns, and hope, for the future of DeFi. In other news, Tether CTO Paolo Ardoino told CoinDesk during Paris Blockchain Week that Terra’s UST still has a long way to go in terms of its potential stability if it ever reaches the size of Tether. Meanwhile, in the NFT sector, Moonbirds has generated $280M in 2 days since launching, while Louis Vuitton has released a raffle to offer its mobile game players the chance to win 10 Vivienne NFTs, and Blockchain Analytics Firm Nansen just released a Q1 report recognizing the impressive growth of the NFT Space. Followed by a deep dive into MakerDAO, the DeFi Era Originator.
In today’s Headlines:
Andre Cronje sees a 'necessity for regulation' ahead of crypto's new era | 1 | 2 | 3 |
Tether's Paolo Ardoino on UST: 'It's All Fun and Games' Until You're a $100B Coin | 1 | 2 |
Kevin Rose’s Moonbirds Ethereum NFT Launch Generates $280M in Two Days | 1 | 2 |
Louis Vuitton Dives Head First Into NFTs | 1 | 2 |
The NFT market is growing more than the crypto market according to Nansen report | 1 | 2 |
Sponsor: Linear Finance (Airdrop)
Deep Dive: The DeFi Era Originator: An Introduction to MakerDao | 1 | 2 | 3 |
Listen the episode: https://www.buzzsprout.com/1825729/10470166
Introduction:
Welcome back to the Altcoin News Podcasts. I’m Peter, this is the show to get a neutral perspective on some of the latest headlines in DeFi, Metaverse, NFTs, and Big Tech. Brought to you by Gate.io, a centralized exchange with a neutral stance on current events and uphold privacy & security.
The information presented in this podcast is to help you stay up-to-date on the latest happening in the crypto space, and nothing presented hereby is financial advice. The news that I cover in this podcast will have the original source at your discretion. Stick by this podcast as I show you how to stay vigilant and learn to do your own research.
Now, without further ado.
Andre Cronje sees a 'necessity for regulation' ahead of crypto's new era | 1 | 2 | 3 |
The popular and controversial DeFi architect Andre Cronje has decried the nature of “crypto culture” arguing that it stands in contrast to the ethos of the emerging ecosystem in a Medium blog post published Monday, titled "The rise and fall of crypto culture."
The former Fantom Foundation technical adviser and Yearn.finance founder, after announcing his departure from the DeFi and crypto space last month, did not come as a surprise as he resurfaced.
When Cronje and his colleague Anton Nell tweeted about the fate of all the applications and services they had built, they offered no other details as to their personal motivations. They even proceeded to deactivate their Twitter accounts on March 6. Now, readers of Cronje's words can surmise that these two partners were going through some sort of ethical crisis. The opening and closing refrain, "Crypto is dead. Long live Crypto," illustrates his ambivalence of emotions when it comes to the future of crypto.
Cronje also argued that many crypto builders have an insufficient understanding of monetary policy.
According to Cronje, it appears DeFi developers read Wikipedia articles on things like bonds, debt instruments, and seigniorage and think “they can do it better.”
His proposed solution for this "new age" of the blockchain economy is regulation. Using the analogy of a parent trying to protect his or her child, Cronje believes that legislation is the best way to stop the crypto community from sticking its fingers into an electric outlet. "One day they will understand, but not today," he said.
While not explicitly indicating a return to the crypto scene, Cronje did state that he was excited about the future of the industry. He ended the blog post by stating that there is an irony in having come full circle, yet he finds himself more excited than ever. Adding he won’t step foot into the badlands again but is vastly excited about this new future.
Tether's Paolo Ardoino on UST: 'It's All Fun and Games' Until You're a $100B Coin | 1 | 2 |
During the Paris Blockchain Week, Tether CTO Paolo Ardoino attended several interviews, notably with CoinDesk and Grit Daily, to discuss his views on several key aspects in today’s DeFi environment.
Ardoino was reported saying to CoinDesk and I quote, “It’s all fun and games if you’re a $5 [billion] or $10 billion market cap stablecoin,” but that can change the bigger that stablecoin's market cap gets.
UST is now the third-biggest stablecoin on the market after Tether's USDT and Circle's USD coin (USDC), which are still significantly larger in terms of market cap. However, the native stablecoin of the Terra ecosystem has grown rapidly, from $180 million at the beginning of 2021 to over $17 billion in market capitalization as of April 18.
Terraform Labs is the organization behind the UST stablecoin and its LUNA token. The fast-growing popularity of the TerraUSD stablecoin comes with some risk because of its dependence on algorithms to hold its dollar peg.
UST keeps its $1 dollar value by using a smart contract-based algorithm to keep the price of UST anchored to $1 by permanently destroying LUNA tokens in order to mint create UST tokens.
As Ardoino sees it, “If you have a liquidation [with an algorithmic stablecoin of UST's size] with this market, you can still handle that. But imagine if you have a $80 [billion] or $100 billion market cap stablecoin like Tether that’s [primarily] backed by digital assets. It’s really hard to predict what will happen and [know] if there will be enough liquidity to backstop that immense cascade.”
Another concern could be that over 67% of the demand for UST comes from Anchor Protocol which is a decentralized savings protocol based on the Terra blockchain and offers a comparably high yield of 19.5% on UST deposits. Terra must therefore maintain that yield. If it doesn’t, UST holders could rapidly try to sell their tokens. In turn, that could raise the risk that there’s not enough liquidity in the market for everyone to exit at the same time, some analysts and traders have argued.
Speaking with Grit Daily about the difference between USDT and USDC, Ardoino has noted that Tether has never refused a redemption to a customer. Unlike their competitors, their core target remains individuals and not banks, as such, Tether is able to be a popular, liquid, trusted, and transparent stablecoin.
Tether, the issuer of the largest stablecoin by market cap, has been the subject of questions about whether it has enough collateral to back the 1:1 dollar peg of USDT. We’ll work on a deep dive on this subject in future episodes. Stay tuned.
Kevin Rose’s Moonbirds Ethereum NFT Launch Generates $280M in Two Days | 1 | 2 | 3 |
The much-anticipated Moonbirds project from tech entrepreneur and VC Kevin Rose’s PROOF Collective was launched on Saturday.
After two days on the market, a collection of 10,000 pixelated-bird non-fungible tokens has become the top NFT collection with over $281 million in sales volume, according to data aggregator CryptoSlam.
PROOF Collective ultimately released 7,875 of the NFTs for sale via an allowlist, which was formed via a raffle process. Each Moonbirds NFT offered via that process was sold for 2.5 ETH (about $7,600) at the time of Saturday's sale. Not to mention its sales on the secondary markets, which had led NFT marketplace OpenSea to notch its largest day of trading volume in more than two months on Saturday, topping $177 million worth of Ethereum trading, per Dune Analytics data.
PROOF Collective is an NFT-driven membership club created by Kevin Rose, a partner at True Ventures and longtime tech entrepreneur best known as a co-founder of Digg and Revision3. He’s also an NFT enthusiast whose PROOF podcast spawned the brand that later led to the NFT club, which minted its 1,000 membership pass NFTs in December.
Though massive sales of NFTs aren’t uncommon, the quick success of Moonbirds—digital art of cartoon owls— stunned many people in the NFT community.
Louis Vuitton Dives Head First Into NFTs | 1 | 2 |
Luxury fashion brand Louis Vuitton is moving ahead with its experimentation with non-fungible tokens (NFTs) with the introduction of PFP (profile pic) inspired NFT rewards in its stand-alone mobile app game Louis: The Game.
Louis Vuitton's game will feature a raffle that will run until August 8, and participating players will have an opportunity to win one of the 10 Vivienne NFTs that will also be transferrable between multiple platforms. Vivienne is an avatar that runs around collecting postcards and information about Louis Vuitton in the game.
The NFTs are made in collaboration with Beeple’s startup Wenew Labs, which also worked with sister company Possible, and minted from Louis Vuitton’s Ethereum wallet.
Luxury and fashion brands have been increasingly experimenting with NFTs and blockchain gaming, with the hope of attracting Gen Z consumers, a group that has an estimated spending power of up to $143 billion.
Last month, dozens of companies – from luxury brands like Dolce & Gabbana to fast fashion brands like Forever 21 – took over the virtual streets and runways of Decentraland for the first-ever metaverse fashion week. The metaverse, often described as the next phase of the internet, is estimated to be an $800 billion market opportunity, according to Bloomberg Intelligence.
Despite the buzz around the loosely defined “metaverse,” research published by Piper Sandler, a consumer research firm, shows that only about half of 7,100 teens surveyed in the U.S. are interested in the concept. While 26% of teens own a VR headset, only 5% use it daily, according to the report obtained by The Block.
Despite the advance into the Metaverse, Louis Vuitton’s parent company LVMH’s own chief executive Bernard Arnault said in a January earnings call that he was cautious about a potential metaverse “bubble,” pointing to the burst of the dot com bubble in the early 2000s.
The NFT market is growing more than the crypto market according to Nansen report | 1 | 2 |
Nansen, a blockchain data analytics company, recently issued its quarterly study on non-fungible tokens (NFTs). The analysis emphasized the NFT sector’s year-to-date outperformance of the cryptocurrency market, predicting a $80 billion market valuation by 2025.
According to the comprehensive report, the NFT market has outpaced the cryptocurrency market this year, with a year-to-date return of 103.7 percent in ETH and 82.1 percent in USD. Despite a drop in global markets across most asset classes at the end of February 2022, the NFT-500 gained 5.9% over the preceding 30 days in March.
The volatility of each of these sectors varies, and according to the Nansen research, Blue Chip NFTs, which are classified by market size, are the least volatile. Azuki, Clone X, and Doodles, among other OpenSea chart-topping compilations, have been designated as Blue Chip.
This is most likely due to their growing popularity in the crypto world and the fact that they may be regarded as strong long-term investments due to their track record of development and value.
The Social-100 index’s composition remained mostly unchanged before and after it was rebalanced. However, the proportion of Access & Membership NFTs and Utility NFTs have seen an increase.
When measured in ETH, the Social-100 index has increased by 49.9% year to date, but when measured in USD, it has increased by 37.5 percent.
Metaverse and art NFTs, on the other hand, were deemed the most volatile part of the NFT market by the research. The Metaverse portion includes land and real-estate NFTs, avatars, and utility NFTs, according to Nansen. It may be difficult to assess pricing, particularly for virtual land like Decentraland or The Sandbox.
The subjective aspect of value assessment, as well as art’s somewhat illiquid character, contribute to its volatility when it comes to art NFTs. Nansen demonstrated that generative art is the most popular component of art NFTs in general and that the majority of Metaverse and art market players are “speculators.”
The Nansen indices also show that the gaming industry’s overall growth is declining. With a drop of -24.4 percent, the Gaming-50 index has plummeted the most out of all the NFT niches included in the research.
Despite this drop, the overall NFT market looks very healthy when compared to the crypto market. NFTs are a fast-growing and dynamic area of the cryptocurrency industry, and this is especially true for retail investors.
Sponsor | Linear Finance
Before I continue with today’s Deep Dive, I must tell you about today’s sponsor.
Linear Finance is a distributed protocol that is compatible with multiple chains and majors with synthetic assets. One of the ways the project achieves this is by enabling investors to save on transaction fees and reduce the time it takes to bring an investment position to life.
The project’s white paper stresses delta-one and synthetic assets. In derivatives, delta-one means that a change in the price of the underlying asset ignites the same change to the product. Synthetic, on the other hand, are assets that derive their value from other assets. Examples of synthetics include futures and options. In the crypto world, synthetic assets enable investors to interact with cryptocurrencies without necessarily holding them.
These assets are also known as liquids because they can easily be converted to cash. The Linear protocol supports liquids in cryptocurrencies, crude oil, coffee, market indices, e-sports, among others.
The project is led by Drey Ng and Kevin Tai. Drey has an MS in Computer Science from the University of Hong Kong, while Kevin has a Harvard Business School MBA; both founders have worked extensively in tech and finance, with Drey currently serving as CPO at Liquefy and Kevin whose past roles include being vice president of structured products at Credit Suisse.
Linear is governed by the LinearDAO. It’s responsible for handling essential platform designs, as well as system parameters like $LINA rewards and frequency, pledge ratio, the introduction of new functionality, technology roadmap, and split of transaction fees.
Now to its tokenomics, the $LINA token is used on the network to back collateralized debts, as well as physical and digital assets. Holders of the token can access Linear USD (LUSD) which can be used to interact with Linear liquids on the Linear exchange. Additionally, token holders contribute to governance decisions such as which assets to be listed, and distribution models.
Be sure to check out the de_script_ion below because we’re giving away 59,000 $LINA tokens via airdrops between April 21st to the 28th. If you happen to win, the first thing you should do is to evaluate Linear’s staking mechanism. Of course, this isn’t financial advice and you’re free to do as you will.
But just to give you some ideas, $LINA stakers earn rewards on either pro-rata exchange fees or an inflationary reward basis. For the first option, the rewards are attained on a weekly basis, and the calculation is done while considering the stakers’ pledge ratio. Other ways stakers earn rewards are via yield farming, a positive variation of the pledge ratio, and providing liquidity on the Linear pool.
DD | The DeFi Era Originator: An Introduction to MakerDao | 1 | 2 | 3 |
Most people in the blockchain space know MakerDAO as the protocol behind the stablecoin DAI.
More than Just a Stablecoin: The Core Lending Protocol
But there’s so much more. MakerDAO is an organization developing technology for borrowing, savings, and a stable cryptocurrency on the Ethereum blockchain. It has created a protocol allowing anyone with Ether and a MetaMask wallet to lend themselves money in DAI.
Using crypto to borrow crypto used to be very tricky. Since most crypto assets fluctuate so wildly, the amount someone borrowed in crypto and the amount someone had to pay back could be wildly different over a short period of time. That's where MakerDAO comes in. By combining loans with a stable currency, MakerDAO wants to allow anyone to borrow money and reliably predict how much they had to pay back.
Brief Timeline
A brief timeline of MakerDAO. In 2014, MakerDAO was founded by Rune Christensen in California; In 2015, the platform token MKR was born; In 2017, MakerDAO officially launched the stablecoin DAI; In 2018, world-renowned venture capital firm Andreessen Horowitz invested $15 million in MakerDAO to buy 6 percent of the total Maker (MKR) token supply. It was the first investment for the firm’s $300 million a16z crypto fund.
In terms of Total Value Locked (TVL), MakerDAO's TVL currently exceeds $15 billion USD, and its dominating share still exceeds 20% of the DeFi sector. For a long time though, MakerDAO's TVL has occupied nearly half of the entire DeFi sector.
DAI Mechanism Explained
Unlike USDT stablecoin issued by Tether based on US dollar reserves, DAI is issued by pledging encrypted assets such as ETH. Due to the continuous fluctuation of the price of collateral (which is ETH in this case), it can also draw price risk to DAI. In order to avoid the risk of random price changes, users need over-collateralization when lending DAI to ETH, and lend different amounts of DAI according to different collateral rates.
When the price of collateral drops to a certain extent, the collateral will be liquidated at a price slightly lower than the market price (generally 97% of the market price) to avoid losses on the platform. Different digital assets have different collateral rate requirements. For Ether, the collateral rate needs to be greater than 150%, that is to say, ETH with a collateral value of $150 can only borrow $100, that is, 100 DAI at most.
If the threat of liquidation keeps the system honest, then Maker (MKR) token holders are the lenders of last resort. MKR is an ERC20 token that is created or burned depending on how close the DAI stablecoin is to the US dollar. The creation of new MKR is dependent on the stability of DAI. If DAI remains stable, more MKR is burned decreasing the total supply. If DAI fluctuates too far from the dollar peg, more MKR is created, increasing the total supply.
MKR Token & Governance
DAI, ETH, and MKR work as an automatic system of checks and balances – each functioning to counteract the other and keep the system stable and decentralized.
When the price of Ether crashes and too many loans are liquidated at once, MKR is created and sold off in order to pay back the loans. At the same time, fees must be paid for in MKR, and liquidation penalties are used to buy back MKR, which are burned or destroyed. In theory, there should always be enough value in MKR to back up liquidated loans.
As long as anyone holds MKR, it is equivalent to joining Maker, which is a decentralized autonomous organization (or DAO for short). Since holders of MKR benefit financially from a stable MakerDAO system, they are incentivized to act in the best interest of the MakerDAO protocol. As a result, MKR holders can vote on governance decisions such as how high to set fees and which collateral types can be accepted as collateral by the protocol. In the MakerDAO system, one MKR token equals one vote so people or organizations with large MKR holdings can have a large influence on voting outcomes.
However, MKR holders also face the risk of eventual liquidation for MakerDAO. When MakerDAO has bad debts and insolvency due to the rapid decline of collateral price, the system will issue more MKRs to buy back DAI, which will also lead to the decline of MKR price. Therefore, the position of MKR holders in MakerDAO is similar to that of the company's shareholders. It is necessary to maintain the smooth operation of MakerDAO through prudent governance.
Conclusion
Compared with centralized stablecoins such as USDT, DAI is completely open and transparent and has less audit risk. Meanwhile, the lending service provided by MakerDAO also provides a new choice for the flexible use of digital assets in hand.
Looking back on the development history of Ethereum, the birth of MakerDAO and DeFi is an important milestone that cannot be ignored. From its inception in 2016, Ethereum has gradually developed into the world's largest public chain, and its positioning has gradually changed from "global computer" to "global settlement layer". At present, the DeFi ecosystem has been greatly developed.
To conclude, the importance of MakerDAO in the whole DeFi sector may have declined, but its innovative ideas are still worth learning.
Today is “Wednesday”, April 20th. Have a great one folks.
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