Messari's Weekend Reads - Issue #54 😎

reading, sleep, and self-care

No one said it would be easy.

Less than a month ago, we popped back above $10,000. This morning we saw a price that started with a $6. Rough tumble, but days like these are great for turning off the price feeds, and diving in for some deep learning.

Luckily, Messari has you covered on both fronts. Let’s get to our weekend reads!

Weekend Reads:

Your daily snapshot from the Messari screener.

• Crypto Exchanges History - Nomics

• Breaking Mimblewimble’s Privacy Model - Ivan Bogatyy

• Factual inaccuracies of “Breaking Mimblewimble’s Privacy Model” - Daniel Lehnberg

• Investing in Bitcoin: The Asset Allocator’s Perspective - Byrne Hobart

• The Lightning Network: Why I Quit the Bond Market for Bitcoin - Nik Bhatia

• Some Experiences with Atomic Weapons - Alan Pope

• Stable Arvo - Anthony Arroyo 

• Money, blockchains, and social scalability - Nick Szabo

• If You’re Busy, You’re Doing Something Wrong - Cal Newport

Have a good weekend y’all.

- The Messari Team

P.S. Share. Subscribe. Tweet at Messari for feedback, comments, or questions.

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Messari Compression Algorithm

Content and thoughts from around the web as summarized by the Messari team.

♟World Chess, a London-based media company that holds the commercial rights to the World Chess Championship, has announced plans for a “hybrid initial public offering”. The plan would entail first raising funds through a security token offering before floating on the London Stock Exchanges’ AIM market in 2020. According to World Chess CEO, Ilya Merenzo, the offering is set to launch next week where the company will raise “in the low numbers of millions of dollars” selling around 4 to 6 percent of the company. The security tokens will launch on Algorand ($ALGO) and will be convertible into potentially more liquid shares when the Aim listing has taken place. Merenzon stated that the majority of the funds raised will go towards developing chess as an Esport.

Why it matters:

• Security tokens were all the hype after the collapse of the ICO market in 2018. The idea that the industry would migrate towards more regulatory compliant token offerings appeared obvious. Yet, security tokens have failed to gain any meaningful traction to date. Plans like this, if executed successfully, may be able to provide a counter to this narrative.

• The offering marks the first security token to be issued on the Algorand blockchain. Algorand now joins an emerging competition to become the dominant blockchain for security token offerings. The Tezos Foundation in partnership with Overstock’s tZERO ($TZROP) recently announced a plan to tokenize up to £500 million ($643 million) of U.K. real estate financed by Alliance Investments. The tokens will be issued on the Tezos ($XTZ) blockchain.

🇮🇳 According to an announcement from the company, Binance users will soon be able to buy and sell crypto with Indian rupees (INR) through the Binance Fiat Gateway after the company acquired Indian crypto exchange WazirX. The plan is to integrate WazirX’s unique auto-matching engine with the Binance Fiat Gateway in Q1 of 2020 allowing all digital assets on Binance to be available with the purchase of $USDT on the WazirX platform.

Why it matters:

• This acquisition marks another effort from Binance to move into fiat to crypto markets as they have in Uganda, Jersey, Singapore, and more recently the U.S.

• Last April, the Reserve Bank of India issued a notice asking banks to stop dealing with cryptocurrency businesses. This made it difficult for many exchanges to operate and led to many shutting down. Binance has extensive experience entering new markets and believes they will be able to scale their business in India.

Did I miss something?

Send me the link, your twitter handle and your best imitation compression algorithm write up. If I like it, I’ll include your bit next issue (with attribution).

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New DeFi Features on Messari

introducing our newest data partnership with loanscan

Your daily snapshot from our Messari screener.

🚨 New DeFi Features! 🚨

I am STOKED.

We've just added a variety of Defi metrics from Loanscan.io to the Messari site to help aspiring DeFi investors and analysts wrap their heads around the emerging permissionless lending market.

You can now track aggregate loan data from MakerDAO, DyDx and Compound Finance for ETH, USDC, DAI, and Wrapped BTC via the Messari screener, with more to come in the weeks and months ahead. This includes 24 hour USD volumes for total loans originated, loans outstanding, loans repaid and loans collateralized.

Additionally, you can now also track interest rates for Bitcoin, Ethereum, USDC, DAI and WBTC from centralized lending platforms like Blockfi, Celsius, Nuo, Nexo, CoinList, as well as from decentralized platforms, Compound and DyDx.

Even better!

You can combine these metrics with our advanced filtering and more than 100 other metrics with Messari Pro. (Get started now with a seven-day free trial.)

Enjoy, and see you tomorrow.

-TBI

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Messari Compression Algorithm

Content and thoughts from around the web as summarized by the Messari team.

🔖 Fidelity Digital Assets has obtained a trust company charter courtesy of the New York Department of Financial Services (DFS) to engage in “virtual currency business activities” according to a press release. The regulatory approval provides the Fidelity Investments subsidiary the legal freedom to serve as a Bitcoin custody and execution platform for institutional investors. With the news, the company became the 23rd crypto-focused company to receive DFS approval for a charter or Bitlicense.

Why it matters:

• Fidelity Investments is one of the premier incumbents that have a long-standing affiliation with Bitcoin. Reports suggest Fidelity started mining Bitcoin as early as 2014, and the team has a history of helping grow Bitcoin adoption among institutional investors.

• The news coincided with the Galaxy Digital Holdings announcement that it selected Fidelity (alongside Intercontinental Exchange's Bakkt) to the Bitcoin holdings in its new funds.

🦊 Shapeshift announced that it would roll out zero commission trading in an effort to promote its non-custodial cryptocurrency exchange. Trading will be enabled by Shapeshift’s previously announced FOX loyalty token, which allows users to access zero commission trading by simply holding it. Upon creating a new Shapeshift account users will receive 100 FOX, which allows $1,000 of free trading volume on a rolling 30 day basis. Thus, each FOX token grants $10 of free trading volume every 30 days, in perpetuity.

Why it matters:

• Self-sovereignty is a fundamental value to cryptocurrency. Cryptocurrency grants individuals the power to control their wealth through the use of cryptographic keys. However, to date most users have tended to sacrifice sovereignty for convenience, choosing to custody their crypto with trusted third parties like cryptocurrency exchanges. The roll-out of zero commission trading could be a boom to winning back sovereignty from cryptocurrency exchanges.

• Non-custodial exchanges are not new. Self-custody is arguably the raison d'etre of the entire category of decentralized exchanges (DEXs). However, DEXs have failed to scale to date due to technical limitations, high fees, and speed. Shapeshift is likely now the cheapest, most scalable non-custodial exchange in the world.

Ripple's Tax Shelter & XRP Schemes

the $1.2 billion affiliated foundation made $0 in grants in 2018

Your daily snapshot from our Messari screener.

Ripple’s Tax Shelter & XRP Schemes

I’ve had this one in the back pocket for a couple of weeks, but didn’t really have the energy to publish it and then deal with the wrath of the XRP army again. Until now.

We’ll go for a two-fer today since Elliptic just released a report tying $400 million of illicit activity to XRP (vs. $829 million for bitcoin).

In other words, for all that centralization, corporate treasury shenanigans, and silver-tongued bullshit, you’re still getting a network that is pound for pound “shadier” than bitcoin, despite what Ripple execs might have regulators believe.

This isn’t the company’s fault, of course. I’m not suggesting Brad Garlinghouse is personally laundering $400 million himself.

Of course not. That would be silly and probably wrong.

What the company is doing with its affiliated foundation may actually be worse, though: using that vehicle as a corporate and executive tax shelter; not dispensing grants to charities (that would actually lead to XRP sales from its treasury and depress the price for company and insider liquidations!); and ultimately obfuscating the fact that 2.2 billion XRP it counts as “circulating supply” is currently locked in long-term restricted selling agreements.

It’s part of the hidden inflation and massive supply overhang in the XRP market we wrote about at length earlier this year.

According to the Foundation’s (public) Form 990, during its fiscal year 2018 (year ended April 30, 2018), the Ripple Foundation for Financial Innovation (nee RippleWorks), the entity affiliated with Ripple and its co-founder Chris Larsen, granted exactly $0 to other charities out of a staggering $1.2 billion AUM.

[And by the way, that AUM figure includes a 40% illiquidity discount on the 2.2 billion XRP on its balance sheet at the time. While the price of XRP has dropped, the Foundation’s XRP balance has likely grown significantly since then.]

At the same time, the Ripple Foundation did pay its CEO a $665,000 salary, while investing $30 million in Michael Arrington’s XRP Capital. Arrington, of course, is a personal friend of Ripple CEO Brad Garlinghouse.

Again, nothing wrong with spreading your wealth around and managing this warchest for the long-term! Per se!

But there is a problem when actual charities are getting less out of the Foundation than the insiders at Ripple. The company donated $174mm to the Foundation in 2018 - likely using that as a perfectly legal writeoff for a non-cash donation of property that the company - *smashing keyboard* - created out of thin air.

And then none of it actually went to charity! Check line 25:

I’m not even mad anymore.

These guys are amazing and nobody cares.

-TBI

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Messari Compression Algorithm

Content and thoughts from around the web as summarized by the Messari team.

🐂 Bison Trails, a New York based blockchain infrastructure-as-a-service startup, announced today that it raised $25.5 million in a Series A. The round was led by Blockchain Capital with participation from Kleiner Perkins, Coinbase, Consensys, and Galaxy Digital, among others. The round follows Bison Trails’ $5.3 million raise last November, bringing its total funding to date to $31 million. According to Joe Lallouz, CEO of Bison Trails, the company plans to use the proceeds of the fundraise to expand its offerings as well as to develop a new network roadmap for several projects, including Libra, Telegram, Skale, and Polkadot.

Why it matters:

• It’s been a hot week of funding for cryptocurrency startups. The round follows recent announcements of Compound’s $25 million Series A led by a16z crypto and Messari’s $4 million raise led by Uncork Capital.

• Bison Trails is one of the 21 founding members of the Libra Association. According to Lallouz, Bison Trails is actively working with founding members to move the Libra project forward, from testnet to mainnet launch.

• Bison Trails is one of the few startups that exists in contrast to staking-as-a-service providers that risk centralizing blockchain validation and governance with large organizations like exchanges. Bison Trails makes it easy for clients to run node infrastructure on the proof-of-stake networks they support without exposing clients’ private keys or having access to moving tokens.

♊️ In its first acquisition, crypto exchange Gemini purchased startup Nifty Gateway for an undisclosed amount. Founded in 2018, Nifty Gateway lets customers buy non-fungible tokens (NFTs, or colloquially “nifties”) like CryptoKitties or Gods Unchained collectibles with a credit card. Gemini founders Tyler and Cameron Winklevoss acquired the young company because they believe “the market for nifties will be as big as the collectibles, art and gaming markets combined.”

Why it matters:

• NFTs are attracting more attention as of late. Aside from this acquisition, Gods Unchained made headlines a week ago when demand for the Ethereum-based game’s trading cards set a new record (beating the previous record by a factor of five) for on-chain ERC-721 token transfers.

• This acquisition is fitting for the Winklevoss twins, as the two have consistently pushed for better access and interfaces to cryptoassets and related use cases. In addition to their crypto onramp (i.e., Gemini), other initiatives include their efforts to establish a Bitcoin ETF, the creation of a dollar-backed stablecoin ($GUSD), and Gemini integration into Flexa’s Spedn application, with varying degrees of success.

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Dissident Tech

thank god bitcoin is boring before it's not

Your daily snapshot from our Messari screener.

Dissident Tech

“Like frogs in the proverbial pot, we’ve collectively spent the last few decades actually and metaphorically signing away our rights when it comes to our data and our privacy.”

-NLW on Long Reads Sunday

I wrote last week about PayPal’s snap decision to cut off 100k PornHub performers from the online payment giant’s services. It’s part of a long list of alarming trends towards Orwellian surveillance of every aspect of the financial system, and the tendency to suspend “others” access to products that most of us take for granted.

If those others are deemed unworthy of access, of course.

But who’s to judge exactly?

This encroachment of financial rights and privacy started as part of the post 9/11 effort to choke off terrorists and criminal networks. (The PATRIOT Act admittedly sounds better than the “this actually solidified the fact that Bin Laden won the war” Act.) But that encroachment has moved deliberately towards less dangerous, still iffy legal gray areas like porn, pot, and gambling.

These days anyone can be de-platformed from social media and unplugged from the financial matrix. For any reason, really.

In fact, they don’t even tell you why anymore.

Bank of America even suspended a random VC’s bank account earlier this week without explanation.

Roelof Botha @roelofbotha

After being a customer of @BankofAmerica for 20 years, I received this notice today that they decided to fire me as their customer! With absolutely no explanation....

Except the random VC is actually Sequoia partner, Roelof Botha who took over Sequoia's US operations from legendary investor Jim Goetz, and is…

THE FORMER CFO AT PAYPAL.

Disturbing.

And one of the most meaningful canaries in the coal mine I’ve seen in a while.

People may cheer the Alex Jones ban from Facebook. He’s an easy-to-hate villain. They may shrug their shoulders when protests erupt on the other side of the world or citizens try to flee hostile regimes with the clothes on their back (“sucks for them, but not my problem”). They may crack jokes about sex workers or marijuana entrepreneurs getting cut off from banking services.

But seriously. This guy?

They’re coming after the white guys in the Patagonia vests now?

For any ongoing debate as to whether the addressable market for anti-surveillance or dissident tech is large enough to command attention - and help crypto cross the chasm to the mainstream - this should provide an alarming signal. If people like Botha are losing bank accounts now, we’re closer to crypto’s mainstream moment than you think.

It may be better to think about the addressable market size of crypto as “everyone eventually” by reframing the conversation entirely.

I like Peter Thiel’s quip here that “Crypto is libertarian. AI is communist.”

It’s a catchy meme - with more mainstream proponents these days - that the industry may need to catch fire and finally expand from niche to necessity.

And it may take a patriotic sounding meme to resist the surveillance cancer that has metastasized from the original PATRIOT act.

-TBI

P.S. This weekend’s Long Reads Sunday fully captured all sides of this emerging narrative. I have little to add in the way of curation. It’s perfect. Read it here.

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Messari Compression Algorithm

Content and thoughts from around the web as summarized by the Messari team.

🔒 Today MakerDAO ($MKR) is transitioning to the long-awaited Multi-Collateral Dai system that introduces support for different types of collateral besides ETH and makes some key structural changes. The first type of collateral to be available is Basic Attention Token ($BAT) which will have an initial debt ceiling of three million Dai compared to 50 million for Ether ($ETH).

The current single collateral Dai (“Sai”) will continue to exist while users are encouraged to migrate to the new Dai. Another major change is the introduction of the Dai Savings Rate (DSR) which acts as an interest-bearing savings account. Unlike traditional accounts, it does not lend the money out, but rather it pays interest to depositors using funds from the Stability fee.

Why it matters:

• New collateral types should increase the addressable market of collateralized debt as well as the stability of the system by diversifying the debt pools.

• The Stability Fee has been changed significantly throughout the year jumping from 0.5% to over 20% back down to 5%. The DSR provides another lever to adjust in order to keep Dai around $1 which should lessen interest rate volatility.

♎️ In a recent update, Libra Association developer Michael Engle revealed the project’s testnet is seeing continued improvement, logging more than 51,000 transactions since mid-September, and its (currently private) “Pre-mainnet” staging environment features seven deployed nodes, with fourteen more in-process. Engle also said the testnet now supports 34 projects created by community contributors, though over 30 of these projects are either wallets, clients, or block explorers.

Why it matters:

• The update shows Libra is continuing to progress in development despite being under regulatory cross-fire from multiple jurisdictions. Based on the evidence provided in the update, any delays to mainnet launch will not result from technical complexities but from a legal impasse or lack of node operator interest.

• Community engagement is promising with 34 projects added in just seven weeks. Now, Libra needs to onboard more partner nodes on its Pre-mainnet, which at seven deployed nodes is 93 nodes short of its live mainnet goal.

🚀 The Oasis Foundation announced its first public testnet is now live. The current version only allows users to spin up a node, but the Oasis team intends to add staking and delegations features soon. In the long-term, the Oasis protocol aims to provide a smart contract platform with built-in data privacy through the use of secure enclaves and zero-knowledge proofs (ZKPs).

Why It Matters:

• Once staking and delegation incentives are live, the Oasis Foundation will host a testnet staking competition, dubbed “The Quest,” and allocate ~1% of its native token supply to the event’s participants. Incentivized testnet competitions help early-stage projects bootstrap a network of validators and stress test the technology in a realistic environment. We cover these experiments in more detail in our Incentivizing Testnet Participation Pro research report.

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