Messari's Weekend Reads - Issue #49 😎

reading, sleep, and self-care

Your daily snapshot from the Messari screener.

Sometimes it’s important to take a step back and ask how we got here.

Messari’s weekend reads:

Have a good weekend y’all.

The Messari Team

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Messari Compression Algorithm

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

🇨🇳 The Central Politburo of the Communist Party of China, led by President Xi Jinping, held a study session on the blockchain technology development on the afternoon of October 24. Xi emphasized that the technology is an important breakthrough and urged the country to invest in and accelerate its development.

Why it matters:

  • The Central Politburo is a group of 25 highest officials of the Communist Party. Historically it has been very effective at using a top-down approach to drive the adoption of emerging technologies. One recent example is deep learning, where China has arguably surpassed the US by some standards.

  • Classically, the official announcement by the state-owned media is full of buzzwords such as "IoT" and "digital assets". However, as with all official announcements by the state-owned media, it is important to read the intent between the lines. The intent is a nationwide focus on the blockchain technology.

  • Interestingly, there is zero mention of the word "crypto". Historically, China has been lukewarm towards cryptocurrencies, with centralized exchanges trading still banned since 2017. Narrative-wise, China appears to make a distinction between "blockchain" and "crypto".

  • Relatedly, China has been researching its own central bank-issued digital currency, backed 1:1 by renminbi reserves.

  • Bitcoin ($BTC) is up 10% since the announcement. This is the first time in recent months that a major price action is likely driven by a news event.

🏗 After a series of audits last quarter that revealed centralization risk in Compound, the lending protocol has taken steps to remove or alter some of the administrative privileges. Included in the upgrade is a 2-day timelock after an upgrade, a Pause Guardian that halts the mint, seize, borrow, transfer functions, and other smaller changes that are being reviewed by the community as well as formally audited.

Why this matters

  • Compound is currently the second-largest DeFi application with over $113 million of $ETH locked and nearly $40 million in loans outstanding, given its integral nature, any attack vector represents a potentially existential threat to the ecosystem

  • The V2.2 upgrade represents a gradual shift towards decentralization that alleviates some of these risks

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