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Tomorrow may be the biggest day in crypto’s history (at least in the US) as Facebook CEO, Mark Zuckerberg heads back to Congress to testify about the company’s plans for Libra, every regulator’s favorite crypto punching bag.
Nathaniel Whittemore breaks things down in this week’s Narrative Watch, and delivers some cliff notes around Zuck’s prepared remarks.
In the first page, Zuck hits on narratives that will fire up both the left (banks aren’t innovating and leaving the underbanked hurting) and right (if you shut this down, China is going to dominate the new financial frontier.
“Admit it, we’re here because it’s Facebook proposing Libra and you kinda already hate us. Isn’t that what this is really about? (paraphrasing).”
Facebook will not be party to launching Libra absent US regulator approval.
“A lot of illicit activity is funded through cash.” I could really see a spirited back and forth on this point that ultimately leads to Zuckerberg crapping all over bitcoin, although I’m sure his team has coached him not to take that approach?
“It would be bad for our country,” if companies are discouraged from solving tough problems. This is the money line, and why everyone in crypto should be cheering on Libra from the sidelines. The way this initiative has been attacked should be cause for concern for all.
The testimony starts at 10am ET.
One other thing to keep an eye on in DC: Ripple made two new big announcements today, joining the board of industry lobbying org the Blockchain Association, and onboarding a former counselor to Treasury Secretary Mnuchin to their board of directors. Ripple is great at playing the long political game, and you can rest assured they’ll be taking plenty of potshots at bitcoin to make their case in DC when given the opportunity. (They have plenty of times before.)
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✅ Tezos’ stakeholders voted in favor of the Babylon 2.0.1 proposal via its on-chain governance system. The proposal was activated when the voting period concluded on Oct. 18, 2019. Upgrades include a more robust version of the blockchain’s consensus algorithm (Emmy+), simplified smart contract development tools, and a refined delegation process for stakers. The Babylon vote also marked a new all-time high in participation in votes submitted (59,967).
Why this matters:
Ethereum is drawing developer attention away from other smart contract platforms, including Tezos ($XTZ), because of its robust development environment. Babylon introduces a more friendly smart contract language that could sway developer mindshare towards Tezos.
One criticism of on-chain governance is that low-voter turnout could enable a minority of voters to dictate the future direction of the network. The Babylon vote saw participation from nearly 84% of eligible stakeholders, suggesting Tezos’ approach is working as intended and even exceeding expectations. It’s also a clear sign of the growth in the staking-as-a-service industry.
🏎 Earlier this month, Uniswap launched a new, high-throughput version of its decentralized exchange on the Ropsten testnet. The demo, called Unipig, is running on “Optimistic Rollup”, a layer 2 scaling solution that supports Solidity smart contracts. Uniswap claims its demo is capable of processing ~250 gas-free transactions per second (tps), a steep improvement over the 12-15 tps supported by the Ethereum ($ETH) mainnet.
Why it matters:
Ethereum’s current inability to scale and non-trivial transaction fees are not conducive for most DEX use cases. A scalable, Solidity-compatible environment like Optimistic Rollup creates the opportunity for projects to build a wide range of new applications while still leveraging Ethereum’s robust developer toolset.
Ethereum 2.0 is still in development and may not be production-ready until 2021 at the earliest. If network utilization grows in the near term, projects will need to explore alternative scaling solutions. The preferred choice will likely be compatible with Ethereum’s existing smart contracts vs. a new blockchain.
The caveat: layer two applications may have difficulty communicating between chains due to a lack of standards for executing cross-network transactions.
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