Justin Sun paid someone to make memes clowning The Block crypto news outlet

Coindesk talked to the a Twitter user who was paid by Justin Sun to make ‘derogatory memes’ against The Block staff members. This was a result of Changpeng Zhao and Justin Sun being upset about The Block reporting that a Binance office in Shanghai was raided and shut down in early December.

Sun is involved in buying Poloniex, founder of TRON blockchain network, and CEO of BitTorrent. Zhao is the CEO of Binance and founder of BNB. The two could be considered competitors but are closer than one might assume. Binance has had complete control over TRON’s voting system for a while now.

They both teamed up against The Block after Zhao denied their reports of a Shanghai Binance office existing, and being shut down after raids. Both Zhao and Sun offered 100 Bitcoin to begin a fund aimed against news that could hurt the crypto market. Zhao also threatened to sue The Block in via Twitter, but the topic hasn’t been brought up since.

In fact, last night, Frank Chaparro posted announced an upcoming interview with Catherine Coley, CEO of Binance.US. The podcast has not released yet but commenters are wondering whether or not they touched on the Binance drama.

$1000 of that 100 BTC fund was used to hire meme-maker and TRX investor, Tommy Mustache to make create some anti-The Block pictures. Here’s what he came up with.

The Block derogatory meme

Mr. Mustache told Coindesk why he decided to give to take the cash.

“Investors like me are getting hurt [by rumors] and we are sick of it.”

With long term investments in TRX and BNB, it’s easy to see why he’s frustrated. Cryptocult does not condone harassment in any way whatsoever, but Mike Dudas and Frank Chaparro have been good sports throughout this, posting some of the memes themselves.

 

Binance allegedly controls 56% of voting power in TRON

Today, Brian Fabian Crain, CEO of Chorus One, tweeted a screenshot showing that Binance has submitted 55.81% of all votes on the TRON proof-of-stake network.

“What a joke: @binance controls 56% of the voting power on @tronfoundation. If they split their votes across 25 nodes, they’d have 499k per node and would control 25 out of 27 validating nodes. Decentralization theater. Centralized exchanges are an existential threat for crypto.”

TRON voting share

 

TRON has a slightly unintuitive voting system in which 27 “Super Representatives” make all decisions. Any holder can still “freeze” (stake) their TRX to vote for representatives, but those stakers can also vote for themselves. This is exactly how Binance became the most powerful voter, staking 12 billion TRX tokens to vote themselves into office.

Super Representatives are frequently revoted, but there is no limit to how long they can hold power. Each TRX token equals a vote, and 12 trillion votes would equal the equivalent of 168 million dollars at the current price of $0.014.

Tron isn’t the only “decentralized” operation that ends up looking like a plutocracy. We have reported that even the reputable MakerDAO platform, creators of the DAI stablecoin often have one rich voter making important decisions.

Arguably the biggest update to ever hit maker, Multi-Collateral Dai was given a 3 day vote to be implemented, and would require $100 million with of DAI to be manually converted, had one voter controlling 50% of power for a majority of the duration. They ended up providing around 35% of the consensus.

Ethereum, the second largest market cap coin is in the process of moving to a proof-of-stake network, and some people are fearing for it’s security. There won’t be a voting system implemented like in TRON, and it would cost way more to take over the network, but TRON and Maker’s voting system are good examples of what can happen when allowing money to control the blockchain.

 

 

Phemex’s derivative exchange is a faster BitMEX aimed at institutional traders

One of the biggest drawbacks to crypto derivative exchanges is that it has been very difficult to trade at a high frequency. Phemex, created by ex-Morgan Stanley executives, aims to fix that problem while offering many standard features available on platforms like BitMEX, Binance and Deribit.

How much faster is Phemex than BitMEX? 

BitMEX, the most popular derivative exchange in crypto offers 500 transactions per second, while Phemex can handle up to 300,000. This is a huge deal for hedge funds who invest heavily in technology to gain their edge. It is also one of the reasons that institutional crypto traders are more incentivized to find arbitrage opportunities than run pure trading bots.

Phemex also promises less than 1ms latency. BitMEX does not provide a firm latency time, but research shows that most orders execute with a bit less than 1 second delay. Once again, this is not super important for the retail clicking trader, but when running high frequency bots it can definitely matter.

An application programing interface (API) is what traders use to connect their bots to an exchange. Most crypto exchanges have proprietary API systems which means that for each exchange, the programming can be quite different. Phemex uses FIX API, a standard API used by banks, brokers and hedge funds.

What does it have in store for retail traders?

Here at Cryptocult, we know how much retail traders love unnecessary amounts of leverage, and Phemex meets the 100x standard. Users can also choose to enter cross leveraged positions.

Right now the only trading pairs are BTC, ETH, and XRP against USD, but in the future they plan on adding LTC and EOS. BitMEX only has BTC and ETH pairs to trade against USD, the rest are against BTC.

Phemex doesn’t require KYC, and it looks like users can withdraw more than once per day. Fees are very similar to other derivative exchanges and there are incentives to be a market maker as well.

Essentially, it is the same thing as BitMEX but faster and more institution friendly. There is one major difference that separates it from any crypto exchange but the release is TBD.

“In the future, we would like to provide our users with the option to trade contracts backed by traditional financial products: FOREX, S&P, commodities, etc.,” Jack Tao, founder of Phemex told The Block.

Synthetix founder compares upcoming futures products to BitMEX’s leveraged perpetual swaps

In an Unchained interview today with Laura Shin, Kain Warwick, Founder of Synthetix, had an interesting answer about new features on the exchange. He described upcoming Synthetix futures products as being comparable to BitMEX leveraged perpetual swaps.

“Essentially it (Synthetix) will be a decentralized BitMEX or Derebit or any futures exchange. You’ll be able to take a leveraged position on something like Bitcoin or Eth and open that position and it will be a perpetual future,” said Warwick.

Synthetix has already gained huge traction in the decentralized finance (DeFi) world, with the second most Ethereum locked right next to Maker. Warwick said that people were attracted to Synthetix because it’s the only place where you can exchange Bitcoin for gold, and then back to USD with no slippage.

They aren’t the only decentralized platform hoping to take on BitMEX though. A BitDEX whitepaper was released a few months ago that uses priceless contracts and no centralized oracle. Synthetix still uses a centralized oracle, which determines prices of assets, but has been manipulated by a trader before who created 2 million dollars of debt in the system and had to be bribed to revert the trade.

Warwick mentioned that they are working with Chainlink to resolve some issues that they have had with oracles, but it still will have lag compared to live price, which people will always be able to take advantage of.

DeFi’s biggest disadvantage when it comes to trading features and liquidity. With Synthetix having infinite liquidity, they could be at a huge advantage against competition as long as users are able to short, set stop losses and limit orders. Decentralized exchanges also benefit from having less regulations to comply with because FinCen sees them as a forum to match orders as they don’t hold users funds. This means that they might not need to enforce KYC in the United States.

“If a CVC trading platform only provides a forum where buyers and sellers of CVC post their bids and offers (with or without automatic matching of counterparties), and the parties themselves settle any matched transactions through an outside venue (either through individual wallets or other wallets not hosted by the trading platform), the trading platform does not qualify as a money transmitter under FinCEN regulations.” – FinCen

There is no literature that explains how Synthetix will go about implementing their leveraged perpetual swaps. After we inquired on their Discord, it seems like other people are anxious to read the technicals as well. This may be the first time Synthetix has made a direct comparison and provided a description of plans.

People are arguing about whether or not DeFi is bad for proof-of-stake systems

It all started with a post from Haseeb Qureshi, an investor at Dragonfly Capital, titled ‘How DeFi cannibalizes PoS security.’ Qureshi wrote a piece implying that the more Ether gets locked in DeFi, the less people there will be to stake, resulting in a weaker proof-of-stake system.

Since posted, the article has received harsh criticism from people like Vlad Zamfir and founder of EthHub, Eric Conner.

The “unqualified” opinions that Zamfir was referring to comes from Tarun Chitra, CEO of the Gauntlet Network, who Qureshi cited in his article. Gauntlet is a “simulation platform” that increases security of smart contract protocols. They work with projects like Compound, so they don’t seem to have much of incentive to degrade opinion on DeFi.

Qureshi’s Dragonfly Capital is even deeper in to DeFi, being invested in Compound, dYdX, Oasis Labs, Cosmos and more, all built within Ethereum. Certainly an investment group with money thrown around the DeFi ecosystem wouldn’t want to hurt returns in any way.

Zamfir doesn’t deny the potential issues, but says that they have been discussed before and brushes it off as a non-issue. Eric Conner on the other hand offers an in detail perspective on the argument.

“It’s claimed the attacker can gather this ETH by paying high rates on Compound. Besides major jumps in logic around liquidity of the defi market and sourcing of collateral, let’s just assume the attacker is able to borrow all this ETH and find $1.5bn in collateral.” – @econoar

He goes on to break down the math behind why it would be unlikely for an attacker to take over 5,000,000 Eth, but the basis of the argument is that it would be very difficult. Others have mentioned that economic incentives aren’t the only reason to claim stake, and there will presumably be a large group of people who are staked for the sole purpose of keeping Ethereum secure.
Brendan Foster, Co-founder of Dharma gave some insight to how Compound might deal with proof-of-stake, a widely used lending platform that he works closely with.
“I’d bet that Compound will integrate staking in ETH2, just like they have DSR for unutilized Dai. So lending in high-yield DeFi won’t be mutually exclusive with staking” – @brendan_dharma
As usual, people don’t really know what will happen in crypto as most operations are one big experiment. It’s hard to name a crypto project that hasn’t gone through a very traumatic experience at some point. Let us know in the comments if you think DeFi will ruin Ethereum’s upcoming proof-of-stake mechanisms.