Mariano Conti, Head of Smart Contracts at the MakerDAO Foundation announced a new site called Sai Sats today on twitter. The site acts as a live feed for information such as Sai supply, the debt ceiling, Ethereum locked and the Collateralization Ratio.
In eight days, Multi-Collateral DAI will release which Maker recommends everyone upgrade to immediately. Being able to see SAI supply drop in real could have an influence on the immediacy users feel about upgrading.
Either way, it’s nice too have a page reminiscent of the U.S. Debt Clock for everyone’s favorite decentralized stablecoin. Conti confirmed with Cryptocult that a similar site with statistics for Multi-Collateral DAI will be available on or shortly after its release.
“Don’t know if I’ll have it ready for release, but it’ll be close!” - @nanexcool
A lot is happening in the Maker world in the upcoming weeks. MCD will be voted on November 15th, implemented on the 18th, and listed on Coinbase shortly after. All holders and people with CDP positions will be responsible for upgrading their SAI (DAI) to DAI (MCD) or risk losing stability on their asset.
If adoption doesn’t happen quickly, users will be able to see it in live time on the SAI stats website.
One of the biggest perception that holds crypto back from being traded and invested in is the threat of market manipulation. The SEC has cited market manipulation as a reason to not allow regulated ETFs, Tether and Bitfinex are facing a trillion dollar lawsuit for alleged manipulation and in general, traders of Bitcoin often refer to it as a “scam.”
Crypto market manipulation can be narrowed down to a few talking points. Problems being acknowledged and worked on could further the case for adoption. Here are the most prominent issues in the crypto market.
Pump and dump (sort of market manipulation?)
Traditionally, a “pump and dump” scenario is caused by a company misleading investors into buying. After price has risen because of suckered investors, the company sells. In crypto, companies don’t have control over coins in the traditional sense.
Bitcoin has no official dev team and the creator is nowhere to be found. Ethereum on the other hand does have an official team, but they still can’t change things by themselves. In decentralized blockchain networks, the user base chooses which version of a project’s open source code to adopt, so it’s harder for one organization to mislead them.
Still, “pump and dump” scenarios happen within Bitcoin on a regular basis. Instead of being caused by a company, they are caused by what crypto traders call “whales.” A whale is someone who owns enough Bitcoin to single handedly impact the market. Classifying this as manipulative is questionable since it can be done by one person. Some would argue that it is simply a trading tactic.
Instead of completely falsifying then destroying a stock, a whale can take advantage of Bitcoin at a low volume time to spike the price up. Whales look for low volume intersecting with an area they know traders have automatic orders placed at. This is usually by areas of big support or resistance. When support or resistance is broken, traders expect big movement to follow because the price is “breaking out.”
So whales put multi-million dollar orders up where price is thought to be breaking out, triggering traders orders and sending the price up even further. Since the move isn’t organic, the price will flatten out and then drop back to where it started. The whales who created this movement sell at the top, and people consider them to be “smart money.”
This process ends up leaving a pattern that can closely be filled in by Bart Simpson’s head, so traders refer to it as a “bart.” It is unique to the crypto market because of its illiquidity, high leverage and lack of regulation.
Tether pumping the crypto markets
Tether is a “stablecoin” created by the Bitfinex exchanges’ parent company, iFinex. As a centralized stablecoin, it is supposed to be backed entirely by U.S. dollars, held by the Tether Limited company. Controversy has surrounded them ever since Crypto Capitol, who managed funds for Tether shut down. Tether lost $850 million that was tied up in Crypto Capitol
In order to compensate for the lost money, Tether borrowed the $850 million from their sister company, Bitfinex. USDT, Tether’s stablecoin, kept printing after these events. Some people have correlated Tether printings with Bitcoin price increases and became under the impression that they were printing money from nothing. Eventually, they were ordered to send financial documents to the New York Supreme Court.
Bitfinex and Tether turned in documentation from April 2019 until October 2019. When they were no longer forced to turn in documents, the New York State Attorney General wasn’t happy and alleged they were stalling. Bitfinex won an appeal to not have to turn in documents any longer, but that was followed with a trillion dollar lawsuit.
The same legal team who took down Craig Write for impersonating Satoshi Nakamoto is suing Bitfinex and friends for $1.4 trillion. They believe that Tether illegally printed their USDT currency to pump the market, costing $1 trillion in damages. The damages come from people who lost money during the collapse, which the legal team credit to Tether pumps. Ironically, this is more like a grand scale classical pump and dump scheme from the picture above.
If this turns out to be true, it would mean that a company used fake money to bring Bitcoin’s price to $20,000. Since that price point was crypto’s greatest accomplishment, it could have negative consequences on morale if it was a hoax the whole time.
Tether can be found on exchanges like Bitfinex, Binance and oKEX.
Crypto wash trading
There are tons of crypto exchanges that abide by no regulations whatsoever and are not registered. This makes it easy for an exchange to fake trading volume by buying and selling with their own funds.
CoinMarketCap is the first site someone might find by searching “popular crypto exchanges” because it ranks all exchanges by volume. Unfortunately, it is very easy to fake volume and get listed on this site. One report said that nearly 70% of volume reported on CoinMarketCap is fake.
The harm comes from users deciding to spend their money on an exchange with fake liquidity. The lower the volume, the higher the slippage. Slippage translates to the amount of crypto available at the price that you want to buy it for. For instance, an exchange might say that you can buy Bitcoin for $9120 but not clarify the supply available at that price. A trader might get the first $1000 worth of Bitcoin at $9120 per Bitcoin, but if they were buying $10,000, the average price might move to $9300 on an illiquid exchange.
Price increasing because of their order gives the fraudulent exchange an incentive to sell their holdings. People trading on these types of exchanges aren’t long term customers because the exchange simply isn’t competitive with others. A trader might be tricked in to exchange on their platform, lose some money, and then leave.
Regulators don’t like that this practice because it means their citizens are being scammed out of money, and it’s hard to get an accurate read on volume. 70% of volume recorded being fake is a large number and it’s easy to see how allowing a Bitcoin ETF on a major stock exchange based off of that data could be problematic.
We’re still in the Wild West
Crypto markets are still in many ways the Wild West. The stock market is made up of mostly made up of data from regulated, documented business. Crypto exchanging began as a global, unregulated market and the biggest centralized exchanges operate outside of the U.S. where there are more lenient trading policies.
In order to bring standards up to what mainstream, institutionalized investors are used to, there needs to be a more global consensus on regulation. It often seems like U.S. regulators are the only ones trying to crack down on wash trading, printing fake money and allowing access to unnecessary leverage. As long as the U.S. is the only threat to scams, they will have somewhere to run and hide.
Bakkt is a company under the New York Stock Exchange’s parent organization, Intercontinental Exchange. Hype has surrounded them ever since they announced physically settled Bitcoin futures for institutional investors. Initially, Bakkt was going after big money, but now they’re making an app for the masses.
This week, they released a some information about their upcoming project and hinted it’s capabilities. Apparently, they will be able to resolve some of the most important issues blockchain tech with an app, and their first partner is Starbucks.
Fast payments and settlements
“For merchants, this enterprise-grade infrastructure enables a new form of payment acceptance at a lower cost per transaction along with faster settlement times”
Bitcoin’s kryptonite is that it doesn’t scale well, meaning as the network grows, it’s already slow processing time can become even slower. The Lightning Network aims to solve this problem by building something that acts as an additional layer to Bitcoin that makes transacting faster while remaining decentralized. Still, this solution has been met with heavy criticism because it requires a two sided exchange. When you’re doing something like buying coffee, it’s a one way transaction.
So Bakkt has a solution to this issue, but it’s safe to assume that it won’t be decentralized. Bakkt will likely leverage its reputation to be a trusted, centralized party that facilitates transaction between a users’ wallet and the merchant. Announcing Starbucks as the first business partner for their payment service seems to be their way into gaining trust.
“We’ll be launching a consumer app to make it easy for consumers to discover and unlock the value of digital assets, as well as ways in which they can transact or track them.”
Right now, Bakkt’s exchange isn’t for regular ole’ people. Their “get started” button links to their e-mail, and the site lacks a traditional “sign up” button.
Things will be different this time around, judging by their intentions to allow consumers to “discover and unlock” digital assets. The idea of letting people purchase crypto directly through an app used for transacting is their way of attacking the problem at every angle.
Bakkt’s vision for the future of crypto is sounding like an phone app that you can purchase bitcoin from and pay with. Something like Coinbase combined with Chase Pay.
What the Bakkt App missing?
One of the most appealing features of cryptocurrency is that it can distance you from your power. People talk about Bitcoin being a hedge against government failure, as a way to avoid banks and providing financial sovereignty. Whether or not it actually fulfills any of these assumptions is up to debate, but regardless, they are topics of interest.
In order for Bakkt’s app to accomplish its goals, they will need your trust. The only way they can allow fast transactions and settlement with Bitcoin payments is by knowing that you have enough money in your account, and crediting the merchant in fiat before anything is verified on the blockchain.
Essentially, they will send your BTC to themselves and a cash equivalent to Starbucks. Starbucks does not want to risk $3.99 to be worth $3.50 by the time they exchange BTC for fiat.
“You can’t even purchase things with Bitcoin” is the favorite line of crypto nay-sayers. Honestly, I’d question if Bitcoin holders even really want to buy Starbucks with Bitcoin. Since the asset isn’t stable, most people invest the assumption that it will grow in value. Nobody really holds 0% fiat and 100% Bitcoin, so why wouldn’t they just use the cash that doesn’t have much of chance to growing?
Still, with their innovation, at least the option will exist. People will no longer be able to say that you can’t buy coffee with Bitcoin, because Bakkt finds the transaction to be worth facilitating.
In a press release today, 3iQ announced approval for a closed-end Bitcoin fund on the Ontario Stock Exchange. This may seem like Canada regulators are a step ahead of Americans when it comes to accepting institutional investors, but the U.S. has a respectably similar investment option.
A closed-end fund trades shares, but the fund can’t buy them back . If an investor wants to sell their purchase from the closed-end fund, they have to do so on a secondary market.
These types of rules are almost identical to Grayscale’s open-ended grantor trust available right now in the U.S. Greyscale sells BTC in shares and does not buy back. The major differences are that Grayscale is over the counter (OTC) meaning that it isn’t traded on an exchange, and by being open-ended, they sometimes can create new shares for investors.
Both open-ended funds and closed-end funds are different than the Exchange-Traded Fund (ETF) that American regulators keep rejecting. Creation and redemption of ETFs are continuously possible, creating more incentive for price to stay close to the value of the asset.
So, 3iQ’s closed end Bitcoin fund lies somewhere between the Grayscale’s open-ended trust and the ETF that everyone wants. Purchasing the fund will be more accessible, but selling still will not be.
Closed-end funds also have a higher return on capital because they do not repurchase or create new shares, leaving them with more cash to pay in dividends. Still, dividends are usually paid once per year and someone interested in an ETF might not want to hold for that long. Another advantage for closed-end funds is that they trade intra-daily whereas open-ended funds like Grayscale are priced at the end of every day.
The ideal situation would be to have a Bitcoin ETF, closed-end and open-ended fund available for investors to choose from. Any progress made is a step in the right direction, but a single decision like this likely won’t cause Bitcoin to moon.
As a newbie in the crypto world, it can be difficult to figure out which media outlets to trust. In 2019, it’s natural to want to use an aggregation site to save yourself from hours of research. CryptoPanic is a product that aims to be a solution to those conflicts, but can you trust it as your main aggregator?
Are quality sites featured on CryptoPanic?
The edge that CryptoPanic has on sites like Reddit is that new posts are automatically pushed to the site. Many Reddit pages have intense criteria before users are allowed to post links, which means even if there is worthy news, a worthy poster must decide to share it.
CryptoPanic handles the vetting process with the news outlets rather than the users. They do allow smaller outlets to be posted, but they must fulfill specific requirements. Some of the most important criteria is not being a single person blog, having original content and maintaining a “high quality” of journalism.
In order for a site to make it into the CryptoPanic aggregator, it must be at least 3 months old. This may seem lenient, but because of venture capital flowing into the crypto space, there are publications that have been top tier since their release.
Are there any advertising conflicts?
There are no traditional banner ads on CryptoPanic which is a good sign. If Coinbase decided to pay for banner ads, they might not want CryptoPanic to allow negative news or opinions about Coinbase to be posted on the site. Instead, they hand pick one company to work with at a time.
According to CryptoPanic’s advertising page, they work with “projects” and “products.” Right now, advertisements are colored differently than posts. The current advertisement is a product that lets users simulate crypto trading which at face value seems pretty neutral. They also claim to work with one exclusive advertising partner at a time, but there doesn’t seem to be a standard length of time.
From the information CryptoPanic makes available, they seem to handle advertising very ethically. Ads are clearly labeled, go through a vetting process and further the goal of aggregating quality information.
How to customize your feed
Users can sort through filters such as blogs, news sites, types of news and followed currencies. After filtering by type of news or outlet, users can also filter by how the community is reacting to them.
CryptoPanic lets users add reactions to posts such as “bullish,” “bearish,” “important,” or by likes and dislikes. This feature is particularly important to someone not very media literate when it comes to crypto news. Rather than sorting through all of the posts shared on CryptoPanic, we would recommend new viewers to sort by “important.”
The site makes money through additional features such as instant alerts, custom RSS feeds, Reddit and Twitter sources. That’s about all of the paid features though.
CryptoPanic seems like they care about aggregating quality content. There is a relatively strong vetting process before sites are allowed on the feed, and proactive measures to ensure minimum advertising conflicts.
Still, sifting through the feed, I’ve found sites that post polls with no sources. When aggregating so much content, they cannot completely ensure the integrity of all posts. This is why it’s good to look at community feedback before taking a post seriously.
It is probably the best site to find every bit of news in the crypto space as quickly as possible. This can fulfill the needs of a day trader who wants to be on the cutting edge of what is happening with their coins, or for the blogger who can’t miss out on anything. A casual follower of the crypto space might find all of the information to be a bit much though, and could be better off creating a custom reddit feed.