Loopring: Avoid Ethereum Transaction Costs with This Provocative DEX

Weekly Analyst Thoughts

Loopring Pay

Last week, the cryptocurrency community found itself in the midst of a mini bull run. Dogecoin rocketed up 97.86% after a buying frenzy triggered by the social media platform TikTok. Synthetix followed the Dodgecoin run with its own rally of 24%.

With so much price fluctuation among cryptocurrencies, it is easy to get wrapped up in the potential value that can be realized from investing in digital assets. While the potential value that crypto offers does tend to raise an eyebrow, it is important to keep in mind that the main value proposition of cryptocurrencies is their ability to send electronic payments between peers without any intermediaries and unnecessary fees.

A potential everyday use case of cryptocurrencies can be seen within the multifaceted nature of Ethereum. One way to use Ethereum cheaper while lowering your gas costs—the costs associated with Ethereum transactions—is to use a layer 2 Ethereum solution such as zkRollups. One of the first Ethereum tokens/companies to integrate zkRollups into their platform is Loopring (LRC), one of the most popular decentralized exchanges on Ethereum. Below, see a video showing Loopring Pay in action.

https://www.youtube.com/watch?v=J7RYYK7mLNA

Trying to understand what this means for your wallet? Imagine not worrying about Ethereum transaction fees when transferring to and from a decentralized exchange. That’s right— totally Free. Loopring Pay is bringing innovation and scale to Ethereum’s blockchain as it prepares the ecosystem for the next crypto bull run.

Jacob Stelter | Blockchain Analyst

Curve Pool Gives Investors New Exposures Through Liquidity Pooling

Weekly Analyst Thoughts

Curve Pool

Defi recently welcomed a new development to its space: Curve Pool. Curve Pool brings together stablecoins and wrapped tokens and offers liquidity pools for investors to contribute to.

Below is a snapshot of their website and the potential returns (APY) investors can earn by joining their pools. Notice that Synthetix token (SNX) offers multiple rewards in SNX for providing liquidity to its stablecoin (sUSD) and its synthetic bitcoin (sBTC).

Source:     https://www.curve.fi/

Synthetix app Mintr, pictured below, promotes opportunities to earn SNX with Curve pool.

Source: https://mintr.synthetix.io/

In summary, if you are holding SNX, REN or other stablecoins, but not using Curve pool to provide liquidity and earn interest on your holdings, then money is being left on the table. If this post sparks your interest in Curve pool, consider the sBTC pool (pool 6) because it gives investors exposure to multiple tokens as they could earn SNX, REN, BAL and CRV.

Jacob Stelter | Blockchain Analyst

American Crypto: A Peek at Digital Wallets Under Federal Evaluation Shows the US May Not Be as Far Behind the Blockchain Curve as Feared

The Coronavirus pandemic has revealed a need for digital banking in the United States.

The United States has been accused, not always unfairly, of complacency as other countries around the world race toward digital currency adoption and claim leadership in shaping the future of digital finance. Information shared by Sarson Funds with insights into conversations happening at the highest levels in Washington, DC reveals that United States may not be as far behind as assumed in the Blockchain Wars with China and other digital currency focused nations.

Digital Wallets Being Evaluated by the US Treasury Include Offerings from Crypto Payments Firm Metal as Shown Here.

Few countries have more to gain from a rebuilding of the international financial architecture than China. Despite efforts to the contrary, capital restrictions on the movement of money into and out of China stopped the Chinese RMB from ever becoming a viable trade currency. China’s development of a two-tiered blockchain-based currency system – with a domestic currency and an international currency, the conversions of which must go through the PBOC – seek to finally address this problem. China, remains the pack leader for the adoption of digital currency globally, with digital wallets (shown below) and blockchain-based digital currencies already implemented and currently running test programs in four cities.

China’s Digital Wallet, Launched in May 2020.

John Sarson, CEO of Sarson Funds, a Wall Street-focused digital asset investment management firm comments that he believes the digital Yuan will be the first government-backed digital dollar to be utilized worldwide.

According to Sarson, all may not be lost for the United States, however. “The United States government works its most effectively when it looks to private industry for leadership,” notes Sarson while also saying it is encouraging to see the US Treasury soliciting technology solutions from crypto industry veterans like Metal Pay. Sarson continues, “Metal’s digital payment platform makes distributing and receiving digital payments anywhere in the world as simple as Venmo, without the barriers for citizens without bank accounts. Moves like this will catch the U.S. up to the rest of the digital-finance world in a hurry.”

Metal is one of a small number of FDIC-insured crypto payment platforms in the United States, as it allows users to send and receive payments with 0% transaction fees on cash – a presumed must for federal partnerships.

With all the talk about China’s advancements in their establishment of a digital dollar, where is the United States in this effort? With the digitization of the Yuan and the support of neighboring countries, it is no shock that Sarson believes the Yuan will be the first globally accepted central bank backed currency.

The reality is the US is not very far behind. So while China has expressed interest in developing such a compatible infrastructure for cryptocurrency coexistence, a federally-backed crypto payment platform is pioneering the effort on the American front. According to Sarson, the United States will need to lean heavily on its private sector – and would be wise to do so – if it hopes to keep up with the increasing digital future of finance.

Balancer Token’s Release Provokes Momentum For the Defi Space

Weekly Analyst Thoughts

Balancer Token

Cryptocurrency enthusiasts have predicted that most future trading will take place on decentralized exchanges, such as Uniswap, instead of centralized exchanges, like Coinbase. Thus far, this prediction has only come true for Ethereum and ERC-20 tokens, which are the standard tokens used for Ethereum smart contracts. On the Ethereum blockchain platform, there is a thriving decentralized exchange (DEX) ecosystem with over $56 million dollars in liquidity pools, fueling the development of decentralized exchanges like Balancer.

Last week, Balancer released their governance token (BAL) and it has exploded in value. As of last Thursday, BAL was up 157% since its release on the main net last week. While BAL has had tremendous success thus far, one of the problems with the BAL token is its’ inaccessibility. When searching for BAL in Uniswap, nothing appears. Instead, investors must navigate to Etherscan.io, a block explorer, find the token contract address and paste it into Uniswap, allowing BAL to appear and be accessible for trade. BAL can also be found in a DEX aggregator called 1Inch Exchange.

The success found by the Bal and COMP tokens in the past two weeks signify significant momentum being gained in the Defi space. Investors must make note of these as well as future developments in the Defi space as these platforms are driving the future of cryptocurrency trading.

DeFi Welcomes Compound Finance: What Investors Need to Watch for this Week

Weekly Analyst Thoughts

Compound Finance

Compound Finance is a decentralized finance (DeFi) platform that allows cryptocurrency users to borrow and lend stablecoins and Ethereum tokens with smart contracts. This week, Compound released a governance token that allows users to use the platform to vote on crypto market proposals in a decentralized fashion.

Looking at the graph below, to say that Compound Token had a great week would be an understatement. However, as successful as the coin’s inaugural performance was, the total supply of Compound’s token is only 2.5 million, while only 100,000 of these have been distributed to the public. Thus, the 2.4 million tokens under the ownership of the Compound founders are locked up so that they can be sold on the market when it gets listed on Coinbase on June 23rd. With such, be prepared for price volatility in the coming week.

Source: https://coinmarketcap.com/currencies/compound/

Jacob Stelter | Blockchain Analyst

Balancer: Changing the Game With Offering of Self-Balancing Funds

Weekly Analyst Thoughts

Balancer: Offering New Exposure to Crypto Through Liquidity Pools

There is a new addition to the DeFi space this week: Balancer. Balancer the next big decentralized exchange, an evolution from exchanges like Uniswap, Kyber Network and Totle Swap. This self-balancing index fund uses liquidity from arbitrageurs to keep Balancer pools at desired percentages. Liquidity providers use Balancer to create a Balancer pool, or personalized index fund, and determine what percentage of up to 8 cryptocurrencies they would like to manage in their pool by providing the liquidity for each. Once providers have established their pool, they can then alter the portion of each crypto within the pool based on the crypto’s recent performance. In establishing a pool with individually contributed liquidity, liquidity providers are then paid for their contributions.

To demonstrate how the Balancer pool works, the image below depicts a shared Balancer pool in action. Liquidity providers contribute 75% Maker and 25% WETH into this pool. This pool’s skew was altered and had Maker above 75% and WETH below 25% this week because Maker went up 30-40% when it got listed on Coinbase. In this price action, an arbitrageur could have exchanged WETH for Maker at a slightly cheaper price while also helping the Balancer pool out by self-balancing back to its 75-25% ratio.

Source: Pools.balancer.exchange

The first generation of DEFI dexes forced liquidity providers to allocate a 50-50 ratio of any two cryptos to any pool they wanted to provide liquidity for. With Balancer, liquidity providers have a chance to make their own self-balancing index funds with personalized portions of each crypto they choose to include. These highly flexible, personally-managed index pools give arbitragers and investors a new level of exposure to the depth and profitability of the crypto space, bringing the ecosystem one step closer to universal comfortability and adoption.

Jacob Stelter | Blockchain Analyst

Bullish Bloomberg Crypto Outlook Reveals Strengthening Foundation for Crypto

Bullish Bloomberg Crypto Outlook Reveals Strengthening Foundation for Crypto

Bloomberg recently released their June 2020 edition of the Bloomberg Crypto Outlook, an in-depth analysis of the current crypto market and the enormous potential that their analysts are seeing within the ecosystem.

Their report noted several bullish analyses for Bitcoin’s recent performance and impending market dominance. These items include:

  1. The acceleration of Bitcoin market maturity due to central bank easing.

Following recent central bank easing to stimulate the economy in the onslaught of the COVID-19 pandemic, Bitcoin is revealing a more mature foundation than ever before.

The sell-off of traditional assets in mid-March that sent markets into historical lows only temporarily affected Bitcoin. Bitcoin, after losing almost 50% of its value in one day, quickly rebounded back to its’ pre-COVID prices, making it evident to investors that Bitcoin’s value has set a firm foundation around $8,000 USD, Bloomberg reports.

Lastly, with the Fed planning on keeping interest rates low through 2022, investors are looking for higher returning investments, and Bitcoin is quickly becoming the next best answer, especially as Fidelity Digital Assets recently released a report stating that 80% of institutional investors see value in digital assets.

  1. A firming foundation indicating heightened maturity as Bitcoin records lowest volatility next to the stock market and commodities as several trends are mirroring 2016’s bull run.

Bloomberg also reported on Bitcoin’s trailing of its’ 2016 trends after its’ recent halving, especially as the last time Bitcoin halved was 2016. The report states:

“That was the last time supply was halved, and the third year after a significant peak. Our graphic depicts Bitcoin marking time for a third year following the parabolic 2017 rally. After 2014’s 60% decline, by the end of 2016 the crypto about matched the 2013 peak. Fast forward four years and the second year after the almost 75% decline in 2018, Bitcoin will approach the record high of about $20,000 this year, in our view, if it follows 2016’s trend.”

With trends mirroring the 2016 bull run and 2017 all-time high, Sarson Funds agrees with Bloomberg’s prediction that Bitcoin will approach its’ all time high of 20,000 in 2020, and believe it is highly likely that Bitcoin will blow past its last all-time high as it continues to mature over the next year, with the COVID-19 pandemic amplifying the need for contactless payments.

While Bitcoin is on track to reach historic highs, Bloomberg is also reporting that Bitcoin is marking its lowest volatility against the stock and commodities markets. With the coronavirus accelerating maturity, Bitcoin’s 260-day volatility measure is currently the lowest ever versus the Nasdaq, as the ratio of the Bitcoin price to the Nasdaq is 1:1. Likewise, Bitcoin is also marking the lowest ever liquidity next to crude oil, which Bloomberg sees as a bullish indication that the crypto is truly heading towards equivalency to digital gold and will continue on an upward trend versus the commodity.

  1. Bitcoin becoming a digital gold as it follows Gold’s historical trends.

Extending on Bitcoin’s emergence as a digital Gold, Bloomberg has deemed gold and crypto as their top assets to advance in 2020, with COVID-19 acting as the fuel they needed to solidify their utility as store-of-value assets and crypto’s emergence as a digital dollar. Fueled by the continuance of central bank easing through 2022, Bloomberg predicts that Bitcoin will continue to appreciate and strengthen its’ recognition as digital gold among investors.

  1. The Grayscale Bitcoin Trust, a leading Bitcoin on-exchange platform, consumes about 25% of newly-mined Bitcoins, compared to 10% in 2019, representing significantly higher institutional interest in crypto exchange-traded instruments.

The Institutional adoption of Bitcoin is also fueling the asset’s firming foundation and impending bull run. The Grayscale Bitcoin Trust (GBTC), a leading Bitcoin on-exchange platform, currently takes a quarter of newly-mined Bitcoin off of the market for its own institutional operations and investments, marking an increase of 2.5x from 2019’s consumption.

Bloomberg also reported that GBTC’s current 30-day average AUM in Bitcoin equivalents is near $340,000, which is 2% of total bitcoin supply. From 1% of total supply in 2018, this doubling of the average AUM indicates a massive increase and growth in institutional investment in cryptocurrencies.

  1. Increasing interest in Bitcoin Futures are significantly swaying investors to considering Bitcoin as a mainstream asset.

Bitcoin’s rapid growth over the past two years also has to do with the increased adoption and mainstreaming of Bitcoin futures. Bloomberg states in their report that “Favorable trends in Bitcoin futures trading on the CME are supportive of the price… Representing maturation toward the mainstream of assets, increasing futures open interest and the steady price premium are headwinds for volatility and tailwinds for prices.”

Bitcoin also recorded a near doubling in futures open interest since the level when the asset topped $10,000 in 2019, indicating a tilt toward higher prices in the near future, according to Bloomberg. While the 50,000 BTC within futures markets is minimal next to the total supply, the availability of Bitcoin futures and their recent growth is essential in Bitcoin’s path to becoming a mainstream asset class for all investors, Bloomberg reported.

  1. Highest active level of Bitcoin addresses points to price stability around $10,000.

Bloomberg also noted that the recent two-year high of active Bitcoin addresses indicates support for Bitcoin’s price above $10,000. As hash rates and transactions continue to increase, Bitcoin has set a firm foundation around $8,000 with support for the price estimated above $10,000. With this being said, recent trends are significantly supporting price appreciation.

  1. Increasing capitalization of stablecoins indicates trends towards the digitization of currencies and stablecoin market dominance.

Lastly, the rapid increase of investor utilization of stablecoins as hedges for risk against the volatility of the crypto market is provocative for the Bitcoin price. Utilized as risk-hedging and value-transfer assets, investors are utilizing stablecoins pinned to the U.S. dollar or other fiat currencies to maintain the value of their assets without the need for a middleman. Tether is currently the most widely-trusted stablecoin, as its market cap just passed that of Ripple XRP and is on track to pass Ethereum, according to Bloomberg’s market tracker.

Be cognizant of the importance of stablecoins like Tether as they become dominant in the crypto universe. Stablecoins are becoming the most appealing approach for central banks across the world to adopt crypto.

With the Bloomberg’s market analysis being incredibly bullish for Bitcoin’s future, Sarson Funds encourages everyone to educate themselves on cryptocurrencies and blockchain technology. We believe that cryptocurrency and blockchain technology are the future of finance and international business operations, and we are dedicated to continue to spreading the word, educating, and advocating for greater regulation in preparation for impeding universal adoption.

Economic Stimulus Checks Encourage Issuance of Digital Dollar

The Coronavirus pandemic has revealed a need for digital banking in the United States. When tasked with the issuance of economic stimulus checks to U.S. residents, the House Financial Services Committee is considering alternative delivery options to U.S. workers, with a digital dollar delivery system being one highly considered option.

The Task Force on Financial Technology, a branch of the House of Financial Services Committee, held a virtual hearing this Thursday, titled, “Inclusive Banking During a Pandemic: Using FedAccounts and Digital Tools to Improve Delivery.” This hearing examined the potential implementation of FedAccounts, which are digital dollar wallets held by the Federal Reserve containing the digital dollar holdings of any user, according to the Financial Protections and Assistance for America’s Consumers, States, Businesses, and Vulnerable Populations Act.

Pioneered by Chairwoman Maxine Waters, Representative of California, and Congressman Stephen Lynch of Massachusetts, this new effort is enormous for the blockchain and digital currency world as discussions of a digital payment mechanism will open the door for talks of a U.S. central bank digital currency. Although the FedAccounts are meant to be a delivery system for the stimulus checks rather than an actual digital currency, creating a distribution platform for a digital dollar shows the central bank that a digital currency has the potential to make financial processes and transactions significantly easier.

The digital dollar clause was part of the draft of the Coronavirus Aid, Relief, and Economic Stimulus Act, or the CARES Act, but it did not make it into the final version. While the clause did not pass, it gained the attention of other American Congressmembers, as two new bill proposals followed the failed attempt: The Automatic Boost to Communities Act and the Banking for All Act.

With notable Representatives and Congressmembers pushing for the digital dollar in the face of the Coronavirus pandemic, the proposal for an electronic distribution platform greatly provokes the opportunity for a central bank digital currency to arise.

Tether: The Whales Behind the Bitcoin Price Movement of June 1st. 

WEEKLY ANALYST THOUGHTS: 6/4/20

BEHIND THE BITCOIN PRICE MOVEMENT OF JUNE 1ST

Last week was momentous for the crypto world. Driven by Bitcoin’s sudden price jump past $10,400 and the subsequent drop to $9,500, investors were left questioning what happened. While Bitcoin has felt price resistance around the $9,500 range throughout May, the sudden price surge to $10,400 was unexpected and unprecedented for investors, shown by the market’s quick correction back to $9,500. So, how can we make sense of the price action last week?

I believe last week’s price volatility can be credited to manipulation by crypto whales using Tether. For those unfamiliar with crypto whales, they are individuals who hold massive crypto wallets and have the potential to create large price swings for cryptocurrencies by transacting with large amounts of crypto. In the case of Tether’s involvement in Bitcoin’s recent price movements, we must keep in mind that Tether is frequently used as a value-transfer crypto considering it is a stablecoin that effectively maintains the value of investor dollars. I suspect that the whales behind the Tether movement are the major crypto exchange Bitfinex, who are minting their Tether (validating blocks of Tether through its’ Proof-of-Stake network) and sending it over to Binance to pump the price, dump their coins, and reap the profits. Below is a graph of this week’s Tether issuance on Coinmarketcap, which is in accordance with Bitcoin’s price upswing.

Source: https://coinmarketcap.com/currencies/tether/

Tether manipulations like this happen so frequently that they have even been coined the “Bart Simpson Pattern,” shown below.


Source: Crypto Dog (Twitter)

What do we know about Tether? One, Tether is a stablecoin that is not 100% backed by US dollars in the bank. Two, it had an IEO (Initial Exchange Offering) of a utility token on its exchange to help shore up its’ losses in Tether. Three, Tether roughly doubled its market cap from the March lows through minting and staking, giving it the volume it needed to become the current third ranked cryptocurrency on Coinmarketcap.

Readers, please share your opinion: Was this recovery by Bitcoin from $4,000 to $10,000 also influenced by the “money printing” tendencies of the cryptocurrency market, as seen with Tether, in addition to Bitcoin’s halving hype?

Jacob Stelter | Blockchain Analyst

Federal Reserve Green Lights AMERIBOR & Blockchain Technology

Each day, the Intercontinental Exchange (ICE) asks banks and financial institutions worldwide to report on their interest rates for short-term loans to borrowers. With this survey of responses, ICE calculates the average of these interest rates and calculates the London Interbank Offered Rate, Libor for short. Libor acts as the global benchmark for interbank, institutional, and consumer loans, and serves as the benchmark for many other interest rates and financial instruments. As the Libor scandal surfaced in 2012, it became evident that Libor rates could be easily manipulated by reporting false interest rates to boost the global “average” to generate extra profits for financial institutions.

As the world’s largest banks each took part in amplifying this scandal and generating crony profits, the international lending industry was left questioning how to create a trustworthy benchmark for short-term loans. Dr. Richard Sandor, creator of AMERIBOR (American Interbank Offered Rate) and the American Financial Exchange, has found the answer to restoring confidence in an interest rate benchmark: Blockchain Technology.

Originating in 2015, AMERIBOR uses the Ethereum blockchain to record the interest rates on loans between small banks, asset managers, and others on a proof-of-authority platform in order to create a true average of the interest rates used between financial institutions. The proof-of-authority (PoA) network allows transactions to be verified by validators, which are software systems that automatically organize transactions into blocks on the Ethereum blockchain, removing the need for human validation. With the PoA AMERIBOR platform, institutions and borrowers perform their transactions over the American Financial Exchange in order to properly record the transaction and the associated interest rate.

In light of the Fed’s proposal for Libor to be phased out of institutions by 2021, Senator Tom Cotton recently questioned Fed Chairman Jerome Powell about the use of AMERIBOR for institutions who believe the benchmark better reflects their cost of funding, according to a Forbes article by Jason Brett.

Fed Chairman Powell responded to Senator Cotton, saying that:

“Market participants should seek to transition away from LIBOR in the manner that is most appropriate given their specific circumstances… AMERIBOR is a reference rate created by the American Financial Exchange based on a cohesive and well-defined market that meets the International Organization of Securities Commission’s (IOSCO) principles for financial benchmarks. While [AMERIBOR] is a fully appropriate rate for the banks that fund themselves through the American Financial Exchange (AFX) or for other similar institutions for whom AMERIBOR may reflect their cost of funding…”

Brett also covers Dr. Sandor’s sentiment on his implementation of blockchain technology within the American Financial Exchange, highlighting his statement on the matter, “We learned a great deal about this new and exciting technology and believe the blockchain has the potential to transform electronic trading and financial markets. AFX is committed to remain in the forefront of this new technology.”

AFX has certainly distinguished itself as a pioneer for the establishment of American trust in blockchain technology through their implementation of blockchain transaction validation within their exchange and AMERIBOR. In an interview with Barron’s, Sandor also states, “If you want to be on time, you’ve got to be early. You have to be anticipatory. The key is to develop an insight into a problem, to build an institution well before there’s a need.”

Because of Sandor’s foresight for the need of a more trustworthy system, his approach, built for small institutions, lenders and borrowers, has the potential to become the go-to financial exchange and interest rate benchmark for even the largest banks and institutions in the United States and across the world. While the AFX network includes 150 banks, broker-dealers, private equity firms, hedge funds, futures commission merchants and money managers, it trades a daily average of $1 billion USD, more than tripling the daily average from April 2018, according to the same Barron’s article. The increased daily trading average assures Sarson Funds that the AFX and AMERIBOR are certainly on track for widespread adoption.

Powell’s support of the institutional use of AMERIBOR to set a standard for lending rates in America is monumental for future blockchain adoption within the American financial system, and is one step closer to the impending universal adoption of the technology. Sarson Funds commends Brett on his covering of this important milestone for the growing blockchain ecosystem.