Bitcoin Cash: Upcoming Fork Decides on Means of Developer Funding

Bitcoin Cash Fork Decided On Opinions About Developer Funding

Bitcoin Cash Fork Decided On Opinions About Developer FundingWeekly Analyst Thoughts 

On November 15th, Bitcoin Cash (BCH) will undergo a contentious hard fork where two competing parties will split from each other and go their separate ways. One party, Bitcoin ABC, believes in taking 8% of the coinbase reward—the mining reward for when a miner finds a new block—to fund developers and other blockchain projects. The other party consists of a group of five nodes (Bitcoin Unlimited, BCHN, etc.) who reject the Bitcoin ABC party’s proposal to take hard earned rewards away from miners and distribute them to developers. This party believes that the best way to fund developers is through voluntary funding mechanisms like Flipstarter, which has been extremely successful funding development teams, charity projects, and non-fungible tokens.

The upcoming Bitcoin Cash hard fork will not have replay protection, so users must be vigilant when splitting coins and claiming their fork. The lack of replay protection on cryptocurrency hard forks is problematic because if a transaction occurs on the Bitcoin Cash A chain,  it is possible for the transaction to be replayed, or duplicated, on the Bitcoin Cash B chain due to how similar the blockchains are. Replay risk exposes users to the risk of double-counting transactions.

In summary, the November 15th Bitcoin Cash fork splits the chain into two functions: one to fund developers and other projects with an 8% distribution of the coinbase mining reward, and another where developer funding comes from Bitcoin Cash community members.

By Jacob Stelter

Harvest Finance Hacked: Flash Loans and How to Mitigate Risk of Loss

Harvest Hacked and how to protect against losses

Weekly Analyst Thoughts

This past weekend, Harvest Finance, a Defi yield farming protocol, was hacked using a Defi transaction mechanism called a flash loan. A flash loan is a specific type of transaction where the borrower must repay the loan in the same blockchain transaction. If the borrower does not repay the full loan (principal + interest), the transaction reverts, so as to seem like the flash loan never happened. Like Harvest, Aave also supports flash loan transactions and credits much of its meteoric 2020 price rise to this feature.

The Harvest Finance attack was executed through the Curve Finance Y pool with a flash loan. As seen below, Harvest’s near $3 billion in volume and over 170% APY raised concerns that there was irregular activity in the Curve Finance pool.

Source: Curve.fi

The takeaway from this clever arbitrage on Harvest Finance is that even if a yield farming protocol has multiple layers of audits (as Harvest did), it can still be vulnerable to attacks. So, don’t let the fact that a protocol is audited give a false sense of security when investing in Defi yield farming protocols. Instead, it is safer to diversify risk by investing with several reputable yield farming platforms (Ex: Uniswap, Balancer) to mitigate the risk of lost funds through sophisticated flash loan attacks.

By Jacob Stelter

Yield Farming With Yam Sees APY Returns Above 300%

Weekly Analyst Thoughts

YAM

Last week was an exciting week in Defi. A new crypto token, Yam Coin, was launched that gives yield farmers APY returns above 300%. The platform allows seven cryptocurrencies to be farmed, and each experienced price rises last week. These tokens are: LEND, LINK, SNX, WETH, MKR, COMP and YFI.  Below, see examples of different yield farming pools that investors can join.

The Yam platform puts a fun spin on liquidity pools with names like Aave Agriculture, Maker Range, and Compounding Hills. Yam coin has an interesting feature similar to Ampleforth called a rebase, which is a new iteration of stablecoins. Yam is not pegged to a value like the US dollar (Ex: USDC), but instead has a target value of $1 and reaches that target value through rebases, which either expand or contract the Yam supply in order to keep its price at its target value. For example, if Yam trades above $1 during a rebase, the Yam Coin supply expands in order to bring Yam back down to its target value of $1. Unfortunately, Yam Coin recently suffered a rebase bug that bricked the project temporarily, but with community funding and a proper audit, Yam 2.0 should be just as exciting as Yam 1.0.

By Jacob Stelter