defi

Bitcoin Has No Real Use For DeFi In Its Current Form

26/02/2021 by Idelto Editor

The decentralized finance (DeFi) ecosystem continues to attract billions of dollars from cryptocurrency enthusiasts. Though the term “decentralized finance” could certainly apply directly to Bitcoin in and of itself, the growth of the DeFi industry lately refers to an umbrella of projects, mostly based on Ethereum smart contracts, that support cryptocurrency-based lending, prediction markets or other financial services.

While the emphasis on Ethereum may make it seem as if Bitcoin and DeFi don’t mix, some intriguing initiatives to merge the two do exist. However, those services will require some modifications to make them more appealing to those who use Bitcoin.

The State Of DeFi Services For Bitcoin

As the world’s leading cryptocurrency, everyone has to ask themselves if bitcoin can even benefit from newer DeFi applications. More specifically, can Bitcoin benefit from innovations being forged by the DeFi projects that the market seems to currently favor? With options such as yield generated on cryptocurrency lending and borrowing offering some potential, it seems worth exploring. But integrating BTC into these decentralized finance use cases has proven challenging.

Thanks to projects like RSK, DeFiChain and Sovryn, it is now possible for Bitcoin users to access decentralized finance solutions. There’s also Liquid by Blockstream, a sidechain that one can use to obtain L-USDT assets with bitcoin holdings and explore DeFi through services like Hodl Hodl. Through this platform, users are able to lend and borrow cryptocurrency in a non-custodial way: borrowers deposit bitcoin as collateral, which is repaid once the borrowed money is paid back in full.

As innovative or appealing as these services may appear, some still require users to wrap their bitcoin holdings (through “wrapped bitcoin,” users create an ERC-20 token with a one-to-one peg to BTC, with both assets being interchangeable), which many see as an unnecessary extra step. No one cannot deny the extra functionality of an asset like wrapped bitcoin, that does not necessarily mean people are eager to use bitcoin in a DeFi setting. As BTC already has a far more robust price than any other DeFi asset that one can “farm” (or, earn yield on), there doesn’t appear to be an immediate need to explore these options.

Better Incentives Could Help

In the current DeFi landscape, Bitcoin users do not have too many options to explore, unless they want to wrap tokens, convert to other assets or take other risks. This situation is far from ideal. But I’m convinced that there are better methods to explore, such as the liquidity provision on automated market maker (AMM) decentralized exchanges. This provides a way for users to empower themselves by picking a decentralized exchange and liquidity pair from which they aim to earn fees, instead of those fees going to centralized exchange operators. Unfortunately, finding such an exchange that supports bitcoin in its native form is nigh impossible.

In this white paper of SIL Finance, I found an exciting reward structure that might make more sense: Not only would users earn AMM fees from trading in the liquidity pool, but they would also earn native DeFi tokens. This would provide two revenue streams and, all the while, users only have to provide one type of liquidity. Reducing risks and increasing the rewards, as this application potentially could, is one way to get more bitcoin users enthusiastic about decentralized finance.

Although the white paper doesn’t mention any native BTC support, the idea could be implemented on a bitcoin sidechain like RSK, for example.

But Does Bitcoin Even Need DeFi?

As bitcoin makes for a substantial long-term investment on its own, one has to wonder if people are willing to take any risks with their BTC holdings. That said, sitting by idly while waiting for the price to go up will not suit everyone’s tastes either. Empowering users by giving them “investment options” to explore will always prove beneficial to some.

On the other hand, the DeFi industry, in its current form, is still marred by insecurity, trust issues and greed. Most people look for ways to get rich quickly through yield farming, which is an unsustainable approach. I think AMM DEXes have a far better chance of succeeding in the long run, especially compared to services with no apparent use cases. Creating a DeFi token to farm yield without offering any long-term use cases for the asset is a business model that will eventually disappear into obscurity.

There is also the apparent increase in institutional demand for bitcoin exposure to contend with. It has taken a decade to get companies to notice Bitcoin. As this wave is now slowly swelling in momentum, launching DeFi on bitcoin may not be the most opportune. The world’s leading cryptocurrency has gained recognition as an investment and store of value, rather than as play money. The introduction and rampant use of DeFi products for bitcoin could potentially erode that image.

Conclusion

Although I find certain aspects of DeFi fascinating, I remain unconvinced that the Bitcoin ecosystem needs any of these solutions today. Granted, it could be useful to do more with my BTC holdings, but for now, I am more than content to keep the funds in a private wallet and play the long-term game.

Should any AMM DEXes eventually integrate support for bitcoin in its native form, I will gladly check out the options. That is, assuming the smart contracts are appropriately audited, the approach is non-custodial and the earnings justify the effort. If these three conditions can’t be met, there is no need to introduce decentralized finance — as we know it today — to Bitcoin.

This is a guest post by Alex Zha. Opinions expressed are entirely their own and do not necessarily reflect those of BTC Inc or Bitcoin Magazine.

The post Bitcoin Has No Real Use For DeFi In Its Current Form appeared first on Bitcoin Magazine.

Cryptocurrency Adoption Passes Another Milestone Surpassing 100 Million Users

25/02/2021 by Idelto Editor

According to a new study conducted by Crypto.com, the total number of global cryptocurrency users has surpassed 100 million for the first time ever. The study, which measured the cryptocurrency marketplace’s size using onchain metrics, survey analysis, and internal data, recorded 106 million cryptocurrency users in January 2021.

January’s Bitcoin Rally Accumulated a 15.7% Jump in Global Users

Compared to December 2020, the 106 million users represent a 15.7% increase in just one month. What’s fueling the growth of the crypto market? According to Crypto.com’s research, it comes down to bitcoin adoption momentum.

Eric Anziani, Crypto.com COO had this to say to Bitcoin.com regarding the research’s findings:

Our study improves upon previously used methods to find a clear trend of growing cryptocurrency ownership. As more companies and merchants adopt cryptocurrencies as a treasury asset and means of payment, we expect 2021 to be a banner year for crypto mass adoption, bringing us ever closer to our vision of ‘Cryptocurrency in Every Wallet’.

Bitcoin smashed through its previous all-time high, pushing its market capitalization past $1 trillion. The growth shows no apparent signs of slowing down either as sentiment around cryptocurrency increases, especially as JP Morgan and BNY Mellon will start offering digital payment methods. Not even two full months into the year yet, investors are piling 10-digit figures into bitcoin. Tesla bought $1.5 billion of bitcoin at the beginning of February, and investment website Motley Fool announced a $5 million investment just a week later.

Bitcoin isn’t the only thing that’s fueling the demand for cryptocurrency. Several other factors are at play too. Crypto.com’s research attributes this rapid ascent to the growth of the decentralized finance (defi) market, the ability to buy, sell, and hold cryptocurrency through Paypal, and the institutional adoption of cryptocurrency are attracting new crypto users every day.

Defi Momentum is Growing

The defi market’s momentum is significant given the increased demand for ethereum and other altcoins like Binance’s BNB. The total market capitalization of coins locked in defi has grown from $690 million to over $11.7 billion, a significant number that’s encouraging new investors to enter the market.

According to Crypto.com’s research, ETH’s growth rate was higher than BTC in November and December 2020; BTC’s unique users grew by 1.5% in November compared to ETH’s 2.8% growth. In December, ETH’s change was nearly double that of BTC’s: 2.8% compared to 1.2%.

How accurate are all of these numbers? A total number of 24 exchanges were included in the research, and while Crypto.com has updated and improved its methodology since its last report, it does admit these figures may be subject to some small caveats.

How long do you think it will now take to reach 200 million users? Let us know in the comments section below.

Jigstack DAO Acquires Icorating.com Platform to Strengthen Its Token Launch Pad Lemonade

24/02/2021 by Idelto Editor

A decentralized finance (defi) protocol announced that it officially acquired an initial coin offering (ICO) listing platform. Jigstack, who bought icorating.com, will migrate all the platform’s assets to its Lemonade’s solution.

Jigstack’ Direct Email Database on Icorating.com

According to the announcement, the defi protocol, which acts as a decentralized autonomous organization (DAO), bought the website to boost its multi-chain token launch solution Lemonade.

Robert Weir, Jigstack’s COO, told news.Bitcoin.com that icorating.com acquisition is a “commercial trifecta for Lemonade” as they own “commercially relevant data, a database of over 30,000 active crypto investors.” In fact, they seek to boost exposure for projects launching through Lemonade.

In Lemonade, anyone can create a token sale in a matter of minutes, including adjusting the token lock sequences, vesting periods, and overall token distribution logistics, added Weir.

For projects launching on Lemonade, Jigstack COO commented:

They now have instant exposure to over 30,000 investors on Twitter and our direct email database and user traffic on the Icorating website.

Partnership With Ethereum Startup Polygon

Per the fees offered in the launchpad following the integration, the company says that it requires a flat 1% fee of the tokens, a 0.5% marketing bounty, and a 1% share of the tokens for the network vault.

Weir further added:

For the Lemonade platform, we just acquired one of the most comprehensive data sets in the crypto space. Specifically relevant for crypto-based fundraising and the investment space. Icorating.com has been operating as one of the biggest players in the crypto fundraising space since 2016. For investors, we’ve now significantly boosted our digital footprint and overnight injected tens of thousands of new investors into the Lemonade and Jigstack network.

Recently, Jigstack partnered with Polygon — formerly Matic Network — by seeking to reduce gas fees and improve the Ethereum defi ecosystem’s performance.

What do you think about the announcement made by Jigstack DAO? Let us know in the comments section below.

Binance Blamed for Purposely Choking Ethereum’s Network

22/02/2021 by Idelto Editor

The recent ramp higher in cryptocurrency prices has assuredly attracted its fair share of cheerleaders and detractors alike, but the reality of this climb has been a concurrent increase in network fees from rising transaction volumes.

Binance is Blamed for Purposely Choking Ethereum’s Network to Drive More Users to Its Own Platform

The resulting volumes have clogged networks like Ethereum, which have seen gas costs climb almost 20x over the last 12 months. For the growing DeFi market, these sky-high costs have elicited significant criticism from the community and mobilized the ecosystem to hunt for more affordable options. Enter Binance, which may dethrone Ethereum as the new DeFi hotspot due to its interoperability and lower transaction costs.

Binance Smart Chain (BSC), which works on a Proof of Authority (POA) model, is centralized (Binance picks the authorities that run each node) relative to Ethereum’s entirely decentralized approach. This has prompted some users to criticize the approach, believing that Binance is abusing its clout and market power to intentionally clog the Ethereum network. However, this sharp critique misses the bigger picture.

A quick look at wallet and gas data highlights that Binance is the largest single gas spender. For instance, the image above tweeted by Nansen AI highlights from February 12th to the 18th, Binance spent the equivalent of nearly 5,000 ETH in gas alone. Although many users are quick to criticize publicized data of Asian exchanges which are known for inflating trading volume, this data can be corroborated by Etherscan data.

The data demonstrate that both in terms of gas spent and transaction volume over the last seven days, wallets attributed to Binance accounted for six out of 10 of the most active wallets in the entire Ethereum ecosystem. While it could be inferred that Binance’s volume is propelling Ether costs upward and doing so intentionally to attract more volume to its smart chain, this argument misses out on the blockchain interoperability that Binance has promoted. Moreover, Binance hasn’t shut off the taps to Ethereum, making the argument of it clogging the network somewhat moot.

Binance Pancakeswap Has Overtaken Uniswap

The costs of switching from Ethereum to Binance are very low, especially for smart contracts and Dapps. By improving the interoperability and reducing switching costs along with rebating developers who bring valuable projects online, Binance has built itself up as a formidable destination for all manner of activities.

Given the volumes of DeFi, any reduction in network fees and costs is likely to attract greater adoption. By filling this void quicker than competitors or more established chains, Binance is now home to PancakeSwap, which has overtaken Uniswap (based on Ethereum) in terms of volume.

Because the barriers of switching from Uniswap to PancakeSwap (which is effectively a copy of Uniswap on BSC), are fairly low, it’s no wonder why DeFi users have made the jump. Moreover, it has caused a sharp incline in Binance Coin’s (BNB) valuation, making transactions also more expensive on its own native chain.

Yet, unlike Ethereum, by building a more cost-effective ecosystem that rewards smart contract developers, Binance is actually incentivizing development and smart contract use, and not necessarily using its market power to clog other competing networks.

FTX Quick to Criticize

Still, that hasn’t been enough to silence critics like FTX, which blame Binance for the default chains where it sends transactions. In a recent tweet critique, cryptocurrency derivatives exchange FTX was quick to pile onto Binance’s withdrawal process which effectively defaults to promoting its own chains and creates a conflict due to the fees it reaps in return.

As a result, it has cost FTX dearly due to coins being sent to the wrong chains. Accordingly, the service has decided to pass along the extra costs to users in the form of a 5% deposit surcharge for tokens sent to the wrong chain. However, in large this argument speaks more towards user mistakes than Binance’s default settings.

While the Binance universe is undoubtedly growing, and exchange volumes speak credible truth to this reality, the self-promotion of its own tools will continue to spark the same sort of denunciations that marked the decentralized versus centralized exchange debate. Ultimately though, utility speaks the loudest.

What do you think – is Binance purposely choking the Ethereum network to gain more users? Let us know in the comments section below.

CyberFi – An Intelligent Trading and Automation Platform for DeFi

22/02/2021 by Idelto Editor

While the decentralized finance (DeFi) space is not new, it has experienced massive growth to surpass $37 billion. Consequently, the sector attracted a lot of attention, which, in turn, led to the unearthing of multiple deficiencies that the industry has. As a result, many projects have been continuously cropping up to address these issues. While the projects are working at a record pace to tackle these challenges, the industry still has a lot of upgrading to do.

Enhance the DeFi Experience

Chipping in to help solve one of DeFi’s insufficiencies is CyberFi, a startup that seeks to offer intelligent trading and enhanced automation to make DeFi user-friendly. The project is a new-gen intelligent trading and automation platform (ITAP). It is described as a multi-product ecosystem that comprises automation products, seeking to enhance the DeFi experience.

CyberFi is the first platform of its kind that aims to fill a gap in DeFi trading by addressing a variety of issues, including high fees, specific onboarding barriers, divergence, and poor user experiences.

It works by combining a decentralized trading platform, an intelligent automation system for complex DeFi strategies, and a cross-chain layer for supporting DeFi automation. By blending these features, the platform eliminates manual processes in DeFi applications, which lead to gas wars, overpaying fees, stress and frustration, and the constant need to be on Uniswap.

Benefits of Using CyberFi

By using CyberFi, traders will get the functionality of centralized exchanges on decentralized exchanges (DEXes) and liquidity pools. For instance, the platform offers automatic order execution based on price divergence indicators (PDI) and best trade value (BTV). While trading on liquidity pool-based DEXes demands manual interaction for a trader to enter or exit a position, CyberFi’s price divergence indicators, which are available through oracles, allow traders to leverage automatic order execution.

This functionality is currently available on Uniswap, and it has a refresh rate of 40 to 60 seconds. However, CyberFi is working on an upgrade that will process live price feeds with a 10 to 30-second latency from multiple exchanges. This iteration will use a BTV concept, which automatically finds the best prices and smallest fees available. In doing so, the system provides traders with a stress-free experience by minimizing the manual processes they need to complete to trade on DEXes.

CyberFi also leverages PDI Change Speed (PDICS) to offer traders risk mitigation tools for volatile assets. This functionality enables traders to set trade limits based on price or percentage losses against time for specific tokens. Additionally, the platform works with the community and renowned DeFi players to improve the data analytics models that are currently available.

CFI Token

The CyberFi ecosystem has a native token dubbed CFI Token. It is mainly used to cover trading fees on the platform. CFI also offers lower commission and access to unique products. Additionally, CyberFi users can use CFI to pay for multi-chain operations. CyberFi will not claim the CFI fees for itself. Instead, the firm will redistribute 80% of the funds to the community to secure liquidity, increasing the token’s value. The remaining 20% serves as a revenue source for the ecosystem.

CFI has a total supply of 2.4 million coins. Breaking down how it will distribute the coins, CyberFi noted that it would use 800,000 CFI for the Alpha and Cyber rounds, where it would unlock 20% of this value in the first week and then unlock 10% of the remaining amount weekly. The project would then offer strategic partners 500,000 CFI with a six-month vesting period. 300,000 CFI would then go toward development. Another 300,000 would go toward community and marketing growth. Out of the remaining 500,000 CFI, the project would dedicate 250,000 CFI to fund the liquidity team, 200,000 CFI for LP and staking rewards, and 50,000 CFI for its transaction mining program.

Strategic Partnerships

To help better its platform, CyberFi has joined efforts with leading players in the crypto and DeFi spaces. Notable investment-side partnerships include a tie-up with the Ferrum Network, which seeks to develop a DeFi ecosystem that interoperates across chains to eliminate barriers to mass adoption. This deal involved the creation of a solution that would offer automatic staking and offer enhanced earning opportunities for users.

On the infrastructure side, CyberFi partnered with DEXTools to bring accurate low-latency Uniswap data to the CyberFi platform. It’s a partnership that will help users make the most out of CyberFi’s automation through up-to-the-minute trading data to inform automated investment strategies. And to help accommodate the trading volume that those automated trades are likely to drive, CyberFi has begun integrating the Matic Network into its platform. That will bring cheaper, more efficient layer 2 transaction functionality, lowering costs and increasing efficiency.

CyberFi also announced that it had integrated Chainlink’s oracle services, giving platform users access to their industry-best price feeds. Having that in place, CyberFi’s users can be certain that they’re making decisions based on fair market values that are resistant to external manipulation. And because Chainlink brings unassailable reliability and security, there will never be a risk of CyberFi’s users losing access to that data or having cause to question its veracity.

A Public Beta Launch

The development of the CyberFi platform has so far exceeded the expectations of both its creators and its early users. Things have come so far so fast that the platform announced the opening of a public beta on January 27th. The public beta includes the wide availability of automation for liquidity pool management and limit order management.

The beta for the liquidity pool automation currently includes four types of smart orders. Using the system, users can create triggers to control adding and removing liquidity, as well as to auto-sell specific liquidity pool assets and exit mining programs. This provides users with maximum flexibility to control their liquidity pool participation without having to babysit their holdings.

And as far as limit order automation, the beta includes functionality to handle standard limit orders as well as cross limit orders. But both features make use of single-TX order flows that save on gas fees and prevent front-run investment attacks. CyberFi accomplished this through innovative use of off-chain transaction storage – pre-authorizing transactions and storing them privately until a triggered execution event.

All in all, it’s an exciting time to be involved with CyberFi. And as industry partners continue to come on board and the platform continues to develop apace, things will only get better from here. It’s the birth of a whole new era in DeFi – where users have ultimate control, flexibility, and ease-of-use, all at their fingertips.

This is a sponsored post. Learn how to reach our audience here. Read disclaimer below.