CoinGecko Quaterly Report 🐸

A cool Quarterly report, focusing on DeFi: derivatives, liquidity, dApps, and so on. If you actually wondered what usage is happening around if any - it would very useful to have a look: https://assets.coingecko.com/reports/2019-Q3-Report/CoinGecko-2019-Q3-Report.pdf

​​Mom, what happens to my mining rewards when Bitcoin block rewards go to ≈0 🤔

If you don't want to read my rant, just click the click and read the awesome paper.

Well, son, the 21M Bitcoin might have been a meme. Do you recall all the tweets about:

- Never ever will more than 21M Bitcoin exist
- No inflation, fixed supply, no money printing by evil banks

It's all fancy-schmancy before you actually think about how it works...

As a miner, you are not running a node as a charity. You spend energy if you stake you have a different equation here, but we don't really need this difference here now. Anyway, you need to have an income to cover your expenditure for doing work. It's either you tax users by charging transaction fees or get paid by the protocol for doing work for it. The former takes a part of what a user owns and the latter is what is called block rewards: inflation but at a verifiable and pre-agreed way, so people are okay with it.

As a comparison, USD inflation is not okay because it's unproven, random, and is not reached by the consensus of the network and its participants.

Issue with Bitcoin 🤕 That block subsidy, which currently makes up 99% of the total block reward, is being phased out according to Bitcoin’s fixed emission schedule. In 2020, Bitcoin’s annual issuance will fall to 1.8%. By 2028 it has halved twice more to 0.5%. As a result, the most important source of miner revenue, the block subsidy, will have to be replaced by an entirely new source of revenue.

Basically, where will miners be getting rewards for their work? The incentive model is why this entire thing functions!

What is the solution to this not-such-a-hypothetical problem?

1] increase max supply, but then one of the USPs of Bitcoin gets eliminated
2] improve blockspace
3] DAO-style to subsidize security via off-chain mechanism for donations
4] adapting the supply of blockspace
5] decreasing miner-extractable value
6] improving miner punishment

Narratives are a strong tool to make people do what you want - but they can also bite you back.

There is a reason why the financial system is the way it is now. It's not perfect, but it's not that way just because of evil old grandpas. Printing more money to grow the economy NOW and have your life become better is a choice people make because, mainly, due to their lifespan. Many don't care what happens with the economics in 200 years, but care what happens now. It's always an investment, with everything you do in life, because every valuable resource is scarce. that's why, in the first place. A cool topic over beers 🍻

Which side of the "solution" for this problem do you see as the best fit?

MakerDAO & DeFi: early ETH supporters eating their own dog food? Who are the users? 🦄

- The Top 10 CDP addresses account for 40.6% of the total DAI Supply
- The Top 100 CDP addresses account for 78.6% of the total DAI Supply
- As for the Top 10 addresses, 1 was an early ETH ICO project (Request Network), and 3 were ETH ICO participants (parent accounts are Genesis Block participants)
- Top 3 CDP address participated in theDAO ICO. Their risk tolerance are very high.

https://medium.com/ddex/who-are-top-10-makerdao-cdp-users-c6ed1f13304e

PS: well this makes sense as Sai [Single Collateral Dai] was enable for ETH only, so it makes sense only that community was active there.

🦐 vs 🌊 | ETH vs EVM

Is it the seafood or the sea that you like?

When you go fishing, is it the water that you like, the fresh fish that you get, or the overall experience - that entices you? What exactly is there that is "sticky" about the idea of fishing? I hope you are not a pervert and did not immediately think of network effects - but if you did, welcome to the club, daddy, because you are right. If you need some context or education, see some stuff from a16z - https://a16z.com/2018/12/13/network-effects-dynamics-in-practice/

Sidenotes 👾 When you look into social networks or cryptocurrencies, network effects are your main catch. "Put simply, it is a phenomenon in which a good or service gains additional value as more consumers use it." - Uber, AirBnb, Facebook, etc. If you would apply it to BTC: the more people hold it, the stronger the Store of Value SoV narrative becomes. But what about other digital assets? Take any payment currency as an example. If the exchange between currencies and people has frictions, then it's easier if we all use one currency, like we all use USD for payments. But what if there were no frictions, then you would not have that value capture there. Because person no1 and no100 using it would have the same easy onboarding, offboarding, and so on. So you likely want to have friction if you expect value appreciation and stickiness. ?

Now to the actual topic. What is sticky about ETH?

It's not the open-source code of the chain. As we have seen, many projects have attempted to fork the code of Layer 1, but none are able to get the same exposure and community as Ethereum. So it's not about code or speed here really. Surely, some make their own chains, but that is usually for the sake of fundraising. So this is not the sticky flavour we are looking for. Community 👥 is the answer. Thousands of developers, contributors, evangelists, and other people around Ethereum.

But the question is, what exactly keeps this community together?

🎰 ETH = Bagholding Ethereums. Are they all bagholders, so they are working on value capture of Ethereum by building applications? In that case, it would make sense that the more people hold ETH and the more stick around & contribute - the more Ethereum appreciates. That's how incentives would work, so seems reasonable.

👾 EVM Is it actually the friendly tools developers use? In that case, one would see the applications become less L1-focused, and the community would evolve around EVM as a code-engine source, and not the financial bagholding spirit of ETH. But then the value capture would actually be at the application layer and not the layer 1 fat protocol thesis.

Why does this matter? This comes back to the question of value capture. Do developers really care about the growing ETH price, outside of security concerns. I personally feel like this is not the case anymore. In that case, the community will keep forming around the EVM as a concept, without any strong emphasis on ETH as an asset.

PS: there will soon be changes in the channel, for better or for worse!

Sai to Dai: why migrate?

Sai to Dai migration has been ongoing for a few days, but the majority of Dai holders don't seem to be in a rush. And why would they? Sai lending rate is still around 6️⃣% on Compound. Economic incentives for existing holders are currently against migration.

You can try to arbitrage with 1inch exchange and then swapping 1:1 in the official app, or just educate yourself on these cool shenanigans 👨‍🎤 Anyway, this is an important step for the ecosystem -> blog.makerdao.com/what-to-expect-with-the-launch-of-multi-collateral-dai/

By the way, InstaDapp made some cool things to help migrate big CDPs: medium.com/instadapp/mcd-migration-70782c9e6730

Blockchain 4.0 CEO: "We launched our mainnet! It's the most resilient blockchain you've ever seen! 1 million TPS! Test it out!"

Me: Let me try sending a transaction...

Blockchain 4.0 refuses to work like intended.

Blockchain 4.0 CEO: "Oh, at least it didn't go through 🤷‍♂️"

See the new Tesla CyberTruck: youtu.be/DPQP68aGiqo?t=23

​​Synthetic Wealth? SNX 🏎 or 🍜

Synthetix aka Havven - a successful pivot into the product-market fit or just a narrative PnD.

Who is that SNX beast sitting at 200 million on CMC and almost 100x from the bottom? From 2M to 200M, damn! It's rebranded Havven which raised 30M at the beginning of 2018. Coming from a stablecoin market - the company made a pivot which resulted in booming growth in 2019. So what do they do?

Synthethic assets. You can lock up the collateral and issue a synthetic asset. You won't be able to issue a CyberTruck on-chain, but you can get exposure to Tesla stock without owning it. This includes iXTZ, iETH, iBTC, and so on. After all, you are doing it as a money-making game, not to actually have ownership of it. You can read more here: https://docs.ethhub.io/built-on-ethereum/open-finance/synthetix/. It's like MakerDao: you lock up ETH and now other assets with the arrival of MCD and issue Dai.

Lobster, are you shilling us a shitcoin? Ha! First of all, clap to founders for taking a better turn - if you measure success in USD and CMC, then you can say they did it / are doing it. However, Bitconnect was also going up. And it wouldn't be Blockchain Lobsters if there was not some unconventional scrutiny and fucking. Let's dive it.

1. Only SNX as collateral 🤢

The choice of collateral is very important, because you need something very liquid, moderately stable, and widely accepted. Now imagine I were to go back in time and as a bank issue dollars not by backing it with gold something that is widely trusted with no exceptions - but with the apples in my garden. A pretty messed up thing to do, right? Well, if you own the market, you can dictate what is worthy and what is not. In this market, only SNX can be used as collateral. And why is it bad?

PS update: this issue was brought up by XNS community, some ideas can be found here: https://github.com/Synthetixio/synthetix/issues/232

2. 750% collateralization ratio & no liquidation 😨

Imagine you want to issue Dai 1:1 USD and lock up ETH. If ETH goes down, you get liquidated and that ETH is used to support Dai price 1:1 USD. Now take a low liquidity coin and try to use it as collateral - you end up with moonlambo as you see on the charts. But it should be the other way around as well then? Well, no. SNX does not yet have liquidation. Meaning the system can be very much under-collateralized if the token goes down.

So how do they try to solve the incentives? You get to mint rewards if f you maintain more than 750% collateralization ratio. Holders are incentivized to mint more sUSD or other assets just to stay above 750% or buy up more. And if they are under 750%... they just can't touch their collateral. Or they just go leverage by buying more SNX. Have to say, the sUSD / ETH Uniswap pool is quite nice though 1200 real ETH, and if you bought SNX lower'ish, you would have made a fuuuuuuc load of money. Just on that synthetic side.

3. SNX Inflation goes from March 2019 but locked till March 2020 📉

Ye, to prevent dumping, they lock up the rewards this way - but let them be used to mint synthetic assets. And after all, I am not even talking about the oracle problem.

--------

They are trying to give SNX intrinsic value ok boomer when it does not have one - but as we have seen with bigcaps, which have even less value if the meme goes on - SNX will become one and could get that muh intrinsic value. Apart from LINK-XRP identical shilling armies across discord, twitter, and telegram - the approach was novel and quite cool. Now I would use UMA for synthetic assets instead - more trustless and actual collateral the market can trust.

Congrats to those who enjoyed the ride up! Don't intend this as FUD, but a few things looked suspicious to me.

Pantera ICO Fund REKT 💩

Here is the public disclosure by Michael Novogratz' Galaxy Digital VC. As you see, most of the liquid holdings are ICO funds and those are rekt. Also, Pantera ICO Fund is closing.

My prediction is that the equity bets on smaller players, like most of the recent SF VC deals, will be 100% annihilated into shitter. Expecting any revenue or actual usable products is not realistic.

The only way out for them is to dump on bigger funds in the next round who simply HAVE to deploy capital somewhere, so they will agree.

Another day, another pleb.

Ⓜ️atic Network - success breeds success

The right mix of the community, narrative, and price. Somewhat of a social media business case study.

A shoutout to the relentless work! There are very few projects I like in the space, and it's always either because the tech seemed very innovative, the community was vibrant, the team seemed very strongly opinionated... In the case of Matic, it's more of a mixture of different pieces. Whether you like Plasma, sidechains, L2, and so on - is not even particularly relevant here. Surely, they have that, but to me personally, I see something else they have mastered that very few could. Let's go directly into those.

1️⃣ Marrying the narrative with the price

Considering the previously negative connotation of being an Indian project, many have called them a scam, despite the team building such cool things as Wallet Connect. It was a tough narrative to reverse, however, they managed to do more. Being a Binance Launchpad project, that gave them some boost, but it wasn't easy [see 3]. If whitepapers are deemed useless, partnerships are seen as vague, technology is early - what tools do you have left? How do you make the narrative work for you?

Price. These guys managed to keep building and promoting it in such a way, where their success led to more success. From an Indian shady project, they grew to the best launchpad performer, to becoming a very known Ethereum ecosystem player, to now leading to the The tech hub of India narrative. They mastered the price and liquidity where their work has been amplified, and is now becoming a living organism by itself. That's what any social media - community strategy should be these days.

2️⃣ Staying lean and community-oriented

Many people, once raising, forget about their previous friends. Honestly, not a hater of Nym per se, but those US projects really get cocky as hell [not budy - cocky] once they get some cash. It;s the trend I only see among them. On the other hand, Matic guys stayed lean, always communicating with the community, tons of AMAs, responding to everyone, being active on media - and not hiding behind secretaries and some full-suited meetings. When people feel the affiliation, they get stuck with your brand, and they become more active.

3️⃣ The importance of feedback and community

Sure, B Launchpad helped them grow and helped get that kickstart, but they have achieved much more than other peers from that cohort. A launching platform is just a boost, it doesn't define everything. In fact, at the very beginning, it was hard for them to get the community love because normal people couldn't really get a part of Matic in ICO as they have been used to. And when it doesn't happen [that people have economic incentives] they don't pay attention - and who are we to blame them, there are hundreds of other coins.

Following up on No1 comment, they have helped bring exposure to Marlin Protocol, Cere Network, and other aspiring projects showing hopes - cementing their position as a leader.

PS: not a paid post duh. Why not use the opportunity to clap to the cool dudes working all the time, it's inspiring! Battle Racers & CryptoKitties, Chain Guardians, Blockade Games, Axie Infinity, and so on - I like the spirit. Price-wise further, idk, they are TOP-damn-50 CMC. Also, I am still rekt as I always have sold the bottom, fml.

Are you rekt? Yes. Me too! Here is some hopium from @crypto_eli5 - use this video as an answer when your family members ask you how that Bitcoin thing is going 👾

Petition against soy boys

Do you have a friend who hasn't bought the dip? Now you know why: he is a soy boy! Get him some beer and make him leverage trade at x125.

What do we say to bear market?
- NO SOY 🌾

What has 2019 brought us - and what are the predictions for 2020? Check the twitter thread by nlw on the most popular pieces of this year 👉 https://twitter.com/nlw/status/1208748177349890048

A lot of the claims are easily seen as pumping bags. VCs claim there is infrastructure building ongoing with new protocols - which is clearly not the case. Lawyers think there is some regulation being passed through, Bitcoiners want anarchy, others see currency wars, and so on.

Quite frankly, almost no correlation with ideas, because everyone has different financial stakes in the game. But it's interesting to recap what some of them say, enjoy the scroll!

Wanted to make some engaging opinionated content, so here is an attempt on some of the things which could spike discussions.

I hope you find some of these interesting. Have a happy and successful 2020 🎄

https://medium.com/@ivangbi/controversial-crypto-statements-opinions-end-of-2019-edition-331e01da3044

​​The syndrome of Arthur can now also get you on-chain 😥

Yesyes, the BitMex Arthur. Liquidating plebs on low depth is what he does as a job and as a hobby. And now it's available in DeFi! Well, it has always been...

Fulcrum has lost a portion of its ETH today following the attack... or as some speculate, actually just a very smart trade which abused the functionalities of the tools people have actually built. That's the risk you indulge in when all the systems so openly inter-operate. A house of cards, quite literally 🃏 Time and tests will fix it, but be careful for now!

By relying on an on-chain decentralized price oracle without validating the rates returned, DDEX and bZx were susceptible to atomic price manipulation. This would have resulted in the loss of liquid ETH in the ETH/DAI market for DDEX, and loss of all liquid funds in bZx. Fortunately, no funds were actually lost. - was actually said before, but it looks like something went through after all. Here is the article from September 2019: https://samczsun.com/taking-undercollateralized-loans-for-fun-and-for-profit/

Curve said: On a serious note, using Uniswap as a price oracle currently, especially if done in a single transaction rather than time averaged, is very dangerous. And also speculating that maybe it was beneficial for some systems, check this tweet: https://twitter.com/CurveFinance/status/1228663789312184320

Cool people, cool communities, cool tools 🤜

Let's use this moment to not just be sad or warn about risks, but also clap to the builders of the ecosystem who are doing cool stuff. There are so many new things and tools that I actually am not sure I can follow them all at this point. So if I missed any - actually please come educate us in the @lobsters_chat 🦀

1. iEarn Finance 🐾 So many lending platforms and APR generating protocols, how do I choose between them? Our beloved nocoder Andre Cronje built an aggregator. You just connect to that, and the contracts decide and rebalance into different protocols. He is actively adding new stuff, inspiring to see! See iearn.finance

2. Frontier Wallet 🌀 The amazing Palash and Ravindra (ex-InstaDapp) built a very cool and unique feature with their new DeFi wallet TxLink Wallet Composability on Mobile as they called the article. Really improves the UX and lets you more easily surf around web3. Read more: https://bit.ly/38uAmLR

3. Curve Finance ➕ Stablecoin on-chain marketmaker Creating deep on-chain liquidity using advanced bonding curves. it's something so mathematically beautiful, and is built by Michael Egorov, CTO of NuCypher, who many community members adore. What a champ too! See: https://compound.curve.fi/faq.html

Super looking forward to ETHDenver submissions and results! Heard of a project doing an exciting experiment there with the networking layer, xDai and Austin taking wallet experience further, Splunk offering more dev-stats in a cool manner, a few new DeFi tools, and more. Will be sharing that later too. Cheers!

Second “attack” 🍿 this time for about $640K in ETH. Here is the explanation: https://news.1rj.ru/str/lobsters_chat/26020

Not confirmed it’s the same person, but it’s unlikely that there could be 2 people exploiting the system with such deep knowledge. What a champ!

Dissolving a Crypto Project

So far projects had only “exit scammed” in crypto - but what else can you do? Money is out, so you just let the open-source stuff out there and fade out, not much of a choice. Well, some projects are trying to do it differently.

DigixDAO and now Contents Protocol, actually distribute the remaining assets to their “token shareholders” as to say. Check out the latest tweet: https://twitter.com/doveywan/status/1230000803496091648

Since the assets have been trading, one cannot just return money to private or crowd sale participants, as those changed hands many times [we’ll see what SEC has to say on secondary markets in situations like this]. So they split out the holdings among token holders.

To make sure we don’t have pink glasses on, there is just one worry with this: who are the actual token holders? What if the team owns most of the supply basically just nicely-legally distributing ETH into their hands this way? What if this way they are trying to liquidate more tokens and then buyback lower at the distribution?

Multiple scenarios here are possible. i am not saying this to minimize the efforts of the projects, but this is always a good question to keep in mind. What do you think? 🍿