August 29, 2022       /       Unchained Daily       /       Laura Shin

Daily Bits✍️✍️✍️

  • Cloud service provider Hetzner, which hosts 10% of Ethereum nodes, said this violates its terms of service.
  • Three Arrows Capital founder Su Zhu accused the liquidators of misleading the Singapore High Court.
  • Coinbase will evaluate listing an Ethereum proof of work token after the Merge.
  • The Senate Agriculture Committee prepares a hearing for a bill that would affect crypto.
  • Grayscale says that due to queries from the SEC, crypto tokens XLM, ZEC and ZEN may be securities.
  • Ashish Singhal, CEO of CoinSwitch, states that the company is “fully cooperating” with Indian authorities, who have searched its offices.
  • The wife of Alexey Pertsev, the arrested Tornado Cash developer, denied links with Russian espionage services.
  • Algorithmic stablecoin USDN lost its dollar peg during the weekend but later recovered.
  • The Monetary Authority of Singapore (MAS) requested crypto companies to disclose business data.
  • Voyager extended the deadline for its bidding and restructuring processes.
  • Cardano’s next hard fork Vasil could happen in September.
  • Thirteen people were arrested following a crypto ban in Afghanistan.

Today in Crypto Adoption…

  • Two lobby groups in Japan are pushing authorities to review the crypto tax framework to encourage startups to remain in the country.
  • Solana’s BarrelDAO is selling a limited edition beer through NFTs.

The $$$ Corner…

  • Animoca Brands’ Japan unit raised $45 million at a $500 million valuation.
  • BITLEVEX, a digital asset investment platform, secured a $50 million investment facility.
  • Blockchain explorer SolanaFM closed a $4.5 million funding round.

What Do You Meme?


What’s Poppin’?

Why DAI Could Lose the Peg to the Dollar

by Juan Aranovich

 

Rune Christensen, the cofounder of MakerDAO, proposed that DAI begin to free float away from the US dollar.

Maker is the protocol behind the stablecoin DAI. The way it works is that users deposit collateral and can mint DAI as a loan. The protocol uses different mechanisms to track the value of the collateral, and if that value falls below the required minimum level (called the liquidation ratio), the user gets liquidated.

There is currently $6.9 billion DAI in circulation. The stablecoin is backed by a diversified portfolio of assets, including BTC, ETH, and also other real-world assets (RWA). However, it’s mostly backed by USDC, which currently accounts for approximately 50% of the vaults.

Following the sanctions on Tornado Cash, Circle (the issuer of stablecoin USDC) decided to freeze $75,000 worth of funds in the banned addresses. This raised a lot of concerns in the crypto community, and Christensen saw it as a warning to prepare for a similar scenario happening within Maker.

“Tornado Cash had extremely little exposure to RWA and is highly decentralized, but that didn’t stop it from being sanctioned,” he said.

The core of Christensen’s idea is that Maker should go back to its roots: decentralization. To achieve this, he proposes to “reduce RWA exposure to a maximum fixed percentage of the total collateral, which requires free floating away from USD”.

Christensen proposes two tools to deal with DAI free-floating: MetaDAO (subsections within the DAO) token farming and Protocol Owned Vault, which would mean Maker accumulating “a large amount of leveraged staked ETH.”

“As all other currencies pour fuel on the fire of the global financial ponzi scheme that is already deeply in overshoot, we can prepare for the worst and focus on accumulating resilient collateral such as ETH, or even eventually physically resilient RWA and build something that could end up meaning the difference life and death for millions,” concluded Christensen.

It is important to highlight that, even though Christensen is a respected leader in the community, he has no power to make a decision on his own. The forum debate would need to become a governance proposal in which the MakerDAO community as a whole would be in charge of deciding whether to follow this path.


Recommended Reads

  1. Synthetix’s founder on capping the supply of the token
  2. DappRadar’s stablecoin report
  3. Justin Bons on Bitcoin as a speculative asset

On The Pod…

With the Merge, Will Ethereum Take Over Bitcoin’s Title as Digital Gold?

With the Merge, Will Ethereum Take Over Bitcoin’s Title as Digital Gold? - Ep. 389

Travis Kling, Chief Investment Officer at Ikigai Asset Management, talks about how ETH changes after the Merge, what factors are going to affect its price action, and whether it can decouple from traditional assets. Show highlights:

  • how the supply and demand dynamics of ETH will change after the Merge
  • why he believes the Merge is the most significant catalyst in crypto history
  • what the risks are in terms of price action
  • whether there is an estimate of how much ETH will be locked up and how this lockup resembles Mt. Gox’s BTC
  • the impact that being a deflationary asset will have on the price of ETH and whether it will actually become deflationary after the Merge
  • how activity levels have been decreasing in the Ethereum network
  • whether ether is underpriced or overpriced, and how to evaluate it
  • how institutional money is sitting on the sidelines at the moment after all the de-leveraging events that happened this year
  • how the Merge affects BTC’s narrative and value-proposition
  • how institutions have never been more interested in ether
  • what the futures market is saying about the price action of ether
  • whether ETHPoW has any value and how to trade it
  • how macroeconomics has been impacting the crypto markets and whether ETH can decouple from the macro setups

Book Update

My book, The Cryptopians: Idealism, Greed, Lies, and the Making of the First Big Cryptocurrency Craze, which is all about Ethereum and the 2017 ICO mania, is now available!

You can purchase it here: http://bit.ly/cryptopians