Fueled by DeFi and ready to disrupt the status quo
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4 Monaten ago
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Uniswap recently surpassed Coinbase Pro in trading volume, overtaking one of the most popular centralized exchanges in the space after reaching around half a billion dollars in daily volume.
Although Coinbase Pro is by no means the largest exchange out there, it seems that the decentralized sector is catching up to traditional crypto trading platforms.
Uniswap is a decentralized exchange and automated liquidity protocol where users can buy and sell ERC-20 tokens and supply liquidity in order to earn exchange fees. This means that the more volume exchanged on the platform, the more rewards liquidity providers receive. The growing volume and, consequently, growing rewards explain why Uniswap’s total value locked is increasing so much, currently sitting close to $1.45 billion, making it the largest decentralized finance protocol out there, according to DeFi Pulse data.
Although decentralized exchanges have existed for a while, traditional centralized exchanges have always been more popular for a variety of reasons, the biggest of which is convenience. However, as technology progresses, DEXs are becoming increasingly sophisticated and easy to use. Here’s a closer look at decentralized exchanges and what they have to offer the crypto community and beyond.
Types of DEXs and popular implementations
There are several types of decentralized exchanges, with different implementations that are based on different networks. Popular examples include the aforementioned Uniswap, which is an Ethereum-based DEX, as well as Curve, dYdX, EtherDelta, Waves and many others.
Uniswap is an automated market maker, which means trades are automatically arranged through smart contracts that source funds from the aforementioned liquidity pools. This means that there is always liquidity for trades, but that the exchange itself is quite limited. While Uniswap (and its fork, SushiSwap) allow users to trade all sorts of ERC-20 tokens, Curve focuses on stablecoins, offering traders extremely low slippage, which does not always happen with all stablecoins that may have low liquidity.
While protocols such as Uniswap and Curve have become popular, 0x and EtherDelta were previously the most popular decentralized exchanges on Ethereum, although they look more like a typical exchange, featuring traditional order books but powered completely through smart contracts on the Ethereum blockchain.
Why are decentralized exchanges becoming popular?
Generally speaking, decentralized exchanges are becoming popular for the same reason that people like Bitcoin (BTC): They do not rely on any third party, so users control their funds at all times simply by plugging their wallet in and signing off on the transaction. Provided that the smart contract is safe, there is virtually no way of anyone misappropriating funds.
As such, decentralized exchanges are, in theory, impervious to hacks, although DeFi liquidity pools have previously been siphoned. Given that there is no centralized party involved, there is also no need to provide any additional information or documents or go through any Know Your Customer verification procedures.
It’s also worth noting that DEXs do not allow users to cash out into fiat currencies, only stablecoins. Moreover, given that these protocols are decentralized, there have been some issues with people adding fake tokens to the exchanges. Notably, Uniswap doesn’t have any listing rules. Nevertheless, DEXs have gained tremendous popularity. On Yavin, founder of Cointelligence and author of The Cointelligence Guide to Decentralized Finance, told Cointelegraph:
“We are in the middle of another financial crisis during 2020 due to the Coronav Virus pandemic and quarantine and that drives more people to be interested in alternative financial instruments and assets. I am sure it will continue and it might take a few years to grow and progress.”
Decentralized exchanges have some problems
There are both advantages and disadvantages to using decentralized exchanges, but the shortfalls seemingly outweigh the benefits. Moreover, centralized exchanges were, at one point, the only possible option, so they have had a starter’s advantage.
Lack of liquidity is the obvious issue that still persists, and while the growth in liquidity providers has clearly changed that, there is still a long way to go. Ilya Abugov, OpenData lead at DappRadar — a DeFi analytics platform — told Cointelegraph:
“Exchanges still need to be able to obtain and sustain meaningful liquidity levels. Given the recent meme-DeFi trend, they have to become and stay relevant. At the same time with speed and marketing coming to the forefront the tech needs to not become a liability.”
There are other drawbacks, as well, including high transaction fees that may jump unexpectedly in accordance with network congestion. Given the current state of Ethereum, this may be the biggest problem at this time.
User interface has always been thought of as an issue in DeFi too. While this may not be the biggest concern for some, ease-of-use and visually pleasant presentation are important when it comes to mainstream adoption. Given the nature of these platforms, UI may sometimes be harder to nail down, but it has certainly been evolving.
Decentralized exchanges do not offer the wide range of services and functions that other exchanges do, such as certain types of derivatives or margin trading or even having multiple services like the latter aggregated. Given that they are decentralized, there is no one to moderate cases of misuse or any other issues.
CeFi and DeFi: Interoperability, institutionalization and competition
So far in 2020, DeFi has become the talking point of the crypto world, and several institutional investors have also begun to dip their toes in the DeFi sector. Lanre Ige, research associate at 21Shares, told Cointelegraph that there are a few signs of institutional interest in altcoins and DeFi:
“It’s still very early to judge to what extent institutions will get involved in DeFi given that there currently aren’t many products that currently provide exposure to DeFi for the institutional investor. However, both are BNB and Tezos ETPs are two of our most popular historically and currently which is a signal of some institutional interest in altcoins and DeFi. We think this will grow as more products, such as ETPs, are available for DeFi.“
As such, interoperability, both within DeFi itself and with the traditional financial sector, becomes a major focus. Synthetix DEX is already bringing traditional assets to a decentralized setting and has seen major success in doing so, being the sixth-largest DeFi protocol at the time of writing. Other projects such as Komodo have focused on providing decentralized exchange services between different blockchains with atomic swap technology.
Related: Powering DeFi market: Overview of the top 5 DEXs by total trade volume
Some centralized exchanges such as Bitrue and OKEx have begun providing high-yield options, both through centralized and decentralized finance tools, as a means to compete with the continued expansion of DeFi. However, it’s unclear if the current growth will be sustained or if DEXs will eventually return to their lower-volume days. According to Abugov, decentralized exchanges still face some challenges in the long run:
“Exchanges may struggle with their incentives models. As more projects opt for governance tokens and liquidity mining to boost volumes, focus shifts from cheapest most user friendly experience for average traders and long-term viable models for liquidity providers to highest yield for farmers.”
OKCoin to Suspend XRP Trading and Deposit from January 4, 2021
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52 Minuten ago
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Dezember 29, 2020
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According to the announcement, the XRP deposit and trading would be disabled on January 4, 2021, as the lawsuit proceedings are taking place.
OKCoin has announced its intention to suspend XRP trading and deposit following the recent lawsuit against Ripple Lab, the company behind the asset, and two executives. This is a huge blow as panic withdrawal has been triggered with investors under pressure to switch to other assets. Coinbase has also announced that they will halt XRP trading in the coming year amid the reported lawsuit. The price of XRP has been affected heavily having dropped from its yearly high to as low as $0.22 especially in a period that is supposed to be a celebration for a bull run.
OKCoin Announcement Related to XRP
According to the announcement, the XRP deposit and trading would be disabled on January 4, 2021, as the legal proceedings take place. OKCoin also pointed out two different timelines for the suspension. The first one has to do with users who have borrowed from the XRP/USD margin pair. Those who fall under this category have until 7:00 PM PST January 13, 2021, to return the borrowed value. Users who refuse to abide by this will have to face an automatic liquidation by their system to end the loan contracts as reported by the exchange.
The second suspension timeline has to do with the spot trading, margin trading, and deposit. Customers who fall within this category should be aware that the above-mentioned activities would be suspended starting from 7:00 PM PST on January 14, 2021. OKCoin noted that the ongoing legal battle will take time to resolve, and there is no known date for the legal proceeding to end. For this reason, they will inform their customers when they get access to any information that can influence the change of their position.
The Legal Battle
The US Securities and Exchange Commission has sued Ripple for the illegal sale of securities. This was revealed by the Ripple CEO Brad Garlinghouse in a recent interview. SEC, unlike Ethereum and Bitcoin has refused to recognize XRP as a currency. XRP was premined, and a lion-share of its units are within the possession of Ripple in an escrow, and periodically released into the market.
Garlinghouse argues that they do not tap the reserve funds anyhow as they please. According to him, XRP has become increasingly decentralized in recent times as it has been recognized as a bridge currency for cross-border transactions. In another part, he accused the Trump administration of being hostile to the cryptocurrency market.
He, therefore, believes that the incoming administration may certainly create a favorable environment for cryptocurrency. Also, he assured that they will not allow themselves to be bullied by the SEC, but instead, they will fight for the entire cryptocurrency ecosystem.
Garlinghouse believes that treating XRP as security controlled by Ripple is equal to treating oil as security controlled by Exxon Mobil Corporation (NYSE: XOM).
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Excellent John K. Kumi is a cryptocurrency and fintech enthusiast, operations manager of a fintech platform, writer, researcher, and a huge fan of creative writing. With an Economics background, he finds much interest in the invisible factors that causes price change in anything measured with valuation. He has been in the crypto/blockchain space in the last five (5) years. He mostly watches football highlights and movies in his free time.
Grayscale’s AUM Hits $19B, Up from $16.4B Announced Week Ago
Published
2 Stunden ago
on
Dezember 29, 2020
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While it may be too early to project the possible performance of Grayscale in 2021, the spate of patronage the company recorded in the last two quarters of 2020 looks quite inspiring.
In what confirms the continued embrace of Bitcoin (BTC) and altcoins by institutional investors and the big-money clients, Grayscale’s total Assets Under Management (AUM) has been reported to top $19 billion, a significant uplift from the $16.4 billion reported a week ago. According to a report by CoinDesk, Grayscale hit this AUM milestone on December 28, and Grayscale’s Bitcoin Trust holds by far the largest chunk of the total assets at $16.3 billion.
The recent rally of Bitcoin to new highs as recorded in the past days started as a chain reaction that took its precedent months ago when Wall Street firms and institutional investors began betting big on Bitcoin. The investment made by the likes of MicroStrategy Incorporated (NASDAQ: MSTR), Square Inc (NYSE: SQ), and PayPal Holdings Inc (NASDAQ: PYPL) did not just help put Bitcoin in the limelight through mainstream media, it also prompted the embrace of the digital assets by other firms.
With this chain reaction, the price of Bitcoin continued to soar in response to boosted demand for the coin, and institutions like Grayscale that serves institutional investors benefited from this new demand, and hence, the continued increase in the firm’s AUM. Besides BTC, Grayscale’s Ethereum (ETH) AUM is now worth $2.1 billion, while the bulk of smaller holdings in Litecoin (LTC), XRP, and ZCash amongst others helped Grayscale’s total AUM to reach the new milestone.
Grayscale’s AUM May See More Boost in 2021
While it may be too early to project the possible performance of Grayscale in the coming year 2021, the spate of patronage the company recorded in the last two quarters of 2020 makes the case for improved performance provided the tempo is sustained.
Just as has been noted earlier, the continued embrace of cryptocurrency assets by highly liquid companies will continue to have a positive reaction on the price of Bitcoin, and by extension, this will even make more people pick interest in BTC. As a relatively young asset class, Bitcoin and altcoins have tremendous room to grow as the adoption rate is still not optimized owing to certain regulatory provisions in most countries, Grayscale and other hedge funds have enough room to compete for new clients entering the space.
With Grayscale been among the institutions at the forefront of helping to drive the acceptance of BTC, ETH, and other digital currencies, enjoying the dividends of its works through impressed AUM figures does not come as much of a surprise.
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Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.
Following the Bitcoin all-time high on Sunday, December 27, Riot Blockchain stock registered 20% gains on Monday’s trading session. The stock has already appreciated by 13x this year. Apart from BTC, investors of Bitcoin mining companies are making a bomb in the market.
Bitcoin mining giant Riot Blockchain is making all the news in the market at the moment. On Monday, December 28, Riot Blockchain Inc (NASDAQ: RIOT) stock price surged a massive 20% surging past $15.5 levels. One of the biggest milestones with the Monday rally is that the Riot Blockchain has clocked a $1 billion market cap.
The latest price rally comes as Riot Blockchain hints at going aggressively on its Bitcoin mining business. Last week, the Riot Blockchain added new S19 Pro Antimers to its bitcoin mining arsenal. The company announced the purchase of an additional 15,000 Bitcoin (BTC) mining machines from Bitmain. The recent purchase also pushes Riot’s total fleet to 37,640 Next-Generation Bitmain Antminers.
Riot said that the fresh purchase of Antminers will help the mining company to attain a 65% jump in its mining hash-rate. RIOT stock has registered an unprecedented rally this year in 2020. RIOT stock has multiplied by 13x this year registering a 1200% surge so far.
Riot Blockchain has issued nearly 17 million shares since November 2020 with its total outstanding shares going to 67.5 million. It has been a phenomenal journey for Riot ever since it ventured into the Bitcoin mining business in October 2017. With valuations less than $50 million back then, Riot has grown more than 20x in size as of its latest stock price.
RIOT Stock and Shares of Other Bitcoin Mining Companies Profit from BTC Bull Run
The recent Bitcoin (BTC) price rally during Q4 2020 has also pushed the stocks of Bitcoin mining companies to new highs. Earlier on Sunday, December 28, the BTC price hit its all-time high of $28,000 in a massive bull run followed by huge institutional inflows.
Moreover, along with the BTC price rally, the Bitcoin hash-rate has jumped significantly since November 2020. Over the last two months, the BTC hash-rate has surged nearly 30% and is currently at 132 TH/s. The surge in the hash-rate suggests higher mining activity for Bitcoin.
As a result, Bitcoin mining companies have been making massive purchases of the BTC mining machines. In addition to Riot Blockchain, other giants like the Marathon Patent Group have made aggressive purchases over the last few months. Just like RIOT, the Marathon Patent Group (NASDAQ: MARA) has registered a phenomenal rally of 18% on Monday, December 28. MARA stock has multiplied investors’ wealth by 12x in 2020. It means the MARA stock has also given phenomenal 1100% returns year-to-date.
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Bhushan is a FinTech enthusiast and holds a good flair in understanding financial markets. His interest in economics and finance draw his attention towards the new emerging Blockchain Technology and Cryptocurrency markets. He is continuously in a learning process and keeps himself motivated by sharing his acquired knowledge. In free time he reads thriller fictions novels and sometimes explore his culinary skills.
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