So Now They’re Hacking DeFi Protocols Before They’ve Even Launched?

When the DeFi degens caught wind of a new pre-release Andre Cronje project they piled in, only to get $16 million hacked away in a flash.

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This episode is sponsored by Crypto.comBitstamp and Nexo.io.

DeFi is one of the breakout crypto categories of 2020. Indeed, yield farming and the grand game of “money legos” has been so profitable that many are following every new protocol with rapt attention. 

This is all the more true for projects graced by YFI creator Andre Cronje. So when word got out about a new, pre-release game economy engine called “Eminence,” the DeFi degens took advantage of the permissionless nature of DeFi to pump $16 million or so into EMN. 

What happened next was arguably the first pre-release hack in DeFi’s history. This episode breaks down what happened and what it means for the fledgling field.

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Market Wrap: Bitcoin Holds at $10.7K; Uniswap Volume Drops

As bitcoin struggles to hold the $10,700 price range Uniswap’s September volume set records but appears to be declining.

  • Bitcoin (BTC) trading around $10,757 as of 20:00 UTC (4 p.m. ET). Slipping 1% over the previous 24 hours.
  • Bitcoin’s 24-hour range: $10,621-$10,924
  • BTC above its 10-day moving average but below the 50-day, a sideways signal for market technicians.

Bitcoin trading on Coinbase since September 27.
Source: TradingView

Bitcoin’s price dropped a couple of hundred dollars as a spate of selling took the world’s oldest cryptocurrency to as low as $10,621 on spot exchanges such as Coinbase, recovering to $10,757 as of press time. 

Katie Stockton, analyst for Fairlead Strategies, says cryptocurrencies like bitcoin are affected by traditional markets, particularly equities, which are considered “risk-off” or liquid assets that can easily be sold during a market slide. 

“Bitcoin has been attuned to the day-to-day moves in risk assets, but the end result of the intraday volatility is a consolidation phase on the chart,” said Stockton. “Short-term momentum has improved with equities, so I expect the consolidation to give way to a move that leaves support near $10,000 intact.” 

Global equities markets are weak today, either flat or down:

Michael Gord, chief executive officer of crypto trading firm Global Digital Assets, senses a bearish mood for the crypto markets. “Bitcoin might get over $11,000 for a short period this week, but with a big exchange like KuCoin being hacked over the weekend I expect this week to have a more bearish sentiment with retail investors,” said Gord. “Institutional investors, on the other hand, might be taking this buying opportunity to buy cheaper bitcoin.” 

Several stakeholders in the crypto market see a lack of yields coming from traditional markets as a sign cryptocurrency has a place in uncertain times.  

“We are moving into a period of stagflation – stagnant growth and inflation – which creates a steepening of yield curves in the fixed income world,” said Chris Thomas, head of digital assets for Swissquote Bank. 

Indeed, U.S. Treasury yields have dropped in 2020 – the two-year maturity is at its lowest yield in over 10 years.

U.S. Treasury bond two-year yields the past decade.
Source: TradingView

“I have a customer leaving bonds for bitcoin. I look at that as very bullish,” said Henrik Kugelberg, a Sweden-based over-the-counter crypto trader. “Bonds that are supposed to be the safest bet there is to actually make a buck on your invested money now all of a sudden seems less attractive than bitcoin.”

Uniswap volume dips

Ether (ETH), the second-largest cryptocurrency by market capitalization, was down Tuesday trading around $356 and slipping 1.5% in 24 hours as of 20:00 UTC (4:00 p.m. ET). 

Uniswap has had a stellar September, with the decentralized exchange, or DEX, having a record $953 million in volume on the very first day of the month. Since then, however, volume has declined. 

Toward the end of Tuesday, volume was $312 million, lower than September’s $468 million daily average.

Uniswap volume the past three months.
Source: Uniswap

“Uniswap is by far the most successful decentralized trading venue, some days rivaling its centralized counterparts,” said Brian Mosoff, chief executive of Ether Capital. 

However, volume doesn’t mean everything for a DEX: Mosoff points to Uniswap’s Tuesday record-high of $2.29 billion in liquidity, which is the depth, or availability, of assets traded on the DEX, as a metric traders should also consider.

Uniswap liquidity the past three months.
Source: Uniswap

”Liquidity has just reached a new all-time high on Uniswap – this means that asset pricing is becoming more competitive and because of this it may capture the majority of trading volume once speculative activity abates,” Mosoff added.

Other markets

Digital assets on the CoinDesk 20 are mostly in the red Tuesday. One notable winner as of 20:00 UTC (4:00 p.m. ET):

Notable losers as of 20:00 UTC (4:00 p.m. ET):

  • Oil was down 3.7%. Price per barrel of West Texas Intermediate crude: $39.03.
  • Gold was in the green 0.86% and at $1,896 as of press time.
  • U.S. Treasury bond yields all fell Tuesday. Yields, which move in the opposite direction as price, were down most on the two-year, dipping to 0.123 and in the red 4.5%.

The CoinDesk 20: The Assets That Matter Most to the Market

Kadena Looks to Capture DeFi Energy With New Decentralized Exchange

Hybrid blockchain platform Kadena plans to launch a new multi-chain decentralized exchange (DEX) in hopes of wooing business from congestion-plagued Ethereum-based rivals.

Called Kadenaswap, the new DEX, unveiled Tuesday and set to debut late this year, will attempt to skirt around Ethereum’s surging gas fees and perennial network congestion (caused in part by the explosive success of Uniswap) by providing decentralized finance (DeFi) traders with an alternative platform that Kadena President Stuart Popejoy claims can handle high volumes.

Coinbase’s New Policy: Anti-Woke or Just a Joke?

CEO Brian Armstrong’s letter has not just the crypto world but the larger world of tech and business talking about the role of corporations in society.

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This episode is sponsored by Crypto.comBitstamp and Nexo.io.

Monday, Coinbase CEO Brian Armstrong published the innocuously titled “Coinbase Is a Mission-Driven Company.” 

While the post talked a lot about Coinbase’s core mission, its real goal seemed to be to make clear Coinbase would not be engaging with any other social or political issues beyond that, and to the extent employees wanted to do so they needed to do it on their own time. 

The reactions were intense, immediate and in many instances, totally opposite. 

In this episode, NLW breaks down the entire social media reaction and the arguments for and against this policy.

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Better Broadband Will Pave the Way for a ‘Brand New World’

Bandwidth will be the defining factor of modern life and social evolution going forward. With increased access to the internet as well as ever-advanced computing, it’s likely the tone and tenor of human existence will change forever. 

Augmented reality (AR), virtual reality (VR) and the ubiquity of cryptocurrencies will become fixtures of life a decade from now, but will only become popularized once the internet is everywhere, running at speeds we can hardly imagine. 

This story is less about the possibility of downloading a feature length film in less than a second than the emergence of trillions of interconnected devices and people, making the web ever present. The year is 2030, and everything has changed. 

James Altucher is an entrepreneur, angel investor, standup comedian and prolific author. This post is part of CoinDesk’s “Internet 2030” series about the future of the crypto economy.

We’re upping a “G” (as in 4G, or fourth-generation broadband technology) almost every two years and expanding bandwidth at an exponential rate. With “10G” on our phones, we’ll look back at 2020 and laugh about how slow the internet was and how Zoom calls were of such low quality.

With 100GB/ps we’ll be able to not only work remotely, but work remotely in the same office. I can “VR-port” into work, go into my office, see my co-workers, go to meetings, all without leaving my home. Haptic sensors will not only make me feel everything I touch in Microsoft VROffice Suite but also massage my muscles so they don’t atrophy, in case I work overtime. 

We may become nostalgic for the days when it wasn’t so easy to go into a complete virtual reality – composed of millions of pixels every centimeter – that will feel as real as any other reality once you’re transposed. Where is the solid ground?, you may ask yourself.

With broadband connection so advanced it’s hard to imagine it not becoming a natural right, as important a commodity as air itself, opposed to something you have to “sign up” for. 

In a world where bandwidth and storage are 100% commoditized, everything will change. Here are the knock-on effects I predict will follow. 

Augmented reality

Consider the scenario of my wife, Robyn, and me taking a walk, where we pass an Amazon 3D printing store. With augmented reality, she might see a coupon for bras while I see a coupon for some marijuana. 

Augmented reality will exist seamlessly side by side with regular reality. Our worlds will be reshaped to meet our personalities, experiences and mood. 

With convenience comes costs.

We’ll walk by a restaurant and she’ll see, about 12 inches in front of her eyes, the vegan menu and I’ll see the paleo menu. A neighbor may pass and – if his settings are set for “Everyone” – we’ll see a floating image of the last movie he saw or recent photos from his latest vacation. 

Or a listing of his political beliefs on display for all to see in case you want to have (or avoid) a conversation with him. 

Crypto

When COVID-19 ended, everyone abandoned the expensive cities for safety, quality of life and financial reasons. And because bandwidth only increased while Zoom got easier to use, there was no more need for office buildings to be full. People could live anywhere and work in the 2D virtual office or in Microsoft VROffice. 

With fewer people and companies, city tax revenues plunged just when deficits were spiking. Mayors in each city had to fire teachers, garbage collectors and police. Crime spiked, garbage was everywhere and fewer tourists wanted to enter the metropolis. 

To combat these countervailing forces, some cities created a local cryptocurrency to provide incentives to stay and shop locally. New York City, for instance, created NYCBucks. Everybody in the city got a steady universal basic income (UBI) of NYCBucks, and everyone who visited NYC as a tourist got an allocation based on how many days they would be in the city. 

You could only spend your NYCBucks in NYC. For every transaction both the buyer and the seller mined micro NYCBucks pro rata with the size of your transaction. 

Tourism began to come back to cities. And businesses returned and required more employees to be local. Cities, for the moment, were saved. 

The same method was applied at the federal level, with the U.S. unveiling USBucks shortly after. 

Auto ecommerce

The widespread deployment of cryptocurrencies and wallets made it possible to financialize even the most mundane aspects of modern existence. 

The smart refrigerator will read when you are running low on milk, complete a blockchain transaction with the wallet at the grocery store and a drone will make a milk delivery directly to the house. The more transactions the refrigerator does, the more USBucks are mined. 

But it’s not just kitchen gadgets. Everything that can be chipped will be. This is a trend that has come to be known as acommerce, short for auto-ecommerce. The economy will thrive on these microtransactions. In other words, people will spend what they make.

Data storage

With convenience comes costs. 

Because of VR and enormous blockchain demands following crypto’s mass adoption, cloud storage demands will be 1,000 times what they are currently. The biggest companies in the world – Amazon, Google, Dropbox, Apple – will only grow larger to meet and upkeep growing amounts of cloud storage data. Every day of 2030 will add up to more information and data created than the entirety of the human race from 2020-2025. 

DNA computing

These monolithic companies, bolstered by growing profits, will make advances in DNA computing, an experimental form that seeks to bring the human body and machines closer together. 

These new machines will be powerful enough to solve NP problems (“nondeterministic polynomial time” – or incredibly complex computer problems) meaning that today’s public key cryptography can be decoded. 

For a time, Bitcoin, Ethereum and all public chains became essentially worthless. However, although quantum computing never worked out (the scientists realized that just the observation of a result could make it wrong), quantum cryptography was solved, thereby ensuring the safety of crypto and making it more resilient. 

Genomics and gamifying enlightenment

In 2020, genomics is in a state of 2D hibernation. Yes, the genome was sequenced and diseases based on single-gene mutations (e.g. Tay-Sachs) are regularly cured with CRISPR technologies, diseases based on multi-gene mutations are still impossible to compute. 

DNA Computing will be suited to solve the problem, and able to discover the gene pairs that mutated for all cancers, heart disease, strokes and Alzheimer’s. And then, later, IQ, emotional intelligence, athletic ability and charisma will be figured out. 

The Chinese government will quickly use 3D Genomics to create a country of super intelligent babies. Nobody knows what the final result will be. 

Though in the west, daily life will also increasingly be brought under the yoke of technology companies and the state. Depending on your DNA and other factors, the ideal number of steps, hours of sleep, hours of reading, Vitamin D, calories consumed and water drank will be counted each day. There will be no “biological privacy.”

It will be agreed that competition breeds the best results, so the health statistics of everyone in the country will be made public and ranked. Dating apps will be set up to match those with similar health. The healthiest, and most mentally fit, will receive direct payments of USBucks. 

Will it be a better world? I have no idea. Time will tell.

Crypto Co-ops and Game Theory: Why the Internet Must Learn to Collaborate to Survive

If the internet was a person, ARPANET was its first tooth, Facebook was the pubescent rage of middle school and Bitcoin was the key to its first car. Today, we find ourselves riding shotgun, unsure of what direction the internet will take next.

There are those who feel we’re about to careen off a cliff, and others who write off the internet’s dangers as inevitable growing pains of innovation. 

The internet allows us to work together while simultaneously incentivizing us to tear each other apart. That dynamic isn’t sustainable for long. Perhaps over the next 10 years the internet will go through one more phase of reckless adolescence (who could forget their post-college twenties?) before arriving at the plateau of middle age and all of the wisdom, maturity and better judgment that comes with it. 

Elena Giralt is product marketing manager at Electric Coin Co., the team that launched zcash. She runs Blockchain Latinx, a monthly meetup group that discusses blockchain, cryptocurrencies and emerging technologies. This post is part of CoinDesk’s “Internet 2030” series about the future of the crypto economy.  

Positive-sum games

At any given time on the internet, more than four billion people have the ability to collaborate or compete with one another. Through social networks, memes and subcultures take on a life of their own, iterating off of each other like a psychedelic fractal. On the internet, we create, play and share new games that have never before existed.

These games are helpful frameworks to model out the tension between selfish incentives and community benefits. Informally, a zero-sum game is a competition where one player’s gain is the other player’s loss. In contrast, a positive sum game is generally thought of as a win-win situation. 

What is the optimal balance between cooperation and competition?

The key feature of positive-sum games is that collaboration leads to better outcomes than competition. That sounds great doesn’t it? But, in practice, collaboration often gives way to competition.

A decade ago, many people considered social networks like Facebook and Twitter positive sum games (look at all of the connections! all of the value generated! how fun!). Now the pervasive narrative is that our attention, our data and democracies around the world were a dear price to pay for the explosive growth of digital advertising.

Credit cards were also once considered positive-sum games – until you factor in predatory loans, crippling interest rates and discriminatory scoring systems. And for a moment it looked like liquidity mining was turning out to be another zero-sum wolf in positive sheep’s clothing. Or was it?

As communities shift from the monolithic platforms of Web 2.0 to the decentralized protocols of Web 3.0, it raises the question: what is the optimal balance between cooperation and competition? 

Platform cooperativism

“Platform cooperativism,” coined in 2014 by New School Professor Trebor Scholz, establishes a framework for digital platforms that are cooperatively owned and governed by their users. Advocates of cooperative business models say they are more resilient, more equitable and more sustainable. To a crypto audience, this narrative should sound temptingly familiar. 

More and more, people are demanding input over how platforms are governed and managed. They want to weigh in on content moderation on Facebook, ad standards for children on Youtube and predictive AI models used by law enforcement. 

In his essay “Exit to Community,” Nathan Schneider said platforms should let the users decide these questions. He extolls the benefits of platform cooperativism and cites examples of big tech companies like Twitter considering this option. Vitalik Buterin seems to be a fan of this approach as well.

Governance tokens and auditable open-source code allow individual contributors to work together to determine the direction of a project. Airdrops and developer funds align incentives between end users and developers. Don’t think that cooperative models mean the absence of competitive mechanisms. In proof-of-work mining, individual nodes are pit against each other to compete for the block reward.

What makes these systems cooperative is that projects can update rules and redefine the game so long as they reach (and maintain) consensus among their members. On Ethereum, what started with gerbils in 2017 morphed into sushi three years later.

As we get better at coordinating, we will get better at reinventing and redefining the world we want to live in. 

Twitterswap: What does this look like in practice?

Is platform cooperativism the way to turn a zero-sum game into a value-add system? It’s probably part of the solution but you can’t just shill some tokens and expect the community to follow. Let’s consider a hypothetical to better understand what positive sum games and participatory business models look like in practice.

From Twitter to Uniswap

In December 2019, Jack Dorsey announced that a special R&D team at Twitter was developing “an open and decentralized standard for social media.” Imagine if such a standard was released and widely adopted within the next decade. 

This move could help correct some of the challenges faced by social media today. For starters, it could assuage antitrust concerns. It could also cut down on bot activity and ad fraud. These platforms already have enormous developer communities who could quickly start building, hacking and integrating these networks to other services, spreading more open, decentralized standards across the web. 

Uniswap’s new governance token illustrates how powerful aligning incentives can be to protect a cooperative platform. By rewarding its users, Uniswap not only doubled its liquidity but also ensured the continued cooperation of community members. While people have been writing about crypto coops and Ostrom’s principles for years, examples like Uniswap prove that these models can bear fruit and are worth implementing.

It is imperative that we consider a better future is possible without deluding ourselves into thinking it will happen naturally and without sacrifice.

Now, imagine a governance token for Twitter. Imagine a mechanism that would allow users to weigh in on protocol upgrades, community rules and business strategies. While this scenario is extremely unlikely given that the top three investors of Twitter are Vanguard, BlackRock and Morgan Stanley, it is still fun to consider. 

In this world, Twitter users would not only have an incentive to improve the platform, but they would also have to coordinate with each other to do so. Developers would need to coordinate with each other to maintain a reliable and secure standard. End users would need to coordinate to understand the impacts and second-order effects of community decisions. If users in the United States want to remove all political advertising on the platform or censure politicians for violating community guidelines, how does that impact political dissidents in China or Belarus?

There are challenges with decentralized governance and cooperativism. Earlier this year, when a single hacker hijacked multiple high profile accounts, Twitter admins were able to freeze accounts and isolate the issue. This would have been a feat more difficult to coordinate in a decentralized system.

Keep your hands on the wheel

Whether you believe the internet is driving us through dark forests or digital gardens, this is not going to be a smooth ride. It is imperative we consider a better future is possible without deluding ourselves into thinking it will happen naturally and without sacrifice. 

In his latest post on Coordination, Buterin describes an unsettling feature about cooperative games, “We can prove that there are large classes of [cooperative] games that do not have any stable outcome … In such games, whatever the current state of affairs is, there is always some coalition that can profitably deviate from it.”

The internet in 2030 will be exciting and in flux. However, if we keep our hands on the wheel, focusing on shared objectives and aligned incentives, we should be able to steer ourselves in the right direction.

Permission.io Has Quietly Raised $50M to Make Advertising Personal and Data Private

Permission.io is a platform that pays users in ASK tokens for engaging with, or even looking at, ads. Built on a fork of the Ethereum blockchain, the Permission platform incentivizes users to grant advertisers and other merchant participants access to their time and data in a peer-to-peer way. 

Over the past 12 months, the startup has raised $5 million through a token pre-sale, and recently closed another round of funding that put the company at $47 million raised through equity financing. And since the platform came out of beta a few weeks ago, it has over 450,000 users, according to the company. 

“Our model is all about advertisers being able to pay individuals directly through crypto, where advertisers’ return on their investment will go up dramatically,” said Permission CEO Charlie Silver. “Everybody’s happy and everybody wins. The user is now being compensated for what typically, today, companies like Google and Facebook are being compensated for.”

Data ownership: How users give Permission

The idea of shifting the benefits of ads back toward users and advertisers rather than middle men isn’t necessarily new. The Brave browser, for example, has let its users choose whether or not to turn on their rewards token system in exchange for viewing ads since its official launch in 2019. 

Silver, while complimenting Brave’s leadership in the area, is quick to point out how Permission is different. He said Brave is purely a browser that collects no data, contending the ads people are served are random.

Permission, on the other hand, allows people to be served ads through their “behavioral data.” Behavioral data means ads are served based on activities such as brand interactions and content consumption. 

“By the end of the year, users will have access to a feature called ‘MyData,’ which will allow them to input specific data points around preferences that will create even more precise ad targeting, and also restrict the ability of brands to reach users that aren’t interested in their products,” said Silver. 

Silver said this tool will allow users to directly revoke or manage their data, with Permission acting as an agent for this data rather than a middle man.

All data generated through Permission, regardless of source, is anonymized on the advertiser end, according to SIlver. While Permission will know which data is tied to a person (for the purpose of awarding ASK Coins) advertisers won’t be able to link it to an individual. 

The startup has integrated with the payments provider CoinPayments, which is accepted by over 3,000 merchants and retailers, to enable people to use various cryptocurrencies like ASK for online purchases. 

When you sign up for Permission, you earn some ASK for doing so. You’re then free to go throughout the platform and “shop and discover product videos that would be of interest to you,” according to Silver. 

Example of the Permission platform interface
(Permission.io)

Tailored advertising: How merchants get Permission

There are two ways that merchants can connect with customers through Permission. First, Permission hosts its own Shopify store where it lists all the participating merchants in its program. 

Second, Permission enables merchants to install its plugin on their own Shopify store sites.

“We’ve built plugins for Shopify and Magento, so e-commerce merchants can simply install a plugin, which will allow them to offer ASK on their site and reward their customers,” said Silver. “So on Permission we’re working to show the efficacy of this kind of permission-based ad delivery.”

For example, a shoe store on Shopify could plug into Permission and display its ads in the Permission marketplace, reward people with ASK for viewing tailored advertising, and then let people purchase their goods in the Permission.io marketplace, using ASK. 

An example of Permission’s marketplace categories. Ads are displayed once a user clicks through.
(Screenshot by CoinDesk)

To test this, I logged onto Permission.io (I earned 100 ASK for doing so), and was taken to the marketplace dashboard, where a number of ads were displayed to me. One was for a pair of steel-toed sneakers, and I clicked on it.

Example of Permission.io marketplace ad and purchasing screen
(Screenshot by CoinDesk)

After watching a 30-second video of someone jumping around in the sneakers and having their steel toe-protected foot rolled over by a car, I earned 100 ASK.

At this point I only had 200 ASK in my wallet, but if I were to complete enough tasks and earn enough ASK, I could spend it on these sneakers, foregoing U.S. dollars. 

“While we will promote those stores on our platform, ultimately we’re looking to help eCommerce merchants drive traffic and conversion to their own stores,” said Permission CTO Hunter Jensen. “By installing our plugin, users will interact with the merchant’s store but will be able to earn ASK along the buying journey.”

Silver said he thinks the Permission model is a key part of data ownership and sovereignty, based around the user, rather than companies like Google and Facebook. 

“Our goal is to really build what we call the permission economy, where millions of websites are offering their users ASK to engage with them on various levels,” said Silver.