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Eth 2.0 and the future of ETH futures


Satoshi&Co Daily Crypto Newsletter

November 15 · Issue #251 · View online

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Ethereum’s transition from proof-of-work to a less energy intensive proof-of-stake consensus mechanism is causing speculation among industry observers as to whether or not Ethereum continues to retain its ‘commodity’ status.
CFTC chairman Heath Tarbert last month stated explicitly that Ether is a commodity and he expects to see regulated ETH futures to be listed soon on exchanges. However, his comments at a conference earlier this week cast some doubt on Ether’s legitimacy as a commodity under the new consensus model. The key question is - would moving to PoS cause the network to be more decentralized or not; this will determine whether the CFTC/SEC will retain their existing view that Ether is a commodity. Ethereum 2.0 developers and researchers believe that making Ethereum more decentralized is in fact one of the primary reasons behind the switch to PoS. 
However, in Tarbert’s, and by extension the CFTC’s view, the jury is still out on this one. In Tarbert’s view, while moving to POS will definitely bemore energy efficient, mining is more ‘decentralized’ than staking, where eventual staking is done by a small group of validators.
The launch of regulated BTC futures was the driving force behind BTC’s last bull run and cemented BTC status as a tradeable investment commodity with a clear pathway towards wider mainstream finance acceptance. The launch of ETH futures could do the same to ETH, and will also lead to better spot market price discovery as is happening with the BTC markets. However,as of now, investor interest in ETH futures is negligible compared to their interest in BTC futures, as evidenced by trading volumes on unregulated futures exchanges.
It might be worth revisiting something we wrote on the trade-offs between various governance models a while ago.
On to our Friday metrics…
Ethereum Locked in DeFi
MakerDAO still accounts for a lion’s share of ETH locked up in collateral, with more than 1.79 million of ETH locked up. Augur declined w/w by 2%. Maker showed a strong w/w growth of 7%.
Lightning Network Growth:
Capacity per channel was flat w/w. The total number of nodes increased by 1%, and the total number of channels was flat w/w.
(For reference, some previous articles on LN, here).
DEX Tracker:
Trading volumes on DEXs have increased on a w/w basis, with the average daily trading volume averaging 35k ETH for this week. IDEX remains the biggest DEX in terms of trading volume and DAI is the highest traded cryptocurrency on DEXs.
(For reference, some previous articles on DEXs, here and here).
Crypto Loans Tracker:
Compound Loans:
Total loans issued on Compound for the last week stands at approx. $3.5 million for the week, a steep decrease from $5.2 million in the previous week. WETH is the most borrowed cryptocurrency on Compound followed by DAI and BAT.
dYdX Loans:
Total loans issued on dYdX for the last week stands at approx. $9.4M for the week, a 70% increase from $14M last week. DAI is the most borrowed cryptocurrency on Compound followed by WETH and USDC.
MakerDAO Loans:
DAI loans issued on MakerDAO for this week stand at ~$14.1M, a 50% decrease from $4.2M last week. The total outstanding DAI debt currently stands at ~$86 million.
(For reference, some previous articles on MakerDao, here and here).
You can also check out last week’s Metrics Watch here.
Meanwhile in Crypto Wonderland....
“Braves Launches A Privacy-focused Browser”
Brave, the company co-founded by ex-Mozilla CEO Brendan Eich after his ouster from the organization in 2014, today launched version 1.0 of its browser for Windows, macOS, Linux, Android and iOS. In a browser market where users are spoiled for choice, Brave is positioning itself as a fast option that preserves users’ privacy with strong default settings, as well as a crypto currency-centric private ads and payment platform that allows users to reward content creators.
“Compound Protocol Raises $25 Million”
Lending protocol Compound Finance just raised $25 million in a round led by Andreessen Horowitz’s a16z crypto fund, marking one of the largest venture capital investments in a decentralized finance (DeFi) startup to date. According to DeFi Pulse, Compound has nearly $103 million worth of crypto locked up in its automated system, which can generate returns for users comparable to interest. Today’s announcement of the Series A follows Compound’s $8.2 million seed round in 2018. Much like MakerDAO’s loans, users can take collateralized loans with ethereum-based tokens, with the locked assets automatically liquidating if an independent “oracle” determines the price has dropped too low.
“RBC Capital Markets To Venture Into Crypto”
A Canadian bank, which banned its clients from buying Bitcoin (BTC), could now become the first in the country to launch a cryptocurrency exchange. RBC is the largest bank in Canada by market capitalization, with $661 billion CAD ($499 billion) in assets under management. According to The Logic, the bank is entertaining the possibility for the exchange to function both for investments and allowing clients to make purchases online and in brick-and-mortar stores. The news follows a previous report that Canada’s central bank wanted to use digital currency in order to better track consumer spending habits.
“Ledger Vault Secures $150 Million Crime Insurance Policy”
Ledger Vault, the custody arm of hardware wallet manufacturer Ledger, has procured a crime insurance policy developed with broker and risk advisory firm Marsh and insurance company Arch Insurance Limited. According to an announcement on Nov. 14, the Ledger Vault platform now provides its users a customized crime insurance program for cryptocurrencies for up to $150 million. The program applies to third-party theft of the master seed and private keys, secure transmissions of the master seed fragments, and insider Ledger employee theft caused by collusion.
Crypto Twitter Pick
Jill Carlson
With the Internet the addressable market for so many companies went from local (millions) to global (billions).

What got left out? Financial services. Locked in by jurisdictional regulations & currencies.

Crypto for the first time unlocks a global market for financial services.
What We Are Reading / Listening To
Binance is blitzscaling by Multicoin Capital
Bitwise’s Latest Plans to Get a Bitcoin ETF Approved featuring Hunter Horsley and Matt Hougan
Overnight Performance of Top 10 Currencies
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