GM. It’s Wednesday, July 17.

Newsmakers

Beyond Bitcoin: Cardano Swims Against the CeFi Tide With Hard Fork

In an era when many in crypto are turning to centralized finance for growth — witness the great ETF race — the Cardano blockchain is doubling down on DeFi. It’s the Chang hard fork, named after the late Phil Chang, an early Cardano advocate, that will prime Cardano to move to a new decentralized governance model that founder Charles Hoskinson believes will be a key differentiator. The last preparatory step, the node 9.0 upgrade, occurred on July 8.

With the hard fork, ownership will shift from the Cardano Foundation, EMURGO, and Input Output Global to a DAO-like structure once 70% of the blockchain’s validators upgrade to node 9.0. Validators will then be empowered to vote on blockchain changes, and Cardano’s native token (ADA) will become a governance token. Delegate representatives elected by token holders will draft a constitution and can propose ongoing network changes.

Hoskinson characterized the shift as a maturing of the seven-year-old blockchain. Cardano initially created ~31B tokens in 2017, selling 26B to investors and retaining the rest for owners. The ICO raised $60B+ and earned ADA a consistent spot in the top ten cryptos by market cap. At the time of writing, the price of ADA is $.044447 with a $15.96B market cap.

Cardano could use some more differentiation. Its unique Ouroboros two-layered consensus protocol, in which the settlement layer manages ADA transactions and the computational layer handles smart contracts, makes it exceptionally scalable. But the supposed “Ethereum killer” has struggled to break through and find its niche as Solana has. Earlier this month, influencer Ben Armstrong (AKA BitBoy Crypto) called Cardano (and Polkadot) “dead for real,” saying it can’t compete with ETH or SOL. On the flip side, one commenter noted that “hinging the success of a decentralized chain on centralized entities is hustling backward” while another praised the fact that Cardano “hasn’t lost the DeFi plot.”

Read more →Cardano

Governments Are Intrigued by CBDCs. Citizens? Not So Much

According to the Atlantic Council’s CBDC tracker that shows central bank digital currency statuses, 134 countries — accounting for 98% of the world’s GDP — are in some stage of investigating CBDCs. However, those who have actually put them into the hands of citizens are finding a less than enthusiastic reception.

China’s digital yuan, e-CNY, is the highest profile example. The country has been experimenting with e-CNY since 2019 and has tried a number of incentives to drive adoption. The latest is using it to pay state employees — most of whom immediately transfer it to their bank accounts to spend as fiat. India has tried a similar tactic with its digital rupee with similar results.

Caribbean nations, including the Bahamas and Jamaica, have launched CBDCs in an attempt to digitize their cash-based economies but, according to a Federal Reserve Bank of Kansas City report from April 2024, adoption is low. The Bahamian Sand Dollar, available since May 2023, represents 0.19% of circulating currency; DCash from the Eastern Caribbean Currency Union, established in 2021, 0.16%; and Jamaica’s JAM-DEX, available since 2022, 0.11%. In Africa, Nigeria’s eNaira, released with fanfare, has had lukewarm results; the International Monetary Fund called adoption “disappointingly low.”

The Fed’s research suggests that people want to see the practical applications of CBDCs, especially as compared to other digital payment systems. They also conclude that CBDCs may not work as stand-alone setups, needing to instead be integrated with the global financial ecosystem. Perhaps, to that end, China earlier this summer signed a memorandum of understanding with Kazakhstan to collaborate on a CBDC.

CBDC wallets may also need to be connected with bank accounts, as the lack of accrued interest makes them less attractive than a checking or savings account. People also want reassurance that transactions can be private.

Read more →Crypto.news

Polygon Pivots From Blue Chips to Degens

Just a couple of years ago, Polygon Labs, the main developer of the Polygon blockchain, got a lot of positive PR when forming partnerships with companies like Starbucks, Meta Platforms, and Reddit, and it even participated in an accelerator program with Disney. Many viewed these high-profile tie-ups as the future of Web3, but many of these partnerships are no more. Starbucks announced that it was shutting down its NFT loyalty program, Odyssey, in March. Meta wound down its NFT initiatives for Facebook and Instagram in 2023. Now, Polygon’s new CEO, Mark Boiron, is pivoting to a new strategy: a wholehearted embrace of crypto’s more degenerate side.

Boiron believes it was too early for these types of partnerships to drive on-chain activity, characterizing them as a lot of “random activities that I would say were very focused on volume” but taking the company’s focus away from “core web3 activities.” Beyond Polygon, the sunsetting of these initiatives seems to be part of a wider trend within crypto; for example, GameStop closed down its own NFT marketplace in January.

Boiron sees DeFi as the path to growth and Polygon as a hub for the type of crypto user “who wants to go into web3 protocols and have a bunch of fun, even if they lose money.” It is refocusing on product development, such as its zero-knowledge technology and its AggLayer, which allows for protocols to easily send assets across chains. It also launched a community grants program to fund projects on the chain.

Polygon has seen its value decline 46.5% year to date at a time when the broader crypto market is surging. Solana and Toncoin, both of which have embraced degen culture (meme coins in the case of the former and play to earn games the latter), are having breakout years. While degen culture doesn’t necessarily always fit corporate America’s more buttoned-up image, Boiron says that, “If we alienate a brand or two, that’s OK.”

Read more →DLNews

News In Brief

Business of Crypto

• Europe Passes North America in Crypto Startups in H1; APAC Pulls to a Close 3rd —

  Cointelegraph

• OKX Joins Binance in Crackdown on VIP Discount Abuse —

  CoinDesk

• State-Backed Chinese Insurer to Advise Swiss Crypto Fund on APAC Expansion —

  crypto.news

Regulation and Security

• U.S. Spot ETH ETFs May Start Trading July 23, Pending Final SEC Approval —

  Reuters

• Hong Kong Regulator Warns 7 Unlicensed Exchanges —

  Cointelegraph

• BitMEX, Execs Plead Guilty to U.S. DoJ Charges of Violating Bank Secrecy Act —

  CoinDesk

DeFi and Web3

• BlackRock’s BUIDL to Participate in MakerDAO $1B RWA Push —

  The Defiant

• Digital Media Company Infinite Reality Buys Metaverse Builder Landvault for $450MM —

  PocketGamer

• Supply of PayPal’s PYUSD Expands 90% Since Solana Integration —

  Coinspeaker

Midweek Market Pulse

Total Market Cap: $2.38T — 7-day change as of Tuesday 7/16/24 12 PM EST: +12.8%

Chart and quotes via CoinMarketCap

The total crypto market surged to a gain of 12.8% to $2.38T over the past week, much of it coming on the heels of a failed attempt to assassinate former President Donald Trump who has positioned himself as the crypto friendly presidential candidate.

While he has not yet outlined any specifics, many believe a Trump victory would usher in a more favorable regulatory climate for Bitcoin (BTC, +12.6%) and digital assets in the U.S. That notion received a boost when Trump announced Ohio Senator J.D. Vance as his running mate. Vance, who in 2022 disclosed BTC holdings between $100K and $250K, was hailed as the “first-ever Bitcoiner on a Presidential ticket.” He has drafted legislation that would prevent crypto firms from being cut off from the banking system and new legislation described as “more crypto-friendly than a bill passed by the House in June.”

Ethereum (ETH, +13.3%) rode the macro news higher and also benefited from reports that the SEC has given preliminary approval to at least three Ethereum ETFs (from BlackRock, Franklin Templeton, and VanEck) and that these and perhaps other ETFs will begin trading on July 23.

Meanwhile, the specter of selling pressure from Mt. Gox’s repayments to creditors continued to loom over the market as the bankrupt exchange moved more than 140K BTC worth nearly $9B into three wallets. Selling pressure from the German government, whose sale of large amounts of seized BTC drove the market lower in recent weeks, has lessened; Germany now holds less than 10K BTC.

Top altcoins like Solana (SOL, +14.9%), BNB (BNB, +11.7%), Cardano (ADA, +19.6%), and XRP (XRP, +35.8%) followed the largest digital assets higher with XRP especially seen as benefiting from a shifting political climate.

THE LAST WORD:

Degen

noun

: A colloquial term derived from the word “degenerate” 

/ Degens are crypto traders who engage in high-risk, speculative trading.