As we witness the aftershocks and contagion of the FTX episode unfold, we have been given THE use-case for bitcoin: decentralized, trustless, permissionless, censorship resistant. The code it operates on is the Law, and if you self-custody you bitcoin, no one can rug pull you. This became very clear the last two weeks.
- Use exchanges for trading/exchanging activity; don’t use it for custody.
- Stablecoins are centralized and as such, the operators can “turn them off,” locking you out.
- By extension, the decentralization in “defi” is the protocol itself. The stablecoins used within these protocols…see #2
- Humans are imperfect, capable of bad calls of judgement, and are corruptible to incentives that fulfill self-interest. Trust in others is third-party risk.
- If you don’t hold it, you don’t own it.
If there is another vector of risk to consider, it is the risk to coins for ecosystems that are managed by centralized entities. Two examples that come to mind are IOHK and Cardano and The Ethereum Foundation to ethereum. I think that the American Howey Test should not the template for deciding if a platform token is a security. I think that since those tokens (and those of other smart contract platforms) are used as fuel for the networks to perform transactions, guidelines should be split to separate the managing organization and the network itself. The dynamics are a completely new paradigm, and have to be seen as such. The price markets are a way to express relative value, but the question I’m turning over in my head now is: are they necessary for the network to function and evolve?
All to be determined.
Comments and suggestions, reach out -> hello @ tinycryptoblog.com
Be well, Everyone.
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Reports:
NYDIG: Implications of the FTX Collapse
Headlines
THE FTX HOLOCOST
–‘Grayscale Discount’ Widens to Record 43% as FTX Contagion Spreads
–Shares of Crypto Bank Silvergate Continue to Fall Despite CEO’s Remarks
–CFTC Has ‘Boots on the Ground’ at FTX Subsidiary LedgerX
–Crypto Firm Genesis Block Ceases Trading Services Amid FTX Contagion
–Revolut Distances Itself from FTX While Pushing for Crypto
–Crypto Fund Sino Global Had Deep Ties to FTX Beyond Equity Investment
–Voyager ‘Shocked, Disgruntled, Dismayed’ by FTX Bankruptcy as Crypto Lender Searches for Another Buyer
–Messari estimates up to 50% of FTX user funds recoverable
–DeFi protocol Oxygen held 95% of supply on FTX
–Over $8 Billion Withdrawn From Exchanges Following FTX Collapse
–BlockFi Mulls Bankruptcy Filing and Layoffs in Wake of FTX Collapse, Met With Binance
Adoption
CBDC (are just Surveillance Tokens)
COMPANIES AND PROTOCOLS
–Research: 78% of all staked ETH is across 4 centralized providers; 74% of all blocks are OFAC compliant
CRIMES AND SCAMS
DAO
DeFi and Lending
–California Finance Regulator Moves to Suspend Crypto Lender Salt’s License
–Nexo resolves real-time audit outage laying insolvency rumors to rest
–Crypto.com becomes latest bank run victim, but CEO says it is business as usual
Exchanges
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GOSSIP
–FTX Ends Bitcoins Relationship With Crypto – Bitcoin Magazine
–The Collapse Of FTX Was Inevitable – Bitcoin Magazine
–SBF is The Wolf of Wall Street of Crypto, Says Michael Saylor
Implementation and Infrastructure
Metaverse / Web3
Mining
–Startup Arkon Energy Raises $28M to Further Expand Into Bitcoin Mining
–Bitfarms sold more Bitcoin than it mined in Q3
–Bankrupt Compute North Sells $1.55M in Assets to Flared-Gas Bitcoin Miner
Nation States (and other political jurisdictions)
NFTs
Regulation, Legislation & Legal Matters
–LBRY Loses SEC Case, Calls Ruling a ‘Dangerous Precedent’ for Crypto
STABLECOINS
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The Wall Street
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