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A nightmare on Stable Street: Centralized stablecoins may be doomed

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Over the last couple of years, we have seen a lot of interest from central banks and governments in the stablecoin market. The reason behind it lies in the development of central bank digital currencies, or CBDCs.

The idea of issuing a digital alternative to cash is a great motivator for central banks. It allows them to gain more control over the transition and processing of cashless transactions, which are currently overseen indirectly through private payment processors and banks.

Related: Did CBDCs affect the crypto space in 2020, and what’s next in 2021? Experts answer

There have been a number of pilot CBDC projects and initiatives already launched by several central banks, and more are about to come. It is important to note, however, that CBDC has nothing to do with cryptocurrency or known stablecoins in the crypto community — they are not intended to be heavily used in trading; some of them will not be even traded for crypto. CBDCs are a mere digital alternative to cash, fully controlled by central banks.

Related: Central bank digital currencies are dead in the water

CBDCs and stablecoins

A reasonable question arises: If CBDCs and centralized stablecoins solve different market needs, why can’t they coexist? In principle, they could, but at a very high price for the latter.

When it comes to exercising control over money in any form, central banks are quite strict and straightforward — if you want a piece of it, you need to be heavily regulated. As central banks enter into the digital currency world, they will apply the same principles to any existing market participant.

A great example of this approach can be found in a bill introduced to the U.S. Congress in late November 2020, called the Stablecoin Classification and Regulation Act of 2020. According to the bill:

  • A stablecoin can only be issued by an insured depository institution that is a member of the Federal Reserve System.
  • In order to issue stablecoins or provide any stablecoin-related services, a written approval from the appropriate federal banking agency and the Federal Reserve System is required.

In summary, the bill is intended to apply banking regulations to centralized stablecoin issuers, which could have a huge impact on stablecoins currently present on the market. Some of them are not regulated at all, while others are. However, they are not as strong as the bill suggests.

Without going into specifics of each particular jurisdiction or the future of singular legislative initiatives, it is quite clear that a similar approach could be undertaken by regulators outside the United States.

Are decentralized stablecoins set to replace the old ones?

It is also clear that the modern cryptocurrency industry cannot be imagined without stablecoins, and the potential disappearance of centralized stablecoins, as of now, could have an irreversible impact on the market. However, this impact could be mitigated by the transfer of liquidity into decentralized stablecoins, which can represent a competitive alternative and, at the same time, fall out of the scope of the central banks’ regulations.

The main issue with decentralized stablecoins has a conceptual nature — the absence of an issuer automatically leads to the absence of stability, guarantees, legal responsibilities and governance. Currently, there are a huge number of decentralized protocols looking to solve this issue by delegating governance to the community, and ensuring full transparency and control over collateral, which is represented by cryptocurrency or other stablecoins.

Related: You can’t talk about blockchain and not bring up CBDCs and stablecoins

Despite solving part of the issue, the above leaves the stability problem in the air. Using cryptocurrency as collateral is the most obvious solution for decentralized protocols in terms of transparency, but at the same time, it can be hardly competitive with the U.S. dollar-pegged stablecoins in terms of stability (yes, DAI, we are looking at you now).

So, it appears that a perfect solution might be a community-managed decentralized stablecoin, connected with real-world assets of stable value — currency, debt obligations or others. The emergence of such solutions could have a significant impact on the current stablecoin industry, providing traders with a stable and transparent alternative to currently existing centralized stablecoins, which are on the verge of elimination under the pressure of regulators and central banks.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Artem Tolkachev is the founder and CEO of Tokenomica. Since 2011, he has been an intellectual property and information technology lawyer and entrepreneur. In 2016, Artem founded and headed Deloitte CIS Blockchain Lab. As part of that initiative, he led a range of innovative projects involving the implementation of enterprise blockchain solutions, tokenization of real-world assets, tax and legal structuring of security token offerings, development of cryptocurrency, and blockchain legislation.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://cointelegraph.com/news/a-nightmare-on-stable-street-centralized-stablecoins-may-be-doomed

Blockchain

A pillar of the Civil Rights Movement, Dr. Robert J. Brown, will keynote a global blockchain leadership event.

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Blockchain and Liberty for All

Broadcast live from Washington DC, June 18-19, 2021, with contributions from chapters around the globe, GBA will virtually present its’ annual state of the union to the world. The GBA global leadership team will present their blockchain results so far and discuss where we are headed for the next decade. 

The featured Keynote speaker, Dr. Robert Brown will share his wisdom gained from decades of working with world leaders, industry titans, and civil rights leaders. The Washington Post called him a “World Class Power Broker”. Just some of his many accomplishments include:

  • Key advisor to the late Dr. Martin Luther King, Jr. 
  • Involved in the Robert Kennedy campaign
  • Special Assistant to President Richard Nixon
  • Close friend and confidant of Nelson Mandela 
  • Consulted with many prominent US corporations on race relations and crisis management
  • Worked on the committee that established the legislation creating the Office of Minority Business Enterprise within the US Department of Commerce
  • He signed the documents that increased funding for historical black colleges & universities under President Nixon
  • Serves on the boards of numerous universities and corporations 
  • He holds eleven honorary doctorate degrees from prestigious institutions of higher learning.

Dr. Brown has handled communications and race relations during pivotal moments of the civil rights movement. His ability to build bridges between Democrats and Republicans during the Civil Rights heyday, makes him an exceptional choice for blockchain leaders who will face inevitable backlash as this technology revolutionizes the landscape for many in power. How are we to move forward in a respectful and mutually beneficial manner? 

As blockchain technology continues to disrupt every industry, GBA influencers will need to hear the lessons learned from this icon of history.

The Government Blockchain Association, (GBA), is honored to have Dr. Brown as a keynote speaker for Blockchain and Liberty for All.

Political freedom must be accompanied by economic freedom for people to be truly free. Blockchain Technology is a new frontier in the economic landscape.” -Gerard Dache, Executive Director, GBA

 

You do not want to miss this event. For more information, go to

http://bit.ly/block4all

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Blockchain

The fees sting but Uniswap v3 sees more volume on launch day than v2’s first month

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The founder of Uniswap, Hayden Adams, has reported that the launch day of Uniswap’s v3 iteration was more successful than its predecessor in terms of volume.

In a tweet on May 6th, Adams declared the launch of Uniswap v3 the day before a resounding success. He noted that over its first 24 hours of going live v3 had already processed more than twice the volume that v2 saw in its first month.

Dividing Uniswap’s volume by total value locked, or TVL, Adams asserted the platform is operating with greater efficiency than its v2 form. While v2 saw $1.1 billion in volume and $8.1 billion in TVL during its first day for an efficiency ratio of 13%, v3 hosted $150 million in volume and $300 million in TVL for an efficiency ratio of 50%, according to Adams.

At the time of writing, the Uniswap dashboard was reporting a daily volume of $214 million with a TVL of $350 million for v3. Over the same period the version 2 stats of $1.1 billion in daily volume and of course it’s built up around $8 billion in TVL over the time it’s been operational.

Gas guzzler?

Not all have been as enamored with the latest iteration of the world’s most popular DEX, with users complaining about the costs associated with using v3. One respondent to Adams stated:

“Even more expensive to make mistakes now. Tried to migrate my UNI/ETH liquidity to V3, failed and paid 108.09 usd worth of gas.”

Dragonfly Capital Managing Partner, Haseeb Qureshi, also asserted that v3 is more expensive to use than its predecessor, noting an example transaction in which he attempted to swap 3 Ether for DAI.

“Looks like Uniswap v3 is more gas expensive than v2, roughly as expected. Specifically, it’s about 28% more expensive for single-hop transactions it looks like. For larger transactions that cross multiple ticks/buckets, the gas costs should be slightly larger.”

Others complained of the cost incurred by creating a pool and adding liquidity on the new platform, with one claiming to have paid 0.2 ETH worth roughly $750.

DeFiPrime commented on the complexities of using the new interface via its Telegram feed, stating:

“Add liquidity UI now requires a master’s degree to figure out how to price your liquidity position. It’s a huge step backward from the simplicity we had in v2.”

Fees still seem to be the major drawback of using the platform — although the same can be said of most DeFi projects on Ethereum in recent months. Uniswap needs to wait for the launch of Optimism to bring layer-two scaling to v3.

On March 29, Cointelegraph reported that Uniswap’s daily fee generation had topped Bitcoin’s by $1.7 million.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://cointelegraph.com/news/the-fees-sting-but-uniswap-v3-see-more-volume-on-launch-day-than-v2-s-first-month

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Blockchain

Ivanka Trump’s luxury Miami apartment block accepting crypto for condos

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Luxury Miami apartment Arte Surfside will now accept cryptocurrency as a form of payment for its remaining luxury residences — including the Villa Nove penthouse, currently listed for $38 million.

The firm has partnered with trading platform SolidBlock, allowing potential buyers to pay in multiple cryptocurrencies, including Bitcoin and Ether.

The region’s “most exclusive” condominium is already home to Ivanka Trump and Jared Kushner, as well as fashion blogger Arielle Charnas from Something Navy. It’s now attempting to appeal towards crypto millionaires and billionaires attracted by Miami’s Bitcoin-friendly reputation. 

According to the announcement, the cheapest condo available starts at $10.3 million with spaces ranging from three to five bedrooms, with access to a 75-foot indoor pool, meditation pond, rooftop tennis court, and private temperature-controlled parking spaces. The highest sale to date was $33M for the penthouse condo — the same one that has just been relisted at $38 million.

Developers Sapir Corp noted that a number of top Silicon Valley companies and venture capital firms had moved to the city and this played a role in the decision to accept cryptocurrencies.

Miami Mayer Francis Suarez has already met with ‘Dogecoin CEO’ Elon Musk, Twitter CEO Jack Dorsey, and Google CEO Eric Schmidt in an effort to convince them to move operation to the sunny state. Cryptofinance firm XBTO Group has a new office there, Scott Minerd from global investment firm Guggenheim Partners and Peter Thiel-associate Keith Rabois have bought property, and VC Delian Asparouhov joked on social media about moving Silicon Valley to Miami. 

Chairman of Sapir Corp Alex Sapir said the company supported Mayor Francis Suarez’s vision to make Miami a cryptocurrency and technology hub.

“As the most exclusive luxury building in the city, we’re positioning ourselves for a future where half the world’s billionaires are crypto billionaires, which will happen once Bitcoin reaches $200,000. With cryptocurrencies already creating incredible worldwide wealth, it’s real estate that will sustain that wealth and provide buyers with a legacy.”

Over the last year, Suarez has made it clear that he wants to landmark Miami as the country’s crypto center and he hailed Arte’s announcement as the first of many.

“The embrace of cryptocurrency and emerging technologies across all sectors of industry is precisely how Miami will become the city of the century,” said Mayor Francis Suarez. “Arte is setting an important precedent and I won’t be surprised to hear similar stories in the near future.”

A resolution for a new cryptocurrency task force passed on May 6, looking at the feasibility of allowing the Miami-Dade county to accept cryptocurrencies as a form of payment for taxes, fees, and services.

Next month, Miami will host the world’s largest Bitcoin conference, Bitcoin 2021 conference.

Coinsmart. Beste Bitcoin-Börse in Europa
Source: https://cointelegraph.com/news/ivanka-trump-s-luxury-miami-apartment-block-accepting-crypto-for-condos

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