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The DeFi revolution is like cooking a recipe

DeFi ingredients are defined by the creators and developers operating in the space, and subtle variations of previous recipes create new results.

Republished by Plato



In the last two months, the decentralized finance industry has seen a dramatic surge of interest, as new platforms promising to disrupt the way people manage their money, transact, earn and entertain themselves have launched in rapid succession in recent months.

Much of this growth has been catalyzed by the meteoric rise of DeFi lending platforms like MakerDAO and Aave, which together now compose more than 40% of the DeFi market. But a wave of new DeFi products that are targeting practically every traditional and digital industry is now making the rounds, expanding the benefits of DeFi to casual consumers and cryptocurrency users alike.

In 2020, DeFi projects and products can be described as either base-level protocols or new experiences built on top of these protocols; or they can be considered refinements or enhancements to pre-existing products and services.

Step 1: Define the transaction rules

Since the industry is still very much in its earliest stages of development, a large proportion of the new projects launched fall under the “protocol” category — these are essentially the cooking methods that allow entrepreneurs and trailblazing firms to launch their own products and services because they can be woven together into complex platforms that offer new functionality.

These protocols define what can be done within a DeFi application, including which types of digital assets can be issued, managed or used, as well as how the platforms built on top of the protocol are able to communicate with one another. In this case, the interplay of different raw materials, such as Wrapped Bitcoin (WBTC), Wrapped Ether (WETH), stablecoins and popular crypto project tokens like Basic Attention Token (BAT), Chainlink and Curve (CRV), among others, can be used to create entirely new combinations (or recipes).

The interplay of multiple different DeFi platforms has led to the rapid growth of the industry, as users stack the benefits of each platform on top of one another to achieve new, ever more creative uses for the technology.

For anybody building their own DeFi initiative, this usually means either working with a handful of plug-and-play solutions to build something new or introducing a new protocol into the mix, with the hopes of adding value to others. When defining the transaction rules for this protocol, developers need to consider its intended use case and find the right balance between versatility, security and usefulness. Developers in the DeFi space typically consider how their own assets (ingredients) fit in with the ecosystem and whether they can provide additional value to holders — beyond what is currently available.

If DeFi is a soup, then blockchain protocols and transaction rules are the cooking method, and the assets are the ingredients. By varying the combination of protocols (cooking methods) and assets (ingredients), it is possible to form a huge variety of products — giving rise to the diverse DeFi ecosystem we see today.

Step 2: Develop the asset(s)

In order to further expand the DeFi industry and bring in the next big wave of users, we need more raw materials. Arguably, one of the most promising raw materials would be tokens that represent sports rights and assets from the sporting industry. With more than 3.5 billion sports fans worldwide, the majority of whom are aged 18–49, there is an excellent opportunity to expand the DeFi industry by offering additional value to sports fans.

For people looking to develop a disruptive DeFi product that forms the interface between sports and blockchain technology, then sports would form the meat of their recipe.

The global sports industry is a $500-billion market that is ripe for disruption by innovative blockchain products, new products and new experiences. Firms have already begun building the basic protocols that can facilitate this disruption.

Some platforms enable fans to participate in the decision-making processes of their favorite sports teams by purchasing and using their chosen sports team’s fan tokens. Depending on the team, these fan tokens can also grant the holders access to a range of rewards, such as unique experiences and exclusive merchandise that is unavailable elsewhere. This can help to provide fans with more meaningful interactions with their favorite sports stars and clubs, while also generating a unique online economy around fan tokens.

But DeFi has the potential to extend this much further. With DeFi, users can engage with an entirely decentralized fantasy league, collecting and trading nonfungible tokens that represent players and teams, and setting up trustless betting contracts where players pit their teams against one another and wager on the outcome. Participants in the system don’t need to trust that the wager will be paid out correctly, as everything is completely transparent and trustless.

DeFi also extends its reach directly into the crowdsourced prediction and betting industry. With new DeFi protocols on the stage, users can turn live predictions into liquid assets, which can allow users to enter and exit wagering positions for practically any event, including sports, presidential elections, cryptocurrency price action and even black swan events. With the elaboration of DeFi exchange protocols, cryptocurrency users no longer need to rely on centralized platforms to conduct their trades, which means users can trade their DeFi ERC-20 tokens.

This development has come just at the right time. Many sports platforms are either looking into or have already begun tokenizing physical merchandise, including MLB Championsbaseball cards and collectible crypto bobbleheads. It won’t be long until these tokens could also be used to redeem real-world merchandise, too — such as exchanging a sports jersey NFT won in a competition for an actual jersey, or, vice versa, by unlocking a new jersey NFT for a fantasy team by purchasing a jersey in real life.

Although the functionality of a DeFi product represents the meat or substance of our recipe analogy, a new wave of products built on top of DeFi protocols can be considered the garnish — or finishing touches.

Step 3: Optimize the user experience

The final layer of the DeFi space is the projects and platforms that either work to make the industry more accessible to everyday users and investors or offer new experiences entirely using the building blocks that are already available.

In the initial stages of the DeFi industry, and even for some DeFi projects today, the user interface was less than intuitive, and the concept behind the platform was difficult to grasp. As a result, just like the blockchain industry in general, the DeFi industry was initially adopted by financial professionals, savvy entrepreneurs and those with a passion for new technologies.

Now, however, the industry is far more accessible, as great strides have been made in terms of the user experience — or dining experience as far as our recipe goes. Dramatic changes in both ease of use and the elaboration of use cases that suit everyday investors and general consumers have helped to make DeFi more than just a niche that benefits the experts.

More mainstream use cases for the technology, like the potential to cross over NFT items in popular video game titles without game houses needing to sign IP license agreements, and adding digital currencies to video games are almost certainly on the horizon. Likewise, the Olympics, various soccer premier leagues, the National Football League and the National Basketball Association will almost certainly be poised to dive into the growing soup of DeFi projects to deliver an engaging sporting experience, player interactions and merchandise over the blockchain. And all of this is coming sooner than you might think.

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.

Victor Zhang is the CEO and co-founder of AlphaWallet. He has spent the past five years working to transform the way banking and blockchain technology intersect. Prior to his venture into blockchain technology, Zhang worked for 17 years in international business in Asia and Australia.



Smart contract exploits are more ethical than hacking… or not?

Republished by Plato



There has been a lot of talk about the recent “hacks” in the decentralized finance realm, particularly in the cases of Harvest FInance and Pickle Finance. That talk is more than necessary, considering hackers stole more than $100 million from DeFi projects in 2020, accounting for 50% of all hacks this year, according to a CipherTrace report.

Related: Roundup of crypto hacks, exploits and heists in 2020

Some point out that the occurrences were merely exploits that shined a light on the vulnerabilities of the respective smart contracts. The thieves didn’t really break into anything, they just happened to casually walk through the unlocked back door. By this logic, since the hackers exploited flaws without actually hacking in the traditional sense, the act of exploiting is ethically more justifiable.

But is it?

The differences between an exploit and a hack

Security vulnerabilities are the root of exploits. A security vulnerability is a weakness that an adversary could take advantage of to compromise the confidentiality, availability or integrity of a resource.

An exploit is the specially crafted code that adversaries use to take advantage of a certain vulnerability, and to compromise a resource.

Even mentioning the word “hack” in reference to blockchain might baffle an industry outsider less familiar with the technology, as security is one of the centerpieces of distributed ledger technology’s mainstream appeal. It’s true, blockchain is an inherently secure medium of exchanging information, but nothing is totally unhackable. There are certain situations in which hackers can gain unauthorized access to blockchains. These scenarios include:

  • 51% attacks: Such hacks occur when one or more hackers gain control of over half of the computing power. It’s a very difficult feat for a hacker to achieve, but it does happen. Most recently in August 2020, Ethereum Classic (ETC) faced three successful 51% attacks in the span of a month.
  • Creation errors: These occur when security glitches or errors go overlooked during the creation of the smart contract. These scenarios present loopholes in the most potent sense of the term.
  • Insufficient security: When hacks are done through gaining undue access to a blockchain with weak security practices, is it really as bad if the door was left wide open?

Are exploits more ethically justifiable than hacks?

Many would argue that doing anything without consent cannot possibly be considered ethical, even if worse acts could have been committed. That logic also raises the question of whether an exploit is 100% illegal. For example, having a U.S. company registered in the Virgin Islands can also be seen as performing a legal tax “exploit,” though it isn’t considered outwardly illegal. As such, there are certain gray areas and loopholes in the system that people can use for their own benefit, and an exploit can also be seen as a loophole in the system.

Then there are cases such as cryptojacking, which is a form of cyberattack where a hacker hijacks a target’s processing power to mine cryptocurrency on the hacker’s behalf. Cryptojacking can be malicious or nonmalicious.

It may be safest to say that exploits are far from ethical. They are also entirely avoidable. In the early stages of the smart contract creation process, it’s important to follow the strictest standards and best practices of blockchain development. These standards are set to prevent vulnerabilities, and ignoring them can lead to unexpected effects.

It is also vital for teams to have intensive testing on a testnet. Smart contract audits can also be an effective way to detect vulnerabilities, though there are many audit companies that issue audits for little money. The best approach would be for companies to get several audits from different companies.

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.

Pawel Stopczynski is the researcher and R&D director at Vaiot. He was previously the R&D director and a co-founder at Veriori and at UseCrypt. Since 2004, Pawel has been involved in the development of 18 IT projects in Poland and the United Kingdom, focusing on the private sector. He was a speaker at several IT conferences, and the organizer of two TEDx conferences. For his work, Pawel was awarded a gold medal at the Concours Lépine International Innovation Fair 2019 in Paris, and a gold medal of the French minister of defense.

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Close to $10 Billion Worth of Crypto Longs Wiped off the Market Amid Sudden Crash

Republished by Plato



It’s been a rough Sunday for the cryptocurrency market.

$7.8 Billion Liquidated in an Hour

The “up only” sentiment in the digital asset market took a major hit today as more than $7 billion in crypto long positions were liquidated within an hour in a sudden market wide crash.

According to data from bybt, more than $9 billion worth of crypto long positions were liquidated in the past 12 hours while more than $8 billion were wiped off the market in the last 4 hours.

Specifically, bitcoin’s price started trending downwards early Saturday but the sharp free fall commenced around 3:00 UTC on Sunday.

After recording new ATH day after day, bitcoin and other cryptocurrencies’ price witnessed a steep downfall today almost touching the $50,000 mark. At the time of writing, bitcoin has regained some support and trades at $55,300.

According to crypto analyst Lark Davis, bitcoin breached the 50-day moving average during the unanticipated crash which is a rare event during a bull run. For context, BTC breached the 50 day MA only a few times during the 2017 bull market. In retrospect, all such dips proved to be immensely profitable buy opportunities.

Overleveraged Longs get REKT

While it typically pays to long in a bull market, investors must be cautious of too much optimism and avoid being long in an already overbought market to not get rekt in sudden market crashes like that of today.

Being long in a market with less liquidity is particularly dangerous as the order books are thin and a sudden dump can cause the price of the underlying asset to go down much more than in other liquid markets.

The Block’s Larry Cermak noticed this on Perp Protocol where the price of ether (ETH) reached as low as $900 due to low liquidity.

Crypto derivatives exchange FTX’s CEO Sam Bankman-Fried share some interesting facts about the exchange during today’s crash.

According to SBF, the exchange witnessed trading volume close to $26 billion which was another all-time record volume day for FTX. At the same time, FTX had close to $250 million of liquidations today.

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Kraken Daily Market Report for April 17 2021

Republished by Plato




  • Total spot trading volume at $2.51 billion, 57% above the 30-day average of $1.6 billion.
  • Total futures notional at $667.9 million.
  • The top five traded coins were, respectively, Bitcoin, Dogecoin, Ethereum, Tether, and Siacoin.
  • Strong returns from Nano (+51%) and Siacoin (+20%).

April 17, 2021 
 $2.51B traded across all markets today

#####################. Trading Volume by Asset. ##########################################

Trading Volume by Asset

The figures below break down the trading volume of the largest, mid-size, and smallest assets. Cryptos are in purple, fiats are in blue. For each asset, the chart contains the daily trading volume in USD, and the percentage of the total trading volume. The percentages for fiats and cryptos are treated separately, so that they both add up to 100%.

Figure 1: Largest trading assets: trading volume (measured in USD) and its percentage of the total trading volume (April 17 2021)

Figure 2: Mid-size trading assets: (measured in USD) (April 17 2021)

Figure 3: Smallest trading assets: (measured in USD) (April 17 2021)

#####################. Spread %. ##########################################

Spread %

Spread percentage is the width of the bid/ask spread divided by the bid/ask midpoint. The values are generated by taking the median spread percentage over each minute, then the average of the medians over the day.

Figure 4: Average spread % by pair (April 17 2021)


#########. Returns and Volume ############################################

Returns and Volume

Figure 5: Returns of the four highest volume pairs (April 17 2021)

Figure 6: Volume of the major currencies and an average line that fits the data to a sinusoidal curve to show the daily volume highs and lows (April 17 2021)

###########. Daily Returns. #################################################

Daily Returns %

Figure 7: Returns over USD and XBT. Relative volume and return size is indicated by the size of the font. (April 17 2021)

###########. Disclaimer #################################################

The values generated in this report are from public market data distributed from Kraken WebSockets api. The total volumes and returns are calculated over the reporting day using UTC time.

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