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May 28, 2020

Episode 005

Binance US & Chainalysis


Crypto Market Data

Digital asset market data provider CryptoCompare was nominated for a Waters Technology award in the best market data provider category. It was the only digital asset data provider nominated. CryptoCompare CEO Charles Hayter explained how the company was able to stand out among the competition, pointing to the three key things it takes to be a data provider in this space: scope of data, delivery methods and indices. On the indices, he said,

“We also have a number of indices that we produce on top of the data that give our data that extra push so we can do what Refinitiv does and do what FTSE does as well at the same time.”
Hayter also addressed the importance of the quality of market data for the institutionalization of crypto markets, saying:

“Data is incredibly important because the price mechanism is key. So the price mechanism is what people need to know about and need to understand how that price mechanism is being created. And so trust in a data provider is probably the most important part of helping flesh out this industry and help it take it to the next step as we see more types of digital assets appear in the ecosystem.”

In Conversation With: Driving Responsible Standards for the Staking Industry

Binance US joined the Proof of Stake Alliance. Catherine Coley, CEO of Binance US, explained why the company got involved.

“One of the things we saw, not only just allowing access to trading, allowing people to buy and sell cryptocurrencies, was the ability for folks to begin staking, or having a say in the governance in order to earn staking rewards for certain coins. And so Binance US began staking for three coins: ALGO, ATOM and Tezos. One of the important things in order to be continuing the health and development of the staking industry was to take part in Proof of Stake Alliance, which brings together the industry’s best players, from Bison Trails, Coinbase Custody, Tezos, Kava, you’ve got a good selection of folks that are going to be more mindful about how we go forward with A.) regulation or B.) innovation around staking and where we can bring this proof of stake forward.”

Coley further explained that alliance members include lawyers, protocol development teams, investment funds and industry service providers like Binance US. She said the industry group must address the regulatory uncertainty that could limit the growth of POS and the adoption of critical innovation, adding:

“We’re working kind of hand in hand, especially with the federal regulators and really hoping to continue to highlight the importance of using staking as a mechanism but also just to ensure the security of various blockchains as well as promote sound governance of these networks.”

She also addressed the opportunities for individual investors using staking, agreeing with Teana that Binance takes an agnostic position when it comes to which consensus algorithm users choose to use.

“We can call it agnostic, but I’m definitely pro freedom of choice for our users. So giving them a full array of opportunity to get involved in whether it’s proof of work, whether it’s consensus algorithm, whether it’s proof of stake, those are all among a bunch of other varieties that we allow for the tokens that are listed or the ways to which you can get involved in digital assets through our platform. But in terms of what are the advantages of people being able to stake within a centralized marketplace, it allows them to be able to nimbly move between their strategies of investment that they choose in their own path,” said Coley.

Onchain Reaction - Onchain Insights and Observations

Chainalysis chief economist Philip Gradwell provided insight and analysis into what happened onchain in the past week.

  • “On the 20th of May, some bitcoin that had not moved since February 2009 finally moved. And the market reacted, the prices falling because people thought that bitcoin belonged to Satoshi….Myself and many others suggest that it isn’t Satoshi moving that bitcoin. The blockchain analysis doesn’t support that, but it still gave the market a shock.”
  • “Fewer people are selling. There’s less bitcoin coming into exchanges over the last couple of weeks than actually the 200-day average. “But despite these low inflows, the amount of bitcoin that’s being held in exchange balances, we actually think it’s increasing. And that’s going to increase the sell pressure because there’s now more bitcoin sitting on exchanges looking for buyers and not being bought and taken off.”
  • “And if we look at flows between regions, well that’s also down and in particular flows to North America have declined the most.”

DeFi Convention: The State of Play of Decentralized Finance

James Brodie, founding partner at ID Theory, and Lasse Clausen, founding partner at 1kx, joined Nisa to discuss the DeFi space. Nisa asked about the recent stress test and whether it set the space back in terms of trust. Clausen mentioned how there was a drop in volumes across the board, adding that it’s picking up again. Brodie also commented on the situation, saying:

“We need events like Black Thursday to come around so that we can stress test the system, identify flaws in some of the protocols and ultimately strengthen everything and the whole ecosystem and optimize what are very experimental technologies.”

Ethereum with its smart contracts has been the leader in the DeFi space. Recently more attempts to bring bitcoin to Ethereum have transpired. Clausen reacted to this dynamic, saying:

“I think it shows that pretty much every other chain is trying to connect to Ethereum, building bridges. There’s attempts now to bring bitcoin to Ethereum. And bitcoin has been around for a long time but now all of a sudden it seems to be starting to take off. I think it really shows…the strength of the Ethereum DeFi ecosystem. And I personally think it’s great that we get many different forms of collateral into this DeFi ecosystem. So, although I have maybe some reservations long-term about bitcoin, I think for the next five to 10 years I think it’s [helping] to bring different forms of collateral onto Ethereum.”

Brodie also weighed in, saying that the tech being used works for Bitcoin but it will work for other chains, adding that Zcash is coming into the De-Fi space, which he thinks is great because one of the flaws on the DeFi at the moment is privacy, adding:

“Ethereum as far as I’m concerned has really captured the DeFi space. I think the composiblity within means that any developer is going to develop on the Ethereum chain. There are issues with Ethereum that it could mean that it loses its crown. I think one of the biggest threats at the moment is a contentious chain split….So you know I think the fact that Ethereum is still forkable is an issue. It’s where other chains that aren’t forkable may prosper in this area like Tezos,” said Brodie.

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Gerelyn Terzo
Gerelyn caught wind of bitcoin in mid-2017 and after learning about the peer-to-peer nature of Satoshi's creation has never looked back. Previously she covered institutional investing and fintech for several major trade publications. Gerelyn resides in Verona, N.J.

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