Messari Founder: The Industry's Recent Frustrations and Hopes
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Messari founder: The industry's latest frustrations and hopes.
This is an essay by the founder of Messari, describing some of the recent frustrations in the industry, and then (hypocritically) sad for a while, pointing out some hopes and insights in the industry. I almost translated the whole essay, it's not very long but it's worth reading. Well, he milked Zcash, milked stable coins, milked Web3 and Defi, but I think he was caught by Zcash.
This article is actually not that pessimistic, and the contradiction is only because of love.
Cryptocurrencies face some major challenges, and the frustration and disappointment I've felt has grown in recent days.
Where is the future of cryptocurrency?
Much of the recent deluge of news has happened to fall in areas where I am more bearish on the industry's outlook: the US regulatory and tax system; the feasibility of Libra's launch in developed countries (given that FB is a political pariah in all Western China it’s 404); ICO/IEO is slowly dying, no real upside catalyst or sticky use case, constant negative headlines, etc.
But there are many areas that still excite me and give me hope!
Bitcoin has been repositioned as a "speculative store of value" by some of the best marketers in the industry - any gold investor should add it as part of their asset basket as it may be the perfect digital analog gold. Bitcoin also has a story of being a "Swiss bank account in your pocket" but this is scary as a marketing story, I wish more people would choose to forgive short term volatility and use it as medium to long term asset protection, Instead of referring to BTC as a "cryptocurrency", it makes people doubly phobic ("black mined dollars") twice.
Zcash to me is the second most important project in the industry because it's the only one with near-perfect privacy embedded in the core protocol... We need to balance homogeneity (for dissidents) and enterprise adoption ( For customer privacy) ). Zcash is also the canary in the coal mine (used by coal miners to detect crises ahead) and is on the front lines of how cryptocurrencies are regulated globally. If the route of Zcash is severely blocked, then I think it will be almost impossible to upgrade the privacy to BTC. I'm glad that Coin Center has been a major supporter of Zcash and that there are some smart institutions and well-connected investors backing the project.
The theme of investing in Web 3.0 has quickly become a concern, and I thought it would take some time to get excited about these applications, but maybe sooner than we think. I'm actually not a big fan of the token-first model, but it's more interesting to apply the token model to an application that's already running. Moreover, from a functional point of view, the value of tokens is not traded through Binance IEO, but is gradually being paid attention to and slowly gaining liquidity. If so, such a change would be welcome, wouldn't it?
I'm a big fan of decentralized exchanges, synthetic assets (on how do foreigners own a shadowy stake in the S&P?), live payments, cryptocurrencies for games and virtual goods, and Web 3.0 wallets; Big proponent of the LEGO model” approach, because it is much easier to build a reliable library of audited mini-contracts than to trust a full tower of smart contracts for a more complex system. I am cautiously optimistic that the ETH 2.0 team will avoid breaking composability.
I'm also super bullish on non-Libra stablecoins: USDT, Dai, USDC, etc. should power the next cycle's biggest killer apps. Dai stands for DeFi? USDT for Emerging Market Payments? USDC for corporate settlement? Dare to think and dare to do.
Now, as it was two years ago, I think the industry can avoid self-inflicted wounds by achieving transparency and consensus on fundamental practices including governance, contributors, token economics, issuance, etc. We're excited to work with the great team on solutions for our Transparency Registry. I hope it helps us move in the right direction both in the US and globally.
Should you be bullish too? Don't take my word for it!I highly recommend that you re-listen toAndreas Antonopoulos on the Defiance Podcast
. Andreas Antonopoulos has been one of the clearest and most inspiring teachers in the cryptocurrency space. If you like text content, it also provides a text draft, which is a very valuable work. My favorite excerpt follows:
The podcast is 55 minutes long, but I listened to it three times over the holiday weekend.
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Innovations in the Bitcoin Tech Stack
This is a Bitcoin technology stack written by Digital Asset Research. It has been written by someone before. This article is somewhat updated, and the diagram he compiled is quite comprehensive. Yes, it is the following diagram:
Some main points of the article are extracted as follows:
One of the most underrated advantages of the Lightning Network is its immediate privacy properties. Since the Lightning Network does not rely on a global verification of all state changes (i.e. its own blockchain), users can use other technologies and network overlays (such as Tor) to conduct transactions privately.
smart contract
It is important to note that Schnorr signatures are the technical primitive that makes all these new smart contract approaches possible. These new approaches could enable novel smart contract applications to be built on top of Bitcoin, of which Schnorr is a foundation.
mining
Another interesting development in the mining industry that has helped improve stability is the renewed interest in hash rate and difficulty derivatives. These are especially useful for hedgers looking to hedge against hash rate fluctuations and difficulty adjustments, and while these derivative products are not yet widely available, they mark an interesting development in the industrialization of bitcoin mining.
privacy
Before we examine specific privacy innovations, it is important to emphasize that the biggest obstacle to private transactions of digital assets is the fact that most solutions are immature, lacking maturity and adoption.
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Crackdown on Cryptocurrency Exchanges Inside China
This is a fascinating article that tells Western audiences more about the sharing and analysis of China’s recent suppression of exchanges. There is often a gap in understanding between China and the West on many cryptocurrency news. This article is written more knowledgeably. It may be related to the author's oriental background, but what he shares with Western audiences is more down-to-earth and real. One of the points that caught my attention was the promotion of "the project party that didn't serve matcha, they are ashamed to say that they are engaged in pyramid schemes." to the West.
The article is divided into two parts: the upstart exchange and the red exchange. The upstart exchange part is the story of the rise of matcha and some recent negative stories. I believe you have read a lot. As for the red exchange part, that is, Huobi and OKex have recently conjectured stories related to some government departments or policies. I believe you have read a lot of Chinese content. It will not be provided here anymore. The author gave a very interesting list at the end, as follows:
do you know?
Most Chinese exchanges make money through the following fee structure:
Transaction Fees.
Listing Fees - Influential exchanges have increased listing fees as they become more famous.
Possibly as much as a $2 million "bond." This is the money reserved for exchanges to use to palletize tokens after they are listed. The recent spat between Biki and CWT showed an ugly deal between the exchange and the project. CWT delayed its deposit, and as a result, BiKi’s community manager publicly discouraged investors from buying tokens, as the huge amount of funds had not yet been received.
Other service fees like membership fees, discounts on villa purchases (yes, some exchanges offer real estate deals!) and "pretty girl service," which means attractive reps with personal service (??? Uh, author That's exactly what the original text says).
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New asset release: breaking down the launch strategy of Kadena and Nervos Network
Written by Messari, dissects the different approaches taken by Kadena and Nervos Network to bootstrap their respective mining communities. All proof-of-work (PoW) blockchains rely on a strong set of miners to secure the network. But a PoW network needs to offer a clear competitive advantage (usually a financial one) to entice miners to join in the first place.
How to do it
Nervos chose to host a mining competition on its testnet, and when the mainnet launches (November 15th), top participants will be rewarded with real-world rewards in Nervos’ native token, CKB. This approach helps familiarize miners with the nuances of the Nervos blockchain and mining client design, while facilitating token distribution.
Kadena quietly launched its mainnet for CPU mining only (token transfers won’t be unlocked until December 6th, and smart contract functionality won’t start until January 2020). This release enables early miners to earn KDA tokens with minimal fees. Kadena has concurrently conducted a public token sale, pricing KDA at $1 per unit. The stark difference in costs between mining and buying creates attractive arbitrage opportunities for miners.
Comparative Results
The growth pattern of Nervos Network is more gradual, but the hash rate and difficulty level of Nervos are orders of magnitude higher than Kadena's security indicators. Nervos is a prime example of how a testnet race can recruit an active community of miners to launch the mainnet.
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The State of Stablecoins in 2019
Tether leads here with 40,742 wallet addresses. DAI ranks second at 2752, followed by USDC and Paxos.
Over the past year, more than $237 billion in stablecoins have been traded on-chain. USDT takes most of the market. Quantitatively - this figure is about 80%. Centralization (and branding) still comes into play here. DAI has seen a 300% increase in transaction volume since January 2019. The introduction of multi-collateral DAI has the potential to push this number even higher.
2019 is the year when USDT-ERC20 established its leading position.
Big players still dominate DeFi and dApps. And, if an app or utility is unlikely to capture big players early in their growth cycle, they may not see much traction due to the small size of the cryptocurrency market today.
