What has been happening around Blockchain Technology and Cryptocurrencies this week? The most relevant local and international developments as well as appealing background reports in a pointed and compact way in retrospect in our weekly review.
The world's largest asset manager, BlackRock Inc, has filed two applications with the SEC seeking access to the crypto market for select funds of the provider. In specific, the filing is regarding bitcoin derivatives with the Chicago Mercantile Exchange (CME). A month ago, Chief Investment Officer (CIO) Rick Rieder already called bitcoin "digital gold," citing strong demand from BlackRock clients.
Unlike the world's largest asset manager, UBS Group is not a big believer in digital currencies, especially Bitcoin. In a report titled "Should I Buy Bitcoin?" the major Swiss bank expressed its skepticism about the largest cryptocurrency by market capitalization and warns of a potential total loss. The study authors mainly point to regulatory uncertainties. In addition, they see a risk that Bitcoin could be replaced by a "better" cryptocurrency in the future. As an example of regulatory risks, UBS refers to a crypto derivatives ban for retail investors in the United Kingdom. An indication for their second argument is the large number of cryptocurrencies on the market - currently more than 8,000 according to CoinMarketCap. Interestingly, the analysts mainly focus on the payment benefits of the cryptocurrency in their argumentation and leave the much-cited store of value characteristics of Bitcoin practically unaddressed.
While Bitcoin is now in the price discovery phase beyond the all-time high created in 2017, Ethereum, the second largest cryptocurrency, is coming close to its all-time high set in January 2018. Reaching an all-time high after a bear market that lasted more than three years underscores continued development and adoption of a cryptocurrency. A lot has happened with the smart contract platform when it comes to fundamentals. The decentralized financial (DeFi) sector in particular has been experiencing a veritable boom since the mid-2020s. So time to take a closer look at the sector. This week, we highlight two sub-areas in the DeFi field. The interoperability space that enables cross-blockchain transactions and the evolution of the now second largest decentralized exchange, Sushiswap:
So-called "wrapped" tokens are an important component of the decentralized financial world. They allow cross-blockchain transactions. One popular use case are wrapped Bitcoin tokens (WBTC) on the Ethereum blockchain. These tokens allow bitcoin to be included in ethereum-based DeFi transactions. One of the leading projects in this field is Ren Protocol. As a co-founder of the WBTC project, they now have a proprietary wrapping protocol. In an interview with COO Michael Burgess, we learn more about the interoperability project and the future of the DeFi space.
Furthermore: In August 2020, the term "vampire mining" was created. It was inspired by the DeFi project SushiSwap, a clone of the most popular decentralized exchange Uniswap. Meanwhile, project has established itself as an independent player. In terms of total cryptocurrency value locked, SushiSwap is catching up to Uniswap. With far fewer trading pairs, the exchange now captures over 50% of Uniswap's volume - an impressive development.
Selected articles in the weekly review:
The trend of increasing institutional interest in Bitcoin seems to continue. With BlackRock, the world's largest asset manager would be entering the crypto market.
Switzerland's UBS expresses skepticism about Bitcoin and cryptocurrencies and warns of a potential total loss.
Reaching an all-time high after a bear market that lasted more than three years underscores continued development and adoption of a cryptocurrency.
They allow cross-blockchain transactions and are an important part of the DeFi ecosystem. Michael Burgess, COO of Ren Protocol, explains the benefits of wrapped tokens.
The Uniswap clone was able to establish itself as a independent project and has earned a place as a DeFi "blue chip".
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