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 weekly review.
Non-fungible tokens (NFTs) were one of the biggest drivers of the crypto landscape last year. Although there are now various marketplaces on different blockchains for these tokens, OpenSea is undoubtedly the big winner of the boom. With monthly trading volumes of up to USD 3 billion and a market dominance of over 90%, the project was able to form a virtual monopoly. Accordingly, criticism rose against the company’s centralized structure, which contrasts with most crypto projects. This is because the decision-making of the marketplace is centrally managed and the fees of 2.5% incurred on any given trade go entirely to OpenSea. In addition, Opensea regularly excludes NFTs from the platform, and specific users are revoked from access. These practices are opposed by many users, as they are in stark contrast to the spirit of censorship resistance and permissionless access. Two important pillars that characterize the crypto and Web 3.0 philosophy. Not least for these reasons, a so-called “vampire attack” was launched this week with the alternative platform LooksRare. In the process, users and liquidity are lured or “sucked” away from the dominant platform to the alternative through token incentives. In fact, the tokens ($LOOKS) of the fully functional NFT trading platform recorded trading volumes in the triple-digit millions and were last traded on a fully diluted market capitalization of $3.5 billion. The promise is to decentralize governance processes while distributing all trading fees to token holders. An interesting development that has certainly been registered with Opensea.
The surge of new adopters often pushes decentralized smart contract platforms to the limits of their capacity. In particular, on the most dominant network Ethereum, users are faced with high transaction costs and long waiting times. The emergence of alternative blockchain platforms was one of the main evolutions in the crypto industry in 2021, and people looking for alternatives quickly come across to the Solana platform. With a unique consensus mechanism called Proof of History (PoH), the blockchain network enables up to 65,000 transactions per second (TPS), far more than Ethereum’s 25 “TPS.” However, to achieve such scale, the network must compromise on decentralization. An introduction to Solana’s functionality, history, and its future.
Stablecoins represent a substantial part of the crypto ecosystem and are becoming increasingly popular. With a market capitalization of $150 billion and a daily trading volume of $60 billion, they have become indispensable as part of the major trading pairs with an essential role in DeFi applications. But with the ability to issue a blockchain-based FIAT currency, private companies have taken over a fundamental function that was previously the exclusive preserve of central banks and their affiliated commercial banks. As a result, the new sector quickly came to the attention of international regulators and is one of the highest priorities for wide-scale regulation these days.
The most widely used stablecoins at present are tokens issued by a central authority that are linked to the value of the dollar. The issuer secures the circulating amount with dollar deposits and thus guarantees an exchange into the native currency. However, it has become apparent that there are large differences in the quality of the collateral deposited by the respective issuers. The largest issuer, Tether, has often been accused of a lack of transparency with regard to the coverage of its stablecoins, which in the past has led to the intervention of the SEC. In contrast, algorithmic and decentrally managed stablecoin protocols are designed to provide full transparency while simultaneously ensuring censorship resistance. In this case, an underlying protocol manages monetary policy with the help of automated issuance or redemption of its stablecoins and serves as a central bank. The collateral in the form of digital assets is publically accessible on the blockchain for everyone. Since MakerDAO launched the first dollar stablecoin DAI in 2017, a wide range of alternative protocols with different stabilization mechanisms evolved. An overview of the leading projects.
In addition: Demand for services with digital assets in the institutional sector is picking up. This is equally reflected by the increasing investment volume in the sector’s service providers. In Switzerland, a majority stake in Crypto Finance AG by Deutsche Börse in the triple-digit millions caused a stir last year. Over the past two weeks, Swiss crypto banks Sygnum and SEBA unveiled funding rounds of CHF 90 rsp. 110 million. Both firms became the first crypto-focused service providers to receive a banking license from the Swiss Financial Market Supervisory Authority (FINMA) in August 2019 and have since recorded significant growth.
Selected articles in the weekly review:
The NFT marketplace OpenSea is encountering growing frustration from users, reflected in the success of emerging competitors.
Solana is a highly functional open source project that banks on blockchain technology’s permissionless nature to provide DeFi solutions.
The regulation of fiat-backed stablecoins remains a widely discussed topic as it’s still uncertain how regulators will approach the asset class.
Algorithmic stablecoins respond to market events with automated stabilization measures. This increases their decentralization and…
SEBA Bank raises CHF 110 million in a successful funding round to further drive international growth and institutional business.
