Blockchain Bites: Aave's Advance, BitMEX's Block, Turkey's Bitcoin Trot

Turkey is in a bitcoin bull run, a Fed branch is studying blockchains to possibly support a "digital dollar" and Aave unleashed unsecured borrowing on DeFi.

AccessTimeIconAug 24, 2020 at 4:16 p.m. UTC
Updated Sep 14, 2021 at 9:47 a.m. UTC
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A branch of the Fed is looking at 30 blockchain networks to possibly support a “digital dollar,” Turkey is experiencing a bitcoin bull run and the Aave protocol has taken a leap forward for DeFi.

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Top shelf

“Can’t stop the nodl”
Turkey is experiencing a dollarization crisis and a bitcoin bull run, exchange volume data reveals. BTCTurk, the largest crypto exchange in Istanbul, has seen volumes roughly quadrupled over the past year, attracting roughly 100,000 active monthly users by July 2020 out of nearly one million accounts, CoinDesk’s Leigh Cuen reports. “August might be the highest volume ever and the highest level of registrations in any month this year,” CEO Ozgur Güneri said. “This also correlates to the volatility in prices.”

Digital dollars
The Federal Reserve Bank of Boston, one of 12 regional Federal Reserve banks operating under the U.S. central bank, is evaluating more than 30 different blockchain networks to determine if they would support a digital dollar, CoinDesk’s Nikhilesh De reports. This follows on news from earlier this month the Boston Fed is actively testing a tokenized version of the U.S. dollar with the Massachusetts Institute of Technology’s Digital Currency Initiative, looking at how it might complement the existing greenback. 

BitMEX blocked
Crypto derivatives exchange BitMEX will block users in the Canadian province of Ontario beginning in September. Without going into detail, the exchange said it was "mandated" by the state's securities regulator, the Ontario Securities Commission. Existing positions may run till Jan. 4, 2021, but no new contracts will be filled. The news comes as the sometimes controversial exchange moves to become more compliant with regulators, having brought in compulsory "know-your-customer" verification procedures earlier this month, CoinDesk News Editor Daniel Palmer reports. 

Wandering yuan?
China’s central bank said experiments of its digital yuan project only involve small retail transactions. The statement, from a People's Bank of China employee, came after rumors of a Shenzhen house sale conducted through the DCEP (digital currency, electronic payment). The seller had been paid with a large amount of the digital currency, but was unable to convert it into the traditional version of the currency, Chinese news source Global Times reported. The PBoC employee later told news source Sina scenarios involving larger-sized transactions during the pilot period are not yet being addressed.

Mining news
Enegix may become one of the largest bitcoin mining facilities in the world if it opens in September. The 180 megawatt (MW) data center will be able to support 50,000 mining rigs, according to sales director Dmitriy Ivanov. Assuming full capacity with Bitmain's AntMiner S19 series or MicroBT’s WhatsMiner M30, they could produce mining power of about 5-6 EH/s – approximately 4% of bitcoin's current hashrate, CoinDesk’s Paddy Baker reports. The $23 million project would draw as much electricity as 180,000 U.S. homes and employ about 160 people in Kazakhstan. Separately, Nasdaq-listed Marathon Patent Group has deployed two shipments of mining machines, increasing the company’s hashrate by 130 petahash per second to 186 petahash per second.

Quick bites

  • Barstool’s Dave Portnoy Is Bad at Trading Cryptocurrency (Zack Voell/CoinDesk)
  • Money Reimagined: DeFi-ing History (Michael Casey/CoinDesk)
  • People Aren’t Buying the "Great American Recovery" Narrative (Nathaniel Whittemore/The Breakdown)
  • “Yield farming” is flashy, but in some ways it resembles what's happening in traditional markets (Frank Chaparro/The Block)
  • Binance Taps DeFi Excitement to "Fuel" Expansion Strategy in India (Leigh Cuen/CoinDesk)

At stake

Aave advances
Aave, a DeFi money market protocol, has brought unsecured borrowing to decentralized finance (DeFi). CoinDesk’s Brady Dale reports the protocol’s credit delegation function is live, allowing users with collateral on Aave to delegate their credit line to a third party they trust, earning a cut of the interest. Aave, like most other DeFi protocols, had allowed users to earn interest on cryptocurrency and borrow against it. Unsecured borrowing represents “a significant shift for DeFi lending, which until now has been predicated on only one of the traditional “four C’s” of credit: collateral,” he writes, (“capacity,” “capital” and “character” were the remaining three). 

What people are saying:
“I think it’s healthy and natural to experiment around these models. But they do have a lot of risks around them, for obvious reasons, if the assets can’t be recovered in time for the primary owner,” Joseph Kelly, CEO of Unchained Capital, a company that writes loans against bitcoin collateral.

Market intel

Bitcoin up, dollar down
Bitcoin was up slightly at about $11,776 early Monday, rising along with European equities, stock futures, gold, copper and oil amid market optimism, CoinDesk’s First Mover reports. The dollar weakened. Prices have now spent 27 straight days above $10,000, the third-longest period in the five-digit zone in bitcoin’s 11-year history. According to Cryptoslate, the streak suggests “$10,000 as strong support, which typically is a positive medium-term sign.” 

Bearish bets
Bearish bets in bitcoin futures from leveraged funds hit record highs on the Chicago Mercantile Exchange (CME), CoinDesk’s Omkar Godbole said. Last week, leveraged funds increased their short positions by 110% to a record high of 14,100 contracts, according to a Commitment of Traders (COT) report published by the U.S. Commodity Futures Trading Commission (CFTC) on Friday. Crypto derivatives research firm Skew suggests these short positions are “a function of attractive cash and carry levels,” an arbitrage strategy.


Crypto Long & Short
It wasn’t just Coinbase alum Brian Brooks, now head of the U.S. Office of the Comptroller of the Currency (OCC), who wanted to open the possibility for banks to custody crypto – the OCC had been looking at this for some time. CoinDesk Head of Research Noelle Acheson looks at the growing number of regulators and politicians – including from the Commodity Futures Trading Commission and Congress – trying to “support crypto innovation while protecting investors for longer than many realize.” Thus, “the OCC’s recent bold move is probably not the only welcome surprise we’ll see from an official body this year,” she writes. 

Podcast corner

Yielding curves
On the latest Long Reads Sunday podcast, Nathaniel Whittemore looks at markets’ reaction to Federal Reserve minutes suggesting yield curve control is off the table

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