DeFi – Strategic Yield Farming

DeFi, short for decentralized finance, is a term used to describe the ecosystem of financial applications built on blockchains. It is an overlapping network of dapps and smart contracts, usually built on Ethereum to capitalize on the modularity that ERC20 blockchain platforms offer. They are typically financial apps with a focus on borrowing, derivatives, exchanges, trading, etc.

The modularity and interoperability of blockchain has allowed for increasingly denser and complex financial application systems and strategic maneuvers such as yield farming. Conceptualized in the midst of Summer 2020, the strategy has been received with much enthusiasm as ICOs once did.

The method revolves around farmers who lock up their cryptocurrency holdings into DeFi liquidity pools, which could then be exchanged or lent out for interests. Similar to staking or loans, the process rewards farmers with either fixed or variable interests for their contribution of liquidity to the DeFi market. The difference is there is no compounding. Yield farming socializes or does not carry the transaction fees to claim rewards; allowing your earned interests to continuously compound without repeated manual interactions and transactions with the smart contracts. Other benefits and incentives include accumulating low-volume, or privately traded, tokens by becoming a liquidity provider for a pool that rewards them.

By utilizing the modularity of blockchain, farmers often will maximize their profits by shifting funds amongst a number of different DeFi platforms to take advantage of the best interest rates and returns. Reward tokens can be deposited back into liquidity pools as well, and complex chains of investments can be created by redirecting yields into other liquidity pools as well which can in turn reward different tokens.

Yield farmers could quickly accumulate tokens of new projects that they adopt, and earn rewards tokens that could rapidly rise in value. Compared to interests from a traditional institution like a bank, yield farming could offer far more lucrative interests, in a much riskier environment. In the rapidly developing cryptocurrency market, there is no guarantee which adopted projects may take off, and some will inevitably fall into obscurity.

Despite the benefits that yield farmers and their liquidity pools could provide to projects, there are speculations that consider the practice as a strain on Ethereum. As the ETH blockchain is already tackling scalability issues, the concern is that increased activity caused by yield farming could cause DeFi traffic to come to a disasterous stop.

Weekly Recap

March 16th, 2021 - March 23rd, 2021

Welcome to our 3rd weekly recap for March.

Overview 

Crypto News

• [1] Report all crypto transactions or face 5-year jail term in South Korea

South Korea’s cryptocurrency regulatory space is set to become even more tightly regulated with the incoming laws on financial reporting for crypto businesses in the country.

• [2] Litecoin Completes MimbleWimble Code for LTC Scaling and Privacy

The Litecoin Foundation has completed the code for its MimbleWimble Extension Block (MWEB) which will enhance scaling and privacy for the cryptocurrency.

• [3] Grayscale Launches Five New Digital Asset Trusts, Said Investors Want Diversification

Grayscale Investments, the largest digital asset manager, launched five new digital currency trusts, the company announced Wednesday.

• [4] Visa Looking to Enable the Purchase of Bitcoin on its Credentials, Says CEO Al Kelly

Visa CEO, Al Kelly revealed the company’s plans to enable the buying of bitcoin using its credit cards during his recent podcast with Fortune’s ‘Leadership Next’.

• [5] Deutsche Bank Says Bitcoin Is Now “Too Important To Ignore”

In her new report, Deutsche Bank analyst and French economist Marion Laboure writes that Bitcoin can no longer be ignored after its market cap eclipsed $1 trillion.

• [6] Cardano listed on Coinbase, ADA’s price rises

Cardano’s (ADA) community long-awaited announcement has arrived. Coinbase has listed ADA on its main and pro platform. Starting today users will be able to start trading the cryptocurrency in all supported regions.

• [7] Flare Networks May Integrate Cardano After User Voting

Flare Networks considers integrating Cardano’s native token ADA. It has launched a poll on its official Twitter handle to find out the community’s opinion.

• [8] Ethereum Developers to Discuss Speeding Up the Merger

Ethereum devs will discuss whether to focus on going full Proof of Stake (PoS) after the fee market hard fork goes through this summer.

• [9] Coinbase Exploring Support for 43 Altcoins After Addition of Crypto Asset Cardano

Crypto exchange Coinbase could be extending support for more digital assets following the addition of Cardano (ADA) on its platform.

Weekly Recap

March 9th, 2021 - March 16th, 2021

Welcome to our 2nd weekly recap for March.

Overview 

Crypto News

• [1] Ripple Officially Ends Its Partnership with MoneyGram

Last month, MoneyGram suspended trading on Ripple’s platform after the blockchain company got sued by the U.S. Securities and Exchange Commission, but both parties were anticipating to resume their collaboration given that a multi-year contract between them was still in place.

• [2] Chinese social media Weibo suspends Huobi, OKEx and Binance accounts

Chinese Twitter-alike social media Weibo has suspended the official accounts of Huobi, OKEx, Binance and MXC in what appears to be an effort targeted on crypto exchanges.

• [3] Bitcoin price sheds 5% after Oracle keeps quiet on $4B BTC allocation rumors

Claims that Oracle would announce a 72,000 Bitcoin buy-in on Wednesday were left unsubstantiated by executives as Bitcoin fell from local highs of $57,300.

• [4] Grayscale Will Be Cashing Out Bitcoin to Get Back $250 Million of Its Shares, Peter Schiff Believes

In one of his recent tweets, a rigorous Bitcoin opponent, CEO of Euro Pacific Capital, Peter Schiff, wrote that Grayscale is now likely to turn into a Bitcoin seller – just as he expected.

• [5] Binance Investigated by CFTC, CZ Responds

The Commodity Futures Trading Commission (CFTC) is investigating Binance, the largest exchange by global trading volume, according to a March 12 Bloomberg report.

• [6] SEC Requests Personal Financial Information on Ripple Executives, They Object

Ripple’s Brad Garlinghouse and Christian Larsen have asked a federal judge to block subpoenas from the SEC requesting personal financial information from eight banks.

• [7] India to Make Holding Bitcoin Illegal

India is expected to pass a bill that would criminalize cryptocurrencies, according to a Reuters report that cites an unnamed government official.

• [8] Alameda is not affiliated with REEF!

A tweet from Sam Trabucco from Alameda clarified that they are not affiliated with REEF as claimed.

• [9] Several Binance Smart Chain Projects Under DNS Attack

A DNS attack can take several forms. However, the affected platforms have reported facing a DNS hijacking on the Binance Smart Chain. In this instance, their domain names have been hijacked, resulting in the internet traffic being diverted to an unknown destination.

Weekly Recap

March 1st, 2021 - March 9th, 2021

Welcome to our 1st weekly recap for January.

Overview 

Crypto News

• [1] Stablecoin Issuer Tether Says It Is a Victim of a 500 BTC Ransom Demand Infoleak Threat

Just days after the conclusion of its long-running feud with the Office of the Attorney General of New York, Tether says it is now a victim of an extortion attempt. According to the stablecoin issuer, the blackmailers are threatening to release documents they claim “will harm the bitcoin ecosystem” if their demand for the payment of 500 bitcoins is not met.

• [2] Crypto Bank Expands in India — Confident Government Will Approve Legitimate Use of Cryptocurrencies

Crypto bank Unicas, a joint venture between Cashaa and United Multi State Credit Cooperative Society, has expanded its operations by opening another physical branch. The bank believes that the Indian government will introduce positive crypto regulation and not impose an outright ban on cryptocurrencies such as bitcoin.

• [3] Goldman Sachs Brings Back Bitcoin Trading Desk as the Firm Sees Crypto Market Becoming More Mature
  

Global investment bank Goldman Sachs has brought back its bitcoin trading desk and will start handling bitcoin futures next week. The firm is also reportedly exploring the potential for a bitcoin exchange-traded fund (ETF) and plans to provide a crypto custody service.

• [4] Biden’s SEC Chair Pick Gary Gensler Reveals Policies on Bitcoin and Crypto Regulation

Gary Gensler, President Joe Biden’s pick to lead the U.S. Securities and Exchange Commission (SEC), has revealed his policies on bitcoin and other cryptocurrencies if confirmed as the SEC chairman. Gensler is a professor at MIT who teaches cryptocurrencies. He previously served as the chairman of the Commodity Futures Trading Commission (CFTC).

• [5] Thai Financial Regulator Claims Controversial Crypto Rule Proposal Was Just to Gauge Public Opinion

The Thai financial watchdog has reportedly retreated from its initial controversial crypto rule proposal. Citing the country’s Securities and Exchange Commission (SEC), a local media outlet stated that public criticism was significant regarding the matter.

• [6] Microstrategy Acquires Another $10 Million in Bitcoin, Company Balance Sheet Nears 100K BTC

On Friday, the incorporated and publicly listed business intelligence (BI) firm, Microstrategy announced the company has acquired an additional $10 million in bitcoin. The company’s CEO Michael Saylor revealed the latest purchase on Twitter with a link to a Form 8-K Securities and Exchange Commission (SEC) filing registered on March 5, 2021.

• [7] John McAfee Indicted by DOJ Over Alleged Cryptocurrency Fraud Charges

Tech entrepreneur and former anti-virus tycoon John McAfee has been indicted by the U.S. Department of Justice (DoJ) on money laundering and fraud charges. The United States Attorney for the Southern District of New York and the FBI unsealed the indictment charging McAfee and his associate Jimmy Watson with securities fraud.

• [8] Goldman Sachs Sees Huge Institutional Demand for Bitcoin

Global investment bank Goldman Sachs is seeing huge institutional demand for bitcoin with no signs of abating. A survey of Goldman’s institutional clients shows that 61% expect to increase their cryptocurrency holdings. Meanwhile, 76% say the price of bitcoin could reach $100,000 this year.

Weekly Recap

February 22nd, 2021 - Feb 29th, 2021

Welcome to our 4th weekly recap for Febuary.

Overview 

Crypto News

• [1] US Secretary of Treasure Yellen Says Bitcoin is Inefficient for Transactions

• [2] Can’t beat ‘em? Join ‘em: Mastercard and Visa make a case for Bitcoin

On Feb. 10, Mastercard announced that it would start supporting a select few cryptocurrencies on its payment network. According to the payments giant, the inclusion of cryptocurrencies will allow customers to “save, store and send money in new ways” while opening up new opportunities for merchants as well.

• [3] MoneyGram suspends trading on Ripple, citing SEC lawsuit

Global money transfer service MoneyGram says it has changed its relationship with blockchain payments firm Ripple amid the latter’s litigation with the Securities and Exchange Commission.

• [4] India’s Financial Regulator Orders Against Crypto Holdings: Report
  

The Securities and Exchange Board of India (SEBI) has reportedly ordered stock promoters to exit all cryptocurrency holdings before raising funds.

• [5] South Korea fast tracks 20% tax on Bitcoin and crypto profits to 2022

After much back and forth, South Korea appears to have finally set a hard date for the dawn of cryptocurrency taxation.

• [6] Bitfinex, Tether settle with New York’s Attorney General for $18.5 million

Crypto firms Bitfinex and Tether have settled with the New York Attorney General’s (NYAG’s) office, ending a legal dispute that began in mid-2019.

• [7] Coinbase Files for IPO via Direct Listing on Nasdaq — Valuation Soars Above $100 Billion

Cryptocurrency exchange Coinbase has filed for an initial public offering with the U.S. Securities and Exchange Commission (SEC). The company has chosen the direct listing route and has applied for its shares to be listed on Nasdaq.

• [8] Dubai Based Crypto Investment Fund to Convert $750 Million Worth of BTC Into ADA and DOT Tokens

A Dubai based crypto-based investment fund, FD7 Ventures says it will offload bitcoins worth $750 million and will use the proceeds to increase positions in Cardano and Polkadot tokens. According to FD7 Ventures, this switch to the two altcoins will help the fund to better serve the interests of investors who are looking to diversify their portfolios.

• [9] Philippine Crypto Exchange Demands Users Return Bitcoin Bought at $6,000 Following System Error

Philippine crypto exchange Pdax recently suffered a costly technical failure – one that led to bitcoin trading at 300,000 Philippine pesos (around $6,000) – a discount of 88% to its current price.

Weekly Recap

February 15th, 2021 - Feb 22nd, 2021

Welcome to our 3rd weekly recap for February.

Overview 

Crypto News

• [1] NYDIG Registers for a Bitcoin ETF, Morgan Stanley Named a Participant in SEC Filing

• [2] Dubai Government Licensing Entity Now Accepts Bitcoin for Payments

A government-owned entity in Dubai has started accepting bitcoin, ether and tether as payment for its services, according to local media reports.

• [3] Publicly-Listed Chinese Lottery Firm Acquires Bitcoin Mining Pool Btc.com

A U.S. publicly-listed Chinese sports lottery firm is extending its arms into the crypto industry by announcing another related maneuver. 500.com Ltd announced it has acquired Btc.com, the well known bitcoin mining pool.

• [4] Canada Has Approved Two Bitcoin ETFs — First One Starts Trading Today
  

Two bitcoin exchange-traded funds (ETFs) have been approved in Canada. Evolve Bitcoin ETF has become the second bitcoin ETF to get approval by Canada’s securities regulator. The first approved bitcoin ETF starts trading Thursday.

• [5] Nigeria Crypto Ban: Bitcoin Sells for $76K as Deposits on Centralized Exchanges Plummet

According to a website that tracks the price of bitcoin across the globe, the crypto asset’s selling price in Nigeria as of February 18 stood at $ 76,000. At this price, the crypto asset is selling for $20,000 more than the approximately $52,000 that most cryptocurrency exchanges are currently quoting.

• [6] World’s Largest Asset Manager Blackrock Enters Bitcoin Space — Discusses What’s Driving Up BTC Price

The world’s largest asset manager with almost $9 trillion in assets under management, Blackrock, has started investing in bitcoin. Sharing his view on what’s driving up the price of the cryptocurrency, the firm’s chief investment officer says the technology and the regulation have evolved to where people find bitcoin should be part of their portfolios.

• [7] North American Bitcoin ETF’s First Trading Day Captures $165M in Volume

The North American Purpose Bitcoin ETF launch on Thursday saw massive demand, as more than $165 million in trade volume was recorded. In fact, the exchange-traded fund listed on the Toronto Stock Exchange (TSX) saw it’s first $80 million swapped during the first hour of trading sessions.

• [8] Nvidia Limits the Efficiency of Mining Ether Using Its GPUs by 50%

Nvidia announced that it will start limiting the efficiency of mining ethereum or any other crypto using its new range of upcoming graphics processing units (GPUs).

• [9] Binance Suspends Ethereum and ERC-20 Token Withdrawals Before Quickly Reversing Course

The rollercoaster-ride in cryptocurrency prices on Monday was accompanied by Binance’s fresh restrictions for ethereum and ERC-20 tokens.

Weekly Recap

February 8th, 2021 - Feb 15th, 2021

Welcome to our 2nd weekly recap for February.

Overview 

Crypto News

• [1] Uber CEO Says the Company Will Accept Bitcoin If There’s a Need For It

• [2] World’s Largest Custodian Bank Moving Into Crypto, Considering Issuing Cryptoassets

The oldest bank of the United States, Bank of New York Mellon (NYSE: BK), has revealed it will start financing bitcoin and other digital currencies through the rollout of a new cryptocurrency custody service.

• [3] Bitcoin ETF Receives Green-light From Ontario Securities Regulator

The Ontario Securities Commission has approved a bitcoin exchange-traded fund, according to public records published Thursday.

• [4] India to Ban Cryptocurrency Investment Completely
  

BloombergQuint reported the news on Thursday, citing an unnamed “senior Finance Ministry official.” The ban won’t be imposed overnight, according to the official, who said the government would give a three-to-six month transition period for existing investors to liquidate their investments.

• [5] Deutsche Bank Quietly Plans to Offer Crypto Custody, Prime Brokerage

Deutsche Bank has joined the growing ranks of large financial institutions exploring cryptocurrency custody, with aspirations to offer high-touch services to hedge funds that invest in the asset class.

• [6] The BitPay Prepaid Mastercard® Supports Apple Pay

Apple Pay is the newest way BitPay makes living life on crypto easy. Simply open Apple Pay and scan or enter the BitPay card information to use it wherever Apply Pay is accepted.

• [7] Ukraine, UAE sign memos, contracts worth over $3 bln – President’s Office

Ukraine and the United Arab Emirates have signed memorandums and contracts worth $3 billion or more, the presidential press service said.

• [8] SEC Commissioner Says There’s an Urgent Need to Provide Crypto Clarity

U.S. Securities and Exchange Commission (SEC) Commissioner Hester Peirce is reportedly vocalizing the urgent need for regulatory clarity across the crypto sector.

• [9] $600 Million: MicroStrategy Announces Plan to Raise Money to Buy More Bitcoin 

Despite this weak price action, a massive influx of new capital may be imminent, thanks to MicroStrategy. The company announced plans to raise roughly $600 million – all of which would be used to add to their BTC reserves.

Weekly Recap

February 1st, 2021 - Feb 8th, 2021

Welcome to our 1st weekly recap for February.

Overview 

Crypto News

• [ELON] Elon Musk Supports Bitcoin, Says BTC on the Verge of Broad Acceptance

• [1] US Federal Reserve Seeking Manager to Research CBDCs and Stablecoins

The U.S. Federal Reserve (Fed) has posted a job advertisement that seeks to hire a role related to stablecoins and central bank digital currencies (CBDC). The Fed is looking for a research manager to join its team to assess the “benefits and risks” of digital assets.

• [2] Swiss Companies Issue First Tokenized Asset for Trading Under New National Blockchain Rules

New legal provisions on distributed ledger technology (DLT) went into effect on Feb. 1 in Switzerland. After the implementation, two local companies announced that they had issued the first tokenized asset under the brand-new law.

• [3] Paypal Launches Business Unit Dedicated To Cryptocurrency
  

Paypal is launching a new business unit dedicated to cryptocurrency services, the company chief executive officer Daniel Schulman announced this week.

• [4] Central Bank of Nigeria Orders Banks to Close Accounts of Crypto Clients

The Central Bank of Nigeria (CBN) has circulated a letter directing banks and financial institutions to identify and close accounts of cryptocurrency transacting entities. The directive, which took immediate effect, threatens “severe regulatory sanctions” to financial institutions that fail to comply.

• [5] Grayscale’s Crypto Assets Under Management Soar Past $30 Billion — ‘Institutions Are Here’

Grayscale Investments has surpassed the milestone of $30 billion in net crypto assets under management (AUM). The company says the tremendous growth is due to institutional investors, particularly hedge funds.

• [6] India’s Central Bank RBI Close to Digital Currency Decision as Paypal Exits Indian Payments Market

The Reserve Bank of India (RBI) is actively working on a digital currency and will make a decision “very soon,” the central bank has reportedly confirmed. Meanwhile, payments giant Paypal is shutting down its payment services within India.

• [7] Bill Miller’s Multibillion-Dollar Hedge Fund to Add Bitcoin Exposure via GBTC

Billionaire hedge fund manager Bill Miller’s flagship fund will soon be able to add bitcoin exposure by investing in Grayscale’s bitcoin trust (GBTC), according to its filing with the U.S. Securities and Exchange Commission (SEC). The fund currently has about $2.25 billion in assets under management.

• [8] Bitcoin Price Surpasses $44k Handle, ETH Futures Launch, Tesla’s Balance Sheet BTC Praised

The price of bitcoin touched a new all-time high on Monday after the community discovered that Elon Musk’s firm Tesla added $1.5 billion worth of bitcoin to the company’s balance sheet. At press time, bitcoin is meandering over the $43k handle and has an overall market capitalization of around $814 billion today.

Weekly Recap

Jan 25th, 2021 - Feb 1st, 2021

Welcome to our 5th weekly recap for January.

Overview 

Crypto News

• [1] Publicly-Traded Firm Buys $150,000,000 in Bitcoin, Says Holding BTC Superior to Holding US Dollar

• [2] As Robinhood Shuts Down GameStop Shares, Demand Emerges For Decentralized, Censorship-Resistant Trading

With the ongoing saga of Gamestop shares surging as a result of the r/wallstreetbets subreddit, Robinhood and other trading platforms such as WeBull and Apex Holdings (the clearing firm for among others, Public.com) has refused to allow for the buying of more GameStop GME +19.2% shares.

• [3] Reddit partners with Ethereum Foundation to boost scaling and resources

Popular social media network Reddit, which counts over 1.7 billion monthly visits, is deepening its ties with the Ethereum Foundation in what it has formalized as its first-ever blockchain partnership.

• [4] Ripple Files Legal Response to SEC’s Lawsuit
  

Blockchain company Ripple has filed its preliminary response to the lawsuit that was announced by the U.S. Securities and Exchange Commission in December.

• [Tweet] Elon Musk adds ‘Bitcoin’ to Twitter bio with 43.7M followers

When the richest man in the world, Elon Musk, updated his Twitter bio on Friday — simply adding the word “Bitcoin” — it was followed by a near-immediate 13% increase to the Bitcoin (BTC) spot price.

• [5] MicroStrategy CEO to release the world’s first Bitcoin ‘playbook’ for corporations

The enterprise business firm entered the Bitcoin space last year amidst fears of inflation and a depreciating dollar. It’s now urging other corporations to do the same.

• [6] Visa reaffirms commitment to crypto payments & fiat on-ramps

During the Visa Q1 earnings call on Thursday, chairman and CEO Al Kelly devoted a portion of his comments to reaffirming the financial giant’s commitment to crypto payments and onramps, as well as explaining “how Visa thinks about crypto in general and our approach.”

• [7] Visa CEO Signals Crypto Payments Support

Visa’s CEO, Al Kelly, suggests Visa could add cryptocurrencies to its list of over 160 currencies, according to the transcript of an earnings call.

• [8] Kraken CEO Reveals 6x Surge in New Users, Says DeFi ‘Eating World of Finance’

Jesse Powell, chief executive of crypto exchange Kraken, says the firm is seeing a significant uptick in the number of new users as interest in cryptocurrencies grows.

Grayscale – An Institutional Approach to Cryptocurrency

Grayscale Investments is the world’s largest digital currency asset manager and a subsidiary of the venture capital company Digital Currency Group (DCG) who also owns the digital media company Coindesk. CoinDesk also hosts a conference on digital currencies and blockchain technologies titled Consensus.

As an asset manager, the company offers its services to investors looking to invest in Bitcoin as security, without making direct purchases or managing funds themselves. Grayscale was established in 2013 and incorporated into DCG when it was formed in 2015 by Barry Silbert.

Grayscale manages multiple investment funds, each for large amounts of various cryptocurrencies such as BTC, BCC, ETH, ETC, LTC, XRP, Zcash, Stellar, etc. The most notable of these being the Grayscale Bitcoin Investment Trust (GBTC), which was the first publicly quoted Bitcoin security when it launched in 2013. The Grayscale Digital Large Cap Fund (GDLC), launched in 2018, allows customers to invest in a group of prominent digital currencies. Grayscale funds were approved for public trading by the Financial Industry Regulatory Authority in 2019, and are accessible on the OTCQX and the Trust trades under their symbol tickers, GBTC and GDLC, respectively.

FIGURE 1: MULTI-ASSET CLASS PERFORMANCE – 4Q20

This heavily influenced the company’s recent explosive growth, with the company’s asset under management (AUM) nearly tripling from $926 million to $2.7 billion, coinciding with digital asset market resurgence during Q2 2019. That number has grown to more than $24.7B in AUM as of January 13, 2021.

FIGURE 2: GRAYSCALE AUM GROWTH

Coinbase Custody, as a NY-regulated trust company, serves as the custodian for the digital assets of Grayscale since July 29, 2019.

Grayscale Investments has also begun the registration process for new trusts on additional cryptocurrencies and Defi-related assets such as DOT, AAVE, XMR, ADA, ATOM, and EOS between Dec 2020 and Jan 2021. However, the company’s Managing Director, Michael Sonnenshein, had clarified that these were “reservation filings” and does not necessarily reflect Grayscale product releases.

As fiat monetary inflation grows on a global scale, so does the demand for cryptocurrencies as more institutional investors look for alternatives. Increasing digital asset demands in conjunction with the most recent Bitcoin mining rate halving in May 2020 has left little circulating supply of BTC, and Grayscale has been a major contributor to this factor. The amount of BTC that entered the Grayscale Bitcoin Trust during 4Q20 was nearly double the amount of BTC mined over the same period of time.

FIGURE 3: GRAYSCALE BTC TRUST INFLOWS AS A PROPORTION OF MINED BTC

Grayscale’s 4Q20 Digital Asset Investment reported that their AUM held 3.31% of the circulating supply of Bitcoin at the time, with an additional $600 million purchase of 16,244 BTC in January 2021. The total estimation of BTC in Grayscale’s possession is currently 566,897 BTC at this time.