Getting to the bottom of the unusually high lending rates for Compound’s DAI market

The rapid emergence of the Ethereum-enabled Decentralized Finance movement has brought with it some curious and heroic tales.

Maker CDP 3228 was the first such tale to attract attention, with industry analysts watching in real time as 50,000 Ether (ETH), valued at close to $7m, was liquidated in orderly fashion after a major move down in the markets on the 19th November.

It has taken just over two weeks for another fascinating saga to arise, this time intersecting three decentralized applications — Compound, Maker, and Paradex.

Compound is an Ethereum-based permissionless money market. The sleek user interface allows long-term crypto…


Measuring the extent to which a network is over or undervalued relative to demand for the network as an alternative payment system

As always, the following is for educational purposes only. This is not investment advice.

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Fundamental Value in a Sea of Speculation

The continued, aggressive market recession has many investors questioning the fundamental value underpinning the crypto asset class.

Several groups and individuals have sought to look beyond market activity, providing alternative, crypto asset-specific metrics, which aim to more accurately measure the fundamental strength of these underlying networks.

The latest offering comes from blockchain media behemoth, CoinDesk, via their ‘Crypto-Economics Explorer’, which, unfortunately, leaves much to be desired.


The tides are changing

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This week Alex Wearn, CEO of IDEX, published an article explaining his decision to block access to New York IP addresses. Wearn also announced that his exchange will soon begin instituting KYC procedures for all users in order to comply with money laundering and sanctions laws.

For those unfamiliar, IDEX is currently the most popular ‘decentralized exchange’ (DEX) on the market: at its peak in May 2018, the exchange saw over 21,000 ETH in 24hr volume. For context, Paradex, the DEX relayer recently acquired by Coinbase, peaked at just over 7,000 ETH in 24hr volume back in September.

This ‘pragmatic’…


A novel metric for measuring the distance PoW chains have to cover in order to sustain current security levels solely through transaction fee revenue

As always, the following is for educational purposes only. This is not investment advice.

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Fee Ratio

Nic Carter recently advocated for a new metric to replace the ever-misleading ‘market capitalization’, the latter currently occupying a hegemonic position as the lead reference when framing the state of the crypto asset market.

The Fee Ratio is the answer to the following question posed by Nic:

“If block rewards disappeared tomorrow what percentage of [BTC’s] economic volume would we have to pay in fees to replace them”

“about 0.6% of economic volume would have to be paid in fees to support an equivalent level of…


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The author owns roughly equal dollar amounts of $BTC and $ETH.

Bitcoin’s disinflationary monetary policy will be its death sentence. The network’s security will become increasingly vulnerable to attacks as honest miners become priced out, with transaction fees failing to provide necessary revenue in an increasingly competitive mining market.

The second part to this piece, coming soon™, will explore the migration of Bitcoin’s network to an Ethereum Plasma Cash chain as a solution to the existential threat posed by a disinflationary monetary policy.

First, some context.

Bitcoin’s Value Proposition

Bitcoin’s (the asset, from here on noted as BTC) core value proposition stems from…


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Disclosure:

Before I start, I would like to disclose that my crypto asset portfolio is heavily weighted towards $ETH and that I do not own, nor have ever owned, $EOS.

I am incredibly conscious that, while I try and remain as objective as possible in my analysis, my financial stake will inevitably result in some degree of confirmation bias on my behalf.

I encourage anyone reading this to refute my assertions and help me understand the flaws in my perspective.

As always, the following is for educational purposes only. This is not investment advice.

All references to spot price and…


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BlockFi.com

Background:

Previous employment at venture-backed tech companies, ad-tech sector /lending side of FinTech.

Zac started becoming more interested in crypto-asset sector and had personal experience during which his bank did not recognize crypto assets when trying to secure a loan.

Team:

Team of 7 full-time, several advisors

Finished seed round of funding for $1.55m in January led by ConsenSys Ventures.

Product

Addressable markets — individuals, companies, institutions.

Individuals don’t pay CGT on loans. If you invest loan in capital markets you can deduct interest payment from gains.

Companies: exchanges, mining companies, wallet providers — anyone that generates revenue in crypto…

Matteo Leibowitz

strategy lead @ uniswap protocol | @teo_leibowitz

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