Weekly Insights #34
June 7: This week, the crypto market experienced a correction after rapid growth in the previous two months, and major crypto assets experienced a decline on the weekly chart. The biggest loser of the week is EOS, which declined right after the big announcement on Jun 1, explained below. Apple and Facebook revealed more information regarding their crypto-industry-related projects, Binance will issue various fiat-backed stablecoins, and the SEC charged the Kik project with an unregistered securities offering.
“The most valuable startup of the last decade didn’t raise money, didn’t have employees, gave away the cap table, and let anyone invest.” — Naval
SEC Charges Kik With Conducting $100M Unregistered ICO — June 4, SEC
As alleged in the SEC’s complaint, Kik had been losing money for years on its sole product, an online messaging application, and the company’s management predicted internally that it would run out of money in 2017. In early 2017, the company sought to pivot to a new type of business, which it financed through the sale of one trillion digital tokens. Kik sold its Kin tokens to the public at a discounted price to wealthy purchasers, raising more than $55 million from US investors. The complaint alleges that Kin tokens traded recently at about half of the value that public investors paid in the offering.
Binance Confirms Stablecoin Offering Coming Soon — June 6, Coindesk
Binance has confirmed that it will soon issue its own stablecoins, each pegged to other fiat currencies, starting with GBP. Binance’s chief financial officer, Wei Zhou, said the first stablecoin will be launched on the platform “in a matter of weeks to a month or two.” According to Zhou, the token will be called Binance GBP and will be fully backed by reserves of British pounds. More coins tied to other fiat currencies will follow, he said, while Binance will also work with partners wanting to issue their own stablecoins on the exchange’s native blockchain, Binance Chain.
Apple to Introduce CryptoKit in iOS 13 — June 4, The Block
CryptoKit will allow developers to carry out common cryptographic operations, including hashing, key generation, and encryption. Developers will now be able to automatically handle tasks that make their app more secure rather than handling them in lower-level interfaces. According to Alejandro Machado, co-founder of Open Money Initiative, the implications for cryptocurrency developers are significant: “For the first time, developers can leverage the secure enclave to manage a user’s keys in an iPhone, achieving a similar level of security to hardware wallets.”
Facebook Plans June 18 Cryptocurrency Whitepaper Debut — June 6, TechCrunch
Facebook is finally ready to reveal details about its crypto project, codenamed Libra, and its GlobalCoin cryptocurrency. A whitepaper explaining the cryptocurrency’s basics is currently scheduled for a June 18 release. The cryptocurrency will indeed be pegged to a basket of currencies rather than a single one like the US dollar to prevent price fluctuations, and Facebook employees will be able to receive their salary in Facebook’s cryptocurrency. Facebook is planning to launch the network with 100 nodes and will be charging $10M to companies that wish to run a node on the network.
OUR OPINION: Given the set number of nodes, we assume the network will be using the Proof-of-Authority (PoA) consensus algorithm, which is a type of a permissioned network or Delegated Proof-of-Stake (DPoS) algorithm that is currently used in EOS and Tron. Time will tell if Facebook will improve or worsen the unfavorable narrative that accompanies these two projects.
DIGITAL ASSETS ON THE MOVE
Big Announcement From Block.one is a Social Network Platform on EOS
The heavily hyped announcement from Block.one (B1), a company that raised $4B to release EOSIO blockchain protocol code, is a blockchain-based social network platform called Voice. The platform will be hosted on EOS and according to B1 will be free of bots and fake accounts, which might prevent fake social engagement and volume. The announcement can be seen in this video, where Daniel Larimer further hints at how the platform will function. There will be an associated Voice token that will be generated by creating content and used to upvote quality content, showing many similarities with Daniel Larimer’s previous project, the Steem blockchain and the Steemit application hosted on top of it. Since the platform will be free of bots and fake accounts, it will have to use some form of “KYC.” Hopefully, it will be conducted in an alternative way than passports and proof of residency. Either way, if anyone is able to create an account, social engagement, volume, and interest can still be manipulated by purchasing accounts or bribing real users to upvote content.
B1 also announced upgrades to the EOSIO protocol. The most important upgrade in EOSIO version 2.0 is an improved EOS virtual machine that will be able to process smart contracts 12 times faster compared to the 1.0 version. The 2.0 version will also adopt the WebAuthn authentication standard. While the majority of public blockchains are trying to improve user privacy by implementing various technologies, B1 is moving in the opposite direction.
The EOS price appreciated in anticipation of the announcement on June 1, peaked on that day, and later declined toward the “preannouncement of the announcement” levels, as can be seen inn the EOSBTC chart below.
MARKET OVERVIEW & METRICS
Weekly Crypto Stats
- Global network value is $253.72B, with a -3% weekly delta.
- Global crypto market turnover is $70.83B, 30% from ATH.
- Real 10 market turnover was $2.43B, -51.3% weekly delta.
- Bitcoin dominance is 55.4%, with -1.6% weekly delta, beta 0.86.
- Ethereum dominance is 10.44%, with -0.5% weekly delta, beta 1.26.
- Bitcoin hashrate is 58.22B TH/s, with -1.8% weekly delta.
- Ethereum hashrate is 169.2K GH/s, with 2.7% weekly delta.
CHART OF THE WEEK
Since the beginning of the bear market, there has been a 26% increase in the number of BTC wallet addresses that hold between 1,000 and 10,000 BTC. The Bitcoin address bracket in December 2018 was likely the result of Coinbase shifting approximately 5% of supply into new cold storage security facilities.
This content has been put together by Marko Štemberger and Tilen Držan. Feel free to contact us for any feedback or if you have questions. Information provided above is not to be considered as an investment advice.