GasNow: China’s hot, new tool that predicts Ethereum gas prices

We’ve all been there. Scratching our heads, we repeatedly check Etherscan or ETH gas station to calculate the optimal gas fees to farm that tasty food token. Sometimes we get lucky. Other times, we have to come back later and try again.

Getting the gas price right is a daily headache for DeFi farmers. One product that has won many Chinese farmers’ hearts is GasNow, an ETH GasPrice forecast system developed by SparkPool, one of the largest Ethereum mining pools based in China. This week’s da bing takes a look at GasNow and how a Chinese mining pool came to develop such a tool.

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Necessity was its mother

As DeFi started to pick up steam, the dev teams at Sparkpool realized that there was a big gap between quoted gas fees from ETH Gas Station and the actual gas fees they processed on the network. It is a problem for everyone on the network. So on August 12, they decided to hack together a tool to give themselves a more accurate and timely prediction of gas fees.

Five hours later, GasNow was born.

“There are two ways to calculate gas fees,” “Uncle Meow,” the pseudonymous product leader of Sparkpool, told me. “Most existing solutions calculate gas fees based on historical gas fee data. However, Sparkpool calculates gas fees based on our own mining pool’s pending transaction mempool, where all the valid transactions are waiting to be confirmed by the Ethereum network.”

The benefit of using pending-transaction data is that such a calculation is predictive rather than retrospective. “Especially during the heyday of yield farming, timing was everything.” Uncle Meow told me.

Once the tool was tested, the team decided to release it to the public so everyone who raced to farm DeFi tokens could benefit. Suddenly, GasNow was making a huge splash on crypto Wechat and everyone in the DeFi circle was talking about it. Data shows that GasNow has 500w average API requests per day and 12,000 unique visitors.

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GasNow analyzes wait times to predict gas prices.

Mining Pool is a natural fit

If miners are the guardians of any blockchain network, mining pools are the guardians of the guardians. They pool miners’ computing power to find the next stable block and then distribute the profit based on miners’ contribution. Like everyone else, Sparkpool had access to the Ethereum network’s pending transaction data across the globe, which is why it only took five hours for the product to go from incubation to launch.

“We decided to release GasNow to the public because we believe that a more accurate gas fee would benefit the entire network. We, as mining pools, are inherently neutral and GasNow does not interfere with our existing business model,” Uncle Meow said.

Indeed, if we look at the purpose of any mining pool, their mission is to attract more hashrate to the network, while providing stable, fair and transparent reward distribution. Providing the most accurate gas fees to users is aligned with that purpose.

Going forward

GasNow is free and will be free for a while to the public. Chinese crypto wallets such as imToken, MYKEY, MathWallet, TokenPocket have already integrated GasNow.

Challenges also exist. The team has been using the past month to fine-tune the accuracy of pending data queues. In addition, the majority of GasNow’s users are based in mainland China but an increasing number of users from abroad are starting to use it. Making sure that there’s a minimum delay of those foreign visits is a priority on its agenda.

GasNow is a fresh breath of air when the whole crypto world is forking DeFi tokens. Communities like Uncle Meow’s team, despite toiling under a centralized entity, show us that the spirit of innovation still remains in the crypto world.

Top 3 other things that happened in China last week

#1. Another wave of OTC crackdowns

China’s over-the-counter (OTC) crypto traders have been under attack left, right, and center recently. Back in April, WeChat Pay, the wallet feature of Tencent’s WeChat, dropped its support for fiat-to-crypto onramps via OTC trading desks. Such a ban prevents many retail investors from buying crypto within the comfort of their superapps.

On September 22, a number of China’s major banks joined the anti-OTC force, blacklisting many OTC dealers and blocking them from opening new accounts within five years. The motive behind such an attack is China Central Bank’s determination to crack down on money laundering.

According to Caixin, the PBoC issued more than $53 million in penalties for money-laundering violations, surpassing 2019’s total amount. Afraid of receiving fines or other forms of punishment, financial institutes have tightened their grip and prefer to blacklist the innocent rather than letting the guilty go free.

The biggest potential victim of the OTC crackdown could be Huobi, the largest OTC trading platform in China. But since the government is primarily targeting OTC trading desks suspected of money laundering, Huobi has time to roll out a PR campaign or a lobbying group to legitimize its business.

#2: Chinese state media glowingly reports on crypto as an asset class

While Chinese banks are cracking down on OTC traders, China’s Xinhua News, the country’s official mouthpiece, published an article on September 23 citing data from Bloomberg that cryptocurrencies are the best performing asset class in the world.

Soon after, Chinese Central Television ( CCTV ) aired a feature on the surge of crypto as an asset class. The broadcast cited the surge of DeFi and claimed that a weakening US dollar contributed to the rise of the crypto asset class.

This might seem insignificant since Chinese state media have been reporting on and off about crypto. However, it is significant since the government news outlet rarely talks about crypto as an asset class. (However blockchain, as you probably know, is legitimate and extolled by the authorities as a technical advancement in China.)

So when crypto is cited favorably as an asset class, it would seem to encourage people to either purchase or even—horrors!—speculate.

One possible justification of this article is the government’s looser control over crypto as they plan to launch China’s digital yuan. In order to familiarize the public with the concept of digital currency, it might not be a terrible idea to mention the whole asset class.

#3. Bitcoin mining difficulties hit new high

Bitcoin mining difficulty has risen 40% since January 2020. And that’s not good news for China’s miners, especially those from Sichuan province where the looming dry season signals the end of cheap abundant electricity. Reports show that there will be a 80% reduction of power supply in Sichuan post-October.

For the Sichuan miners, the options are few. They can either shut down their machines, or migrate elsewhere. Regardless, it’s going to be a long harsh winter for the miners.

Do you know?

“财富密码,” which literally means “wealth code,” is the Chinese equivalent of alpha. All over Wechat, people are asking where is the next DeFi “wealth code” so people can start liquidity mining before everyone else jumps in.

This non-Ethereum based DeFi project has $180M staked so far

This project is focusing on cross-chain interoperability and on-chain credit scoring to advance the DeFi lending ecosystem.

Wing, a lending protocol built on the Ontology blockchain, currently has $180 million in crypto assets staked on its platform — not a meager amount, even by Ethereum (ETH) standards. 

Eric Pinos, Ontology’s ecosystem lead for the Americas and an advisor to Wing, told Cointelegraph that he believes two features make this DeFi project unique: cross-chain interoperability with Ethereum and the fact that lending is credit-based, allowing for loans to be under-collateralized. The system’s OScore analyzes each user’s on-chain behavior to generate a credit score. This then determines the amount of collateral the user needs to post for a given loan:

“So instead of everything being over-collateralized right now, you have to put up $10,000 if you want to borrow $8,000 with undercollateralized loans, you can show a credit score that’s built off of your on-chain transaction history and your DeFi interaction history.”

Pinos said that this feature is not yet live, though he noted that it will be integrated into the next pool.

Unlike old-fashioned off-chain credit history where the rating agency typically has access to most if not all relevant information, the on-chain counterpart does not, as a user can choose which addresses or accounts to submit and omit. Pinos said that they will try to mitigate those challenges by combining on-chain and off-chain data, such as social media profiles.

Pinos hopes that the unique features of Wing will attract more users and assets. He said that they beating big on the DeFi cross-chain interoperability, while the high cost of transactions on Ethereum may further help their cause.

Ethereum Users Now Have More Than $10 Billion at Play in DeFi

The decentralized finance sector within the cryptocurrency industry has been on fire in 2020, and today, DeFi has broken through another major threshold.

DeFi users have now locked more than $10 billion in digital assets, including cryptocurrencies such as Ethereum and dollar-pegged stablecoins, into DeFi applications, according to data aggregator DeFi Pulse. This figure stood at just above $1 billion a mere three months ago.

Nearly all of that $10 billion total is in Ethereum, and more than half comes from just three protocols, as the biggest names in DeFi begin to capture outsized market share and attention while batting away copycat projects in a rapidly expanding marketplace.

Metrics site DeFi Pulse gathers data from different DeFi protocols through blockchain analysis to determine the value of all assets deposited by users, known as total value locked (TVL). The metric is widely used as a way to measure the current popularity of DeFi products in the market among users. 

DeFi protocols allow users to deposit digital assets into automatic financial applications, with all but a few running on the Ethereum blockchain. The DeFi protocols, powered by automated code known as smart contracts, allow users to take loans or earn interest using their assets as collateral as they would at a bank. 

DeFi users can typically receive better interest rates than they would at traditional financial institutions thanks to lower overhead costs enabled by operating on an automated decentralized network.

Uniswap, a token swap platform that automatically processes token trades without an order book, previously held the top spot for total value locked. This was largely thanks to a surge of interest following the release of the exchange’s UNI governance token last week. The new token allows its holders to vote on the future development and direction of the Uniswap platform. But Uniswap no longer holds that stop spot in the rankings.

Ethereum Locked in Uniswap Soars to $1.6 Billion After UNI Launch

Maker is another very popular service among DeFi users. It allows crypto enthusiasts to lock up digital assets such as Ethereum, Bitcoin, and other tokens for use as loan collateral paid in dollar-pegged DAI stablecoins. It has now narrowly edged out Uniswap in total value locked—$1.9 billion to Uniswap’s $1.89 billion.

The third-most popular DeFi product out there right now is Aave, with approximately $1.4 billion in total value locked. Aave is a DeFi service offering both crypto-backed loans and interest earning deposits, as well as pioneering functionality like unsecured loans using delegated collateral from other users, known as credit delegation loans.

With so many billions now flowing, it’s easy to lose sight of the fact that $10 billion in TVL represents 400% growth in DeFi since the beginning of July. It’s the sort of ultra-fast growth only possible in the world of cryptocurrencies—and one that, at this rate, might seem like a small and distant memory soon enough.

The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.

Diamond Standard Tries to Make Diamonds a Liquid Commodity via Ethereum

Diamond Standard, a New York-based startup, is launching a novel way to buy, track, and sell diamonds on the Ethereum blockchain: The company wants to turn diamonds into a liquid commodity, as fungible and easy to trade as any other asset.

To that end, on Monday, it’s holding an “Initial Commodity and Asset Token Offering” that, it hopes, will standardize the price of diamonds by literally pegging the gemstones to a physical token that’s encrypted, trackable, and registered to the blockchain. The company hopes to raise as much as $25 million via the sale of the diamond-studded tokens; each token will be sold for $5,000 during the Offering.

Screenshot 2020 09 22 185032
The Diamond Standard token.

How Diamond Standard works

“If you buy a diamond on 47th Street in New York and try to sell it, you are going to have a hard time getting two-thirds of your money back out of that. Even if you take it to Sotheby’s and try to auction it, you’re going to pay 18% commission. We’ve made an efficient commodity just like gold,” the company’s founder, Cormac Kinney explained in an interview last year.

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Kinney, a serial entrepreneur who founded, among other things, Flont Inc., a fine jewelry company, launched Diamond Standard in 2018.

So how does it work? After a vendor delivers their diamonds to a global Gemological Institute of America lab to be assayed, the diamonds are inspected and separated into sets. They’re then assembled into a “Diamond Standard Coin,” which is sealed with an embedded, wireless encryption chip. The process is audited by Deloitte and the coin is registered as an ERC-20 token on the Ethereum blockchain. It can then be traded, sold, or even used as collateral for a loan, via a mobile app.

“Diamond Standard is unique—it is both a physical and digital asset containing GIA certified diamonds,” Tom Leonard, a Diamond Standard spokesman, told Decrypt.

Screenshot 2020 09 22 185217
The Diamond Standard token is studded with diamonds and encrypted.

Diamond Standard’s coin offering

According to Diamond Standard Co., each coin that will be offered during Monday’s public offering contains certified natural diamonds with identical geological scarcity and a wholesale market value of  $5,000.00 as of the sale date.

The diamonds are tracked via the blockchain through the wireless computer chip. Once the coin is purchased, the diamonds ship to the buyer or to approved custodians BitGo, Gemini, Dillon Gage, or IDS Delaware. Individual buyers can sell their Diamond Standard Coins to another buyer using the Diamond Standard app or website. Know Your Customer compliance is required to buy, trade, or sell Diamond Standard Coins.

Screenshot 2020 09 23 081832
Screenshot 2020 09 23 081916

“Not only can you trade the commodity, but you can pledge up to 80% of the value of the coin through smart contacts and back any digital transaction. We want to encourage entrepreneurs to innovate digital capabilities,” Leonard said.

The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.

Hacker Saves $10 Million in Ethereum From Inevitable Theft

A blockchain security researcher and whitehat hacker, known as samczsun, today published a detailed “post mortem” of an undercover operation that resulted in the rescue of 25,000 ETH, worth over $9.6 million at the time. The funds were saved from a vulnerable Ethereum smart contract.

On September 15, samczsun was looking through Ethereum smart contracts in search of vulnerabilities (like he often does). Eventually, he discovered what later turned out to be a part of Lien Finance’s protocol: a smart contract that contained over 25,000 ETH.

Only these funds could’ve been taken by anyone.

According to the post, the smart contract contained a “burn” function. Essentially, this allowed any users to mint themselves a lot of valueless tokens and exchange them for all the ETH stored on the contract, getting away with a cache worth nearly $10 million. For DeFi’s sake, Samczsun decided to intervene.

Since Lien Finance’s team was anonymous, the whitehat went through a bunch of potential connections to anyone involved. Alexander Wade, a security researcher at ConsenSys—one of the two companies that audited the smart contract (and also funds an editorially independent Decrypt)—and Ethereum security specialist Scott Bigelow soon joined the rescue operation.

Realistically, there were two ways the situation could’ve been resolved. First, Lien Finance could’ve publicly disclosed the vulnerability, but that would’ve created a perfect opportunity for hackers to snatch the funds—like placing a “free money” sign. 

Ethereum 2.0
Ethereum is the second biggest coin by market cap. Image: Shutterstock.

Second, the whitehat team could’ve exploited the smart contract itself and then return the funds to their rightful owners. But this would’ve definitely attracted the so-called generalized frontrunner bots—apex predators of Ethereum’s mempool.

The mempool, expressively referred to as “Ethereum’s Dark Forest,” is a special “staging area” where transactions congregate before they are accepted by miners to be included in the next block. And this area is constantly patrolled by frontrunners—special bots that are looking for any exploitable transactions to hijack.

Inside the Mysterious World of Ethereum’s Mempool

Basically, frontrunners could automatically copy any transaction in the mempool, replace its addresses with their own and make sure that the duplicate operation gets picked up by miners first. In the current situation, that meant $10 million could’ve been easily stolen by frontrunners in a matter of seconds. Secrecy was essential.

With the help of blockchain researcher Tina Zhen, the team added members of both CertiK—the second company that audited the smart contract—and Ethereum mining pool SparkPool to the rescue effort, as well as finally reaching out to Lien Finance.

After a short onboarding, SparkPool’s coders spent the next couple of hours developing and testing a specialized “whitehat API” that would allow miners to pick up a transaction without displaying it in the mempool. In their turn, members of the whitehat team finished the script to generate four sequential signed transactions that would ultimately save the 25,000 ETH.

But these transactions weren’t designed to directly withdraw the funds. If executed in the correct order, they would transfer 30,000 SBT and LBT tokens—which are infinitely mintable—to Lien Finance, allowing it to convert these tokens back into ETH via the burn function with the final operation.

When all preparations were complete, the whitehat team finally commenced the rescue operation. By working with a mining company, the transactions successfully evaded the bots. This is because the transactions were not sent to the mempool—they were directly placed in a block by the miners themselves.

“After adapting the transaction-creation script to feed the transactions directly to SparkPool’s new endpoint, it was time. I hesitated for a moment, but this was absolutely our best effort. We might lose $9.6M, but there would be no regrets,” the post explained, adding, “The ~15 blocks it took before our transactions were included felt like hours, but finally, we had our immaculate transactions: mined, in order, not reverted.”

Hackers Save $10 Million in Ethereum From Inevitable Theft
The whitehat team safely returned over 25,000 ETH. Image: Etherscan

Now, what was left was for the Lien Finance team to exchange the SBT and LBT tokens for ETH using the burn function. A few moments after the final transaction was executed, Etherscan reported its successful completion, sweeping 25,000 ETH out of harm’s way.

Thus, the whitehat team “escaped the dark forest,” and saved a small fortune.

Ethereum studio ConsenSys wins Hong Kong central bank digital currency study project

Ethereum development studio ConsenSys has been awarded a central bank digital currency (CBDC) study project by the Hong Kong Monetary Authority (HKMA).

ConsenSys announced the news on Friday, saying that it will develop technology for the HKMA’s digital currency proof-of-concept. ConsenSys will work with PwC and fintech firm Forms HK on the project.

Specifically, the trio would work on the second implementation phase of the project Inthanon-LionRock, that initially began in 2018. “ConsenSys is thrilled to lead this implementation of CBDC for cross-border payments,” said Charles d’Haussy, director of ConsenSys Hong Kong.

Using its enterprise Ethereum stack, ConsenSys said it would test solutions that prioritize scalability, security, and interoperability.

ConsenSys has previously worked with two central banks — the Monetary Authority of Singapore (Project Ubin) and the South African Reserve Bank (Project Khokha) — for developing their decentralized payment networks.

© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

Ethereum scaling startup Optimism releases limited testnet of its Layer-2 solution

Optimism, the Ethereum scaling startup that is building a Layer-2 solution using a tool called optimistic rollup, has released the limited testnet of its network. 

Optimism said it has opted for a gradual release process, where its network will be integrated with a small cohort of decentralized applications (dapps) one at a time, in order to “best isolate bugs.”

The first dapp to integrate with Optimism’s limited testnet is decentralized synthetic-asset exchange Synthetix. The exchange will incentivize its users to test Optimism’s network with 200,000 SNX tokens. That is about $930,000 in total rewards (one SNX token is currently priced at about $4.65).

“There are no words for how grateful we are to Synthetix for the opportunity to truly test our code in an environment that is as close to mainnet as possible, where serious value is in play,” said Optimism.

Other projects that have wished to test Optimism’s network are top decentralized exchange Uniswap and decentralized price oracle Chainlink.

There are four phases in which Optimism would be releasing its testnet and reach toward mainnet: Phase A, Phase B, Security drill, and Phase C.

Source: Optimism 

In Phase A, no deposits or withdrawals will be enabled. It will only allow airdrop tokens into L2 Goerli and enable participants to mint and burn sUSD (Synthetix’s stablecoin), and claim staking rewards.

In Phase B, deposits will be enabled, as well as airdrop of L1 Goerli SNX to participants. Users will be able to increase their staked SNX if they perform a deposit.

In the security drill phase, Optimistic Virtual Machine (OVM) contracts will be upgraded to add verification abilities. “We’ll actively commit fraud and reward the users who successfully submit a fraud proof,” said Optimism.

In the last Phase C, withdrawals will be enabled and participants will have to perform a successful withdrawal to receive their testnet rewards on mainnet. Optimism didn’t reveal specific timelines for these phases.

Formerly known as non-profit Plasma Group, Optimism rebranded and turned to a for-profit startup last year, to entirely focus on Ethereum scaling. Optimism is backed by Paradigm and IDEO CoLab Ventures and has raised $3.5 million to date. 

© 2020 The Block Crypto, Inc. All Rights Reserved. This article is provided for informational purposes only. It is not offered or intended to be used as legal, tax, investment, financial, or other advice.

This is a summary of some of the errors I faced when learning Ethereum following this article here.

Trying to sync your node with rinkeby network 
geth — rinkeby — syncmode “light” — rpc — rpcapi db,eth,net,web3,personal — cache=1024 —…

Ethereum 2.0: User Outlines Why He Would Not Stake ETH at Launch, Danny Ryan Weighs In – Herald Sheets

There have been concerns over the risks of staking the digital token ETH on Ethereum 2.0 at launch. In this regard, a supposed Ethereum enthusiast has outlined three major reasons why he wouldn’t stake ETH on Beacon Chain. In a thread titled “Why I won’t be staking ETH at launch”, Chase Wright pointed out that […]

Source: Ethereum 2.0: User Outlines Why He Would Not Stake ETH at Launch, Danny Ryan Weighs In – Herald Sheets

Uniswap’s UNI Gains 20% as Most DeFi Tokens Suffer Losses

The newborn token that now allows the Ethereum-based decentralized exchange Uniswap to be community run has spiked by more than 20% in the last 24 hours. It’s now trading for roughly $5 per token. Meanwhile, however, the rest of the DeFi market isn’t faring so well—and the same goes for the broader crypto market, too.

The birth of UNI was bombastic. Two days of hype pushed the token from just $0.30 at launch to $6.90 the next day. Since then, trading on UNI has cooled, and the price dropped all the way down to $3.90 yesterday. Something changed overnight, however, and Uniswap fans have seemingly grown tired of seeing UNI in the red.

Uniswap’s token currently ranks 36th among all cryptocurrencies by market capitalization, which today rebounded to $614 million. That’s enough for sixth among so-called DeFi tokens, according to CoinGecko.

Uniswap (UNI) price. Source: TradingView
Uniswap (UNI) price. Source: TradingView

Studying charts won’t get you very far with UNI. It is still only a week old after all. The token is still only finding its way within the crypto market, and there are no past trends to reference to make any future predictions on its price.

For UNI, it all seemingly comes down to market sentiment at the moment. Though, curiously, as hot as the DeFi market has been in 2020, most tokens associated with decentralized finance are down today. In fact, some of the biggest tokens in the DeFi space are down a lot within the past week.

Uniswap Trading Volume Trails Only Bitcoin, Ethereum, Tether

Chainlink, for example, is down 24% over the last seven days.’s YFI has lost 30% to its price, now trading for $25,000 per token. DeFi lending protocol Aave’s token LEND is likewise down 16%, while UMA, the seventh-most capitalized DeFi coin, is down a whopping 37% in the last week.

Of course, the same basically holds true for the entire market. Crypto took a $22 billion hit on Monday as Bitcoin’s price fell close to 5%, settling around $10,400. Traditional markets likewise have felt the pain, with the Dow falling 800 points. Neither crypto nor stocks have yet fully recovered from that drop.

The views and opinions expressed by the author are for informational purposes only and do not constitute financial, investment, or other advice.

Stablecorp announces collaboration with Loopring to launch QCAD trading and transfers on Ethereum…

September 23 2020: Stablecorp and Loopring are thrilled to announce that QCAD, the first mass market Canadian Dollar Stablecoin is now…

Ethereum Data Firm Dune Analytics Nets $2 Million Seed Round

Dune Analytics, a free Ethereum data website run by a two-person team out of Oslo, is getting a cash injection to scale up its staff and expand its offerings.

The company announced today it has raised $2 million in a seed round. Dragonfly Capital led the round, with additional funding from Multicoin Capital, Digital Currency Group, Coinbase Ventures, and a smattering of other prominent projects, VC firms, and angel investors.

Dune is a website for data junkies trying to determine what’s going on with the Ethereum blockchain and connected projects. It pulls data from Ethereum smart contracts and turns them into charts showing things like decentralized exchange volume, number of DeFi users, and transaction sizes. Whereas a block explorer like Etherscan provides a searchable history of blockchain transactions, Dune is more of a tool for interpreting that history.

What are Smart Contracts?

Much of its appeal is that it allows people to create their own charts so they can explore individual projects like Compound or Curve. Some projects, such as Uniswap and Gnosis, purchase additional access, allowing them to create private analytics dashboards.

DEX volume 2019 and 2020
DEX trading volumes for 2020 far surpass 2019. Image: Dune Analytics.

Its paid version likely would have been enough to keep Dune chugging along as a bootstrapped project, but founders Fredrik Haga and Mats Julian Olsen knew a seed round could help them do more.

“As a profitable company we’ve had the opportunity to be self-sustained but we’ve nevertheless decided to bring in more capital to meet the ever-growing demand, scale up the team and build out even more powerful tooling for the community,” wrote Haga in a press release.

Tom Schmidt, a partner at Dragonfly Capital, told Decrypt Dune was easy to spot as a quality investment because of its ubiquity as a reference tool.

“Dune is hands down the best on-chain data platform on the market,” he said. “You can just see the empirically when you look at which platform journalists use for their stories, investors use for research and diligence, and projects use for their dashboarding: it’s always Dune.”

In a Medium post announcing the investment, Schmidt noted that Dragonfly isn’t just a Dune investor: “We personally use Dune for all of our articles at Dragonfly Research, and constantly use it to arrive at ground truth when making investment decisions.”

Schmidt, who referred to the “forkable and remixable” site as “Github for data,” further stated that its open, community-driven approach “allows Dune to cover projects faster and more accurately.” And not just the big ticket items, but some of the emerging trends making their way from the margins into the crypto mainstream.

Indeed, Dune counts several well-known DeFi personalities as “power users,” among them Stanislav Kulechov of Aave, Calvin Liu of Compound, and Matteo Leibowitz of Uniswap. All three, as well as several others, stepped up as angel investors for the seed round.

Dune’s next step is to double its team: It’s currently hiring remote front-end and back-end software engineers.

Bitcoin-Backed Ethereum Token tBTC Launches—for the Second Time

Bitcoin-backed Ethereum token tBTC gets its long-awaited release today. Thesis, the developer of the Keep Network and tBTC, claims it offers the safest way yet for holders of the world’s most popular cryptocurrency to access Ethereum’s $8 million Decentralized Finance (DeFi) sector, and earn on their investment. 

The San-Francisco venture studio has taken a polar approach to the live-fast, die-young mantra that’s seen many a promising, young DeFi project fail. Only now—after one failed launch, three audits, and months in development—does Thesis CEO Matt Luongo consider that the project is safe enough to have achieved its most important metric.

“It’s really about not just bringing Bitcoin to Ethereum, but also Bitcoiners to Ethereum and doing that in a way that’s consistent with their values of decentralization,” he told Decrypt on a recent call. 

UMA has launched the ETHBTC token, a novel DeFi derivative product that allows holders to track the competition between Bitcoin and Ethereum.
Bitcoin and Ethereum are the top two coins by market cap. Image: Shutterstock.

Some would say it’s an obtainable goal, but Luongo sees it as a huge opportunity to bring more functionality to Bitcoin, without sacrificing security, and to unite two warring tribes—no mean feat. 

Bridging the chasm between Bitcoin and Ethereum

As the amount of Bitcoin transferred to Ethereum has increased, so too have concerns regarding centralization, and the role played by the three top transfer solutions.

There are plenty of projects that enable a bridge between Bitcoin and Ethereum, with many people already using them. Over 100,000 Bitcoin, or roughly $1 billion, is locked up in Ethereum, at the time of writing—mainly on wBTC, another so-called cross-chain protocol or bridge. 

Ethereum co-founder Vitalik Buterin is among those who have called for better security. “I continue to be worried about the fact that these wrapped BTC bridges are trusted,” he tweeted last month.

Like its rivals, tBTC allows users to “mint,” or exchange Bitcoin, for a replica or wrapped token, pegged to the value of the original coin. The resulting Ethereum-compatible ERC-20 token can be used on DeFi platforms—to unlock lending on Compound and MakerDAO, for instance, or to tinker with high-yield meme tokens.

What distinguishes tBTC from most of its competitors is the lack of third-party custodians, as is the case with wBTC, or a centralized exchange, like HBTC (which is controlled by Singapore based Huobi). 

“This is an opportunity to unify our narratives. Bitcoin is hard money, but Ethereum is trying to replace retail banks. Those things go very well together.”

Over $24 million is already locked in the network, waiting for the tBTC launch, according to Thesis, and Luongo said the demand for a trustless alternative is huge.

“We don’t want to put user funds at risk or hold a wallet that we control and that the team can potentially censor,” he said. Thus, tBTC has funds distributed across many so-called “KEEP signers,” as he refers to those that hold the protocols “work token,” KEEP.

“People are staking and running the bridge and holding small amounts of Bitcoin and they’re bonded. And so if there’s misbehavior, you have guarantees,” he said. “It’s really important to actually have some economic guarantees beyond just reputation.” 

A $193 billion opportunity

Crypto analytics firm Messari is among those who have pointed out the extent of the opportunity at stake. The amount of Bitcoin that’s been tokenized to date represents but a tiny percentage of the dominant cryptocurrency’s $193 billion market cap—even a fraction more would be a major catalyst for an emerging DeFi market.

Thesis and Luongo are no strangers to crypto, and are behind Bitcoin rewards platform, Fold. tBTC has the support of dozens of industry partners, and The Keep project has now raised a total of $22 million to launch tBTC, from investors such as Paradigm and Andreesen Horowitz. 

But Luongo is proceeding with caution. tBTC got off to a shaky start when its first launch attempt failed after two days—undone when an untested type of Bitcoin transaction was introduced into the codebase. “We paused new deposits. And so not a cent was lost,” said Luongo, adding that while it was frustrating, he was happy with the result. 

Matt Luongo
Thesis CEO Matt Luongo. Image: Thesis

Thus today’s tBTC has been designed with initial supply caps—so there’s no expectation of a huge, initial flood of Bitcoin into tBTC. Safety is paramount.

In the first week, there is a cap of 100 tBTC, which gradually increases to 3000 in the ninth week. The cap will then be lifted. Like Bitcoin, there’s a 21 million supply limit. 

tBTC supply
The tBTC supply schedule. Image: Thesis.

“Obviously, the market would love to just put in as much Bitcoin as possible. And I get it. I mean, I’m excited. I have my own Bitcoin. I want to get loans against and trade within Ethereum. But I think it’s really important that we do this carefully. And that means sacrificing growth for security,” said Luongo. 

Bitcoin and its immutable design have been hugely influential, said Luongo. With an immutable release, there are few ways to improve or upgrade the system after launch, he explained. 

The project also has limited governance functions, so, unlike many DeFi projects, there will be no team, or multisig holders, who will continue to upgrade the contracts and only later pass control to token holders.

A Massive Honeypot: Ren Holds $100M in Bitcoin in Centralized Wallet

“Allowing this whole system to be governed by a majority token vote, that’s terrifying,” said Luongo. “I don’t want the majority to choose what happens with my money. And so for that reason, we really have to get it right.”

To entice users to try the token, tBTC liquidity is being bootstrapped right now. This gives the project freedom to distribute tokens, “as we go,” said Luongo. A stake drop is happening shortly after launch, and will distribute 20 percent of the token supply. Another five percent is going to liquidity rewards, he said.

To complement the safety-first theme, there’s also a built-in insurance component. Insurance provider Nexus Mutual will be onboard at launch, with others invited too. KEEP will be used to incentivize insurance and ensure that users who want cover can get it for a good price, said Luongo.

Built by a Bitcoiner for Bitcoiners

Luongo claims to be a Bitcoiner, “I do lean right with my fiscal philosophy,” he said, while admitting that, like many Ethereans, he’s a technological optimist. But is he up to such an enormous challenge? 

“Our industry has been desperate to bring more functionality to Bitcoin without sacrificing its core properties of censorship resistance and trustlessness. After years of failed attempts by other projects, it looks like tBTC has finally unlocked it,” said Spencer Noon, head of investment firm DLT Capital. He credits Luongo as one of only a handful of people with the understanding and technical ability to build tBTC.   

Paradigm co-founder Fred Ehrsam, who also co-founded Bitcoin exchange Coinbase, has called tBTC a credible attempt.

Luongo is all too aware of what he’s up against. As “money maximalists,” many Bitcoiners won’t welcome an asset that competes with Bitcoin as a store of value, he admitted. But he doesn’t believe, like some, that the two blockchains are mutually exclusive. 

“This is an opportunity to unify our narratives. Bitcoin is hard money, but Ethereum is trying to replace retail banks. Those things go very well together, so let’s align and fight the status quo rather than each other,” he said. “My great dream is to actually see big winners play with this new tech. And maybe we’ll all do more together. That’s my hope.”

How Bitcoin is coming to Ethereum, again 

Luongo is also keen to eat his own dog food; he’s happy to put his own Bitcoin into tBTC. “I’m going to put it all in,” he said emphatically. “I want to have skin in the game, like I need to keenly feel user pain. And the best way to do that is to be a user, to be in the same boat.”

It’s undeniable that, with tBTC, Thesis and Luongo have pulled out all the stops. They’ve produced an open-source, decentralized, incentivized, insured, thrice-audited protocol that replicates Bitcoin holdings on Ethereum and spits out liquidity rewards, as well as other benefits.

If it succeeds, tBTC could stand beside Bitcoin—a lasting legacy. Just don’t say anything about blowing up bridges. 

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