B3, the Brazilian Stock Exchange, confirmed that within six months it intends to launch its first official product aimed at the cryptocurrency market — Bitcoin (BTC) futures trading. The group’s chief financial officer, André Milanez, made the announcement during a conference call on Monday.

Milanez did not provide many details on how the product will work. It is not yet known if B3 will form a partnership or if it will offer Bitcoin futures trading directly, but the timeline for launching this product was stated to be relatively short. “We plan to launch bitcoin futures in the next three to six months,” he said.

Currently, in Brazil, institutional and retail investors can trade 11 ETFs through B3 with exposure to cryptocurrencies, including CRPT11 from Empiricus with Vitreo; the NFTS11 of Investo; QBTC11, QETH11 and QDFI11 all from QR Assets and META11, HASH11, BITH11, ETHE11, DEFI11, WEB311 all from Hashdex. In addition, in Brazil, there are more than 25 investment funds approved by the Securities and Exchange Commission (CVM) that offer different types of exposure to the crypto-assets market.

In January Jochen Mielke de Lima, director of information technology at B3, had already said that the Brazilian stock exchange would launch several products with exposure to cryptocurrencies in 2022, including Bitcoin futures and Ethereum (ETH) futures

At the time, the executive highlighted that the Brazilian stock exchange had been looking closely at the cryptocurrency market from a technological point of view since 2016.

According to the statement, B3 only needed to settle the question on whether the negotiations would be carried out against the U.S. dollar or against the Brazilian real. Futures contracts need a reference index, so if the team chooses Brazil’s native currency, it will be necessary to compose a crypto-assets index in reais — something that does not exist n.

The B3 rep also said it is exploring ways to provide data inputs for the country’s central bank digital currency, or CBDC.

B3 and Cryptocurrencies

In addition to BTC and ETH futures, B3 also intends to offer services to national cryptocurrency exchanges and to be a kind of “centralizer” of custody and settlement operations, according to Jochen Mielke de Lima:

“We have around 30 national crypto exchanges, apart from the international ones that operate here. We could offer a service to facilitate and standardize their operations. I believe it has something to explore in providing custody services and in the settlement process.”

Mielke, also stated that the cryptocurrency market is very similar to the regulated stock market, as it involves issuing, trading, settlement and custody. He stated therefore that B3 could help solve common problems between exchanges.

“We are identifying points of friction that we can help resolve to face up, such as helping our customers provide the best access to their end customers,” he said.

In addition, B3 plans other products based on cryptocurrencies and blockchain to launch in 2022. Among them, there are studies on a platform for asset tokenization, cryptocurrency trading, cryptocurrency custody, among others.

“Trading and access to liquidity centers: this means mitigating the complexities of accessing a fragmented, global and 24×7 market; Digital Asset Custody: providing reliable custody (hence, purpose of blockchain transactions); Over-the-counter facilitation: thIn this way, it wants to provide more security and efficiency in the movement and DVP of digital assets; Capital efficiency gains: thus, it wants to mitigate the pre-funded nature of operations and Crypto as a service: make it easier for clients to explore the crypto market with low friction,” highlighted B3.

For 2022, B3 reps said they foresee the official launch of a reinsurance platform. This will work on the Corda blockchain R3, and is a partnership between the exchange and IRB Brazil.


Cointelegraph By Cassio Gusson

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Over-the-counter, or OTC, trading refers to any trading that is not done via an automated exchange. What exactly is OTC trading? Who does it, and why? To learn more about what an OTC desk is and how these “under the radar” exchanges operate, Magazine spoke to a few insiders to get the scoop.

The most popular conception of OTC trading revolves around massive off-market deals, like when companies such as MicroStrategy make multimillion-dollar purchases using OTC desks run by the likes of Coinbase or Kraken.

OTC trading is, however, not the exclusive domain of the rich, as it can also refer to peer-to-peer platforms like LocalBitcoins, which has been helping individuals trade BTC both in-person and via bank transfer since 2013. Even some crypto ATMs can be categorized as OTC trading, as these transactions do not always clear on an exchange. In between these two are medium-sized regional OTC desks, which facilitate purchases and sales of crypto by both individuals and companies.

 

 

OTC desksWhat really goes on behind the scenes at an OTC desk?

 

 

Going over-the-counter

Why do people seek out OTC deals in the first place when existing exchanges like Binance and Coinbase offer easy fiat on-ramps?

Amin Rad, CEO of Dubai-based OTC broker Crypto Desk, explains that this way of trading offers advantages for some people. He says there are only “a few ways of converting fiat currency into cryptocurrency,” highlighting three:

1. Credit and debit cards are a popular way for new users to purchase cryptocurrency via an exchange, but they come with high fees of up to 10%. However, many banks and credit card issuers still consider such transactions suspicious, locking or even closing accounts after learning the nature of the transactions. On the exchange side of things, the credit cards of certain countries — including Russia, Kazakhstan and Ukraine — are automatically rejected. “A further limitation is that users cannot sell crypto in this way, only buy it,” Rad adds, as it is usually impossible to “withdraw” money onto a credit card.

2. “The second channel is purchasing through bank transfer,” he says, which involves sending fiat to an exchange’s bank account. Rad considers this problematic because many banks, in some countries more than others, don’t want to be associated with cryptocurrency nor have their clients trade it. “If you want to do a bank transfer, 99% of the time you will have to lie to the bank because otherwise, they will close the account,” he says, with his views likely most applicable to his own region, the United Arab Emirates. [Editor’s note: Don’t lie to your bank lest you end up like Peter McCormack.]

 

 

 

 

Banks that do tolerate transfers to cryptocurrency exchanges may still involve their compliance teams to ask detailed questions regarding the exact destination of funds and the reasoning behind crypto purchases. And when transfers do go through, they can take several days. Someone might try to wire money to an exchange on Monday to buy BTC at $30,000, only to watch it rise to $40,000 before the money arrives on Thursday.

3. OTC is the third method, allowing buyers and sellers to exchange directly or via a trading desk such as the one Rad operates. No credit cards are involved, and banks cannot easily determine that the funds sent to them are destined to be used for cryptocurrency. With immediate confirmations of receipt, there is no need to wait around for days and potentially miss an opportunity.

 

 

Amin RadRad in his Dubai office.

 

 

“A big driver of OTC is that it allows a buyer to deal with larger amounts of cryptocurrencies, such as 100 BTC from one seller at one agreed price, as compared with buying over an exchange,” explains Jerry Tan, OTC payments manager at Singapore-based exchange XT, which operates an OTC desk. 

From the perspective of whales, such as funds that deal in large sums of cryptocurrency, OTC desks are valuable due to their ability to conduct large trades without moving the market against them. This effect is known as “slippage” and occurs when large-scale buying causes prices to immediately rise before the targeted amount of cryptocurrency has been purchased, while selling causes it to fall before it’s all sold.

“Odds are that a single seller in the order book is not able to transact such a large amount as 100 BTC. Hence, you will need to buy from multiple sellers at higher prices. This is where slippage from your initial desired price occurs.”

Despite the many reasons to engage with OTC trading, there are risks, according to Victor Olmo, fund partner at NewTribe Capital. “One of the most significant is counterparty risk — the possibility of the other party’s default before the fulfillment or expiration of a contract,” he explains. Scams are another common pitfall, many of which were described in a recent Journeys in Blockchain article profiling Rad and his Crypto Desk OTC exchange.

 

 

Amin RadRad told his story, and gave tips on avoiding crypto scams, in a recent Journeys in Blockchain article.

 

 

Who uses OTC exchanges like Crypto Desk?

Though Rad’s operations are local to the UAE, he says clients tend to fit into two major categories: Local buyers of cryptocurrency tend to represent “traditional finance” diversifying into the industry, while expat sellers already hold crypto and need to swap it for local currency “in order to purchase real estate, cars and pay their living expenses in the UAE.”

These expenses may even include the purchase of real property, in which case it is quite understandable that neither sellers nor buyers want to risk going through a traditional exchange and bank transfers, as banks may block, freeze or question large sums being withdrawn directly from crypto exchanges. Though his daily turnover is in the single-digit millions, it tends to consist of several much smaller OTC deals that are not above the means of fairly normal people — many of whom do not want to risk trouble with their banks, which might block transfers between crypto exchanges.

 

 

 

Differing regulations

The Dubai-based Crypto Desk is an example of a brokerage with a low regulatory threshold, as clients must only prove their identity and sign a declaration letter saying that they are not involved in terrorism, money laundering or trading with sanctioned countries. “Once I obtain this from you, I am safe. Even if the government comes after you later, I can say I did my job.” Rad says he is not required to report transactions, no matter their size, but he keeps records indefinitely.

When it comes to other OTC desks, regulations are usually on par with normal exchanges in terms of KYC identity requirements, though they tend to be less policed.

According to Panu Peltola, chief compliance officer of Finland-based LocalBitcoins, most regions in the world are tightening regulations. He cites Asia as having some of the “most advanced” regulations, followed by North America.

“The EU is just planning more comprehensive regulation,” he notes regarding proposed rules to flag all transactions over 1,000 euros from “unhosted wallets” — any wallet whose private keys are not held by a centralized company like a crypto exchange or payment provider.

“Global policymakers have taken note of the increasing volumes and adoption rates and are currently balancing innovation, growth and risks.”

In the United States, all transactions above $10,000 involving cash must be separately reported to the Internal Revenue Service, regardless of whether an individual or financial institution is receiving the cash. This form requires the full personal information of whomever the cash was received from. Though only a minority of OTC deals involve physical cash, this $10,000 line in the sand, similar to the EU’s proposed 1,000 euro limit, also marks the maximum limit after which financial institutions across the U.S. must report electronic money transfers. The real values of these sums are notably getting progressively smaller due to compounding inflation.

 

 

When cash changes hands, the IRS wants to know all about it! Source: IRS

 

 

The regulatory landscape in Asia, which has many more countries and lacks supranational centralized decision-making organs like the EU, appears more fragmented and difficult to describe, with each country having its own existing and forthcoming regulatory procedures. Mainland China, a country with strict capital controls, is perhaps the most restrictive, with its ambition to completely ban trading and mining. In October 2021, Cointelegraph spoke with Henri Arslanian, PwC crypto lead and former chairman of the FinTech Association of Hong Kong, regarding a “flood” of brick-and-mortar OTC shops, many of which are located in touristic areas to cater to visitors from the mainland.

“One could assume that if mainland Chinese tourists visit Hong Kong, nothing will stop them from buying crypto at these OTC shops.”

But even Hong Kong, a place once considered among the world’s most financially open, is on the cusp of banning the retail trading of cryptocurrency, which would theoretically include OTC, likely sending OTC shops underground.

Singapore recently introduced stricter measures, according to Tan from XT. “Companies that wish to operate cryptocurrency trading and OTC services to Singaporeans have to obtain a license from the Payment Services Act,” he explains, adding that exchanges without the PSA license are not allowed to offer services to Singaporeans. In addition, all Bitcoin ATMs on the island were ordered to shut down earlier this year.

 

 

 

 

Talking money

So, how do OTC desks make money? With spread, in a way comparable to normal exchanges. While popular exchanges might charge 0.25% on transactions, it is common for OTC desks to take well above 1% in commission. Back in 2017, 2%–3% margins were common, Rad says.

Fundamentally, an OTC desk operates either by matching buyers and sellers or by fulfilling orders automatically from its own liquidity pool, with the former carrying less overhead and risks for the exchange and the latter allowing for instant transactions. “That’s why clients prefer to deal with me,” Rad says regarding his desk’s advantage in having its own pool of funds that allow for reliable transactions.

 

 

OTC desksOTC desks provide a way to avoid slippage on exchanges.

 

 

Another differentiator between desks is whether they trade fiat for cryptocurrencies like Bitcoin or Ether or only for stablecoins like USDT or USDC. In recent times, there has been a trend toward stablecoins because they give buyers greater flexibility to exchange into more volatile cryptocurrencies when they see fit. Some exchanges such as Rad’s Crypto Desk deal exclusively with stablecoins, further reducing the risks of maintaining a liquidity pool.

Rad is confident that the OTC market will flourish, both among retail and institutional clients, due to its more direct, intimate nature when compared with larger exchanges. For many, dealing person-to-person is more comfortable than wiring money to an exchange overseas, especially when it comes to making large, one-off transactions.

“Local [OTC] exchanges will control the local markets because they have better knowledge about their own market — they have better compliance solutions and better licensing solutions.”

 

 

 

 




Cointelegraph By Elias Ahonen

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Sam Bankman-Fried, the founder of crypto exchange FTX, has criticized the efficiency of Bitcoin (BTC) as a payment network, only to meet heavy backlash from the crypto community.

During an interview with the Financial Times, Bankman-Fried fueled environmental concerns associated with the Bitcoin network’s mining consensus, proof-of-work (PoW), and claimed it’s not scalable enough to accommodate millions of transactions.

He advocated for the use of proof-of-stake mining consensus instead and claimed it is better suited for blockchain payment networks. He said:

“Things that you’re doing millions of transactions a second with have to be extremely efficient and lightweight and lower energy cost. Proof of stake networks are.”

Bankman-Fried comments resonated with the recent calls for a complete ban on PoW by a group of billionaire lobbyists comprising Ripple co-founder and several other environmental groups. However, Bitcoin proponents have been actively fighting against the ongoing narration calling for a change in the code of the Bitcoin network’s mining consensus.

Related: Eager to work: Bitcoin switch to proof-of-stake remains unlikely

The likes of Jack Dorsey have already made it clear that PoS is more centralized and less secure than PoW.

The crypto community was not very pleased with FTX CEO’s recent comments. Many claimed the Bitcoin network is not intended to be a payment network, but rather a settlement one and layer-2 solutions such as the Lightning Network act as the main payment gateway. One user wrote:

“Either SBF or FT lying here. What happens to L2 (Lightning Network)? The Bitcoin Lightning Network handles up to 1,000,000 transactions per second!”

Others reminded him of high centralization and concurrent shutdowns of PoS networks such as Solana. One user wrote:

“Thanks god we have Soylana that we can switch off and on every other week!”

Another user on Reddit wrote:

“He doesn’t have a friggin’ clue what he is talking about (or the journalist interviewing him doesn’t). Scaling has NOTHING to do with the consensus algorithm and hence whether it is POW or POS is completely irrelevant to the scaling issues.”

The FTX CEO took to Twitter himself to clear the air around his comments and said that he also talked about the Bitcoin network’s potential as a store of value. He said:

“To be clear I also said that it does have potential as a store of value. The BTC network can’t sustain thousands/millions of TPS, although BTC can be xfered on lightning.”

The PoW vs PoS debate started last year when the Ethereum network outlined its plan to move to the PoS mining consensus. The likes of Elon Musk fueled the sentiment that BTC needs to use more clean energy to be a viable option. However, in 2022, the debate seems to have shifted towards a complete change of mining consensus for the BTC network.




Cointelegraph By Prashant Jha

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Crypto investment giant Grayscale is expanding operations by launching a new crypto-linked exchange-traded fund (ETF) in Europe.

Grayscale officially announced its first European ETF, called Grayscale Future of Finance UCITS ETF, on May 16.

The new investment product is getting listings on major European stock exchanges, including the London Stock Exchange, Borsa Italiana as well as Deutsche Börse’s electronic trading platform Xetra. Listed under the ticker symbol GFOF, the ETF will also be passported for sale across Europe.

Launched in partnership with Bloomberg, GFOF UCITS ET tracks the performance of the Bloomberg Grayscale Future of Finance Index. Bloomberg and Grayscale jointly introduced the index in January 2022, aiming to track the digital economy, focusing on three main directions like technology, finance and digital assets.

According to the announcement, the new ETF includes companies directly involved in cryptocurrency mining, energy management and other activities in the digital asset ecosystem.

“Through GFOF UCITS ETF, European investors now have the opportunity to receive exposure to the companies that are pivotal to the evolution of the global financial system,” Grayscale’s global head of ETFs David LaValle said.

Grayscale also collaborated with Europe’s white-label issuer HANetf to create the new investment product. The issuer is known for cooperating on blockchain ETFs with companies like ETC Group.

Grayscale is one of the world’s largest Bitcoin (BTC) investment companies, providing the Grayscale Bitcoin BTC Trust (GBTC) with $18.3 billion in assets under management. Amid massive market volatility, GBTC recorded a significant decline, trading at a nearly 31% discount on May 13.

The firm has been aggressively pushing its Bitcoin spot ETF, with CEO Michael Sonnenshein claiming that Grayscale was gearing up for a legal fight with the United States Securities and Exchange Commission if its ETF is denied. The firm reportedly tried to persuade the SEC that turning the biggest BTC fund into an ETF would unlock $8 billion for investors.

Related: Why the world needs a spot Bitcoin ETF in the US: 21Shares CEO explains

The news comes amid the increasing adoption of crypto and industry-related ETFs worldwide, with total assets invested in crypto ETFs hitting $16.3 billion in Q1 2022.

21Shares, a major crypto ETF issuer in Europe, recently expanded its investment offering with a Layer 1 and decentralized finance (DeFi) infrastructure exchange-traded products (ETPs).

Listed on SIX Swiss Exchange on May 12, the 21Shares Crypto Layer 1 ETP (LAY1) offers investors exposure to the five largest blockchains in the DeFi industry. The 21Shares DeFi 10 Infrastructure ETP (DEFI) will list on the same exchange on 18 May.




Cointelegraph By Helen Partz

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Bitcoin (BTC) starts a new week under $30,000 as the battle to save the market from fresh lows grinds on.

After hitting its highest since the Terra LUNA crash last week, the largest cryptocurrency nonetheless continues to fail to reclaim $30,000 as support.

What could be in store this week? The potential for major upheaval from macro players, notably the United States Federal Reserve, is shapeshifting this week ahead of the World Economic Forum.

At the same time, internal crypto market pressure remains as the implications of LUNA’s collapse continue to play out.

Cointelegraph takes a look at five potential BTC price movers for the coming days.

Record weekly downside greets bulls

The sense of caution among traders is palpable this week after the past seven days upended market expectations.

When Blockchain protocol Terra’s LUNA and TerraUSD (UST) tokens imploded, their decline ricocheted throughout crypto markets, and Bitcoin was naturally no exception.

After dipping to near its realized price just below $24,000, BTC/USD staged something of a V-shaped recovery to bounce past $31,000 in the following few days. That strength, however, now appears limited, as $30,000 proves to be a stubborn level to win over for good.

While the picture looks decidedly more reassuring than that of some altcoins, traders are keeping away from any firmly bullish price takes.

A key narrative gaining traction revolves around current levels forming the basis of a relief bounce which will ultimately end not just in rejection but an attack on lower lows than those from last week.

“Just as us bulls fought the trend for the past few weeks, I think bears about to deny or refuse any more upside,” popular Twitter account IncomeSharks said in part of two recent posts on the BTC/USD outlook.

It added that those only now flipping bearish, however, will “get too stuck in their bias.”

Fellow trader Crypto Tony meanwhile said that the pair needs to reclaim $31,000, not just $30,000, in order to continue higher thanks to the former marking the highs of the week’s range.

Zooming out, the picture hardly seems any less precarious than on hourly or daily timeframes.

The weekly BTC/USD chart, despite the modest recovery, closed its seventh red candle in a row on May 15 — the first time in history that such an event has occurred. The week closed out at around $31,300, data from Cointelegraph Markets Pro and TradingView shows.

BTC/USD 1-week candle chart (Bitstamp). Source: TradingView

Pondering whether protracted downside could continue much longer — even beyond 2022 — Twitter account Nunya Bizniz noted that leading into block subsidy halvings, Bitcoin has historically been far below all-time highs.

As such, it would fit historical precedent for BTC/USD to trade significantly under $69,000 at the time of its next halving in two years’ time.

DXY just won’t quit as Davos looms

Last week saw the Fed grapple with inflation, rate hikes and geopolitical strife, all factors that were ironically eclipsed almost immediately by Terra.

By contrast, no announcements of such significance are expected this week, but the underlying tensions have not gone away.

As such, the Russia-Ukraine war, inflation and measures being undertaken to mitigate it remain the topic du jour for central banks around the world. This will no doubt be a major topic of the World Economic Forum as the 2022 event begins on May 22.

The Forum, and the potential for Bitcoin-related soundbites from attendees both positive and negative, will follow a different gathering this week in El Salvador, where representatives of 44 countries will discuss Bitcoin.

“Tomorrow, 32 central banks and 12 financial authorities (44 countries) will meet in El Salvador to discuss financial inclusion, digital economy, banking the unbanked, the Bitcoin rollout and its benefits in our country,” President Nayib Bukele confirmed on May 15.

At the same time, the U.S. dollar refuses to quit when it comes to strength versus major trading partner currencies.

The U.S. dollar index (DXY), despite local consolidatory phases, remains in a firm uptrend which has denied bears a macro top for months.

DXY hit 105 on May 9, its highest since the week of Dec. 9, 2002.

“At the same time, the Euro is testing it’s 5-year lows vs the U.S. Dollar,” analyst Blockchain Backer tweeted as part of a thread on the macro environment as it relates to crypto.

“The Euro is a major component of the U.S. Dollar Currency Index (DXY), and historically has been acting inversely to the DXY.”

U.S. dollar index (DXY) 1-day candle chart. Source: TradingView

DXY traditionally pressures stocks and crypto markets as well, the latter nonetheless showing correction structures already seen in bear markets, Blockchain Backer argues.

“So, we have a lot of things happening here. Dow Jones below support break from last week. DXY in 20-year highs. EURUSD on support. Altcoin Market and Ethereum with similar correction structures seen before. But, no coins are flying as if a reversal is in,” the thread continued.

Tether crawls back from 5% depegging

Regardless of upcoming events, it is the ghost of last week’s mayhem that is haunting the market on Monday.

The aftermath of the collapse of Terra’s UST and LUNA tokens is not yet fully understood as data continues to trickle in about both the breakdown and the company’s plans to mitigate the fallout.

Some facts appear clear, yet have not been officially corroborated, such as mass selling of the Luna Foundation Guard’s (LFG) BTC reserves. Others remain rumors, notably mass insolvencies of organizations with LUNA and UST exposure.

What happens next is equally unclear, and as Blockchain Backer notes, no one knows for sure whether the sell-off is done.

“Last week there was a devastating hit on LUNA and UST. We don’t know the complications of this and who took collateral damage from it yet,” it summarized.

“Were there other treasuries exposed to this? Has LFG sold off all their Bitcoin reserves, or is there more left? We don’t know.”

Attention is not just on UST, however, but on the industry’s largest stablecoin by market cap. Tether (USDT) saw its dollar peg slip last week, and despite there being no signs of a repeat UST performance, 1 USDT still does not fully equal 1 USD as of May 16.

USDT/USD 1-hour candle chart (Bitstamp). Source: TradingView

“When things started hitting the fan for TerraUSD (UST), it started with a small slip, then spun out of control,” Blockchain Backer added.

As Cointelegraph reported, Tether’s creators have vocally defended USDT’s ability to ride out the storm thanks to its structure being inherently different from UST and algorithmic stablecoins in general.

“Over the next few weeks, we will start to know the full extent of damage as reports of significant losses and collapses emerge,” Crypto trading firm QCP Capital told Telegram channel subscribers in its latest update on May 13.

“In spite of the carnage however, we are heartened by the resilience we’ve seen in particular segments of crypto.”

LUNA continues to see uncontrolled volatility, making it all but impossible to chart on any timeframe, and at the time of writing on May 16 traded at 0.00023 on Bitfinex.

LUNA/USD 1-hour candle chart (Bitfinex). Source: TradingViewAnalyst: Institutions stepping up to buy

Is anyone buying Bitcoin? Data says that the answer to this is a firm “yes” from certain market segments.

In analysis released on May 16, Ki Young Ju, CEO of analytics platform CryptoQuant, highlighted interest from institutional investors as a key phenomenon of Bitcoin between $25,000 and $30,000.

Ki explained that while the LUNA debacle had forced bids down toward $25,000, overall bids had remained the same for a year. Not only that, but those bids could now be mitigating the sell-offs related to Terra.

“If you see the BTC-USD order book heatmap for Coinbase, it’s pretty thick bid walls since the latest bear market in May 2021,” he noted.

“I think institutions tried to stack $BTC from $30k but had to rebuild the bid walls at $25k due to the unexpected LFG selling.”

An accompanying chart shows how events played out on Coinbase, the exchange that Ki says received the bulk of Terra-related funds for sale.

Coinbase order book vs. BTC/USD annotated chart. Source: Ki Young Ju/ Twitter

As Cointelegraph reported, meanwhile, the world’s first Bitcoin spot price exchange-traded fund (ETF) added a record intraday amount of BTC to its assets under management last week as two Australian ETFs began operating.

Bitcoin address growth contrasts sentiment woes

It is likely not surprising that crypto market sentiment remains on the floor.

Related: $1.9T wipeout in crypto risks spilling over to stocks, bonds — stablecoin Tether in focus

Reflecting nerves over price stability, the Crypto Fear & Greed Index is firmly in “extreme fear” territory this week at 14/100.

Having hit historical bottom territory last week, the recovery has been conspicuously less robust than the original fall, which took the Index from 27/100 to 10/100 in five days.

Crypto Fear & Greed Index (screenshot). Source: Alternative.me

Behind the scenes, however, all may not be as bleak as it seems.

Data from on-chain monitoring firm Santiment last week shows that amid the chaos, unique Bitcoin addresses continue to grow.

“The silver lining to this -33% drop the past 3 weeks is that $BTC’s address activity has remained steady,” it wrote in Twitter comments.

“The divergence between addresses & price is at a 16-month high.”

Bitcoin unique addresses vs. BTC/USD annotated chart. Source: Santiment/ Twitter

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.




Cointelegraph By William Suberg

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Investors familiar with the concept of equity investing will find equity tokens to be an extension of the same thought process as initial public offerings while those with a riskier appetite can venture into plonking their capital on the utility tokens in which they believe.

One glaring difference between utility and equity tokens is the fact that the former is not regulated as they provide access to a service rather than a specific investment in an asset or company as do equity tokens. 

However, for those asking the question of whether utility tokens can be traded, the answer is that they are similar to equity tokens in this aspect and are available for trading on various exchanges. 

To answer whether utility tokens are good investments though, any money put into a utility token needs to be weighed against the prospects of the service being offered by the issuing company and the potential rise in its demand to generate returns for token holders.

On the other hand, equity tokens are regulated and issued by existing firms that are already in business and provide token holders with voting rights that allow them to participate in the working of the company. 

For novice crypto investors, it seems more prudent to invest in equity tokens as they are an extension of equity shares on the traditional stock market and are an easier concept around which to wrap oneself. 

However, if you believe in the prospects of a blockchain project like XRP and want to gain an early mover advantage, it may be more beneficial to put your money on a utility token ICO and ride the demand wave to generate handsome returns in the process. 

Do remember that utility tokens are not treated as a security and therefore, will have a higher risk involved when investing. Either way, it is important to read all the terms and conditions before investing money and understand the applicable fees that are levied on redemption or while trading these tokens on the various exchanges available in the crypto market.


Cointelegraph By Murtuza Merchant

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We ask the buidlers in the blockchain and cryptocurrency sector for their thoughts on the industry… and throw in a few random zingers to keep them on their toes!

 

This week, our 6 Questions go to Dominik Schiener, a co-founder of the Iota Foundation, a nonprofit organization, and the creator of the Tangle, a permissionless, multi-dimensional distributed ledger designed as a foundation of a global protocol for all things connected. 

 

Dominik Schiener is a co-founder and the chairman of the Iota Foundation, one of the largest and greenest cryptocurrency ecosystems in the world. The Iota Foundation’s mission is to support the research and development of new distributed ledger technologies, including the Iota Tangle. Raised in Italy, Dominik oversees partnerships and the overall realization of the project’s vision toward the machine economy. He is a strong advocate for research-based, community-vetted, transparent developments in the cryptocurrency sector.

 

1 — If you were investing in startup companies right now, what kind of blockchain-based business opportunity would catch your eye?

I’d go all-in on startups focused on the intersection of Web2 and Web3. We’re in a transitional period that’s going to last for a long time, and embracing this ongoing transition is smart from both a financial and technical point of view. Companies helping the centralized world move into the decentralized one — and vice versa — are the present and the future. This includes crypto banking, fiat gateways, NFT marketplaces, and so on. The biggest barriers to adoption are user experience, not scaling. Focusing on and investing in UX is the road to mass adoption and to the new world of Web3.

2 — Which people do you find most inspiring, most interesting, and most fun in this space?

I’m drawn to people who have endured and risen above hardship in their personal and professional lives and have become more capable leaders as a result. Naturally, I’m inspired by people like Vitalik Buterin within the crypto space, but I also admire Ray Dalio, whose innovations — and thinking — transformed traditional finance long before crypto even existed.

3 — What is the single most innovative use case for blockchain you’ve ever seen? It may not be the one likeliest to succeed!

I’m increasingly enthusiastic about algorithmic stablecoins. I’m fascinated by their mechanics and their possibilities. They are, of course, highly experimental, and some may just fail, causing investors to lose millions. Even so, these stablecoins have enormous potential to onboard retail investors and offer a new way to transact. I believe they are crucial to mainstream adoption, so I certainly hope they’re likely to succeed.

4 — What’s the most interesting place you’ve ever visited, and why?

I’m a mountain guy. I grew up in the Alps, so I’m probably a little biased. My favorite places are remote areas in the mountains, where you’re far from civilization and can really take a moment to step back, reflect, and appreciate the beauty of our world. That kind of tranquility is the best way to take a break from the crypto madness. I love being in a place where the only reminder of the modern world is the occasional airplane overhead. I love Südtirol [in northern Italy] in particular.

5 — Which movie alternate universe would you most like to live in, and why?

I’m going to go with Avatar. It’s such a stunningly gorgeous and fully realized world. I love the look of that movie and the deep importance it places on the interconnectedness of nature. If I’m a nature guy on Earth, I figure I’m a nature guy on other planets, too. Living in an alternate reality and becoming part of the Na’vi tribe sounds like an amazing exploration adventure.

 

6 — What should we be teaching our kids?

Financial literacy still isn’t the priority — it should be within education, and the sooner that changes, the better. I also think there needs to be a bigger emphasis on philosophy and, more specifically, ethics. Science and technology are developing more rapidly than ever before in human history, and we simply can’t have a generation that is unable to think critically about the human element of these developments. We know about the dangers of technical advancement without ethical boundaries — there are countless dystopian movies about exactly this! — and its importance cannot be understated.

 

A wish for the young, ambitious blockchain community:

That we never forget why we’re here. It’s not about getting rich quick. It’s about removing centralization and abuses of power to lead billions of people to prosperity and abundance through decentralized technologies.


Cointelegraph By Editorial Staff

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There was a time when all cryptocurrencies traded against Bitcoin (BTC). Speculators ventured into other coins when they saw assuring tokenomics or promising hype, but Bitcoin was their settlement coin of choice.

Things have changed. Stablecoins now constitute a critical $150 billion pillar in the cryptocurrency market. Perpetual futures over-amplify market sentiment and, more often than not, dominate price action. Much more capital, including from institutional funds, has come into the market lately with only a moderate impact on Bitcoin’s price. So, some former bulls now dismiss Bitcoin as boring.

Is this the end of Bitcoin maximalism? Probably not. But, perhaps, it’s time for more realism.

Related: Gold, Bitcoin or DeFi: How can investors hedge against inflation?

Bitcoin in a sea of memes

Just as Disney’s stock can hold value next to gold, new digital-native names like the nonfungible token (NFT) project Bored Ape Yacht Club (BAYC) can rise next to Bitcoin in the digital asset arena. And, just as investors would be willing to obtain the rights to a nearly century-old Mickey Mouse, the BAYC represents a new approach to brand building. And, it could work.

It might not, though. It’s speculative, which is what traders like.

ApeCoin’s (APE) volatility is not the same as that seen in Bitcoin today. The apes track brand hype, while Bitcoin now trades against a macroeconomic backdrop. It’s realistic to say that Bitcoin is consolidating as a core holding, not just in the digital asset space but even with some brave institutional investors — who typically shun volatility. Bitcoin is the established base layer in the digital asset market, but will it also be the ultimate reserve asset?

In all fairness, it’s not Ripple (XRP), Shiba Inu (SHIB) or Bitcoin Cash (BCH) that we see sovereign wealth funds beginning to hold. No serious retirement funds are picking them up either. Realists see that because Bitcoin has proven itself to be resilient throughout multiple crises and because it is truly decentralized and beyond the reach of any single government’s control, it is different from its contenders.

We can see that in the “payments” sector, Bitcoin’s dominance with a $750 billion market capitalization is obvious as it dwarfs the next in line. At the same time, however, we cannot dismiss the rise of other “cryptocurrencies” against Bitcoin as futile simply because they are not Bitcoin. Realism opens up the conversation and more understanding, which is ultimately the key driver of adoption.

Bitcoin for boomers

From a price perspective, Bitcoin is only boring for those who crave the roller coaster rush of speculative trading. As that interest looks elsewhere, Bitcoin is growing up and that in itself can unlock more growth.

While YouTube influencers race from farming and breeding to staking and minting, haven’t we also seen the conversation about Bitcoin become so much more mature and focused on first principles?

No, we didn’t get to see a $100,000 Bitcoin in 2021. But, then, do we really need to be that greedy when we haven’t even reached 5% global adoption yet? Yes, in a less boring world, Bitcoin can benefit from human greed and speculation — as with all investments — but those same impulses can send any asset value plummeting.

Related: Boom or bust? Is there a way for Bitcoin price to hit $100K in 2022?

Bitcoin takes time

A Bitcoin maximalist typically wants to own enough Bitcoin to do well for themselves across time and space. They probably also want to see a fair and more just economy — hence their support for Bitcoin in the first place. A maximalist should also agree that it’s better to see billions of people holding a little Bitcoin than a few million holding all of it.

Indeed, buy-the-dip moments aren’t just useful for those most committed to Bitcoin, but they also help with further distribution as new entrants are attracted to the buying opportunity. That’s a good thing.

In this respect, it’s helpful to ask yourself how much Bitcoin you think you should own or aim for. And then act accordingly.

Most staunch Bitcoiners, including Michael Saylor, took time — maybe years — to come to their inspiring views. Famed financier Ray Dalio is still evolving. Most politicians barely understand Bitcoin and I have to assume there are even times when El Salvador’s President Nayib Bukele, who made Bitcoin legal tender in his country, stares at the charts and feels nervous.

Related: El Salvador’s Bitcoin Law: Understanding alternatives to government intervention

Anyone coming into the crypto space for the first time because a funny dog or pixelated primate presented itself as a hyper-sound asset is going to need time as well — A lot of it. But, the end result isn’t necessarily Bitcoin maximalism.

Being a core holding, though, most participants in the space have some exposure to Bitcoin already. Just looking at the game theory playing out across emerging markets and in the context of the current sanctions regime, as well as inflation, most investors in digital assets know it’s good to hold “some Bitcoin.”

Too toxic?

Some say Bitcoin maximalists are toxic. But, people are toxic everywhere. And, what maximalists in Bitcoin do a good job of is reiterating first principles, which helps anchor the conversation. Their motto is, Bitcoin doesn’t need you, you need Bitcoin. True? Well, true or not, the point is: Don’t put your life savings in a memecoin because the community is so nice to you.

Let’s be real. The world is dealing with currency debasements, Bitcoin mining can and does serve environmental goals, the United States and its allies did freeze Russian foreign reserves, the future is profoundly digital, inflation is not transitory and holding Bitcoin in the context of any of these makes complete sense.

Bear markets show what projects and protocols are really made of. Axie Infinity’s Smooth Love Potion (SLP) token currently trades around 40-times lower than its all-time high. Bitcoin is at about 2-times lower than its all-time high. Breaching $69,000 sooner rather than later would not be unreasonable or even out of the ordinary.

Finally, banks “getting into Bitcoin” is somewhat of an oxymoron and some might argue Bitcoin needs none of that, but it’s equally realistic to say that Bitcoin’s integration with global finance and existing infrastructure makes the asset more resilient, as it brings in more stakeholders who will be invested long term.

No one needs to be a Bitcoin maximalist, but everyone should be a realist.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Ben Caselin is the head of research and strategy at AAX, the crypto exchange to be powered by London Stock Exchange Group’s LSEG Technology. With a background in creative arts, social research and fintech, Ben develops insights into Bitcoin and decentralized finance and provides strategic direction at AAX. He is also a working member of Global Digital Finance (GDF), a leading industry body dedicated to driving the acceleration and adoption of digital finance forward.


Cointelegraph By Ben Caselin

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Accessibility is a pain point for cryptocurrency adoption that has been discussed for years, yet still, it is pertinent as ever. This issue was most recently recognized by the United States government as we’ve seen Treasury Secretary Janet Yellen discuss during her remarks on digital assets policy and regulation. There are barriers that are limiting accessibility to cryptocurrencies, such as financial education and technological resources, and it is our duty as developers and leaders in this revolutionary industry to address them. 

Studies have shown that only 33% of adults across the globe are financially literate. With many projects in the decentralized finance (DeFi) space focusing on providing individuals without access to traditional financial institutions and tools for earning, saving and transacting, this is a key consideration.

Traditional financial institutions certainly have additional barriers that cryptocurrency projects are bypassing, such as requiring documentation, lofty fees and a general lack of local financial institutions in emerging markets. With that said, even DeFi requires knowledge and understanding of money to comfortably enter the space. Comprehensive education on the building blocks of finance, from tips on savings to market fluctuations, is crucial to encourage those who have felt excluded by traditional finance to enter the DeFi world.

Related: Decentralized finance may be the future, but education is still lacking

Cryptocurrency education and technostress

Another educational component necessary is cryptocurrency and blockchain education. New technology of all kinds can be overwhelming and confusing to potential new users — it’s so common that the term “technostress” was coined to diagnose this issue.

Highly technical language and frequent use of jargon are two issues I’ve witnessed in the space that deter the crypto curious from diving into the world of DeFi. Providing resources that break down the essentials of blockchain technology, whether they are blog posts or explanatory videos, helps to bridge the large gap of knowledge between developers and everyday individuals. While this is an important start, the unfortunate truth is that education also requires one crucial and very limited resource — time.

The time and energy it takes to learn the ins and outs of blockchain and cryptocurrency technology can be a major barrier to developing a deep understanding necessary to enter the space. While providing easy, simple educational tools is beneficial, it serves an admittedly limited population. As a result, financial literacy and crypto education remains important, but there are other steps developers and leaders must take to enable user adoption. Project leaders should also consider the knowledge gaps as they design their platform and build out messaging. Using simple, concise language that will resonate with all audiences is key to welcoming new users.

Related: Women’s interest in crypto grows, but education gap persists

How the wealth gap serves as a barrier

As mentioned, the wealth gap presents many challenges for lower-income individuals to enter the space. In addition to a lack of access to and time for education, limited liquidity is another massive barrier to entry.

In order to invest, individuals must be able to cover their living expenses with additional money to allocate elsewhere. For those living paycheck to paycheck, or even those who simply do not feel comfortable risking their resources on investments, they are far less inclined to put money into investment accounts.

Related: Crypto education can bring financial empowerment to Latin Americans

This is especially true with digital assets since they are newer and less regulated than traditional investment avenues. Undercollatoralized loans will enable those with less liquidity to invest in the space, serving as a major driver of mainstream crypto adoption. Projects, such as Teller Finance, that allow individuals to borrow crypto assets without posting collateral are moving the space forward. This space will continue to grow and is necessary for increasing accessibility.

How leaders and developers can navigate these barriers

As developers focus on simplicity and ease for users, their platform must reflect those considerations. Onboarding is the first step for any curious potential new user, so ensuring that sign-on is intuitive is your opportunity to create a lasting first impression. If there are many complicated processes to set up an account, people will understandably not want to move forward. Easy Know Your Customer identification, rather than laborious protocols, is one way that projects can enhance their onboarding experience.

Another step for projects to take is building out a robust network of partners. Depending on the project, this could be compatible blockchains, integration with decentralized applications, or joining initiatives like Celo’s DeFi for the People that aim to increase real-world use cases. There are so many projects in the space, often with limited interoperability, which means that users have to juggle many different accounts and applications. Making your platform as expansive and interoperable as possible means providing users with countless ways to use your platform through compatible programs, which in turn encourages them to utilize your offerings.

The blockchain industry’s continued growth requires a steady flow of new users within the space. To do so, we as an industry must develop projects with new users in mind. Offering educational content is the first step to building a foundation that will allow us to revolutionize the economy.

Bearing in mind that this does not serve every user, and finding additional ways to incentivize new users to join the space is crucial. Offering uncollateralized loans helps to bridge the wealth gap that we have seen throughout crypto’s progression and increased adoption. Keeping your audience in mind every step of the way, from design to messaging, to the offerings that you provide, is of equal importance. The ultimate goal is for blockchain technology to be embedded within applications to the point where users don’t even need to know that they are on-chain. When our applications are as intuitive and understandable as the traditional financial tools that users have downloaded by the millions, we will see an increase in users like never before.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Fabrice Cheng is the co-founder, CEO and chief technology officer at Quadrata. He was previously the head of blockchain technology at Spring Labs. Fabrice is an experienced technologist and has been building in the Ethereum ecosystem since 2016, with a particular interest in how to extract value from the mempool, and he’s also an Ethereum 2.0 open-source contributor at Prysmatic Labs.


Cointelegraph By Fabrice Cheng

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Coming every Saturday, Hodler’s Digest will help you track every single important news story that happened this week. The best (and worst) quotes, adoption and regulation highlights, leading coins, predictions and much more — a week on Cointelegraph in one link.

Top Stories This WeekBreaking: Terra blockchain officially halted following LUNA price collapse

This week, news about the Terra ecosystem dominated the headlines after algorithmic stablecoin TerraUSD (UST) lost its peg to the U.S. dollar — and continued to crash. 

At its lowest point during the week, UST fell to around $0.13, according to CoinMarketCap. The meltdown also affected LUNA due to its symbiotic relationship with its sister asset. After reaching a high of $120 in early April, LUNA’s value plummeted this week to basically zero. 

Do Kwon, CEO of Terraform Labs, looked to impliment certain measures to right the sinking ship, as per Cointelegraph’s reporting on Thursday. Subsequent reporting showed that the Terra blockchain halted operations briefly after LUNA’s hyperinflation significantly reduced the cost of a governance attack on the network.

 

 

 

Leaked report: South Korea to establish crypto framework by 2024

South Korea plans to govern crypto assets with a new set of laws intended to come into play by 2024, according to a leaked government document. Although verified as valid, the leaked document is not a finalized plan. 

Led by the administration of President Yoon Suk-yeol, the new crypto regulations pertain to several categories, including NFTs.

 

Meta will test digital collectibles on Instagram starting this week

Earlier this week, Meta said it intends to experiment with NFTs on Instagram by allowing digital collectibles to be used as profile pictures. The decision came directly from CEO Mark Zuckerberg. 

Adding NFTs to Instagram serves as a precursor to bringing digital collectibles to Facebook and other Meta entities, Zuckerberg said. Other social media platforms, such as Twitter, have already moved toward offering NFTs as profile pictures.

 

 

 

Robinhood shares spike 30% after Sam Bankman-Fried buys $650M stake

Since March of this year, FTX CEO Sam Bankman-Fried has been buying shares of popular trading app Robinhood, concluding his purchasing this past week. In total, Bankman-Fried picked up $648 million in Robinhood stock, equating to a 7.6% company stake. The FTX CEO’s average price per share was $11.52. 

A United States regulatory filing recently revealed the purchase. Robinhood shares increased more than 30% immediately after the news became public.

 

ECB lays out ‘anonymous’ digital euro as public opposes ‘slavecoins’

The topic of central bank digital currencies (CBDCs) has become increasingly common. A recent working paper from the European Central Bank gave the latest update on where the monetary authority stands on the matter. According to the central bank, a CBDC with anonymity features could streamline payments while also enabling merchants to prevent banks from extracting information about their payment flows. 

Meanwhile, Europeans have apparently come out against CBDCs. “Slavecoin” is the term some online commentators have used to describe CBDCs. The backlash has steadily flowed in following the April 5 launch of a digital euro consultation which, in part, allows the public to weigh in on the issue via online comments.

 

 

 

 

 

Winners and Losers

 

At the end of the week, Bitcoin (BTC) is at $29,994, Ether (ETH) at $2,067 and XRP at $0.42. The total market cap is at $1.28 trillion, according to CoinMarketCap.

Among the biggest 100 cryptocurrencies, there were only two altcoin gainers of the week: Maker (MKR) at 1.22% and Fei USD (FEI) at 0.27%. 

The top three altcoin losers of the week are Terra (LUNA) at -100%, TerraUSD (UST) at -81.61%, and Fantom (FTM) at -50.89%.

For more info on crypto prices, make sure to read Cointelegraph’s market analysis.

 

 

 

 

Most Memorable Quotations

 

“When it comes to mass adoption, it’s really about comparing what blockchain technology can bring to users through existing solutions.”

Ming Duan, chief operating officer and co-founder of Umee

 

“In most places in the free world and in democracies, crypto is going to eventually be regulated and legal. […] And the way that we push the conversation forward is by taking action.”

Brian Armstrong, CEO of Coinbase

 

“If you want to do an algorithmic stablecoin, for example, it has to be 300% backed by solid assets, solid crypto assets — not 105%, or 110%, or even less. […] That does not make sense.”

Paolo Ardoino, chief technology officer at Bitfinex and Tether

 

“Everybody who has been here for less than 18 months is probably shocked, but for us who have been here since 2016, 2017, it’s part of the game. Bitcoin is not going away, Ethereum is not going away because of LUNA or because of UST. Everything is business as usual.”

Marcel Pechman, crypto analyst and Cointelegraph contributor

 

“The same rules that apply to investments in the physical world continue to apply to investments in virtual worlds.”

Five U.S. state regulatory bodies 

 

“If platforms — whether in the decentralized or centralized finance space — offer security-based swaps, they are implicated by the securities laws and must work within our securities regime.”

Gary Gensler, chair of the U.S. Securities and Exchange Commission (SEC)

 

Prediction of the Week 

 

Bitcoin macro bottom ‘not in yet’ warns analyst as BTC price holds $30K

Bitcoin is coming off a highly volatile week, briefly falling below $27,000 at one point, according to Cointelegraph’s BTC price index. Although the asset subsequently rallied above $30,000, BTC may not be out of the woods yet in terms of a larger scale macro bottom.

In presenting his case, Twitter user Material Indicators noted: “IMO, the macro bottom is not in yet.”

Other market evaluations included one from former BitMEX CEO Arthur Hayes, who said in a May 12 blog post: “The crypto capital markets must be allowed time to heal after the bloodletting concludes.” He continued with other comments, noting certain price levels he is watching for BTC and ETH.

 

 

FUD of the Week Galaxy Digital reports $112M Q1 loss, citing crypto price volatility

Crypto investment firm Galaxy Digital Holdings recently published its results for Q1 2022. The firm posted a net comprehensive loss of approximately $112 million during the quarter, a considerable change of pace from its roughly $858 million profits during Q1 2021. The company’s results mirror the significant shift in market sentiment for crypto assets over the past 12 months.

 

‘Mortified’ crypto trader gets 42 months for fraud, claiming he was a total gun

A New York court dealt Jeremy Spence, known under the pseudonym “Coin Signals,” a 42-month jail sentence for running a Ponzi scheme. The scheme involved making false assertions about his crypto-trading profits, taking money from investors and then paying out older investors with money from newer ones. The court ruling also included other terms of the sentence.

 

Breaking: Binance suspends LUNA and UST trading amid issues on Terra blockchain

Amid the turmoil surrounding LUNA and UST, Binance decided to suspend spot trading for the UST/BUSD and LUNA/BUSD trading pairs. UST and LUNA withdrawals were temporarily halted by Binance earlier in the week. Binance Futures has also adjusted certain LUNA-related trading features.

 

 

Best Cointelegraph FeaturesBitcoin 2022 — Will the real maximalists please stand up?

“The attack is cryptocurrency. That’s the fucking attack.”

Can Solana become the dominant PoS chain despite persistent outages?

The Solana network seems to be battling persistent outages while seeking to address the industry’s blockchain trilemma.

What happened? Terra debacle exposes flaws plaguing the crypto industry

The downfall of Terra calls into question the real-world utility and long-term viability of algorithmic stablecoins.

 

 

 


Cointelegraph By Editorial Staff

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