Weekly Blockchain Insights (CW 30-2020)

27. Jul 2020Weekly BC Insights

Ethereum rally, crypto custody & ecosystem development

 

Blockchain insights about Bitcoin, DeFi and Ethereum

In Weekly Blockchain Insights, we share the most interesting Blockchain Tweets, discussions about crypto from all blockchain ecosystems and various blockchain solutions from the past week. Make sure to sign up for the newsletter below and get all blockchain insights to your inbox.

This week’s blockchain insights include positive crypto custody news from the US authorities, insights to blockchain project growth and the overall development of the blockchain industry.

If you come across a great Tweet in the future, please tag us @BCComparison. And make sure to join our new Telegram group where we collect insights from all ecosystems: @BCinsights.

 

Blockchain Basics

We lower the barriers to join the ecosystem by showcasing solutions, with great lists, a comprehensive knowledge base, a Telegram channel with insights from all blockchain ecosystems & by providing blockchain customer service for free. How do you onboard people to Bitcoin and blockchain?

Most explanations of blockchain, crypto and DeFi are still very technical and the utility of blockchain is still unclear to many people as we saw when J. K. Rowling asked people to explain Bitcoin to her. Are we able to explain it with 3 words or for children to understand this?

Haseeb Qureshi shared a great introduction to the most prominent decentralized exchange (DEX) called Uniswap, to automated market-making and impermanent loss. If you are currently getting started with DeFi this is a must-read.

 

General blockchain insights & blockchain ecosystem developments

Stablecoin demand is at an all-time high for a number of reasons in a time of economic uncertainty. Many new stablecoins are launched and they can be used as collateral in DeFi lending or as hedge for crypto assets.

In 2020, with the launch of many new layer 1 protocols such as Europechain, Celo, Polkadot or Symbol from NEM and the presence of established protocols such as Ethereum, positioning is becoming more important than ever. While many layer 1 protocols are for general purpose, there is now a clear trend towards focus (DeFi, Gaming, Enterprise) and flagship projects per chain because that helps with positioning, onboarding of users and enables network effects.

After a long DeFi rally, Ethereum broke out this week and the discussion about transaction costs and scalability started to return. Various blockchain protocols are starting to utilize scaling solutions such as sharding, multi-chain architectures, side chains and state channels (See Overview). But only a few layer 2 blockchain protocols such as the Lightning network are in production and adoption is low.

So far, current onramp activity doesn’t show meaningful inflows from new investors. The current increase in Total value locked (TVL) in DeFi is mostly a recirculation of money within the crypto market. Some investors choose to put their existing assets to work as collateral and chase liquidity mining rewards or short-term gains in token prices.

Total Value Locked is an indicator of DeFi adoption but whales (large stakeholders) can deceive the real adoption curve. Crypto capital assets generate revenues and can be valued with the price-to-earnings ratio. Ultimately, the price-to-earnings ratio (P/E) is more important to determine the real growth of protocols and their valuations. Note: These open-source protocols can easily be copied and their defensibility is yet to be seen.

Blockchain is more than cryptocurrency or technology. In fact, open-source blockchain technologies can be copied but a strong community can enable long-term growth and network effects. A shared mission, thought leaders, believe in a platform and good incentive structures are beneficial.

In the USA, the Office of the Comptroller of the Currency (OCC) published a letter that clarifies that national banks can provide cryptocurrency custody services to customers (See Full Announcement). This is an important milestone for cryptocurrency adoption and could result in banks acquiring digital asset custodians in the USA.

Visa just shared that they collaborate with players such as Coinbase & Anchorage and have been researching blockchain technology for years (See Full Announcement). The Block reported about Paypal’s growing involvement in blockchain while Paxos announced its crypto brokerage service.

Sunny Aggarwal shared a great writeup that explains a potential future of crypto and what’s needed for mainstream adoption. According to him the integration with existing systems, open Finance and Open Law are the future of crypto while Web3 & the decentralized web are a parallel movement.

Great insights. No noise. Weekly Newsletter.

In our newsletter we introduce great blockchain solutions and share a collection of the best blockchain insights from the past week.

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