Blockchain Bites: MakerDAO’s Do or Dai Moment, Bitcoin in Africa, Dollar Trends Up

MakerDAO has voted not to compensate victims of the “Black Thursday” flash crash, a former Pantera partner is launching a new crypto-focused hedge fund and bitcoin may be headed to the doldrums as the U.S. dollar rises.

Decentralized governance
MakerDAO will not compensate victims of March 12’s “Black Thursday” flash crash that left some of the decentralized finance (DeFi) platform’s investors out $8.33 million, according to a vote that closed Tuesday. Large MKR holders dominated the vote as only 38 unique votes (8.74% of MKR holders) were cast, CoinDesk’s Will Foxley reports. In March, market making bots exploited a flaw and were able to buy ETH at near-$0 prices, as the entire crypto market tanked, thereby liquidating many collateral positions. Investors lobbied the community for partial compensation denominated in the platform’s MKR governance token. The Maker community had initially voted in early April to refund sunken investors. 

Data markets
Taking cues for DeFi, Ocean Protocol has teamed with Balancer Labs to create the first automated market maker (AMM) for data. “Our goal is to unlock this data economy with data marketplaces, connecting the buyers and sellers of data. These can be individual humans, families, small companies, large companies, cities, nations, etcetera,” Ocean founder Trent McConaghy said. The decentralized market approach aims to make pricing data easier, by allowing anyone to discover, price and trade using a variety of cryptos like Ocean’s native token (OCEAN) or other cryptos like ether (ETH) or dai (DAI).

Global south
JBS, the biggest meat packer globally by sales, plans to use blockchain technology to stem deforestation caused by cattle suppliers in the Amazon. The Brazilian company will monitor all of its meat suppliers on a blockchain system by 2025, saying current monitoring efforts enable its suppliers further down the chain to potentially “launder” meat from cattle raised on illegally cleared ground. Meanwhile, to the north, Venezuela has legalized crypto mining but only under the direction of the government. All mining activities must be registered and carried out through an official National Digital Mining Pool, a centralized pool that will keep the government in control of disbursing profits. This comes as Iran continues to clamp down on crypto mining – despite its citizens’ growing reliance on the borderless technology.

Banking the unbanked
FastBitcoins has partnered with prepaid voucher giant Flexepin to expand to 14 countries in Africa. Announced Thursday, the deal also expands FastBitcoins’ coverage to some 20,000 point-of-sale locations in Australia where Flexepin is based, as well as across Canada and Europe. Flexepin caters to users who want to make online payments without using credit or debit cards. It also supports mobile money payments in Africa, opening the possibility of exchanging prepaid vouchers for bitcoin and accessing the larger global financial system. 

Fintech, meet crypto
Visa’s Global Fintech Lead, Terry Angelos, told Forbes cryptocurrency companies had shown a “significant interest” in working with them. And they, them. Visa is currently “onboarding” 25 crypto companies,”at various stages of development,” through its fast track program and other methods. This is in addition to other major firms like Coinbase, Visa is working with. Meanwhile, Coinbase announced it has hired former executives from Venmo, Adobe and Google to VP roles on its product, engineering, and design & research teams. 

Bitcoin returns?
For early bitcoin investors, like those at the maverick hedge fund Pantera Capital, heart pounding returns may seem like a thing of the past. 

Founded in 2003 by Dan Morehead, Pantera was originally focused on global macro hedge fund investments. A decade later, the firm switched its focus exclusively to the world of crypto. 

This appears to have been an auspicious move. Its first bitcoin fund, opened in late-2013, has rallied by over 10,000%.

Such returns on BTC now appear beyond the pale. MicroStrategy’s Michael Saylor has sunk close to half a billion dollars of his firm’s treasury into bitcoin, not as a venture investment, but as a means to beat inflation. He told CoinDesk’s Danny Nelson that MicroStrategy is prepared to hold BTC for the next 100 years. 

Paul Brodsky, a former partner at Pantera Capital, also appears skeptical that bitcoin will see another breakout rally. He believes that bitcoin is too easily accessible, its derivatives market too established and its network too energy-demanding to offer massive investor upside.

Though he hasn’t soured on crypto broadly. 

Brodsky is opening a new hedge fund, called PostModern Partners, aimed at volatility plays across cryptocurrencies and traditional assets. Set to open in 2021 the fund is seeking high-risk, high-return blockchain investment opportunities, CoinDesk’s Nelson reports. 

While it isn’t clear precisely what assets might have Brodsky’s eye, PostModern’s organizational documents reads, “we believe there are greater scaling opportunities in Proof-of-Stake tokens.” 

Dollar-led doldrums
The U.S. dollar is showing signs of life and a continued breakout could weigh over bitcoin, which surged amid the greenback’s sharp sell-off this summer. Bitcoin (BTC) is currently trading at $10,320 – up nearly 2% from Wednesday’s low of $10,140. The dollar index (DXY), which tracks the greenback’s value against major fiat currencies, has broken above its two-month-long range of 92.00-94.00. CoinDesk’s Omkar Godbole reports the dollar and bitcoin (like other assets including gold, and increasingly stocks) are inversely correlated, meaning a rise in one might cause a downside in the other.

Version 2
Parity Technologies has released the second version of its blockchain building kit, Substrate 2.0, CoinDesk’s Will Foxley reports. The new release gives developers additional tools to customize a blockchain “precisely for your application or business logic,” a blog post reads. Parity Technologies is the developer of the Polkadot blockchain with ambitions for developing a Web 3.0, undergirded by a meshing of various blockchains running on a “tooling kit” called Substrate. The latest code update includes 70 composable “modules” for blockchain architects to build and modules to bring off-chain data onto the blockchain.

Incentive loops
Corey Hoffstein, Chief Investment Officer of quantitative research and investment fund Newfound Research LLC, joins the latest episode of The Breakdown to discuss how the Federal Reserve, passive investing and volatility-correlated strategies have joined to create a market incentive loop that is causing markets to aggressively react to exogenous shocks.