Blockchain Bites: River’s Rise, Canada’s CBDC and Bitcoin’s Whales Post-Halving

The number of bitcoin whales is at its highest level since 2017, as the network adjusts its difficulty setting for the first time post-halving.

Elsewhere, Canada is hiring a CBDC expert, Thailand is using a blockchain to issue bonds and Kraken is expanding into Australia. Here’s the story:

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Top shelf

Post-Halving Jumps

On Tuesday, Bitcoin posted its biggest mining difficulty increase in nearly 2.5 years. Its 14.95% rise comes after two consecutive declines in difficulty following the May halving. Miners contributing hashing power to the network are now facing the fourth-most difficult two-week mining period in Bitcoin’s history. As of Tuesday, the number of bitcoin whales, or entities holding at least 1,000 coins, was 1,840, up nearly 2% from the level seen before the halving. The metric clocked a recent high of 1,844 on Monday, a level last seen in November 2017. The steady accumulation since the halving suggests investor confidence in the long-term bullish narrative surrounding bitcoin. 

On the National Stage

Canada’s central bank is getting serious about digitizing its currency with a new job posting for a CBDC Project Manager. “The Bank of Canada is embarking on a program of major social significance to design a contingent system for a CBDC, which can be thought of as a banknote, but in digital form,” the bank wrote. Meanwhile, the Public Debt Management Office within Thailand’s Ministry of Finance has announced plans to sell 200 million baht ($6.42 million) in savings bonds using a blockchain-based e-wallet. Elsewhere, the World Economic Forum has partnered with the Inter-American Development Bank (IDB) and Colombian officials to develop a proof-of-concept using Ethereum to add transparency to the nation’s public-private procurements contracts. Finally, Kraken is opening operations in Sydney, Australia.

Institutional Support

Bitcoin brokerage River Financial raised a $5.7 million seed round with backing from Polychain Capital, Slow Ventures, and Castle Island Ventures, among others. The capital will be used to scale River, as it seeks licensing across the United States. The firm currently offers a spot market, cold-storage solution and private client product in 15 states. Meanwhile, WisdomTree Trust, a prominent asset manager, may launch an exchange-traded fund (ETF) that could see 5% of the contract’s net assets placed in the Chicago Mercantile Exchange’s bitcoin futures contracts. That’s as a Deloitte survey of 1,488 executives from 14 countries found 39% of companies are integrating blockchain into their operations and 55% named the tech among the top five strategic priorities for their companies. (Decrypt) 

Legal Review

Former Bitcoin Core developer Peter Todd has settled his defamation lawsuit against fellow privacy-tech expert Isis Lovecruft, who tweeted in February 2019 that Todd was a “rapist.” Lovecruft, who uses nonbinary pronouns, claimed in 2019 that Todd sexually harassed and grabbed their arm, which he denied. On Tuesday, without deleting the original tweet, Lovecruft also tweeted, “Peter Todd never raped or sexually assaulted me.” Elsewhere, founders of the “Centra Card” crypto debit card pleaded guilty to a $25 million securities and wire fraud conspiracy, after completing an unregistered token sale backed by boxer Floyd Mayweather and music producer DJ Khaled. Finally, researchers at PeckShield believe a peer-to-peer crypto exchange in Korea, Good Cycle, is responsible for paying $5.2 million in fees to send two Ethereum transactions last week. Circumstantial evidence leads the researchers to believe the exchange may be engaged in a Ponzi scheme or blackmail. (Decrypt)

Protocol Level

The seven-day moving average of the total amount of “gas” used in transactions on Ethereum’s blockchain rose to a record high of 61.12 billion on Monday. Analysts say the growth of both transactions and the cost to process them is being driven by an increase in stablecoin usage and DeFi applications. That’s as the Stellar community gears up to vote on a raft of new network updates, grouped together as “Protocol 13,” to give exchanges greater control over how digital assets are traded on-chain and how they can enforce local regulations. Lastly, but not actually “last,” Ripple was ranked 28th on CNBC’s annual “Disruptor 50” list.

Social Good

The PAN protocol is a blockchain-based, censorship-resistant database for recording police misconduct built by the Police Accountability Now group and secured on Ethereum and the InterPlanetary File System (IPFS) distributed storage platform. (Decrypt) Elsewhere, the Giving Block launched the Crypto for Black Lives campaign to raise $1 million for nonprofits working on civil rights causes. (Decrypt)

Market intel

COMP’s Capitalization Computation

Bullish trading in Compound’s new COMP tokens, released Monday, has given the project a fully diluted, implied market capitalization of nearly $785 million, well above Maker’s $546.2 million. This implied market cap is well above the $163.1 million locked in the protocol (MakerDAO, the largest network, has $487 million locked within its smart contract. Compound’s outsize market cap, relative to the total value locked in the protocol, “may signal the rally went too far,” The Defiant, a newsletter tracking the DeFi sector, wrote on Tuesday. Yesterday, COMP tokens were valued at $78.56 each. 

Second-Order Effects

Curve, a new automated market maker devoted exclusively to stablecoins, saw trading volume spike to $23.3 million yesterday. The sevenfold growth is driven by demand for the freshly issued Compound governance token, COMP, which has surged to a $774.3 million market cap since first being distributed on Monday. Traders are swapping stablecoins, searching for higher interest rates, on Curve to put back into Compound.  

Opinion

Venezuela Is a Testing Ground for Digital Dollarization (and Zelle Doesn’t Like It)

J.P. Koning, a CoinDesk columnist and author of the Moneyness blog, digs into campaigns in Venezuela to repurpose digital U.S. dollars to combat hyperinflation in the nation’s local currency, using Zelle and other payments apps, and Zelle’s attempts – in turn – to limit the activity. “In the future, U.S. dollar stablecoins such as tether, paxos, or USD coin could be recruited by nations suffering from hyperinflation,” Koning said. “Unlike Zelle, these privately issued blockchain-based versions of the U.S. dollar do not put many limitations on usage.” 

Podcast

From Moral Hazard to Business as Usual

Jesse Felder, a leading independent financial analyst, shares thoughts on the “Robinhood rally,” Fed policy and why Modern Monetary Theory is already here.

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