Welcome to RelayNode NYC Area edition! The NYC blockchain ecosystem is growing. My goal is to harness its energy and provide a weekly curated list of personal thoughts, interesting content, upcoming events, and local jobs.
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RelayNode NYC is curated by:
David Gogel: Founder @GogelX/Definancier, Advisor/Operator/Investor, Advisor @Paperchain.io, Wharton MBA/BS/BA, fmr Associate @Techstars' Blockchain Accelerator, Co-president @Wharton FinTech, Corp Dev @LinkedIn @AIG
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Market Stats
Gloomier Economic Outlook: Stocks slipped last week with growing COVID cases and geopolitical tensions rising between the U.S. and China. Beijing reacted to the US shutting down the Chinese consulate in Houston by ordering the closure of the US consulate in Chengdu. Last week, the Dow, S&P 500, and NASDAQ lost -0.8%, -0.3%, and -1.3%, respectively. Meanwhile, the White House and Senate Republicans agreed to a $1T stimulus package that includes money for testing, schools, and additional stimulus checks, but no extension of heightened unemployment benefits. Investors remain cautious. Gold, traditionally a safe haven, surged to another all-time high of $1,900, and the dollar weakened to a multiyear low, ahead of a meeting by the Fed’s rate-setters. Traders expect interest rates to remain close to zero.
Risk-on: the total market cap of crypto-assets sits at ~$306B, up 12% WoW. Volatility has returned. Bitcoin broke out of its tight range with open interest and volumes increasing. Bitcoin jumped above $9,500 on Wednesday, before breaking through the psychological $10,000 price level on Sunday. All eyes are now focused on $10.5K, a multi-month resistance level, as a signal for a bull market. Ether increased 37% last week reaching a 13-month high after DeFi yield farmers locked in some gains and due to DeFi-related demand. Most DeFi coins are showing signs of cooling down after several weeks of outperformance.
1 Big Thing: Programmable Money Optimized for Yield
Yield farmers were focused on yearn.finance, a decentralized ecosystem of aggregators leveraging lending protocols to optimize yield. When users deposit tokens to yearn.finance, they are converted to yTokens, which are regularly rebalanced to invest in the most profitable lending protocol.
The yearn.finance ecosystem consists of the following products:
yearn.finance - Profit switching lender to optimize lending yields (live)
ytrade.finance - Leveraged stable coin trades (testnet)
yliquidate.finance - 0 capital automated liquidations for Aave (testnet)
yswap.exchange - Single-sided automated market maker (live)
iborrow.finance - Credit delegation vaults for smart contract to smart contract lending (testnet)
On July 18, Yearn.finance launched its governance token ($YFI) with no pre-mine, pre-sale, or allocation to the team. The founder Andre opted for community governance, where YFI holders govern the protocol. YFI’s governance forum is very active.
There were 4 pools to farm 30,000 capped YFI (great summary by web):
Pool #1 yCRV staking pool: Earns y curve fees and lending fees. Earns YFI and CRV as rewards.
Pool #2 BPT (98% DAI 2% YFI) staking pool: Earns balancer fees. Earns BAL and YFI as rewards.
Pool #3 BPT (98% yCRV 2% YFI) staking pool: Earns y curve fees, lending fees, and balancer fees. Earns BAL, CRV, YFI as rewards. Owning more than 1000 BPT (yCRV 2% YFI) grants you the ability to stake YFI to earn yCRV.
Pool #4 YFI staking reward pool: Only eligible to individuals with more than 1000 BPT (98% yCRV 2% YFI) staked in Pool 3. Also need to participate in voting proposals.
In under 2 weeks, the yearn.finance pool increased from $8M to ~$350M in Total Value Locked. Despite Andre’s warnings that YFI is worthless and “won’t be on Uniswap,” it was listed on Uniswap where it reached an all-time high of $4,600, resulting in >1,000% APRs for farmers. YTI currently trades at $2,691, implying a fully diluted market capitalization of $78.5M.
Current roadmap
Finalize + launch ytrade
Finalize + launch yswap
Credit delegation stable coin / synthetics
Credit delegation smart contract loans
Risks
Quantstamp’s informal code review
What To Read
🌐 MACRO / WHY BITCOIN?
🌐 Big Cycle of the United States and the Dollar: Ray Dalio, Co-CIO & Co-Chairman of Bridgewater, explores the US Empire and its path along the archetypical big cycle of dominant powers *since* World War II. “A number of empires and dynasties have sustained themselves for hundreds of years and the United States, at 244 years old, has proven itself to be one of the most durable now in existence. I think the most important question is how we adapt and change by asking ourselves and honestly answering some difficult questions.”
💰 FUNDING, M&A, EXITS
Seed
💰 Teller, a blockchain project building an algorithmic credit risk protocol for decentralized finance incubated by A16Z’s crypto startup school, raised a $1M Seed led by Framework Ventures with participation from Parafi Capital and Maven11 Capital. The protocol aggregates data from legacy credit scoring systems, like Equifax, into decentralized lending markets.
Token Sales
💰 Avalanche, a blockchain project created by Cornell computer science professor Emin Gün Sirer, raised $42M in an oversubscribed public AVAX token sale. In 4.5 hours the team sold all 72M tokens to accredited non-US investors. Participants had access to purchase AVAX at $0.50 per token with a year-long vesting period or AVAX priced at $0.85 per token with no vesting.
💰 Spencer Dinwiddie, the Brooklyn Nets point guard, raised $1.35M by selling tokenized shares backed by his NBA contract. Dinwiddie’s issuer SD26 LLC sold 9 of the 90 available tokenized contract shares, priced at $150,000, to 8 investors. The amount raised was 10% of the target raise of $13.5M. He first proposed tokenizing his 3-year contract in Sep 2019, but faced pushback from the NBA.
💰 Orion Protocol, a DeFi liquidity aggregator, raised $3.45M in a dynamic coin offering or DYCO. DYCOs allow investors to claim refunds if projects fail to deliver. Orion guarantees to return 80% of the raised money back to DYCO participants through refunds if requested. The refunds create a price floor that provides organic liquidity and volume.
Series A
💰 Bitcoin Suisse, a Zug-based financial services provider for the digital asset industry, raised a $48M Series A in a private placement for 16.4% of total equity, including the issuance of 10% of new shares, pushing its valuation to CHF 302.5M (~$327M). Funds will be used to expand core capital and credit business, provide additional liquidity for brokerage business and proprietary trading, and provide capital for and setup of Liechtenstein bank.
💰 VALR, a South African cryptocurrency exchange, raised 57M rands (~$3.45M) in a Series A by 100x Ventures, the investment arm of 100x Group, with participation from 4Di Capital, Bittrex, and former CEO of FirstRand's First National Bank. Funds will be used to expand into new markets across South Africa, launch new products and services such as derivatives trading and lending, and strengthen its team of technology, compliance, and client service functions.
Public Markets
💰 Silvergate Capital Corporation (NYSE:SI), a leading provider of innovative financial infrastructure solutions to the digital currency industry, released its 2Q financial report. Net income for the quarter was $5.5M, compared to net income of $4.4M for 1Q 2020, and net income of $5.2M for 2Q 2019. Digital currency customers grew to 881 at June 30, 2020 compared to 850 at March 31, 2020, and 655 at June 30, 2019. The Silvergate Exchange Network (“SEN”) handled 40,286 transactions in 2Q 2020, an increase of 28% compared to 31,405 transactions in the 1Q 2020, and 12,254 transactions in the 2Q 2019. The SEN handled $22.4B of USD transfers in 2Q, an increase of 29% compared to $17.4B in 1Q 2020, and $8.6B in 2Q 2019. On Friday, SI shares closed at $13.9 per share, implying a total market capitalization of $259.5M. Pre-market, shares are trading at $14.6.
DEFI / CEFI / OPFI
🔓 What explains the rise of AMMs? Haseeb Qureshi, GP at Dragonfly Capital, explains the model and design tradeoffs behind automated market-making platforms, such as Uniswap.
🔓 ANT liquidity rewards program: Aragon, a leading protocol for DAO creation, is joining the yield farming wave after announcing a liquidity mining program for ANT, the native token of the Aragon Network. Over a 30 day period, 50,000 ANT (~$90,000 at current prices) will be distributed as rewards to liquidity providers for the ANT/ETH pool on Uniswap V2. The ANT-ETH pool has become the 6th largest liquid pool on Uniswap with $3.3M in total liquidity.
🔓 Balancer Thesis: Chris and Evan from Placeholder VC released their investment thesis on Balancer, an automated market maker building programmable and customizable liquidity pools.
🔓Mempool Manipulation on Black Thursday: On March 12, 2020, the crypto markets saw one of their biggest sell-offs in history, with the price of ETH falling 43% – and BTC falling 39% – in a matter of hours. As prices fell, a negative feedback loop emerged that reduced liquidity and forced liquidations from various DeFi contracts. Blocknative uncovered evidence that the MakerDAO liquidations on March 12 and 13 were an engineered event. This evidence is derived from the mempool, the pre-chain area miners use to create blocks.
🔓 UMA's Yield Farming Yield Dollar: UMA, the decentralized financial contract platform, released USD, a synthetic yield dollar token. The yield dollar represents a fixed-rate, fixed-term loan. Further, Risk Labs has decided to bootstrap liquidity by offering liquidity mining rewards in $UMA tokens for users who contribute yUSD liquidity to the yUSD/USDC Balancer pool.
🌉 INFRASTRUCTURE
🌉 Visa’s digital currency ambitions: Visa released its outlook and approach to digital currencies, providing views on stablecoins, partnerships, and investments (Anchorage), internal R&D (Zether, FlyClient), and CBDCs. Around the world, 25 digital currency wallets have already linked their services to Visa, giving users an easy way to spend from their digital currency balance using a Visa or prepaid credential.
🌉 Coinbase’s mid-year review: Coinbase's institutional team has revealed details about the size of its client base and the exchange's future plans. According to the mid-year review, Coinbase has grown its client base to more than 35M retail and institutional clients.
🌉 Programmable government: The Beijing Municipal Government released a 145-page blueprint (EN translation) detailing its plan to become a hub for blockchain by 2022. The government’s main goals are to build a blockchain-based unified framework for digital governance, facilitate data-sharing between agencies and businesses, and enable cross-departmental and cross-regional collaboration. Matthew Graham, CEO of Sino Global Capital, has a great tweetstorm summarizing key takeaways.
🍰 LAYER 1
🍰 Ethereum 2.0 ready: The final public testnet, which will enable Ethereum to scale, is to launch on August 4. Tanner Hoban and Tom Borgers, on the Corporate Development team at ConsenSys, review the network economics of Ethereum 2.0.
🍰 Polkadot’s mainnet: Polkadot's on-chain governance system completed its first vote, which removed the Sudo privileges held by the Web3 Foundation. This Sudo ability allowed the Foundation to manage the chain and initiate runtime upgrades during Polkadot's early phases.
🍰 FTX & Solana: Crypto exchange FTX announced it is launching a DEX built on the Solana blockchain. Called Serum, the DEX is interoperable with Ethereum. According to Sam, Solana can process 10,000 times as much as Ethereum; and it's 1,000,000 times cheaper.
⚖️ LEGAL
⚖️ US national banks, federal savings associations can now custody crypto: The OCC published a letter clarifying national banks' and federal savings associations' authority to provide cryptocurrency custody services for customers. "This opinion clarifies that banks can continue satisfying their customers' needs for safeguarding their most valuable assets, which today for tens of millions of Americans includes cryptocurrency." The move is widely praised as a step towards mainstreaming crypto. Peter Van Valkenburgh from Coin Center explains why this is a positive signal for the industry.
⚖️ Bitcoin is money: In the case of United States v. Harmon, Chief Judge Beryl A. Howell wrote that money is "commonly means a medium of exchange, method of payment, or store of value.” Defining bitcoin as money was integral to the court's decision to not dismiss criminal charges against Larry Harmon, the operator of an unlicensed bitcoin trading platform, for laundering money.
🎥 PODCASTS / VIDEOS OF THE WEEK
📅 Upcoming Events
If you would like to highlight events in future editions, please submit here.
July 28: Responsible Data Summit (Virtual)
August 6: Global DeFi Summit (Virtual)
August 22-23: Dystopia Labs / Blockstack: FuturePROOF (Virtual)
October 20-22: CordaCon 2020 (Virtual)
🎓 Highlighted Industry Jobs (non-exhaustive list for NY)
If you would like to highlight jobs or internships in future editions, please submit links here.
Bison Trails - Business Development Manager (new)
BlockFi - Client Service Associate (new)
CoinDesk - Chief Marketing Officer (new)
Multicoin Capital - Analyst
Chainalysis - Product Marketing Manager
Paxful - Chief Operating Officer
Nothing written in RelayNode NYC is legal or investment advice and should not be taken as such. No one should make any investment decision without first consulting his or her own financial advisor and conducting his or her own research and due diligence.