Welcome to this 6th edition of our Chain Reaction newsletter for the week commencing the 27th December 2021. There is 1 week left in 2021 and last week we saw some year in review type posts such as how Ethereum stacks up a year after announcing it's pending upgrade, further real world purchases by crypto related entities and some other pieces on what DeFi needs to be accessible to the masses.
It's now the last week of 2021 so hope you're enjoying your time with family and friends if you're on a break or that you've got some good plans for the rest of the week ahead of you.
Also, if you're interested, join us on our Discord: https://discord.gg/XPbnkFNC
What you can expect in this newsletter
In the News
Videos of the week
Charts and Data
Around the world of social media
Education
In the news
CoinDesk - Market Wrap Year-End Review: Bitcoin Starts Off in a Frenzy – a review of Bitcoin (BTC) journey in 2020 starting off with its surge in January and many talking about HODL (hold on for dear life) with regards to their investments. This is the first in a series of reviews for CoinDesk and they mention that they’ll also cover market-moving tweets, corporate buyers and more volatility in the market
NewsBTC - By The Numbers: How Ethereum 2.0 One-Year Stats Stack Up - With over a year since the movement to Ethereum 2.0 had started, this article looks at some of the metrics over that time. Some great stats and charts like this one showing that over 7% of ETH is staked.
CoinGape - Breaking: Thai central bank announces a delay in CBDC pilot - Central Bank of Thailand has delayed its testing of its central bank digital currency (CDBC) until the end of 2022. The central bank mentions they are in no rush to develop their CDBC and does not plan to have it compete with other established stablecoins or cryptocurrencies.
CoinTelegraph - Crypto exchanges to toss up a Hail Mary at Super Bowl 2022 - Crypto.com and FTX will air ads at the NFL (National Football League) Superbowl next year and will pay a hefty price to do so (> 30 second ads cost over $5 million). But, it should come as no surprise as both entities already have stadium naming rights in the NBA.
CoinTelegraph – Crypto exchange FTX US partners with four Washington, DC sports teams - More on mainstream news for crypto with 4 Washington D.C. sports teams having FTX as their official crypto partner. With Crypto.com buying the name rights for the former Staples Centre stadium in Los Angeles, FTX also claiming the naming rights to the Miami Heat basketball stadium (for US $135 million) and more, it is interesting to see more of this going mainstream.
The Defiant - Polygon’s Surprise Code Change Triggers Questions and Controversy - This week we see a battle between centralisation and decentralisation with the forking of Polygon's blockchain raising this concern amongst users. The fork was done to address a security vulnerability but was kept quiet. It puts into question the topic of decentralisation, that's for sure.
Tom's Hardware - Gamers Rejoice! Ethereum Reminds GPU Miners the End Is Near - Whilst not DeFi specific this article does remind video gamers that The Merge, a term coined for the Ethereum 2.0 upgrade and going from Proof of Work (PoW) to Proof of Stake (PoS), is coming and will mean less competition for the same GPUs that are required for both crypto mining as well as gaming. Those interested were reminded of the move on Monday as Ethereum released their Kintsugi testnet for developers to look at the new environment.
Lyn
The Defiant - DeFi Needs to Simplify Design to be Truly Accessible to the Masses – Another one from The Defiant looking this time at mainstream adoption and how one of the issues with DeFi has been in how complicated it has been for anyone looking to learn and understand the space. As they mention
“But so far, it is those with the time and resources to understand and access the underlying technology and new financial tools who are reaping the benefits.”
There is a need for stronger user experiences as the current ways are complex to understand. They go into the need for good UX to ensure that mass adoption occurs and that the need for inclusion is as high a priority as security. Check out more in this article
CoinDesk - Inside the DeFi Vending Machine – Opinion piece here from Marcelo Prates starting with the comparison of DeFi and how the procedures it automates are akin to vending machines which appeared and astonished the public in the 1920’s. There are further comparisons in the article such as how costs to use Ethereum blocks got as high as they did due to demand and how that could be similar to vending machine product demand getting so high that the only option is to increase their number, size or the cost of using them. It also highlights regulation and how self-regulation with smart contracts should be a first line of defence.
Videos of the week
Fireship - Is Web3 all Hype? Top 10 Web 3.0 Questions & Answers - Video looking at the pros and cons of web3 and the creator economy it is meant to build. Did you know that you can build decentralised apps without the blockchain? Think BitTorrent and Napster back in the day. Covering tokens, NFTs, user authentication and more, this is a good overview video. 9mins
The Defiant - Fact-checking millionaire influencer for Christmas fun - Another great video from The Defiant looking at one of the main finfluencers on YouTube when it comes to personal finance, Andrei Jikh. Whilst there are some errors that Robin Schmidt from The Defiant finds in one of Andrei’s videos he clarifies rather than scolds the content which we see as quite important considering that this is a space that needs to be inclusive. Not everyone knows about blockchain and its important to make the teaching in this space inclusive and inviting. A great video if you’re in a position where you or mates are just getting started. 18mins
The Defiant – How to be safer and smarter using MetaMask – In this video, The Defiant shows the best ways to use the MetaMask wallet because no matter what, if you don’t think about how to properly use any technology, you can be prone to having it not work as well as it should and in the world of crypto, that can be especially painful for your investing. He highlights the BadgerDAO hack and what was exploited by the hacker who got into Badger’s Cloudflare account. In this case, people were asked to unlock their accounts unwittingly to the hacker due to change made to the Badger front end. The lesson is to make sure you know what you are approving and don’t just trust what the website says. Other lessons are included in this video so worth a look. 11mins
ausbiz - DeFi and NFT to be the big 2022 trends as accessibility improves - per the show notes "The two largest cryptocurrencies by market capitalization were roughly flat over the weekend. Ethereum and Bitcoin stayed mostly steady but some of the altcoins made big news. Avalanche (AVAX) dropped by over 7% in 24 hours while terra (LUNA) surged to a near record high. Caroline Bowler from BTC Markets told ausbiz that crypto was having a bit of a off period, as some market observers were watching to see how omicron might affect economic activity. What is now expected is the $46K level for Bitcoin is to get buyers back into the market." 4mins
Charts and Data
Glass Node
This analysis comes from the analysis by Justin Arzadon of BetaShares in his weekly newsletter - click on this link or the image below to see full newsletter. More details available at Glass Node.
"This week on-chain, we take a look at the flows of bitcoin held by the Purpose Bitcoin ETF, a spot-based ETF based in Canada. With the most recent drawdown, I thought it would be interesting to see if investors in this ETF have been selling or buying the recent dip.
Citing data from on-chain analytics company Glassnode, the Purpose Bitcoin ETF has seen inflows of roughly $240M over the last two weeks during this drawdown, now holding ~$1.5B in BTC. As per chart below, accumulation of the ETF’s bitcoin holdings has accelerated in the last two weeks."
CoinGecko
Top 10 cryptocurrencies by market cap as at the 26th December 2021 XXXXX AEST on CoinGecko. Seeing all green in the 7 day movement of the top 10. Terra continues to gain with the biggest 7 day move at +33% compared to other coins in the top 10.
Lyn Alden - Bitcoins Network Effect - If you're not already aware of the work of Lyn Alden you should check this out. An analysis of the network effect in Bitcoin but to start off with she looks at different types of networks (one and two-sided as well as successful and failed network disription examples and more). After this lengthy and detailed introduction she gets into Bitcoins strengthening network effects and strengthening hashrate since its fork from bitcoin cash in 2017.
New layers like the lightning network and institutional grade custody are also shown along with the addition of major investors/backers of bitcoin (Square, Tesla, MicroStrategy). The market share of bitcoin (and second biggest currency, Ethereum) shows just how strong the network is too.
In conclusion Lyn reckons there is at least an argument for allocation (non-zero allocation) in an investors portfolio.
Social post of the week
Post from CateCoin showing hte top DeFi projects as highilghted by LunarCrush - https://twitter.com/catecoin/status/1474677163789979650
Education
Getting Started Series - Part 4 - Last week we went through smart contracts and how they are the backbone of DeFi (decentralised finance). This week, we highlight a video talking more about DeFi and its differences to centralised finance (including risks). Check out the video below from Finematics for more.
Thanks again to our contributors for the newsletter including:
Jordan Franklin (aka The Happy Spender)
Terry Condon (from The CashFlow Co)
Mark Monfort (see LinkedIn)