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HEALTH, WEALTH, AND HAPPINESS |
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Welcome, bitcoin natives! Here's what's new. |
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Members-Only Workshop: You've heard of DAOs -- collectives of like-minded investors -- but how do you join one? Find out this Friday Dec 10 at 12pm ET: RSVP here!
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How to Stake ETH (scroll down to "Welcome to the Era of ETH Staking"): Excellent guide from Bankless on how to make money with the ETH you own -- like earning interest in a bank account (but better).
Investor takeaway: Easiest way is to use an exchange that offers staking, like Coinbase. Next easiest is to invest your ETH in staking protocols. Most difficult (but with the biggest rewards) is running an ETH validator. |
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Staking your crypto in top DeFi protocols is the modern equivalent of earning interest in bank accounts. Here's what top crypto platforms pay, compared with the average banking account. |
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Hi Everyone,
One thing we can say about the Bank of International Settlements' latest report on DeFi is that the financial institution has been very thorough in its criticism of cryptocurrencies. The other thing we can say is that its timing is impeccable.
As we know, the latest pullback in the crypto market took place this weekend. When volumes are thin, the market can be quite vulnerable.
This BIS report came out the following Monday morning, almost as if the organization had been sitting on it for a while, waiting for the right release date.
Anyhow, after analyzing the report, our team has come to the conclusion that the BIS is correct in just about all the issues they've brought up about DeFi.
Their research practices are quite thorough, and they have made several compelling arguments about how the market is untested and immature. It's nothing we didn't already know, but it's good to reiterate.
The most ironic of their claims, however, was that DeFi is too centralized. Yup, that's right.
This is coming from the organization that is run by general manager Augustin Carsten (pictured below) and is described as "the bank of central banks" on its own website. Still, this is their biggest criticism of DeFi. |
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Commenting on the report for CNBC, Carsten further went on to say that DeFi governance lacks transparency, and that the incentives of the key stakeholders are not very clear.
The irony here is thicker than 3-week-old stew and stinks even worse. You've got open source code on one hand, and a central bank system run by this guy on the other. Which of them do you think has more hidden incentives? |
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The real eclipse
They have every right to be fearful, of course. According to their own report (middle chart), the total value locked in the DeFi market has come from literally nothing in 2018 to well over $240 billion today. |
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That may not seem like a lot, but consider that the Fed was printing $120 billion per month at the peak of its latest quantitative easing cycle, before it started pulling back stimulus.
Obviously, if this practically vertical pace of growth continues, it's only a matter of time before it completely eclipses the global bond market, which is currently estimated at being worth close to $119 trillion.
Sure, there are plenty of issues with DeFi in its current state. We state this quite often and are not ashamed. Decentralized finance is still largely under construction.
You wouldn't really point at a building that's under construction and say "hey, that building looks really dangerous because it has no walls."
The one area where we vehemently disagree with the BIS is their conclusion that DeFi needs to be regulated by a central authority.
We've all seen how ineffective global regulators have been in recent decades, leading to things like malicious fees to the Libor scandal and even the great financial crisis. No thanks. |
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Behind the curve
As I write today, there's a grand crypto hearing on Capitol Hill. I want to refrain from commenting on it too much, as other members of our team have been covering this. What is clear is that the U.S. is still way behind the curve when it comes to crypto regulations.
One place that seems to be gaining ground lately though is Africa, where officials have made the move from fighting cryptocurrencies to attempting to compete with them in a fair market.
Nigeria's ambitious central bank digital currency actually seems to be going swimmingly well, and we've got the goods for you today.
Just published, here is an insider's view on eNaira, its pace of growth and ease of use, as covered by analyst Olumide Adesina, who put together this outstanding research. ...
As always, we highly appreciate all our readers. Many thanks for continuing to send in your kind words of encouragement, your awesome questions and top-notch insights. They're always appreciated.
I wanted to express a special thank you to Vildana Hajric and Misy Egkolfopoulou from Bloomberg, both of whom have cited my comments in their articles yesterday.
Best regards, |
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Mati Greenspan Analysis, Advisory, Money Management |
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Remember: there's no limit to "limited edition" NFTs. |
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Bitcoin Market Journal is a daily newsletter focusing on blockchain and crypto investments. It is written and edited by Evamarie Augustine, Charles Bovaird, Mati Greenspan, and John Hargrave.
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