Square's $3.51B in BTC Revenue

What you need to know today in crypto and beyond

May 7, 2021

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Today's must-reads

Top Shelf

11-FOLD: Square's Cash App generated $3.51 billion in bitcoin revenue in the first quarter of 2021, according to a shareholder letter published Thursday, an 11-fold increase compared with this time last year. The fintech’s sizable BTC treasury holdings have also appreciated to $472 million (purchased at $50 million), though the company reported a $20 million impairment loss on those assets.

OCC HEAD: U.S. Treasury Secretary Janet Yellen will appoint Federal Reserve Associate Director Michael Hsu as acting comptroller at the nation’s top banking regulator, the Office of the Comptroller of the Currency (OCC). At the Fed, Hsu was part of the supervision and regulation division, meaning he oversaw major banks. His level of knowledge with cryptocurrencies, unlike his predecessor, is unclear.

BETA AMBITIONS: Dfinity could potentially give Ethereum another layer of censorship resistance with the release of “The Internet Computer,” a system of smart contracts to move all DeFi apps off “traditional IT.” The protocol, which its chief scientist says could replace everything online but Bitcoin, launched today in beta.

BANK BLOCK? India’s central bank-owned retail payments platform refused to ban crypto transactions, as the Reserve Bank of India punts the decision of whether to accept or block crypto currencies to the banks themselves.

– Daniel Kuhn

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Overheard on CoinDesk TV

Sound Bite

"I haven’t lost faith in the dollar, but I do see that it is a depreciating asset. We need to be prepared."

– Scott Conger, the mayor of Jackson, Tenn., on CoinDesk TV's "First Mover."

A message from CoinDesk

CoinDesk Research: Does Bitcoin Have an Energy Problem?

Is Bitcoin bad for the environment? This CoinDesk Research report looks at the data behind the most common critiques and shows that, while Bitcoin uses a lot of energy, the mix is evolving toward renewables. Bitcoin also incentivizes investment in clean energy sources, can convert pollution into value, and redistributes wasted power production. Download the free report.

What others are writing...

Off-Chain Signals

- D.K.

A message from NEAR Protocol

NEAR is an open-source platform that accelerates the development of decentralized applications. Developers can overcome high fees and slow speeds by building on NEAR’s fast, scalable and low-cost blockchain protocol. With a suite of climate neutral solutions, creators and communities can now thrive. NEAR.org - Infrastructure for innovation.

Introducing Unlocked 101 at Consensus by CoinDesk 2021

New to crypto? Here's a crash course. Unlocked 101 is a free educational series of sessions designed to give you the tools to navigate crypto. Sessions will be hosted May 4–20 to prepare you for Consensus by CoinDesk 2021, our virtual big-tent event.

Register for Unlocked 101 this May.

Introducing CoinDesk Indexes

TradeBlock, the leader in providing crypto asset indexes to financial institutions, is taking the CoinDesk name.

Introducing CoinDesk Indexes, the industry standard for institutional-grade digital currency price references, with billions of dollars in monthly trading volume quoted against them.

Underlying new brand names, TradeBlock's index methodology will continue to adhere to the standards of integrity and reliability that have always differentiated its indexes.

Read more about CoinDesk Indexes, the industry standard in crypto benchmarks.

Putting the news in perspective

The Takeaway

The Anything-Can-Happen Days

Uniswap is issuing non-fungible tokens (NFTs) to wallets that lend assets to its market-making services as part of its version 3.0, released this week.

It was probably necessary to switch to NFTs from fungible tokens because its new system is so much more complicated than the old system. Here's what probably wasn't essential: Each of these NFTs comes with a special image that represents the deposit, something shiny, pretty with a hint of cyberpunk.

It's cute. I don't mean that condescendingly! It just is. The team didn't have to do this but they did, because they knew people would like it. We're in the fun era of this industry and it's not going to last forever.

We're in the time when people are going to keep finding new extremely clever solutions for problems that crop up. It's so impressive that it makes heads spin. Someday it will hit an inflection point when what works is largely known and successful projects will do more to guard market share than solve problems.

So enjoy it. It's happening now.

In case the very top of this piece was a little baffling, let me explain a bit more: Uniswap is an automated market maker, a particular kind of exchange, which means it always has a buy price and a sell price for any token it lists. Not only that, it has a price for every token in every other token.

Want to swap ZRX for WBTC? It's got a price for that.

The key point is this: It's an exchange where buyers trade with the exchange itself. A bunch of token holders have lent it coins on the promise they would share in fees earned by the coins it lent Uniswap.

This model had some drawbacks, though, which we have explained in detail elsewhere. In short, under certain circumstances, depositors could lose dollar-denominated value even as their crypto bags got heavier.

It's called impermanent loss. It's a head scratcher. Bancor and THORchain are similar products and they also took on the problem. What do people usually do when they fear a loss? They buy insurance. So those products offered insurance in exchange for patience.

Uniswap looked at the problem a whole other way. Its new solution, called concentrated liquidity, allows depositors to put guardrails on their trades. That fixed it.

It's like how hikers used to get snow inside their parkas no matter how pricey their jackets. Then someone thought of putting those elastic bands at the ends of the sleeves and fixed the problem.

The bands, like the guardrails, are reminders that pernicious problems are just one clever person away from being solved.

Like the pretty little cards representing depositors' liquidity positions on Uniswap, an elegantly solved problem isn't just nice or helpful. That solution is a delight.

This is a time of delights.

– Brady Dale

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