June 23, 2021 | Issue #174

MUST READS

The Mining Migration Begins

By now, it should be clear that the “hashrate migration” is real: Miners are leaving China for good.

As of April 2020, an estimated 65% of bitcoin hashrate was domiciled in China; with confirmed bans across the country, that figure will be far lower 12 months from now.

The precise magnitude and schedule for the move is currently unknown, but all signals seem to be indicating the greatest shakeup in the geographic makeup of bitcoin mining since the start of the industrial mining era.

Hypotheses for the ban are in circulation, but no single explanation appears to be clear yet. Some ideas floating around are:

To meet climate/emissions targets (this seems unlikely)
To remove the competition from China's national digital currency
To stop unmanaged capital flight

Of course, there have been some more nefarious-sounding theories proposed as well, but we will leave those alone for now.

We've All Been There, Mark

A DeFi project recently touted by Mark Cuban called Iron Finance saw prices for its TITAN token collapse from a high of around $65 to near-zero as panicked sellers bailed.

Cuban hasn’t revealed the size of his loss, but told Bloomberg, "as a percentage of my crypto portfolio it was small... but it was enough that I wasn't happy about it."

After experiencing his first "rug pull," the famed DeFi enthusiast – who has posted a series of essays on the emerging market – has called for increased stablecoin regulation.

In response, Kraken CEO Jesse Powell slammed Cuban for acting irresponsibly through Twitter:

"Not doing your own research and YOLOing into a terrible investment because your time was worth more than your money is your problem."

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DEEP DIVE

DeFi Infrastructure 101

Chris McCann published a long-form essay on the topic of Decentralized Finance (DeFi) infrastructure and how it's enabling 10x the speed of innovation in the world of fintech-driven applications.

The essay includes a market map and architectural diagrams to get a better sense of how these new DeFi apps are constructed from a technical perspective.

Institutional Investors Come to Polygon Amid Rising Ethereum Layer-2 Demand

While the whole market's waiting for Eth 2.0, an increased number of institutions and DeFi whales are coming to layer-2 protocols like Polygon.

Key statistic: According to data compiled by blockchain data research firm Nansen, at the beginning of June, about 65% of daily stablecoin transaction volume on Polygon came from transactions with values above $1 million. That percentage underscores the shift of DeFi “whales” from Ethereum to Polygon.

Many Ethereum-native DeFi protocols have moved or started migrating to Polygon, including the popular money market protocol Aave. Most recently, Ethereum-based decentralized exchange Kyber Network announced that it will also integrate Polygon with the launch of “Rainmaker,” a new market maker protocol.

An Honest Crash Alert

It defies all logic... all market fundamentals... all rational thought: Despite recent swings, stocks just keep going up. And most investors are having to make THIS painful choice about their money.

As you'll see in this urgent alert, the Thunderclap Research team is pretty passionate about this... That's because this one trade essentially saved investors in the days leading up to the pandemic crash last March. (You can see the proof right here)

REGULATORY FRONT

Crypto Enforcement Actions by U.S. Regulators Reach $2.5 Billion

A new report from Elliptic shows that the SEC leads U.S. regulators in monetary penalties against crypto firms by a wide margin.

Since bitcoin's creation in 2009, regulators (i.e. SEC, FinCEN, CFCT, etc.) have levied $2.5 billion in enforcement actions against various crypto projects.

Key Points:

Of the $2.5 billion, $1.69 billion came from actions brought by the SEC
Most of the SECs total, $1.38 billion of it, resulted from unregistered securities offerings
For some perspective, SEC disgorgement orders (when wrongdoers give up profits earned from illegal activity) for all cases in the fiscal year 2020 totaled $3.589 billion. This goes to show that crypto is far from being the “wild west” of finance.

El Salvador's U.S. Bitcoin Partner Lacks Key Licenses

We're big fans of Strike CEO, Jack Mallers, here at CoinSnacks...

Founded in 2019, his company lets people make rapid transactions (think of it as Venmo, but for crypto) via Lightning Network, a recent extension to the Bitcoin network.

Mallers was also hailed as a hero for helping The President of El Salvador, Nayib Bukele, bring Bitcoin to El Salvador. The company boasts that its digital wallet technology, which allows users to move quickly between crypto and fiat currency, will also help Salvadoran merchants comply with Bukele's decree to accept Bitcoin as payment. (Here's some recommended listening for those who want to learn more about Jack and his ambitions with Strike)

Strike certainly has the technology to help El Salvador embrace Bitcoin, but one thing it appears not to have are certain licenses to operate as a money transmitter.

In an investigation by Decrypt, it was discovered that the company behind Strike, Zap Solutions, lacks licenses to operate in most US states. Experts suggest this means many cash and crypto transfers to El Salvador using Strike are potentially illegal – a situation that could further cloud the Central American country's already controversial Bitcoin plans.

“They say they’re active everywhere except for two states and then you go to try to confirm that they, in fact, are registered [in every state] and you can’t find it, that seems suspicious.”