Judge’s Comments During SEC Hearing Could Be Favorable for Ripple: Unaffiliated Attorney

Judge’s Comments During SEC Hearing Could Be Favorable for Ripple: Unaffiliated Attorney

Attorney Jeremy Hogan, a partner at Hogan & Hogan legal firm, has pointed out some comments made by the magistrate Judge that may favor Ripple against the U.S. Securities and Exchange Commission (SEC).

Hogan observed the judge commenting in a virtual hearing over the SEC’s attempt to obtain personal financial information of Ripple CEO Brad Garlinghouse and Executive Chairman Chris Larsen.

Judge’s Comments May See Ripple Come Out Triumphant

In a YouTube video, Hogan said Judge Sarah Netburn had interrupted the discussion to clarify a statement she felt was untrue.

Netburn is not the primary judge in the case; she is assisting District Judge Analisa Torres with discovery and mediation.

According to Hogan, Netburn gave the impression that Ripple’s XRP cryptocurrency may not be a security as the SEC claims. According to Hogan, the judge said,

“My understanding about XRP is that not only does it have a currency value, but it has a utility, and that utility distinguishes it from Bitcoin and Ether,”

Attorney Matthew C. Solomon representing the defendants said XRP had the same intrinsic attributes as Bitcoin and Ethereum, which is branded as a “commodity.”

Hogan, who is not in any way related to the case, said that the second comment Netburn made that was as striking as the first was questioning whether everyone who sold XRP was selling illegal securities.

This was based on the SEC’s prior argument. But the SEC lawyer said that only Ripple and its affiliates could be accused of selling the XRP as illegal securities under the regulator’s Securities Act.

Hogan then surmises that the SEC lawyer’s statement clears the way for cryptocurrency exchanges in the United States to possibly re-list XRP again with no fear of reprisal.

Others believe Hogan’s argument doesn’t hold much weight. One of them is popular trial lawyer Stephen Palley.

Palley believes that an “offhand comment” made by a magistrate judge in charge of mediation and discovery doesn’t mean Ripple would win the case. On exchanges relisting XRP, Palley feels crypto exchanges like Coinbase and Gemini would be foolish to take such a stance in an ongoing case.

Ripple Having A Good Run So Far

Hogan said that Netburn’s comments are exactly what Ripple would want the court to think. He said,

“If I’m Ripple, I’d be feeling pretty good that my mediator and consulting summary judgment judge just said on the record what I essentially argued in my pleadings.”

The lawsuit against Ripple, filed in December 2020 as the former chair Jay Clayton vacated his position, alleges that co-founder Chris Larsen and CEO Brad Garlinghouse aided and abetted Ripple’s unregistered sales of securities in 2013 and 2015, respectively.

Ripple has responded, stating that it had never offered or sold XRP as an investment and that XRP holders do not acquire any claim to Ripple’s assets, hold any ownership interest in Ripple, or have any entitlement to share in Ripple’s future profits. Following the SEC’s lawsuit, numerous crypto exchanges came out hard on the company by delisting its XRP token.

Despite the backlash from businesses in the U.S, Ripple’s Asian market continues to boom. The blockchain firm has partnered with a subsidiary of Japan’s SBI Morningstar, which plans to pay its shareholders XRP tokens as dividends.

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Author: Jimmy Aki

JPMorgan Chooses ‘Fintech Over Bitcoin’ As the Real Financial Game Changer during Global Pandemic

JPMorgan Chooses ‘Fintech Over Bitcoin’ As the Real Financial Game Changer during Global Pandemic

Fintech is the long-term story for COVID-19 related financial developments, not Bitcoin, JP Morgan analysts.

In a story first covered by CNBC, analysts from the top U.S. bank dismissed the recent superficial growth in Bitcoin’s price as an “economic sideshow” during the current global COVID-19 pandemic. According to the report, fintech development and digital payment systems will be the major story arising from the financial field in current pandemic times.

The price of Bitcoin has soared past $58,000 to set new all-time highs in 2021 as institutional investment soars from firms such as MicroStrategy, Tesla and MasterCard entered the Bitcoin market, a note from JP Morgan reads. However, it is the fintech innovations that will get the credit in the long term, it further states.

“Fintech innovation and increased demand for digital services are the real Covid-19 story with the rise of online start-ups and expansion of digital platforms into credit and payments.”

Over the past year, there have been increased efforts by non-financial firms such as Google and Apple to get into the fintech space. As financial firms invest heavily in technology, these Big Tech companies are moving rapidly to capture the digital payments market. With an advantage in digital spaces by owning a huge amount of consumer data, big tech firms rapidly narrow the gap to financial institutions and banks.

Bitcoin, on its part, saw a boost in demand, reaching the $1 trillion market cap, as investors looked for “diversification assets” during the pandemic. Comparisons with gold as a store of value is also increased over the year. JP Morgan previously stated the digital coin could rally as high as $146,000 as it competes with gold as a hedge against inflation during the COVID-19 pandemic.

Despite the optimistic price targets (which could take years to achieve), JP Morgan analysts warn cryptocurrencies are still the “poorest hedge” against stock prices and still hold a questionable amount of risk.

As previously reported, JP Morgan Chase Co-President, Daniel Pinto stated the bank could invest in Bitcoin if there’s a demand for the crypto. However, strategists at the bank revealed a report stating BTC’s price is “unsustainable” at $52,000 claiming volatility will kill the current hype cycle in the market.

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Author: Lujan Odera

Bitcoin OTC Indicators Point to Ongoing Institutional Buying And This Means Only One Thing

Bitcoin is holding firmly to its gains made during the wild rally of 4Q20. Trading above $24,000, yes, another all-time high on the weekend, with $4.7 billion in ‘real’ volume, BTC/USD is up 230% this year.

Despite these substantial gains, bitcoin is not looking like it will correct anytime soon. Many are expecting the digital asset to run even higher up before any pullback could be expected.

Similar views are of Ki-Young Ju, CEO of data provider CryptoQuant, and the reason for this continued bullishness is the ongoing institutional buying.

“This BTC bull-run never stops as long as these OTC indicators keep saying institutional-buying,” said Ju pointing to all the large over-the-desk deals still going on vigorously.

For starters, massive outflows can be seen in Coinbase BTC outflows going to their new cold wallet for custody that held 6k to 8k BTC. Whenever the US’s biggest exchange moves a significant amount of Bitcoins to other cold wallets, it indicates OTC deals.

The largest digital asset manager, Grayscale, which continues to add up BTC to its stash, uses Genesis Trading for buying Bitcoin, which in turn uses Coinbase OTC desks for that. Coinbase was the one that helped MicroStrategy in its initial $250 million investment. Ruffer also confirmed that they purchased their BTC via Coinbase.

Another indicator is the Fund Flow Ratio for all exchanges, the ratio of network transaction volume of exchanges among all the tokens transferred on the network. If this value goes up, it implies most of the network transactions are exchange deposits/withdrawals; otherwise, transaction volumes are coming from non-exchange wallets. Young Ju noted,

“Since the price is eventually determined on exchanges, massive non-exchange transaction volume is considered as a bullish signal. These transactions include OTC deals.”

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Currently, only 5% of the network transactions are used for exchange deposits and withdrawals. The same level was seen in February 2019 when major exchanges launched OTC desks.

Looking at Tokens Transferred, which is the number of Bitcoins transferred on the network, this indicator has been trading up ever since early August.

If the value of Token Transferred goes up and the fund flow ratio for all cryptocurrency exchanges goes down, it again “implies that huge OTC deals are ongoing.”

Based on these on-chain indicators that estimate OTC deals going under the hood by institutional investors, large OTC deals are happening, and they point out that “institutions are continuing to buy BTC.”

So, much like this week, which saw several levels and all-time highs getting breached, we could continue further up.

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Author: AnTy

Brazil Becomes The Latest Country To Confirm Plans to Launch A CBDC

Brazil’s Economy Minister recently spoke during the celebration of the Caixa Economica Federal’s 100 millionth digital savings account, and he used the opportunity to announce Brazil’s own CBDC.

The Central Bank Digital Currency (CBDC) trend is larger than ever, with countries worldwide announcing their intention to create their own digital currency, one after another. The latest in this long line is Brazil, whose Economy Minister personally confirmed plans to launch digital real.

Brazil announces its upcoming CBDC — digital real.

Brazil’s decision to launch its own digital currency does not come as a major surprise. After all, as soon as China announced digital yuan, many countries started developing their own CBDCs in China’s fear of obtaining too much influence.

As soon as a few nations’ central banks showed their willingness to start creating their own crypto, the rest were bound to follow. Brazil comes as the next one in line, as confirmed by its Economy Minister, Paulo Guedes.

Guedes made his statement yesterday, November 5th, during a special ceremony that celebrated the opening of the 100 millionth digital savings account in Caixa Economica Federal.

He said that the central bank is once again autonomous and that the digital dimension is booming. With that being the case, he revealed that Brazil would have its own digital currency and remain ahead of many other countries.

Brazil was prepared for work on CBDC, but it did not address it before

Interestingly, this was the first time that the country’s Economy Minister addressed this subject. However, he still did not reveal any more details regarding the upcoming digital real.

Of course, Brazil has been keeping an eye on crypto in the past. Its central bank even announced setting up a study group for potential CBDC issuance back in August.

Its president, Roberto Campos Neto, also said that Brazil requires improvement in its currency. However, he expected that this would happen within the scope of a new federal digital payment system, Pix. He said,

“In our case, Pix is very important because from now on, we see the union of an instant, open and interoperable form of payment with an open data system. They will meet somewhere in the future with a currency that has yet to be perfected.”

Brazil’s CBDC to arrive in 2022

As mentioned, there are currently no available details on the digital real, as not even the central bank has released new information about it. However, Campos Neto did reveal that digital real will be in circulation in 2022.

Another interesting thing regarding this announcement is its timing. As some may know, Pix just recorded its first transaction this Monday, and it will be officially available as of November 15th.

According to the central bank’s statement, it will only be used for foreign exchange transactions in and out of the country as for digital real.

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Author: Ali Raza

DeFi Shifts to A Risk-off Environment, But A 2017-like Crypto Rally is Still Far Off

During the recent Bitcoin rally, altcoins suffered losses, and DeFi tokens had an even worse time.

Today, as BTC went to the $13,000 level, driven by European lockdowns, the crypto market reported deeper red. This consolidation in BTC could give altcoins a chance to recover, but it’s undecided and remains to be seen.

In the past month, except for a handful of DeFi tokens like Aave and Maker, the majority of them extended their losses from last month.

The total value locked (TVL) in the decentralized finance (DeFI) sector has been unperturbed by the crash in price as it hit an all-time high at $12.46 billion on Oct. 25. But since then, it has dropped nearly 10% to about $11.2 billion, as per DeFi Pulse.

But such declines aren’t new for the TVL, and it tends to recover just as fast.

“Just want to say that we are still extremely early in DeFi. As an analogy to Bitcoin, we probably just experienced the spring 2013 hype cycle. We haven’t even seen the winter 2013 cycle yet. Let alone the 2017 cycle,” said entrepreneur and quant trader Qiao Wang.

According to him, in the DeFi hype cycle, we are currently at a point where half of the legit projects have capitulated while the other half are in the process of capitulating.

Ethereum, on which the whole ecosystem is built, price-wise, is trading around $385. The sector meanwhile has a record 9 million ETH locked in it.

DeFi tokens on Ethereum are still minuscule, though, as they currently account for 1.39% of the $365 billion total crypto market cap. In terms of a number of holders, they capture an even smaller share of the market.

DeFi governance tokens in Ethereum have declined by a third in just last month while stablecoins and tokenized versions of Bitcoin on Ethereum have managed to continue in terms of market cap.

The shift has been because of a shift to a risk-off environment into less volatile yield-generating assets. As such, yield farming is transitioning from attracting users with unsustainably high rewards “to a more methodical approach rewarding those that actually create value to DeFi protocols.”

“It appears that the catalyst for DeFi’s initial boost may also be behind its crash,” noted IntoTheBlock.

Besides the high inflation rates, the bigger the rise in the price of DeFi tokens, the larger the retrace.

“While DeFi may currently be negligible in comparison to the $1.5 trillion financial services industry, there is a high room for growth as these systems become scalable and adopted.”

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Author: AnTy

US Treasury Dept And Federal Reserve Are ‘Studying’ Possible Launch Of A Digital Dollar

Speaking during the online Atlantic Council webinar, the U.S Deputy Treasury Secretary, Justin Muzinich, said his department, alongside the Federal Reserve, is looking at launching a central bank digital currency (CBDC) tied to the dollar in the future.

This announcement follows a trail of the Federal Reserve’s previous efforts to launch digital dollar wallets liable to the central bank. Federal Reserve Bank of Cleveland President Loretta Mester, revealed last month that legislation is being set up so each American would own a digital dollar account with the Feds.

Notwithstanding, the Boston Federal Reserve announced in August that they are testing over 30 blockchain projects to prepare a digital dollar. However, the research and development process for a CBDC is set to take years to complete – having begun in 2015 – the Boston Fed said.

Muzinich stated the learning curve in launching a digital dollar on a distributed ledger would produce “efficiency benefits and cost benefits.” He further targeted the slow U.S. efforts in introducing its own dollar:

“And I also think, more broadly, it’s important for the government to embrace innovation and not be scared by it.”

However, there are still a few factors to consider in launching a CBDC, including regulation of the CBDC to prevent money laundering activities while maintaining users’ digital privacy.

On regulation of a digital dollar, Muzinich states governments worldwide – especially Europe – should work to regulate cryptocurrencies globally. This arises from the different functions of cryptocurrencies, away from payments.

Questions of money laundering have taken center-stage in the adoption of cryptocurrencies. Still, other issues such as financial stability and monetary base of the cryptocurrency should also be put in check. To keep the consumers and users of the digital dollar safe and secure, Muzinich stated the existing laws governing fiat currencies should be extended to crypto.

“Treasury has made it clear that the obligation to comply with U.S. laws is the same, regardless of whether a transaction is denominated in traditional fiat currency or digital currency.”

“Existing laws apply to digital assets in no uncertain terms.”

He explains that even if cryptocurrencies comply with the KYC/AML/CFT rules, there’s still a danger of foreign parties disrupting the monetary base creating financial instability. This could arise if a stablecoin issuer shifts its reserve ratio from fully backed to partially backed, or changing the composition of assets in reserve.

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Author: Lujan Odera

Crypto Funds Reporting ‘Impressive’ Performance This Year

Bitcoin had a good start in 2020, starting the year at around $7,200. During the market-wide crash in March, the digital asset crashed to $3,800 but only to surge to the yearly high of $12,630 in mid-August.

Up until August 31st, bitcoin recorded a return of 66.6%.

During the same period, Pantera unveiled returns of over 100% across various funds the firm manages, with its bitcoin fund gaining 61%, revealed the firm in its September 2020 investor letter. It was the company’s digital asset fund that recorded 168% returns and the ICO fund having a whopping 323% uptrend while the long-term ICO fund had a 270% return.

The outperformance of other funds has been primarily because of DeFi tokens that rallied hard between May and September of this year. The firm had invested in about 40 ICOs over the years.

Pantera’s Chief Investment Officers also pointed to DeFi as the main driver behind their portfolio performance. “We’ve been positioning the funds towards decentralized finance,” which they started acquiring some years back.

One of the largest digital currency funds in the space, Pantera, has reportedly nearly $500 million in AUM, compared to the largest asset manager Grayscale’s $5 billion AUM.

Also Read: Grayscale Bought 17,100 BTC Last Week, Now Holds 2.4% of Bitcoin’s Supply

Promise for value investing in crypto

Off The Chain Capital is another one that saw returns of 93% YTD compared to 57.2% returns posted by crypto funds during the same period.

The $40 million fund is also in talks to purchase about 1% of crypto-payments processor BitPay and another stake in the crypto exchange Kraken. Back in March, the Florida-based company bought 1% of Polychain Capital and then a year ago a stake in Digital Currency Group.

Additionally, Off The Chain has been buying claims of creditors of Mt.Gox every week and is its largest buyer.

“I learned about Bitcoin” in 2014, said Brian Estes, who runs the fund. “Coming from traditional finance, I thought it was just a scam. After the Mt. Gox hack, my value instincts kicked in, I started doing due diligence. I read the Satoshi white paper, and it clicked with me.”

It was when he started investing in bitcoin and crypto startups like Coinbase. His son actually grew his money from $500k to almost $10 million at the end of the 2017 bull run, which Estes then bought and opened to outside investors last year.

Additionally, it is packaging Bitcoin and Ether into equity-like investments to sell them through brokerage firms.

“Even if Bitcoin doesn’t move, we are making 40-60% a year on harvesting these premiums,” Estes said.

“Off The Chain’s reported performance this year has been impressive and may indicate promise for value investing in the crypto space, even as it has fallen out of favor with traditional equity investors,” said Josh Gnaizda, CEO of CryptoFundResearch.

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Author: AnTy

ECB Exploring Benefits & Risks of Digital Euro to Provide an Alternative to Crypto: President

In her introductory remarks, during the Franco-German Parliamentary Assembly on Monday, ECB President Christine Lagarde said they are “exploring the benefits, risks and operational challenges of introducing a digital euro.”

This ensures the strength and autonomy of European payment systems as the digital euro could be complemented to cash. She said,

“It could provide an alternative to private digital currencies and ensure that sovereign money remains at the core of European payment systems.”

While Lagarde, like other regulators, wants to keep the control of money issuance with the central banks, Galaxy’s Mike Novogratz says that it doesn’t matter because just like the traditional version, the digital one would devalue as well.

“Digital Central Bank issued FX is coming. I believe it will help the adoption of BTC and other crypto’s as well. If those same CBs keep printing their FX like its toilet paper, the digital version will depreciate. BTC won’t,” Novogratz said.

Shaping Europe’s Future

According to Lagarde, digitization is one of the trends that pandemic has the potential to accelerate.

“Trends that will lead to structural changes in the global economy.”

“We need to fully reap the potential gains from digital technologies and, at the same time, make sure labour markets remain inclusive,” she said.

Lagarde talked about accelerating the progress towards the Digital Single Market through economies of scale for digital firms.

Besides the digital euro, she also touched upon transitioning to a carbon-neutral economy and the coronavirus crisis, which is of “unprecedented magnitude,” giving Europe the “opportunity” to strengthen the Union.

Lagarde said ECB expects a rebound in activity in the second half of the year and judged that the economy still needs fiscal support for the recovery to continue and strengthen further, which has been critical in alleviating the impact of the pandemic.

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Author: AnTy

DeFi’s Speculative Frenzy Subduing Ethereum; Users Approaching 500k

During the bloody red Monday, Ether lost about 10.6% of its value; currently, it is trading around $340.

These levels were last seen earlier this month, but another small lower and Ether will get back to July level.

“Weekly time frame still looking like a bearish retest of the previous range ($390s). Bitcoin looking better on the weekly, but also pulling back from daily resistance,” noted trader Cred.

With a lull in price came the opportunity to make cheaper transactions on the second-largest network. Not that the sky-high fees prevented users from doing that, as evident from the drastic congestion seen last week.

DEX Extravaganza

Currently, the average transaction fees on Ethereum is around $3.56, down from $11.6 on Sept. 17, the day popular DEX Uniswap airdropped its governance token UNI.

Uniswap is the project that accounts for the highest gas spent. In the past 30 days, Uniswap V2 was responsible for spending $12.7 million in gas.

It is also the largest decentralized exchange by trading volume that generates nearly $1.5 million in fees per day, less than Ethereum’s $5.2 million but more than Bitcoin’s just over $500k, as per TradeBlock.

The trading volume on DEXs overall has also been hitting a new all-time high. More than $17 billion in notional volume has already been transacted so far in September, double the August’s volume and an increase of 400% since July.

DEXs have seen explosive growth in recent months on the back of increased capital flows in DeFi tokens, which don’t need a formal listing process. All this speculative frenzy of activity results in driving up ETH gas fees.

With traders desperate to get ahead of their peers and willing to pay outrageous prices for a confirmation, the Ethereum fees proved to be inelastic, which has some projects even abandoning the network as it makes their project economically unviable.

Can even ETH 2.0 handle it?

The overwhelming demand for Ether has been going on for the past three months, which saw the daily transactions on the network hitting a new peak at 1.4 million, up from 1.34 million set at the height of last bull run, in early Jan. 2018, as per Etherscan.

This is why ETH continues to flow out of centralized exchanges and into smart contracts. Since August 15th, the balance of ETH has decreased by 11.6%, with 2.2 million ETH withdrawn from exchanges while the amount of Ether in smart contracts increased by 3.4 million.

DeFi currently has nearly 8 million ETH locked compared to 16.6 million on centralized exchanges, as per Glassnode.

The innovation in DeFi space is also drawing users in like crazy, currently just under 500k, up from 98k at the beginning of 2020 and a mere 8,325 on January 1st, 2019.

This raises the question of whether ETH 2.0 will really be able to handle this growth.

“(ETH 2.0) starts with 64 shards at first, so it should be able to handle at least 64x more usage (potentially even more if we get some L2 adoption as well),” said David Lach.

Although the first step towards ETH 2.0 has been taken, the path to launch is long and arduous, as such layer-2 applications present another solution with Ethereum co-founder Vitalik Buterin himself endorsing the likes of OMG, Loopring, and Zk-sync.

With high gas fees also burning the profits of exchanges, with Coinbase now passing this directly onto users, an increasing push towards these solutions has been seen. Tether is already implementing Zk-roll ups; many apps are also turning to side chains such as xDai.

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Author: AnTy

Green Shots Emerge in DeFi Following the Painful Unwinding of the Crowded Space

During the recent correction, the DeFi market pulled back hard, so much so that the seven days percentage returns are still in the negative by 20% to 40%.

Except for a handful of top DeFi tokens, all of them plunged 70% to 95%.

But the market seems to be gaining momentum yet again. While in the past hour, DeFi tokens are slowly turning red, in the last 24 hours, significant gains have been made.

Notable mentions include Cream (81%), Swerve (81%), Hydro Protocol (44.3%), bZx Protocol (30%), YFI (17%), Loopring (12%), Aave (10%), Bancor (6.3%), Chainlink (5.6%), Serum (5%), Synthetix (3.8%), and CRV (2.5%).

Total Value Locked (TVL) in DeFi has also climbed to $7.95 billion after falling to the $6.78 billion low today from the high of $9.5 billion on Sept. 2nd.

Uniswap, with $1.47 billion in TVL, is now dominating the DeFi space, a position juggling between Aave, Curve Finance, and the long-standing leader Maker.

Another Vicious to Resume

The market correction was actually the domino effect of DeFi positions unwinding after the head chef of SushiSwap decided to call it a day by pulling a Litecoin’s Charlie Lee, or you could say Ethereum’s Vitalik Buterin.

“The uber-crowded trade in US equities is nothing compared to the crowded nature of DeFi space,” said Denis Vinokourov of London-based brokerage service Bequant.

When DeFi tokens started going down, “the spillover effects turned out to be significant,” which makes sense given that almost $10 billion worth of capital was splashing in the ecosystem. Vinokourov said,

“Going back to the recent price action and as demonstrated in the past, crowded trade unwinds are extremely painful and broad-based but eventually green shots emerge.”

And this is what we are seeing in the market currently. Also, with a considerable reduction in Ethereum gas levels and potential interest from China, another vicious circle will soon resume.

An Opportunity for Competitors

During the DeFi craze, network fees being too darn high also came back in the light. Ethereum miners made a killing from transaction fees, pocketing a total of $113 million in profit in August, up over 3,660% from the meager $3 million earned just four months back.

This means the Ethereum network has all to gain from this DeFi craze and to lose as well.

So, what the second-largest network needs, according to Vitalik Buterin, is nothing but “drastic increase in scalability” – which involves only sharding and rollups, and that has been coming for years.

This makes it a big opportunity for Ethereum competitors such as Cardano, Tezos, and EOS. But while Cardano has just released its mainnet, EOS is not seeing much traction, recording $1.74 billion volume compared to Ethereum’s $5.64 billion.

But according to Brendan Blumer, CEO of Block.one, the company behind EOS, “EOS will unleash DeFi… EOS has the performance, liquidity, and developer community to support DeFi applications that aren’t possible anywhere else.”

Polkadot is another one that jumped the ranks thanks to a denomination – crypto’s version of the stock split.

In the meantime, market participants acknowledged Ethereum’s layer2 solutions like the OMG network and Loopring, resulting in these tokens outperforming.

But Vinokourov says, Ether contenders “command significant financial firepower and a competing platform to rival Ethereum’s DeFi is likely a matter of time.”

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Author: AnTy