DeFi Lending App, Aave Protocol, Raises $3 Million Through LEND Token Sale

  • Two Venture Capital firms, Three Arrows Capital and Framework Ventures invest $3 million in decentralized finance (DeFi) lending platform, Aave.
  • The investment was made through the purchase of Aave’s native tokens, LEND.

In an announcement on Wednesday, confirms a $3 million investment in Aave Protocol, the third-largest DeFi app in total locked value. Framework Ventures and Three Arrows Capital directly purchased LEND tokens from the Aave Protocol Treasury, showing increasing interest from institutional investors in the DeFi industry.

According to the statement by Aave, the investment will be used in fostering decentralization of the lending and borrowing, token governance, new tokenomics, and an insurance fund in case of low liquidity on the platform. This investment will further DeFi protocol’s “mission of enabling global, permissionless tokenized assets money markets.”

Michael Anderson, CEO of Framework Ventures, believes the latest investment will help Aave strengthen its position as the private borrowing and lending assets moves to decentralized platforms. He said:

“Aave stands to significantly benefit from this underlying shift by enabling more assets as collateral, continuing to innovate with new lending features such as credit delegation and partnering with other DeFi protocols.”

The investors purchased around 30 million LEND tokens while it traded at $0.10. Following the rush in DeFi borrowing, lending, and yield farming, the token has since grown to $0.26, offering a 160% increase in the investor’s ignition investment.

Framework and Three Arrows Capital have taken a rather strong stand in the DeFi space despite governments taking a closer look at the industry. The two companies will actively participate in Aave’s staking and governance systems following the investment.

Aave has rapidly grown into the third-largest DeFi platform since launching at the start of the year, and Stanley Kulechov, CEO of Aave, believes the latest partnership will scale its platform. He said:

“Their [Framework and Three Arrows Capital] involvement will bring substantial expertise to scale the protocol for institutional usage, and they will be helpful stakeholders within our community.”

Aave is taking up a range of crypto assets in its borrowing and deposit pool, including Tether (USDT) and Ethereum (ETH), to boost its liquidity pool. Notwithstanding, the platform also recently joined the Chicago DeFi Alliance and partnered with OpenLaw to launch ‘under-collateralized loans” through credit delegation.

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Author: Lujan Odera

As Decentralized Finance Continues to Evolve, Big Four Audit Firms Will Play a Major Role in DeFi

Big four audit firms are set to be a significant part of the Decentralized Finance (DeFi) ecosystem according to the latest blockchain industry report by German-based non-profit, dGen.

The DeFi space, which has seen tremendous capital gains in TVL, will grow even more prominent in the coming decade as per dGen insights on its report. Jake Stott, the co-founder of dGen, noted that support from other financial market stakeholders would be inevitable going forward. Tom Howard, Chief Strategy Officer at Mosendo, said;

‘Over time, traditional financial institutions will have no choice but to interact with  decentralized finance tools, slowly disinter-mediating the industry from the inside out.’

Functions like verifying the authenticity of an invoice, tracking payment settlements, and insurance claims could occur faster with the help of a blockchain. Their role will be to act as an intermediary between DeFi and traditional finance.

Dubbed the ‘Decentralised Finance: Usecases & Risks for Mass Adoptionreport, dGen paid particular attention to the DeFi space. Currently, over $2.5 billion in funds is locked within DeFi based products. It is an area that has been hailed as the future of markets given almost all traditional assets are finding their way onto Ethereum based protocols. Though still at its infancy stages, dGen acknowledged this underlying potential in DeFi stating that it,

“could leapfrog the current FinTech industry, providing a new structure of financial services.”

Consequently, this optimistic narrative has gained massive support from across financial services, tech, and the academia elite. DGen’s researchers are bullish that the market could grow past the trillion-dollar mark by 2030. The report highlights that DeFi will: “Provide income for thousands of gamers, streamers, and influencers”

It will also be adopted by European financial institutions who will switch to offering “DeFi-enabled savings and pension accounts.”

A recent Q2 report by industry giant, ConsenSys, concurs on the possibility of a DeFi future given historical growth rates in the past three months. It goes on to detail that Bitcoin tokenization protocols and Yield farming frenzy are the fundamental factors behind this growth as per now.

While the DeFi space has emerged as an avenue to make better interest compared to zero percent in some jurisdictions, it continues to face security threats arising from the core infrastructures.

“Knowledge and security risks will continue to reduce, on top of a growing number of securities in the event of a hack. It appears the solutions the industry needs to scale will come from within the industry itself.”

The team is, however, optimistic the underlying issues might be resolved in as little as one year. Kain Warwick, Founder of Synthetix told dGen,

‘Insurance on DeFi is still extremely limited[…] DeFi still has significant tail risk, so insurance is likely to remain very costly in the short term, but as protocols mature, costs should come down[…] allowing for simpler and more useful insurance to emerge’.

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Author: Edwin Munyui

AMR Filling Reveals Fidelity Investments Owns 10.6% Stake In Canadian Bitcoin Miner, Hut8

Fidelity, a digital asset management firm, holds over 10% of the recently-listed Canadian firms, Hut8, according to reports from TheBlock. The former’s, which is also invests in Bitcoin mining, investment in Hut8, aims at increasing its hash rate with the purchase of new MicroBT and Whatsminer mining equipment.

In an official filing by Hut8 – an alternative monthly reporting (AMR) – to Canadian top securities authority, Ontario Securities Commission (OSC), on Friday, disclosing Fidelity Investments holds 10.6% of shares in the company in a mix of common shares and common share purchase warrants. AMR is filed by Canadian companies to disclose their institutional investment partners.

Welcoming a new investor in the company through an underwritten public offering on June 25 forced the filing of the AMR. The total offering is 5,750,456 units, with each unit representing one common share and one common share purchase warrant. Each Hut8 unit in the round costs $1.45, bringing the total raised in the firm to $8.34 million.

The statement released on Fidelity Investments purchase reads:

“Fidelity holds 8,396,138 Common Shares and 2,054,956 common share purchase warrants, as a result of which Fidelity deemed to hold 10,451,094 Common Shares representing approximately 10.58% of the outstanding shares of that class.”

This raise is aiming to better Fidelity’s Bitcoin mining hash rates with part of the investment set to purchase new mining equipment, including MicroBT’s, Whatsminer M30S, M31S, and M31S+.

Fidelity Investments in Bitcoin

The latest partnership is significant to Fidelity as it aims to expand its cryptocurrency operations. The asset management company, which holds over seven trillion in AUM, opened a new entity in London at the tail end of 2019 to help institutions onboard Bitcoin as assets.

Notwithstanding, in January this year, the company released a job listing looking for a Bitcoin mining engineer in a bid to boost operations.

On the other hand, Hut8 is struggling to make profits since launch as the Canadian mining firm witnessed a third successive drop in revenues at the end of Q2 2020.

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Author: Lujan Odera

ING Bank Launches ‘Travel Rule Protocol’ to Ease FATF Compliance for Crypto Businesses

  • Top Netherlands bank, ING, introduces a new protocol system to ease crypto exchanges and firms aiming at implementing the recommended FATF’s Travel rule.
  • The new protocol, Travel Rule Protocol, or TRP, in short, sets ING as the first bank ever to comply with the Travel Rule affecting virtual assets.

In a report released earlier on Tuesday, ING launched the TRP joining forces with Standard Chartered, Fidelity Digital Assets, and several crypto-native firms, including BitGo, Crypto Broker AG, Metaco, 21 Analytics and OSL/BC Group.

The protocol aims to take a “regulatory first approach,” allowing firms dealing with digital assets to comply with the FATF recommendations easily. In a statement released on the launch, Hervé Francois, Blockchain Initiative Lead on Digital Assets at ING said:

“With a regulatory first approach, we are actively involved in different working groups to support standardization of this emerging ecosystem and ultimately pioneer mass adoption.”

The protocol, however, will steer away from the public cryptocurrencies such as bitcoin and ether favoring to work exclusively in decentralized ledger technology (DLT) projects. Hervé continued:

“ING, as an innovation leader on blockchain/DLT, sees increasing opportunities concerning Digital Assets on both asset-backed and native security tokens.”

“More Like SWIFT”

According to the statement, the new partnership aims at developing an infrastructure that offers virtual asset service providers (VASPs) a direct way to “query for the existence of contact or address,” such as a legal entity identifier and essential public information.

One source familiar to the matter stated the platform was more like SWIFT transfers, the interbank messaging and settlement system. The protocol also offers a hybrid system (permissionless and permissioned network) promoting an open, transparent solution to firms having trouble with the FATF Travel Rule compliance.

ING Bank in Blockchain

ING is a big digital assets player since opening its blockchain branch in 2018. Since the Travel Rule recommendation became public in 2019, the bank set out plans to get an understanding and look for opportunities in the crypto space that banks can fit into.

The Travel Rule is a recommendation by the Financial Action Task Force (FATF) to include any virtual asset service provider in the global anti-money laundering and anti-terror financing rings.

In a meeting scheduled for June 24th (tomorrow), the FATF committee will look into the overall progress of the implementation of the rule giving further recommendations.

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Author: Lujan Odera

Estonia Revokes License of Over 500 Crypto Companies to Curb Money Laundering

European Union member Estonia is now cracking down on cryptocurrency firms to attack money laundering in the country.

Estonia has been in the spotlight for Europe’s biggest money-laundering scandal, about €200 billion were laundered from Denmark’s biggest financial institution Danske Bank’s Estonian branch from 2007-2015. To put it in perspective, in 2017 Estonia’s GDP was €29 billion.

The scandal raises serious questions over the capacity of not only banks but also the government in combating money laundering. Now, the country has set its eyes on crypto businesses that exchange and help hold virtual currencies like bitcoin, reported Bloomberg.

Interestingly, Estonia was among the first in the EU to license these firms in late 2017.

But now, the regulators have stripped more than 500, a third of the total permits this year. According to Madis Reimand, head of the Baltic country’s Financial Intelligence Unit, the decision was made because the regulators are worried these firms are using their local credentials to help commit fraud elsewhere. Reimand told Bloomberg,

“This is a first step in tidying up the market, allowing us to take care of the most urgent issues by permitting operations only for companies that can be subjected to Estonian supervision and coercive measures.”

According to FIU’s annual report released on Thursday, there has been an increase in sectoral risks in 2019 amid “extremely fast” growth in service providers.

Out of the 56 supervisory inspections last year, 34 were of the virtual currency companies suspected of embezzlement of clients and providing financial services abroad without proper authorization.

So far, the crackdown has been those companies that failed to start operations in Estonia within six months of receiving the permit.

They were “probably giving out those permits too easily to God knows what companies,” which were then used to “create credibility for some evil schemes,” said Andre Nomm, a member of the Estonian Financial Supervision Authority’s management board last year.

After warnings from supervisors about the increase in issuance since 2018, parliament has also been enacting stricter licensing rules.

Now, more than half of the remaining 900 cryptocurrencies risk losing their licenses if they have no operations in Estonia.

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Author: AnTy

DeFi Total Locked Value Doubles Since the March Market Crash, Now Over $1.01 Billion TVL

The DeFi market cap has doubled within a span of two months according to analytics firms’, DeFi Pulse, and DeFiMarketCap.

However, the two entities differ in the analytics that they provide. DeFi Pulse focuses on the exact total value locked (TVL) within this upcoming market. While DeFiMarketCap tracks the value of tokens within the DeFi space. According to the former, the value stands at $1 billion while the latter shows a $2.288 billion valuation as of press time.

The market had been thriving, hitting the $1 billion mark in February as per DeFi Pulse stats. These gains were wiped out a month later on Black Thursday as the crypto market dipped together with international global commodity prices. At the time, TVL went to a low of $559 million but has since recovered based on the prevailing stats.

DeFi Pulse
Source: DeFi Pulse

The DeFi Market Bounce Back

DeFiMarketCap which was launched in April to compete with the likes of DeFi Pulse and CoinMarketcap shows that the TVL in Decentralized Finance crossed the $2 billion mark over the weekend.

The platform reveals that Maker protocol currently dominates the DeFi market with around $568 million; roughly a quarter of the total market capitalization. It is followed by Ox and Kyber Network Crystal which are both ERC-20 compliant.

On the other hand, DeFi Pulse shows a bounce back to the $1 billion mark on June 8; a level which was last surpassed at the beginning of March. While both platforms agree to a spike by almost double, the approach in TVL measures may have caused the difference in values. DeFi Pulse tracks the TVL of digital assets like ETH and DAI which are used in liquidity creation and staking. Its newly established counterpart, however, tracks the total value of all tokens attributed to certain protocols such as Maker.

Fundamental Value Drivers

The DeFi market return to its attractive TVL can be pegged to a number of fundamental factors. One of the leading narratives is a general reversal of the downtrend experienced by global markets at the height of the COVID-19 pandemic.

The crypto market seems to have replicated performance, a development that has left some questioning the value of digital assets in violating ‘market norms’.

The recent addition of wBTC as collateral for minting DAI stablecoins within Maker’s protocol has also spurred DeFi activity.

This Bitcoin-based digital asset was added as recently as May and is already the second most popular within MakerDAO’s staking portfolio. Its value proposition lies in tapping Bitcoin’s liquidity into an ETH dominated ecosystem. Given these developments, investor confidence in the DeFi markets has significantly grown despite global uncertainty in financial markets.

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Author: Edwin Munyui

Bitfury Announces Bitcoin Mining Investment Program For Institutional Clients

Bitfury, one of the oldest Bitcoin mining firms established back in 2011, has announced a Bitcoin mining investment program for institutional investors on May 26th. This investment program is set to offer an innovative way for institutional funds and family offices to diversify their portfolio and get exposure to the Bitcoin verse.

These institutional clients would be able to invest in different data centers located in North America, Iceland, Norway and Central Asia. The investment program would see these institutional clients can either make direct investments in these data centers or through joint ventures.

Bitfury believes that this investment opportunity is the perfect way for institutional clients to get the right exposure to a market which has intrigued both the small and big players in the past couple of years. Bitfury would be solely responsible for looking after all aspects of the investment program, be it procuring different types of equipment, site sourcing or maintenance.

The firm claims to have one of the most advanced sets of crypto mining equipments under their belt which when combined with the location of their data centers, where the cost of electricity is quite cheap, the firm is hoping to make this innovative investment program mainstream. The Bitcoin mining company believes that these kinds of programs offer better exposure than direct spot trading due to uncertainty in prices. Valery Vavilov, the CFO of Bitfury commented on the idea behind the program and said,

“While this offering is attractive to different types of accredited investors, we believe one of the groups that will benefit most from this offering is family offices. Our streamlined avenue to diversification is designed specifically for their portfolios – exposure to digital assets without any of the operational/technical requirements of holding the digital assets/infrastructure themselves.”

Bitcoin Mining Could Become A Form of Investment Vehicle

Bitfury is not the only Bitcoin mining firm which came up with the idea of offering Bitcoin exposure through part ownership in mining farms. Prior to Bitfury, Chinese mining company Canaan also offered a similar investment opportunity before its listing on Nasdaq, however, its legal trouble did not allow it to become a known choice of investors.

Institutional clients have always preferred an alternative investment vehicle to the spot market and most of them do not want to directly take custody of Bitcoin fearing the volatile market might get triggered by their behavior. Thus, these big investors always look for alternative exposure to Bitcoin to get exposure to one of the most profitable assets over the past decade.

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Author: Rebecca Asseh

New Messaging Standard Pushes Crypto Industry Closer to FATF ‘Travel Rule’ Compliance

Crypto firms have made a step towards FATF compliance following the release of a messaging data standard for the Virtual Asset Service Providers (VASPs).

The initiative has been dubbed ‘IVMS101’ and was pioneered by the Joint Working Group on InterVASP messaging standards (JWG).

This milestone is set to revolutionize how crypto firms will be sharing data with regulators like FCA, FinCEN, MAS, JFSA, and the FATF.

According to the IVSMS101 whitepaper, adopting this standard will facilitate the exchange of KYC/AML information by VASPs in a harmonized manner.

Notably, the project is a product of three key stakeholders with interests in VASPs: International Digital Asset Exchange Association, Global Digital Finance, and the Chamber of Digital Commerce.

Sian Jones, the convener of JWG, has since confirmed that the team’s vision of a standard data model is now a reality:

“I’m pleased to confirm that the working group approved the final text and that the IVSMS101 data model standard now exists,”

InterVASP Messaging Standard, IVSMS101

With this tech in place, all VASPs will be required to integrate the IVSMS101 standard for interoperability and efficient communication.

Basically, the IVSMS101 pegs its underlying design on a universal language that will simplify the process of decoding information shared by ecosystem participants. The paper notes that such an approach, not only enhances regulation but also minimizes the cost of sharing information.

The International Digital Asset Exchange Association (IDAXA) said through an email to Coindesk that the launch of a common standard is a step in the right way since the Virtual Asset guidelines were published by FATF back in June 2019,

“Coming up with the Intervasp Messaging Standard 101 (IVMS101) as a common standard is definitely the first step in the right direction.”

As we approach FATF’s one-year progress review, the IVSMS101 standard will be a key topic. Sian Jones has been commended by the Chamber of Digital Commerce for steering and delivering on the project in good time:

“Our members have worked hard to create this standard and achieve consensus in advance of FATF timelines – a real achievement in such a complex area.”

Currently, the standard has already gained traction amongst crypto industry stakeholders with notable firms like TRISA and Sygna Bridge backing the initiative.

Despite the strong value proposition, IVSMS101 has yet to clear the air on how entities in regulated jurisdictions will communicate with those in less strict environments. What is, however, evident is the shift towards the sunrise phase where the industry is seeing more execution based on the plans and designs laid out earlier on.

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Author: Edwin Munyui

Swiss Crypto Association Rolls Out A 1:1 Bitcoin-Backed ‘tzBTC’ Token on Tezos For DApps

A consortium of Swiss based crypto firms have come together to launch “tzBTC”, a bitcoin-backed token on Tezos blockchain in a bid to kick-start decentralized finance (DeFi) on its programme.

This recent move to incorporate bitcoin onto Tezos blockchain is a step closer in rivaling Ethereum blockchain which introduced bitcoin applications more than a year ago. DeFi evidently grew rapidly on Ethereum in 2019. Tezos blockchain was launched back in 2018 with an aim of playing host to a new generation of decentralized finance (DeFi), social and business projects.

The Tezos Foundation has teamed up with Bitcoin Association Switzerland along with a number of Swiss digital asset service providers among them including Sygnum, Inacta, Swiss crypto token and Bitcoin Suisse to create the TZBTC digital token. The token gives its holders the ability to interact with Tezos smart contracts while attaching on the value of the Bitcoin. Tezos foundation operational head Roman Schnider told swissinfo.ch that the collaboration openly demonstrated that Switzerland is a leader in financial innovation.

Lucas Betschart the president of Bitcoin Association Switzerland said in a press statement that the new token brings the brand and the liquidity of the blockchain. Furthermore, it gains the potential for rich functionality made possible by Tezos smart contracts. The head of operations at the Tezos Foundation Roman Schnider said that atomic swaps are for building out DeFi exchanges and perhaps a wrapped Ethereum (ETH) token. He more so insisted that this partnership was the first in kind but was a roadmap to a better future on the same front.

The main consideration under the recent integration was that intermediaries such as banks and lawyers were not paramount during exchange of items of value. This promises to ease full operations while promoting accessibility and flexibility. This new system all but ensures that privacy will be preserved, as well as bring efficiency and transparency to established digital systems.

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Author: Lujan Odera

Crypto Rating Council Adds IOTA, BAT and USDC, While Ripple Gets Ignored

The Crypto Rating Council (CRC) is a consortium of United States-based crypto firms who advocates for better regulatory clarity in the crypto space and is backed by the likes of Coinbase, Kraken, Bittrex, and others.

Given the growing debate over whether cryptocurrencies fall under the security category apart from Bitcoin (BTC) and Ethereum (ETH) (they are considered as assets, given the level of decentralization and transparency), they analyzed a number of digital assets to determine whether they possess traits of Security.

In a blog post dated 2nd April, CRC revealed that they have inducted three new cryptocurrencies in its list with different ratings which include Basic Attention Token (BAT), USDCoin (USDC), and Iota (IOTA). The blog post also revealed that the recent analysis was based on reviewing their previous ratings along with new developments and available information in the public domain. CRC also updated the scores for Maker and Polymath tokens.

How Do CRC Ratings Work?

CRC rates each token on a scale of 1-5, the higher the rating, the higher its chances of showing traits of security. Security ratings are important since it ensures that these are not sold unregulated. Every country has different security laws and they must adhere by them and have a regulatory clearance before making it into the market. However, it is also important to note that CRC is not affiliated to any government body and its ratings are not endorsed by any developers, regulators or third-parties.

The CRC rating gave IOTA an overall score of 2.00 which makes it unlikely for it to be considered as a form of security. IOTA has always claimed to be among the decentralized projects and belive the current rating by CRC would really help it expand its credibility in the US market. The firm responded to their rating of 2.0 saying,

“With our Crypto Ratings Council rating, we believe the US market and CRC’s partner organizations will feel more comfortable and confident engaging with the IOTA token and protocol.”

Apart from IOTA, even BAT scored a 2.00 rating on CRC while USDC scored the lowest of 1.00 suggesting it inhabits the least qualities of security. USDC which is a US Dollar backed stablecoin, even DAI, the decentralized stablecoin scored 1.00 on CRC ratings suggesting stablecoins shows the least traits of security.

Ripple Shows High Traits of Security

Ripple backed XRP token when evaluated by the CRC back in 2019 scored 4.00 rating that suggest it shows high traits of Security. While CRC ratings are not taken into consideration by any government-affiliated agency or security regulators and probably won’t change any of their opinions, but Ripple is facing a lawsuit for being security in the United States. XRP still maintains a rating of 4.00 on CRC.

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Author: James W