Treasury Secretary Spooks the Traditional Market; Bitcoin Slides Down & Drags Ether with it

Treasury Secretary Spooks the Traditional Market; Bitcoin Slides Down & Drags Ether with it

Janet Yellen is talking about increasing the interest rates to prevent the economy from overheating. This obviously sent the markets into a sell-off mode from S&P 500, Dow, Nasdaq to Bitcoin Ether while the USD Index inches upwards.

The price of Bitcoin is on a slide, hitting $53,200 so far and dragging Ether down with it to $3,175 from its latest all-time high of $3,535 on Coinbase.

This latest weakness in prices is in line with the sell-off seen in the traditional markets. The S&P 500 also dropped just about 2% before seeing a slight increase, the same as Dow Jones Industrial Average, which fell about 1.3%. Nasdaq, meanwhile, is on a decline since last Monday by more than 4.5%.

The USD index, in turn, saw a small uptick and is currently around 91.30. Trader Light noted,

“Something spooked equities. Will likely put pressure on crypto and torch the recent leverage build up. BTC was weak and is already buckling, ETH will probably wick down on liquidations shortly.”

What spooked the traditional markets was Treasury Secretary Janet Yellen talking about increasing the interest rates. During an economic seminar presented by The Atlantic, Yellen said,

“It may be that interest rates will have to rise somewhat to make sure that our economy doesn’t overheat.”

“Even though the additional spending is relatively small relative to the size of the economy, it could cause some very modest increases in interest rates.”

If rates get increased, people would be risk-averse and more interested in keeping their money safe in bonds.

Ever since the Covid-19 pandemic broke out early last year, Congress has printed trillions of dollars and injected them into the market, inflating the prices of the assets. This increase in money supply and virtually zero rates have been the primary drivers of Bitcoin’s wild rally from March 2020 low of $3,800 to a new all-time high of $65,000 last month.

The Biden administration is currently pushing for another $4 trillion infrastructure plan, and Yellen wants higher taxes to pay for this, arguing that the US needs to contain deficits over the long term though she said the government still has “a reasonable amount of fiscal space.”

President Joe Biden is “taking a very ambitious” and “active” approach, “but we’ve gone for way too long on letting long-term problems fester in our economy,” she said.

The Federal Reserve, which Yellen led from 2014-18, has been keeping the short-term rates near zero for over a year and time and again Chair Jerome Powell promised the market that it would be kept that way until the 2% inflation and full employment is achieved.

While inflation concerns are rising, Yellen is not largely concerned about it becoming a problem, and should that happen; there are tools to address it, she had said. Just over the weekend, Yellen had told NBC that,

“We’re in a good fiscal position. Interest rates are historically low. They’ve been that way for a long time, and it’s likely they’ll stay that way into the future. But we do need fiscal space to be able to address emergencies, like the one that we’ve been in with respect to the pandemic.”

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Author: AnTy

Gemini Survey Reveals Adults Are Becoming More Interested in Cryptocurrencies

With cryptocurrencies gaining more and more media attention, investors in traditional financial markets are gradually looking into cryptocurrencies. Beyond institutions, more women are starting to get involved with Bitcoin.

14% of US Populace Own Crypto

According to a Gemini State of Crypto Report for 2021 on 3000 US adults, crypto is beginning to broaden its investor base.

The document estimates that 14% of the US population, roughly 21.1 million adults, own crypto assets. It also showed that 74% of these crypto holders are male, while 77% are under the age of 45.

Women are not left out, as they make up 26% of crypto investors.

The document also pointed out that the average age of a cryptocurrency owner is 38 years old, making approximately $111,000 per annum.

Gemini spoke about another group of investors called the “crypto-curious.”

Gemini defines this group as investors who are yet to take the crypto plunge but planning to do so in 2021. This section comprises over 63% of US adults.

About 13% of this group plan to diversify their investment portfolio into cryptocurrencies in the next 12 months.

Gemini notes that this could see 19.3 million new crypto holders coming into the space, which would double the crypto population in the North American nation.

The survey also shows an interesting trend. Women are more likely to buy crypto soon as 53% of female respondents say they plan to own a digital asset by the end of the year. 4% of the current female crypto owners are 55 years or older, and the average age is 44 years.

Regarding demographics, 52% of current investors reside in urban or suburban areas, while 26% are domiciled in small towns and rural areas.

Bitcoin Still Most Dominant Digital Asset

Even though cryptocurrencies are gaining mainstream acceptance and more investors are coming into the crypto space, the knowledge of the various virtual currencies on offer is still lacking.

95% of respondents still associate crypto with Bitcoin and claim partial knowledge of other digital assets.

Even though Ethereum is the second most valuable cryptocurrency globally, just 38% of respondents said they have heard about it.

Bitcoin forks, Bitcoin Cash and Litecoin, followed after that with 24% and 16% of respondents claiming knowledge about these lesser traded digital coins, respectively.

Foremost stablecoin USDt could only gather 11%, while San-Francisco blockchain firm Ripple Labs’ XRP had 6%. Oracle provider Chainlink had 8% of respondents saying they must have come across it once.

The least known projects were Cardano’s ADA and Polkadot’s DOT which secured a meager 2% given their influence in the crypto space.

This showed that most crypto investors and enthusiasts are still experiencing knowledge gaps regarding the various crypto assets in the blockchain ecosystem. According to Gemini, this can be addressed with accessible educational crypto materials to turn the crypto-curious into active crypto investors.

The survey also noted that most crypto investors view these digital assets as a long-term investment strategy.

A whopping 69% of investors buy and hold for long-term appreciation compared to 36% who trade short-term for profits. 27% of the respondents use digital assets to make purchases online.

Another survey by analytics firm Piplsay points to a growing faith in the safety of trading cryptocurrencies, with 50% of respondents stating their willingness to invest in the space. A further 57% demanded that consumer companies like Amazon and Apple start accepting cryptocurrencies as a form of payment.

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Author: Jimmy Aki

Bitcoin Lending Grew Nearly 12x; Only Accounts for 0.15% of the $20T Total Collateral Market

There is also growing demand for Ether among traditional actors entering crypto lending with ultra-high-net-worth individuals, corporations, traditional hedge funds, and family offices wanting to enter the market looking to generate excess yield on idle cash.

Total active collateral in the Bitcoin lending markets has grown from $1.9 billion in Q3 2019 to a whopping $24.3 billion in Q4 2020, reveals the latest joint report by Arcane Research and crypto exchange Bitstamp.

The crypto lending market is simply flourishing, but it has a long way to go with the collateral markets’ current size estimated to be $20 trillion, providing a huge potential for bitcoin as collateral.

Over 400,000 BTC are estimated to be used as collateral for Bitcoin-backed loans today, doubling over the last year, reads the report. It is particularly used to leverage up and buy more crypto for arbitrage, market-making, tax deferment, and the need for fiat and miners covering costs.

The interest rate on Bitcoin deposits is currently high at 6-10%, which is expected to decline as more BTC are collateralized, and the crypto sector grows.

In total, 625,000 BTC, approximately $30 billion, are used as collateral in the crypto market today, based on estimations of collateral held in the derivatives market and tokenized BTC in DeFi. Still, bitcoin collateral only accounts for 0.15% of the total collateral market, which is growing rapidly, states the report.

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Arcane Research expects further growth in the BTC lending market, which could be “very bullish” for Bitcoin as it allows users to employ their cryptocurrency to serve their everyday fiat-needs, without requiring the hodlers to sell and realize profits.

Bitcoin, which can be transferred around the world instantly, at almost no cost, is a superb collateral asset because it is without both counterparty risk and credit risk, reads the report.

Institutions are just as interested in the crypto lending market, with institution-focused Genesis seeing a YoY growth of 245% in their outstanding loans.

One of the market-leading companies in the lending market, Genesis has seen incredible growth over the past year. Their outstanding loans surged to $3.8 billion in Q4 of 2020, a roughly 80% growth from Q3.

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The company further processed nearly $20 billion on loans last year to institutions only, “showing tremendous demand for traditional actors entering crypto lending.” In Q4, the company also pointed to the inflow of institutional lenders as well with ultra-high-net-worth individuals, corporations, traditional hedge funds, and family offices wanting to enter the market for the first time looking to generate excess yield on idle cash.

But it isn’t only about Bitcoin; there is also growing demand for Ether among institutions. There has been a steady increase in ETH loans outstanding, which grew 177% during the last three quarters of 2020.

Like BTC, this growth was attributable to ETH’s price inflation, the biggest reason was tied to in-kind placements in Grayscale’s Ethereum Trust, according to Genesis.

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BlockFi is another company leading in crypto lending with over $4 billion in outstanding institutional loans. According to the report, BlockFi’s internal numbers show that the company is a clear competitor to Genesis on the institutional side.

In 2020, BlockFi processed $18.6 billion in loans to its institutions and private clients, and by the end of the year, it had $4.4 billion in outstanding institutional loans. These clients aren’t just based in the U.S. either, just 60%, but spread across the world — 25% in the Asia-Pacific and the last 15% are based in Europe.

Other notable competitors in this sector are Celsius which processed over $8 billion in loans, Nexo which has over 1 million users and shares profits with its token holders, and Nebeus, which was one of the first movers in 2014.

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Author: AnTy

EU Watchdog Monitoring Accelerating Retail Trading in Traditional & Crypto; May Even Step In

EU Watchdog Monitoring Accelerating Retail Trading in Traditional and Cryptocurrency Market; May Even Step In

ESMA chair Steven Maijoor said the new retail activity is concentrated in young investors and “speculative.”

European Union regulators are inspecting the market transactions and may intervene after a surge in online trading by retail investors, said the securities watchdog of the bloc.

“We are closely monitoring these new developments and are assessing whether any further supervisory actions are needed,” Steven Maijoor, chair of the European Securities and Markets Authority (ESMA), told an Afore Consulting webinar.

During the 5th Annual Conference on ‘FinTech and Regulation: New Challenges and New Solutions,’ Maijoor touched upon the digitization, accelerating trends, and risks and opportunities.

Besides the frenzied bout of retail trading in the traditional markets, particularly in blue chips in France, which rose fourfold last March and overall volumes tripled, cryptocurrencies are their matter of concern. He said,

“A related development of clear concern is the large price bubble that formed in Bitcoin and other crypto-assets during the second half of 2020. Although it is hard to establish cause and effect, increased speculation in this area may be linked to increased retail trading of traditional financial instruments,”

The ESMA chair further noted that while it has “never been easier to gain exposure to Bitcoin,” now popular apps used for standard financial purposes are also offering crypto trading; as such, they “will remain vigilant in monitoring developments.”

The regulators are concerned about the risk of new activity being “speculative” and that this growth in investing that is concentrated among young investors have them turned to day trading to fill their time during lockdowns.

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Author: AnTy

The UNI Airdrop is Now Worth Over $7k as Google Searches Rise Up & Volume Hits New Highs

The traditional investors are coming to the world of decentralization. Uniswap allows users to front-run the rest of the world amidst the ongoing censoring.

UNI, the 13th largest cryptocurrency by market cap of $5.14 billion, is the largest DeFi token. The digital asset that enjoyed an uptrend throughout last week to reach nearly $20 is up 275% YTD.

These gains made the UNI airdrop currently worth a whopping more than $7,000. The popular decentralized exchange (DEX) Uniswap launched its governance token UNI in September, less than five months back. UNI tokens were airdropped to all of the users who provided liquidity to the platform before Sept. 1st.

UNI tokens’ worth is increasing as more and more users are using the decentralized exchange, which gained momentum after the Robinhood fiasco. The zero-commission broker halted the trading of popular stocks like GME and has now limited the number of shares that can be purchased. The popular retail app also halted crypto trading last week.

This pushed the traditional investors to the world of decentralized finance (DeFi).

Uniswap is actually allowing traders to front-run the rest of the world as it is open for trading 24/7/365, as is the entire crypto space.

This can be seen in the Google search volumes for “Uniswap,” which is now reaching their DeFi summer levels. The search volumes gained momentum last week just as the WallStreetBets vs. Wall Street battle intensified with trading platforms and social media platforms limited the retail traders’ scope.

Google Trends for the search term “Uniswap”

Source: Google Trends “Uniswap”

Another indicator showing an increased interest in using Uniswap can be seen in its volumes.

Interestingly, throughout January, the decentralized exchange (DEX) has been recording higher than ever volumes. All four weeks of Jan. saw $5.5 billion of volume, as per Uniswap.info.

When it comes to daily volume, it kept above $700 million, and several times it went over $1 billion.

According to Dune Analytics, Uniswap did over $25 billion in volume in January, while its competitor Sushiswap did $12.17 billion, and $6.7 billion was recorded by Curve.

The total DEX volume recorded in the last 30 days was $54 billion, with Uniswap accounting for 48.4% of the share, followed by SushiSwap’s 23.5% and Curve’s 9.6%.

“The writing is on the wall. The majority of non-fiat trading will end up on decentralized, borderless, uncensorable venues,” commented Erik Voorhees, the CEO of the self-custody crypto platform ShapeShift, which is integrating with decentralized protocols and apps.

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Author: AnTy

Gen X Investors Overtake Millennials in Crypto Adoption: Wirex & Stellar Report

Nearly 75% of consumers view digital assets and stablecoins as an alternative to traditional money transfer services. High fees, slower transaction times, and hectic cross-border transfers are some of the reasons leading consumers to digital asset payment systems, joint research from Wirex and Stellar Development Foundation (SDF) states.

The research report titled ‘The Future of Money: Cryptocurrency Adoption in 2021‘surveyed 3,834 respondents from the two companies’ database in the past three weeks. Over 81% of the respondents hailed from Europe and 17% from the Asia Pacific region, 83% of them aged above 35 years.

The research focuses on the adoption rates of crypto across different genders, age groups, and regions and how digital currencies solve problems in the real world.

Older People are Rapidly Accepting Cryptocurrencies

The older generations are gradually accepting cryptocurrencies as a global payment system in cross border transfers, the report states. The appetite for crypto solutions in traditional payment systems is clearly there across all ages. Surprisingly, 30.2% of the respondents aged 45-54 stated they have used (are using) crypto, the largest group in the study.

Furthermore, older women are more likely to use crypto and blockchain-powered payment systems, the report shows. Slightly above a quarter (26.1%) of women respondents aged 55-64 years invested in cryptocurrency, while only 14.3% of men in the same age bracket invested in crypto.

Cryptocurrency is a Global Payment System

According to the research, the younger generation is rapidly moving towards digital assets seamlessly to transact across borders. With nearly 57% of respondents aged 18-24 years having sent money internationally, there is still room for growth as the “digitally-conscious” generation look for seamless ways to transact value across the globe.

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International transfer fees remain the major issue that is pushing respondents to crypto. Despite the respondents adjusting, most complained about the international transfer fees were still too high. Over 40% of the respondents believe that paying 1% fees is still too high, with the number understandably increasing as the fees increased.

Consumers are open to switching to alternative transfer channels so long as the costs and fees drop significantly, the report states. This is a problem that crypto could solve. The authors of the report wrote that 74% of the respondents agree to digital assets as the solution to slow and expensive traditional money transfer systems.

Over 83% of the respondents stated they owned at least one cryptocurrency or stablecoin, with Europeans leading the way at 84.5% while 74.7% of the APAC region respondents owning digital assets. Fewer female respondents hold digital assets than male respondents (70.3% vs. 85.6%), with 65.7% of women who hold digital assets aged over 45 years.

A Haven for Users?

Despite the positive sentiments derived from the report and 86.1% of the respondents claiming that they “feel safe” with crypto payments, the authors still believe there’s more to be done in the industry. Unsurprisingly, younger generations feel most safe using crypto (90.6%) while older generations, those at 65+ years, feel less safe (80.7%) due to digital payments’ tech-savvy nature.

However, the survey showed some shortcomings as it focuses on the customers of Wirex and Stellar, who already have interacted with cryptocurrencies. The authors concluded that crypto converts’ views will definitely differ from those who are yet to use blockchain technology or cryptocurrencies in global money payment systems.

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Author: Lujan Odera

Gold Is Trashed As USD Regains Strength; Will Bitcoin Hold Onto its Gains?

The traditional safe-haven asset has lost 5.6% of its value in three straight days of losses. The digital gold is still strong above $41k but the market needs to pay attention to the macro environment to see if USD gains take its toll.

Today, gold lost 3.14% of its value while USD gained some strength to move above 90 and Treasury yields made some recovery.

The yellow metal had a good couple of days entering into 2021 as it jumped back above $1,900, but it hasn’t been long that the bullion went down again.

Today the third day in a row that the precious metal has been going down, losing 5.6% of its value since Wednesday.

“It is the first week of January and the staying power for positions tends to be low so moves can get exaggerated,” Tom Fitzpatrick, a Citigroup’s technical strategist, told Bloomberg. Fitzpatrick has been the one that predicted a $318,000 BTC target.

The weakness in gold coincides with the greenback bottoming at 89.2 on Jan. 6 to find its way back above 90 after 10 days.

“Gold and metals getting trashed. The dollar incredibly bottomed on the elections … should have gone down, but didn’t. Rates behaved as expected, but the dollar turned,” noted trader and economist Alex Kruger.

Pay Attention

Unlike gold, the stock market continued its uptrend amidst the growing speculation on further stimulus but despite a sharp slowdown in US hiring.

With the U.S. President-elect Joe Biden getting full control of Congress after the two Democratic wins in Georgia’s Senate runoffs this week, the expectation for more stimulus and higher spending on economic reconstruction has been bolstered.

Bitcoin has also been making strong moves, with this week being yet another wild one for BTC in which the cryptocurrency went from $29,000 on Monday to nearly $42,000 today.

However, trader TheCryptoDog suggests to “pay attention to the macro environment,” adding, “Is the Fed really going to continue such wanton debasement of the dollar?”

Kruger also feels that “If this dollar trend were to continue for much longer it will likely take its toll on bitcoin.”

“This parabolic move upwards, with normally staid Wall Street firms including JP Morgan calling $146,000 as their price target for Bitcoin, and Guggenheim called $400,000, feels like it has a long way to go before exhausting,” is what Guy Hirsch, managing director for the U.S. at eToro believes. “It wouldn’t be all that surprising to see $100,000 at some point this year, given the current momentum.”

While making these new highs every day, Bitcoin has been time and again giving small pullbacks, only to make these daily tops support the very next day for another push higher.

But the market believes that despite being in this new paradigm, “brutal retracements are still possible.”

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Author: AnTy

Ruffer Investment Reduces Gold Exposure & Adds Bitcoin as an ‘Insurance Policy’

UK-based traditional asset manager Ruffer Investment is the latest company to allocate 2.5% of its portfolio to Bitcoin.

Much like Paul Tudor Jones, MicroStrategy, Square, MassMutual, and other institutions, Ruffer uses Bitcoin as insurance against the devaluation of the world’s fiat currencies.

The company’s Bitcoin allocation was close to 2.5%, which represents about $740 million (according to a spokesperson that confirmed with CoinDesk). On the other hand, Ruffer’s parent company has £20.3 billion ($27.4 billion) in AUM. The official announcement by the company reads,

“We wanted to give shareholders a short update on performance this year and to let you know about a new allocation to the digital currency bitcoin.”

During its performance update on Dec. 15, the company noted that their portfolio made strong progress even amidst the turmoil of 2020, which was the result of gold and the inflation-linked bonds performing well, and more recently, equities reacted very positively to the success of the covid-19 vaccines, leading the portfolio higher.

The company further stated that they had made a recent addition “within the Ruffer Multi-Strategies Fund,” Bitcoin, which is “primarily a defensive move.” This allocation to Bitcoin was actually made in November “after reducing the company’s exposure to gold,” it said.

It further goes on to say that their bitcoin exposure though small is a “potent insurance policy against the continuing devaluation of the world’s major currencies.”

According to Ruffer, Bitcoin diversified their much larger investments in gold and inflation-linked bonds, adding that the largest cryptocurrency “acts as a hedge to some of the monetary and market risks that we see.”

The company aims to not lose money by being in cash and grow the value of their clients’ assets in the long term.

“Traditional asset managers are not buying bitcoin to dump after a short period of time. They represent the herd we’ve been talking about for years,” said trader and economist Alex Kruger.

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Author: AnTy

SGS Audit Places Crypto.com into NIST’s Highest Privacy & Cybersecurity Framework Tier

Crypto.com, the digital asset exchange and alternative traditional finance platform, has received the highest security and privacy ratings as per the National Institute of Standards and Technology (NIST) framework. The Hong Kong domiciled firm announced a recent audit by SGS placed them at Tier 4 ‘Adaptive tier’; this is the highest maturity level on the NIST privacy and security framework.

“Audit conducted by internationally recognized audit services firm SGS, which attested that Crypto.com is operating at “Adaptive (Tier 4)“, the highest tier on the scale for both NIST frameworks.” Reads the announcement.

NIST, a non-regulatory agency of the U.S Department of Commerce, released its cybersecurity framework as early as 2014. This has been instrumental in guiding the private sector players on handling cybersecurity threats, especially now that they are rampant within the tech space. This framework provides some of the guidelines that include cyber threat identification, assessment, response, and recovery.

The NIST privacy framework only came into play earlier this year to strengthen data privacy via enterprise risk management (ERM). According to Crypto.com, both the security and privacy frameworks are integral in building market trust and playing by the books regarding compliance issues. Also, lean communication amongst stakeholders in matters of privacy and security.

To receive a Tier 4 (Adaptive rating), Crypto.com was audited based on core functionalities, which include Identify, detect, protect, respond, recover, communicate, control, and govern. Notably, the four tiers of maturity in privacy and security as per the NIST framework are; Partial (Tier 1), Risk-Informed (Tier 2), Repeatable (Tier 3), and Adaptive (Tier 4).

Crypto.com Co-founder and CEO Kris Marszalek, commented on this milestone, adding that the firm’s clientele is now past the 5 million marks,

“Achieving the highest maturity level based on the NIST Frameworks speaks volumes to our commitment to security and privacy, which have been cornerstones of our business since day one.

Having recently surpassed 5 million users, we will continue investing aggressively in technology and process that maintains the highest standards of security and privacy in the industry.”

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Author: Edwin Munyui

Another Unaudited ‘Zero Value’ Farming Token is Taking the DeFi World by Storm & Coins Flying

  • The cryptocurrency world has been much faster than the traditional world, and now the DeFi space is running at a quicker pace than crypto.

On Tuesday, a new DeFi project for yield farming was launched called Yam. Within a few hours of its launch, the unaudited project saw a whopping $250 million locked in it. Temporarily it even hit a $325 million nominal fully diluted market cap.

Even BitMEX CEO Arthur Hayes has jumped into farm YAM, which the community can’t decide if it is good or bad.

No Premine, No Value But Gains & Gains

The launch of YAM came on a gloomy day when the crypto market turned red following bitcoin down. But, DeFi is in its world.

After surging to an all-time high of $125 today, YAM has gone down to $83.68, as per CoinGecko. Similar to another popular DeFi token YFI, “YAM holds zero inherent value,” reads the announcement.

A governance token of Yam Finance, the project is all about farming YAM by staking popular DeFi tokens.

“Distributed in the spirit of YFI — no premine, no founder shares, no VC interests — simply equal-opportunity staking distribution to attract a broad and vision-aligned community to steward the future of the protocol and token.”

By offering a larger APR rate on several digital assets, it has pushed the prices of the likes of COMP and SNX higher as such decoupling from the broad crypto market.

Many of the tokens involved here are enjoying a surge in their prices — in the past 24 hours, COMP has jumped a whopping 43%, LEND 19.76%, LINK 11.62%, Synthetix 19.86%, and Maker by 22.82%.

Farmers Get YAM

“An experimental protocol,” YAM comes with elastic supply, full on-chain governance, and a governable treasury, similar to Ampleforth (AMPL), where the supply expands and contracts as per market conditions intending to target a 1 USD peg per token.

The difference is 10% of each supply expansion (known as a rebase) is used to buy yCRV, a high-yielding basket of stablecoins. This yCRV is then held in a community governed treasury and used to support price stability.

In its ‘fair-farming’ pools, Liquidity Pools (LP) are awarded YAM. There are eight staking pools, including LINK, COMP, LEND, YFI, MKR, SNX, WETH, and ETH/AMPL.

A total of 5 million YAM are there but subject to change by future releases, which are set to occur every 12 hours. Initially, 2 million YAM, 250k per pool, per week will be distributed to users who stake the tokens as mentioned above. The rest of the 3 million is distributed to YAM LPs for the yCRV/YAM Uniswap Pool.

“This was a 10-day project from start to launch,” says the team while “strongly” urging “caution to anyone who chooses to engage with these contracts.”

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Author: AnTy