Will 2020 Be The Year of Staking? Leading Crypt-Assets & Wild Predictions of Staking Space

  • Staking is an incentive mechanism by projects to encourage users to participate
  • 2020 would see users from POW world exploring staking for the first time
  • With Ethereum slated to switch to PoS crypto space will be forced to reckon with staking sooner – Binance
  • Experts predict, staking fees to be close to zero by end 2020 & emergence of staking derivatives

Staking gained momentum in 2019 with Tezos (XTZ) having its more than 70% circulating supply being baked that has its prices soaring. Cardano has been the latest one to launch Shelley incentivized testnet that saw 5 billion ADA tokens staked.

This has Binance Research’s latest report covering “The Rise of Staking” and if “staking’s maturing ecosystem is compelling enough for widespread adoption”?

Staking is basically locking the cryptocurrencies to support the operations of a blockchain network and receiving rewards. It is used as an incentive mechanism by projects to encourage users to participate.

2020 would see users from POW world exploring Staking

Staking was first introduced as a concept in Peercoin (PPC) that started as a hybrid of Proof-of-Work/Proof of Stake chain only to transition to fully PoS.

In its research, Binance segmented stake-able coins into five core categories, Proof of Stake (PoS) like Algorand, Delegated Proof of Stake (DPoS) with assets like ICON and EOS, Distribution model with assets like Stellar, Dual-coin systems with assets like NEO/GAS, and Masternode with assets like Dash, TomoChain, and ZCoin. Caleb Kow, CEO of Tezos Southeast Asia predicts,

“Many who never came from the POW world would also start to explore staking for the first time and enjoy the seamless process.”

Staking Amount beats DeFi by 548%

When it comes to the largest 10 crypto-assets that support staking represents a cumulative market cap of $25.8 billion. Excluding Ethereum, the cumulative staking market cap is worth $11.2 billion with $6.4 billion being staked.

“With Ethereum slated to switch to Proof-of-Stake in the not-too-distant future, the blockchain space may be forced to reckon with staking sooner, rather than later.”

The highest yields are offered on Synthetix at 61.9% and Liverpeer at 102.7%, as per StakingRewards.

Staking rewards unlike block rewards in PoW blockchains are distributed to PoS participants often proportionately to users who stake coins on the network.

In comparison to the growing DeFi sector where $982 million is licked in volume, a whopping $6,368 has been staked.

But according to Xin Xu, CEO of Sparkpool, it will be very interesting to look into how to combine DeFi and Staking together.

When it comes to staking ratio, it is the amount staked at a single point in time divided by the circulating supply to the crypto.

With 81.7% ratio, Synesthetic is at the top. Meanwhile, among the assets listed on Binance, Tezos, Algorand, and Cosmos have the highest staking ratios at more than 70%. Coins like Tron and Qtum, on the other hand, have a staking ratio of under 25%.

Staking Derivatives & Zero Staking Fees Coming Up?

When staking coins, users have to consider the risks of unlocking restrictions, frequency of reward payouts, custodianship risk, opportunity costs, staking reward rate in comparison to holding other coins, security risks, interest rate uncertainty because “what you see may not always be what you get,” and price uncertainty.

Also, you can either go for staking pools which are much like mining pools where on-chain addresses delegated candidates to accept pledge support or delegation services. Dedicated custodian solutions are another option that can help to stake on the user’s behalf in exchange for a cut, similar to delegation services.

However next year, according to Kelvin Koh, Co-founder and Managing Partner of Spartan Group’s prediction,

“Staking fees will be close to zero by end 2020 and half of the independent stakers will be out of business.”

It would, however, just be the starting as Colleen Sullivan, CMT Digital emergence of staking derivatives just like Tiantian Kullander, Founding Partner of Amber Group. Kullander sees this happening after the cryptos like XTZ, ATOM, DOT, ALGO prices sees decoupling from the rest of the space.

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Author: AnTy

Kraken Security Labs Discovers ShapeShift’s KeepKey Crypto Wallet Can Be Hacked Easily For $75

KeepKey hardware wallets are affected by a flaw that would make them vulnerable to attacks if a hacker has access to the device for around 15 minutes. This is according to a recent report released by Kraken Security Labs and published in a blog post on December 10.

KeepKey Crypto Hardware Wallet Affected By Flaw

As per the report released by Kraken, an attacker would rely on voltage glitching to extract the encrypted key of the user from KeepKey wallets. After this, the encrypted seed can be cracked and the PIN can be easily hacked with brute force. The researchers claim that it is possible to perform this attack with a consumer-friendly glitching device for just $75.

In addition to it, the report explains that it would not be possible to stop these attacks from happening with a software update from the company. In order to solve this issue, a needed  complete hardware redesign, which is certainly expensive to perform and very costly for users.

The company claims that they are already aware of these attacks but their goal is to protect users against remote attacks that could happen to online, desktop or mobile wallets, among others.

It is very important for users to be sure that if they lose their cryptocurrency wallet, the funds could be potentially accessed by attackers and the funds could be at risk of being stolen. The cryptocurrency market has many times been affected by hacks that were pointed at exchanges and other large holders of digital assets.

The report has also advised users to enable the BIP39 Passphrase with the KeepKey client in order to protect the crypto funds in the wallet. The passphrase is generally not user-friendly in practice but it is also not stored on the device, meaning it would not be vulnerable to this attack.

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Author: Carl T

Major Loophole Flagged by Dev That Could Lead to $340M Theft, Stealing All Of MakerDAO’s ETH

  • The attack would require the work of a few MKR whales or many minor MKR addresses.
  • The cost of such an attack would be about $20 million, possibly more.

The Maker protocol currently holds $300 million in ETH, but is it as safe as investors believe? Micah Zoltu, a developer and the co-author of the original whitepaper for Augur, recently published a post that suggested that there’s a massive vulnerability with MakerDAO. In the blog, he states that this vulnerability could be attacked, pulling every bit of ETH from the MakerDAO system.

Often, users will lock ETH into the Maker protocol, allowing them to create loans involving the DAI stablecoin, which is pegged to the dollar. However, Zoltu points out that the way Maker is governed creates a problem, stating, “Some group of plutocrats can control how the system behaves.”

The only way that the attack could occur is if a few of the MKR whales decided to take fast action, though a sophisticated attack would only take about 40,000 MKR. Based on the voting system and the staking approach presently implemented for Maker, using 48,400 MKR would allow this attack to take place right away. Essentially, at least $20 million in cryptocurrency would be needed to make this possible, assuming that the price wouldn’t push upwards with this kind of purchase, which isn’t likely. Zoltu continued, writing,

“It is worth nothing that Maker Foundation could attack the system in this way right now if they wanted. What is worse, [venture capital firm] a16z has enough MKR on hand right now to executive the attack the patient way!”

Apart from the possibility of an inside job by individuals that want to see the DeFi application thrive, the ability to actually get all of the MKR needed for this type of attack is likely the biggest struggle. Joey Krug, who is a partner of Pantera Capital and has been made aware of this vulnerability, stated,

“I feel like it’d at least double the price. You could probably get a lot of whales to sell to you OTC if you were paying double market.”

In the open market, the price would skyrocket exponentially, in the event that the attacker had to start from square one.

As it stands, the MKR token governs the Maker protocol. There’s been a small amount burned already of the one million minted, but the Maker Foundation remains in control of a few hundred thousand in both treasury and smart contracts. At the time of writing, a single MKR sells for $499.16, and about $4 million to $10 million in turnover is processed daily.

By holding MKR, any investor has the ability to put up a smart contract, though Maker uses continuous governance to allow for changes at any time. The system just made the upgrade from the single-collateral DAI to the multi-collateral DAI, which means that a whole new version of the protocol is available. Now, there are two kinds of DAI, and users are being pushed to convert their old DAI to the current DAI.

While there are new security changes, like a delay on voted changes to take effect, Zoltu points to the biggest weakness, there is no governance delay. This means, any provision that is voted and approved will immediately take effect, which head of engineering Wouter Kampmann believes is better to have for now. Kampmann added, “It’s really a matter of finding that sweet spot there.”

When speaking with CoinDesk, Kampmann stated that all of the ETH that MakerDAO holds wouldn’t just be moved into a wallet that an attacker could control. Instead, Kampmann stated,

“The way permissionless, unstoppable code works is that there is certain business logic that determines the rules of how to interact with the contract – and these rules are unchangeable.”

This kind of attack would take substantial intelligence and planning, but anyone who remembers the DAO hack is probably a little nervous anyway. Zoltu’s attack theory would need to take place quickly, as the governance delay would likely be increased in the first quarter, possibly as early as January. However, this decision isn’t actually up to the foundation staff. Kampmann stated,

“You cannot just ignore the economics of it. The problem with the model that’s set forth is really in the incentive model.”

There are presently a few whales that already have accumulated enough MKR to attack in this way already, but it isn’t likely they will. The attack would ultimately cause the loss of their value in other assets as it shakes up Ethereum, costing them much more than they gain. Kampmann states that MKR holders should be staking their MKR on votes, if they care about making the protocol secure. Plus, there’s still a lot of MKR sitting on the sidelines. Krug added that, while MKR whales probably have good intentions, it would be unwise to “assume it for sure.”

Another option of this attack would require massive collaboration amongst many minor whales, which account for about 16,000 ETH addresses. If they combined forces without tipping off the MakerDAO community, it is possible that they could avoid the price movement while collecting enough tokens. Considering that MKR simply doesn’t move around that much, this type of cooperation is not likely at all, but Zoltu doesn’t believe that all of these assumptions make the protocol safe enough. Zoltu added,

“They [the Maker Foundation] are operating under the assumption that there are no dark pools of liquidity available to attackers. This is, kind of by definition, something one cannot know.”

As The Next Web’s Hard Fork points out, MakerDAO recently stated that there was another major security flaw in October, allowing the theft of Ethereum before the DAI upgrade was released.

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Author: Krystle M

Poloniex US Customers Need to Withdraw Assets from Circle ASAP to Avoid Fees

  • Poloniex US customers were told in October that they would need to withdraw their funds from Circle.
  • Customers that do not withdraw their assets are at risk of being charged custodial fees or losing their funds entirely.

On October 18th, 2019, Circle posted a blog to announce that Poloniex would be separating from the platform, creating an independent company called Polo Digital Assets, Ltd. In the meantime, Circle expressed that they would still be building up their “open, global, and accessible financial system.” The blog noted that there would be major changes, including that US customers would no longer be able to trade on the exchange by November 1st, and that customers could still access their funds and wallets through December 15th.

The first deadline has already passed, which means that consumers only have about 12 days left to withdraw their funds from Circle. To ensure that consumers don’t miss this deadline, Circle just posted another blog on the matter today, stating that there’s a chance that Circle will start charging fees to the Poloniex US customers still on their platform.

To warn customers, the blog explained that there are two fees that these customers leave themselves open to if they don’t withdraw their assets before the deadline:

  • A monthly service fee, charged for holding the assets on the platform.
  • A one-time fee, for leaving the account dormant.
  • The current regulations state that Circle is allowed to send unclaimed assets to state governments if they so choose.

The assets on Circle’s platform must be pulled by the customers by December 16th, or they will face a few actions that will make their circumstances much harder. First, they will no longer have access to the Poloniex US accounts. Then, the assets left in their account will become USDC and stored as such. Plus, customers are left at risk of being met with one of the above-mentioned fees.

The blog concludes by urging customers to “withdraw their assets as soon as possible,” offering a link that takes Poloniex US customers exactly where they need to go.

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Author: Krystle M

JPMorgan Tests Blockchain Solution To Track Automobile Inventory

  • JPMorgan is testing a new blockchain solution that it would allow it to track auto dealer inventory. In this way, it would be possible for companies to avoid linking the same cars for different loans.
  • The information was unveiled in a recent patent filed by the car financing arm.

JPMorgan Develops Blockchain Solution For The Automotive Industry

The patent describes a blockchain lending system that would allow car companies to handle car loans and their inventories.

It is worth mentioning that each of the cars in the market has an individual vehicle identity number (VIN). In this way and with the help of a blockchain system, it is possible to reduce inefficiencies in the industry and improve loans, services and solutions.

According to the head of research and development at Chase Auto, there is a responsible person that identifies each of the vehicles and reconciles the inventory on the dealer’s and the bank’s systems.

Clearly, this is an inefficient way of handling loans and inventories. This is why JPMorgan, with several years of blockchain experience, is trying to offer improved solutions in the industry.

Christine Moy, blockchain lead at JP Morgan, mentioned that the pilot is being tested with some partners but it is not ready to be released to the market as of yet.

Blockchain technology has been expanding during the last few years and several companies, including JPMorgan, are offering solutions to clients and other firms.

The automotive industry is also very important for the U.S. economy and it is clearly a large market for it to have old financial and tracking systems.

This is not the first time that JPMorgan is working with distributed ledger technology. The firm has also been developing its own permissioned blockchain network that would allow the bank to improve its presence in the market and offer better services.

It is possible for dealerships to pledge the same vehicle as collateral for one floor plan with one bank and using the same car for another floor plan and with another bank. With this new blockchain system that is currently being tested, this problem is solved and the whole system becomes much more efficient and fast.

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Author: Carl T

Analyst Willy Woo Makes The Case That 99% Of All Cryptocurrency Assets Are Not Worth Investing In

Many people thought they would get rich investing in altcoins back in 2017. Most of them were wrong. At the height of the crypto bubble, the price of almost all altcoins were going up, but now most of them are worthless assets. Why? There are several reasons for this.

Willy Woo, a crypto analyst, has recently talked about why some tokens survived 2018 while others are basically zombies today. He affirmed that CoinMarketCap (CMC) has 4978 tokens listed but most of the ones below the top 40 do not have a lot of liquidity. In fact, most do not have any liquidity at all.

99% of the assets listed on CMC are basically worthless in his view. Everybody trades Bitcoin, but almost nobody cares about an unknown small cryptocurrency. There are many dead coins without any updates and some which have seen better days.

One of the primary reasons why Woo believes that this happens is because we are not living an “altcoin season” like the one in 2017. Several tokens that were contenders to become prominent have basically fallen into obscurity by now. Most of these projects did not even exist three years ago, they were all created in 2017 or 2018.

Why have these tokens failed? Because people have better and more solid options. Bitcoin, Ethereum, Litecoin and stablecoins like Tether are basically everything that most traders need. Some tokens are tied to failed services and startups as well. Only the ones linked to very successful enterprises such as Binance Coin managed to get good results.

The altcoin season is over and we may never see another one again. Are any of these forgotten tokens worth investing in? You probably have the answer to that question.

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Author: James W

Meltem Demirors and Jill Carlson Pose Tough Questions at SF Blockchain Week

Questioning the assumed role of bitcoin – that’s one area few would want to explore, especially in a room filled with blockchain enthusiasts.

This is exactly what Meltem Demirors and Jill Carlson did at the San Francisco Blockchain Week as featured attendees of the event.

Meltem Demirors, the Chief Strategy Officer at CoinShares Capital and Jill Carlson, the Founder of Open Money Initiative have become household names in the blockchain circle because of their insightful podcast, What Grinds My Gears – a podcast about the bizarre and buzzworthy happenings in the world of cryptocurrency.

At the main stage of the event, the two women discussed whether bitcoin, rather than providing an alternative to the traditional financial system, as it was touted to do, is in fact heading in the same direction.

The two pointed out that bitcoin was originally created after the failure of the banking system in October 2008. The whole purpose was to decentralize currency and eliminate the middleman. However, when someone else holds a person’s bitcoins, that person fulfils part of the primary function of a bank. And this behaviour seems to conflict with the original ethos on which bitcoin was built.

Carlson said, “Most people in crypto are totally comfortable putting their assets in what are basically banks.” Expressing her disappointment, Carlson added, “I got into this space because I was excited that we could build this whole alternative to the existing financial ecosystem. In reality, what we’ve created resembles the old system, only with fewer risk metrics and models, with fewer controls around it.”

Further delving into whether bitcoins uphold the lure of transparency, Carlson expressed her disillusionment. “Don’t tell me that just because something is happening on-chain makes it transparent to the average retail trader, consumer, etc,” she said. “The average person does not have the ability to go in and conduct the chainalysis that’s necessary to understand what’s going on in the system any more than they could understand JP Morgan’s balance sheet.”

The two also mentioned that just like a big Wall Street institution, some crypto platform and exchanges have become too big to fail. At the end of their talk, Carlson said, “To me, a lot of this conversation, though, is a more existential question of just, ‘Do people actually want to be their own banks and in what context do they?’”

The questions the two women raised do indeed raise a valid point many have begun to digress from.

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Author: Sakshi Jain

Zilliqa Donates $5 Million to Fund Oxford’s Blockchain Students to Support Diversity

Zilliqa, a blockchain company based in Singapore, has recently announced that it would donate $5 million USD to the Oxford Women in Computer Science Society. This group supports women who are in the computer science field.

With the money from the company, the Oxford group will carry out several workshops, named Blockchain A-Z, and give grants to students. The workshops will be held at the University of Oxford and will be open to all kinds of students on campus (but each session will be limited to only 20 students at a time).

The workshops will cover several blockchain topics. They may include philosophical foundations of the blockchain, fundamentals, technical topics, and insights about the industry and its businesses.

Students interested in receiving the grants can submit their projects up until November 21. The ones who present the best ideas will receive the grant and special mentorship to move their projects forward.

Paula Fiddi, the president of the Oxford organization, affirmed that the mission of the group is to ensure that women get equal opportunities in the technology industry. The importance of diversity was also highlighted by Saiba Kataruka, a developer from Zilliqa. According to Kataruka, decentralization cannot really be achieved without diversity of race, gender and academic backgrounds.

Kataruke commented,

“Whether it be the diversity in race, profession, academic background, or gender, having a variety of individuals, each with a unique perspective and broad breadth of experiences to offer, is essential to success. Decentralisation is a core principle of blockchain, and you can’t really have decentralisation without diversity.”

This is surely an important initiative, especially when we look at the data. According to a recent survey done by Quartz, only 8.% of all blockchain companies were co-founded by women. Also, less than 5% of the top 100 crypto projects on Github were contributed by women, too. In order to reach diversity, these numbers have to go up.

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Author: Gabriel Machado

Binance to Work with Chainlink (LINK) to Supply Crypto Data for Decentralized Finance Apps

The giant exchange platform Binance, announced that it would join hands with Chainlink. This partnership will enable Binance to spread its crypto information and data to other blockchain technologies. The bold move was commissioned in a bid to expand the Decentralized Finance.

Binance Believes in Defi

Currently, Defi is the talk in town despite being in its developing stage. Its protocols depend on smart contracts that are blockchain-backed to initiate decentralized infrastructures that can anchor financial applications.

Such financial services characterized by traditional finance may include derivatives trading, lending, and decentralized exchanges. Defi does not need any central authority to take control of the market all courtesy of the DLT (Distributed Ledger Technology). It also takes the role of a guardian.

Binance has always shown interest in Defi and believes it is the next big thing. The Malta-based organization inaugurated Binance DEX, which is a decentralized exchange just recently. The new exchange functions separately on its own and not from their central platform.

Binance CEO CZ commented:

“We support the development of Decentralized Finance as an important part of the ecosystem. Binance works with many blockchain projects, including Chainlink, to bring freedom of money everywhere, and through the help of Binance data and Chainlink’s network, we can help accelerate the growth of DeFi.”

Core Objectives of the Collaboration

The duo joined hands to achieve some of the following crucial functions:

Transaction automation:

The incorporation will allow developers from Defi to create applications that will automate Binance’s transactions. The exchange said that this would bring about more flexibility in application creation and will also open up strategies for assets that are limited to market cap coins which are at the top.

Putting Binance Data On-chain:

The oracle system for Chainlink will enable Binance data to be available on blockchain technologies like Ethereum. That will include the data on insurance, trade finance, Defi, gaming etc.

Defi projects will have unlimited access to Binance data off-chain very securely. Chainlink has come up with an external adapter that smart contracts will use to merge Binance API’s data. That will ensure there is efficient connectivity and that all the node operators can submit data.

Applications created by Defi applying data from Binance can manufacture numerous new products and derivatives like options/futures that would depend on groups of cryptocurrencies.

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Author: Daniel W

French Investment Bank Bpifrance Joins ACINQ Blockchain Startup’s $8 Million Investment Round

A few years ago, most of us would probably never have believed that traditional banks would be investing in the blockchain technology. This is, however, what seems to be happening right now. Bpifrance, an important state-owned French investment bank, has recently participated in the investment of ACINQ, a Bitcoin Lightning startup that raised $8 million USD during its Series A investment round.

According to Veronique Jacq, a representant of the bank, the institution is convinced of the potential of Bitcoin, which is becoming more and more obvious as time passes. The blockchain revolution is happening and the bank does not want to be outside of it.

ACINQ’s round was led by Idinvest Partners and companies such as Serena and Bpifrance also had large participation. Nicolas Debock, from Idinvest Partners, affirmed that the venture capital firm continues to look at crypto-focused companies and that it was important to see which ones were creating good products.

According to him, what really makes ACINQ stand out is that the company was not rushing its product. Instead, it was carefully developing it.

Debock also affirmed that if the Lightning Network lives up to its potential, it can be a powerful tool. Other investors certainly agree with that.

Now that the company finished this round, ACINQ has around $10 million USD to fund its projects. This will be used to hire more people to the team and to focus on creating the best possible final product. At the moment, the company operates the node with the largest capacity of the network and more improvements are on the way.

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Author: Gabriel Machado