On April 29, blockchain took over the Cyberlaw Podcast once again with Alan Cohn, Gary Goldsholle, Will Turner, and guest speaker, Jeff Bandman, covering all things blockchain and cryptocurrency. We dove right into the recent activity from the SEC, namely, the Framework for “Investment Contract” Analysis of Digital Assets and the No-Action Letter issued to TurnKey Jet, Inc. (TurnKey) for a digital token. The framework focuses primarily on the reasonable expectation of profits and efforts of others prongs of the Howey test. The TurnKey No-Action Letter was most useful for parties interested in structuring a private, permissioned, centralized blockchain, but the guidance in the Framework would allow for alternative structures. We also discuss the importance of network functionality and the tension between the need for centralization to achieve functionality, and the need for decentralization as a means to avoid meeting the “derived from the efforts of others” prong of the Howey test.
After touching on Blockstack’s Regulation A filing and the recently reintroduced Token Taxonomy Act of 2019, we turn to the interview with Jeff, who describes how he co-founded Global Digital Finance (GDF). GDF has a number of working groups focused on developing high-level principles and standards on a range of topics, including stablecoins, custody, tax, and security tokens. Jeff is also in the process of launching a new transfer agent service, Block Agent, focused on enabling and supporting SEC-regulated issuances.
You can read the full summary and listen to the podcast here.
ConsenSys-Incubated Startup Releases In-Browser Atomic Swap Wallet for DeFi
On Thursday, ConsenSys-incubated startup Liquality released a new wallet that lets you atomically swap digital assets directly from your browser.
The Liquality Atomic Swap Wallet can act as a trustless alternative to current methods of porting cryptocurrencies into the decentralized finance (DeFi) space due to the peer-to-peer (P2P) nature of atomic swaps, Liquality co-founder Thessy Mehrain told CoinDesk in a phone interview.
The wallet interacts similarly to cryptocurrency wallet MetaMask, but with an entirely different end-game: swapping assets trustlessly.
“It’s called a chain abstraction layer, which basically is a way of making different blockchains talk the same language and interact,” Liquality co-founder Simon Lapscher said.
Liquality’s wallet leans on atomic swaps and hashed time locked contracts (HTLC), a cryptographic escrow scheme that allows two parties to swap assets without trusting the other party. HTLCs are also the foundation of Bitcoin’s second-layer payment scheme, the Lighting Network.
Notably, atomic swaps let investors hold onto their private keys throughout the entire exchanging process.
Mehrain and Lapscher believe these swaps can act as a trustless alternative for DeFi investors looking to bring value from one blockchain to another. To date, over $1.1 billion worth of bitcoin has been tokenized on Ethereum.
Yet, investors have increasingly relied on private firms to bring value from other blockchains to Ethereum’s DeFi markets.
Current methods of transferring value from Bitcoin to Ethereum, such as BitGo’s wrapped bitcoin (WBTC), require third-party custodianship. P2P atomic swaps, on the other hand, do not.
Liquality itself currently acts as the counterparty to all wallet swaps, with advanced users having the ability to choose other counterparties. The startup makes revenue acting as market maker for swaps, Lapscher said.
Enough adoption should create sufficient network liquidity within the wallet to allow Liquality to disinvolve itself entirely from the process, he added.
Binance Chief CZ Talks DeFi, Ethereum 2.0, And More
The Binance chief CZ is in the latest cryptocurrency news for remaining skeptical about Ethereum 2.0’s features. As he said, the decentralized finance space is in full swing, and one of its biggest supporters appears to be exactly the exchange Binance. The platform and its United States branch recently joined the Chicago DeFi Alliance, with a main aim to further develop the US DeFi industry.
Additionally, the Binance news show that support for new DeFi projects continues to grow. Most recently, the exchange has demonstrated its close ties with BurgerSwap, which is a new decentralized exchange that aims to improve upon the Uniswap project.
The Binance chief CZ has been bullish on DeFi for a while. In a recent interview, he expanded on his opinion and said more about why this sector has started taking off, as well as what we can expect from it moving forward. When asked about why DeFi is hot right now, the Binance chief CZ said:
“The automated market makers use a pricing mechanism that follows a curve. So, they hold a constant ratio of different assets in the liquidity pool. This type of curve with automated market making has a strong advantage, being that is very transparent. If I lose money, I know why. So, there is potential for users to lose money, but they know exactly why. There’s not a lot of cheating going on.”
Zhao also attributed Binance’s involvement with DeFi and said that the exchange lists DeFi tokens fairly aggressively. He also said that right now on Binance.com, there is a liquidity swap product and the target users are more so the novice users who don’t want to hold their own keys because they are afraid of losing them.
When it comes to the decentralized side of things, the Binance chief CZ mentioned that they have been working on Binance Smart Chain for over a year, describing it as “an Ethereum-compatible smart contract.”
“Feature-wise, it’s 100% compatible with Ethereum. But speedwise, it is actually much faster, which helps reduce the high gas fees and traffic congestion problem on Ethereum, given the increased traffic that DeFi has brought. Binance Smart Chain is another offering we were putting out there to allow developers to launch their DeFi projects very easily.”
When asked about Ethereum 2.0, CZ said:
“I think Ethereum 2.0 is really hard to deliver. It’s just one of those things that need full features and very high flexibility. Also, this has to run on a laptop with high speed, and you want it to be decentralized. Those problems are hard to solve.”
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ChainLink rebounds above USD 8.40 after bears sank it new weekly low
LINK/USD touched $7.40 after extreme sell-off pressure saw it tumble from highs of $20
ChainLink’s price action has been one full of bleakness over the past few weeks, recent sell-off pressure sending LINK/USD to lows of $7.40. With Bitcoin and the rest of the cryptocurrency market looking weak as of writing, it also appears ChainLink could be in for a continuation of the downtrend if bulls fail to consolidate above $8.00.
Last week’s massive capital flight meant LINK/USD edged further away from it’s all-time high around $20 reached in August as its integration in the DeFi space peaked. Yesterday, the price dropped more than 12% to see it touch a new six-week low. The token is also more than 20% down over the past week, and nearly 58% off its peak.
Despite the downtrend, ChainLink is the top gainer among the top 20 largest cryptocurrencies in the market. LINK/USD is at the time of writing over 400%up on its price since the crypto market crash of March.
LINK/USD technical picture
Most coins are still seeing red, but ChainLink is turning green on the daily chart, with bulls likely to break $8.50 to strengthen its detachment from the rest of the market.
After LINK/USD lost its $9.00 support peg, sellers matched almost unimpeded to crack another major support level around $8.00. The freefall threatened to crash any bullish hopes of retaining support at critical levels that would make establishing a quick rebound to $10.00 in the short term easily achievable.
A look at the daily chart shows that if LINK/USD breaks above the 20-EMA at $10.60, a run to the 50 MA around $13.00 would help confirm a bullish reversal. In between, the 23.6% Fibonacci retracement level at $11.25 presents a notable hurdle.
The RSI is turning north, while the MACD is printing a hidden bullish divergence pattern to suggest bulls are gaining an upper hand.
However, as it is, that all depends on whether ChainLink marines maintain the upside momentum to retake control above $9.20. The area is home to a key price level that marked the latest rejection to a new weekly low of around $7.40.
LINK/USD is trading around $8.43 and is up 3.13% in the past 24 hours. Meanwhile, BTC/USD and top altcoins are still struggling with selling pressure.
Bitcoin is down 1.5% on the day, trading around $10,240 as of writing, while Ethereum is changing hands at $328 after dropping 2.95%. XRP/USD is at risk of losing $0.22, with its price nearly 5% down.
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