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Inside the Mysterious World of Bitcoin’s Mempool

Blocknative’s Mempool Explorer lets you explore the transient space where Bitcoin transactions are suspended in limbo.

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In brief

  • Blocknative has launched its Mempool Explorer to help understand mempool data.
  • Transactions pass through the mempool before they reach the Bitcoin blockchain.
  • The Mempool Explorer promises to democratize access to mempool data.

Blockchain infrastructure firm Blocknative launched a Blockchain Mempool Explorer yesterday, enabling users to access data more easily from the mempool

But what is the mempool? It’s the gateway to Bitcoin’s blockchain and many others. Before any transaction is written on a blockchain, the information first enters the mempool. There it sits, almost in purgatory, waiting for a Godly miner to select it and inscribe it into a block—or discard it forever. But the very nature of this in-between world, which differs for each miner, has always made it challenging to analyse. And it is often exploited by bad actors with the expertise to see things the rest of us can’t.

“At a minimum, our platform represents sunrise in the Dark Forest. The alpha predators are still operating, but now everyone can monitor their actions,” Matt Cutler, CEO and co-founder of Blocknative, told Decrypt

The main problem is that the Bitcoin mempool is built upon the shifting sands of pending Bitcoin transactions. As there is no one central source of mempool data—each miner has their own version of events—it is difficult to gather and utilize this data. This, in turn, makes it hard to take a reliable snapshot of events, and present them to developers. 

“It is pre-consensus by definition. It is constantly changing—literally at a sub-second level,” said Cutler. 

How the Mempool Explorer works

The Mempool Explorer tries to make sense of the pre-consensus data found in the mempool, making it accessible and easy to analyze. 

In the mempool, pending transactions are ordered, fees are prioritized, and new blocks are sent to the blockchain. The Mempool Explorer examines this data and makes it available to developers. Using the Mempool Explorer, users can track pending transactions, monitor exchanges, and share mempool data with others. In other words, it is a purpose-built environment for crunching data before it hits the blockchain. 

The Mempool Explorer in action. Image: Blocknative

The Mempool Explorer works as a global network of nodes, all enabling the Explorer to detect and record data on the mempool in real time. The Mempool Explorer can record more than 7 billion Ethereum mempool events in just one month. That is over 2,000 events per second on a 24/7 basis. 

How mempool data fights frontrunning

While mempool data is tricky to get hold of, it’s very useful for several different purposes. 

One of its main, albeit shady, uses is for frontrunning. Frontrunning is a way of making trading decisions based on knowledge of future events, similar to insider trading. And traders use frontrunning to get ahead of people on decentralized exchanges, typically on the Ethereum blockchain.

Alex Svanevik, CEO at Nansen, told Decrypt, “There’s certainly demand for mempool data. Trading in traditional finance is often a latency game, and crypto is no different,”

Here’s how frontrunning works when blockchain is involved. Since blockchain data is public, someone watching the mempool can see a trade being made and then make the same trade, offering a higher transaction fee. Since miners tend to pick transactions from the mempool that have higher fees (so they make more money), this means the later transaction is more likely to get included in the block—and the person gets ahead of the trade.

Until now, only some individuals use such techniques. “Today, these techniques are the domain of a well-equipped, and well-financed, elite few. Everyone else is at best a spectator to their actions – at worse, unaware,” said Cutler. This means general people using decentralized exchanges are often subject to frontrunning—but may have no idea.

Now anyone who uses the Explorer will now be able to fight back. 

“Any adversarial action that goes on chain must—just like everything else—first traverse the mempool. So our platform can give concerned parties advanced warning that adversarial actions are underway,” Cutler added. 

It’s time to embrace the mempool.

Blockchain

Did VET Break Out or Are There More Lows to Come?

The Vechain (VET) price has possibly broken out from a descending resistance line and validated it as support. As long as the current support area holds, the price should continue moving upwards towards the resistance levels outlined below. Breakout or Fakeout? The VET price has been declining since Aug 9, when a high of $0.22 […]

The post Did VET Break Out or Are There More Lows to Come? appeared first on BeInCrypto.

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The Vechain (VET) price has possibly broken out from a descending resistance line and validated it as support.

As long as the current support area holds, the price should continue moving upwards towards the resistance levels outlined below.

Breakout or Fakeout?

The VET price has been declining since Aug 9, when a high of $0.22 was reached. It has been following a descending resistance line since.

VET reached a low of $0.011 on Sept 7 and seemingly began another upward move, only to get rejected and validate the $0.155 area as resistance before moving down to make another low.

After reaching a low of $0.096 on Oct 7, the price created a bullish engulfing candlestick and proceeded to break out from the descending resistance line ten days later. Despite this breakout, the price has not moved upwards much.

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The main support and resistance levels are found at $0.105 and $0.155, in which a breakdown from the former could trigger a very sharp drop towards $0.008.

VET ResistanceVET Resistance
VET Chart By TradingView

Continuation of Upward Movement

Technical indicators on the daily time-frame are bullish but don’t yet confirm the possibility of an upward move.

While the MACD has just crossed into positive territory, the RSI is still below 50. The stochastic Oscillator has made a bullish cross but has failed to continue moving upwards.

VET Resistance Line breakVET Resistance Line break
VET Chart By TradingView

The 6-hour chart is slightly more bullish. Until now, VET has made two failed breakout attempts. Nevertheless, the RSI has shown strength during these failed attempts.

If the price creates another low and then validates the ascending support line, it should break out above the minor resistance area afterward.

VET Resistance areaVET Resistance area
VET Chart By TradingView

VET/BTC

Cryptocurrency trader @Altcoinsherpa tweeted a VET price chart, stating that the price might have reached a bottom near 95 satoshis. She expects an upward movement towards 113 satoshis.

VET MovementVET Movement
Source: Twitter

The price has been hovering around the 92 satoshi area since the tweet, validating it as support.

On the VET/BTC pair, the descending wedge is still clearly intact. However, the price is near the end of the pattern, and both the RSI and the MACD have formed significant bullish divergence.

Therefore, a breakout towards the 140 satoshi resistance area is the most likely option. This would also fit with the possible VET/USD breakout.

VET/BTCVET/BTC
VET Chart By TradingView

For BeInCrypto’s previous Bitcoin analysis, click here!

Disclaimer: Cryptocurrency trading carries a high level of risk and may not be suitable for all investors. The views expressed in this article do not reflect those of BeInCrypto.

Source: https://beincrypto.com/did-vet-break-out-or-are-there-more-lows-to-come/

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Blockchain

How Strong Is Bitcoin’s Push Above $12,000?

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Who has the most recent bitcoin move right, the bulls or the bears? 

Our main discussion: bulls vs. bears as bitcoin passes $12K

Someone recently tweeted, “Bitcoin price has never been this high with such bearish sentiment.” 

On this episode, NLW looks at the bullish case (growth in open interest on CME backed by strong macro narrative around stimulus) and bearish case ($12K BTC sell wall and bleeding from alts and DeFi).

Source: https://www.coindesk.com/how-strong-bitcoin-push-12000

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With COMP Below $100, a Look Back at the ‘DeFi Summer’ It Sparked

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The curtain has fallen on DeFi Summer – not that the sector is done, but the wild buzz seems to be.

The changing of the seasons is marked by Compound’s governance token, COMP, falling below $100 early Tuesday. COMP kicked off the yield farming craze way back in June as a new mechanism for luring assets onto what is now the sixth-largest decentralized finance (DeFi) platform, and the first to briefly topple MakerDAO as the industry leader.

COMP has been hovering right around $100 since a big drop on Oct. 6 brought it down close to our arbitrary threshold, and it’s finally lost that sweet third order of magnitude.

Compound Labs founder Robert Leshner declined to comment for this story.

How DeFi got here

After Compound’s June surge, things started to get interesting as DeFi’s money legos began stacking up.

First introduced on Ethereum by Synthetix in July 2019, “liquidity mining” is what inspired this summer’s boom. The prospect of giving people a fresh new token above and beyond normal returns on deposits quickly drove COMP up higher than anyone had seemed to anticipate. On June 21, COMP reached its zenith at $372. 

Read more: First Mover: Compound’s COMP Token More Than Doubles in Price Amid DeFi Mania

The governance token’s runaway success led other dapps to follow suit, such as with the multi-token pool maker Balancer, the non-fungible token (NFT) marketplace Rarible and others.

But events would quickly become comical in ways they only can in crypto. 

First, a prominent automated market maker (AMM) would have its governance token accidentally released early, then vegetable coins would take over everyone’s imagination and the final drama would introduce vampirism and a convoluted exit scam.

Ultimately, leading AMM Uniswap would release its governance token, UNI, with its own liquidity mining scheme. 

“I personally consider UNI issuance is the peak of this farming movement,” Primitive Ventures’ Dovey Wan told CoinDesk in an email.

Endless summer

The takeaway from DeFi Summer for Wan is the power of the fair launch narrative that was kicked off by Yearn.Finance. Yearn had already been a tool to optimize returns when COMP was first released, but the excitement engendered by yield farming sparked a lot of innovation.

Yearn’s creator, Andre Cronje, created the YFI governance token and urged liquidity providers to earn it rather than buy it. Setting aside no pre-mine for himself, this sent already hyped-up yield farmers into overdrive.

Read more: What Is Yearn Finance? The DeFi Gateway Everyone Is Talking About

“The biggest value of this hype is bringing the fair launch back to the game,” Wan wrote. “The fundraising or bootstrapping liquidity mechanism itself, through farming, quickly gains mindshare and adoption. This will definitely bring value to the industry as an alternative to the previous VC presale game.”

Other observers are taking a similarly long view on the sector’s staying power.

“It’s obvious to anyone who studies this space that DeFi has major structural advantages compared to CeFi,” Spencer Noon, an investor at DLT Capital, told CoinDesk in an email. “This is because, among other factors, protocols don’t have employees, physical locations, or incur other expenses that traditional finance companies do.”

In a provocative twist, the final rays of DeFi Summer coincided with U.S. enforcement actions against crypto exchange BitMEX that cast a new light on the benefits of decentralization.

“If we look at the big picture, the recent indictment from DOJ on BitMEX is another alert why we need a true decentralized finance alternative where it can have minimal exposure to potential regulatory haul,” Wan wrote, who added that bubbles are moments for innovation and adoption. 

Read more: What Is Yield Farming? The Rocket Fuel of DeFi, Explained

Even as DeFi Summer cooled, the coin that kicked it all off held onto value as the narrative it had launched moved on. It wasn’t until Sept. 4 that COMP would sink below $200.

But Kain Warwick, of Synthetix, the firm that first birthed liquidity mining into the crypto lexicon, is undeterred by the cooling of 2020’s DeFi buzz.

He believes that underneath it all, an actual industry has been proven out. 

“[Decentralized exchange] volumes and usage as well as [total value locked] are still 10x+ up from earlier in the year. So while the irrational exuberance has been tempered we are still directionally in a good place in terms of traction,” Warwick said, adding:

“At some point we need to transition from hype to reality. The big difference between this cycle and the previous one is that the reality is here and it is sustainable.”

Disclosure

Source: https://www.coindesk.com/comp-below-100-defi-summer-over

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