Over the past year, several major cryptocurrency companies have suffered, and the banking industry is also in crisis. Our experts tell us what problems the DeFi sector is solving

Cryptocurrencies returned to growth in 2023. Since the beginning of January, Bitcoin’s price soared 70% and hit a local high above $28,000. The largest altcoins in terms of capitalization also rose in price following Bitcoin. At the same time, the banking system is suffering: it all began with the bankruptcy of three banks in the United States (Sillicon Valley Bank (SVB), Silvergate and Signature Bank). And then the problems of Swiss Credit Suisse, which was saved by the takeover of UBS. However, the situation continues to be uncertain. And more and more investors are looking toward DeFi.

For cryptocurrencies now also plays the fact that the U.S. authorities are trying to reduce tensions in the banking sector. And to take additional measures. And, as we remember from recent history, low Fed rates and “dovish” policy of the U.S. authorities. Then it’s a path for risky assets to hit record highs. It was during quantitative easing (QE) that Bitcoin quotes were at a peak of $69,000. And after the change in QE, the crypto market began to correct.

It is important to understand the high dependence of digital currency quotes on U.S. policy. This is a serious factor, but not a determining one. Last year, several major cryptocurrency companies, including trading venues and hedge funds, went bankrupt. The most famous example is the FTX exchange, as well as the Terra project. The total losses amounted to billions of dollars.

The main problem of both the banking sector and the largest bankrupt crypto-projects is centralization. In order to solve it, financial services in the form of services and applications – decentralized finance (DeFi) – were created on blockchain. They are an alternative to the banking sector, which is particularly vulnerable in recent times. And a replacement for the traditional technologies of the financial system.

Important benefits of decentralized finance

A key advantage of DeFi is the ability to function without the need for a third party. A computer program executes agreements between two or more parties. As a result, under one condition or another, certain actions take place. This is the principle on which the smart contract works.

Just as importantly, when working with DeFi-service, the user is always in control of all of his funds. Customers of centralized platforms (whether banks or exchanges) have to trust them with their money, to give it for deposit. In the case of decentralized finance the client connects his own wallet and conducts all transactions directly from it.

The DeFi market is just beginning to develop. Our experts estimate that only 7 million people have used decentralized finance protocols so far. The potential growth of this sphere is estimated to be at least 50 times in the coming years.

In conditions of banking crisis and collapse of centralized giants of crypto-industry, probably, it makes sense to pay attention to the sphere of decentralized finance DeFi. This is a promising industry that is just beginning to develop, and with the right approach, allows investors to work with their assets in a transparent and relatively safe way.

Crypto Upvotes experts offered to collect their investment portfolio of six tokens of promising projects for Ethereum scaling

Projects that solve the problems of scaling blockchain networks and Ethereum in particular. Now they are actively developing and attracting funding, which indicates a high interest of investors in these solutions. And expectations of growth of capitalization of this sector.

Ethereum’s transition to the Proof-of-Stake (PoS) algorithm in the network is proceeding smoothly: the problems with coin inflation and now with the withdrawal of tokens from staking with the Shapella update have been solved. But the issues of scaling the network, that is, making transactions in it faster and cheaper, have yet to be resolved.

According to the team’s plans, that will take two years. And during that time, Layer-2 projects that offer off-the-shelf extensions to scale Ethereum could cover the growing demand for the network.

Given how actively Ethereum is developing, the demand for it will only grow in the near future. Not only from within the industry, but also from external users. Who want to implement blockchain solutions with high security, speed and economy of transactions. Layer-2 solutions will obviously be in high demand in the coming months as well.

Our idea for an investment portfolio:

Buying a portfolio of tokens at current market prices in the following ratio:

• Polygon (MATIC) – 25%
• Synthetix (SNX) – 20%
• Optimism (OP) – 15%
• Loopring (LRC) – 15%
• Celer Network (CELR) – 15%
• Immutable (IMX) – 10%

This portfolio makes sense to hold till the end of the year. Since the main market movements may start in Q3-4.

Risks:

The main risk for this token portfolio will be a drop in market capitalization due to fundamental negative events. Such as external – the impact of inter-market relations and macroeconomics. As well as internal, it is the strengthening of regulatory pressure and problems of the projects, tokens of which are included in this portfolio.

It is also worth bearing in mind that the May-July period is historically weak for the growth of prices for digital assets. Therefore, the main movements on tokens from the portfolio may start in the second half of this year.

Disclaimer:
Crypto-Upvotes does not provide investment advice. This material is published for informational purposes only. Cryptocurrency is a volatile asset that can lead to financial losses.

Crypto Upvotes experts analyzed the situation in the Crypto market. And told how it can change in the short term, as well as what will happen to Bitcoin price

Last week was a hot one. Bitcoin rose in price by 7.63%, but this is no reason to panic. The growth of quotations began in the evening of April 9. Since the new week, purchases of the first cryptocurrency intensified amid the growth of U.S. stock indices. After the end of the holiday in the U.S. and strong Friday employment data. Investors raised the probability of another Federal Reserve rate hike in May by 25 basis points.

Since this pace of rate hikes has been factored in by the markets. Then buyers went on the offensive after a prolonged sideways trend. At first they took the level of $29,380, and on April 12 they tested the psychological level of $30,000. The price went up to $30,550.

The locomotive for the whole market was Ethereum (ETH). On the night of April 12-13, the Shapella update was successfully activated on the main Ethereum network, after which it became possible to withdraw blocked tokens from staking. There was no reaction to the network update. Apparently, investors wanted to see how staking would behave after coins were withdrawn. The effect was delayed. The Shapella update boosted trading volumes and supported the bullish trend of the major altcoins. The ETH/USDt pair was up to $2,128.

On April 12, the U.S. Labor Department released its inflation report. The consumer price index rose 0.1% month-on-month and 5% year-on-year. Although, of course, everyone was expecting inflation to match the 0.2% m/m and 5.2% y/y forecasts. The inflation report couldn’t stop Bitcoin’s rise. That’s because the rise was supported by the Ethereum rally. And then the dollar also fell to 101.16p after rising.

On April 14, the pair BTC/USDt was rising to the level of $31,000. It was not possible to move higher – the dollar turned up and the indices went down. The dollar rose at the end of the week on strong industrial production data, which rose 0.4% in March after rising 0.2% the previous month (the forecast was +0.2%).

Cryptocurrencies have gained a trump card.

By the end of the day U.S. stocks closed the day down. But they recorded weekly gains across the board. Investors appreciated the weak retail sales report. Which undermined the enthusiasm about the start of the quarterly reporting season.

Cryptocurrencies have gained a trump card. Democrats and Republicans continue to play the political game of who will do more damage to the United States. Congressmen are haggling and the Treasury Department is paying higher interest on debt service.

Democrats and Republicans continue to play a political game of who will do more damage to the United States. Congressmen are haggling and the Treasury Department is paying higher interest on debt service.

On April 11, the cost of U.S. default insurance jumped to the highest level in a decade. Default insurance on 5-year U.S. bonds rose to 42.91p.

In 2022, the U.S. paid $853 billion in interest on its government debt. This year, the amount of interest payments on government debt could reach $1.2 trillion to $1.5 trillion. Yellen warned that the government has enough money until June. The country could face default in July or August. Right now, it doesn’t matter if there is a default or not. Bitcoin and gold could act as protective assets against it. Gold in physical form and Bitcoin in digital form.

The technical picture for Bitcoin is favorable for continued upward movement. Now we can head to the area of $34-35 thousand. For ETH the nearest target is around $2,770.

Elon Musk is gathering a team of researchers and engineers in the field of artificial intelligence. He is also negotiating with a number of investors to invest in a new startup

American billionaire Elon Musk plans to launch a startup in the field of artificial intelligence. Which will compete with the creator of ChatGPT OpenAI. This is reported by The Financial Times, citing its own sources.

The Tesla founder and Twitter owner is gathering a team of researchers and engineers in the field of artificial intelligence. Including the British company DeepMind, the interlocutors told the FT.

For the new project, Musk bought thousands of powerful graphics processors from Nvidia. GPUs are high-end chips. Which are necessary to achieve Musk’s goal of creating a large language model. And also artificial intelligence systems capable of processing huge amounts of content. Including the creation of human-like texts or realistic images, the FT specifies.

Elon Musk is also in talks with a number of investors from SpaceX and Tesla to invest in the new startup. “A bunch of people are investing in it, and they’re excited,” the source noted.

Our experts note that at the end of March, Elon Musk signed an open letter from experts and representatives of the IT industry. It said that artificial intelligence systems could pose a danger to society. They called on all AI labs to stop training systems more powerful than GPT-4. Until common security protocols are established.

Despite the rise of Dogecoin, the token Lido Staked Ether passed the meme coin in market capitalization and came in at number 8. Crypto Upvotes expert review

The top 10 cryptocurrencies changed with the rise of Ethereum (stETH). The Lido Staked Ether (stETH) token overtook Degocoin (DOGE) in market capitalization on April 14. And in doing so, it climbed to 8th place in the top 10 crypto assets.

Lido Staked Ether is a token issued by the staking platform Lido to users. Who have staked Ethereum. In exchange for inputting ETH, the platform gives out stETH tokens in a 1:1 ratio. They are also used to accrue income from staking.

StETH tokens give users the liquidity of their underlying positions. At the same time, they allow users to trade them or use them to generate additional income through various strategies in decentralized finance (DeFi) protocols.

Lido Staked Ether rose at the same time as Ethereum. According to CoinMarketCap, it rose to $2,100 in 24 hours. Its market capitalization reached $12.5 billion, which matches the price of ETH staked on the Lido platform.

Despite the fact that Dogecoin showed a growth of 6.5% in the last 24 hours. Then the capitalization of stETH exceeded that of the meme coin, pushing it to the 9th place among the leading digital assets.

Rates of native cryptocurrency staking platforms also rose. Lido DAO (LDO) management token gained 7.9% over the day, while Rocket Pool (RPL), an asset of a competing service, added 16.7%.

Sei is a future candidate for a possible airdrop. It will spend the funds to find the “right” strategic partners. As well as expanding its presence in Asia

Crypto project Sei has raised $30 million at a valuation of $800 million, Sei Labs co-founder Jayendra Jog told TechCrunch. The investors were Jump Capital, Distributed Global, Multicoin Capital, Asymmetric Capital Partners, Flow Traders, Hypersphere Ventures and Bixin Ventures.

Blockchain Sei is a Tier 1 solution, with developers building cryptocurrency trading applications on its platform. The project team consists of former employees of Goldman Sachs, Databricks, Robinhood, Google and Nvidia. The blockchain is in the testing phase. And the core network is scheduled to launch in the second quarter of this year. According to the company, the Sei network already has 120 projects and about 3.6 million unique users.

The project’s mission is to create a better infrastructure for exchanges, Jog explained. He added that there are also game-making projects on the blockchain. As well as NFT-marketplace and other applications that are associated with trading.

Sei has already raised $5 million from investors in August 2022, with the main goal of fundraising being to find the “right” strategic partners, the money will also be used to expand the project’s presence in the Asia-Pacific region.

Sei is one of the potential contenders to issue and airdrop its own tokens, also Our experts note that this project is often mentioned in thematic discussions of possible airdrop in social networks.

Our experts talked about trends in the staking cryptocurrency niche after the Shapella update and its impact on cryptoasset prices

The price of Ethereum cryptocurrency (ETH) crossed the $2,000 mark for the first time since August 2022. After a major blockchain update of the second largest cryptocurrency took place. And fears of a massive outflow of funds from the network were not confirmed. Since the beginning of the year, the coin has grown by more than 60%.

The fears of many market participants were not justified

The April 13 update to the Ethereum blockchain, working title Shanghai. Which was made as part of the Shapella update group gave investors the opportunity to withdraw coins on a first-come, first-served basis. Which they placed as collateral in a special Beacon Chain smart contract, launched back in 2020. This gives them the status of a transaction validator on the network and allows them to be rewarded by issuing new coins, a process called staking.

Accumulated rewards also became available for withdrawal to the wallets. According to the analytical service Nansen, in the first 12 hours after the activation of the update, investors withdrew only 0.3% of the 18 million ETH. Which were placed in the contract for staking.

Contrary to the fears of many market participants, the rate of ETH tested $2,000. It’s safe to say that traders and investors took the update positively. The possibility of withdrawal of coins [from staking] is limited. As it can put pressure on the price.

Only 43.2 thousand ETH can be unlocked in a day. About 170 ths ETH will be sold at market price in the near future. But even if coins will be withdrawn at the maximum allowed limit per day. That figure would fit into the average ETH inflow to the exchanges and would not critically affect the price of the coin. It’s important to understand that many validators are just now starting to test the new feature. And they are withdrawing exactly the earned funds and not the deposit of 32 ETH. Accordingly, they plan to validate transactions further, our experts explain.

What will happen to the price of ETH in the next week

According to Coin Metrics analyst company, about 1.2 million ETH are expected to be withdrawn from staking in the next five days. Which is equivalent to about $2.3 billion at current prices. About $36.7 billion in Ethereum coins remain in the Beacon Chain.

The price of ETH could experience fluctuations in the coming weeks. As some investors will rush to withdraw coins and sell them. But those who were not ready to freeze their assets before. Then now on the contrary, may decide to place coins in a smart contract. Most likely, the upgrade of the network in the medium to long term will lead to the growth of ETH exchange rate. But before that, a period of increased volatility is possible, our experts say.

Staking as a service

Self-staking Ethereum involves setting up equipment. And mandatory minimum deposit of 32 ETH. But even more private investors use stacking services on cryptocurrency exchanges. And decentralized platforms that provide the service of so-called liquid staking.

In this case, exchanges or services act as a validator. Which pools users’ funds into a single pool with a user-friendly interface. And also with the reward for staking in proportion to their investment. The largest staking platform Lido. At the same time, being a validator, manages about 31% of all ETH in staking. Binance, Coinbase and Kraken crypto exchanges are also in the top five largest validators.

Staking from crypto exchanges

The main advantage of staking services from exchanges is simplicity. The user does not need to understand the intricacies. The user only has to press a couple of buttons and be assured that staking works. Interest payments are made by the exchanger. And it also takes the rights and responsibilities. If there are any difficulties, you can write to the support service and get an answer in a short time. This is always suitable for beginners. That is why the popularity of staking through exchanges or platforms will not suffer much from Ethereum updates.

The possibility of unlocking coins is unlikely to have much effect on the popularity of staking services. Their target audience is not so much those investors who were not ready to freeze their assets. But those who simply don’t have 32 ETH to place in a smart contract. The demand for the service, even if it falls, is insignificant, our experts say.

Kraken leads in the number of applications to withdraw coins from staking. The U.S. exchange accounts for more than 86% of the total amount of ETH. Which are now “in line” for withdrawal. The exchange was forced to stop its staking service in the U.S. and pay a $30 million fine when the Securities and Exchange Commission (SEC) recognized its staking service as the equivalent of illegal sales of securities. Because of such bans in the U.S., it is the decentralized platforms where coins will be put. The use of which the SEC will not be able to prohibit technically.

Staking on decentralized platforms

Decentralized liquid staking services allow you to invest in staking coins from Ethereum and other blockchains. Which work on the Proof-of-Stake (PoS) algorithm. And receive derivative tokens of equal value in return. Which are also traded on cryptocurrency exchanges. And can be used for additional earning strategies. Examples of such platforms include Lido, Rocket Pool, Stakewise, and others. Many of them issue their own tokens. Which give you the right to vote in DAOs or get discounts on fees for services.

Our Crypto Upvotes experts point out that the investment appeal of such platforms’ tokens depends not only on the set of their services. But also their overall marketing performance, turnover and trends in the market. Some platforms don’t have a token. But this does not prevent them from attracting users. For example, stake.fish is popular due to the experience and reputation of the f2pool behind it. It is a well-known brand in the niche of mining pools.

Tokens of the largest staking platforms also benefited from the successful Ethereum update. The tokens of Lido (LDO), Rocket Pool (RPL) and Stakewise (SWISE) showed growth of 6-7%.

Individual legislative reforms will not solve the problem of cryptocurrency risks. Therefore, this requires coordinated action by all countries, said Minister of Finance of India Nirmala Sitharaman.

India, which holds the G20 presidency, intends to develop a common regulatory framework for all countries to combat cryptocurrency risks. This was announced by Minister of Finance of India Nirmala Sitharaman, according to The Indian Express.

Speaking at the Peterson Institute for International Economics (PIIE) in Washington. She noted that the multiple upheavals in the digital asset ecosystem have severely affected investors around the world. And piecemeal legislative reforms won’t solve the problem. Sitharaman stressed that coordinated action by all countries is needed.

“Cryptocurrencies are a very important part of the discussion during India’s G20 presidency, given the large number of crashes and shocks in the cryptocurrency industry. We aim to develop common rules for all countries to address this issue,” Sitharaman said.

The issue of global regulation of cryptocurrencies has been discussed for years by the heads of central banks and finance ministries of the G20 countries. However, multiple bankruptcies, hacks and collapses of cryptocurrencies in 2022 have increased regulators’ attention to the industry.

In 2018, G20 finance heads discussed the situation with cryptocurrencies and concluded that, despite the obvious risks. But they did not pose a threat to global financial stability at the time. But all participants of the meeting were in favor of continuing to monitor the situation at that time. And many of them supported the need to develop common regulatory principles.

Financial Stability Board (FSB)

Our experts note that at the same time, the Financial Stability Board (FSB). Which oversees and develops legal measures in the area of financial policy of the G20. It rejected several states’ request for an international legal framework to regulate the digital money market.

Over the past five years, the FSB has not developed any meaningful proposals for global regulation of the industry. The only document that covers several states. That is the bill Markets in Crypto-Assets (MiCA), relating to the regulation of cryptocurrencies in the EU. The provisions of this document will not come into force until early 2024.

Last December, the then FSB Secretary General Dietrich Domanski told the Financial Times in an interview. That the organization would introduce global regulations for cryptocurrencies in early 2023 and “put them into effect quickly.”

According to a program of publications on the FSB website, the final recommendations for regulating Stablecoin. As well as other crypto-assets will appear in July of this year.

The NFT community Own the Doge and the PleasrDAO project, which bought the rights to the DOGE meme for $4 million. Now they involve Hollywood producers and streaming companies to promote the story of the dog Kabosu, the symbol of a Dogecoin coin

Proponents of Dogecoin (DOGE) have made a “documenal” film about the meme cryptocurrency, writes Decrypt. The NFT community Own the Doge and the PleasrDAO project, which bought the rights to the image of the DOGE meme for $4 million in 2021. They created and financed an as yet untitled feature film. It is about the transformation of an abandoned Shiba Inu puppy, nicknamed Kabosu, into a Dogecoin cryptocurrency symbol.

The film was directed by John Lynn and is currently in production. Despite the initially niche nature of the project, its creators hope to extend it to a mass audience. And are on the lookout for new partners to promote this film.

At this point, according to one of the producers of the film under the pseudonym of tridog. This project has secured the support of Jim Toth, a former Hollywood casting agent. He is also the producer and ex-husband of actress Reese Witherspoon. Also, according to tridog, they were joined by “Feels Good Man” documentary director Arthur Jones and producer Evan Rosenfeld.

The creative team behind the film is also trying to attract major film distributors. For example the streaming platforms Netflix, Hulu or Amazon Prime Video. The filmmakers believe they can offer these companies an asset. Which may be of interest to them, namely the audience interested in the success of the project.

Our experts say that Dogecoin is a cryptocurrency, which is one of the top ten largest digital assets by market capitalization, with an indicator of $11.7 billion. We think all Dogecoin followers would love to see this movie.

Our experts assessed whether decentralized autonomous organizations can be recognized as an official form of business governance. After the Arbitrum blockchain project token voting scandal

The issue with the multi-million dollar funding of the Arbitrum project developers’ fund has resulted in a conflict with the owners of its tokens. And it set a precedent in the field of decentralized management of blockchain services.

A DAO is a decentralized, autonomous organization that is governed by the voting of the owners of the blockchain project’s management tokens using smart contracts. Any token owner can independently put forward a proposal for the development of the project. Or vote for other proposals. Most often, they concern the distribution of specially reserved funds – the project treasury .

Before the release of their own token and Arbitrum’s sensational Airdrop, the developers often stressed the need for a decentralized autonomous organization (DAO). In which ARB token holders will be able to choose by voting the directions of the project’s development, including the distribution of budget funds. The only function of ARB tokens is to be able to vote and put forward their own proposals for consideration by the DAO. This is because their owner receives no other technical benefits when interacting with any project in the Arbitrum ecosystem.

Scandal at Arbitrum

Last week, the Arbitrum Foundation. which includes project developers and cronies, put forward a proposal to allocate 750 million ARB (about $1 billion in U.S. dollar equivalent) to the foundation’s own controlled purse for future grants. As well as to cover its administrative and operating expenses. The amount seemed to be too high to the participants. Therefore, about 80% of ARB token holders voted against the proposal.

As it turned out later, even before the voting was completed and without the approval of the participants of the DAO. These funds had already been transferred from the project’s coffers. And some of them were converted into dollars on exchanges or issued as a loan to large market makers. Arbitrum Foundation managers were quick to release a statement saying that the vote was only meant to “ratify a decision that had already been made.” And that further angered both the participating token holders and the cryptocurrency community at large.

The project team’s behavior shows a lack of thought into the financial strategy. Of course, any project needs funds for operating expenses. But they need to be reported on in advance, not post-facto. This is a decentralized organization. Therefore, the opinion of the community must be taken into account. This will be a lesson for the team for the future, our experts say.

Under pressure from FAO members and faced with a wave of negative responses on external resources. Arbitrum Foundation was forced to accept the community’s terms and refuse the offer. And subsequently splitting it into several separate ones and changing the terms in favor of greater transparency. In official publications, the developers acknowledged “communication problems.”

Our experts believe that this event clearly shows how a decentralized autonomous organization can identify problems. Such as corporate abuse, financial manipulation and ineffective financial planning.

Positive and negative aspects of DAO

The Arbitrum Foundation situation has set a precedent and provoked a wave of discussion about the effectiveness of the DAO as such. Despite the lack of a legally recognized form, decentralized organizations are created around many large blockchain projects. And votes from their token owners tend to matter a lot indeed. The process is similar to the decision-making process of shareholders of companies in traditional businesses.

The incident highlights some of the vulnerability of the voting process within a DAO. As well as the mechanism for governing DAOs through voting in general. Due to the lack of conditions enshrined in legally binding documents, questions inevitably arise. For example, is it possible to oblige developers to execute the decision of voting token owners. And on what, apart from the credibility of the project alone, the voting mechanism holds in principle.

Our experts believe that such situations undoubtedly attract the attention of public and government authorities. It can be assumed that they can contribute to the development of a proper legal regulation in the DAO sphere. They can also encourage community and, in particular, investors in such projects to verify the information in more detail. At the same time requiring guarantees of execution of decisions made by a general vote in the DAO.

Opinions of our lawyers

According to our lawyers, the DAO model itself still looks “too utopian for our world”. However, transparency and speed of decision-making are important advantages of DAO. This is due to voting on the blockchain. However, our experts list serious disadvantages. And the main ones are the almost complete lack of legal regulation.

Because in the case of problems, fraud and abuse, the affected persons simply have nowhere to turn. And it is not clear how to get their money back. Decentralization and autonomy from the law are good exactly until they violate the rights of the individual. And then he will seek protection and restoration of his rights through traditional legal mechanisms.

Prospects for DAO development in the ordinary world

Our experts believe that DAO is unlikely to become a recognized legal form of organization in the coming years. This is despite the fact that crypto-assets are already in the legal field in many places. This governance structure makes it difficult to distribute responsibility.

So far, it is just a kind of community, a club of interest. But the potential of this form is very large. Because DAO takes into account the interests of all community members and helps choose the development path for any project.

Of course, progressive company owners will appreciate these advantages and use DAO mechanism. If such a mechanism will be in the legal field. Therefore, our experts believe the co-existence of DAO along with the usual forms of organization is possible. But if it will be properly regulated.