Welcome to the 26th edition of ‘The Digital Asset Digest’. Over the last few weeks, we’ve started expanding on our interest in DeFi, and in this new edition, we give a quick and dirty breakdown of the difference between liquidity mining and yield farming. This will feel elementary, but we promise to get to more interesting topics going forward.
“Meanwhile, Grammy-nominated R&B singer Akon is forging ahead with plans for his cryptocurrency-powered Akon City in Senegal, which he has previously branded a “real-life Wakanda,” with the president of Akon’s akoin cryptocurrency, Jon Karas, saying the coronavirus pandemic has made the development of Akon City ‘more necessary.’ ”
“If the futures market open interest and volume spike, it puts Bitcoin in a vulnerable position and raises the probability of cascading liquidations like those seen during the infamous Black Thursday when over $1 billion worth of futures contracts were liquidated as Bitcoin price plunged below $3,600.”
“As stated by the mind behind Bitcoin Evolution, the program can observe massive quantities of data and information. That is exactly what makes it unique. It assesses the marketplace at an extremely quick pace — matters which you wouldn’t be in a position to perform over a brief quantity of time. These attributes allow it to stand out from the audience since it will make choices for you based on chances and lucrative trends. Speed is crucial, after all.”
“The challenge of exchanging one asset for another exists even outside the crypto ecosystem. In traditional financial markets, sending money across borders and exchanging for local currencies has proven to be cumbersome. Legacy payment networks such as SWIFT are too expensive and obtuse to keep up with modern demand and globalization of business. Cryptocurrency provides an alternative solution to the siloed system currently offered for fiat currencies, but without open and interoperable protocols, the system has yet to live up to its promise.”
In our most recent article on the Global Digital Assets blog, we discussed NEO and how they’re digitizing assets. The article explains its community-based focus, how it’s changing the crypto landscape, and gives some of our thoughts on its future.
Read it here!
INDUSTRY WIDE SNAPSHOT
This is the second edition of our DeFi column, and in it, we’re going to focus on a key distinction that isn’t always made these days. Namely, what is liquidity mining and how is it different than yield farming?
Last week, we discussed yield farming in broad overtones and used the two terms interchangeably. In reality, there is a very specific difference between them that should be pointed out.
Yield farming is about putting your capital to the best possible use on the different protocols and figuring out novel ways to interlink the systems for maximum profit.
Sometimes this means that there will be opportunities to do what is called “liquidity mining”. This is when a protocol gives tokens in exchange for a user’s participation on the platform.
They offer incentives for people to lend or borrow on the platform. In the traditional finance world, something like this is very rare, and the closest analogy that can be drawn is to bonuses when you sign up for credit cards.
Anyways, in the world of DeFi, there are tons of these incentives for people who are ready to be early adopters. Compound is the most notable company where this has occurred. They offer COMP to users who engage in their platform and that helps build the long-term value of the network.
Liquidity miners are people who collect these “bonuses” as they go about yield farming on the different protocols. It should be noted that these terms are very new and may be subject to redefinition, but this is the general meaning of them right now. In our next issue, we’ll go deeper on some novel ways to yield farm and show you how creative this space can get.
Source: Washington Examiner
“In countries where large portions of the population are staunchly opposed to free market capitalism, and harbor strong prejudices against the rich, levels of stock market investment are far lower than in countries where people feel more positive toward free market policies and wealth. This, of course, has a negative affect on investment returns.”
Source: Trading View
Well, it looks like we’re right back to where we left you last week. Bitcoin is back around $10,750 after suffering a quick price drop on October 1st. These price swings definitely keep things interesting, even if the net change hasn’t been huge.
We were previously excited about Bitcoin leaving the $10,400 range, but with some fundamental news releases, there was bound to be a drop in price.
We saw a very rapid price drop after it was announced that BitMEX was being charged for unregistered securities trading, among other things. The market naturally gets very skittish when something like this happens, but seems to have eventually priced this in as a blip rather than a change in the fundamental thesis for investing in Bitcoin.
You can see that BTC was oversold in that market correction, but has since been fluctuating on either side of the ribbon in the last 5 days. We see BTC maintaining its price level for the next week or so in anticipation of a wild November with the elections.
This concludes another issue of the ‘Digital Asset Digest’. We hope you enjoyed this week’s edition. We are constantly making changes and are always open to feedback.
But more importantly, we have started a newsletter for everyone who wants to stay up to date with news and happenings within the crypto space. Our Timestamp newsletter will go out every Friday and contain all the posts we want to highlight from the busy week. You can subscribe here!
And as always, thanks for reading and we hope to hear from you soon.