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The Crypto Brain Drain: Digital Asset Digest Volume #63

Welcome to the 63rd edition of ‘The Digital Asset Digest’. Today, we examine why the tech and finance sectors are losing talent to the crypto industry, and go on to look into Ethereum’s upcoming hard fork.

SNIPPETS

EU Cracks Down on Anonymous Crypto Wallets

Source: CryptoPotato

“The EU Commission has proposed regulations that would require companies to report important details about the sender and the recipient of cryptocurrency transactions.”

Tron-Based NFT Marketplace APENFT Burns $2.52 Million Worth of NFT: Details

Source: U.Today

“According to the official announcement shared by the APENFT team on its social media channels, 1.03 trillion of its core native NFT assets were destroyed on July 16, 2021.”

Billionaire Fund Manager Expects Bitcoin Price To Eventually Crash to Zero

Source: CryptoGlobe

“In a recent interview, Hamish Douglass, Co-Founder, Chairman and Chief Investment Officer of Magellan Financial Group, and Lead Portfolio Manager of Magellan’s Global Equity strategies, said that sooner or later the crypto bandwagon will crash.“

CoinFund Raises $83M for Its Third Crypto Fund

Source: BeInCrypto

“Blockchain investment firm CoinFund has raised $83 million for its third fund, set to focus on the early stages of mainstream crypto adoption.“

Introducing Defactor

Source: Medium

Introducing Defactor, the game-changing platform bridging the gap between DeFi liquidity and real-world asset originators.”

TOP GAINERS

TOP LOSERS

INDUSTRY WIDE SNAPSHOT

MARKET OUTLOOK

Ethereum’s Upcoming London Hard Fork

The Ethereum network is just weeks away from one of its most consequential updates ever. The upcoming London hard fork promises deep changes to the way the network handles fees and the transition to a new consensus mechanism.  Here’s a closer look at what the London Hard Fork entails for Ethereum users, developers and investors.

Ethereum’s Hard Forks

The Ethereum network has had several forks since its initial release in 2015. Each fork integrates new Ethereum Improvement Proposals (EIPs) that are meant to augment or alter the way the network works. 

Source: Medium / MyCrypto

The most recent hard fork – Berlin – happened in April this year. It integrated 4 EIPs that introduced a new transaction type, made transactions backward compatible, and lowered gas fees on the network. 

The upcoming hard fork – London – is set to occur on August 4th, 2021. It will integrate five changes to the network, but the most controversial and consequential is EIP-1559.

EIP-1559

Ethereum’s growing popularity over the years has congested the network. In May this year gas fees hit an all-time high of $70. That made some decentralized applications (dApps) virtually unusable. 

EIP-1559 seeks to resolve this issue by changing the way fees are handled on the network. The EIP was submitted by Ethereum’s founder, Vitalik Buterin, and a team of other developers. It proposes a base fee for each block which changes the way miners are compensated and burns some Ether to adjust the overall fees lower. 

Not only does this make the network cheaper to use, it also makes Ether a deflationary asset. In other words, since some tokens are burned on every transaction the overall number of tokens is limited and gradually reduced. This should, theoretically, make each remaining token more valuable.

Users and developers are looking forward to the impact of EIP-1559 more than any other recent upgrade, but that doesn’t mean other upgrades are inconsequential. EIP-3238 is also worth a mention.  

EIP-3238

EIP-3238 is another change the upcoming London Hard Fork will implement. The upgrade delays the network’s difficulty time bomb.

Ethereum developers hope to transition the network away from its current consensus mechanism (Proof-of-Work) to ETH 2.0 (Proof-of-Stake). To encourage miners to shift to the new protocol, Ethereum developers implemented a difficulty time bomb: a mechanism that makes Ethereum mining increasingly more difficult until the miners find it impossible to mine profitably. 

EIP-3238 delays the detonation of this difficulty time bomb until Q2 of 2022. By that time, developers hope, the transition to ETH 2.0 shall be completed. 

Future updates

Vitalik Buterin claimed that the development team had several more major upgrades planned after the transition to ETH 20. In the future, the team may have to clean up the network’s PoS protocol, make security upgrades, institute sharding to make the network faster, and make the network stateless.

In short, the network could be constantly evolving to add incremental value for investors and users. 

EXPLORING NEW IDEAS

The Crypto Brain Drain: Tech and Finance Lose Talent 

The flow of talent is, often, a leading indicator of success for any nascent industry. In the early- to mid-2000s, talented young professionals were flocking to Silicon Valley. This brain drain from other sectors of the economy allowed the region to create some of the biggest brands we know today. It also pushed nascent technologies such as e-commerce, social media, and smartphones into the mainstream. 

Now, the flow of talent is heading to a new destination: digital assets. Recent data suggests that young, educated and talented professionals from across the world are increasingly keen on working with decentralized platforms, DeFi applications, and cryptocurrency exchanges. This flow of talent could indicate the sector’s rapid ascent to the mainstream. 

Much of the brain drain is focused on two key sectors: Tech and Finance. 

Tech

“If you or your engineer friend is bored at BigTechCo, get in touch,” Coinbase vice president and general manager Dan Romero said in a recent tweet. The fact that Coinbase is now a publicly-listed firm worth $47 billion could have made Romero’s offer much more attractive. 

With capital flowing into the sector, leading firms are aggressively hiring developers, software engineers, product managers, and cybersecurity professionals away from traditional tech. At the time of writing, Binance, Gemini, and Crypto.com have between 50 to 370 job openings each. 

Most leading crypto firms are remote first, while tech giants like Google and Apple have been asking staff to head back into offices. A clear sign that developers who want to work remotely or avoid the cost of living in San Francisco have more opportunities in the digital assets sector. 

In their latest freelance recruitment survey, Upwork mentioned “blockchain development” as one of the fastest-growing job opportunities on its platform. Yet another signal that digital assets and blockchain are gaining favor with developers who prefer remote work. 

Finance

Unlike Silicon Valley, Wall Street has been more willing to experiment with blockchain technology. Financial institutions like JPMorgan Chase, Fidelity Bank of America, Goldman Sachs have all recently introduced crypto services and products for their clients. That could help this sector retain some of its talents.

However, not everyone is enamored by the standard career ladder at major Wall Street firms. “I just didn’t see a future in traditional finance,” former Barclays trader Daisuke Murayama told Bloomberg when he took a pay cut to join bitFlyer. Others who’ve quit Wall Street have managed to create immense wealth by launching their own startups. 

The founders of FTX and Binance worked for high-frequency traders or hedge funds before quitting to launch their firms. These firms now have several open positions for high-frequency traders, data analysts and quant developers, and compliance officers with traditional Wall Street experience. 

The emergence of digital assets has created a new career path for ambitious, young, and talented professionals. This surge of talent could help the industry mature and stay innovative.

TOKEN OF THE WEEK

0x (ZRX)

0x is a special type of cryptocurrency exchange that allows people to create and operate preferred markets without intermediaries. Simply put, it is a decentralized cryptocurrency exchange on which various types of tokens representing stocks, bonds, or even physical real estate can be traded.

It operates as an open-source protocol built on top of the Ethereum blockchain. Consequently, it supports the trading and exchange of various ERC tokens. Additionally, it provides means of exchanging various tokenized assets ranging from stocks to gold and video game items.

The brainchild of Will Warren and Amir Bandeali, 0x was launched in 2016. Its primary goal was to provide a peer-to-peer platform on the Ethereum blockchain that anyone could operate at inception. People building and operating exchanges on top of 0x are referred to as relayers.

Background

0x is an Ethereum-based cryptocurrency exchange in which no single party has control over what happens in the network. The decentralized aspect ensures that users can universally trade and exchange assets and cryptocurrencies without any central authority but with the help of smart contracts. 

Unlike other decentralized exchanges, 0x does not record all transactions on the blockchain. Its protocol is designed to wait for all transactions to be settled on the blockchain before sending the orders to be settled.

The ZRX token acts as a medium for settling fees on services rendered on the decentralized exchange.

ZRX Tkenomics

ZRX is the native token that powers the 0X exchange. The token plays two key roles; first, it is the native currency through which fees are settled on the network for services rendered by Relayers. Additionally, the token offers a way for people to influence the development of the Ethereum network. In this case, ZRX owners have a right to make decisions in the development of the OX exchange.

ZRX is a capped cryptocurrency which means there will only ever be 1 billion tokens in circulation. At inception, 500 million tokens were sold to the public.

The co-founders completed the first Initial Coin Offering on July 16, 2017. The offering ended up raising $24 million in ether from a group of about 12,000 participants. A good chunk of the investors came from venture capitalist firms, including Pantera Capital and Blockchain Capital.

Recent developments

In February, 0x Labs, the firm behind the decentralized exchange, completed a $15 million Series A equity round led by Pantera Capital. The funds are to be used to finance the development of a trading desk business as well as the 0x API.

ZRX is one of the cryptocurrencies that has felt the full force of increased sell-off in the cryptocurrency space. The crypto has shed more than 50% in value from its record highs of $2.2 registered in April. After dropping to six months lows last month, the ERC token is once again trying to bounce back.

0x is a decentralized exchange that facilitates the trading and exchange of assets and cryptocurrencies without the involvement of central intermediaries. The exchange came into being with the sole aim of addressing the costliness, slowness, and illiquidity of other decentralized exchanges.

GETTING TECHNICAL

BTC/USD

A snapshot of Bitcoin’s spot price as of this writing is 29,703.43 representing a 17.24% increase in trading volume since July 19th at 9:15 AM. The 30-day volatility of BTC is 59.44%. Bitcoin remains the top cryptocurrency trading with a support at $27,000 and resistance at $36,000. 

ETH/USD

ETH is trading at $1,751.60 as of this writing, representing a 24-Hour decrease of 3.98%, and 30-day volatility of 81.62%. Over the last 24 Hours, the trading volume increased by 17.10%. As of today, ETH holds 17.29 % of the cryptocurrency market, making it the second-largest coin traded. It has a circulating supply of 116,768,535 coins, an increase of 66,373 over the past five days. 

THIS WEEK’S DEEP READ

Coercion and coexistence: How El Salvador’s Bitcoin Law may change global finance

Source: CoinTelegraph

“Lending pools, U.S. tax law and the World Bank all stand in the way of El Salvador’s move to adopt Bitcoin as legal tender. But in the end, the world’s first digital currency may win.”

One company in our network, Defactor, is picking up steam and we wanted to mention them. They’re a game-changing platform bridging the gap between DeFi liquidity and real-world asset originators. Check ’em out here!

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