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One more step for Ethereum and clouds over Binance

Posted by
Ilya Abugov

Dapp Digest | Week #45 | 2020

This was a loaded week for the crypto world. Global politics aside, there was a flurry of news from the major players in the industry. Bitcoin breached the $14,000 mark, as excitement around crypto’s biggest asset continues to build, while many of the leading DeFi projects saw significant losses from their associated tokens.

Games, collectibles, and art continue to support interest in NFTs. Developers are experimenting and building, filling the industry with a sense of constant anticipation.

One more step for Ethereum 2.0

One of the most anticipated projects in the industry, Ethereum 2.0, now is open for staking. This is an important milestone for the project. The launch is now expected to happen on December 1st.

While the release itself should not have an immediate impact on Ethereum’s ecosystem it marks an important step in the network’s attempt to deal with its scalability limitations. Given the amount of capital locked on Ethereum and the growing number of layer 2 scalability solutions, it will be important to monitor what dapp teams choose going forward.

This is a worrisome development for Ethereum’s rivals, as scalability was one of the main advantages for them. Most have not been able to establish a significant DeFi, gaming, collectibles, or art ecosystems, and if Ethereum is able to address one of its key limitations, rival blockchains may find it even harder to attract developers and users.

Clouds over Binance 

One of the biggest brands in the industry was hit with a bit of controversy over the past few days. A Forbes story referencing the “Tai Chi” document, showed that Binance may have used its Binance.US entity as a means to intentionally deceive US regulators.

Centralized crypto businesses have been in the news a lot recently regarding various legal matters. If it were to be proven that one of the major companies in the blockchain space was willfully misdirecting regulators, it can result in significant regulatory actions and hurt the industry in the short term.

It also doesn’t help that Binance is also closing Binance Uganda and Binance Jersey. While these events are supposedly not motivated by regulatory concerns, they may not inspire confidence.

Binance has been actively engaging in the decentralized part of the space with its DeFi initiative on Binace Smart Chain. It has also implemented BNB Vault as a way to increase the value of its BNB token which may be seen as a CeFi-DeFi blend.

However, the centralized business appears to still be core to its operations, and if Binance gets in trouble with the regulators it may have a detrimental effect on the industry as a whole.

Thwarting attacks

Attacks and scams have become almost expected by-products of growth in the crypto sector. However, this week, Tron and Binance demonstrated their ability to deal with vulnerabilities and malicious activity.

Tron was attacked with the alleged intention of stopping block production, but the issue was identified relatively quickly and node upgrades were implemented as a countermeasure. While details around the attack are vague, it would appear that the network has come out of the incident with minimal damage.

Binance Security made the news because it was able to recover assets almost lost in a “rug pull” event. The team was able to track transactions related to Wine Swap’s addresses and identified suspect activity. Actions were taken in a timely manner, and 99.9% of the assets were returned.

Decentralized protocols suffer from attacks and scams that make it difficult for investors and users to have any means of recourse. Tron and Binance are often seen as more centralized entities, but if they are able to guarantee the security of users’ assets, it may be that some will be willing to overlook the centralization aspect.

It will be interesting to see if decentralized protocols are able to implement security levels in a decentralized manner and or delegate certain duties to the community.

Evolution in DeFi continues

Liquidity mining has been focused on incentivizing protocol users, but now UMA is looking to reward developers launching products/assets on the protocol with Developer Mining. Some of the previous token mining initiatives in the industry had issues with incentive misalignment, so it would be interesting to see how the community responds to this. This could become another tool for teams to grow their project ecosystems.

Boson Protocol is looking to utilize NFTs to introduce real-world assets into the crypto ecosystem. A number of projects are working on similar initiatives. If there is a significant inflow of tokenized real-world capital, it could catalyze the next stage of growth for the industry.

The Lightning Network has been somewhat quiet of late in terms of news. Now Lighting Labs is looking to introduce Lightning Pool to help the network’s node operators obtain necessary liquidity, and give liquidity providers a way to profit from it.

NFTs continue their march forward

Terra Virtua announced that it raised $2.5M to create a “mass-market” NFT ecosystem. While DeFi has been in the headlines due to some impressive numbers, NFTs offer use cases that are much simpler to understand and interact with for the general public. As such art and collectibles platforms, especially if they receive support from firms in the traditional industry, have very interesting prospects for bridging the adoption gap.
NIFTEX announced that it raised $500K to further develop its NFT platform. As the NFT space continues to develop we may see more and more high-value NFT auctions. As the traditional art and collectibles space has shown, the items may not be very liquid. Fractionalized ownership may address that issue to some degree.

We may also be seeing competition developing around the digital wearables (like clothes) subsector. The concept has already been introduced in the traditional sector and makes sense in the context of NFTs. It will be interesting to see if and when fashion brands start to utilize NFTs for this.

NB: The information provided here is for reference and informational purposes only. This is not investment advice and should not be treated as such.

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Ethereum generated more than $47 billion in transaction volume in October 2020.
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