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MakerDAO Hikes Fees by 4% to 7.5%, Wiping $10 Million, Cryptos Fall

MakerDAO, the world’s newest central bank, has raised the stability fee or interest rates for DAI holders by an incredible 4%. That makes it a jump from 0.5% to 7.5%... The post MakerDAO Hikes Fees by 4% to 7.5%, Wiping $10 Million, Cryptos Fall appeared first on Trustnodes.
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Accepted: MakerDAO Vote to Raise DAI Stablecoin Stability Fee by 4% to 7.5% per Year

Accepted: MakerDAO Vote to Raise DAI Stablecoin Stability Fee by 4% to 7.5% per Year Users of Decentralized Autonomous Organization (DAO) MakerDAO (MKR) have voted to raise the so-called stability fee for Maker’s DAI (DAI) stablecoin by 4 percent, according to the results of a recent poll completed on March 21. The firm announced on […] Cet article Accepted: MakerDAO Vote to Raise DAI Stablecoin Stability Fee by 4% to 7.5% per Year est apparu en premier sur Bitcoin Central.
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MakerDAO Governance Call: Despite 0.75% supply decrease Dai continues to trade down

This free preview of The Block Genesis is offered to our loyal readers as a representation of the valuable journalism & research our team produces and Genesis members receive daily. Want to see more? Join today. With Dai continuing to trade below $1 over the weekend, the MakerDAO Foundation initiated the three day polling process on Monday, setting out three options for the Stability Fee: keep at 3.5% APR, raise by 2% to 5.5% APR, or raise 4% to 7.5% APR. Governance The polling process concluded an hour after this week’s Governance call, with stakeholders ultimately settling on a 4% increase. A total of 58 addresses participated, representing 0.58% of MKR holding addresses, of which 73.2% voted in favour of the highest hike, 17.9% in favour a 2% increase, and just 8.9% voting to maintain the status quo. Breakdown by stake produced similar results, with 75.6% of MKR bonded towards the highest interest rate increase. Source: Richard Brown, MakerDAO Head of Community Development Of course, the pseudonymous nature of Ethereum addresses means that stake percentage is the more relevant metric. Weighting by vote per address would likely lead to a Sybil attack, whereby voters split their MKR holdings across multiple addresses in order to falsely signal superior support. It’s interesting to note that, although the polling process had yet to conclude, participants on the Governance call debated and discussed under the assumption that the 4% increase was all but guaranteed. While the poll did eventually resolve in favour of a 4% increase, I encourage future conversations to be more vigilant: there always exists a possibility that a large MKR holder will wait just before expiration before staking in favour of a less popular outcome, thereby taking advantage of near-complete information and the time-based nature of the voting process. Risk The majority of this week’s call focused the imbalance between Dai’s supply and demand. Although Dai price briefly trended upwards following last week’s call, it has since fallen back to the $0.96-$0.97 range measured by Volume Weighted Average Price across the 0x network of relayers and the Eth2Dai exchange. Source: Vishesh Choudhry Perhaps surprisingly, this ~2% depreciation of price since March 16th came in spite of a net 698,901 DAI, or 0.75%, decrease in outstanding supply over the same period, the majority of which came the infamous CDP3228, who net wiped 640,000 DAI. Source: mkr.tools One would naturally expect Dai price to increase as CDP holders net purchase Dai to close out their positions, yet data presented shows no sign of abating price depreciation. Representatives from the Wyre Capital and Maker Foundation trading desks noted that inventories had remain largely flat, suggesting that the Dai purchases had not taken place on either spot exchanges or Over-The-Counter. One possible explanation is that, rather than acquiring Dai on exchange, those closing out CDPs instead borrowed Dai on Dharma Lever, where borrow rates are currently subsidized at 0.1% APR. Borrowing, rather than purchasing, would allow CDP holders to maintain long exposure to ETH. However, if Dai does return to its peg over the duration of the 28 loan period, Lever borrowers stand to pay roughly 4%, rather than the marketed 0.1%, on their debt. Data from Dharma somewhat, but not entirely, supports this theory, with 249,854 DAI issued in loans over the past 30 days. According to Dharma CEO Nadav Hollander, Dai borrowing demand has exceeded expectations to the point that they are now guaranteeing 6% APR on Dai loan offers. Source: metabase.dharma.io In subsidizing borrow rates 0.1% and thus disabling the market’s ‘invisible hand’, Dharma Lever should temporarily be considered an outlier among alternative lending platforms. However, as suggested in last week’s report, an aggregate reference rate of lending rates across other lending venues — dubbed Decentralized Inter-Protocol Offered Rate (DIPOR) — can serve as a valuable metric for assessing the impact of Stability Fee changes on the wider Dai economy.   Compound, a decentralized lending platform that adjusts interest rates algorithmically according to outstanding supply and demand, is one such venue worth observing. Compound Dai supply volumes have fallen close to 1 million DAI since the latest stability fee hike to 3.5%, while borrow volumes have declined slightly over the same period. As a result, interest rates have risen for both suppliers and borrowers, with the former briefly reaching parity with the MakerDAO Stability Fee. At the time of writing, Compound supply rates are back down to 3.34%. Source: Vishesh Choudhry This slight disparity in supply rates is perhaps to be expected as prospective lenders can always acquire Dai on exchange rather than paying 3.5% to generate Dai through a CDP, but the upwards trend in supply rates does nevertheless indicate that the latest hike, as well as the impending hike, may be having its desired effect.   Multiple call participants posed questions regarding use cases for drawn Dai in the hope of understanding interest rate price sensitivity. A thorough analysis of wallet addresses could provide detailed insight, although at this stage most data indicates that the overwhelming use case is to leverage long Ether. In fact, we can already calculate the profitability of opening a CDP taking into account expected Ether price appreciation over different time periods. Under the assumption that Dai is trading at $0.95 and borrowers will have to repurchase at $1.00, the table below shows that a 50% APR Stability Fee would not be sufficient to deter purely rational market actors from opening a CDP if they expect more than 10% gains over the next month. Similarly, even a 100% APR Stability Fee would not be sufficient to stifle CDP demand if ETH is expected to increase more than 10% over the next week.   Compound’s WETH market provides further insight into market sentiment, with just 6.25% of total available supply being lent out and supply interest rates at 0.44% APR. Low demand for WETH adds credence to the theory that there is currently a marked lack of interest from shorts. Source: app.compound.finance Meanwhile, this week, the ETH/USD Long:Short ratio on Bitfinex reached an all time high of 4.98:1, suggesting a significant imbalance between bulls and bears. Perhaps somewhat serendipitously, this imbalance could set up the conditions for a ‘long squeeze’, with speculators forced to close their positions in a falling market, causing a further cascade of price depreciation and, simultaneously, increasing demand for Dai. Source: Joe McCann   As the Stability Fee continues to be adjusted upwards, MakerDAO stakeholders should remain vigilant of CDP holders’ desire to hedge against rate increases through the futures market. This week Veil, the Augur-based relayer, launched a preliminary draft for a scalar Stability Fee market and it is likely that binary markets — i.e. will the Stability Fee be adjusted upwards by X date — will similarly emerge in the near future. Source: veil.co By purchasing shares in increased Stability Fee outcomes, CDP holders can offset any adverse effects from an interest rate hike, essentially setting themselves a fixed interest rate in what is designed to be a variable interest rate market. Considering the Stability Fee is currently the primarily tool in the MakerDAO monetary policy arsenal, these markets could spell trouble for future Dai stability, leading stakeholders to turn to alternative methods, such as increasing the liquidation ratio or lowering the debt ceiling, in order to engender stability. Comments?  Reach out at: matteo@theblockcrypto.com NB: In last week’s report I noted that the top 100 accounts collectively own 91.52% of MKR tokens. It should be clarified that the top 3 MKR addresses are: the development fund, the redeemer contract, and the voting contract. The latter two addresses should be ignored in the context of distribution analysis.  
The Block Crypto

MakerDAO Voters Support Raising Ethereum-backed Loan Interest Rates to 7.5 Percent

MakerDAO, a decentralized autonomous organization that provides crypto collateralized loans, polled its community on whether to increase interest rates and by how much. The community voted to increase rates by the maximum that was proposed, 4.0 percentage points, raising rates to 7.5 percent. If successfully executed, this would be the third rate increase within the last two months. MakerDAO polled its community, beginning Mar. 17th, on whether to raise rates by 0, 2 or 4 percent. The vote to increase rates by 4 percent won by a large margin, with voting completed on Mar. 21st. The vote is a continuation of three recent rate increases in an attempt to curb its Ethereum-backed stablecoin, Dai, from trading below its $1.00 peg. If Dai continues to trade below the $1.00 mark then rate increases are likely to continue. Source: Maker Governance Dashboard Background on Maker’s Loans Maker is an open platform that provides collateralized loans through a series of smart contracts and oracles, giving users access to credit without a centralized point of control. Users obtain these loans by locking their Ethereum in a smart contract. In return, users receive Dai, a stablecoin which represents a pool of all ether locked in the platform. Dai is soft-pegged to $1.00 based on the locked-up ETH. Users can then sell Dai for fiat or use it as leverage by trading it for more cryptocurrency. Currently, users can obtain up to 60 percent of the value of their ether in Dai. If the ratio between collateral and the loan amount provided falls below this 60 percent ratio, then the position is automatically liquidated; consequently, it is often prudent to take loans below this maximum ratio to decrease the chance of automatic liquidation. To repay the loan and retrieve the locked Ethereum the user must repay the Dai they received in addition to a stability fee, an annual interest rate charged to borrowers to compensate participants who maintain the stability of the system. How Dai Maintains Its Peg When Dai is trading below $1.00, users are incentivized to purchase Dai (at a discount from its $1.00 peg) to repay their loans. When Dai is trading above $1.00, Ethereum holders are encouraged to use their holdings as collateral for Dai, allowing them to engage in arbitrage and get more than the current value of their collateral. When Dai consistently trades above or below these rates, more drastic changes are required. In these circumstances, the stability fee is adjusted up to encourage borrowers to repay their loans—increasing the price of Dai as it is taken out of circulation for loan settlement—or adjusted down to encourage Ethereum holders to obtain loans, increasing the supply of Dai and decreasing its price. MakerDAO Community Supports Rate Increase One of the advantages of Maker, when it started, was its highly-competitive annual interest rate of 0.5 percent. However, this was unsustainable and the price of Dai began to fall below its $1.00 peg as users in-mass locked up their ether in exchange for Dai. So far, a whopping 2.0 percent of the total Ethereum supply is locked up in Maker contracts. In February, the holders of MKR voted to increase interest rates twice, raising interest rates from 0.5 percent to 1.0 percent, then to 1.5 percent. Rates were raised again on Mar. 8th to 3.5 percent. Yet, according to the core team, the exchange price of Dai has continued to persist below $1.00 and that there was “little attributable impact from the previous stability fee increases.” Although, the governance poll did suggest the last rate increase was followed in a slight uptrend of Dai’s price from $0.96 to $0.985. On Mar. 22nd the MakerDAO will issue an “Executive Vote” among MKR holders to determine whether to execute the 4.0 percent rate increase, raising interest rates to 7.5 percent. If the rate increase is unable to increase the price of Dai to its $1.0 peg, measured over the following 5 days after the vote, then there will be a proposal for another rate increase. Overall, it is impressive to see MakerDAO deliberate on monetary policy at the scale currently seen. The organization demonstrates that a DAO is capable of making informed, long-term decisions. Even more impressive is what MakerDAO could precursor: a more decentralized method for determining monetary policy, conceivably fulfilling some of the same functions of a central bank like the US Federal Reserve. The post MakerDAO Voters Support Raising Ethereum-backed Loan Interest Rates to 7.5 Percent appeared first on CryptoSlate.
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Why Do We Need to Wrap Bitcoin?

BitGo, Kyber Network, MakerDAO, IDEX and many other crypto companies partnered to create a Bitcoin-backed Ethereum token, Wrapped Bitcoin. This token will represent BTC, 1 token equal to 1 BTC stored in the custody of BitGo. It could be used to trade BTC on DEXes, the whole administration will be via DAO, similar to Maker system

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Crypto Exchanges Under Fire: DragonEx Hacked, Coinbene Undergoes Sudden Maintenance

Singapore Exchange Loses A Mass Of Crypto Exchanges haven’t had the best start to 2019. Sure, Binance has been doing A-OK with its initial exchange offering (IEO) model, with its resident token rallying past $17, but lesser-known crypto platforms have been suffering. Earlier this year, QuadrigaCX was revealed to have ‘lost’ access to over $150 million worth of Bitcoin, Ethereum, and other assets, as Cryptopia suffered a devastating hack. This facet of the industry’s misfortune has continued, unfortunately enough. According to CoinDesk, DragonEx, a Singapore-based exchange, was hacked. The company announced this unfortunate happening via its Telegram channel, in which DragonEx’s PR staff claimed that funds of users and the platform itself were “transferred and stolen.” DragonEx has yet to divulge the exact details of the crypto assets stolen, including the type and the nominal value. However, the company did post the addresses of the assumed hackers, of which there were about 20 pertaining to a series of assets (Bitcoin, XEM, EOS, XRP, ETC, etc.). From a brief look, a minimum of 135 BTC, 500 Ether, and 4,670 LTC were forcibly yanked from the exchange’s coffers. This, for those who are wondering, racks up to ~$800,000. The full amount hacked, however, could easily be much higher than this sum. DragonEx has purportedly informed a number of local authorities, including those in Estonia, Thailand, Singapore, and Hong Kong, to the attack. Elaborating, the crypto startup wrote: “We’re assisting policemen to do investigation. All platform services will be closed and the accurate assets loss recovery situation will be announced in a week. It was added that the firm will “take the responsibility no matter what.” Coinbene Under Seige? This comes as Coinbene suddenly revealed it would be undergoing maintenance. A tweet from the company claims that it “upgraded the platform wallet… operations such as deposit and withdraw will be affected.” While this is a normal announcement for exchanges across the board, Coinbene’s session came straight out of left field, leading to ramping speculation. Nick Schteringard posted the below message in a bid to draw suspicion to the exchange’s Ethereum wallets, which sent out a mass of ERC-20 tokens yesterday. Some strange activity spotted on #Coinbene. Users report that #ETH wallets were hacked and attach these two addresses. https://t.co/f5NxvfscSC https://t.co/S1WnwI8CUx #bitcoin #exchange— Nick Schteringard (@schteringard) March 26, 2019 Coinbene’s ongoing imbroglio comes after Bitwise Asset Management, an American crypto-centric investment services provider, targeted the exchange in its scathing report on fake Bitcoin trading activity. As reported by Ethereum World News previously, Bitwise drew attention to “suspicious exchanges” such as the little-known CoinBene to back its report. CoinBene purportedly utilizes “trade printing” between the bid and ask prices, hinting that there could be an automated system behind much of the trades. Thus, some have concluded that this sudden period of maintenance could be the platform’s bid to rectify bots and other bad actors. Photo by Markus Spiske on Unsplash The post Crypto Exchanges Under Fire: DragonEx Hacked, Coinbene Undergoes Sudden Maintenance appeared first on Ethereum World News.
Ethereum World News

Japanese E-Commerce Giant, Rakuten, Gets Nod of Approval by FSA to Launch Crypto Exchange

Rakuten, the e-commerce giant and Japan's Amazon has completed the registration of its cryptocurrency exchange Rakuten Wallet that will be going live next month, as per the press release of the company on March 25. The official announcement reads: “We are pleased to announce that our registration with the Kanto Finance Bureau has been completed […]
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$3.4M Huobi Prime Sale Shows Investor Enthusiasm Remains High

Huobi Prime successfully completed its first initial exchange offering (IEO) on Huobi Prime this afternoon. The sale concluded in a matter of seconds, and raised $3.4M – proving that investor enthusiasm for the new token sale format isn’t confined to Binance Launchpad. TOP Network, a blockchain-based messaging service, was the first project featured on the new platform. More than 1.5bn TOP tokens were sold, around 7.5% of the total supply. The token was made available for trading almost immediately, and at the time of writing was exchanging hands at a multiple of around four times the asking price. The sale comprised three funding rounds, each offering larger quantities at a slightly higher asking price than the last. Although each round was set to last 30 minutes, each round was heavily oversubscribed and finished within seconds of opening. The first round completed within seven seconds. Huobi only announced its new Prime feature last week, as Crypto Briefing reported. Unlike the first few sales on Binance Launchpad, which were open to the general public, Huobi requires eligible participants to hold 500 Huobi Tokens (HT) – used to purchase tokens – at least 30 days prior to the sale. As Ross Zhang, Huobi’s head of marketing said at the time, this was to ensure the exchange gave equal opportunities to investors who were “involved and invested in our ecosystem”. Binance announced Sunday that Launchpad sales would now feature a new lottery-based format to its token sales. Better Protections For Investors… Unless Conflicts Arise? What makes IEOs interesting is that they tweak the token sale model. Instead of direct transactions between investors and projects, the exchange itself forms the counter-party. Participants must register and create an account on the platform, and this requires them to first pass KYC/AML checks. It’s also within the best interests of exchanges to ensure sales are full compliance. It’s their necks on the line and this means they are likely to carefully vet projects first. As Huobi said in its initial announcement, tokens must first pass a “[r]igorous screening and selection processes to ensure only premium projects that have yet to be listed on any major exchange are included.” Binance upgraded its own KYC/AML procedures today. Other exchanges are also looking at the IEO model, and despite a failure to launch with their first effort, Bittrex is seeking to offer VeriBlock as its next attempt. The VeriBlock project, which counts Bittrex CEO Bill Shihara as an advisor, would be valued at over $200M if the sale is completed successfully. Bittrex includes a disclaimer on its website explaining that as a result of Shihara’s dual role, “Bittrex holds a customary minority equity position in an affiliate of the sponsor of the VBK Coin Initial Exchange Offering, and will indirectly benefit from the successful completion of the Initial Exchange Offering.” Whether this discourages investors remains to be seen. Few would have thought three months ago that sales such as BitTorrent (BTT), Celer Network (CELR) and now TOP Network would have been possible. KuCoin’s Spotlight platform will be hosting its first token sale next week. Is an IEO season upon us? The author is invested in digital assets, but none mentioned in this article. Join the conversation on Telegram and Twitter! The post $3.4M Huobi Prime Sale Shows Investor Enthusiasm Remains High appeared first on Crypto Briefing.
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Why the New ‘Apple Card’ Credit Card Doesn’t Compete With Bitcoin

The Apple credit card launches this summer. Here’s why it nothing like Bitcoin and is more underwhelming than a utility token with no use-case. Apple Announces Credit Card Apple has long been revered as the world’s most innovative company. There’s no denying that the smartphone changed the way billions of people around the world live their lives forever. But it’s time for the trailblazing tech company to wake up and smell the roses. While Apple was releasing one carbon-copy product after another at higher and higher prices, the competition was busy doing the opposite. Now the high-end, high-priced tech manufacturer is scrambling to hold its own in a rapidly evolving market. And with the launch of its underwhelming Apple Card, there’s something sad about the stench of its desperation. Apple Card vs Samsung’s Built-In Bitcoin Wallet Apple’s largest competitor apart from the slew of cheaper Chinese products is undoubtedly Samsung. The South Korean giant hasn’t had an easy ride either with equally pricey products getting undercut left and right. But as one large company embraces the future, its flagship Galaxy S10 coming with a built-in Bitcoin wallet, Apple’s response is disappointing, to say the least. Rather than acknowledge the cryptocurrency revolution, and appeal to a younger market, the smartphone manufacturer aims to ‘disrupt’ the credit card industry. Isn’t that the wrong pool to be swimming in? The revolution won’t come in the form of borderless transactions since it’s only available in the United States. It also won’t be peer-to-peer, eliminate centralized institutions, or greatly reduce fees. Although its interest rates will be: Among the lowest in the industry Mind. Blown. Apple’s game plan is more about additional security of payments, no annual or foreign transaction fees, and the fact that (wait for it) its partner Goldman Sachs will never sell your data for marketing. You can even buy yourself a coffee on the Goldman Sachs blockchain. You just have to trust Apple and Goldman Sachs to do so. It’s a Custodial Hardware Hot Wallet The Apple Card will come built into the iPhone’s Wallet App, which effectively makes it a custodial hardware hot wallet for USD. Apple claims they will never track your transactions, and all the information will be held on your device. Users can request a laser-etched titanium card, should they be so inclined, although, there seems to be little point in that. In fact, why even offer a traditional card for a wallet the company wants you to get rid of in the first place? If you’ve failed to be bowled over by so much innovation so far, there’s more. Users can track their spending on their phone through a user-friendly app. You Have to Trust Goldman Sachs In the wake of major gaffes by tech companies like Facebook and Google, Apple is pushing its next-generation security and privacy features. The centralized entity will not track your transactions and Goldman Sachs (the other centralized entity) has agreed not to sell user data. Explosive stuff compared to a decentralized alternative financial system which requires no intermediaries at all. Increased adoption of Apple Pay? Perhaps. A revolution in finance? It’s just as well Cook wasn’t speaking at a Bitcoin conference, the audience would have walked out in droves. Steve Jobs Would Have Had Bitcoin in iOS by Now Apple Card seems like a desperate bid to push Apply Pay onto the people rather than let them to choose how they manage their finances. CEO Tim Cook enthused that the card was: The most significant change in the credit card experience in 50 years. Exactly where has he been lately? Steve Jobs would have Bitcoin integrated into iOS by now.  The aim of the game is presumably to bump up the adoption of Apple Pay in partnership with market leaders MasterCard and Goldman Sachs. Two giant financial institutions that will hardly feel the pinch from Apple Pay and its meager card. There are no real tangible benefits for users of the card beyond a few outstandingly mundane offers. For example, paying for Apple products with your built-in Apple Card gets you a whopping 1-3% cash back on purchases. So what is Apple thinking entering an already saturated market that swathes of people are trying to overthrow? Once on the cutting-edge of innovation, Apple now seems to be extremely myopic when it comes to the future. What do you this of this new credit card? Will it undermine payment-focused cryptocurrencies with low fees? Share your thoughts below! Images via Shutterstock The post Why the New ‘Apple Card’ Credit Card Doesn’t Compete With Bitcoin appeared first on Bitcoinist.com.
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