Crypto lounge thread

@Burner you mentioned gas fees.....they are incredibly high. Polkadot (DOT) is a new ecosystem that fixes this problem.......the potential of this project should not be ignored. Worth looking into as this could definitely steal some marketshare from ETH.

In regards to the SUSHI farming craze.....the sushi protocol offers higher rates for liquidity providers. This is why uniswap is losing so much liquidity. I will not be farming sushi as i believe many will be moving their funds/liquidity back to uniswap in the next couple don't want to be the last one moving back.

Personally I still believe the best strat in crypto is to buy and hold solid projects. Bitcoin is still king, I think many will learn this in the coming months.
There are other potential projects outside polkadot porting out ethereum dapps. Erik Voorhees mentioned Cosmos on twitter and another one coming in a few months is Flare which uses Ethereum Virtual Machine and Avalanche consensus. Erik predicts that devs will port over dapps or jump ship altogether not being able to wait 1-2 years for ETH 2.0.


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There are other potential projects outside polkadot porting out ethereum dapps. Erik Voorhees mentioned Cosmos on twitter and another one coming in a few months is Flare which uses Ethereum Virtual Machine and Avalanche consensus. Erik predicts that devs will port over dapps or jump ship altogether not being able to wait 1-2 years for ETH 2.0.

Do you guys take stakes in those various projects that attempt to compete with ethereum on the base layer, whether Cosmos or Polkadot or some other purported ethereum killers?

Surely, over the years, I have criticized ethereum quite considerably for being smoke and mirrors, vapourware and overstating of its capabilities, and even though I have continued to lack confidence in the various technical aspects of ethereum, we cannot doubt that considerable network effects have been built around ethereum over the past 5-6 years, including the ability of individuals to be able to sidetrack traditional investment channels and traditional investment requirements in order to be able to invest directly into projects (sometimes also referred to as the ability of a scam project to facilitate further scams at the retail level) - and there has been decent demand for those kinds of abilities for regular joes to be directly invest (or gamble) in projects of their choosing.

But surely there have been quite a few competitor products that have proclaimed themselves as ethereum killers, and I suppose that guys can have confidence in those ethereum killer products and to invest part of their investment (gambling) portfolio into such ethereum killers out of anticipation that one or more of those projects might start to take market share from ethereum (but is it going to happen in reality, and is it worth injecting some personal investment portfolio value into those kinds of purported "ethereum killer" products?)
Polkadot and Cosmos have been in the background since 2018 or earlier I think. Neither claimed to ethereum killers like other smart contracts platforms. Their whole thing is interoperability. Might be a bit late to get into DOT as it's already top 5 in market cap. Cosmos has 1b and some room for growth. The other one I mentioned Flare hasn't come out yet. The snapshot date for that one is Dec 12 so people would get the tokens some time after that. If it manages to siphons eth devs it could be worth something. If I were to gamble on something it would be these ones as they seem solid and have upside potential.


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Great description of the fundamentals of DeFi and current state...

How DeFi is Eating Traditional Finance

Many people have been asking me to discuss the bull case for DeFi. The following write-up is from the research team at dYdX, which spells out their perspective. I don’t agree with everything written, but I think they did a good job laying out the argument.

With the introduction of Bitcoin’s genesis block, the world had its first truly decentralized financial application. Bitcoin enabled anyone in the world to store wealth without the need for a centralized party. That wealth could be taken and sent anywhere in the world, the only requirement was an internet connection. As the Bitcoin network grew in terms of number of holders and value transferred, developers began looking for ways to create more complex financial transactions. This was at odds with how the Bitcoin community viewed the tradeoffs between security and expressive financial applications, which created an unmet opportunity for a blockchain that could facilitate more complex financial contracts.

When Ethereum launched, it aspired to be a world computer capable of powering an arbitrary number of applications through smart contracts. The ICO mania of 2017 reflected this vision, but Ethereum as a platform ultimately left much to be desired for most applications. Amidst all the noise, it became increasingly obvious that Ethereum was fertile ground for financial application experimentation. Ethereum drastically dropped the costs associated with a variety of financial transactions including capital formation, asset issuance (hence the ICO bubble), asset exchange, loan administration, collateral management, and much more. After the rubble of 2017 cleared, the Ethereum community was left with a burgeoning movement dubbed, “DeFi” (short for decentralized finance).

DeFi had immense promise given both how inefficient traditional finance was and how well its aims aligned with the core ethos of the crypto community. Ethereum’s smart contracts enabled money to be managed programmatically, without the need of a central party, which in turn created many efficiency gains. Similarly, DeFi applications were open and permissionless. Just like Bitcoin, anyone could access them, all they needed was an internet connection.

Compare this to the traditional financial system and it’s easy to see how much more desirable DeFi is. In the traditional world, financial applications are difficult to access, rigid, hard to use, and most importantly, expensive.

Early Signs of Product Market Fit

Shortly after the Ethereum community rallied around DeFi and allocated engineering resources towards building out infrastructure, early signs of traction emerged. In these early days, the most promising developments were DeFi primitives: building blocks that could be built on top of each other to create more expressive applications. The composability of these primitives help create strong network effects, where the value of products and services grow as the number of DeFi users increases.

The first use case to see large growth was stablecoins. Stablecoins are simple, they are assets designed to keep a peg to another asset, which in the case of the most popular stablecoins, is the dollar. With stablecoins, anyone can transact in dollars, globally, and with no delays. Stablecoins seem rudimentary on the surface, but being able to send dollars freely within the crypto ecosystem has always been difficult — the fiat world and the crypto world aren’t very interoperable.

Stablecoins really started to see growth when new primitives came to market. The ability to exchange stablecoins for crypto through decentralized exchanges such as dYdX, 0x, and Kyber or the ability to borrow and lend stablecoins through platforms like dYdX and Compound, made stablecoins that much more powerful. Users could remain on-chain for a lot of their banking needs.

We can see clearly that stablecoin issuance really took off in late 2018, right as many of DeFi’s first primitives came to market. The amount of USDT tokenized on Ethereum has grown to over $6 billion USD from virtually 0. USDC has also seen astronomic growth, growing to over $1 billion market cap in less than two years.

Decentralized exchange was another primitive that took off in 2019. With decentralized exchanges, smart contracts handle all parts of the exchange process — they verify that each holder owns the assets, that they approved the transfer, and once those are satisfied, the contracts atomically swap assets between the two counterparties. Again, it seems simple, but the traditional exchange process can be costly and exposes users to a lot of counterparty risk. As we have seen time and time again, exchanges can go down with all of their customers’ crypto.

Automated market makers took the decentralized exchange concept one step further by removing the need for a centralized market maker to quote both sides of the book. There are many reasons AMMs have been a breakthrough model for decentralized exchanges. First, it’s extremely costly for token projects to engage market makers – the deals are very one-sided and concentrate too much influence in the market maker’s hands. Second, it’s expensive for market makers to provide liquidity on decentralized exchanges given the latency and cost of on-chain transactions. Through AMMs, projects can have liquidity from day one, making it much easier to bootstrap communities and networks.

The last DeFi primitive worth mentioning is borrow and lend markets, more specifically, borrowing and lending directly from a smart contract. These systems allow anyone with idle assets to deposit them into a shared lending pool and anyone who wants to borrow assets to draw down from this pool in exchange for interest. Developers have been able to build powerful products by building a top these lending markets. For example, dYdX’s lending markets power a global margin trading system — the ability for traders to earn interest helps bring more liquidity to the platform.

Where is DeFi Going?

DeFi has just started to scratch the surface in terms of decentralizing the most important pillars of traditional finance. 2020 has been a watershed year for DeFi — the primitives noted above are being leveraged to create both products that rival traditional solutions as well as net new products that aren’t available in today’s system.

The recent liquidity mining boom is actually an interesting play on yield generation. While most of the yields are a function of inflation rather than actual interest or cash flow, it’s being offered at a time where most traditional banks are offering savings rates close to 0%. Because of this, we’re seeing a massive influx of capital into the ecosystem. Even if it’s short term, this new capital helps fuel experimentation until something of value is found. Similarly, these protocols have intrinsic value via their cash flows. So even if the yields will collapse over time, they still have a floor that’s much larger than anything offered in the traditional banking system.

Decentralized exchange is also a vertical that will continue to grow in the short to medium term, and we expect them to surpass most centralized exchanges in the next few years. Already today, there have been numerous days in which trading on Uniswap has surpassed the trading on Gemini, Kraken, and even Coinbase. Developments like liquidity mining will boost the liquidity offered on decentralized exchanges to the point where traders will be able to exchange at a cheaper rate than they do on centralized exchanges, and without KYC. Additionally, decentralized exchanges are still in their v1.0 modes. At dYdX, we’ve worked hard to build margin trading and the very first synthetic BTC perpetual swap, all on-chain so users never have to give up custody of their funds. In the next few months, we will also be launching our Layer 2 solution with Starkware, which will greatly reduce costs, increase throughput, and enable more trading pairs as well as the ability to cross-margin on our perpetual markets.

Another area in which decentralized finance is subverting its centralized counterparts is lending. On-chain lending was always criticized for not being able to administer undercollateralized loans given the lack of legal recourse and identity, but this might change soon thanks to lending protocol Aave’s new credit delegation design. Through their system, token holders will be able to stake their assets behind the credit reputation of another address (tying to a user), enabling that address to borrow funds without overcollateralizing the loan. If that user doesn’t repay the loan, it is their staker that is punished, meaning token holders are incentivized to act in a way that doesn’t hurt them, in effect helping ensure only creditworthy borrowers are able to take out uncollateralized loans.

Lastly, the DeFi ecosystem has birthed its own insurance offerings, allowing users to buy protection against smart contract risk. One of the biggest barriers to adoption in the early days of DeFi was the lack of insurance. No traditional insurer would enter the space so ecosystem participants built their own solutions. Through protocols like Nexus Mutual and Opyn, DeFi users can secure their deposits without the need of a traditional bank or institution.

All of the innovation happening in the DeFi ecosystem is affirming the fact that decentralized finance can create financial applications that are more desirable than those that exist in the traditional world. We’re already seeing some DeFi projects overtake parts of the centralized crypto economy and it won’t be long until this activity starts to overtake the traditional world. There’s never been more of a need for a financial system that’s more fair, open, and efficient. At dYdX, we couldn’t think of a more exciting mission to build towards.

About dYdX: dYdX is building open, secure, and powerful financial products accessible globally. Trade Spot, Margin, and Perpetual Markets, with up to 10× leverage. dYdX runs on audited smart contracts on Ethereum, and enables trading with no intermediaries. It allows traders to move quickly, while maintaining full control of their assets.

This installment of The Pomp Letter is free for everyone. I send this email to our investors daily. If you would also like to receive it every morning, join the 50,000 other investors today.


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BTC Corrected 10.5% this week testing the .50 Fib retracement from the A wave low still in the C wave with support at the lower trend channel base line:



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The UniSwap on chain DEX is addressing the security issues of dodgy easily hacked exchanges and their Uni coin is promising. UniSwap now exceeds Coinbase trading volume with greater on chain security and much lower fees.

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Updated Weekly BTC Waves with long term Fibonacci retracements... up 1350+/- this week above the .618 Fibonacci Golden Ratio retracement looking like a minor 5th wave up in the C leg retracement... Next target .786 at 15,750 +/- then C leg TA target of 18,000 +/- then a retest of the ATH 19,892.