Cardano’s Algorithmic Stablecoin DJED to Launch in January 2023

 The stablecoin will be backed and overcollateralized using solely cryptocurrency, including ADA and SHEN – the smart contract’s reserve token. 

Shahaf Bar-Geffen – CEO of COTI, a stablecoin development company – revealed the launch date for Cardano’s new algorithmic stablecoin at Cardano Summit on Monday. 

After a successful audit, the over-collateralized DJED token will go live in January 2023.

What is DJED?

DJED is Cardano’s attempt to create a price-stable digital asset backed by ADA – the network’s native cryptocurrency. 

By sending ADA to a given smart contract address on Cardano, users will receive the same dollar value worth of DJED in return. Likewise, by sending 1 DJED back to the smart contract, the sender will receive $1 worth of ADA. 

This model could theoretically collapse if ADA were to experience major downside volatility, causing circulating DJED tokens to no longer be fully backed. As such, the smart contract will also include a reserve currency, SHEN, to cover ADA’s price fluctuations, ensure price stability, and guarantee a collateralization rate of 400-800%.

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SHEN holders will be rewarded with fees every time someone exchanges DJED or SHEN for ADA (or vice versa), creating an incentive to hold the token and help maintain the stablecoin peg ratio. 

Unlike DJED, Shen will not be price-pegged, leaving it open to volatility just like ADA. However, the smart contract will prevent anyone from minting new SHEN tokens once the smart contract reaches a maximum threshold, in order not to dilute existing holders. 

Recent market events have proven again that we need a safe haven from volatility, and Djed will serve as this safe haven in the Cardano network,” said Shahaf Bar-Geffen. “Not only do we need a stablecoin, but we need one that is decentralized, and has on-chain proof of reserves.”

Proof of Reserves

“Proof of reserves,” is a growing trend among crypto industry giants in the aftermath of FTX’s fallout, in which the exchange went bankrupt after allegedly misappropriating depositors’ funds for lending activity. This left the exchange unable to satisfy client withdrawals following a bank run earlier this month. 

Rival exchanges including Binance and Bitstamp have agreed to provide blockchain-based proof of reserves to ensure customers that their funds remain safe at all times. Grayscale, however – the owner of the world’s largest Bitcoin fund, GBTC – refused to provide such transparency this weekend, citing “security concerns.”

Reserve transparency is a long-time expectation for stablecoin providers which rely on adequate reserves to satisfy token redemptions at all times. Tether, the issuer of USDT, has faced years of scrutiny over the legitimacy of its $60 billion + reserves but has thus far managed to satisfy redemptions when under stress. 

Organizations like Terra have attempted to design algorithmic stablecoins that remove the requirement for trust in a centralized issuer. However, the ecosystem’s UST and LUNA tokens both collapsed to zero in May, making industry participants and regulators wary of similar models. 

The three top stablecoins – USDT, USDC, and BUSD – are all backed solely by cash and US Treasury bills, per their latest attestation reports

Here’s Why Tim Draper Still Believes Bitcoin Will Reach $250K

 Draper recently shared why he still sees Bitcoin at $250,000 and probably beyond despite the intense crypto winter. 

American billionaire venture capitalist Tim Draper has reiterated his bullish support for Bitcoin despite the crypto winter intensified by the sudden crash of the FTX exchange. 

Draper predicted last June, during the bull market, that the leading crypto asset would reach $250,000 by the end of 2022. However, his prediction is less likely to happen this year since the largest cryptocurrency is now trading below $17,000 following the FTX fiasco. 

Women and Retailers Can Push Bitcoin to $250k

Nonetheless, the billionaire still believes Bitcoin will hit the $250,000 target and probably go beyond once the market recovers and people, especially women, start using the cryptocurrency for daily shopping. 

According to Draper, women control 80% of the total retail spending, which includes clothing, shelter, and food. 

He added that women’s interest in cryptocurrency has also improved. In the past, women controlled 7.14% of Bitcoin wallets, but today, the number has more than doubled to 16.6%. 

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The billionaire investor further outlined another reason that could ultimately push the price of Bitcoin is when merchants start accepting BTC for payments. 

“When women realize they can get a discount by paying in bitcoin or retailers realize they can double their income by accepting bitcoin, it’s going to move pretty quickly,” he said. 

The crypto asset is trading at around $16,000 after reaching nearly $70,000 in 2021. Although it is down more than 75% from its ATH, a growing list of companies worldwide have adopted the cryptocurrency as a payment option, with the latest being the South African supermarket chain Pick n Pay. 

Draper’s Bitcoin Plans

Draper started making the $250,000 Bitcoin prediction in 2020 while describing what the United States would look like if he became president for a day. 

Aside from the forecasts, the billionaire venture capitalist noted that he would explore other aspects of the crypto asset if given a chance. Draper said he would try out a Bitcoin-based universal basic income (UBI) or tax system.

The crypto proponent also stated that he sees Bitcoin as a hedge against bad governance during the just concluded Web Submit 2022. 

Ethereum Dips Below $1200 as FTX Drainer Swaps 5K ETH For Bitcoin

 The FTX account drainer swapped around $6M worth of ETH for wrapped Bitcoin.

Ethereum’s price is trading below $1,200 on Sunday, charting a decrease of around 3.5% in the past 24 hours.

This happens as the FTX account drainer is swapping ETH for wrapped Bitcoin.

• Data from the popular security resource, PeckShield, revealed that the address that drained funds from FTX is swapping ether for BTC.
• The “FTX Account Drainer” dumped around $6 million worth of ETH (around 5K ETH) and bought 357 renBTC.

Source: Twitter

 

• This is causing pressure on ETH’s spot price, which is currently down some 3.5% (on Binance) for the past 24 hours.
• As to who the drainer may be, CryptoPotato recently reported that the Securities Commission of the Bahamas assumed control of associated assets. Per a media release shared by authorities:

On 12 November 2022, the Securities Commission of The Bahamas, in the exercise of its powers as regulator acting under the authority of an Order made by the Supreme Court of The Bahamas, took the action of directing the transfer of all digital assets of FTX Digital Markets to a digital wallet controlled by the Commission, for safekeeping.

Grayscale Says No To Proof of Reserves

 Grayscale said it will not follow the trend and perform a proof of reserves because it would no be the safest thing to do.

The cryptocurrency industry was built on top of one slogan: “don’t trust, verify.” But Grayscale is different from the rest of the cryptocurrency-related businesses.

In a recent Twitter thread pondering the need for transparency in the industry after the collapse of FTX, Grayscale attempted to calm its investors’ fears, assuring them that the regulations that apply to its various entities make an FTX-like scenario nearly impossible.

Grayscale Says: Funds Are Safe, Trust Us

Grayscale assures that each of its products is duly registered as a separate entity with its own regulations. They explain that the laws and regulations governing each of its crypto trusts prevent underlying assets from being sold, loaned, or otherwise transferred.

In a subsequent tweet, Grayscale assures that its cryptocurrencies are held by the custody service provided by Coinbase, the only regulated and publicly traded cryptocurrency exchange in the United States.

But now comes the awkward question. What about proof of reserves? Grayscale declined to do such a thing, citing security reasons. They explain that Coinbase, as custodian, does perform periodic validations, but as such, they would not disclose addresses or any information considered confidential so as not to affect the nature of their products:

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6) Coinbase frequently performs on-chain validation. Due to security concerns, we do not make such on-chain wallet information and confirmation information publicly available through a cryptographic Proof-of-Reserve, or other advanced cryptographic accounting procedure.

— Grayscale (@Grayscale) November 18, 2022

Does Proof of Reserves Really Matter?

The Proof of Reserves is simply a way for users to prove that an independent auditor studied and proved the reserves of a specific exchange or business. It uses Merkle Trees to capture data and get a set of fingerprints that let users verify that their funds were properly audited by a third party.

The proposition for proof of reserves has started to get a lot of buzz in the cryptocurrency community in the wake of the FTX meltdown, the latest victim of a cryptocurrency winter that has taken down industry heavyweights such as Terra, 3AC, and Celsius.

The idea is to provide a way for users to verify a business’s assets via cryptographic techniques that ensure data transparency. Binance recently agreed to work alongside Vitalik Buterin to implement a new proof-of-reserves protocol that is supposed to be more efficient and secure than the current methods.

However, Grayscale is adamant that some things should be kept secret.

7) We know the preceding point in particular will be a disappointment to some, but panic sparked by others is not a good enough reason to circumvent complex security arrangements that have kept our investors’ assets safe for years.

— Grayscale (@Grayscale) November 18, 2022

Grayscale currently holds the largest cryptocurrency trust in the industry, to the point where it was considered the best way to get exposure to the cryptocurrency market among institutional clients. However, following the crypto winter, each share of the trust has traded about 40% below the price of BTC as an underlying asset.

Grayscale has also tried to convert its trust into a Bitcoin ETF, but the SEC has not given the thumbs up for the project to continue.

Saint Kitts and Nevis to Make Bitcoin Cash Legal Tender in 2023

 The Prime Minister Terrance said Saint Kitts and Nevis will engage with Bitcoin Cash mining and make BCH legal tender by March 2023.

The island country located in the Caribbean region – Saint Kitts and Nevis – plans to turn Bitcoin Cash (BCH) into an official payment method inside its borders by March next year.

The announcement positively affected the asset’s price, which jumped above $100.

• The Prime Minister of Saint Kitts and Nevis – Terrance Micheal Drew – disclosed that the government is willing to engage with Bitcoin Cash mining and make the asset legal tender on local soil by March 2023.
• The leader opined that the cryptocurrency represents “future opportunities” and said the initiative will go live once regulators guarantee consumers will have maximum protection.

• BCH jumped to around $103 immediately following the speech and still trades above $100. Still, this is far away from the 2021 price levels when it surpassed $1,500. The all-time high occurred in 2017 when it traded at over $4,300.
• Bitcoin is the only digital asset that currently serves as legal tender. The first country to embrace it was El Salvador in 2021.
• The Central African Republic followed suit this year. The President of the nation – Faustin-Archange Touadéra – argued that “bitcoin’s “disruptive power” will bring “long-term prosperity.” He also urged people to understand the benefits of the asset as it could serve as a lifeboat during the ongoing adverse economic times.

Binance Has No Big Plans for India Due to High Taxation, Says CZ

 

Early this month, the Binance CEO said at Singapore Fintech Festival that high taxes can kill the crypto industry in India.

Binance CEO Changpeng Zhao (CZ) has all but given up on India. Pointing out the 1% transaction tax that came into force on 1 July 2022, CZ said it makes crypto trading unviable in India.

Speaking at the TechCrunch Session: Crypto 2022 on November 17 in Miami, CZ further pointed out that Binance is engaged with blockchain associations and influential persons in India to present the industry’s stance before the policymakers, a TechCrunch report said.

CZ Red Flags 1% Transaction Tax

“If you are going to tax 1% on each transaction, there is not going to be that many transactions… To be honest, I don’t think India is a very crypto-friendly environment,” he said.

While CZ maintained his negative outlook on India, first publicly expressed during the Singapore Fintech Festival early this month, Binance is available to Indian users.

“A user could trade 50 times a day, and they will lose like 70% of their money. There is not going to be any volume for an order book type of exchange. So we don’t see a viable business in India today,” he explained.

Indian exchanges have witnessed up to a 90% fall in trading volume after the transaction tax on crypto activities became effective in July.

Binance Sees Spurt in Indian Traders 

The 1% transaction tax on crypto activities became effective on 1 July 2022. And, Binance seems to be a major gainer as traders have deserted Indian exchanges for fear of tax reporting and compliance and thronged to foreign exchanges, including Binance, which is yet to take a call on compliance with new taxes.

The Binance app witnessed 429,000 downloads in August in India, the highest for the year, and over three times more than the runner-up, CoinDCX, media reports said in early September.

“Binance goes to countries where regulations are pro-crypto and pro-business. We don’t go to countries where we won’t have a sustainable business — or any business, regardless of whether or not we go,” he told the panel at the opening session of TechCrunch’s first dedicated event on crypto.

CZ has Not Given Up Entirely 

But the Binance CEO has not completely removed India from his scheme of things.

“We just have to wait. We are in conversation with a number of industry associations and influential people and trying to put some logic there… We are trying to get this message across, but tax policies typically take a long time to change,” Zhao cautioned.

Revolut Distances Itself from FTX While Pushing for Crypto: Report

 Several crypto firms have been affected by the fiasco and many of them are now revealing their exposure to it.

After Sam Bankman-Fried’s crypto empire imploded last week, exchanges are rushing to soothe the nerves of infuriated investors. Digital banking firm, Revolut is the latest one to distance itself from FTX.

In an emailed statement, Revolut told users that it did not have “material exposure” to the bankrupt crypto exchange.

Revolut Monitoring the Situation

The London-based company said it is still monitoring the situation while reminding the volatility associated with digital assets.

“This is a good reminder that crypto is very volatile: the value does go down, as well as up. So, remember to only invest what you can afford to lose.”

It is important to note that the FTX chief tweeted that users could transfer money in fiat currencies between his exchange and Revolut in June last year. Despite this, the latter’s spokesperson has confirmed that the company does not have any direct exposure to FTX.com or its sister trading firm Alameda Research. Additionally, Revolut has very little indirect exposure and does not allow trading in FTX’s native – FTT token.

Other platforms, such as Robinhood Markets, have also confirmed having no direct exposure to FTX. In fact, its Chief Executive Officer Vlad Tenev claimed that customers were turning to the trading app in a “flight to safety” after the collapse.

A NY-based investing company, Public, notified its members this week, assuring that it does not have “any direct exposure” to FTX, Alameda, or FTT. Stephen Sikes, Public’s chief operating officer, went on to assert that customers did not have access to FTT on their platform since it was not listed by US-based firms.

Legal Woes for FTX

FTX is currently battling bankruptcy with an $8 billion deficit in its financial records. This week, the court-appointed Bahamian liquidators claimed signs of “serious fraud and mismanagement” on the bankrupt crypto exchange’s part. Brian Simms, the provisional liquidator, questioned the validity of a Chapter 11 bankruptcy filing by subsidiary FTX Trading and the collective 130 affiliates in Delaware court.

The high-profile collapse will undoubtedly trigger several criminal and civil actions against FTX as well as its executives, such as Bankman-Fried. Furthermore, regulators across the world are also expected to double down their initiatives on crypto regulation.