The MakerDAO loan system, administered by the Maker Foundation, hit its debt ceiling Wednesday with roughly $100 million worth of the stablecoin DAI issued and more than $339 million worth of ethereum locked up as collateral.
On Thursday, the Maker Foundation proposed a new debt ceiling of 120 million DAI, which will now be voted on by holders of MKR governance tokens.
“MakerDAO has hit that limit and no more [DAI] can be generated until that debt limit is increased,” Maker Foundation president Steven Becker told CoinDesk.
This follows the previous raise in 2018, which doubled the DAI debt ceiling from 50 to 100 million stablecoins.
Despite the platform’s rapid growth, Becker said the nonprofit’s employees don’t have any statistics or insights into which demographics are taking out these cryptocurrency loans. Whoever they are, LoanScan tallied users conducting 35,919 transactions over the past month alone.
Back in July, the MakerDAO Foundation’s Joe Quintilian told CoinDesk he “wouldn’t be surprised” if the first $3 million loan was issued by 2020. As of November, there are at least five loans exceeding that amount, including two loans over $8 million each.
These loans don’t have fixed interest rates. Michael McDonald, creator of DAI analytics site mkr.tools, said in July that raising the debt ceiling might require a higher “stability fee,” the interest rate users must pay when they close out their DAI loans.
The stability fee fell from over 18 percent this summer to 5.5 percent today. The majority of the 35 voters who participated in a poll this week voted to raise the rate again to 9.5 percent. However, Thursday’s MakerDAO Foundation proposal to boost the debt ceiling to 120 million DAI also put a 5 percent stability fee back up for a vote.
Borrowers will have to pay whatever fee these voters decide on if they want to reclaim their collateral. Voter turnout remains low (just 1.97 percent of MKR holders participated in this week’s vote), perhaps in part because MKR tokens cost around $612 each.
Andreessen Horowitz’s crypto-centric fund holds 6 percent of those MKR tokens, with Polychain Capital and 1confirmation also holding significant amounts and nonprofit board seats. The MakerDAO Foundation has 85 contracted employees, Becker said. Furthermore, the system’s underlying ethereum backbone is being reconstructed, a project called Eth 2. Becker said it’s too soon to say when or how the system will migrate to the new blockchain, although mutual compatibility is the plan.
“The impact that we plan should be negligible and very much manageable,” Becker said of the ethereum upgrade.
Maker holder and DAI tinkerer Taylor Monahan, CEO of the wallet startup MyCrypto, told CoinDesk she is concerned there aren’t enough open discussions about the risks involved with decentralized finance [DeFi].
“Let’s be upfront about what the risks actually are, rather than say they are so minimal,” she said, adding:
“We can’t just let [growth] overshadow the fact that there are unintended consequences and unmitigated risks.”
One risk: These loans automatically liquidate if the price of ether drops below a designated point (which varies depending on the loan).
As of Nov. 18, MakerDAO will switch to a multi-collateral system, where users can put cryptocurrencies beyond just ETH into the DAI system. For starters, the system will only support one other token, BAT. Becker told CoinDesk OmiseGo is another prospective token being considered. Each type of token collateral will face prospective liquidation according to its own price feeds.
One aspect of the current MakerDAO migration that troubled Monahan is calling the collateral process a “vault,” as if the ether collateralized to issue DAI was stored for safekeeping with no further action required on behalf of users. (The previous name for taking out a DAI loan was “collateralized debt position.”)
Becker said there will be ample materials instructing users on how to transfer their loans from the current system to the multi-collateral system later this month. It could be as simple as pressing a button and indicating consent, he said, depending on the users’ platform of choice.
“Like any migration, you’ll have a dual system running until some time has passed,” Becker said, adding it’s not yet clear what will happen to loans that haven’t moved over by this time next year.
Monahan said she’s excited about the growing DeFi ecosystem, but that it also reminds her of the Decentralized Autonomous Organization [DAO] hack in 2016, where millions of dollars worth of tokens were stolen and the entire ethereum blockchain was reorchestrated to restore lost funds.
“I kind of hope we don’t do the same exact thing. Let’s talk about [risks] before this gets too big,” she said, adding she hopes people are exploring every possible way this could impact users.
Bitcoin Is Bad For The Environment… Or Is It?
- The massive energy costs that miners are burdened with for Bitcoin have been worrying many in the crypto community.
- The main headline that a lot of people use, is something like ‘bitcoin mining is killing the planet’.
- But there are many misconceptions of bitcoin out there…
The massive energy costs that miners are burdened with for Bitcoin have been worrying many in the crypto community, especially in light of the fact that several people outside of the community have aimed a lot of negativity towards to the industry. The main headline that a lot of people use, is something like ‘bitcoin mining is killing the planet’.
According to a report from the digital asset management firm Arca, there are many misconceptions of bitcoin out there. Titled “Bitcoin Study: Energy Consumption as a Corollary to Environmental Impact and the Potential of the Evolution of Money,” the report looks into such stories of Bitcoin ‘killing the planet’ and ‘harming the environment’.
The author of the report, Sasha Fleyshman has said:
“Is there a problem with Bitcoin because it needs electricity? The same argument could be made for refrigeration, which is completely reliant on electricity to keep products cool. Does that mean that refrigeration has a systemic problem?”
The author further went onto talk about the idea of the leading cryptocurrency being the first modern-day darknet market. This argument comes from the general consensus of Bitcoin not being governed by a regulatory body and is therefore impossible to keep track of.
“As for using BTC for nefarious activities, a report conducted in 2018 revealed that 46% of all Bitcoin transactions ($76 B) were used for illegal activities, which fell in line with the percentages in the U.S. and European black markets. When you take into account the vast imbalance between the total Bitcoin market capitalization to that of the U.S. dollar, it becomes evident that Bitcoin is dwarfed by traditional currencies in funding illegal activities ($100 B, 2010).”
KuCoin Announces One-stop Exchange Solution KuCloud
KuCoin, an IDG-backed global crypto exchange, today announces the debut of its one-stop cryptocurrency trading platform solution product – KuCloud.
KuCloud now offers two products named XCoin and XMEX and is able to deliver the key functionalities of KuCoin Spot platform and KuMEX Futures platform, including world-class architecture, risk-management system, high market depth & liquidity, all-around
customer support and more.
With the top-tier white-label solution offered by KuCloud, partners will be able to set up their own crypto exchange in 72 hours in their local market with features ranging from spot trading, margin trading, staking, fiat gateway to up to 150x leverage futures trading.
In addition, thanks to the high scalability of the KuCoin architecture, KuCloud can also customize its offering on the basis of the partners’ needsJohnny Lyu, co-founder of KuCoin stated,
“The idea of KuCloud started in 2018 as a concept called ‘subnets’, with which we intended to give our exchange a powerful advantage when expanding into new markets since each new exchange can act as a separate entity.Now we go one step further and upgrade the ‘subnets’ to KuCloud, eliminating the difficulties and hassle of opening a crypto exchange, allowing all our partners to build crypto-related platforms with us to contribute to the liquidity and mass adoption of crypto.”
To celebrate the new arrival, KuCloud is now offering an early bird privilege of zero-cost to launch a crypto exchange, aiming to save future fellow exchange operators million-dollar input and months of time cost, which will ultimately fuel a corner overtaking on this very racing track.
You can learn more about KuCloud through this webiste, or just send them a mail.
KuCloud is an advanced white-label solution offered by KuCoin Group. Standing on KuCoin’s shoulder, KuCloud fully utilizes the Group’s solid independent R&D capacity, provides partners with world-class, secure, scalable and high-liquidity infrastructure
technology of crypto spot and futures exchange, shoring partners to better leverage its commercial and operational edges to achieve a greater good. Further information is available here.
Bitcoin’s price is anyone’s guess; the next US President not so much
Can you accurately predict Bitcoin’s price? Most people would disagree. In a market so fickle and sensitive, Bitcoin’s price can never be accurately estimated.
A testament to this unpredictability is the case of the golden cross. Earlier this week, market participants were celebrating the $10,000 ascent because it came with the crypto’s 50-day MA moving over its 200-day MA, a sign of bullish things to come. It wasn’t.
In the next few days, the coin dropped below $10,000 yet again, a 5.5 percent hourly drop that took the coin back down to $9,500. Whomp whomp!
If you think this was a golden cross anomaly, you’re wrong. Back in October, as Bitcoin entered the bearish equivalent of the golden cross, titled the ‘death cross‘ the price increased by 27 percent in the next three days.
Source: BTC/USD via TradingView
The Bitcoin market is quite shaky, but what could be worth predicting, in the larger scheme of things is who will become the most powerful person in the world, come November 2020. FTX, a crypto-derivatives exchange, rolled out PRESIDENT 2020 contracts for both the incumbent Donald Trump and the 5 top Democratic nominees.
After last night’s Democratic primary debate, there has been a reshuffle, providing a glimpse of who the crypto-community is bullish on come the nominee pick.
At press time, while Bitcoin is down by over 5 percent in the daily charts, the biggest gainer on the Presidential derivatives is, surprisingly, Elizabeth Warren. The senator from Massachusetts’ Warren 2020 contracts are up by a whopping 38.46 percent after a strong showing in the debate. Despite the recent price rise, Warren 2020 contracts are still priced at $0.018, lowest of them all.
Source: PRESIDENT 2020, FTX
It seems that while the market has turned bullish on Warren, it turned bearish on perhaps the biggest capitalist of the filed, Michael Bloomberg. The former mayor of New York city saw his contracts drop by 23.2 percent. The Bloomberg 2020 contracts which before the debate was priced at $0.14 fell to $0.096, but is still second only to Bernie Sanders’ derivative.
The Bernie 2020 contracts were up by 6.84 percent, taking the lead at $0.203, with over $75,000 trading volume, more than the rest of the contracts combined, including the Trump 2020 contract. Pete Buttigieg remained flat with no change, while two-term vice president, Joe Biden also saw an increase of 4.35 percent.
While volatility is rampant on the Dem-derivatives, market participants are still bullish on a continuing Trump presidency. Latest information suggests Trump is riding high at a price of $0.63 percent, but who knows… a tweet could soon change that. How things go from here to November will be very interesting.
Regardless of the outcome and the market, the fact that a derivative product priced in dollars and traded for cryptocurrencies is predicting a Democratic Socialist to win the nomination reeks of unending irony. What’s even more ironic is that FTX is restricted in the US, so US citizens cannot trade a contract predicting their next president.
Even still, predicting who will be the next US president is easier than predicting the price of Bitcoin.