Relaynode SoCal: October 7, 2019 – Relaynode SoCal
Reflections on China
This week, we’ve added the first in a new weekly DeFi series written by my friend and former colleague, Roy Learner, probably the most active user of DeFi applications that I have met.
I was a senior in high school in a small(ish) town in suburban Long Island, when I first witnessed the explosive growth of China. I didn’t experience first hand the loss of local jobs to Chinese factories, but I saw it in a movie: Mission Impossible 3 (lol, I know). My eyes were glued to the screen as Tom Cruise leaped from one giant skyscraper to the next across the breathtaking skyline of PuDong in Shanghai. I was taken by the scale of the city and knew that I was looking into the future.
This is when I decided I would commit to studying mandarin in college. My plan was to learn so that I could live and work in China where economic growth was clearly shifting. In the summer of 2008, I took my first trip to Shanghai to study at Shanghai Normal University. It was an exciting time to visit China during the 2008 Beijing Olympic games. From Shanghai, I hopped on a high speed train to Beijing with a few new friends and witnessed first hand the incredible spectacle of China’s growing power. I had heard that Beijing was a grey city, but during the Olympics, factories were shuttered and sulfur was shot into the sky which was bright blue by the time I arrived. Zhongguo JaiYou!
Another two years passed (as well as the largest financial crisis of the century) and I graduated with a minor in east asian languages & civilizations. Finance opportunities in China were limited — if you couldn’t read a 10-K in mandarin, the banks didn’t want you. Unfortunately for me, I was not that advanced.
But I managed to return to China to shadow the marketing director of a shoe last manufacturing company called Jones & Vining. Their factories were located in Guangdong province in the cities of Zhongshan and Dongguan. I slept in the factory dorms next door to the much larger and now infamous FoxConn factories where to this day a meaningful percentage of chips and computer parts are manufactured for US tech companies.
The lifestyle in Guangdong didn’t suit my 21 year old privileged American tastes, and I had a girl plus a high-paying investment banking job waiting for me in New York. Rather than testing my luck as an expat entrepreneur in a strange foreign land, I took the safe route and decided to return home. It’s a decision that I question to this day.
At the time, I did not realize that only ten years later, this region on the South China Sea, would sit at the epicenter of a massive economic struggle that will likely determine the financial (and possibly political) future of the world.
Anyways, this is already too long for one week + I always wanted to write these words, so —
“to be continued…”
Probably the biggest news of the week was Block.one’s settlement with the SEC. The company raised $4 billion via its ICO (much from outside the US), but settled with the SEC for only $24M ($6m less than Block.one paid for the Voice domain). Huge win for Block.one who now claim that this settlement resolves all open issues with the SEC. You can read the full SEC Order here. On a related note, this guy wins the 2019 lawyer of the year award.
In the same week, the SEC also settled with Nebulous, the creators of SiaCoin, for $225,000. The two settlements set the precedent that although a company may have illegally raised money via an unregistered securities offering, this does not by default make their network tokens securities. These decisions carve a legal path forward for all companies that raised via ICO who have yet to launch a mainnet.
Paypal became the first Libra Association member to depart from the foundation (before it officially launches).
A16z launched a crypto start-up school to encourage more tech entrepreneurs to start crypto projects.
BlockFi released a report on the “Institutional OGs of Bitcoin” based on scraping information from public fund ADV filings. A few interesting takeaways: there are exactly 201 private funds with crypto exposure, 18 of which are traditional hedge funds who each manage over $1 billion in assets. BlockFi estimates that around $3–5 billion of traditional fund money has been invested in crypto (excluding venture). They also categorize and rank key service providers. Tagomi was the only crypto prime broker named in the ADVs, and Coinbase custody was named 27 times. The company’s custody business is on a tear as evidenced its booming AUM.
Speaking of Coinbase, they made a few important moves this week. First, they are clearly moving into bank territory by offering 1.25% rewards on USDC accounts held in Coinbase. While these rates seem low for those of us immersed in the DeFi space, I believe that yield-paying stablecoins will be the second largest use case of crypto behind speculation & trading (at least in the near term). Ironically, both use cases benefit the middlemen (albeit new ones).
Second, Coinbase is increasing their trading fees by 150% likely to account for declining revenue. Coinbase’s 2018 revenue disappointed relative to 2017 on lower volume, which appears to be highly correlated to Bitcoin prices. They’ll need to expand into new business lines (ie: custody) and markets (geographic and token) to grow. Otherwise, they’ll need to leverage their balance sheet to acquire high quality assets or teams like peer-to-peer rental startup Omni.
Finally, congratulations to the Vega team (and new Relaynode London author, Christina Norgard Rud) on closing a $5M seed from Xpring, Pantera, & Hashed to build a protocol for non-custodial derivatives trading.
Contributed by Roy Learner
Union
One of the largest barriers to broader adoption of crypto lending today remains the fact that users must deposit between 125%+ in collateral to take out a loan. This has led to margin trading as the primary use case among lending primitives (Maker, Compound, dYdX, etc.) — use your ETH as collateral to receive USD/Dai, to then lever up and purchase more ETH.
Union, billed as a “credit union DAO”, aims to enable under-collateralized lending by allowing members to borrow interest yielded from the DAO’s capital pool (i.e. interest generated from Compound).
Applications to the DAO include an initial capital contribution and combine a form of on-chain identity (wallet address, KYC, etc.) + social vouching (new DAO members must be staked by 2 existing members). A “Web of Trust” starts to form, with the DAO penalizing members if their vouched peers exhibit bad behavior (late payments, don’t repay their loans, etc).
The project is an interesting blend of centralization for membership (KYC) with a crypto-native spin in the form of bonding curves and a DAO for membership (similar to NexusMutual’s approach), which I think we’ll continue to see more tinkering with in the future. Keeping a close eye on this one.
Balancer
Balancer is a more generalized version of Uniswap. Instead of using ETH and another token with equal weight (50% ETH / 50% DAI), Balancer enables the formation of liquidity pools with multiple tokens (80% ETH, 10% Dai, 10% USDC). Exciting to see how this new #DeFi primitive can be used as a potential building block (creation of index funds, staking-specific funds, etc.).
BitDEX
Decentralized BitMEX from the team at UMA. Will be interesting to see if they can steal market share away from the growing number of centralized derivatives platforms (BitMEX, FTX, CoinFlex, Bakkt, Deribit, etc.), or if trade volumes will reflect the current DEX vs. CEX landscape.
Written by Roy Learner, Wave Financial, fmr Enterprise Ethereum Alliance
If you’re company is hiring in LA, please submit new roles directly to marc@relaynode.io
Spring Labs — Senior Blockchain Engineer (Full Time)
Wave Financial — Consulting Associate (Full Time)
Ikigai — Analyst (Part Time)
WAX — Senior UX Designer (Full Time)
ARCA — Data Scientist / Quantitative Analyst (Full Time)
This Week
CryptoMondays LA(Free)
When: Monday, October 7th, 6–9P
Where: Upstairs Space 1212 Restaurant on 3rd Street Promenade in Santa Monica
3Box & Crypto Wallet Hygiene — Come Learn About Social Identity & Wallet Hygiene (Free)
When: Monday, October 7th, 6–8P
Where: Rough Draft Brewing Company 8830 Rehco Road · San Diego
Hosted by Blockchain & Brews, the goal of this event is to cover the basics of wallet hygiene and to help members to learn about 3box and setup their 3box profiles
Discussion about Monero Technology and Uses (Free)
When: Wednesday, October 8th, 8–10pm (every 2nd Wed of the month)
Where: Available upon sign up
Discuss the latest updates from the Monero community
UPCOMING
Beginner Blockchain Day @ USC (Free)
When: Saturday, October 12th, 10A-5:30P
Where: USC Michelson Hall, 1002 Childs Way Los Angeles, CA 90089
A day to introduce blockchain technology and its potential applications to industry newcomers. Confirmed speakers include Preethi Kasireddy from TruStory, Mark Jeffrey from Guardian Circle, and a few members of the Spring Labs team.
Bitcoin Basics! Brunch (Free)
When: Sunday, October 13, 2019, 11A-3P
Where: Expert Dojo 395 Santa Monica Place #308 Santa Monica, CA 90401 (2nd floor of the mall)
A series of talks from a number of Bitcoiners designed to dispel the myths many newcomers hear about the cryptocurrency
Crypto Sunrise Hike (Free)
When: Sunday, October 13, 2019, 7:30–10:30A
Where: 510 Los Liones Dr, Pacific Palisades, CA 90272
To kick off LA blockchain week, join nature loving crypto enthusiasts for a hike watching the sun rise with views of the Pacific Ocean, breathing and discussing blockchain’s latest.
BlocktoberFest (LA Blockchain Week Kick Off Event) (Free)
When: Sunday, October 13, 2019, 4–10P
Where: Boomtown Brewery, 700 Jackson Street Los Angeles, CA 90012
Kick off event for LA Blockchain Week — RSVPs limited, so recommended to sign up early
HODL Masters Crypto Golf Tournament ($50–70)
When: Monday, October 14, 2019, 8:30A-12P
Where: Westchester Golf Course — 6900 West Manchester Blvd, Westchester, CA 90045
Hosted by Melrose PR, enjoy a day on the linx with a few new crypto friends.
Crypto Invest Summit (I’m giving away 10 free tickets to CIS to the first that register with the code RELAYNODE)
When: Tuesday, October 15 — Wednnesday, October 16, 2019
Where: LA Convention Center, 1201 S. Figueroa St. Los Angeles, CA 90015
LA’s leading investment focused crypto conference
LA FinTech Awards 2019 ($11–25)
When: Tuesday, October 15, 2019 7–9P
Where: LAAC 431 W. 7th St. · Los Angeles, CA
Watch presentations from a few of the nominees and discuss the future of finance
NOTABLE CONFERENCES
Sep 30-Oct 1 — Korea Blockchain Week (Seoul)
October 5–6 — Cryptoeconomic Systems (Boston)
October 8–11 — Devcon 5 (Osaka, Japan)
October 8–10 — World Digital Mining Summit (Germany)
October 19–20 — The Lightning Conference (Berlin)
October 21–23 — ACM: Advances in Financial Technologies (Zurich)
October 23–24 — CordaCon (London)
Oct 28 — Nov 3 — SF Blockchain Week (San Francisco)
Nov 1–3 — Prosper Retreat by Celo (The Land Sanctuary, 2.5 hours north of San Francisco)
Nov 4–5- Stellar Meridian (Mexico)
November 12th-13th — Capital: Global Coinmarketcap Conference (Singapore)
Nothing written in RelayNode LA is legal or investment advice and should not be taken as such. RelayNode LA does not make any guarantee or other promise as to any results that may be obtained from using our content. No one should make any investment decision without first consulting his or her own financial advisor and conducting his or her own research and due diligence.
Published at Mon, 07 Oct 2019 07:15:49 +0000
{flickr|100|campaign}
