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Every day is proof of keys for DeFi (Market Monday - Lite)

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Every day is proof of keys for DeFi (Market Monday - Lite)

Market Monday for January 6, 2020

Ryan Sean Adams
Jan 6, 2020
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Every day is proof of keys for DeFi (Market Monday - Lite)

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Dear Crypto Natives,

Not your keys not your coin.

If you don’t have access to the private keys of your cryptocurrency then you don’t really own them. The ETH you own in your Coinbase account or on BlockFi is really an ETH-IOU. It’s backed by trust. It’s not fully bankless.

I’m not against using crypto banks by the way. I use them all the time. But if crypto ends up dominated by a small set of powerful crypto banks that we have to trust—well, what’s really changed?

If we do use crypto banks ideally we have a way to verify that they have our money.

That’s why I like the idea of Proof of Keys Day—a day when crypto holders simultaneously withdraw their crypto from the crypto banks to prove that the banks really have their money. A socially coordinated run on the bank every January 3rd. A bank system audit by mass fund withdrawal.

An aside—it’s interesting to consider the equivalent in traditional finance. What would happen in a Proof of Cash Day in traditional banking if we mass withdrew dollars? Pure chaos! Banks operate on a fractional reserve basis so they’re only required to hold 10 percent of their liability obligations in cash (yes, your savings account is a bank liability). And most of these dollars are digital not physical and these digital dollars are held in special accounts with the Federal Reserve that only certain banks can access (not consumers!). So the cash can’t be withdrawn because most of it doesn’t exist and the part that does exist isn’t available for regular people.

Not to worry though. The banking system is highly efficient as long as people trust it!

Back to crypto. Is a bank run through proof of keys really the best we can do? No! People like Nic Carter advocate proof of solvency. That crypto banks voluntarily report and cryptographically prove their reserves on a regular basis. So far, the market has not demanded this of the banks and neither have regulators, thus there’s been near zero uptake. Banks will be banks.

But we can do better than banks now.

Money protocols like Maker, Uniswap, and Compound have proof of solvency built into their systems. Anyone, anywhere in the world can audit them at anytime with the click of a button.

You want to know how much collateral backs DAI? One click & you have the answer.

Don’t trust Etherscan? Try another site. Or run a node and do the query yourself.

You can see how much DAI Compound holds. You can audit the liquidity pools of an entire exchange on demand. No CPAs, legal system, or government required.

A Bitcoin node can assay a Bitcoin. But an Ethereum node can assay a banking system.

Do you see how powerful this is? How much does it cost to audit the traditional banking sector—the lawyers, accountants, reporting across Every. Single. Bank.

An Ethereum node can audit the open finance banking system for $30 a month.

This means anyone can do it.

So I’m saying proof of keys is good. But open finance is better. Because it’s not just one day a year.

Every day is proof of keys for DeFi.

- RSA


Price of ETH and BTC up—is that the smell of bullishness in the air? Everyone predicting a flat or slightly up year for crypto. I predict a 10x year for leveling up.


MARKET MONDAY:

Scan this section and dig into anything interesting

Market numbers

  • ETH up a smidge to $143 from $132 last Monday

  • BTC down a bit to $7731 from $7,302 last Monday

  • DAI stability fee stays 4% with savings rate 4% (vote may move it to 6% & 6%)

Market opportunities

  • (Lend) Add ETH to Uniswap pool in a click w/ losing ETH (liquidation risk tho)

  • (Lend) Add DAI liquidity directly via pools.fyi (last year DAI pool did 23%)

  • (Pay) Pay contractors without a bank using RemRoll (have not tried)

  • (Trade) GodsUnchained cards on TokenTrove

  • (Buy) Coffee vouchers on Uniswap using Cafe tokens (cool experiment!)

  • (Earn) Trustlines tokens through airdrop right here (Ethereum PoS Sidechain)

  • (Lend) wBTC on Fulcrum for 4.7% (you can buy WBTC on DEX.ag)

  • (Lend) Still can’t beat BlockFi ETH and BTC rates at 4.10% & 6.20%

  • (Give) To GitCoin grants & have your donation matched (give to Bankless!)

  • (Earn) 10% on DAI at crypto.com (get $50 MCO w/ banklesscode)
    (they’re releasing a non-custodial wallet soon too)

New stuff

  • Social trading by Set (like eToro) coming soon

  • Can now buy crypto via Visa credit card using Binance if in the EU

What’s hot

  • Uniswap great 5,000% in liquidity last year!

  • 3m ETH locked in DeFi for the first time last week 🔥

  • BTC up 9,000,000% over the last 10 years

  • 500x gas improvement using LoopRing DEX (high potential tech here)

  • 76 million DAI w/ 20 million supplied to Compound

Money reads

Lots of great reads this week—people busy writing during the holidays it seems!

  • A resource for crypto articles called Nakamoto popped up w/ some good stuff:

    • Credible Neutrality (incredible article 🔥🔥🔥) - Vitalik Buterin

    • Values of Bitcoin article - Jameson Lopp

    • Beginners guide to DeFi (liked it! one thought) - Linda Xie

  • Great year in Review (but why notjust admit ETH is money?) - Nick Tomaino

  • A year in crypto (lots of data!) - Santiment

  • Year end take on DEXes (decent growth!) - Will Warren of 0x

  • Good reddit post on what 2020 may bring for ETH - DCInvestor

  • Solid take on the last decade of Crypto - Brian Armstrong of Coinbase

  • Good perspective on the battle for interest in DeFi - Varun Deshpande

  • Overview of how exchanges are becoming more like banks - Deribit Research


WHAT I’M DOING

Check out a few opportunities I’m capturing right now with my crypto money


WEEKLY ASSIGNMENT:

Make time to complete this assignment before next week


Extra Credit Learning


MAIN & MINI TAKES:

Read my takes but draw your own conclusions


TWEET-A-QUESTION

Tweet me your question—I reply to one per week

Question from Twitter:
Isn’t ETH just a commodity?

RSA Response:

- RSA


Some recent tweets…

Twitter avatar for @RyanSAdams
Ryan Sean Adams - rsa.eth @RyanSAdams
Bitcoin is a good It’s the reason we got here But I don’t feel a need to operate under some Bitcoin flag And I feel zero compulsion to pander to maximalists in my writing or speaking I support projects that bring the world closer to an open money system. Bankless not Bitcoin
1:18 AM ∙ Jan 6, 2020
107Likes10Retweets
Twitter avatar for @RyanSAdams
Ryan Sean Adams - rsa.eth @RyanSAdams
I refuse to take any Eth Killer seriously who a) hasn’t shipped a mainnet or b) who’s network is full of empty blocks Ship a mainnet, fill some blocks, then maybe...just maybe you can talk of trying to compete with Ethereum
2:37 AM ∙ Jan 5, 2020
254Likes30Retweets
Twitter avatar for @RyanSAdams
Ryan Sean Adams - rsa.eth @RyanSAdams
Benchmark Sequoia Capital Kleiner Perkins Caufield & Byers "Smart money" like this invested $1.7 billion the Telegram ICO Now telegram won't tell the SEC how they spent the $1.7b Smart money FOMOs into things just like everyone else Don't let them tell you otherwise
4:54 PM ∙ Jan 4, 2020
105Likes10Retweets
Twitter avatar for @RyanSAdams
Ryan Sean Adams - rsa.eth @RyanSAdams
Gift cards are a $160b market Big growth is in digital cards, Amazon, Starbucks Digital gift cards are basically company issued stablecoins But they're illiquid, non-composable, analog What if they became money lego? What if they became an ERC20? Just a matter of time 🚀
5:28 PM ∙ Jan 3, 2020
260Likes34Retweets
Twitter avatar for @RyanSAdams
Ryan Sean Adams - rsa.eth @RyanSAdams
How much will ppl pay for crypto transactions? Basically zero dollars aside from Bitcoin & Ethereum 2019 avg daily tran. fees: - Bitcoin: $426k - Ethereum: $95k Everything else under $1k Yet...VC coins tell you their value is based on future cash flows of these fees LOL
5:46 PM ∙ Jan 1, 2020
239Likes27Retweets

Actions

  • Execute any good market opportunities you saw

  • Complete weekly assignment: [subscribe to access]


Level up—no interruption. $12 per mo. Includes Inner Circle & Deal Sheet.


Pay with crypto—using ETH, BTC, or USDC. Annual subscription only.


Let’s onboard 1 billion people to open finance…

If you believe in what we’re doing don’t keep it to yourself—share Bankless with as many people as possible.

Post. Tweet. Tell. That’s how we take back our money system.

If you believe in what we’re doing don’t keep it to yourself—share Bankless with as many people as possible.

Post. Tweet. Tell. That’s how we take back our money system.

Twitter avatar for @money_is_ether
more than money @money_is_ether
My new year's resolution: I have closed 5 out of my 6 bank accounts so far this year and plan on going completely bankless before the end of 2021. All thanks to awesome stuff built on #Ethereum
2:32 PM ∙ Jan 6, 2020

How do you identify?

Twitter avatar for @ethlongmusk
ethlongmusk | wireme.eth @ethlongmusk
@RyanSAdams Bankless
10:00 PM ∙ Jan 5, 2020

👉Send Bankless a tip for today’s issue (rsa.eth)


Not financial or tax advice. This newsletter is strictly educational and is not investment advice or a solicitation to buy or sell any assets or to make any financial decisions. This newsletter is not tax advice. Talk to your accountant. Do your own research.


Disclosure. From time-to-time I may add links in this newsletter to products I use. I may receive commission if you make a purchase through one of these links. I’ll always disclose when this is the case.

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Every day is proof of keys for DeFi (Market Monday - Lite)

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