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The rise of the protocol politicians (Market Monday)

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The rise of the protocol politicians (Market Monday)

Market Monday for October 21, 2019

Ryan Sean Adams
Oct 21, 2019
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Share this post

The rise of the protocol politicians (Market Monday)

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Reminder: if you’re not a paid subscriber this is your second last Market Monday on the program! Free trial stops next week. 😲 Don’t miss out. Subscribe now & get 20% off forever!

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Dear Crypto Natives,

A dozen bankers meet every 6 weeks to set the interest rates for the world. A committee of unelected officials charged with achieving maximum unemployment and price stability—keeping the U.S. economy on track.

Federal Open Market Committee - January 2014

This institution of technocrats—do they have skin-in-the-game? Are they apolitical? Are they accountable to anyone? Are they captured by special interests?

And you think this system is flawed—ok, what would you suggest instead?

Maker has a suggestion. A new protocol with a sole mandate of currency stability governed by MKR holders who each have skin-in-the-skin. Successful management increases MKR price. Flawed risk management dilutes it.

If successful, the stablecoin they govern—DAI—becomes a major world currency.

Today MKR holders vote on changes to DAI interest rates. With the launch of multi-collateral DAI, they’ll also determine which collateral assets back DAI and the risk parameters of those assets—the decisions get more complicated.

Since each MKR holder votes directly governance requires time and effort. A voter must be knowledgeable on the issues and vote often. This means the interests of passive MKR holders aren’t represented. And smaller voters become too apathetic to participate—their vote doesn’t matter when the larger holder swing the outcomes.

But what if the passive holders could delegate their votes to representatives?

Twitter avatar for @nanexcool
👹 Mariano Conti @nanexcool
If you could delegate your MKR to someone (non-custodial, retrieve at any time) so you don't have to vote every week, would you do it? Who in the community would you trust to vote in your best interest?
9:33 PM ∙ Oct 19, 2019
79Likes12Retweets

Does voting become more scalable? Does the system start to resemble some new form of shareholder governance—one with with instant election and removal?

Will we see new politics emerge as prospective delegates campaign for voters?

And maybe someone like me will create a platform to Keep DAI bankless!

Twitter avatar for @RyanSAdams
Ryan Sean Adams @RyanSAdams
As a MKR delegate: I will make every effort to maximize the trustlessness of DAI by... - voting to preserve ETH as the primary collateral - voting against the inclusion of permissioned assets Vote for RSA! Keep DAI bankless!
Twitter avatar for @nanexcool
👹 Mariano Conti @nanexcool
We could pit @RyanSAdams vs @TrustlessState and see who can gather the most MKR 😃 "I will give you lower stability fees" "With your help, I will increase Token X debt ceiling" "I promise lower liquidation penalties" https://t.co/9HrYirWO3y
10:52 PM ∙ Oct 19, 2019
91Likes10Retweets


While political rivals rise up promising the highest MKR rewards:

Twitter avatar for @TrustlessState
David Hoffman🧢 @TrustlessState
As an MKR delegate: I would accept Permissioned collateral, while preserving ETH as main col. How: - Low penalties and SF for ETH CDPs - high SF for permissioned assets CDPs Maximize ETH lockup while maximize secondary collateral fees. Burn that MKR with @TrustlessState! https://t.co/5S4YIZ3dz9
Twitter avatar for @RyanSAdams
Ryan Sean Adams @RyanSAdams
As a MKR delegate: I will make every effort to maximize the trustlessness of DAI by... - voting to preserve ETH as the primary collateral - voting against the inclusion of permissioned assets Vote for RSA! Keep DAI bankless! https://t.co/UchRNDOHLR
6:25 AM ∙ Oct 20, 2019
32Likes7Retweets


David Hoffman and I had fun defining our MKR political platforms this weekend:

  • “Ryan’s plan leaves fees on the table” - Hoffman

  • “The constraint for DAI isn’t supply!” - RSA

  • “Ryan is an ETH-agent in the MKR system!” - Hoffman

  • “False! Don’t let the bankers take over!” - RSA

  • “Both of these plans are terrible” - Third-party candidate enters the ring

You can see how quickly rhetoric emerges and sides are chosen. Ahh…politics.

To be clear, while Hoffman and I probably have positions resembling our hyperbolic tweets, MKR delegation does not yet exist and our twitter vitriol was more illustration than serious. But a delegation system can be created with just a bit of code. And isn’t this an inevitable glimpse into the future?

Imagine a monetary protocol with the power to affect global economies—a private, protocol-based central bank for open finance. How could such an institution exist without accruing political cruft at every open surface area of decision-making?

  • Political parties

  • Forks based on disputes

  • Vote-buying markets

  • Lobbyists & interest groups

The rise of the protocol politicians?

Let’s shore up our governance systems and enter these next chapters with eyes wide open. The protocol politicians are coming.

- RSA


We’re maybe 6 months away from having a completely bankless version of Venmo but the crypto markets don’t care yet—put some syrup on em—they’re flat as a pancake


MARKET MONDAY:

Scan this section and dig into anything interesting

Market numbers

  • ETH down slightly at $176 from $182 last Monday

  • BTC about even at $8,240 from $8,243 last Monday

  • Maker stability fee down to 9.5%—back to double digits!

Market opportunities

  • (Lend) Argent releases Compound on Android (jump the queue 🔥)

  • (Lend/Borrow) ETH/DAI margin trading with new DDEX feature (zero fees!)

  • (Lend/Borrow) See rates across crypto banks & protocols at CoinMarketCap

  • (Lend) DAI on DyDx at 10.13% (free arbitrage if you borrow DAI at 9.5%)

  • (Trade) DAI on Bittrex US for the first time

  • (Bet) Will Justin Trudeau be re-elected Prime Minister of Canada?

  • (Invest) Get 2% rebate on PAX Gold tokens (stay tuned for my gold token review)

  • (Lend) BlockFi still 6.2% BTC / 4.1% ETH

  • (Trade) Nexo token on Binance chain to earn rewards (geofenced of course)

New stuff

  • ENS support in more chains & wallets (might make your ENS more valuable)

  • A Maker-type “DeFi chain” on Cosmos being sold on Binance (many thoughts!)

  • Crypto.com offering PAX Gold Lending (i’m doing reviews on both soon!)

  • Zerion added Set to its dashboards | Multis too!

What’s hot

  • From 0 to 35k users—money protocol look like hockey stick growth to me 🔥

  • USDT on Ethereum will probably flip USDT on Bitcoin anytime now

  • Uniswap doing more volume than Bakkt 🌶️

  • GodsUnchained is a 2 weeks from release & already blowing up! (this is why)

  • Over $400m now exchanged on Synthetix exchange! (SNX is a “bank bet”)

Money reads

  • How kids will Bank (i tend to agree!) - Vishva Dave

  • Buying stuff in China (feels like dystopia imo) - Tony Sheng

  • QE4 is here (about $300B worth between now and Q2 2020) - Zero Hedge

  • Ethereum’s DeFi Competitors (good but missed SoV) - Mohamed Fouda


New release—🔥Bankless exclusive AMA with one of the most promising privacy tech protocols in open finance today. Does it make DAI private? Find out!

👉AMA with Aztec Protocol (full subscribers only—here’s what one VC said about it)


WHAT I’M DOING

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

Explored a crypto card. Update: investigated crypto.com crypto card this week and I ordered one. It’s a custodied solution using BitPay, mobile app is slick, though I still have some analysis to do on their MCO token. I plan to use the card and do a full write-up for us. Stay tuned!

Used new Wyre on-ramp. This was the easiest fiat onramp experience I’ve ever had in crypto (still jurisdiction restricted though). A mainstream user can get crypto without extensions or downloads directly from a browser link—all they need is an Apple or Google Pay wallet—no account setup, no KYC, no prerequisites. Costs 2.9% + 0.30 fee. This is Stripe for money protocols. (In Europe? Hearing good things about Ramp)

I bid on a few premium ENS names. In last week’s assignment you picked up and registered an ENS name—did you know auctions are going on right now for premium ENS names? I’ve bid on a couple so far. DeFi.eth (10 ETH), Gold.eth (5 ETH), and BTC.eth (4.6 ETH) will all be auctioned off in the next week—and sorry folks money.eth is gone—because guess what? ETH is money.

What did you do in crypto last week? A few of my faves from this thread:

  • Secured ENS names

  • Figured out Synthetix

  • Bought assets on Uniswap—no bank

  • Tezos protocol upgrade

  • Lent on Compound via Argent wallet


WEEKLY ASSIGNMENT:

Make time to complete this assignment before next week

Setup MyDeFi app. (15 mins) I’ve mentioned this money protocol management app a couple times. It’s time for me to officially assign it. This week we’re going to download the MyDeFi app and set it up.

What is it? Think of your ETH address as a bank account. But unlike a traditional bank account, you own it. So you can plug it into any user interface you want. MyDeFi is one such interface—really simple, mobile optimized, ETH account tracking.

Here’s what you do:

  1. Download and install MyDeFi app (iOS and Android)

  2. Add an active ETH address

  3. See your account activity

This is a view-only interface meaning no ability to access your private keys.

Note on privacy: according to the developer the ETH address is stored locally—no addresses stored in server—do further due diligence on privacy if paranoid.

Now view your account assets, money protocol activity, and balances. Also, check out Best Lending Rates under Tools to see opportunities. This app will be useful for future weekly assignments—e.g. check out Pool Together assignment in MyDeFi!

Cool right? Open finance is already creating its Mint.com. And I expect ETH account wrapper tools like this to get a lot better in the coming months.


Extra Credit Learning

  • (Beginner): VIDEO: How to enter Pool Together Lottery (Chris Blec)

  • (Beginner): Rika’s DeFi reading list

  • (Beginner): 5 Things your should know about DeFi

  • (Beginner): What is Tokenization?

  • (Intermediate): Upgrade guide to the new Maker CDP system (another one here)

  • (Intermediate): VIDEO: DeFi Lending pools | DeFi P2P Lending

  • (Intermediate): How to use DeFi Safely

  • (Intermediate): AMA with Connext on ETHFinance (happening today)

  • (Advanced): All about TBTC—BTC on ETH (requires 1.5x ETH for every 1 BTC)


MAIN TAKES:

Read my takes but draw your own conclusions

  • This G7 report on stablecoins claims Bitcoin and crypto has “…so far failed to provide a reliable and attractive means of payment or store of value.” Governments seem far less threatened by Bitcoin as a highly volatile store-of-value than they did when Bitcoin’s narrative was a P2P electronic payment system. This explains both their aggressive posture toward Libra and relative dismissal of crypto monies like BTC and ETH. This may be working in crypto’s favor at the moment—crypto monies can grow unstraggled in their crib while governments chase Facebook

MINI TAKES:

  • Coinbase commerce adding a way to pay in crypto directly from a Coinbase wallet—looking more and more like crypto Paypal everyday

  • Grayscale offering a new trust product that’s 80% BTC, 10% ETH, and the rest XRP, BCH, and LTC—expect to pay crazy high premiums and fees—way better to break out of your brokerage account and buy them yourself

  • Can’t help but notice BTC and ETH are the two assets Fidelity is talking about to institutional investors—the two crypto monies

  • Binance made over $1b in profits and while I admire the execution keep in mind this is the casino model of crypto banks—yes, every bank exists on that spectrum, but Binance is especially happy to help you take as much risk as you like—buyer beware

  • 109k ETH wallets ready to stake—for self-staking Ethereum will require a minimum of 32 ETH to stake—over 109k wallets have more than 32 ETH today

TWEET-A-QUESTION

Tweet me your question—I reply to one per week

Question from Inner Circle:
If Argent the company goes away can you lose access to your Argent wallet funds?

RSA Response:
This is an important question for any smart-contract wallet. I don’t think Argent’s had a good answer to this previously, aside from setting a hardware wallet as a recovery guardian.

More recently however they released details. There’s good news—you can fully recover your funds by following a few steps here.

And this is a useful level-up even if you don’t use Argent.

Because really, any time you trust a substantial amount of funds to a smart-contract you need to make sure there’s a recovery processes. Have funds in Set? They recently released their recovery instructions too.

Remember: the functions of a truly bankless money protocol are completely accessible on the public ledger. The app you use? That’s just the wrapper.

- RSA


Some recent tweets…

Twitter avatar for @RyanSAdams
Ryan Sean Adams @RyanSAdams
Ethereum = magical internet money system Ethereum address = magical internet bank account ENS domain = name your magical bank account ETH = magical internet money DAI = magical internet money (that's stable) Maker = magical internet bank Uniswap = magical internet exchange
7:03 PM ∙ Oct 18, 2019
203Likes55Retweets
Twitter avatar for @RyanSAdams
Ryan Sean Adams @RyanSAdams
Poloniex just announced they're exiting the US Binance US is now separate from Binance Global But... There's only one Uniswap There's only one Maker And they're global The crypto banks continue to geofence The money protocols are global
6:40 PM ∙ Oct 18, 2019
176Likes18Retweets
Twitter avatar for @RyanSAdams
Ryan Sean Adams @RyanSAdams
People misunderstand We have nothing against banks But we had nothing against Blockbuster either It's just that Netflix was better
7:38 PM ∙ Oct 15, 2019
189Likes39Retweets
Twitter avatar for @RyanSAdams
Ryan Sean Adams @RyanSAdams
We’re probably 6 months away from having a 100% bankless version of Venmo No central bank No commercial bank Just you and the public ledger I don’t think any of this is priced in
6:45 PM ∙ Oct 15, 2019
234Likes34Retweets
Twitter avatar for @RyanSAdams
Ryan Sean Adams @RyanSAdams
To the general public there's absolutely no difference between BTC, ETH, XRP, LTC, BCH, or TRX They just want the one that goes up the most If you know the differences between these assets you have massive information asymmetry right now
5:24 PM ∙ Oct 16, 2019
171Likes33Retweets

Actions

  • Execute any good market opportunities you saw

  • Complete the weekly assignment: Setup MyDeFi app with an active ETH address


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Twitter avatar for @sjude09
Crypto Jet Jockey @sjude09
I finally did it. I subscribed. This is the first newsletter that I’ve felt is worth paying for. @RyanSAdams #bankless
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6:03 PM ∙ Oct 4, 2019
12Likes2Retweets

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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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The rise of the protocol politicians (Market Monday)

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