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Facebook To Launch Coin In 2020, Coinbase Lists DAI & Stellar Grinds To A Halt


Ethereum Stats

Ethereum Price: $268.56
Ethereum Price (BTC): 0.03066 BTC
Market Cap: $28.54B
ETH Network Dominance*: 75.04%
7 Day Candle**: $249.81 / $272.16 / $232.06 / $268.56

️ Nick’s Market Summary

Facebook’s internally dubbed “GlobalCoin” cryptocurrency has been the talk of the town this week following a story published by the BBC which suggested the token could be circulating as soon as Q1 2020. While the details are still thin on the ground (expect more in the summer), the thought of Facebook getting involved with something as privacy-focused as cryptocurrency has led many to prematurely dismiss the idea in its entirety.

Facebook has had an infamously poor track record when it comes to storing and sharing personal data. Such a toxic corporation entering the cryptocurrency space with more of the same is not only antithetical to the industry at large but a major distraction from decentralized hopefuls such as Ethereum and Bitcoin.

However, I would not be so quick to judge this one. Facebook made it clear at their recent developer conference, F8, that they plan to give power back to the user (whether you believe them or not is another matter) and cryptocurrencies are the perfect opportunity for delivering on that promise. More substantially, the FT reported that Facebook has been meeting with the exchanges Gemini (ironically owned by the Winklevoss Twins) and Coinbase. If Facebook does intend to have their “GlobalCoin” listed on Coinbase, then they’d need to fit into Coinbase’s “Digital Asset Framework“. Clause 1.1 of said framework requires significant steps to ensure that the token falls into the “Open Financial System” – specifically that the coin cannot be controlled by a central party.

The significance of this is huge. If Facebook are indeed on the cusp of launching a stablecoin that is decentralized and uncensorable, then something close to the true meaning of cryptocurrency could be made available to 2 billion people overnight.

For the record, my guess is that we should expect something inbetween a centralized “ZuckBuck” and crypto-utopia. It is probable that Facebook will launch a Delegated Proof of Stake chain (a handful of permissioned nodes as opposed to thousands of non-permissioned ones á la Ethereum) and that transactions will be censorable with addresses open to blacklisting. A less likely alternative to this is that Coinbase instead makes an “exception” to their policy and introduces a centralized Facebook coin despite the company’s mission statement.

While the purist in me will scoff at the entire “GlobalCoin” project, my investor inclinations are that this will be hugely legitimizing for the industry as a whole, adding enormous volumes of liquidity and directly benefiting all existing cryptocurrencies in the process.

– Nick, Owner

MakerDAO’s DAI Added To Coinbase

Coinbase, one of the largest cryptocurrency exchanges, announced in a press release on 23 May 2019, that it would make stablecoin DAI, a token that runs on the Ethereum blockchain, available on its retail platform. The press release also stated that the currency would be available in all jurisdictions except for New York at this point; placating concerns about DAI’s regulatory standing given its uncensorable nature.

DAI is created by locking up ETH (or in the future, any cryptocurrency) in a smart contract which acts as collateral. This process allows users to borrow DAI using their existing assets without any central party taking custody of funds. This mechanism has proved enormously popular with $80M worth of DAI circulating today, collateralized by 1.75M ETH (1.65% of the entire Ether supply).

DAI is designed to be pegged to the US Dollar with a 1:1 value. However, it has been trading under $1 for much of 2019. The token recently regained its peg after its decentralized governance process successfully motivated users to burn DAI, reducing its supply and increasing the price. DAI’s addition to Coinbase is a huge boon to the ecosystem, allowing retail investors – for the first time – to gain access to an uncensorable stablecoin.

⏸️ Stellar’s Downtime Raises Questions Around Decentralization

Earlier predictions became a reality when Stellar, a platform for money remittance, went down for two hours on 15 May 2019. The downtime was in fact forced by the Stellar team. The Stellar Development Foundation (SDF) said regarding the halt, that the network was paused due to a failure to reach consensus on transactions. The team said that a temporary halt was preferable to a permanent breakdown.

“The halt wasn’t because the Stellar Consensus Protocol failed, in fact, it worked as intended. For a system like Stellar, a temporary halt is preferable to the permanent confusion of a fork.”

The fact that the SDF was able to halt the whole system lent itself to criticism from across the crypto-blockchain space, including analysts, experts, and enthusiasts around the definition of true decentralization and how it is applied within the Stellar platform.

The SDF has comeback with possible solutions to avoid further halting, such as introducing better onboarding for new validators, achieving better operational standards, and to improve better monitoring and alerting to warn node hosts about which crucial nodes are missing from the network.

Yongdae Kim, one of the Korean Advanced Institute of Science and Technology (KAIST) researches that published a paper in April 2019 titled “Is Stellar As Secure As You Think” said that these may be a good set of mitigations but they will not primarily fix the liveness of Stellar. Essentially, until Stellar onboard a serious set of validators that perform properly, there could be further halts in the future.

While the SDF says that no money was lost during the halt, users are ultimately affected by shutdowns.

* calculated as: (ETH Market Cap / Ethereum Network Market Cap)
** open / high / low / close

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Nick Founder