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Too little, too late? Ethereum losing DeFi ground to rival blockchains

Decentralized exchanges explore alternatives as Ethereum continues to be overloaded. Is this the beginning of the end for the blockchain?

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2021 has been a great year for Bitcoin (BTC) and crypto in general. However, Ethereum and the decentralized finance, or DeFi, sector have outshined other niches of the cryptocurrency space, dazzling the community with enormous growth in terms of popularity, engagement and sheer volume, with the total value locked currently sitting at around $56 billion, according to DappRadar.

The nonfungible token, or NFT, space is also seeing unprecedented growth. Many believe 2021 is shaping up to be the year of NFTs. However, DeFi continues to thrive, especially on the Ethereum blockchain where developer and user activity surpasses that of any other blockchain.

However, it’s no secret that Ethereum is currently at a decisive point. Congestion and high gas fees are plaguing the network and making decentralized exchanges, or DEXes, almost impossible to afford for common users who want to make small to medium-sized trades. Even simple transactions can cost more than $10. Banks aren’t so jealous anymore.

DeFi is looking for alternatives

On March 3, SushiSwap, the popular Uniswap fork known for its contentious inception through a vampire mining attack, announced that the DEX had added multiple Ethereum alternatives to its platform, deploying contracts on xDai, Moonbeam, Binance Smart Chain, Polygon (previously called Matic) and Fantom.

SushiSwap has received a lot of negative criticism from the community and even from Hayden Adams, founder of Uniswap, who has expressed little appreciation for the fork and even less for the conduct of its pseudonymous founder, Chef Nomi, who exited the project early on with a pocket full of tokens, only to return them soon after. In a recent Twitter thread, Adams stated:

“I’ve seen tons of comments about sushi being a high quality dev team building a differentiated product. While I really wish this was true, I’ve seen no evidence of this whatsoever to date. Just liquidity mining and marketing so far.”

Nevertheless, the project has seen major success, being the second biggest DEX in terms of volume, according to Dune Analytics. Now, SushiSwap is providing users with new alternatives to Ethereum and allowing them to move away from the huge gas fees that have recently become a norm, even if reluctantly so.

It’s not just SushiSwap

It seems that projects are generally looking for alternatives even though they don’t intend to fully give up on Ethereum. While these are not “moving away” from Ethereum, they are adding multiple alternatives to their platforms, which will be a major game changer for some of these blockchains, especially Binance Smart Chain, which seems to be the most popular choice.

Balancer recently announced it will be deploying ports onto Moonbeam and Polkadot. Furthermore, exchange aggregator 1inch recently added support for Binance Smart Chain. Users can change networks with the simple click of a button and enjoy lower fees and faster transaction times.

Although 1inch has added support for BSC, the team doesn’t seem to be moving away from Ethereum anytime soon. Sergej Kunz, co-founder of 1inch, told Cointelegraph:

“We don’t plan to move completely away from Ethereum. Our expansion to BSC is just an add-on as we’ve gotten a lot of requests from the 1inch community because there’s a lot of money and activity on BSC.”

Projects haven’t removed Ethereum as the main option for their platforms, and while Binance has been standing out among the rest, Ilya Abugov — an advisor at DappRadar, an aggregator of decentralized application statistics — believes that the future will hold a multitude of options for DeFi users. He told Cointelegraph: “This is an indication that the multi-chain future is much more likely. BSC projects have achieved significant enough TVL where it makes sense for new projects to consider BSC as a viable ecosystem.”

Binance is certainly the most popular alternative at the moment. Recently, DappRadar also added support for Binance Smart Chain in its portfolio tool, but there are other projects that are growing and becoming viable alternatives, and these may begin to gain more traction as time passes. Abugov continued:

“There is also Polkadot, Flow and a number of others that are showing viable ecosystems. Before projects were almost forced to build in ETH, now they have an actual choice. As bridges become more developed this trend should become stronger.”Layer-two options are also gaining traction

While Ethereum alternatives like BSC and others are becoming popular, layer-two options are also being integrated at lightning speed. SushiSwap chief technology officer Joseph Delong noted that the decentralized exchange is planning additional future deployments, including on Optimism.

SushiSwap would be just one of the latest to do so. Other projects such as Synthetix, a decentralized derivatives trading platform, are also experimenting with layer-two options, the most popular of which seems to be Optimism. Kain Warwick, founder of Synthetix, told Cointelegraph:

“Every project currently on Ethereum will need to adopt a Layer 2 solution. There are fast-moving teams that now have considerable treasuries and highly skilled engineers, and allowing more users to interact with a protocol is a huge incentive to move quickly into scalable solutions.”Will Ethereum 2.0. restore trust, or will it be too late?

While Ethereum is currently facing scalability issues and becoming very hard to use, Ethereum 2.0 is currently in development, and its staking and sharding features will allow the experience to return to normal for the common user and improve on many other aspects. Not only will the network be able to handle more transactions without congestion, which results in lower fees, but staking will also improve on the wasteful proof-of-work model that requires miners to burn electricity to validate the network.

However, the current issues experienced in Ethereum are opening doors for others to become popular alternatives. This means that Eth2 may not be enough to regain Ethereum’s previous market share, according to Abugov: “ETH 2.0 is significantly far away that competing blockchains can establish their own ecosystems. When ETH 2.0 launches it will likely be just one of the options for project teams.”

While projects are now exploring other options, Ethereum’s network effect is still standing strong. Developers don’t seem to be moving away from the blockchain, but they appear willing to look for additional options that can give Ethereum 2.0 developers more time to perfect the upcoming launch and present users with new, exciting options for DeFi interaction.

Source: https://cointelegraph.com/news/too-little-too-late-ethereum-losing-defi-ground-to-rival-blockchains

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Cointelegraph

Chainalysis raises $100M in Series E funding led by Coatue

Chainalysis secures its second $100 million investment round in three months.

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Chainalysis has secured hundreds of millions of dollars in the second quarter as venture firms allocate more resources to the emerging blockchain sector.

Chainalysis raises $100M in Series E funding led by Coatue

Blockchain analytics company Chainalysis has secured $100 million in Series E financing, bringing its total valuation to a staggering $4.2 billion and highlighting once again the tremendous growth of the cryptocurrency industry.

The round was led by global investment manager Coatue, with additional participation from 9Yards Capital, Altimeter, Blackstone, GIC, Pictet, Sequoia Heritage and SVB Capital, Chainalysis announced Thursday.

Chainalysis said the funds will go toward expanding its blockchain data capabilities, which includes investing in new data tools, software and APIs.

“We believe blockchain data is the asset that can help public and private sector organizations understand the risks and opportunities surrounding this asset class and promote its adoption safely and successfully,” the company said.

Chainalysis’ valuation has more than doubled in the last quarter thanks to several strategic investments. As Cointelegraph reported, the company closed out a $100 million Series D round in March led by Paradigm, a crypto-focused investment firm. At the time, Chainalysis’ director of communications Maddie Kennedy told Cointelegraph that the funds will be used to expand the company’s enterprise data offering.

Related: Crypto-finance company Amber Group valued at $1B following $100M raise

Mega-million-dollar funding rounds have become commonplace in the cryptocurrency industry over the last six months. Venture firms have poured billions into crypto startups this year alone, with the likes of Andreessen Horowitz going a step further by announcing a new $2.2 billion crypto venture fund.

What’s more, dealmaking seems to be happening irrespective of current market conditions, which marks an important evolution from the 2017 bull market that saw venture funding dry up once the initial coin offering mania faded.

Source: https://cointelegraph.com/news/chainalysis-raises-100m-in-series-e-funding-led-by-coatue

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Cointelegraph

Crypto miners eye cheap power in Texas, but fears aired over impact on the grid

Can Texas meet the electricity demands of migrating Chinese Bitcoin miners?

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The recent crackdown on crypto mining in China has seen concerns expressed over the potential impact a hashrate migration could have on Texas’ unreliable electricity market, as an increasing number of dislocated miners eye the Lone Star State.

Texas’ abundant sources of renewable energy and highly deregulated power grid make the state an obvious choice for migrating miners from China and elsewhere, with 20% of Texan electricity being generated by wind as of 2019.

Speaking to CNBC, Brandon Arvanaghi, a former security engineer at crypto exchange Gemini, predicted Texas will see “a dramatic shift over the next few months” as miners look to set up shop.

“We have governors like Greg Abbott in Texas who are promoting mining. It is going to become a real industry in the United States, which is going to be incredible,” he said, adding:

“Texas not only has the cheapest electricity in the U.S. but some of the cheapest in the globe.”

Castle Island Ventures’ founding partner, Nic Carter told CNBC that half of the world’s hashing power could ultimately exit China’s borders and will need new homes, stating:

“Every Western mining host I know has had their phones ringing off the hook. Chinese miners or miners that were domiciled in China are looking to Central Asia, Eastern Europe, the U.S., and Northern Europe.”

Global hash rate has fallen by one-third since early May following reports that China’s mining industry would be subjected to stricter supervision.

But is the Texan power grid up to the challenge of providing power for an influx of more crypto miners? The Electric Reliability Council of Texas (ERCOT) has just requested that Texans curb their electricity usage amid the recent heatwave that saw many residents turning up their air conditioners earlier this week.

Roughly 12,000 megawatts of generation capacity was offline as of Monday — enough to power 2.5 million homes. ERCOT described the scale of forced outages as “very concerning.”

The regulator warned that a failure to heed the request could result in a repeat of the widespread winter power failures that left 69% of Texans without electricity, and roughly half without water in February. According to Buzzfeed, February’s outages could have resulted in up to 700 deaths in the state.

Angela Walch, a Texas research associate at University College London’s Centre for Blockchain Technologies, tweeted her concerns regarding the share of Texas’ electricity being devoted to Bitcoin mining, emphasizing that her family has been “asked to reduce our air conditioning use, not run washing machines & dryers, etc.”

Obviously, Bitcoin is not the sole cause of this cluster*^% that our poor political leadership in Texas has caused.

But, I am curious to know the portion of the grid it uses. Maybe Bitcoin miners are the first to be shut down in times of grid stress.

— Angela Walch (@angela_walch) June 15, 2021

However Tierion CEO Wayne Vaughan responded by asserting that much of the electricity used to power Texan mining operations comprised stranded resources that “would never be able to reach your home to power your appliances.”

Others argued that wholesale Bitcoin mining operations could actually alleviate Texas’ power issues, with Texas’ seasonal surges in electricity demand incentivizing miners to sell power back to the state’s grid that otherwise go uncaptured.

In September 2020, the Peter Thiel-backed crypto miner Layer1 in West Texas reported it had reaped profits exceeding 700% by selling renewable electricity back to the grid amid surging summer demand.

While up-to-date data for global hashrate distribution is not available, the Cambridge University’s Bitcoin Electricity Consumption Index (BECI) estimates that China represented 65% of the world’s hashing power as of April 2020.

Earlier this month, district regulators in Western Xinjiang and Yunnan issued notices mandating the suspension of virtual currency mining enterprises. BECI estimates the two regions account for 40% of the country’s hash rate.

Castle Island Ventures’ founding partner, Nic Carter told CNBC that half of the world’s hashing power could ultimately exit China’s borders and will need new homes, stating:

Source: https://cointelegraph.com/news/crypto-miners-eye-cheap-power-in-texas-but-fears-aired-over-impact-on-the-grid

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Cointelegraph

Bitcoin price hits $40K as Paul Tudor Jones slams Fed inflation claims

Bitcoin price action is back at $40,000 as Paul Tudor Jones recommends a 5% BTC portfolio.

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Bitcoin (BTC) passed $40,000 on June 14 as a consolidation period snapped to unleash a solid breakout.

BTC/USD 1-hour candle chart (Bitstamp). Source: TradingViewBTC price breaks out past $40,000

Data from Cointelegraph Markets Pro and TradingView showed BTC/USD gaining 3% in under an hour, reaching $40,500 on Bitstamp.

The largest cryptocurrency capitalized on upside which resulted from a new positive tweet from Elon Musk over possible acceptance by Tesla in the future.

Earlier, Cointelegraph reported on traders betting on a leg up to around $47,000 before a correction.

A look at buy and sell positions on major exchange Binance showed support at $38,000, wit resistance at $40,500 the next hurdle for bulls.

Buy and sell levels on Binance as of June 14. Source: Material Indicators/TwitterTudor Jones advocates 5% BTC allocation

Bitcoin reached a $2 trillion market cap because of a “dichotomy” in Federal Reserve policy which “questions” its credibility, says famous trader Paul Tudor Jones.

In an interview with CNBC on June 14, the founder of Tudor Investment Corporation sounded the alarm over advancing inflation.

After last week’s consumer price index (CPI) report showed that U.S. inflation had hit a 13-year high, Bitcoin’s deflationary nature has rarely looked so appealing.

For Tudor Jones, the idea that higher inflation is just temporary due to recent events, as suggested by the Fed and central banks in general, is a myth.

“It’s somewhat disingenuous to say, for them to say, that inflation is transitory,” he told CNBC’s Squawk Box segment.

Today’s environment is entirely different to that which saw episodes of inflation in the past, such as 2013, and as such, there is little sense in the Fed applying the same forecasts.

CPI was much lower then, Tudor Jones noted, while now, unemployment and jobs also roughly equal each other.

Related: Paul Tudor Jones says Bitcoin is ‘like investing early in Apple or Google’

Meanwhile, gold and Bitcoin have provided a refuge for many. Despite the precious metal vastly underperforming Bitcoin in terms of gains, it remains near record highs.

“When you look at the Fed today and the Fed back then, you wonder how can you have such wildly different policy views on what constitutes the right levels for employment, the right levels for inflation,” he continued.

“How can you have that with an eight-year timeframe? It’s almost like a split personality and you wonder why Bitcoin has a $2 trillion market cap and gold’s at $1,865 an ounce. And the reason why is you have this dichotomy in policy that again questions — questions — the institutional credibility of something.”

Ultimately, a 5% Bitcoin allocation is one of the only things he advocates to those seeking portfolio advice.

“I say, ‘OK, listen, the only thing I know for certain is I want to have 5% in gold, 5% in Bitcoin, 5% in cash, 5% in commodities at this point in time,'” he added.

A look at buy and sell positions on major exchange Binance showed support at $38,000, wit resistance at $40,500 the next hurdle for bulls.

Source: https://cointelegraph.com/news/bitcoin-price-hits-40k-as-paul-tudor-jones-slams-fed-inflation-claims

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