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09 December 2022
In this issue

Weekly price tracker || What's hot || The “mostly” decentralized future

Hello, 

Coinbase CEO announcing that their revenues will drop by 50% or more this year compared to last year is yet another indicator of how bad things are on the crypto streets, although hardly surprising. 

Meanwhile, hedge fund Fir Tree has sued crypto investment firm Grayscale to obtain details about its flagship Grayscale Bitcoin Trust (GBTC) – the world’s largest Bitcoin fund – to investigate potential mismanagement and conflicts of interest. As this happened, shares of GBTC hit a record-high discount rate of nearly 50%, relative to the price of Bitcoin. 

The FTX saga refused to die down, with more details emerging on Alameda’s investment portfolio, which included companies which sell knockoff body lotions and weight-loss drugs, and Chinese news sites. SBF has meanwhile hired himself a lawyer, the one who represented US socialite sex offender and paedophilia enabler Ghislaine Maxwell. 

Basically, crypto world continues to be a...
Among the most important developments in the past few days has been the MetaMask debacle. This controversy has a lot to do with the future of crypto – it is about how we imagine it to be, and whether complete privacy and decentralization are even possible. This is what we are doing to deal with in our main piece this week.
The newsletter is put together by Giottus Crypto Platform and The News Minute’s Brand Studio. You can read all the previous issues of Cryptogram here.
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WEEKLY PRICE TRACKER
Price movements from last Friday
BTC:  1.6% with BTC receiving strong support at $16,733.

ETH:  0.73% as ETH entering accumulation phase near $1,200.

TWT:
 15% as tokens of non-custodial wallets continue to gain popularity post FTX collapse.

CHZ:  3.5% as a classic example "buy the rumour, sell the news" took place after the FIFA world cup began.

AXS
 19% as gaming ecosystems, especially play-to-earn narrative, pick up phase during bear market.
WHAT'S HOT
Project to look out for:

Flare - enables secure interoperability between chains, scaling the use of blockchain by enabling all digital assets & on-chain info to flow freely. Token distribution on January 9, 2023.

Coins to look out for:

THORChain (RUNE) - THORChain is a decentralized liquidity protocol that allows users to easily exchange cryptocurrency assets across a range of networks without losing full custody of their assets in the process.

Graph (GRT) - an indexing protocol for querying networks like Ethereum and IPFS. Anyone can build and publish open APIs, called subgraphs, making data easily accessible.
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THE BIG STORY

The “mostly” decentralized future

ConsenSys, the company behind non-custodial wallet service provider MetaMask, revealed recently that the company’s key products, MetaMask and Infura, collected users’ wallet and IP addresses. The firm added that Infura, which is the default remote procedure call (RPC) provider on digital wallet MetaMask, will collect the user's IP address and Ethereum wallet address for transactions. 

And people were like…
The very idea of a non-custodial wallet is security and privacy – and if you are collecting and sharing IP addresses for transactions, it can be legitimately seen as a violation of the very basic principles at play here. After the backlash, the firm has since clarified its data-sharing practices and said it would rebuild MetaMask’s settings page to address user concerns. But it has done little to inspire confidence.
This is truly a “wtf” moment for users trying to remain in control of their financial assets. If you are in the mainstream economy, banks control you. If you are on centralized exchanges, they gamble with your money. And if you have your own wallet, they store and share your data?! 

It is thus unsurprising that more data is emerging to show that more users are leaning towards a world that is decentralized in terms of data, privacy and control over their assets. Three things to support this. 

1. Bitcoins (and crypto assets) are moved off top exchanges

Around $3.4 billion worth Bitcoin (~ 1% of its market cap) has left top exchanges in the past 30 days.
This essentially means that retail investors are beginning to see merit in non-custodial wallets including hardware wallets such as Ledger. Ledger has had multiple single biggest days of its hardware wallet sales ever last month. 

2. Growth in DeFi users, transactions and volumes

Trade volumes in DEXs rose sharply to $104 billion in November from $58 billion in October according to data from DeFiLlama.

Here’s the growth in users and transactions on DeFi platforms (from previous month)
3. CeFi companies are pivoting to DeFi

EY is building tools to enable both private payments and transfers on the public Ethereum network and is developing its own privacy-enabled products. 

As we mentioned last week, payments processing company Stripe is launching its own fiat-to-crypto on-ramp, allowing customers to exchange dollars for cryptocurrencies.

Coinbase has launched a wallet that is non-custodial. Similarly, CoinDCX, an Indian exchange, is launching a product called Okto to access DeFi from a single Web3 app. 

Walmart’s global chief technology officer Suresh Kumar has said that cryptocurrency transactions would be at the centre of the retail giant’s digital strategy. Kumar said he envisioned a future where digital assets could be used when shopping at Walmart’s online stores and the metaverse.

But this is not the whole picture…

In spite of these trends, the role of centralized entities in bringing wide adoption to Web3 and crypto can’t be understated. 

Governments will likely want to encourage and regulate centralized on-ramps to control the flow of currencies along with KYC and compliance requirements. 

The crypto trade economy continues to be a miniscule percentage of global trade; where centralized companies continue to dominate share. 

Ease of use continues to be an impediment to wide DeFi adoption – better products for the masses are currently made available by CeFi.

The whole picture, as presented above, raises many foundational questions about crypto and answers to these will define the future of crypto and its very survival. If the FTX debacle has taught us anything, it is that we need control over our assets – we need our wallets, we need our privacy. But in a world full of scamsters and control-freak governments, is it possible to give complete privacy to every user, and have ecosystems which are 100% decentralized?

The “mostly decentralized” future

Even Vitalik doesn’t really think so. In his recent blogpost, he lays out a vision which is undoubtedly about merging TradFi and DeFi, which means – and we think he implies this as well even if he doesn’t state it outright – that there will be some compromises in implementing such a vision, to do with privacy and decentralization.

So, how can you prepare for this “mostly decentralized” future - aided in the medium-term by centralized entities?

Interactions with DeFi may continue to have a centralized element to it - though, once that bridge is crossed, many pain points will be addressed and processes optimized. Data storage and privacy will be central to this premise. 

Till that eventuality, investors can focus on receding control from centralized entities. Here are some of the things you can do: 

1. Identifying a stable and compliant local exchanges for regular trades. 

2. Investing in private wallets for long holding assets

3. Diversifying the portfolio to minimize exposure to any particular altcoin or NFT

4. DYOR on platforms and their business models before transferring assets to them.
That’s all we have for this issue, see you next week! 

If you have any questions or feedback for us, write to us at crypto@thenewsminute.com. You can check out the previous issues here.
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Disclaimer: Crypto-asset or cryptocurrency investments are subject to market risks such as volatility and have no guaranteed returns. Please do your own research before investing and seek independent legal/financial advice if you are unsure about the investments.
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