Digital Advertising is Broken– Lin Dai Wants to Fix It with TAP Network

Lin Dai is a self-described nerd. He started his professional career in the first dot com boom while he was a student at Carnegie Mellon. Dai built one of the first social networks for teenagers called Kiwibox Media Inc. with about two million people on the website. After taking the company public, Dai moved to New York City and lived through the dot com crash and burn. 

Dai went on to help major media companies such as Viacom and Alloy branch out into the digital advertising industry. After a few years in corporate, Dai itched to get back into the startup world and joined a mobile video social network startup called Keek, which he helped grow to 75 million users in about three years. 

Today, Dai’s primary focus is running TAP Network, a blockchain-based network that powers an ecosystem that cuts out the third-party data merchant.


What’s wrong with the current digital advertising ecosystem?

No matter how you cut it in the current digital advertising ecosystem, Facebook and Google will win 99% of the business.

Every other media brand is struggling. Media companies need ad revenue, which is under assault from Facebook. 

Part of the solution for media companies is diversification of revenue streams. A future mix of revenue could be ⅓ subscription-based products, ⅓ media advertising, and ⅓ commerce. 

What does the digital advertising landscape look like today? 

The bulk of user data is aggregated by two companies: Google and Facebook. These companies leverage that data by providing it to third parties. These third-party marketers then use that data to advertise. 

Advertising targeting runs over two sets of identities: a device ID (anything that happens on your phone they can target) and a browser ID (cookie or something that tracks you, and it doesn’t matter where you search). Your browser ID is tagged with something that advertisers can deliver advertising to. Hundreds of companies can collect your data through GPS location, different preferences you set, actions you take through browsers.

Advertising is very different today than its early days. Before it was like,  “we’re a shaving company and wanted to advertise on Men’s Health magazine!” 

Now, advertisers are just buying programmatically. They don’t necessarily even see where their ads are, nor do they need to. They can target you, who they believe to be a potential customer, wherever you’re at. That’s fine in our eyes, as long as you’re giving them permission and are being compensated. But that’s just not how it works today. Multi-billion dollar companies are middlemen that allow marketers to take advantage of this data, and it’s not in the benefit of the individual nor the marketer. 

While this model works, we don’t really see it as being sustainable. Most of this data is collected without a user’s permission, or at least the use of it by third parties isn’t explicitly approved by users. 

The consumer is being targeted without their consent, and the intermediary is taking their commission regardless of a sale or not. 

We’re imagining a way the consumer can delegate permission to a brand, and brands can understand their “opted-in” audiences better. 

We started thinking about how we could create more value for users while also giving them ownership of their data. Part of that solution meant finding ways to collect data that is superior to what Facebook and Google are collecting. Also, we had to find a way to help make consumers aware of when their data is being arbitraged to monetized. 

The last frontier for data is finding the actionable data that does a much better job of qualifying how an individual or audience will respond in the future. For example, if I’m Dominos, I can target people who liked a photo of pizza. But, if I can target people who liked a photo of pizza who ALSO purchased something from Papa John’s in the last 10 days, I’ve got a much higher quality audience. 

The problem is getting people to willingly share that type of data. 

How is the data collected by TAP superior to what Facebook and Google are collecting?

TAP members directly opt-in their purchase data, which is far more accurate than other behavioral data such as “likes” or interests on Facebook. 

For example, if a consumer is willing to share how often and how much they spend at Domino’s every month, that’s far more accurate than if they simply “like” a photo of a pizza on Facebook. 

Also, the major differentiator is TAP obtains first-party permission from the consumer directly on collecting the purchase data, as well as directly compensates the consumer in the form of rewards points or rewards dollars from brands. This is fundamentally different from major social network and internet platforms collecting and monetizing your data without direct compensation to you.

How does a company extract monetary value out of the data collected?

Accurate purchase data allows our network of brands and merchants to cater to specific deals and rewards to the individual consumer and generate higher ROI.

For example, a customer’s purchases greatly impact the value of their data. For example. if my purchase data and history indicates I’m a heavy traveler that travels 14 times a year and spends $20,000 or more annually on hotels and airfare, major hotel groups in the TAP Network will offer up to 70% off publically available rates specifically to me next time I’m booking travel via the TAP booking engine. 

TAP Network receives a commission on the sales generated and splits the majority of the proceeds in the form of rewards to the consumer.  

Could you describe the marketplace for finding buyers for this data?

TAP doesn’t sell user data, ever. User data is secured and anonymized in the TAP system, and TAP works directly with brands and merchants who are looking to make offers to TAP rewards members that fit certain criteria or purchase patterns. 

Perhaps a major pizza chain would like to offer a bonus reward to anyone that purchases $100 or more per month on pizza, or a streaming service would like to offer everyone who hasn’t used their service yet a trial offer. The data will be leveraged anonymously for building each campaign but never sold outside of the TAP ecosystem.

What incentivizes the merchant partner to partner with TAP?

Through offering Universal rewards, TAP Network encourages rewards members to actively shop with merchant partners in the network to earn rewards points. 

Merchant partners generate additional sales from new and existing users, and can accurately measure sales revenue or frequency lift through TAP analytics.

How does TAP plan to fix the digital advertising landscape?

If your data will be touched, you should be compensated. You should have full control over who has access to your data. You can say, it’s my data and I don’t want to share it with a specific brand or person. 

We started an experiment with Hooch, a rewards app that rewarded people with free drinks. They would get one free drink per week as long as they shared their purchase data. 

We used the OpenFinance API, which allows them to connect all their credit and debit cards to us. Then, we’re able to scan their transactions and understand their purchases. For example, if you’re an active bargoer, and that data is supported by your transaction history, you’re a very valuable person to target for alcohol companies. They’ll reward you and compete for your business. 

Drinks were a clunky denomination of rewards. We decided to evolve into a full rewards program where users could accumulate rewards points for anything from a $5 coffee or a $500 hotel room. 

Rewards points is a concept many people already understand. They can easily convert $20 in TAP with vendors in the network. 

Traditional rewards programs are designed to take advantage of the consumer. For example, if you fly enough, you can accumulate enough points for free stuff. The thing is 80% of users don’t really accumulate enough points to do anything with. We want to make rewards fairer and more accessible to the consumer. You can accumulate one single currency and spend it with hundreds of brands.

Have you guys raised capital yet?

Hooch developed the TAP technology and its network, and as of its Series Seed round has raised $7.8m. We are in discussions with VCs and strategic investors about a Series A round early 2020.

Where does blockchain come into play?

An overwhelming number of consumers started sharing their data. Our hypothesis was that only 20% of our users would share their data, but about 80% of people shared it. Blockchain came into play because we wanted to secure this data responsibly. 

We wanted to allow users to delegate their data without sharing any personal information. It’s done with a token connection with the issuing bank, similar to how Mint and Acorn use similar APIs. We don’t record card numbers and names. They are not linked or traced back to you. 

You’re assigned a blockchain wallet address, your pseudo-identifier in our system. 

How do you guys make money?

We set up deals with about 250,000 merchant partners, travel, dining, hotels, retailers, eCommerce companies, etc. 

When you make a purchase with them, it’s either tracked with a digital link or detected from the card. We can detect the wallet personally. Those partners pay TAP Network for driving that sale. About 50% of what we receive is converted into TAP Coin ( a stablecoin pegged to USD) and deposited into the user’s wallet. 

We wanted to build a project for the mass consumer, so their rewards have to be easily converted to something tangible they can use rather than some obscure confusing token. 

If you’re a consumer, you’d download the Hooch app and link any number of debit and credit cards. The app starts detecting purchases. If you go to one of our partner merchants, let’s say Starbucks, we detect a transaction is made with that partner. Once the transaction is verified, the TAP Network receives a commission from that partner. Then, part of that commission is deposited into a user’s wallet. 

**Editor’s note: The link included is an affiliate link that gets you $5 in TAP. **

On the merchant side, it’s all about owning the relationship with your customer. In the early Facebook days, Facebook would tell someone like Pepsi to bring their audience on the Facebook platform because they can do a lot of cool stuff like target them in different ways and learn so much more about them. Years later, they flipped the script. They changed their algorithm so companies could only reach a small % of their own audience and would have to pay Facebook to reach the rest. It’s one of the biggest corporate bait and switches ever. 

Merchant partners are incentivized to build their own direct channels with their customer data. 

What’s the future hold for TAP?

We have a plan to reach 30 million users over the next two years. 

We’re doing that by working with existing enterprises such as major media and entertainment companies to license and label our technology in their own name.

Every new digital advertising dollar that comes into the market, Facebook and Google take about 94 cents of it. Major companies are fighting over 6 cents of every dollar because the data Facebook and Google provide is very actionable. 

We want to go to these companies and tell them we have a way to have their consumers send their data directly to them. They can white-label a rewards program in their own name within 60-90 days, which would take them maybe 2 years to build out internally. 

We have our first white-label launch mid-November so that’s really exciting. It’s a company in the entertainment industry with 10m+ users. We want to scale to tens of millions of users very quickly. 

We want to help usher in the second wave of consumers and do our part in bringing blockchain to the masses. 

Thanks, Lin!

This article is Originally posted on CoinCentral.com
Author: Alex Moskov

The Blockchain Art Market is Here. This is What You Need to Know.

Technology Meets Creativity

Some people say that technology is a form of art. With the recent boom of the blockchain art market, this is looking to be more fact than fiction these days. From digital kittens and meme trading cards fetching prices of over $100,000 to artificial intelligence (AI) driven artwork, blockchain technology has officially entered the art world.

Blockchain art consists of more than just slapping a piece of art online, though. There are a few things you should know about this emerging market and how it’s changing art for the better.

People are Creating Blockchain Art

There are a few different methods artists are using to incorporate blockchain into their work. Some artists are creating pieces in which blockchain is the subject while others are actually using the technology in their creations.

Collectibles

Currently the most popular form of blockchain art, collectibles like CryptoKitties and Rare Pepe trading cards have garnered a cult-like following. These digital pieces of art are directly created, stored, and traded on blockchain platforms like Ethereum and Counterparty.

Like Beanie Babies, the rareness of each collectible is what drives its value and price. You can easily pick up collectible blockchain art for as little as $5, but some pieces have price tags of over $100,000.

Blockchain-driven Art

scarab artwork

Current Scarab Experiment Artwork

Beyond collectibles, artists are finding other ways to utilize blockchain technology for their artwork. One example of this is the Scarab Experiment. The Scarab Experiment combines artificial intelligence (AI) with tokenized memberships to create one piece of art from the combined 1000 submissions of community members. Once you submit your art, you receive a tradeable Scarab token that gives you voting rights for what artwork the project includes.

Plantoid is a self-replicating “life form” also driven by AI and blockchain, specifically Bitcoin and Ethereum. It’s a robotic plant with a DNA structure on the Ethereum network that interacts with the people that donate to it. Once it receives enough Bitcoin donations, the Plantoid enters the “reproduction phase” in which it puts out a call for artists and designers to create another Plantoid. The person that gets the bid must create another Plantoid following the same DNA rules as the Plantoid before it. In return, the creator receives the Bitcoin donations from the original plant through a smart contract.

Blockchain-based Art

Although not built with blockchain, there are numerous works of art that use the technology as inspiration. Recently, the first-ever publically commissioned Bitcoin monument was erected in Kranj, Slovenia. Citizens of the city submitted ideas for the monument via Facebook, and officials chose Bitcoin because of the region’s ties with the industry.

Blockchain has also influenced Bitcoin graffiti art, renditions of Satoshi Nakamoto, and even the Last (Bitcoin) Supper.

last bitcoin supper

You Can Track And Verify Art On The Blockchain  

Perhaps more important than creating art is being able to verify that the art you purchase is authentic. The Fine Art Experts Institute (FAEI) in Geneva stated in 2014 that over 50% of the artwork that they examine are either forged or misattributed to the incorrect artists. With pieces in the fine arts market selling for tens or even hundreds of thousands of dollars, it’s important that you’re buying what you think you’re buying.

Similar to blockchain’s use in agriculture and supply chain, you can use the power of public immutability to maintain art’s integrity. To do so, some projects are working to tokenize art provenance. Blockchain art provenance is a method of proving the ownership of original creations via blockchain. It works like this:

  1. An artist creates a new piece and certifies it with a token on a blockchain.
  2. When you buy the artwork from the artist, they transfer the associated token to you.
  3. When you sell the piece, you transfer the token to the buyer.
  4. And so on, and so on.

The token transactions are stored publicly, so you, as a buyer, can easily track the entire history of ownership back to the artist. If the token doesn’t originate with the artist’s wallet, the artwork is a fake.

You can use this process for physical pieces of art as well as digital works. Because digital works are easily reproducible, associating them with tokens preserves their rarity which, in turn, retains their value.

Blockchain in Art Eliminates Middlemen…Once Again

As with most industries, the blockchain art market is best at making middlemen obsolete. Decentralized art galleries are popping up left and right giving most (if not all) of sale proceeds to the artists.

Curio Cards are GIFs and images tied to Ethereum in which artists receive 100% of their sales. Because the cards are on the blockchain, you, as an artist, can choose exactly how many you want to sell. There’s no need to worry about copying, forgery, or massive fees. This opens up a whole new world of monetization for digital artists.

Even with physical works of art, galleries are using blockchain. Maecenas is a decentralized platform that democratizes fine art. If you’d like to get involved with art investing but don’t have the bankroll to purchase a multi-thousand dollar piece, this platform is for you. On Maecenas, you can invest in a portion of artwork using the platform’s ART tokens. Additionally, to finance new pieces, galleries are able to list their artwork to Maecenas users at a fraction of the cost of what an auctioneer or loan would cost them.

Participate in the Blockchain Art Market

Whether you’re a collector, creator, or just a casual observer, art’s blockchain revolution probably affects you in some way. Even in this young industry, there are still plenty of ways to get involved and stretch your creative muscles.

Don’t let a lack of artistic ability stop you. Projects like Slothicorn, which provides a Universal Basic Income for all crypto art (including “shitty GIFs”), give you the support you need when first starting out.

Who knows? You could just become the first meme-making millionaire.

This article is Originally posted on CoinCentral.com
Author: Steven Buchko

Brock Pierce on Crypto, Blockchain Gaming, Rebooting Mt. Gox, and More

Brock Pierce is seemingly everywhere in the cryptocurrency and blockchain space.

One can trace Pierce’s fingerprints on a dizzying amount of industry-shaping events. Today, Pierce is still behind the steering wheel of some of the space’s largest happenings and projects. Pierce is currently the Chairman of the Bitcoin Foundation, a co-founder of Block.one, EOS Alliance, Tether, Mastercoin, and Blockchain Capital, and advises companies like BitGo, DNA, and Patrick Byrne’s tZERO.

2019 is already shaping up to be a big year for the billionaire master storyteller, with his plans to relaunch the infamous Mt. Gox, a cryptocurrency exchange hacked for about 740,000 bitcoins (~$2.664 billion) in 2014.

Pierce’s reputation is built on years of entrepreneurship and venture capital, cryptocurrency and blockchain evangelism, being what Rolling Stone calls “[the cryptocurrency] world’s first cult leader”, being a blockchain billionaire, and amusingly enough, a child actor in Disney’s 1992 classic The Mighty Ducks.

Although Pierce may have retired from the acting world at seventeen, he still holds a flair for storytelling and showmanship, placing much of his focus on nurturing and growing a young, but flourishing cryptocurrency sector.

We got the chance to interview Brock Pierce regarding his thoughts on the growth of the space, cryptocurrency entrepreneurship, Bitcoin, gaming and blockchain, Puerto Rico, Seasteading, and the McAfee Campaign.

entrepreneurship

How does entrepreneurship in the blockchain & cryptocurrency space differ from the more traditional startup world?

I guess one of the main things you realize when you work as an entrepreneur is that it’s long days, long hours. When you start working as an Internet entrepreneur, the world is moving at a million miles an hour and is changing rapidly.

Crypto is just a further acceleration of that. It’s like a billion miles an hour. It’s more difficult than any other space that I’m aware of just because of the speed of change. This industry is moving so rapidly. What would be more realistic? The Internet took 40/50 years to get to where it is today. We’re moving probably about three times faster. We’re basically the speed of the Internet times Pi.

The evolution has been crazy to watch. Especially during the ICOMania in 2017-2018, which added another element of acceleration. So many random companies were popping out of the ether and raising millions to build projects of either world-shattering or completely dubious value. 

A good thing is that the ICO market has had a nice correction. We needed to slow down a little bit. We were getting in front of our skis, as they would say.

It’s been interesting to see how so many cryptocurrency and blockchain entrepreneurs have become very public figureheads for their projects.

The figurehead is normally the storyteller. In a band, you’ve got the lead singer, I prefer to use the term conductor. The figurehead is normally the conductor and the storyteller. It’s often lost in most Silicon Valley startups, the importance of storytelling when most people are thinking about they assemble their team and the critical functions that the team needs to be successful. Storytelling is normally not on the list.

It’s almost a lost art, but when you start looking at projects that are successful versus those that aren’t, you’ll find that there’s a common thread and that common thread normally involves a good storyteller.

What’s a day in the life of Brock Pierce look like?

These days, I get up by 6:00 AM, meditate, journal, Yoga. I’m trying to get all that stuff done by 7:00 or 8:00 in the morning, all of my morning rituals. Then I work long hours and rinse, repeat.

Often, I’m on a plane. If you take just the last month, I was in Puerto Rico. Then I was in Vegas for one night, LA for one night, New York for one night, LA for one night. West Palm Beach for one night, Miami for one night. London for one night, Versailles for one night. Normandy for one night, Paris for one night, DC for two nights. New York for one night, LA for two nights, Tokyo for three nights. This is often how I roll.

How do you keep your brain narrowed and focused on producing at a high level every single day, especially with all the travel?

It’s all training. I’ve been doing this a long time.

2019 and 2020

Do you think there’s going to be a make or break type moment for cryptocurrency in 2019/2020, and if so, what would you hypothesize it would be?

Well, I don’t see a break happening. I only see a make.

We’re in a bear market, but we’ve been in bear markets before. This is kind of like a regular cycle. Remember the price of cryptocurrency is the primary barometer of sentiment. It has very little to do with fundamentals. The fundamentals of the ecosystem have been consistent and up and to the right. Number of users, number of entrepreneurs, amount of capital coming in, all of it. Transaction volume, pretty much everything has consistently been up and to the right, sometimes accelerating faster than at other times.

The foot is off the gas right now versus pedal to the metal. We’re still moving forward even though the price might be down.

We go through these cycles and it’s very necessary because what happens is when the price rockets, the mentality of the ecosystem is “when moon, when Lambo”? That is not what we are or how we want to be represented. Whether people realize it or not, we are building the technology framework that’s going to change the world and hopefully make it a much better place. The outcome will be determined by the quality of the people that do it.

Do we want “when moon, when Lambo” mentality being the designers of the new world or do we want it to be people of high integrity that are hunkered down and doing the work to build the necessary infrastructure to build a better future for all of us?

We need these corrections because they act as a cleansing or purging event and it gets everything out of the industry that is not in resonance with what we’re doing and what we’re building. I for one am very happy the market is down because the market is now becoming rational again and the people that are not operating with integrity are disappearing because they don’t see a quick buck anymore. What’s left are the true believers and the people that are here to change the world.

Let’s assume that we continue on this current trajectory. How do you see your average non-technical person interacting with cryptocurrency and blockchain solutions on a daily basis within the next few years? 

Remember, this space has only been around 10 years and very few people were working in it 10 years ago. You can count them on two hands. It’s really only been the last six or seven years that you’ve had any critical mass of people working on things and that mass has obviously expanded exponentially over these last six, seven years.

We have a lot of really talented people all over the world focused and participating. The Internet, as it was being developed over the 60s, 70s, 80s, and 90s, wasn’t usable to consumers until 1995. In 1995, Netscape was created. The Internet was not usable to average people until you had an internet browser, until you had an email client until you had search engines and content and things to consume and things to buy. Until you are at a critical mass of infrastructure, until the bridges, the roads, and the tunnels had been built, it was not ready for mainstream.

Crypto has been in a very similar state. I think we’ve now had our Netscape moment and that was with EOS. I believe EOS is our Netscape. EOS is the first scalable blockchain that has low latency, meaning it’s fast, and no fees on to the consumer, meaning no friction. I think we’ve had our Netscape moment. You remember when Netscape launched, no one recognized its significance until you had the benefit of hindsight, meaning a few years later. I believe we’ve now had our consumer internet moment. This is the equivalent of when the Apple iPhone came out and the app store. We’re in the beginning stages.

The first apps in the app store are early, they’re not where it’s all going to end up. I’m also not saying that EOS is definitely the future. I’m entirely chain agnostic and there’s a lot of generation three protocols that are going to come out that are scalable and fast and things of that nature.

Ethereum will have an upgrade at some point. I’m just saying it was first and keep in mind there was Netscape, Internet Explorer, Safari, Chrome, Firefox, Brave, ETC. There will be a number of browsers, to use that analogy. I think we’ve had our consumer moment and so, I think that’s now. I think over the next year or two or three, we’re going to see meaningful consumer adoption because we now have systems that can scale and can deliver that now. 

There’s still a handful of other things that need to be improved. User interfaces, but that’s getting better as more marketing people and designers come into the space. It’s not just great engineers anymore and great cryptographers.

Obviously, to get mass consumer adoption, you need things that are consumer usable and you also need applications that appeal to the masses. The three categories where I think we’re going to see the first killer apps emerge are going to either be in social, things that are going after Facebook and Instagram or it’ll be in messaging, things that are going after WhatsApp and Skype or it’s going to be in gaming.

I think those are the three areas where we’re going to see the first sort of killer apps emerge that deliver meaningful scale to blockchain. I think that we’re going to see our first app this year hit a million users.

This bear market has many projects laying off significant amounts of their staff, if not shutting down completely. Do you have any words of wisdom for any entrepreneurs in the blockchain and crypto space?

Have faith. You’re in the right space at the right time and most likely doing the right thing. A poem comes to mind. The poem by Rudyard Kipling and the poem is known as “If”:

If you can keep your head when all about you   

    Are losing theirs and blaming it on you,   

If you can trust yourself when all men doubt you,

    But make allowance for their doubting too;   

If you can wait and not be tired by waiting,

    Or being lied about, don’t deal in lies,

Or being hated, don’t give way to hating,

    And yet don’t look too good, nor talk too wise:

If you can meet with triumph and disaster and treat those two imposters just the same, it feels like an appropriate poem for everyone. For anyone that hasn’t read it, maybe that’s the best piece of advice I can give everyone today.

Having a very Zen-like or stoic resolve and ignore the explosions around you. Just keep focusing on what’s going on in front of you.

Exactly, be present, stay present.

gaming

The intersection of gaming and blockchain has been very interesting to follow. Why would now be the best time for game developers to start building as opposed to a few years ago?

You didn’t have the infrastructure a few years ago. What kind of game are you going to build on a blockchain a few years ago? The only thing that was done recently that had any success was Crypto Kitties, and Crypto Kitties couldn’t scale.

What type of video games do you expect to see that are supported by blockchain? Would it be like your typical Fortnite and World of Warcraft on blockchain? Would it just be more of an NFT solution?

It definitely won’t be Fortnite or World of Warcraft. Those games take years to develop. Those things won’t happen on blockchain for some time. They’re going to be more simple games. Things like Crypto Kitties, things with NFTs. Gambling games, we already have a lot of adoption there. You’ve got the gambling side and we’re going to have more and more and more of that, but then you’re also going to have casual games, but I also think we’re going to see something where gambling games and casual games converge.

I like to call that category “reward-based gaming”. It looks like a video game and it doesn’t look like a gambling game, but you’re actually earning things of value. Things like trivia games. A lot of the same stuff that you see that’s popular on mobile today. They’re going to be simple because these are the things that you can turn around and crank out quickly.

We’ll see hundreds of simple games, most of which will fail, but we’ll end up with a few hopefully killer apps and by playing the game, you earn value. You’re collecting coins, think Farmville, stuff of that nature except for those coins have value like in games like World of Warcraft. The games need to be designed so that people want more of them and there has to be a reason why we would buy and sell them, the utility or whatever else.

It’s basically the industries I’ve worked in most of my life, which is gaming and specifically, marketplaces around gaming and game currencies.

I was the biggest market maker of game currencies in the world. I built a supply chain of 400,000 people in China to play games professionally to mine digital currency. I’ve done $20,000,000 worth of sales in that business.

That’s pretty much where my crypto roots are as well. I was selling Runescape items and gold for real dollars at like 12 or 13.

That was my business. I was doing that for RuneScape and every game.

Were you using Chinese bots?

I taught the Chinese how to do that. I’m the guy that taught the Chinese.

It’s funny to think about how many people that used to play World of Warcraft and RuneScape eventually got in cryptocurrency and general internet entrepreneurship. What were some of your favorite video games while you were growing up?

I was a pro gamer, so I played every game I could get my hands on as a kid. I was also a mall rat, so I loved hanging out in arcades back when they still existed. I’m dating myself now, but Mortal Kombat was probably my personal favorite in terms of arcade games. The one that I played in a lot of tournaments, but I love role-playing games more than probably anything else.

The Final Fantasies and everything else. I also played a lot of card games, things like Magic the Gathering. The first persistent games were coming online. I played a lot of Everquest, World of Warcraft, things of that nature.

Mt gox rising

So, you guys are looking to bring back MtGox from the so-called abyss. How are you guys planning to go about doing that? I’m very curious about the actual process of rescuing funds.

How do we plan about going and doing that? There’s a couple of priorities here. Number one is that there are 24,000 victims that have filed claims with the bankruptcy trustee in Japan. There are 24,000 victims that made an early bet on Bitcoin back in the day and they’ve been deprived of the benefits of having taken that risk and their money’s been locked up in a bankruptcy process for five years now. Number one on the list of priorities is getting them that money and that bitcoin as quickly as possible

What does the actual task of recovering the funds look like?

MtGox lost 850,000 bitcoin. They found 200,000 of those, so there’s still 650,000 missing bitcoin. Now of the 200,000, the bankruptcy trustee sold about 50,000 of them for $630,000,000. The MtGox estate today has about $630,000,000 and about 150,000 bitcoin. That cash and that coin needs to be distributed to creditors, the victims, as soon as possible. 

How about the bitcoin that’s not on the table, are there going to be any efforts to recover that or is that something that is beyond the immediate scope of the MtGox uprising?

I’d say that one more step down the road. The number two thing that needs to happen to get that money paid out is a simple rehabilitation plan, a CR plan, that needs to be approved by the bankruptcy trustee. That’s number two. Number three is that CoinLab filed a lawsuit against the MtGox estate for $70,000,000 back in 2014.

That lawsuit was a frivolous lawsuit in my opinion because they breached their contract and failed to perform. In addition to that, they embezzled $3,000,000 of Mt. Gox customer money. The firm that failed to perform was in breach of contract and embezzled $3,000,000. It’s suing MtGox for $70 million. Does that make any sense to you? It’s insane. The gall to do something like that is crazy.

Now, fast forward to today. Once CoinLab realized that it’s coming out of liquidation and going into civil rehabilitation and that the value of the bitcoin has gone up so much and that there are $630,000,000 there, they’ve amended their lawsuit and now they’re claiming they’re owed $16,000,000,000 ($16 billion). They want all of the money.

They’re basically saying that if MtGox had stayed in business and if MtGox had not canceled their contracts from which they were in breach, and have they not embezzled the money which they chose to do, had they actually performed and done something which they did not, they believed their company would be worth $16 billion today.

They believed that they would be bigger than Coinbase. The only thing that I’m surprised by is why they’re not saying they’d be Facebook or Google or both. The gall to make that statement is out of this world. They’re claiming that they’re owed all the money and creditors should get zero. They believe that 100% of the money should go to CoinLab. That needs to be addressed. They need to be stopped.

One way we’re stopping it is I bought the MtGox equity in 2014. It looks to me like I own 100% of MtGox. As the equity holder, it looks like I would be entitled to $700,000,000 or $800,000,000 of excess capital. I want all of that to go to the creditors.

We want the creditors to receive all that cash and coin as quickly as possible. Call it the good guys. On the other side of the house, you’ve got CoinLab that did nothing, stole money and breached contract and they’re saying they deserve everything. Let’s call them the villains.

It’s very Joseph Campbell-esque.

This is a Joseph Campbell story. This is why I’m getting involved. It’s because MtGox, you had the rise and the fall, and the story is not over. We have the power as an industry to write the end of this story. How do we as an industry want the story to end and I would say let’s write a Joseph Campbell ending.

The rise, the fall, like a phoenix rising from the ashes, the rise again. Let’s stop the villains. Let’s stop the bad guys from taking all the money and as an industry, this is our Lehman Brothers. This is our Bear Stearns. Let’s show that we’re different than the old financial system. Let’s show that we’re better than the old financial system. Let’s get creditors all their money back and demonstrate that we’re resilient as an industry and we’re still standing.

It’s a very hot topic, especially recently with this whole Quadriga exchange scandal.

That’s the other piece, let’s raise the bar. Let’s raise the bar and operate this exchange as a lighthouse, as a demonstration of best practices of how exchanges should operate today so that this story that has continually plagued our industry, even quadrangle, as recently as now, Cryptopia, but this has been going on.

This story is happening over and over and over again, and the technology is there. The tools are there, the skills are there to prevent this from happening going forward. For one, decentralization of the custodianship, noncustodial exchanges. We can do that with the crypto. This shouldn’t be happening anymore. Multisig, this most recent one. You didn’t even use multisig. What is going on here? It looks intentional.

It looks very suspicious because we should all know better at this point. It’s time as an industry that we stop tolerating exchanges that do not implement the current best practices. This needs to stop.

A lot of people that are storing their cryptocurrencies aren’t even aware of what types of measures are taken to protect their money. A single person, unfortunately, passing away with the keys to $190,000,000 or whatever the amount was, it’s bonkers and it’s definitely not winning any points from a mainstream audience.

Most people got their introduction to Bitcoin through the MtGox story. That’s how people learned about the industry. They think it’s used for drugs or it goes up and down a lot and it’s really risky and not safe and it’s always getting hacked.

That’s the perception of the average person because of the MtGox story and the stories like it that have continued to plague our industry. It’s time to bring that to an end.

Number one, creditors, the victims, the 24,000 creditors, getting them that cash and coin as quickly as possible.

Number two, stop CoinLab. Stop the villain.

Number three, establish a foundation on behalf of the creditors governed by the creditors to pursue the recovery efforts of going after the missing coins and pursuing any and all claims to get creditors what they deserve. You get the victims what they deserve.

Number four is to relaunch the exchange.

Remember when Bitfinex got hacked? Bitfinex was able to pay off their creditors through the proceeds of operating the exchange. If MtGox had been operating for the last five years, creditors might have already been made whole. Let’s not let another five years go by. Let’s get this thing up and running quickly.

It’s my belief that this story, the creditors are the most important piece, 24,000 creditors, but we’ve all been victims. Anyone that’s ever held a bitcoin is a victim of the MtGox hack because MtGox getting hacked has set back our industry by one or two years. Every time there’s another one of these hacks, it sets back, and it damages the public perception of the work that we’re doing. What’s good for Gox is good for the ecosystem in my opinion.

What would you say would be the biggest hurdles in building back that Gox brand beyond reimbursing the creditors?

Building a best in breed, best in class exchange that has solved for the custodianship of the coin so that you can’t have the money stolen again. Then getting people to trust it again. That’s obviously a long process. Clearly, people have been burned. We’ve all been burned, but there’s a bit of a redemption story here.

puerto rico, seasteading, mcafee

Could you tell us a bit about how things are going in Puerto Rico?

Things in Puerto Rico are moving along. More and more amazing people are showing up with intellectual capital, human capital, financial capital, spiritual capital, and good intentions. Little by little, we’re making progress. You now have a number of angel investors in Puerto Rico, which had never been the case previously. You have a number of mentors that have built successful startups in the past that are there to help each and inspire the next wave of entrepreneurs.

There had never been any startups in Puerto Rico that had raised even a million dollars historically. Two startups raised over a million bucks last year at the second app. I think we’ll have a number of more this year. There’s a whole startup ecosystem emerging, and this is Puerto Rican entrepreneurs.

Puerto Rican people are so talented. Puerto Ricans have more bachelor’s degrees per capita than anywhere else in the United States. They’re the most educated on average. They also have more artists per capita than anywhere in the United States. meaning they’re very creative.

Puerto Rican people have talent. It’s a place we should all be spending more time. Puerto Rico’s main export is humans, human capital, but most of it ends up in San Francisco or in New York because there’s not enough opportunity in Puerto Rico. This has been this sustained brain drain where the most talented Puerto Ricans are continually leaving because they don’t have the tools to do what they want back home. That’s starting to change and hopefully continues to.

Especially with the digital revolution where you can pretty much start a multimillion-dollar company just from your laptop, no matter where you are. What are your thoughts on Seasteading and a self-sustaining autonomous blockchain built economies?

I love playing around with new forms of governance. I spend a lot of my time thinking about nation building. I’m friends with Patri Friedman, Milton Friedman’s grandson who started Seasteading. Randy, who was the CEO of Seasteading up until maybe a couple of months ago, has been living in Puerto Rico with us. I’m a very big fan of the Seasteading process.

The concept itself is fascinating, especially with the beauty of the internet connecting everybody, even if you’re pretty much nowhere. I’m just curious about your thoughts on McAfee’s campaign to become president.

I introduced John McAfee to Bitcoin. I think that’s what he’d tell you. John’s an extraordinary guy, very interesting. He has lived one of the most extraordinary lives and has certainly been a big and very public advocate for crypto and the things that we’re doing. If you get the pleasure of hanging out with him, you will be thoroughly entertained.

Final Thoughts

You’re known to be fairly accessible for virtually anybody who’s very interested in the cryptocurrency industry. I always see you at conferences chatting up with the crowds an all sorts of other events. 

I make a point of being accessible. I give talks at conferences and I hang out for a couple of hours afterward always. Over the course of my entire life, every major speaker gives a talk and they exit out of the back door. I’ve only seen a couple of people in my entire life that doesn’t do that.

It’s a very unique aspect of the cryptocurrency space as well because you have a lot of the people that are doing the innovating are also engaging in building the community up. It’s awesome to see.

That’s what separates us from the old world is we’re building communities. That’s what this is. The technology is not what differentiates one project from another. It’s open source, copy paste.

What separates one project from another is the quality of its community and the stewards that help support it. Those stewards putting their community first, not themselves. That’s what separates us from the old world because we’re building open source systems with open hearts and open minds

What’s the next piece of the puzzle for you in your projects and how can our readers help out with any of the things that we’ve talked about today?

If you’re a Gox creditor, come to Gox Rising and sign up so that you own some of the new exchange and be informed. If you are not a Gox creditor, keep doing what you’re doing. It takes teamwork to make the dream work. It takes all of us and all the work that we’re doing.

There are so many ways that each and every one of us can contribute in our own unique, special way. Let’s change the world and make it a better place.

Thank you for your time, Brock! 

This article is Originally posted on CoinCentral.com
Author: Alex Moskov

Innovative Margin Trading Solution To Stimulate Growth At DDEX

The DDEX team recently unveiled its new margin trading facility to the general public. The new margin trading solution has been going through a rigorous beta test over the last few days of volatile cryptocurrency trading.

Tian Li

Tian Li, DDEX Cofounder

Last week, CoinCentral’s Munair Simpson had the occasion to sit down with Tian Li, DDEX cofounder, at his office in Seattle. The interview was focused on the design choices made by Tian and other members of the DDEX team.

Tian spent 45 minutes to reveal the amount of thought put into designing the new platform. The new platform is significant. DDEX dug in deep to innovate in areas where they could uniquely add value.

In conjunction with recent advancements in decentralized finance, or DeFi, the DDEX team was able to innovate in the following ways:

  1. Improving liquidity with a USDT bridge and bootstrapping systemic risk-aware lending pool.
  2. Making liquidation less terrifying with stop/loss orders and Dutch auctions. 
  3. Integrating an insurance scheme.

There are other advancements. However, there just wasn’t sufficient time to uncover them all. The interview below will have to suffice for now.

Would you like to introduce yourself, your background, and how you got into cryptocurrency?

Sure, I’m the founder of DDEX along with Bowen and David, my two co-founders. I’m an engineer. I worked at Microsoft and in the Valley for five years. Then I did two startups in Asia in mobile/Internet and was also an EIR for a few venture capital funds. 

That was my history prior to coming to crypto. I got really interested in Solidity programming while I was an EIR at a fund. I was very bored doing research, so I taught myself how to write basic smart contracts. This was April of 2017. That’s why I first got into it. Just as a programmer, downloading MetaMask, and writing these very simple game contracts. Then, near the end of 2017, I decided that smart contract programming is definitely a new type of technology. 

There are some different things that you can build. As an entrepreneur, that’s really what I look for. That’s when I approached Bowen and David to do this project together. That’s how we jumped in, almost two years ago now.

You’ve known them to from before, correct?

I’d known David for years. David was the best engineer at both of my previous startups. So he was the first person I asked. Bowen was working as an investment analyst in Zhenfund, which is a general VC fund. They invest in a lot of things. Bowen was looking at the crypto space. This was really early. I think May of 2017. This was before the ICO hype. I remember Bowen was one of the few people I met that was interested in assets and projects. 

The first project we looked at together was 0X. This was before their ICO. Which was interesting, because we eventually ended up doing something in the decentralized exchange space.

The first time we really sat down together we were like, oh, what do you think about this project? He’s like, I know this project’s that. What do you think about this project? We went through a bunch of projects, and then eventually, yeah, you know definitely a great, complementary team.

Would you like to describe the product and tell us how it will be launched?

Just to summarize what we did… At the end of 2017, we started with a decentralized exchange called DDEX. At the time, it was very simple. The idea was, can you swap tokens trustlessly? Until the end of 2018, we just worked on a decentralized exchange that was not too painful to use, and a set of smart contracts that are robust, simple and secure.

That took us pretty much a whole year to really understand the space. In 2019, we felt the market was quiet. We thought that this was the best time to make bigger investments. Technically, when there’s not much going on operationally, I think you can really afford to invest six months into a project.

In 2019, under the radar, we looked at, what’s going on with the DeFi space. We realized that step one was trading. Step two, with the rise of Compound and these lending platforms, was lending. We thought that was the second most interesting thing. Financially, if you take trading and lending, and you mix them together, you get margin trading. So we were just fascinated by the possibility to compose. 

Our second project, which you can call a feature addition on the original DDEX, underneath this is brand new territory. It’s a “margin” decentralized exchange. The idea was that we would compose a decentralized betting pool. Borrow some money and trade with the borrowed money. Allow the user to do so. In doing so, you can create leverage long and short positions. It is a sort of a derivative on the top of a spot exchange. So that’s our new project.

We didn’t give it a new name. It’s still called DDEX. When we launch and you open DDEX, you will have margin trading. Margin trading is pretty much an upgrade over spot trading. We will still have all the spot trading functionality, but now, in addition, you can do margin trades. 

We actually tried to make it so that, from the product perspective, the users will still be familiar. We still use all the old trading paradigms of order form, order book, and stuff, but now you are basically able to increase your purchasing power.

What is the URL that they can visit?

Sure. We’re just low key right now. So you could use the main net. Our contracts are audited. You can find the new product at margin.ddex.io.

Yeah, check it out. You will be one of the first users because we haven’t really published this URL. We do have 50 to 100 early-stage users. Using it and giving us feedback. We are iterating. We are planning a public launch in October.

What distinguishes yours from other platforms out there? 

First off, if you look at these lending platforms, one question that really interested us is: Why are people borrowing? These loans are over collateralized loans. In essence, you have to pretty much give them $150 of collateral to take out $100. This is not how you typically think about a loan. 

So the first question that anyone asked is, why are people borrowing? Everyone understands why people are lending, because right now your tokens are just sitting there. Earning zero percent. If you can even earn 1% that is just strictly better. 

We always thinking about motivations. Why do people do this? Particularly from a product perspective. Lenders are easy to understand. But borrowers are not. Why are you paying 15% interest the whole time?

Then we really looked into the data. The analysis, and there’s really only one answer, is that you borrow to create leveraged positions.

To be clear, to performant margin trade, you don’t need a specialized product. I could say margin is more like a way of doing things. I could borrow a Bitcoin from you and then sell it. I’m shorting it. Now I have USD. Someday I have to pay you back.

If Bitcoin goes down, I can buy it back cheaper to repay you. I can barter trade by just borrowing it from a friend. Of course, the whole point of margin trading is to increase the efficiency and decrease the trust dependency at which you can do these things.

I think one innovator in the space, a sort of pioneer of margin exchange, was dYdX. From the very beginning, since we were creating the DDEX, they’ve been thinking about how to do this right. 

We started probably around the same time, late 2017, early 2018. Then we see them go through a few iterations.

I think that the main difference… We want to bring something unique to the table. We weren’t a first DEX. Back then [in development] we were looking at decentralized exchanges. We were like, oh… Here are the three things where we can improve on. We did the same thing with margin trading.

We were looking at margin exchanges in its various forms and I think there are three things that can be drastically improved. One is that we want to be less dependent on Dai liquidity. Dai is amazing. It is like the oasis that bootstrapped all of DeFi. 

Absolutely, that’s the perfect name for it.

When it comes to liquidity, the more the better. So we were thinking, in addition to Dai, we bring additional stable coins. This will increase the liquidity of these markets.

I think one really big, untapped source is centralized USDT, USDC, TUSD. We’re talking about actual fiat-back stable coins.

Very huge… There are a lot of people using them… Very high liquidity when you look at Coin Market Cap.

Yeah, but there’s a technical challenge. I think the reason everyone started on Dai is that Dai is completely on-chain. These completely on-chain DEXes are in theory able to provide a source of, what we call contract-fulfillable liquidity. USDT is not contract-fulfillable liquidity.

There needs to be an adapter. Something that takes USDT and converts it into a form of liquidity that decentralized protocols can use. We basically have to build an adapter. That takes something from the non-totally decentralized world, pass it through this filter, and make it decentralized. It’s not just about liquidity. So that’s the challenge.

I think we’re the first one to do it. It’s not like a trade secret. We’re hoping that when other people see us do this, they will enter the game and do this as well. This is one way to really bridge.

Philosophically, the way we look at it is that something like Dai is really trying to bootstrap liquidity from within the DeFi ecosystem. It is creating liquidity out of nothing. Whereas bringing something like USDT or USDC, you bring from outside of the DeFi ecosystem. We call it bootstrapping liquidity inside and out.

There’s a really good effort on the inside front. We want to try to contribute from the outside. So that’s like the first part. 

The second part of what we do differently is that we actually don’t compose. What we mean is that to build a margin exchange you need two things. You need a spot trading exchange (a DEX) and you need a lending pool. 

There are multiple permutations of how to bring these together. You can actually just take an existing exchange like Kyber, and an existing lending pool like Compound, and then you could just build a very thin layer on top. That is a margin exchange without building either of these two components.

One project that this was called Opyn. It was a very interesting experiment. Unfortunately, they shut down.

They shut down… October 15th is the last day.

I read their post mortem. The reason that their business shutdown was because they were too thin. That is because they’re just composing out of existing components. The unique value offering they have, which is most likely usability, is maybe not enough to justify existence. 

Which does really make sense. When you compose, there are a lot of imperfections on the product level. It’s a leaky abstraction. The users sense the complexity because, underneath you’re still interacting with multiple protocols.

DYDX, the first version, I think they take one step earlier. Like… We’re not going to use an external. We’re going to build our own landing pool. Then we’ll compose it with an external DEX. For example, Eth2Dai. By building one thing externally and then using one thing internally, they can drastically improve the usability. 

We just were looking at the trend and we felt like a natural progression was to just to do both pieces internally.

Yeah, I think it’s been a good decision.

It’s a trade off, right? As an engineer, you never want to reinvent the wheel, right?

How do you bootstrap that liquidity for your lending pool?

Yes, definitely. The third feature is that, because we’re doing this integrated solution, we’re able to really restructure certain things. One thing we focus on is that, although there are two things you can do on such an exchange, which is lending and trading, we really don’t put them in parallel. We still believe, which I’ll explain, and which answers your next question, we think we have to start with margin trading first because there is no shortage of lenders. We have $20 billion worth of Ether sitting there earning essentially zero percent. 

I think if there is a safe, risk free rate, the supply side of it will come. At the end of day someone’s paying interest and someone’s earning interest. Everyone wants to earn interest. You don’t have to do very much to get it. 

Who actually pays interest? It’s the traders, right? If you can make the traders happy, then they are willing to pay interest and this interest will attract lenders. 

It is a chicken egg problem. We bootstrap on this side.

We designed our contract in a way that will bias towards what we believe the borrowers want. I can give you a few examples. For the borrowers, what they want is really stability. 

There’s some innovation in this space. For generalized lending platform, like Compound, I think they’re doing some very interesting things. For us, we actually reduce a few of the advanced features to increase robustness.

One example of this is that, on these innovative lending platforms, they made a choice to allow the collateral to be lent out as well. So what I am saying is, imagine I want to borrow some Dai. I will put up some Ether as collateral. 

It’s like mortgaging your house. Or going to a pawn shop and saying take this valuable watch I have. Then I am going to make some cash, right? 

Now the interesting part is, I don’t think any centralized or CeFi projects do this. They [Compound] allow the collateral to be also lent out. So this Ether, which is somebody’s collateral, also enters of lending pool. That can also be lent out. Which is, sometimes even when you’re borrowing, you could be earning interest on your collateral. It’s a really cool feature.

We’re not judging. Or saying this is bad. But when we look at it from a very practical perspective, from the perspective of a margin trader, we think this is unnecessary.

We think is unnecessary. One you’ll notice that the interest rates are very unbalanced. You’re earning 10% on Dai, but you’re earning 0.1% on Ether. The demand to borrow Ether is just not there. 

This trivial amount of interest is close enough to zero that it does not drastically increase the utility of the lending pool. But what’s the downside? It sounds like there’s no downside. The collateral is there as collateral. Which means if something goes wrong, it supports liquidation. This collateral gets sold, right?

So the question is, what happens if there was a really huge price drop? You’re trying to liquidate Ether, but the Ether is actually not there. It’s lent out. So you have to do cascading liquidation, right? 

You have to liquidate again. Someone has borrowed that Ether, and they’ve put up some other collateral. Now you have to liquidate that collateral too. Just so that you can liquidate the Ether to get Dai, right?

No one knows how it’s going to play out, and it could be this catastrophic event.

It could just be that we are overthinking things, but who knows?

I mean, we actually, we have less pure asset utilization. In some ways, you could say we have an inferior lending pool. But just in case something really bad’s happening, we are a little bit more confident in our liquidation process.

So these are the trade offs that are very hidden. We don’t really tout this as a product competitive advantage. But, it makes us sleep a little bit better at night. We thoroughly went over our liquidation process. 

In line with that, for the counterparty, it’s this notion of insurance, right? When you are lending out on one of these platforms, what you are really worried about is not being able to get your money back. It is the liquidation process that protects users assets. That’s because there’s a trustless system.

At the end of the day, if the liquidation was successfully, users are guaranteed to get their money back. This notion of insurance, to be specific, there are two types of risks for a lending pool. You have the liquidation risk, and you have smart contract / bug risk. 

The second one is hard to insure against, but the first one is completely measurable. That’s because the liquidation process itself is just some logic in the smart contract. We can just add logic and say, if the liquidation fails, because there was not enough incentive for someone to participate in liquidation, then there’s insurance. Which essentially act as one more trader. Except it will do the liquidation at a slight loss. 

So we actually have a full implementation of a trustless liquidation insurance. Which we think is a neat addition to this to this game. One that we’re kind of proud of.

We’re hoping that it doesn’t kick in. Since when it kicks in, something went wrong. Still, it is one more guard against catastrophic situations.

Do you want to disclose how you structured your liquidation penalty?

Sure. There is a liquidation category. Which just means that when the collateral approaches a percentage of the loan debt, the collateral gets put up for liquidation. It could be, 110%. It could be 105%. If you set it too high, then it’s just inefficient. The liquidation is kicked off. It’s just too early, like a false alarm. But if you keep it too close to 100%, you risk falling further and not being able to liquidate. 

It’s part art, part science. We have it set at 110% right now.

For all assets? 

Yes. Right now, we’re mainly just looking into two markets. The Ether to USDT market and the Ether to Dai market. In the contract, every market gets their own parameter. 

Every asset should get their own price. Every asset and every market should have different liquidity depths and risk. Right now, the 110% percent rate is the current rate of the ETH – USDT market. 

When liquidation kicks off at 110%, it doesn’t mean that the borrower gets penalized 110%. It’s not like a 10% penalty. It’s just that the liquidation starts at 110%. 

We actually use the Dutch auction mechanism. There’s two matrices in terms of liquidation design. One is how and when do you kick off the liquidation. Two is how you execute the liquidation. 

There are really two ways to execute a liquidation. One, is to give the smart contract full control. It just takes all the collateral and sells it at market on Kyber. That’s one way to do it. 

Two, is that you will open gradually increasing auctions. Whoever wants to swap, as long as you’re able to help me pay back the loan, then you get the collateral. 

In some ways, because an auction is a price discovery mechanism, the second way is more decentralized. It is actually more fair. You’re more likely to get to market rate. 

There is a drawback. The drawback is that the action takes some time. Maybe, it takes 10 minutes. In that 10 minutes, the price could drastically change in a way that increases risk.

There are always these tradeoffs. At the end of the day, without a doubt, Dutch auction was the better way to go. It’s more elegant. I think it scales better into the future. So we use this.

So basically, when I say Dutch auction, at 110% it starts by auctioning a portion of the collateral. Let’s say there was 100 ETH in there as collateral. You don’t sell all the ETH. You offer 80 ETH for any one to pay back the loan. No takers? Then I’ll offer 81 ETH to pay back the loan. So on a block-by-block basis, it increases the percentage of collateral that you will get. The remainder of the collateral goes back to the borrower. In that way, they don’t lose all of their collateral in the case of the liquidation. 

That’s very good.

It’s a cool mechanism. Even though we’ve been beta testing for weeks, and because Ether has has risen a lot recently, some short positions got liquidated. One of my short positions got liquidated. I was testing. I’m actually very long on Ether.

Same here. So I’ve been in trouble.

It’s pretty cool to see this whole mechanism work out. There’s no tangible difference between liquidation and a stop loss, right? 

At some price, you’ve already lost the money. At some price, you just settle.

What we found in our beta testing was that people have to psychological avoidance. They feel getting liquidated is a very bad thing.

Let’s say your liquidation is at $200 and you get to $195. I’m still okay. It’s not liquidated, but you’ve already lost most of your equity. People just don’t want to get to that final point where their whole position gets liquidated.

A stop loss is really just a partial liquidation. It’s a liquidation of maybe 50% of your margin account. 

I want to design a way that people don’t also don’t feel emotionally bad. I think that part of the product design challenge is also interesting.

What are your thoughts about the HOT token and its utility?

When we designed the token, it’s basically a Costco membership or frequent flyer mileage. It’s a decentralized version of BNB. 

All it means is that.. What is the value of the DEX? It’s actually the place that’s able to aggregate enough buy and sell demand to form a market. In other words, its only asset is its liquidity. Or, the depth on its books. If all DEXes have the same liquidity, then transaction fees will just go down to zero. That’s because like people will trade on the cheaper one. 

If you look at Coinbase, if you look at Binance, the reason that these fees aren’t zero is that they have this competitive advantage. They just have the best liquidity, right? 

The value of this network is its liquidity. If you were to have a token to incentivize it, then you will incentivize the people who create liquidity.

For any token, I think there are two questions. One is who gets the token? Who is doing the work? Two is what utility does this token have, right?

Fundamentally, at some point, the only value a decentralized exchange protocol can offer is a discount on its fees. The token is a marker for people who trade and thus provide liquidity to the network. Thus increasing the value of the network. Therefore the network rewards these contributors, with basically a discount.

We looked at all the token mechanisms. The only ones that really make sense are some sort of medallion. It’s not really in itself some reward, but it’s the right to do work in this case. For the people who hold the tokens, HOT is basically a marker for contributing liquidity to the community.

Historically, when you look at 2017 – 2018, people will make these very fancy, elaborate, or complicated token mechanisms. When it was cool.

The next batch of projects had no tokens. It was so uncool. I think now if you look at it from a rational perspective, a token is just a tool. It’s a tool to achieve the goal, which is to bootstrap a network. Bootstrapping any network is the hardest part. But if you are able to start the network, then that network can have long-lasting value.

In some ways, a token could be like a very elegant solution to the bootstrapping problem. I think it’s never really changed. But it is very hard to do in practice.

In terms of inspiration, look at something like the Maker DAO token. It’s not completely unnecessary. It is like a piece in the liquidation mechanism. 

At the end of the day, in the Maker ecosystem it earns interest. This interest gets paid with the token. Basically, the total holders are just like the interest earners, which is beautiful. 

Compared to the P2P market, where users are earning interest, in the Maker system no one earns interest except for the token holders.

I think that is a valid way to design something to be able to bootstrap the network. Fortunate teams are those that have venture funding or have revenue. They have the ability to wait, over-promising on this grand token. They can slowly iterate.

Not all teams have the opportunity to do that. At the end of the day, everyone has to figure out some revenue model.

When you do the work, it is expensive and exhausting to create smart contracts. In terms of hiring the best engineers and then doing the auditing. Everyone needs to funding from somewhere. There’s always a promise. You take funding from venture investors. For three years, five years, and one day they are going to ask, what is the revenue model of this thing?

That is something that I think dYdX, Compound, they’ll have to figure out. We all have to figure it out. If you figure it out, I think it’s actually not that hard to either create a tokenized system or just use stock equity to pay back the investors.

You guys don’t charge trading fees, is that correct?

We have been charging fees. Since day one, DDEX charged fees. We thought that was a fine thing to do. In some ways it is proving value. I personally believe if it is the only thing you can compete on is just being cheaper, then maybe you’re not that competitive.

I think people mix free with decentralization. I think that they’re two completely separate issues. 

It doesn’t mean that you charge fees that therefore you’re a centralized system. Even in a decentralized system, for example in Ethereum, gas is a fee to users of the system. It is also what keeps this whole machine running.

If you can’t charge fees, then how can you possibly have a working token economy. In the long term, our goal is to create some viable, sustainable business model. That is actually really hard to do. 

If you’re relying on outside investment and funding, then you’re not truly decentralized. Self-sufficiency is one of the key design goals. That said, there’s the trend that everyone is not charging fees. 

One thing that really hurt us is these aggregators who’re comparing dApps and bid-ask spreads. We’ve always had one of the best bid-ask spreads. But… If you add fees into it, the fees effectively increase our spread on the order book. Then we’re no longer ranked number one. It kind of bothered us a little bit. Everyone’s basically undercutting the fees to a point to try to compensate for the lack of liquidity.

So with this new product, we’re just like, let’s just go with free as well. I don’t know what will happen, but it definitely makes us way more competitive. After we dropped fees, now we have the best spread for both margin and spot trading.

I’ll come back to your question about Dai. Dai is our secondary market. We have been focusing on the USDT market more. For the USDT market it is not even close! We have substantially better spread than any other Ether to stable coin market on DeFi systems. Regarding the Dai spread, it is our observation that no one can really do substantially better than anyone else. That’s because Dai is completely onchain liquidity. It is very cheap to marry the liquidity between DeFi projects. In our observation the liquidity, depth, and spread of Dai will probably be similar on the top three to five platforms. That is not something that we can do substantially better than anyone else. It’s also not something that can actually do substantially worse than anyone else. If you knew how liquidity stuff works, everyone probably does achieve parity.

From a competitive strategy perspective, it makes more sense to put our focus on markets that don’t reach parity automatically.

The USDT market is something that we could, if we spend a lot of effort, do much better than everyone else. So that’s our goal. 

Dai is a core component of the DeFi ecosystem and we definitely support them. But we can only support them as well as anyone else, not substantially better.

Is it possible to generate revenue from charging a little more to borrow?

We actually looked at centralized exchanges for how the world used to work. If you look at a lot of centralized margin exchanges, they don’t even have a lending pool. They just supply their own lending. They are the lenders. They charge. People talk about 20% APR being a really high Dai fee. The average, that we’ve seen, is that they charge 0.1% per day, which is 36.5% annually. No one cares.

Like you’re telling us, your mentality is, I’m only going to short this for like, a week. You’ll play 0.1% daily. That’s playing 0.7% weekly. But I’ll be making 50%.

Fundamentally, we actually don’t think the interest rate spread is where the biggest money is. To generalize a generalized lending pool like Compound, one day they will go beyond financial use cases for these loans.

They’re talking about payday loans, and there’s obviously other cool stuff like cDAI. That could potentially open a much bigger market.

If you make the assumption, which is that 100% of the borrowing will occur due to margin trading, then any interest rates spread you can earn is going to be an order of magnitude smaller than transaction fees. Do the simple math. You’re talking about a percentage on top. Compound takes 10% of the interest of spread. That’s 10% on top of 10%. 10% of 10% is only so it’s 1% annually, right?

We’re talking about a one week loan. That’s 1/50th of 1%. The smallest trading fee centralized exchange charge is maybe 0.1%. That’s still 10 times bigger than 0.5% of 10% of 10%. 

Also, I’m not actually sure that Compound is pocketing the difference. They could just be using this for insurance funds. I think that is one good way to supply insurance. This is what BitMex does. You take a percentage of the interest rate spread to cover liquidation failures. That’s a very nice mechanism. We’re not going to mess with that.

One of the more attractive features about DDEX is that the spot facility has no KYC or AML involved, allowing for more privacy than competitors. Are there any plans to change the way this is done for the margin product?

I’m not sure if the KYC is the way to go. Once you do the KYC, you do lose. 

The thing is that a decentralized exchange is never going to be as fast. It’s never going to be as efficient as a centralized exchange.

Fundamentally, if you go through all the effort to implement exchange in a decentralized way, and then you drop KYC on top of it, you lose all the advantages. Then you might as well build a centralized exchange. 

That is the first principle argument of why KYC is not the way to go. I do think that it should be compliance friendly. What I mean is that I think people talk about, the early DEXes as a way to avoid being compliant.

What people forget is that DEXes fundamentally have some properties that are very beneficial in terms of compliance. 

Why are exchanges regulated? There are two fundamental answers. One, is that you want to avoid money laundering. Two, you want to avoid fraud because custodial exchanges take custody. They can run away with everyone’s money. It’s an exit scam.

With decentralized exchanges, because they’re noncustodial, there is no possibility of an exit scam. That’s a very nice property, one. And two, because all the transactions actually happen onchain, it doesn’t break linkability. 

The reason someone will take stolen funds and deposit them into a ShapeShift or a Coinbase is that they can withdraw it and the money will be “washed”. If you perform a transaction on a decentralized exchange, like DDEX or Radar Relay, the likability is not broken. You know exactly where that money came from. You know exactly where it went.

These are two very elegant properties. We should be taking advantage of these properties. To create better products where people cannot do bad things. 

DEXes already have these properties but no-one is really talking about that. Overall, it’s just about how early we are. It’s just the fact that we don’t have any sort of identity system. Even if you implement a KYC system, it’s a very centralized, isolated, KYC system. Only a particular DEX may have some SQL database of a mapping of some addresses to some people’s information. 

Maybe that’s not the solution. That thing could get hacked, or get lost. Maybe it’s not big enough. I am also excited about the identity problem that people are trying to solve. Imagine if we had a decoupled third-party identity system. One that has credit history and other stuff that you also would be able to tap into. I think that is the solution. I don’t think the solution is for any one particular DeFi project to roll his own, effectively siloed identity system. That’s what these KYC system look like to me. 

How are you going to get the word out?

In my previous mobile internet startup, with our my first product, we went from zero to 16 million users in the first year. We did so much growth hacking. I don’t think DeFi is like that.

There are two things. One, you’re talking about even the most successful projects, you’re talking about the very small user base. If you look at the Makers and you look at the Compounds, we’re talking about in the order of thousands of users not millions.

To reach this very, very niche crowd, I am not saying it’s not hard, but it’s more that you just have to have unique value offerings. Then they’ll probably find you. Think about the type of people who will use a decentralized product. These people are incredibly sophisticated. First of all, they have a MetaMask, Ledger, or a D’CENT wallet. That alone takes some expertise. Then they have to understand the financial operations of creating a margin trade and the implications of that and the risks. People talk about “usability is a barrier”. Yes, someday… But we’re not there today.

We’re talking about the intersection of some who’re both engineering savvy and financial savvy. Right now we’re under the radar. Yet we’re surprised how many people actually found us. How did you find us? We didn’t even publish our URL anywhere. We’re not talking about a lot of people. 100 people found us. That’s a non-trivial portion of the potential user base that we could reach at this point.

I think you got to take a step-by-step. All the first-tier teams in Defi our patient. The people who are trying to make moves and try to utilize tokens or viral marketing, they burn themselves out very fast. If you look at the people who are actually writing and shipping, actually getting traction, like the Compounds and the Makers, they took a long time. They’re all on six-month ship cycles and not a lot of growth hacking and PR.

At this stage, of course, we want to grow faster. We want to have exponential growth. But you can’t force it too hard. There’s still a long way to go before anyone will build a DeFi product that is ready for public consumption.

We are very focused on getting the first hundred users, the first thousand users, the first 10,000 users. But 10,000 users actually is very small. Literally, we could talk to our first thousand users one-by-one. We don’t have to skip. To sum up that position and to answer your questions, we’re willing to do things that don’t scale. We don’t need to scale. Then we’ll figure out the hard questions for the scale later.

What are your thoughts about high gas fees and how that impacts financial inclusion?

In some ways we’re talking about scaling now. There’s layer one scaling, maybe changing the consensus model. Or layer two scaling, maybe batching transactions. You could take something like zero knowledge proof, and maybe you could compress, a thousand transactions into one transaction.

These two things we definitely look closely at. At the end of the day, there’s not any one team that can solve all the problems. We are a layer two DeFi product. From our perspective, we want to validate on Ethereum. The most secure, maybe expensive, but secure network. You’re paying for the security.

You really validate your use case here. Then you try to figure out a path where you can take it. Maybe it’s Ethereum 2.0. Or maybe it’s with the aid of level two solution. Maybe a better blockchain. Our job is to evaluate these things and figure out their legitimacy and to build our protocol in a way that it is migrateable.

Fantastic Tian! Thank you so much for taking the time with us today. 

Thank you so much love talking about this stuff. If anyone has questions, reach out.


Final Thoughts

For the time being, the new margin trading platform does nothing for those holding HOT tokens. DDEX is under fire. Competition in the margin DEX space is fierce. The most clear example of this is the upcoming close of the Opyn margin trading service on October 15, 2019.

Hopefully, DDEX’s focus on spread/depth and network security will be of great service to the existing community of sophisticated traders and engineers propelling DeFi forward. This focus should ensure a path forward for DDEX.

Please feel free to reach out to the DDEX team with questions:

Twitter: Tian Li (CEO/Cofounder), Scott Winges (Head of Product)

Telegram: Bowen Wang (COO/Cofounder)

Margin Trading Platform: https://margin.ddex.io

This article is Originally posted on CoinCentral.com
Author: Munair Simpson

How Naughty America Plans Use Blockchain to Beat off the Competition

The adult entertainment industry is seemingly always the media early adopter of new technologies, such as faster streaming solutions, virtual and augmented reality, artificial intelligence, and now, blockchain. 

A stark difference from most attention and dollar-starved media companies, adult entertainment sites are thriving.

At an initial glance, one might scoff at the idea of the same companies producing videos ranging from [expletive redacted] to [expletive redacted], and even the occasional [expletive redacted] being viewed as technological leaders, but it’s a reality that shouldn’t be overlooked.

The average consumer of adult media is biologically primed, if not addicted, to consuming a particular site’s content. They’re loyal, repeat customers that would disable their ad-block in a heartbeat to consume content– a dream that makes non-adult media site owners salivate. 

Adult media companies are traffic powerhouses. 

Pornhub ranks #7 on Similarweb’s list of top websites in the United States and gets more traffic than Instagram, Wikipedia, and Reddit. Instagram! How many times have you personally checked Instagram today? Instagram has over a billion users. Pornhub beats it. 

The second and third top-ranking sites take #11 and #13, beating out Netflix, LinkedIn, Pinterest, CNN, ESPN, Foxnews, Yelp– even Coincentral.com. 

On the international traffic front, the top three adult sites hold three spots in the top 11. 

Top international site traffic. Source: SimilarWeb

Top international site traffic. Source: SimilarWeb

Every user earns the site ad money. Some users purchase premium subscriptions. Some even buy merchandise. Adult sites leverage their massive user bases to invest in creating new content, 

While Wikipedia was begging users for spare change to stay alive, Pornhub was crowdfunding money to send people to have sex in space. The campaign ultimately missed its target for $3.4 million in 60 days but received pledges of $236,086.

Many adult entertainment companies are allocating a significant amount of capital towards exploring new technologies to keep their edge over the cut-throat and often shady competition. From artificial reality holograms (link NSFW) that make porn stars magically pop up in your living room on stripping poles to artificial intelligence “deepfake” porn that seamlessly superimposes non-performer (celebrities, people of interest, maybe even you) faces in sexual scenes, the adult entertainment space appear to be miles ahead of not only other media sites, but of full-on film production companies.

Some companies have even taken to blockchain monetize, protect, and further distribute their content– potentially serving as future excellent case studies for all content production companies struggling to monetize.  

Enter Naughty America CEO Andreas Hronopoulos

We got a chance to interview adult film studio Naughty America’s CEO Andreas Hronopoulos on how the company has been exploring and innovating new technology to make a better overall experience for its customers. Find out the impact blockchain for adult entertainment can have on the overall media industry, and how a leader in the space plans to prove it. 


Why are adult entertainment companies alway on the innovative edge?

It’s in the essence in that adult entertainment fulfills a need, like breathing air. There’s always a demand for [our content]. For people creating products around that need, there’s a fast process of iteration and you can see if there’s an interest in the new product or not. 

It’s very binary. If you work in the adult entertainment space, you know you’re going to be doing cutting edge stuff all the time. Pushing the envelope; how we can help people find their fantasy? Linking tech and sex. There’s the demand, and we want to apply the tech and see if there’s a fit or not. 

Could you walk us through a day in the life of Andreas Hronopoulos? What are the typical daily decisions that need to be made?

Simply just finding new ways with tech and finding how Naughty America can help people in the adult entertainment industry. For us, we’re going in line with where blockchain is. 

This is a great era for our organization because we’ve always looked at how our content can help other companies. How can we take our library of content and help other companies with their business? I bring Naughty America to the table, and how can we help you? It’s about the simple idea of trading. 

The blockchain industry seems to be ripe for partnership with a content-rich company like Naughty America. So many projects are working on solutions that require some volume of users and content. 

My daily to-do list revolves around our brand and our content can help other people grow their companies. We want to bring our assets to your ecosystem. That’s the beauty of Naughty America, it travels. We’ve invested a tremendous amount over 20 years in content, and we’ll continue to invest in it. 

We’ve been very welcomed by everyone in the space to bring our content into their ecosystem. It’s an exciting time, blue ocean, it’s a new day, it’s so different than where we were 12 years ago. We’re [digital media companies] in such a radically different world from just around a decade ago. 

We’ve always seen ourselves as a media company that utilizes technology. The adult entertainment industry has always been ahead of the curve. Being a media company is where we want to be. We don’t want to be a tech company. There are a lot of brilliant engineers out there, and we want our media to be there to support them. 

Could you tell us more about Naughty America’s relationship with blockchain? 

We first started accepting bitcoin as payment in 2014. We had a big uptick of people using it, but then that number declined. We were getting Bitcoin for our content and we just didn’t understand it. I didn’t understand it. To me, it was like someone paying with Apple Shares for a cup of coffee. 

That’s the fun of working with all these blockchain ecosystems now. We have companies hit us up all the time to accept their payment coin, but that’s not really how it works. We provide our content as an ecosystem – as far as payment solutions there’s nothing better than accepting Visa/Mastercard.

 In 2016, we started investing time and energy to go about leveraging the value of our digital asset, our content library. 

The first company we talked to was Decent. The ability to aggregate people’s content they’ve provided to us and provide them a record using blockchain to show that when content is being broadcast helped establish transparency. 

what is decent dct

In an unregulated Internet, having a blockchain record allows us to give our partners their ability to see when we’re aggregating their content for royalties and compensation, helping increase trust. We weren’t looking to accept Decent as a payment solution. This was purely an internal solution for accounting and records. 

The second company in the blockchain space we got involved with was Ara Blocks, to help us in putting our own content out there on a Video On Demand basis. We come in from this in a few ways, one was aggregating content in the premium membership. The second one was to allow content to be individually smart contracted and allow people to pay with Ara. 

Ara blocks

The third company we want to do involves non-fungible tokens (NFTs) for Naughty America and content. We’re going to be utilizing some form of blockchain to track the content. People coming into Naughty America can buy NFTs that are tied to specific pieces of content. 

What are some of the largest technical challenges the adult entertainment industry faces?

For us, it’s always trying to find creativity and how to create a more entertaining and memorable experience with whatever medium we’re using. 

That’s what’s interesting about what we’re doing with these holograms. Our current challenge is finding out how to make the next best hologram out there. Holograms are the new tech for media, along with other advanced forms for entertainment. For example, I’m anticipating Netflix to get into video games. 

An example of the Naughty America holograms.

An example of the Naughty America holograms. Source: Naughty America

You’ll see media companies focused on making better content, then utilizing something like the blockchain to syndicate that content. 

Naughty America hologram in action.

Naughty America hologram in action. Source: Naughty America

Thank you!


Adult entertainment and blockchain make as good a pair as any content site and blockchain. As the conversation about blockchain’s practical uses in any environment heat up, companies like Naughty America are taking the discussion beyond pure theory. Blockchain for adult entertainment may end up being the successful data point that other media sites can leverage to make the most out of their content. 


This article is Originally posted on CoinCentral.com
Author: Alex Moskov

Halsey Minor’s VideoCoin is Coming for a $30 Billion Industry

VideoCoin debuted its blockchain-powered video infrastructure platform dubbed the VideoCoin Network this week, along with the listing of the native VID token on KuCoin and Beaxy cryptocurrency exchanges. This launch enables VideoCoin users to live stream video content, as well as be compensated for hosting the streaming services.

We got a chance to interview VideoCoin Founder Halsey Minor on what this announcement means for the video streaming industry, obstacles his team faced in the past few months, and a few subjects off the beaten path such as Facebook Libra. Halsey Minor borrows from an amalgam of unique high-level entrepreneurial experiences to pioneer yet another industry.

Minor started one of the world’s largest media publications (CNET), co-founded one of the most successful cloud-based software companies (Salesforce), founded a cryptocurrency exchange (Uphold), and founded a virtual reality company that created the first live-stream 360-degree virtual reality camera (Live Planet).

“We built the VideoCoin Network from the ground up as a next-generation solution to allow anyone to stream video using our blockchain-powered video infrastructure platform,” said Devadutta Ghat, CTO at Live Planet – strategic services and technology provider to the VideoCoin project – and Principal Architect at VideoCoin Network. “I’m thrilled to officially unveil the VideoCoin Network today, marking a major milestone on our journey to revolutionizing the multi-billion dollar video streaming market.”

This release consists of several important components including:

What stands out about this launch is that this is the first blockchain project to integrate a third party fiat payment processor, underpinned by a consortium of banks. The model is optimized to enhance the utility of the VID as a reputational staking token that powers the network and ensures the most qualified network operators are serving customer needs.

Additionally, prior to the launch, the VideoCoin team burnt 66% of its total token supply to allow them to focus on creating a sustainable token staking mechanism. 

This news comes on the heels of the debut of the Blockchain Virtual Reality (VR) Network (BVRN), the first VR network built specifically for the blockchain industry. The Network will feature in-depth and engaging VR programming from top blockchain industry influencers such as theBad Crypto Podcast, Crypto Trader, Boxmining, BLOCKTV, and us. This partnership boasts a combined global audience of half a million blockchain enthusiasts, all shot with the Live Planet VR System

This first customer use case of the VideoCoin Network is harnessing the power of blockchain to make 4K stereoscopic 3D video cloud processing more efficient, less expensive, and more secure. 

“We are thrilled for the launch of the VideoCoin Network, but more importantly, we’re excited for the future,” said Halsey Minor, CEO of Live Planet. “Video is fundamental to the human experience. It’s the way we connect, the way we learn, the way we express, the way we grow. As such we believe this experience should be in the hands of everyone, and not in the control of a few. Decentralization of video infrastructure through the VideoCoin Network is how this will happen.”

This article is Originally posted on CoinCentral.com
Author: Alex Moskov

Does the Coinbase Effect Still Exist? ChainLink’s 83.6% Gain Says Maybe

Back in my day, I remember when you could only buy three things on Coinbase. 

Those early to the cryptocurrency investment game will remember that the world’s most basic user-friendly exchange, Coinbase, only had a handful of digital assets including Bitcoin, Ethereum (added July 2016), and Litecoin (added May 2017). 

It was at this time that even the faintest rumor of a new coin getting added would skyrocket that coin’s price by double digits. When a digital asset did get added to Coinbase, however, the effect tended to be rather uneventful. 

Ripple, for example, was added in February 2019 and its price stayed stable at around $0.30 per XRP. 

XLM had a similar fate: 

This is why many analysts and investors pointed towards the slumping of the “Coinbase Effect.” A coin getting added to Coinbase resulted in lackluster price gains, and it showed that people very much tend to buy the rumor and sell the news, or at least the former part of the expression. 

In June 2019, the Coinbase Effect argument was given new life. A relatively obscure project called ChainLink was added to Coinbase and its price skyrocketed from $2.26 to $4.15 per LINK over the next day – a whopping gain of 83.6%.  

To the many analysts prematurely hammering the nails in the Coinbase Effect’s coffin, this new piece of information changed everything. Here’s what we make of it.


What is ChainLink?

Chainlink basically takes information that is external to blockchain applications and puts it on-chain.  With ChainLink, smart contract users can use the network’s oracles to retrieve data from off-chain application program interfaces (APIs), data pools, and other resources and integrate them into the blockchain. Basically, ChainLink.


The Coinbase Effect was overshadowed by the cryptocurrency winter. It doesn’t matter how powerful of an effect Coinbase can have on the market if the market is overall extremely bearish. People weren’t willing to put money into BTC, one of the more stable digital assets, and they sure weren’t wanting to bet big on the more obscure altcoins.   

Basic trader psychology dictates that investors sometimes tend to operate on emotional, rather than logical responses. This is why many decisions are made based on FOMO (fear of missing out) or attempts to recover large losses with increasingly riskier plays. 

The psychology of cheap coins is another notable way to frame the Coinbase Effect. The value of a company or project has little to do with the price of its token/coin, but people (especially beginners) tend to react to it like it does. What sounds better – 0.8% of a Bitcoin or 1,000 Stellar Lumens (XLM)? Both lots are worth about $100 USD, and most beginners would rather go for the higher volume in hopes of exponential price gains. Again, that big What IF this altcoin becomes BIGGER than Bitcoin? element of trader psychology will urge people to purchase more of the smaller coin. 

The Law of diminishing returns will weigh on the Effect: There are currently 15 digital assets, one of them being a stablecoin, on Coinbase. 

The tangible value of being on an exchange is volume and liquidity: The big question here for savvy traders is quantifying how valuable it is to get listed on a Coinbase or Binance absent of any market speculation. 

We’re in a highly speculative, although decreasingly so, industry: There are few if any asset classes as homogenously over-speculated as that of cryptocurrency. The cryptocurrency market has yet to mature to the point of deciphering a company’s value on P&L statements and quarterly reports. Folks, this is the same industry where some founders regularly announce that they will announce an announcement in the future – and the price of their token goes up. That being said, I believe the market has no choice but to mature in the long-term, and this future is going to look very different than what we’ve been used to in the last cryptocurrency boom (mid-2017 to early-2018). 

Final Thoughts – The Edge

The Coinbase Effect was prematurely presumed dead. As evidenced by ChainLink becoming the best performing digital asset of the year* based on just one announcement (getting added to Coinbase), the Coinbase Effect still has some gas in the tank. 

We urge our readers to explore the lower price digital assets, not for the sake of investing in them or make any speculative reaches, but to understand how markets will react to the next coin/token being added to Coinbase. 

This article is Originally posted on CoinCentral.com
Author: Alex Moskov

This Week in Cryptocurrency: July 19th, 2019 | CoinCentral

Cryptocurrency Market Update

Ouch. But we’re used to it! 

This wasn’t the best week for cryptocurrency markets in recent weeks, but the volatility isn’t anything we haven’t seen before. If you’ve been following cryptocurrency markets for a while, a 10% change in either direction in a day isn’t much to blink over.

Anyway, let’s do a roll call of this week’s casualties:

However, a few projects managed to escape the slaughter. V Systems, a newcomer to the game, saw a 22.1% uptick. 

Price Table

G7 Agrees: Libra and Crypto Have Significant Concerns: In comments to CNBC’s Squawk Box, US Treasury Secretary Steve Mnunchin said, “There was a clear agreement from all G7 finance ministers and central bank governors that Libra, in particular, raises some very significant concerns, and cryptocurrencies more broadly,” adding, “before any of us let these go through, we’re going to make sure those concerns are satisfied.” While the G7 finance ministers and central bank governors reached consensus (ha!), it’s still unclear whether there will be an international decision in regards to regulation of digital assets. Mnunchin also commented, “first of all let me be clear, we very much support financial innovation and anything that lowers payment processing costs, especially cross-border.”

BitMEX Under Investigation by the U.S. Commodity Futures Trading Commission (CFTC): The people planning to invade Area-51 aren’t the only ones about to be probed. The  U.S. Commodity Futures Trading Commission (CFTC) is currently probing Seychelles-based cryptocurrency exchange BitMEX. Earlier this week, cryptocurrency antagonist Nouriel Roubini denounced BitMEX claiming that it “may be openly involved in systematic illegality.” According to Bloomberg, the CFTC investigation is “ongoing” and won’t necessarily lead to misconduct allegations.  

Top Cryptos Pronounced Dead: A report by CoinTelegraph noted five tokens pronounced “dead” for a variety of reasons. The list includes Emercoin, NEM, Bitconnect, Bitcoin Diamond, and Universa, for reasons running the gamut from theft, Ponzi Schemes (you know which one this is), low liquidity, and lack of liquidity.  

Jeremy Allaire Added to Power Lunch Time with Warren Buffett: The upcoming lunch between Tron CEO Justin Sun and billionaire Oracle of Omaha Warren Buffett has grown to include the CEO of Circle, Jeremy Allaire. Sun seeks to help Buffett, a vocal Bitcoin skeptic, see the light for cryptocurrency’s ability to impact the world positively, as well as an asset class worth exploring. The $4.6 million lunch also includes Litecoin creator Charlie Lee and will take place at Quince, a three-Michelin-star restaurant in San Francisco. 

What’s New at Coincentral?

Facebook Libra Project Already Facing Resistance, Major Hurdles Ahead: There have been concerns that its Libra platform will be used to gather financial information about its users. Facebook has made an effort to mollify data privacy fears by publishing a communiqué which emphasizes that consumer data will not be shared with third parties.

What Is Blockstack (STX)? | The First SEC-Qualified Token Offering: Blockstack is a decentralized computing network and ecosystem for decentralized applications (dApps). The project recently made headlines as the first token sale in U.S. history to receive clearance from the Securities and Exchange Commission (SEC). The team has been together since 2013, however.

Iran is Looking to Allow Regulated Cryptocurrency Mining: Abdol Nasser Hemmati, the governor of the Central Bank of Iran has announced that the government is working on a framework that will allow regulated cryptocurrency mining.

3Commas Sees an Automated Trading Cryptocurrency Future: As the cryptocurrency market continues to entice new and old traders, teams are building projects to facilitate the process of buying and selling digital assets. One such company, called 3Commas, is one of the largest in the space to provide trading bots and trading automation tools.

This article is Originally posted on CoinCentral.com
Author: Alex Moskov

This Week in Cryptocurrency: July 5th, 2019

Happy belated 4th of July to our American readers, and Happy “Watching Videos of Americans Blow Eachother Up with Fireworks” Day for our international readers. 

This week’s markets experienced a pullback from the gains of last week. Bitcoin seems to be settling just shy of $11,300, down 6.3% for the week. Ethereum is down 5.29%, XRP is down 5.29%, and Cardano is down 11.65%. Privacy coins Monero and ZCash are down 9.17% and 10.18% respectively. 

However, the markets weren’t all red this week. Tezos went up 20%, Dogecoin up 8.81%, Bytom up 12.67%, and Komodo had a whopping 25.31% gain on the week.  

Price Table


Cuba Looking to Use Cryptocurrency to Avoid U.S. Sanctions: According to Reuters, Cuba is exploring to use cryptocurrency to avoid U.S.-imposed sanctions. In a public address, Cuba’s President Miguel Diaz-Candel said the plan will raise capital for about a fourth of the population and help pay for reforms. Cuba has felt the waves of financial dismay from Venezuela, which prior to its own economic calamity, was a major source of aid. “We are studying the potential use of cryptocurrency… in our national and international commercial transactions, and we are working on that together with academics,” Reuters quoted economy minister Alejandro Gil Fernandez as saying. 

Some Telegram Grams to Hit Market at Nearly 300% Increase from ICO:  South Korea’s Gram Asia was an early investor in Gram is looking to sell rights to its Grams at an asking price of $4 per Gram starting July 10th, a hefty gain from the $1.33 paid by private investors in Telegram’s second ICO in March 2018. Telegram currently has over 200 million users and raised around $1.7 billion from qualified investors in 2018 to develop the Telegram Open Network blockchain. 

What’s New at CoinCentral?

What Happened to the DEX? | Building in Secrecy or Just out of Steam?: There are clearly serious downsides to using centralized exchanges then and yet they still thrive.

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This article is Originally posted on CoinCentral.com
Author: Alex Moskov

DreamTeam’s Founder on Tackling the $50BN eSports Market as a Startup

DreamTeam is an all-in-one infrastructure platform for competitive eSports gaming. The platform acts a secure payment gateway with the goal of making eSports competition much more accessible to anyone around the world who wants to compete. 

DreamTeam aims to solve several pressing issues for eSports fans and players, such as secure salary payments and reception of tournament prize money via smart contracts. The company was founded on the ideals of creating a pure decentralized economic system based on P2P contact between users. 

We connected with DreamTeam CEO and Founder Alexander Kokhanovskyy. Kokhanovskyy has 20 years of experience in the eSports industry and created Natus Vincere (Na`Vi), one of the most popular teams and successful teams in eSports history. In 2016, Kokhanovskyy became a shareholder of ESForce, which was acquired by Mail.Ru for $100m


How are your CounterStrike chops today? Do you still got it?

I don’t really have the time to play much these days. However, I can say this, of course, I still have it. 🙂

What was it that drew you to start DreamTeam? 

 I’m a former gamer and have been in the esports industry for 20 years. I know it inside and out and from multiple angles: from an amateur to a successful professional player, coach, team manager, and CEO of the pro team NaVi. All of this experience has helped me understand the key pains of every esports player: how to form a team, how to find great teammates, coaches, managers, advertisers, etc., how to manage it all, and moreover, how to monetize and earn money. So, I came up with the idea to build one platform which can help solve all of those problems in a single place. That’s why I’m building DreamTeam, which is going to become the place which serves as the one and only point of entry for the entire esports industry and will give every single gamer the opportunity to reach their goals.

Dreamteam

Let’s talk emerging tech. Blockchain, AI/ML, and VR/AR have the potential to completely transform gaming as we know it, and in some ways, they already have. Let’s fast-forward to 2029 – a 12 year old kid turns on his gaming console. How different do you think the gaming experience and industry will be?

Those technologies are already changing the gaming landscape. In 10-15 years gaming will move to AR/VR, people will no longer be sitting near their computers. The second technology that is revolutionizing the industry is mobile gaming. We already see mobile changing the way people are playing and using their devices. It’s become an obsession and people spend hours playing on the go. In terms of performance, mobile gaming loses compared to PC gaming. 

But, from another point of view, as the number of mobile games grows, esports will continue to move from PC to mobile. We can now see that phones are already outpacing Console, Native PC, Tablet, and Browser games. Another technology is blockchain, which has huge potential at solving existing gaps in gaming. 

At first, blockchain will become a solution for reducing the cost of microtransactions between users and game developers. The second point is that blockchain is the most secure way of making such transactions. It can help enhance trust between customers and the gaming market. We already see such projects on the market. Considering all of these, it’s actually really difficult to predict which gaming opportunities we’ll see 10 years from now. But for sure it will be different.

In March 2019, Snapchat, Walmart, and YouTube announced they were releasing gaming offerings and entering the industry. What impacts do you think this will have on the industry in general? How about for smaller platforms? How about for gamers?

Any time a large Player, meaning Walmart, Youtube, or any other well known and worldwide company that enters the market, it’s a great thing for esports. Those large companies have the connections and resources to reach hundreds of millions of people. So, by those listed companies getting into esports, the industry will benefit greatly. 

In terms of the impact those companies will have on smaller platforms and gamers, I can’t really say at the current moment. It really depends on what they have planned. 

What are your thoughts on the evolving battle royale formats like Fortnite and Apex Legends in terms of earning market share? Could you touch on what it takes for a gaming company to earn a significant market share in this industry? 

With games like Fortnite and Apex Legends, we see meteoric rises in popularity. So, being first to the market helps a lot. However, that isn’t the most important thing. Obviously, you need to create an amazing product. You need to provide services and features that players want and need. And you need to think outside of the box in order to come up with features that can connect the community. 

If you can do all of those things, you have a good chance of grabbing a significant percentage of the market. I think there is little room for more Battle Royale games. As there is no place for MOBA —  everything there is for 2 games like Dota2 and LOL. 

I think that in the next 2-3 years we will see new stages in the development of multiplayer games in new genres.  But I will also definitely say that those games will be more for casual audiences than for hardcore ones.

Why tokenization and blockchain? Could you touch on what differentiates DreamTeam from similar offerings on the market? 

DreamTeam Tokens were created with a goal of improving the entire esports ecosystem. Tokens combined with the latest blockchain technology solve a lot of pressing issues for esports fans like secure salary payments and the reception of tournament prize money payouts while avoiding common pitfalls like fraud and non-payment. 

dreamteam

And all this can be done through the use of smart contracts. Sponsors and advertisers can be absolutely sure that the money will be paid only when their KPIs are 100% completed (be it some kind of advertising campaign, video views, etc.). 

We believe that this is an ideal decentralized economic system, where there is no one responsible for your money, but only p2p contact between users. Speaking about other companies, yes we have some niche competitors. But companies on such a scale are absent in esports, as we are creating a unique combination of blockchain, AI, recruitment services, monetization options and much more. This is what makes DreamTeam stand out.

As a former amateur gamer, this image is pretty exciting. Unfortunately back then, eSports didn’t look like as lucrative as a career as it does now. Could you walk us through how DreamTeam plans to transform amateur gamers into pros? 

dreamteam

As with any professional team sport, having two things is essential to winning: a great team and skills. DreamTeam is a platform that builds both. Until DreamTeam came along, it was very difficult for the average player to gain access to the tools that pro teams use. For example, the DreamTeam CS:GO Analytics tool.  Teams can upload their games to our Analytics program which will analyze their game, also they can analyze any game to learn new Pro tactics or learn how to anti-strat their opponents. DreamTeam also has a feature called the DreamTeam Journey. 

This feature walks users through the steps of finding teams and players, setting up practice games on free servers, using the training center and analytics tool, and so much more. By making everything more accessible, DreamTeam can help pave the path from amateur to pro for hundreds of millions of gamers. 

What are your plans and channels for user acquisition? Then, how do you keep your users coming back? 

Since the launch of the platform, we’ve used the following available channels for user acquisition: influencer marketing, SEO, search engines (Google, Bing), content marketing, partnerships, and sponsorship programs, etc. 

The best way to choose the right channel is to test all of the possible regions and all of the possible instruments. Each channel works well depending on the goals, audience, geo, and other factors. Search optimization is one of the best channels in terms of traffic because people search and find us themselves. 

To touch on partnerships and sponsorship programs, we’ve sponsored FACEIT Major London 2018 (CS:GO) and a couple of Starladder tournaments. We have partnerships with industry leaders like Na’Vi and Fnatic. We’ve received really nice results with influencer marketing, this was one of the main channels that helped us reach 1M users in less than a year.  

As mentioned before, it was almost impossible to get access to the features that pro teams have and moreover to find all the needed features in one place. DreamTeam is changing this. We are creating a clear path for every player to reach their goals. And of course, adding new features and new games makes users come back to the platform.

What are the biggest challenges or milestones DreamTeam plans to hit in the near future? 

For now our main focus is on the product itself, the marketing process is already set up. We are now working on developing the product in order to increase retention.To achieve this, we are constantly working on adding new and improving existing features for our main game on the platform — CS:GO. In addition to this, we’re looking for new markets and new games. 

A couple of months ago, we launched Apex Legends — where users can track dynamic stats, see worldwide leaderboards, find and chat with players using the LFG feature, learn pro strategies with DreamTeam guides, and stay up-to-date on the latest news. Adding Appex legends also worked very well in terms of conversion. 

To summarise, our biggest challenge is to understand how the work we’ve done can be implemented to other games added to the platform. In terms of business expansion, we are looking to the other markets. We see a huge potential in the Asian markets and we are now working on new partnership opportunities in order to launch in Asia in 2020. 

How can a reader support DreamTeam?

The best way to support DreamTeam is to join our platform!:) As we are building the platform for the number 1 sport of the future. And we have no doubts that in 10-15 years esports will be bigger than all other traditional sports.

Thank you!

This article is Originally posted on CoinCentral.com
Author: Alex Moskov Moskov