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RelayNode NYC #27 - November 11

David Gogel

Welcome to RelayNode NYC Area edition! The NYC blockchain ecosystem is growing rapidly. Our goal is to harness its energy and innovation for the benefit of New Yorkers and provide a weekly curated list of interesting content, upcoming events, and local jobs.

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RelayNode NYC is curated by:

David Gogel Advisor & Finance Lead @ Paperchain fmr Associate @ Techstars' Blockchain Accelerator, Co-president @ Wharton FinTech, Corp dev @LinkedIn @AIG

Hsin-Ju Chuang Director of Community & Growth @TQ Tezos, ex-Head of Growth @Stellar/Lightyear, Side Hustle @Dystopia Labs.

Some personal thoughts…

"Credit is the most important part of the economy, and probably the least understood."

MakerDAO is a Decentralized Autonomous Organization (DAO) that manages the Dai Stablecoin System on the Ethereum blockchain. It is the world’s first 100% software-based, community owned and operated credit facility.

As a family of smart contracts operating on Ethereum, the system offers secured loans of equal cost to anyone in the world. The by-product of loan generation is Dai, a stablecoin collateralized using on-chain rules and assets. Dai is pegged to $1 USD and is maintained through automatic pricing mechanisms built into smart contracts. The Team at Placeholder VC have great research covering the Maker network and their investment thesis.

In December 2017, Maker launched the Collateral Debt Protocol (CDP) enabling the creation of Dai and has become a foundational lego block in the decentralized finance (DeFi) ecosystem. Anyone anywhere can open a CDP, lock ETH as collateral, and generate Dai as debt against that collateral. Only by driving the cost of manufacturing credit closer to $0 can a meaningful next-generation distribution and user experience layer be built. According to loanscan.io, Maker has originated ~$460M in loans. For some perspective, it took Lending Club five years to originate $250M in loans.

On November 18th, Maker will introduce Multi-Collateral Dai (MCD), which is widely viewed as a major milestone in the evolution of DeFi. MCD enables new types of collateral to be used to create Dai and introduces the Dai Savings Rate (DSR). Ryan Sean Adams, Founder of Bankless, has a great post featuring Greg Di Prisco, Head of Business Development at The Maker Foundation on why MCD is important. Brendan, COO and Co-Founder at Dharma, has an excellent tweetstorm about the transition from the current system to MCD.

Post-transition to MCD, the narrative will likely shift to governance and which new forms of collateral, both trustless and non-trustless assets, should be added as collateral to MCD. Camila Russo, Founder of the Defiant, has a great post outlining the pros and cons of expanding collateral types beyond trustless assets. Not all collateral types are equal and with new collateral types comes new risks. Alex Evans from Placeholder VC has published a great risk management framework and a ratings-based model for managing interest rate and collateral types at the scale Maker intends.

Final vote pending, MCD will start with crypto-native assets, starting with BAT, followed soon after by non-fungible real-world assets. Centrifuge has been working closely with the Maker Foundation to build the tools to responsibly bridge real-world assets to the DeFi ecosystem. Adding tokenized real-world assets as collateral for Dai is key for its long term stability and adoption as it addresses the two main challenges the DeFi ecosystem is currently facing: stability and volume. Indeed, many applications require a low threshold of volatility to be viable on a blockchain, and greater diversification of collateral types will increase stability. Further, limiting collateral types to crypto-natives assets limits the total addressable market of the overall system.

So what does adding real-world assets as collateral in MCD look like? Over the last 6 months, the Paperchain team partnered with Centrifuge and the Maker Foundation to launch a pilot transaction advancing $60,000 worth of earned but unpaid Spotify streaming revenue to a record label. It was the first collateralization and advance of its kind in the DeFi ecosystem. One small step towards an open financial system and faster payments in the media industry.

This post-mortem document describes the process of tokenizing synthetic account receivables to issue short-term secured loans. The loans are originated by Paperchain, with the intention of being used as collateral in the Multi-Collateral Dai Credit System through integration with the Tinlake administration system developed by Centrifuge. The pilot provides a roadmap for companies to tokenize real-world assets and pledge them as collateral in DeFi applications, enabling industry participants to access credit from a fully open and permissioned financial system run by smart contracts. Still some steps to go to full automation and productization but more bullish than ever that DeFi can be used beyond speculative trading and to solve a real-world use case as an efficient mechanism for trade finance and payments.

Things to Read

🌐 Macro / why Bitcoin?

  • Ray Dalio, Founder of Bridgewater, explains “because the “trickle-down” process of having money at the top trickle down to workers and others by improving their earnings and creditworthiness is not working, the system of making capitalism work well for most people is broken.” We are approaching a financial paradigm shift.

  • According to a report by SFOX, whale transactions may have contributed to recent market volatility. The report was released on the heels of a Bloomberg article citing an academic study positing that the 2017 surge in Bitcoin prices was manipulated by a single whale using Tether on Bitfinex. Tether rejected the claims, with General Counsel Stuart Hoegner arguing that the paper is “foundationally flawed” because it is based on an insufficient data set. Bitfinex and Tether aren’t new to controversy. Patrick McKenzie has a fantastic post on the history of Tether.

  • Tuur Demeester, Founding Partner at Adamant Capital, argues in “The Bitcoin Reformation” that there are 4 fundamental parallels (1. rent-seeking monopolistic service providers 2. technogical revolution: catalyst for change 3. new economic class: people with something to fight for 4. credible strategies for defense and escape) between the Protestant Reformation and the present day, signaling profound societal and economic changes ahead. Bitcoin suggests that it’s possible to separate money and state.

💰 Funding & Exits

  • Silvergate, a San-Diego based chartered bank serving 756 firms in the crypto space, IPOd on the NYSE. Silvergate raised $40M by offering 3.3M shares (25% primary; $10M) at $12, below the range of $13 to $15. At the offer price, Silvergate commands a market value of $229M. Latest S1 from October here. The offering is expected to close on Nov. 12, subject to customary closing conditions. As of June 2019, the company had $91.2 in LTM revenue, $28.M in LTM net income, and $2.2B in assets.

  • eToro, a trading platform, acquired Delta, a popular crypto portfolio management app for $5M (according to Techrunch.) Delta enables users to track over 6,000 cryptocurrencies from 180 exchanges. To date, Delta says it has seen 1.5M downloads and has “hundreds of thousands” of MAUs.

  • Arweave, a decentralized “Permaweb” protocol that enables archiving and the funding to support it at web scale, raised $5M in funding led by a16z, with participation from Multcoin Capital (investment thesis here) and USV (investment thesis here).

🔓 DeFi / OpFi

  • The Maker Foundation Interim Risk Team placed an Executive Vote into the voting system enabling the community to vote for a new Dai Stability Fee of 5% and a new Debt Ceiling of 120M Dai. The vote comes shortly after the debt ceiling was raised to $100M.

  • Uniswap, the specific implementation of an x*y=k market maker that exists on Ethereum today, turned 1 year old. Hayden Adam, Uniswap’s creator, recaps his founder story from the beginning in v0.

  • Brian Mahoney, Head of BD at Alkemi, an open finance prime brokerage platform, released an excellent article on how Alkemi helps drive institutional capital to crypto and makes the case that institutional adoption on ramps is required to drive real mainstream adoption, to realize the massive potential of a globally accessible financial system.

💸 STOs / Stablecoins / Tokens

  • Microsoft released the Azure Blockchain Tokens, a new Azure managed service that allows users to create and manage ledger-based tokens easily to accelerate blockchain solution development. This service provides a set of prebuilt templates and the flexibility to create your own templates based on the standards developed by the Token Taxonomy Initiative. Compliance with the Token Taxonomy Initiative ensures interoperability across Ethereum networks, with additional networks coming soon.

🌉 Infrastructure

  • Coinbase announced that it offering staking services for all U.S. customers, starting with Tezos. Binance Research released an excellent overview of staking, which allows users to earn rewards directly on-chain for holding a given currency.

  • Spencer Applebaum, Tushar Jain and Kyle Samani from Multicoin Capital wrote an excellent report on how Binance is blitzscaling, exploring the company's dominance of crypto markets and how they are expanding their product offerings. He also discusses the value capture of BNB, the competitive landscape of crypto exchanges, and why he believe BNB is sharply undervalued at current prices.

  • Jake Brukhman, Founder at CoinFund, has a great post on governance and analyzes the voting power of MolochDAO members using some existing tools from the theory of voting systems.

  • Andreessen Horowitz announced it is launching a crypto startup school starting in February 2020 to teach would-be entrepreneurs how to build blockchain businesses over a 7-week program.

🏦 Institutionalization

  • Binance Research released its Global Markets October Report from the lense of institutional investors.

🍰 Layer 1

  • Nervos, a proof-of-work blockchain that promises to solve blockchain’s scaling issue, announced the public launch of its Lina mainnet, following a $72M token sale. Miners and developers will be able to use the mainnet from November 16.

  • The Kadena blockchain, a proof-of-work blockchain solving the problem of limited scalability by weaving multiple PoW blockchains together to run concurrently, went live on mainnet. Kadena will conduct two token sales on CoinList soon after the mainnet launch, aiming to raise up to $20M through the distribution of up to 30M tokens.

  • The Electric Coin Co. (ECC) passed the Zcash trademark to the Zcash Foundation, an independent nonprofit that focuses on financial privacy, Zcash development and community engagement.

  • The Stellar Development Foundation (SDF), the non-profit organization that supports the development of the Stellar blockchain network, burned 55M Lumens (XLM), worth $4.4B in a push to reshuffle its development strategy. There are now a total of 50B XLMs in existence, in comparison to the 105B prior to the burn.

  • uPort, a ConsenSys spoke providing tools for decentralized identity and trusted data, donated much of its core libraries to DIF (the Decentralized Identity Foundation) to move the needle forward on interoperability in the Decentralized Identity space.

⚖️ Legal

  • Xi Jinping named blockchain a "core technology" for China, triggering a blockchain frenzy. Mia Deng, from Dragonfly VC, has a great post summarizing key takeaways.

  • Ashley Alder, the CEO at the Hong Kong Securities and Futures Commission, made a speech announcing a new regulatory framework which enables virtual asset trading platforms to be regulated by the SFC. Chinese tech giant Tencent received a license from the Hong Kong authority to open a "virtual bank."

  • Brian Brooks, Chief Legal Office at Coinbase, penned a letter on Fortune advocating for USDC and outlining the key questions for US regulators: whether our government needs to create the digital dollar, or whether the private sector can do so effectively?

🎥 Video & Podcast of the Week

  • In the latest Digital Asset Report from the NYSE, Nisa Amoils covers Paxos, Digital Euros, China, and Tokenizing Real Estate.

  • In Venture Unplugged, Mike Novogratz and Mayra Ceja discuss prison reform, privacy, blockchain, bitcoin and more.

Highlighted Industry Jobs (non-exhaustive list for NYC / remote):

If you would like to highlight jobs or internships in future editions, please email links here.

Also check out Indeed’s latest report on crypto / blockchain jobs and trends for 2019. The number of employment ads in shares per million rose by 26% last year, while job searches within blockchain and crypto dropped 53% over the same period.

Events this week:

CM NYC Fireside Chat with Yassine Elmandjra, Cryptoasset Analyst, Ark Invest (Free)

When: Monday, November 11, 2019, 6:30 PM to 9:00 PM

Where: Lounge At The Rose Hill Hotel, 34 E 32nd Street · New York, NY

This CryptoMondays NYC will feature a Fireside Chat with Yassine Elmandjra, Cryptoasset Analyst and Bitcoin Product Lead at Ark Invest, the first institutional investor to invest in bitcoin. Ark Founder, Cathie Wood is a true crypto pioneer. Her first analyst was Chris Burniske, now recognized as a global thought leader in valuing crypto assets. Priot to joining Ark in July, 2018, Yassine spent time in venture capital working as an analyst at Rembrandt Venture Partners. Yassine graduated from the University of Pennsylvania with a Bachelor in Economics from Wharton and a Bachelor in Systems Engineering from The School of Engineering.

Consensus Invest: NYC (Free for Qualified Investors, $899)

When: Tuesday, November 12

Where: New York Marriott Marquis located at 1535 Broadway New York, NY 10036.

Invest: NYC is an annual forum focused on delivering discussions on the trends and investment opportunities for cryptoassets, the fastest-growing alternative investments in history. Invest brings together global investors across asset management, commercial banks, hedge funds, pension funds, mutual funds, insurance companies and service providers, all with unique perspectives and experiences to underline the current sophistication of digital securities and commodities.

[Whitepaper Wednesday] BitDEX (Free)

When: Wednesday, November 13, 2019, 12:00 PM to 1:00 PM

Where: Rent24, 25W 39th Street 14 Fl · New York, ny

This week, we're reading about BitDEX, a proposal for a decentralized exchange that uses an oracle: https://github.com/UMAprotocol/whitepaper/blob/master/research/BitDEX.pdf We'll discuss their approach, its tradeoffs, and how decentralized exchanges work.

Fireside Chat between Anchorage CEO Nathan McCauley and BlockTower CIO Ari Paul (Free)

When: Wednesday, November 13, 2019, 6:30pm-9:30pm

Where: Distributed Global, 4th Floor, 16th Vestry St, New York, NY 10013

Join us for an evening of crypto, cocktails, and conversation, with a fireside chat between Anchorage CEO Nathan McCauley and BlockTower CIO Ari Paul.

Liquidity: The Final Frontier (Free)

When: Wed, November 13, 2019, 6:00 PM – 8:00 PM EST

Where: Coinshares, 101 5th Avenue, New York City, NY 10003

New trustless bridges between Bitcoin and other chains have enabled increased liquidity and value to flow into DeFi, allowing crypto-denominated products to expand into markets traditionally dominated by fiat.

6-6:30 - networking & drinks

6:30 - CCG introduction & brief demo of tBTC (CCG's first project)

6:50 - A panel with Tezos, Cosmos, and Keep focused on interoperability & scaling DeFi

7:30 - more networking & drinks

BitDevs: Socratic Seminar 98 (Free)

When: Thursday, November 14, 2019, 7:00 PM to 9:00 PM

Where: NYU Stern, 44 West 4th Street · New York, ny

Discussion Topics: Please see our link aggregator for a list of potential discussion topics. Feel free to make suggestions in the comments section below. A final list will be posted the day before the event. https://www.zotero.org/groups/691739/devsny/items/collectionKey/ULF65ETC

Community Breakfast: Featured Topic- A Founder’s Journey through Blockchain (Free)

When: Thu, November 14, 2019, 8:00 AM – 10:00 AM EST

Where: NYC Blockchain Center, 54 West 21st Street, Suite 1001, New York, NY

Soluna is the world’s first utility-scale blockchain infrastructure company powered by captive sources of renewable energy. Join other blockchain enthusiasts to hear from Phillip Ng, Soluna’s VP of Corporate Development as he discusses his journey to becoming a successful entrepreneur in the blockchain space while staying resilient and testing his abilities to overcome obstacles.

Blockchain LatinX Community Gathering: A Very Crypto Friendsgiving (Free)

When: Thu, November 14, 2019, 6:00 PM – 8:00 PM EST

Where: NYC Blockchain Center, 54 West 21st Street, Suite 1001, New York, NY 10010

For November, we'll be celebrating potluck style in the company of friends and projects that we are grateful for. Bring an attitude of gratitude and your best crypto buddy. Tis the season. Whether you're a hardcore bitcoiner, a free spirited ETH cat-herder, a privacy advocate passionate about Zcash/ Monero/ Horizen, or working on a project no one's heard of yet, you are welcome here. Whether you're a trader, a hodler, a developer, a newbie or one of the earliest miners on the scene, I'd love to see you.

Polkadot for Investors -- Risk vs. Upside of staking participation (Free)

When: Thursday, November 14, 2019, 6:00 PM to 8:00 PM

Where: 101 5th Ave · New York, NY

Polkadot is one of the most anticipated mainnet launches of the year. By end of this year, Dots will be traded, staked and held by investors. Coinshare's Meltem Demirors will moderate a discussion between Blockchange Partner Ken Seiff and Blockdaemon Founder Konstantin Richter to discuss:

  • How can an investor safely engage in the network?

  • What are the main concerns?

  • What are the risks and strategies to mitigate them?

  • What 3rd party solutions exist and how do they all stack up -- Accounting, Custody, Nodes etc.?

Upcoming events

⚡Continued: Klatch: Let's Build a Peer to Peer Meetup App w/ Libp2p ⚡(Free)

When: Monday, November 18, 2019, 6:30 PM to 9:00 PM

Where: WeWork Dumbo Heights, 81 Prospect St · Brooklyn

🎤 6:30pm - 7:00pm: Beginner Q&A + Bring up a cool piece of tech

🎤 7:00pm - 9:00pm: Klatch: a peer to peer meetup app

Klatch continued: We will mock up the user stories for a meetup clone, Klatch. The twist will be to build a peer to peer meetup clone where the users are the servers and the users with Libp2p. Think Bittorrent meets Meetup.

Notable Conferences

Nothing written in RelayNode NYC is legal or investment advice and should not be taken as such. No one should make any investment decision without first consulting his or her own financial advisor and conducting his or her own research and due diligence.