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RelayNode NYC #25 - October 28

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.

Some personal thoughts…

The United States and China are competing for tech and financial leadership in the 21st century. A new battlefront is emerging in the realm of stablecoins and blockchain tech supremacy. The countries’ different approaches to exercising power and fostering innovation were on display this week.

Mark Zuckerberg, the CEO of Facebook, participated in a hearing before the US House of Representatives Committee on Financial Services to discuss Facebook’s plans for Libra. Zuckerberg pledged that Facebook would not launch Libra until it meets a high threshold of legal and regulatory safeguards. He also agreed to drop out of the project should the independent Libra Association move ahead before receiving approval from U.S. authorities. Despite these assurances, the hearing highlighted lawmakers’ suspicion of Facebook and the politicization of Libra. It is clear that the era of “move fast and break things” is over.

It was interesting to hear Zuckerberg warn lawmakers that China will quickly fill the void should Libra not move forward. He argued that Libra would “extend America’s financial leadership as well as our democratic values and oversight around the world.” Alignment of interests is a key tool of persuasion.

Meanwhile, China’s digital currency initiative is rapidly accelerating. The driving force is the People’s Bank of China, not a private enterprise. According to Bloomberg, the Chinese central bank will provide its own electronic version of the yuan “soon”, potentially the first major central bank to issue a digital national currency. Although China’s approach will rely on Ant Financial’s Alipay and Tencent Holdings’ WeChatPay for implementation across their users, the PBOC will take the lead and end up controlling a third of the online payments market.

Furthermore, Xi Jinping, the President of China, made a speech last week, emphasizing the use of blockchain as an important breakthrough for independent innovation of core technologies, and urged to accelerate the development of blockchain tech and industrial innovation. Mable Jiang, Partner at Nirvana Capital, translated the speech here. Dovey Wan, Founding Partner at Primitive Capital, has an excellent tweetstorm covering the increase in search interest on Wechat & Baidu. Note that Xi did not refer to Bitcoin, but greater awareness of blockchains lifts all boats. Following the speech, Bitcoin’s price spiked ~15%.

The current uncertainty in Sino-US trade negotiations is creating new challenges while the dollar might finally face real competition as the world’s dominant currency. Game theory is a way to formalize the study of multi-party interactions and evaluate outcomes. It involves thinking strategically: how will rational decision makers respond to others’ actions? If China launches a digital yuan first, how should the US respond? With the PBOC announcing plans to accelerate investments in blockchain tech, how should lawmakers negotiate with Facebook over its Libra plans? Obviously, this process involves a strong assumption on rationality.

We are witnessing a master game of chess, a sequential move game, between lawmakers and central bankers in the US and China. Players make moves publically and sequentially, and can respond to actions played before their decision point. Sequential games are solved by starting at the end and working backwards. Players assume that other players will always select their best action. If you can manage to move first, you can pick the equilibrium you like. If you can communicate ahead of time, you might be able to negotiate on the equilibrium. Sometimes, if you can’t win a game, the best thing to do is to take your opponent’s advantage away by being unpredictable. Policymakers and central bankers need to assume stablecoins and blockchains are here to stay, work backwards, and have the courage to lead. Ultimately, I don’t think this a zero-sum game and healthy competition hopefully drives innovative results.

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RelayNode NYC is curated by:

David Gogel

Advisor @ Paperchain fmr Associate @ Techstars' Blockchain Accelerator, Co-president @ Wharton FinTech

Hsin-Ju Chuang

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

💰Funding & Exits

  • Bitcoin Suisse, a Swiss cryptocurrency brokerage and custodian, announced the purchase of a “sizeable minority stake” ($3M) in CoinRoutes Inc., a smart-order routing, trade automation and trade intelligence provider.

  • PeerNova, Inc., an enterprise software company in the financial industry, announced it raised $31M in growth funding led by, Mosaik Partners, with participation from Medici Ventures and Intuitive Venture Partners.

  • Blockchain Ventures announced it is the first equity investor in Enjin, a leading blockchain game development company responsible for bringing over 40 games and apps to the Ethereum network.

  • Current, a digital bank targeting millennials and Gen Z, announced it raised $20 Series B backed by Galaxy Digital EOS VC Fund, Wellington Management Company, CMFG Ventures.

🔓DeFi

  • Dharma, a smart contract offering a high-yield (7.4% APR) savings account, came out of beta. Behind-the-scenes, interest in Dharma is generated via the Compound Protocol — a global network of borrowers and lenders. Every loan in Compound is over-collateralized and secured by smart contracts on the Ethereum blockchain.

  • The team at Alethio release an excellent quantitative assessment of MakerDAO’s DAI. It is clear that DeFi is starting to scale.

  • Binance launched a fiat to crypto onramp/offramp by way of the Nigerian Naira (NGN). Users can now deposit Nigerian Naira and buy BUSD, BNB, and BTC.

💸 STOs / Stablecoins / Libra

  • After the successful completion of its SEC-qualified offering, Blockstack announced a partnership with Binance and Hashkey Pro (institutional) exchange for the first listings of the Stacks (STX) token. Listing on exchanges increases access to the network globally and ensures liquidity for holders and app miners. Binance Research released an excellent research report on Blockstack (STX). It is ironic that US retail investors are locked out of the only available secondary markets for the compliantly sold tokens.

  • The G7, in partnership with the Bank for International Settlements, set up a working group on stablecoins, to examine the challenges, risks and benefits that global stablecoins may pose. The full report is available here.

🌉Infrastructure

  • Richard Chen, Partner at 1confirmation, provides an overview of the crypto wallet ecosystem and highlight some of the recent improvements in wallet UI/UX, including wallet SDKs, smart contract wallets, and meta transactions.

  • Not directly crypto related, but Allison Bishop, Co-Founder & President of Proof Trading, has an excellent blog post covering stock exchange pricing dynamics. Over the long-run crypto exchanges’ high transaction fees are likely to be subject to competitive pricing dynamics and margin compression is likely. It is interesting to look at how exchanges pricing has evolved in traditional markets.

🏦Institutionalization

  • Keffy Loeffler, CEO of Bakkt, announced the expected launch on December 9 of a regulated options contract for bitcoin futures. The Bakkt Bitcoin Options contract will be based on the benchmark Bakkt Monthly Bitcoin Futures contract and represents another important step in developing this asset class for institutional investors.

🍰 Layer 1

  • Chris Burniske, GP at Placeholder VC, wrote a great article outlining key factors that could make or break the various “Ethereum Killers” that are coming online.

  • Felix Lutsch from Chorus One shared a report “Analyzing Stake Distribution and Diversification” on the Cosmos Hub.

  • “Given the relatively high levels of mining difficulty and the uncertainty of local transfers, getting uncompromised (clean) Ether is nearly impossible today.” Trent VanEpps shares State of The Mixers: A Summer 2019 which is a general overview of all mixer / privacy efforts currently in development for Ethereum.

⚖️ Legal

  • Ivan Manuel Molina Lee, the president of Crypto Capital, the entity involved in the NY Attorney General’s investigation into Bitfinex and Tether parent iFinex, was arrested by Polish authorities on charges of money-laundering. Crypto Capital was the company with which Bitfinex entrusted $850M, money the exchange said it was unable to access later. To cover the loss, the exchange conducted a $1B token sale.

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.

Events this week:

Fewer events this week as many teams are in SF for Blockchain Week.

The Dawn Of The Enterprise Token (Free)

When: Monday, October 28, 2019, 6:00 PM to 9:00 PM

Where: Rise New York, 43 W 23rd St · New York, NY

A speaker and panel series focused on the exploration of enterprise tokens like the JPM coin, Libra, & the Walmart patent, what it all means, where it is headed and how you might position for it.

CryptoMonday NYC Fireside Chat w/ Jason Goldberg, Founder & Maker of Pepo by OST (Free)

When: Monday, October 28, 2019, 6:30 PM to 9:00 PM

Where: The Ainsworth, 45 E 33rd St · New York, ny

This CryptoMondays NYC will feature a Fireside Chat with Jason Goldberg, Founder & Maker of Pepo by OST. The event will focus on how to optimize the user experience (UX) in crypto.

NYC Blockchain Center Member Demo Showcase (Free)

When: Tue, October 29, 2019, 6:30 PM – 8:30 PM EDT

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

Join us for a showcase of new products from four of our member companies. BTBlock, Milligan Partners, and others will demo recent work ranging from identity and cybersecurity to enterprise transactions and tokenization.

DAOs and the Legal System (Free)

When: Tuesday, October 29, 2019, 12:00 PM to 1:00 PM

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

Our Tuesday lunch event series is back! Kurt Watkins, an attorney doing extensive work in blockchain law, will talk about his work integrating DAOs with the legal system and his opinion as to the best way forward, followed by a Q&A.

[Whitepaper Wednesday] Bitcoin’s security and the declining block subsidy (Free)

When: Wednesday, October 30, 2019, 12:00 PM to 1:00 PM

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

This week, we're reading about Bitcoin's security model as block rewards decline. Read the paper by Hasu and others, "A model for Bitcoin’s security and the Declining block subsidy": https://uncommoncore.co/wp-content/uploads/2019/10/A-model-for-Bitcoins-security-and-the-declining-block-subsidy-v1.06.pdf. We'll talk through how the system pays for security today, and what it might look like in the future.

Upcoming events

BlockchainWeekend NYC ($39)

When: Thursday, November 7th - Sunday, November 10th

Were: TBD

BlockchainWeekend is a city-wide inaugural initiative supported by New York City Economic Development Corporation (NYCEDC) and the biggest tech ecosystem players in New York. It will take place on Thurs., Nov 7 to Sun. Nov 10th, with 50+ blockchain-focused events to take place across all five boroughs. With events covering in all industries of blockchain, you will experience the latest blockchain technology and how the technology is used. Browse and discover what you like!

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.

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.?

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.