A weekly developer call of the MakerDAO, the open-source developer group of decentralized, ETH-backed stablecoin DAI, came to the understanding that the coin’s dollar peg was reaching its “breaking point” due to a lack of organic demand.
Concerns at the meeting mostly revolved around the DAI’s ability to hold its peg at a time when there’s a speculative drop in its market value.
It is this concern that saw the founder of MakerDAO Rune Christensen suggest that stakeholders vote to determine whether the team should hike the fees for the dollar-pegged coin and in the process help resolve issues surrounding its liquidity.
MakerDAO launched the poll on Monday, in which holders of the MKR governance tokens are expected to vote on the question of the “Dai Stability Fee.” The vote will be to determine whether the fee should be raised from 1.5 percent to 3.5 percent.
As well as other stablecoins in the crypto space, the DAI has seen fluctuations in its prices over most of 2019, with data at XBT.net showing that prices have so far dropped to $0.98 or risen to $1.02.
While DAI has remained consistent enough on Coinbase Pro and Bitfinex at about $0.98 since January, the bouncing seen on the global markets is a cause for concern.
MakerDAO’s risk management lead Cypress Younessi said during a public call that although the dollar-pegged token was giving a “good deal,” the pressing concern at the moment is to get the price locked at least until the right kind of stability in fees is reached.
Last month, MKR holders voted twice to increase the fee by 0.5%, but according to an official Reddit post, that increase had a “negligible” impact on correcting the difference between the stablecoin’s value and the peg.
As such, the project’s risk team felt there needed to be an increment of 2% “until the trend in the peg has been corrected.”
Increasing the fee isn’t going to impact just MakerDAO, but several other applications that rely on the increasingly popular stablecoin’s value and fee, including Gitcoin that regularly denominates and pays its bounties in DAI coins.
Other applications that leverage the DAI as their primary medium of transactions are payment channel platforms. An example is the Connext Network which is soon launching its mainnet on the Ethereum platform.
At the moment, MakerDAO smart contracts have seen users lock over 2 million ether tokens, with these accounting for about 2 percent of total ETH supply.
However, increased adoption for the DAI token continues to occur via “collateralized debt positions” (CDPs), which requires that a user’s locked ether be three times the amount of DAI they wish to withdraw.
As a stablecoin withdraw-able for fiat, the DAI token has become extremely popular with ETH holders who want loans to pay off bills.
But this has had a broader effect in destabilizing the network- principally due to the spike in loan demands that does not correspond to the demand for DAI for organic purposes.
MakerDAO has noted that the widening gap brought about by this scenario has seen contributors and employees look to increase the token’s use cases.
Some of the new usages happen behind the scenes at companies that offer crypto-financial services when handling backend value transfers.
Allegedly, most people who hold the stablecoin end up liquidating it within an hour or so of possessing it. But perhaps this is directly related to another problem impacting ether collateral in DAI CDPs.
For instance, a CDP will automatically liquidate when ETH prices decline to value below 150 percent, but even that doesn’t guarantee that a user will recoup all of their collateral.
MKR Token holders
A spokesperson for MakerDAO revealed that only those individuals and entities that hold MKR tokens would have the opportunity to vote, mainly on matters relating to the addition or removal of data sources.
Under current circumstances, the power to vote is a crucial aspect given the debate regarding an increment in the stablecoin’s debt ceiling.
If markets drop significantly, then liquidating ether collateral becomes a necessity, although Christensen maintained that this was only “hypothetical” and a “worst-case scenario.”
Still, it remains to be seen how many MKR holders will participate in the latest vote, given that those who voted in the last two rounds were less than 10 percent.
The DAI needs a diverse ecosystem of token holders and other stakeholders to pull together for it to make it in the industry. However, therein lies a problem as a majority of the tokens are owned by very few people.
For instance, Etherscan shows that the top three holders of the token control 55 percent, with one of this owning roughly 27 percent. a16z fund’s Andreessen Horowitz owns 6 percent, while hedge fund 1confirmation also has a significant amount of MKR tokens.
While the rest of the top 10 holders haven’t been publicly listed, the trend is that most MKR is in the hands of very few people. ConsenSys and the Ethereum Foundation are also thought to hold significant portions although information to that effect isn’t available.
Disclaimer: This is not investment advice. Cryptocurrencies are highly volatile assets and are very risky investments. Do your research and consult an investment professional before investing. Never invest more than you can afford to lose. Never borrow money to invest in cryptocurrencies.
Bitcoin Dominance at 2-Month High: Disaster for Altcoins
August was a bullish month for altcoin traders as they ranked in profits, forcing Bitcoin dominance to drop below 60% for the first time since the start of the year. However, the altcoin euphoria was shortlived as September brought along the bears.
The end of Q3 wasn’t great for Bitcoin traders, but that was expected as September is usually not a profitable month for Bitcoin. In fact, data shows that Bitcoin has lost more in September than in any other month.
As expected, the Bitcoin effect was seen across boards in the market. Altcoins suffered the most, shredding almost all of the profits accumulated in the previous month.
Bitcoin Eyes $12K
Bitcoin is pushing hard towards the $12k mark. It traded as high as $11,942 for the first time since mid-August.
Analysts believe the trend is the start of a new bull cycle for the leading cryptocurrency considering the coin shielded itself and recovered quickly from the recent negative news, including BitMEX’s charges and OKEx’s withdrawal saga.
Although October has been impressive for Bitcoin, and the coin has since recovered from the bearish move in September, altcoins continue to live in the terrible nightmare from the past month.
October: Another Nightmare For Altcoins
Bitcoin dominance started rising in mid-September after it went as low as 55%. At the time of writing, the cryptocurrency maintains a 60.3% dominance of the entire crypto market while the altcoins struggle with 39.7%.
Even Ether (ETH), the second-largest cryptocurrency, was not spared. In August, the coin traded near the $500 mark, reaching $485 for the first time in two years. In the last two months, Ether lost over 20% of its value, and market dominance dropped from above 15% to 11%.
Now, ETH is exchanging hands at $369 with a 2% loss on the daily chart. However, speculation in the market is that the upcoming ETH 2.0 Phase 0 could provide the needed boost for Ether bulls.
Looking at the top 100, a handful of altcoins have shredded at least 15% of their value on today’s trading session. Some of the most significant losers include Uniswap (-17%), Crypto.com (-25%), Balancer (-19%). Meanwhile, Flexacoin saw a big boost with over 258.11% gains in the last 24 hours.
Crypto.com Integrates PayID Offering 5M Users an Easy and Unique Way to Send & Receive Crypto
HONG KONG, October 19, 2020 — Crypto.com today announced PayID, a universal payment identity developed by the Open Payments Coalition, is now available on the Crypto.com App.
Crypto.com’s 5M+ users can register for a PayID from the Crypto.com app, consolidating complex wallet addresses and accounts into a simple ID that works across any payment network and currency. Users who register for their unique PayID will get an exclusive Crypto.com-branded, easy-to-read ID — such as “yourname$payid.crypto.com — that enables users to send/receive crypto payments from other compatible wallets with just a single ID, easing their ability to connect to 100M+ crypto users worldwide.
PayID solves a key pain point in the crypto payments world, which consists of many closed and complex networks. Participants must manage multiple long and random wallet addresses, increasing the likelihood of erroneous transactions. PayID creates a free, open and common protocol that allows for interoperability between any payment network or currency.
Starting today, Crypto.com is offering early access for select customers to register their unique Crypto.com PayID. To be eligible:
- Stake 10,000 CRO or more in Crypto.com Exchange; or
- Stake 10,000 CRO or more in Crypto.com App
On 2 November 2020 all Crypto.com App users can register their own Crypto.com PayID within the Crypto.com App.
Once registered, users can send crypto from other compatible wallets to the Crypto.com App with just their PayID, instead of a full-length crypto address. At launch, supported cryptocurrencies include CRO, ETH, BTC, XRP and many more ERC20 tokens. Users can also send crypto to other compatible wallets using PayID hosted by other members in the Open Payments Coalition.
Crypto.com was founded in 2016 on a simple belief: it’s a basic human right for everyone to control their money, data and identity. Crypto.com serves over 5 million customers today, providing them with a powerful alternative to traditional financial services through the Crypto.com App, the Crypto.com Card, the Crypto.com Exchange and Crypto.com DeFi Wallet. Crypto.com is built on a solid foundation of security, privacy and compliance and is the first cryptocurrency company in the world to have ISO/IEC 27701:2019, CCSS Level 3, ISO27001:2013 and PCI:DSS 3.2.1, Level 1 compliance. Crypto.com is headquartered in Hong Kong with a 600+ strong team. Find out more by visiting https://crypto.com
Crypto More Popular Than Gold Among Russian Investors: Report
A survey among over 2,000 Russian investors has placed cryptocurrency next to gold in terms of popularity. Moreover, younger investors aged below 30 have displayed significant favoritism towards digital assets.
Crypto Ranks Above Gold Among Russian Investors
According to the study published by the World Gold Council, investors from the world’s largest country by landmass have allocated the most funds into generally accepted as safer instruments such as savings accounts, foreign currencies, real estate, and life insurance.
When asked what sorts of investment tools they had invested in the past 12 months, they placed cryptocurrencies as the fifth most popular asset with 17%. Interestingly, gold came next with 16%.
World Gold Council Director of Central Banks and Public Policy, Dr. Tatiana Fic, commented that gold had been a valuable part of Russia’s history. She explained that the development of the gold mining industry began in 1745 with the discovery of gold in the Urals. In the next 100 years, more than half of the global gold production came from Siberia.
However, she noted that the investment market has declined in interest lately. Dr. Fic reasoned that there’s an evident lack of education, resulting in people steering clear from the bullion. She also claimed that investors fear buying fake or counterfeit gold products.
It’s worth noting that Russia seized purchasing gold earlier this year following half of decade of increased accumulation.
Younger Generations Keen To Experiment With Crypto
WGC’s report confirmed previous narratives that younger generations prefer allocating funds into riskier investment instruments such as digital assets.
“18-to-24-year-olds are much more willing to take risks to get exponential growth, rather than take a long-term view. For example, they are the least likely to have invested in a savings account but are the most likely to have invested in collectibles – and around two-thirds are considering investing in cryptocurrencies.” – the report reads.
The paper highlighted that the growing role of mobile apps linked to investment accounts have made it easier for tech-savvy youth to purchase their preferred assets. Cryptocurrencies lead the way “with nearly 80% being bought exclusively online.”
Although physical gold has been bought mostly offline, the report noted that online investments in gold-backed ETFs and vaulted gold have jumped in the past few years as well.
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