Newsletter #6

Week in review

Talking DCEP on “Tiger Talk”

Last week I appeared on China’s Phoenix Television show “Tiger Talk” (一虎一席談). Tiger Talk is one of Phoenix TV’s longest-running shows, each week featuring a major societal issue or event which experts, academics, and guests would debate on. The topic of the week was “DC/EP: China’s release of digital currency, will it shake the US Dollar’s hegemony?”. You can watch the episode below or check out our DCEP overview:

Tiger Talk

What I found interesting was that the show gave a general overview of blockchain technology, Bitcoin, Libra etc. This is likely because the show’s aim is to educate the general public on these concepts in anticipation for DCEP’s release. The show also highlighted the benefits of DCEP and its superiority over Bitcoin due to its centralisation.

At the same time, from the show’s discussions, I think DCEP may introduce the public to explore cryptocurrencies because: (1) the public is becoming more educated on concepts surrounding Bitcoin and cryptocurrencies; (2) there seems to be a real concern that China may be kicked out of the SWIFT system. Further, the show also talked about the ability to freely send USDT/Tether, which confirms the narrative that USDT is being heavily used in China.

Farming is the new 2020 lockdown trend

Sourdough bread and mircrogreens are SO Q2 2020. Right now EVERYONE is yield farming. Here’s my farming list for this week.

From our research on Twitter, Telegram etc, we found that $YFV and $SUSHI are THE most talked about farms.

YFValue ($YFV)

YFV (YFValue) is basically derived from other tokens from what we call the “Y Family”. Confused? Here’s a chart we created with Cryptonauts to help you navigate this field:

As with other members of the Y Family, YFV governance token so you can use it to vote on issues pertaining to the running of the platform. Though many also simply trade the token and speculate on its value. YFV’s sister ($YFII) was recently listed on Binance Exchange, resulting in its prices doubling in one day. Meanwhile, $YFV is listed on OKEx Exchange, and from looking at the charts, this listing also helped push up $YFV to double its price.

Check out our YFV farming guide. If you are interested, sign up for YFV and get started!

Sushiswap ($SUSHI)

Sushiswap ($SUSHI) is a fork of Uniswap and was founded less than a week ago by an anonymous developer known as “Chef Nomi”. There is word on the street that Sushiswap was created by the team behind FTX Exchange. And this is not completely impossible, considering the FTX team is one of the biggest $SUSHI farmers and was quick to list and offer $SUSHI trading products. $SUSHI token is also listed on Binance and OKEx exchanges.

Currently, there is over USD$1.2billion locked in Sushiswap, insane considering it’s only been 5 days since it first launched! Sushi farming is considering very risky, but can potentially be very rewarding since it can have an ROI of around 1-7% per day depending on the pool. Important stats such as Total Value Locked (TVL), amounts staked and yields can be found on SushiBoard.

In fact, Sushiswap is also hugely popular in China where it is dubbed “Uniswap’s biggest rival” and popular cryptocurrency news website 8btc has an entire Sushiswap section dedicated to news and tutorials.

Yield farming risks

Yield farming does have its risks. One of the main risks is that yield farming is all run on smart contracts. If the smart contracts are defective or created with loopholes in it, it could mean that funds would be lost. This is especially since smart contracts are self-executing, so there is no way to “abort” a smart contract once it has been deployed. Hence smart contract auditing is crucial for yield farming or DeFi projects generally. These auditors are third party companies that go through the code and check for any vulnerabilities and bugs. Check out this video from Cryptonauts which explains how smart contract auditing works:

Smart Contract Auditing in Decentralized Finance

For reference, YFV has already been audited by The Arcadia Group and according to the YFV team, no high or critical severity issues were found. Meanwhile Quantstamp will be doing a “security review”, NOT an audit for Sushiswap. Quantstamp has clarified that their services will be similar to what they did for Yearn Finance ($YFI), which was an informal code review limited to the most prominent contracts- those that hold or can distribute funds.

Another risk is from purchasing and speculating on $SUSHI by trading the token. If there are indeed vulnerabilities and worse, finding “minter keys” in the code which essentially allows developers to massively create new tokens, then the value of $SUSHI would be diluted to the point where it is essentially worth less than an actual sushi roll.

DeFi is driving up transaction fees

Ethereum transaction fees have shot up to all-time highs for the second time in 3 weeks. As at 2nd September 2020, the average transaction fees are around USD$15.13.

transaction fees
True story

These high transaction fees and skyrocketing Ethereum (ETH) prices are a direct consequence of the increasing number of DeFi projects and yield farming since farmers need to pay ETH for each transaction i.e. moving funds in/out of pools etc. In particular, the spike in average transaction fees on 1st September 2020 is thought to be attributed to the launch of Sushiswap.

Average transaction fee (Image credit: Blockchair)

Whilst this spike in fees is good news to Ether miners whose revenue increases with higher fees and more transactions, there is growing concern about the sustainability of Ethereum. Many are saying that the high transaction fees means that they are “priced out” of activities on DeFi platforms. Also, more transactions means there is more congestion on the network resulting in higher number of unconfirmed transactions and wait times. Taken further, it may even mean that some smart contracts become virtually unusable, thereby bringing the question of Ethereum being a smart contract platform in the first place into question.

One answer to this can be Ethereum 2.0, but its mainnet launch is months away.

Upcoming events

3rd Sept 2020 4:00pm: Skale Network token launch. Eligible purchasers can buy up to USD$1,153 worth of SKL tokens for USD$0.03/token. Details here.

4th Sept 2020 12:00pm: Animoca Brands, the developer and publisher behind games such as The Sandbox and Crazy Kings etc will launch its REVV token on Uniswap. Details here.

5th Sept 2020 11:00am: Linear Finance AMA. Check their Telegram page for details.

*All times are listed in UTC unless otherwise stated.

See here for back issues of our newsletter.

The information provided in this article is intended for general guidance and information purposes only. Contents of this article are under no circumstances intended to be considered as investment, business, legal or tax advice. We do not accept any responsibility for individual decisions made based on this article and we strongly encourage you to do your own research before taking any action. Although best efforts are made to ensure that all information provided herein is accurate and up to date, omissions, errors, or mistakes may occur.

I’m Michael Gu, Creator of Boxmining. I’ve been involved in the digital asset and Blockchain space since 2012. Something I immediately noticed was that accurate information is hard to come by in this space. More often than not, we find extremely biased information that exploits the complexity of blockchain to obscure facts. Having been around before bitcoin or blockchain was even “cool” meant that I had to do a lot of discovery myself, and along the way, I had many successes, but also made mistakes. I started Boxmining in 2017 mainly as a passion project, to educate people on digital assets and share my experiences. Being based in Asia, I also found a huge discrepancy between digital asset trends and knowledge gap in the West and China. So I leveraged my knowledge and positioning to bridge that information gap and let people know what is truly happening. This journey has been nothing short of exhilarating for me, starting from when I mined Bitcoin in grad school to appearing on China’s national television as an overseas expert on blockchain technology, and having the honour of interviewing leading crypto entrepreneurs, including Binance CEO Changpeng Zhao and FTX founder Sam Bankman-Fried.


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