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| The biggest crypto news and ideas of the day Dec. 1, 2021 If you were forwarded this newsletter and would like to receive it, sign up here. Sponsored by Welcome to The Node.
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–Daniel Kuhn
Today’s must-reads Top Shelf EXPANDING: Cryptocurrency exchange Crypto.com will buy North American Derivatives Exchange (Nadex) and Small Exchange Inc. to expand its presence in the U.S., subject to regulatory approval. Both exchanges are part of the North American branch of London-based IG Group, the FTSE 250-listed online-trading firm with a market cap of around $4.3 billion. IG owns 39% of Small Exchange, and will receive a total of $216 million from the transaction. Crypto.com will use the acquisition as a gateway to trade certain derivatives and futures products for U.S.-based customers.
FUNDING: 1inch Network has raised $175 million at a $2.25 billion valuation as the decentralized finance (DeFi) platform gears up for the launch of a new set of institutional products. The Series B round was led by Amber Group, with over 50 additional investors participating including Jane Street and VanEck. The raise was conducted via a token sale from the project’s “ecosystem development fund.”
STEPPING DOWN: Libra Creator David Marcus is leaving Meta (formerly Facebook) with the company’s diem (formerly libra) stablecoin yet to be fully launched, he announced on Twitter. Libra was an ambitious plan to make sending money across borders as easy as sending a text, but was scaled back after immediately being met with scrutiny following its 2019 announcement. Marcus was the face of the Facebook-led project.
BUYING PRIVACY: Iron Fish, a decentralized blockchain network that aims to create a cryptocurrency as private as cash, has raised $27.7 million in a Series A round led by Andreessen Horowitz (a16z) ahead of the network’s Dec. 1 beta launch. Iron Fish launched its first testnet in April and says it has since attracted nearly 2,000 self-identified miners to its community. The proof-of-work blockchain project roadmap includes adding more assets, stablecoins and cross-chain bridges, including layer 2 support.
TRACKING: Chinese cybersecurity giant Qihoo 360 said Tuesday that it has built a system to monitor crypto mining operations, which will assist the government’s crackdown on the industry. The monitoring system is aimed at government agencies and companies that want to comply with China’s latest crackdown on crypto mining. The software can provide miners’ IP address, geographical location, network type, connection frequency and suggest methods of how to dispose of them, Qihoo 360 said.
–Helene Braun
A message from Nexo When it comes to buying, borrowing or earning on your crypto, you won’t find and easier, safer way to do it than Nexo. And here’s what’ll happen next: you and your referrals will both get $25 in BTC within 30 days of them passing Advanced Verification and topping up the equivalent of $100 or more of any asset supported on the Nexo platform. There’s no limit on the number of people you can refer, so invite as many friends as you’d like!
Overheard on CoinDesk TV... Sound Bites “Borders are going to be less and less relevant and what’s going to be relevant is this decentralized world.”
–Draper Fisher Jurvetson founder Tim Draper on “First Mover.”
What others are writing... Off-Chain Signals Crypto meets the real world (Axios) Venture Capital funding for crypto in surging (New York Times) Inside Coinbase’s budding plan to become the AWS of crypto (Forbes) Croatia’s largest supermarket chain now accepts crypto (Cointelegraph)A normie’s guide to becoming a crypto person (New York Magazine)
A message from Horizen You are invited to Horizen’s Zendoo mainnet launch party! There will be ZEN and swag giveaways!
Horizen is the zero-knowledge network of blockchains powered by the largest and most decentralized node system. Its blockchain deployment protocol, Zendoo, is launching on mainnet on Dec 1st, 2021!
Zendoo enables developers and businesses to deploy private and public blockchains with unmet scalability, flexibility, and throughput to support any real-world needs.
Putting the news in perspective The Takeaway Shiba Inu: Memes as the Future of Money Hi, David Z. Morris here. The shiba inu (SHIB) coin has had a really interesting week. Between late October and Nov. 28, the “Dogecoin Killer” meme token lost about half of its value in dollar terms. Then it surged more than 30% as the Kraken exchange announced it would list the token. Then, starting early this morning, it crashed again by about 20%.
Volatility has been a notorious feature of most cryptocurrencies, of course – they’re speculative investments so they swing on sentiment, much like Tesla and GameStop and Rivian stock. SHIB is distinct in that it’s explicitly a “meme token”: It declares pretty much up front that it has no unique utility and depends on attracting a “community” of holders for its value. I don’t think it would be unfair to describe SHIB as a “decentralized Ponzi scheme.”
Parts of that also applies to the likes of bitcoin or ether but meme tokens lack the underlying technological advantages of top cryptos – bitcoin’s hardness, ether’s use in smart contracts run on the Ethereum blockchain – or even the innovation in so-called altcoins like Decred’s governance experiments over the years. Shiba inu’s spiritual forebear, dogecoin, was in fact created to more or less make fun of the idea that crypto was actually an “innovation.” One of its co-creators has become an extremely salty crypto critic.
But instead of standing as a performance-art critique, DOGE ended up presaging a wild new species of free-market speculation. It was the first meme token, and during its early days circa 2013-2015 it test-drove the lighthearted community shenanigans that have become an inescapable bizarro element of 21st century capital markets. Just like the GameStop crowd nearly a decade later, DOGE holders organized through message boards like Reddit and engaged in eye-catching stunts such as sponsoring a NASCAR team and the Jamaican bobsledders.
The DOGE community is not as prominent these days, but those early memes have helped the currency stay in or near the top ten of all cryptos. As developers put their blood, sweat and tears into technological innovators like Ethereum, and more recently Solana and Avalanche, DOGE just kept derping along, changing barely at all, coasting on Good Vibes.
And it worked! Which makes it all the more emotionally complicated to watch something like shiba inu skyrocket in value over the past few months. It is arguably an even purer distillation of the memecoin ethos of uselessness than dogecoin. DOGE at least has its own blockchain, while shiba inu is just an ERC-20 token on Ethereum. It offers no defensible market or technology “moat.” It seems to have benefited substantially from unit bias as new entrants came to crypto and bought the token just because it was “cheap.” Its presence among the most valuable cryptos on some indexes is thanks to a perhaps misleading “market cap” metric. And its supply cap of 4 trillion coins, even if it were reliably enforceable, means there’s very little long-term scarcity.
And yet there it is, trading with the big boys. The one thing you can’t do in response is become a meme yourself, gritting your teeth and growling about how “SHIB offers no technological innovation and should be worth zero!”
By getting mad at SHIB, you’re implicitly buying into the Efficient Markets Theory, or EMT. EMT is (loosely) the “invisible hand” you learned about in your high school economics class, the idea that supply and demand magically converge on a “correct” price. When it comes to assets, EMT assumes that investors, collectively, have access to all relevant information about an asset and reach a price based strictly on that information.
But boy oh boy, is that idea deader than a doornail.
Read the full essay here.
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