18 October 2020

Aave $25 Million Fund, Blockchain Ventures Blockchain Capital Standard Crypto

This week in the cryptocurrency market has been more of new developments in the cryptocurrency and the DeFi space. On the other hand, the institutional money flow in the crypto space continues to gain dominance.

Grayscale reported massive inflow during the third quarter of 2020 across its range of crypto investment products. However, Bitcoin remains the first preference for institutions and also serves as a potential hedge against the current economic uncertainty.

Polkadot Announces New Trustless Wrapped Bitcoin: PolkaBTC

Polkadot, the blockchain interoperability solution provider announced its new cross-chain bridge with Bitcoin (BTC) that will go live in the first quarter of 2021. This will be a milestone achievement in getting Bitcoin to the DeFi platform.

Bitcoin, Polkadot, PolkaBTC, Trustless Wrapped Bitcoin
Source: Twitter (Polkadot)

Users can tokenize their Bitcoins and transact them as PolkaBTC on different decentralized finance (DeFi) platforms. The BTC-Parachain will be completely developed by Interlay and funded by the Web3 Foundation grant.

Users: Issue, Trade, and Redeem PolkaBTC
Source: Polkadot

The BTC-Parachain will be completely trestles and open and run by a completely decentralized network of community members, individuals, and companies. There will be no third-party intermediary and anyone can participate to operate the bridge.

The official announcement states: “Once deployed, users will be able to mint 1:1 Bitcoin-backed assets onto Polkadot, as PolkaBTC, and use these across a wide range of applications, including decentralized exchanges, stablecoins, and lending protocols”.

The PolkaBTC will function similarly to any other native asset within the Polkadot ecosystem. All holders of the PolkaBTC can also redeem their wrapped Bitcoins for BTC or reimburse in the “collateral currency at a beneficial rate”.

Grayscale Investments Secures Over $1B in New Investments in Q3 2020

The world’s largest digital currency asset manager Grayscale reported a massive $1 billion investment inflow across all its crypto investment products during Q3 2020.

The asset manager said that it registered the highest ever net inflow in a quarter in its entire history of operations. The Grayscale Bitcoin Trust was in leading demand registering inflows of $720 million during the third quarter. Also, the Trust’s assets under management (AUM) jumped a massive 147% making it the fastest-growing investment products.

Grayscale noted that the demand for its other crypto investment products also surged during Q3 2020. There was a notable increase for other Grayscale products like the Grayscale Litecoin Trust, the Grayscale Bitcoin Cash Trust, and the Grayscale Digital Large Cap Fund. As per Grayscale, the net inflows for all these investment products jumped 1400% YoY. The official press release notes:

“Year-to-date investment into the Grayscale family of products has surpassed $2.4 billion, more than double the $1.2 billion cumulative inflow into the products from 2013-2019. The majority of investment continued to come from institutional investors, accounting for 81% of investment in 3Q20. Additionally, investors continue to broaden their digital asset exposure, with 57% of investment coming from multi-product investors in 3Q20”.

 

Aave Raises $25MM from Institutional Investors

The popular decentralized lending and borrowing protocol Aave announced a massive $25 million investments coming from institutional firm, such as like Blockchain.com Ventures, Blockchain Capital, and Standard Crypto.

Aave $25 Million Fund, Blockchain Ventures Blockchain Capital Standard Crypto

Speaking to Decrypt, Aave CEO Stani Kulechov said that they will use the funds to expand in the Asian markets and bring DeFi applications closer to institutional use. The Aave CEO added that the new stakeholders will also be able to participate in the protocol’s governance and staking processes.

The DeFi lending platform currently allows investors to earn interest by providing liquidity to the liquidity pools. On the other hand, users can borrow cryptocurrencies with little collateral.

Aave (LEND) Lending Pool
Source: Medium (Aave)

Aave is one of the most popular and the third-largest DeFi protocols in the market. In another development, Aave has now started moving its LEND tokens to a more powerful AAVE token that brings voting and staking rights. Calling this move as “Aavenomics”, this process will help to increase decentralization and allow the community to have a greater say in decisions.

The transfer from LEND to AAVE will happen at the rate of 100 LEND per 1 AAVE. Although, the overall market cap will remain the same. CEO Kulechov explained:

Aave is now moving towards the AaveDAO, which means that after the migration from LEND to AAVE, anyone can build new functionality into the protocol along with the Aave team, effectively decentralizing development and governance”.

Vitalik Buterina Asks Ethereum (ETH) Users to Adopt “Rollups,” the Layer 2 Scaling Solutions

Ethereum co-founder Vitalik Buterin has urged the platform users to start using scaling solutions that are already “here for many classes of applications.”

Buterin was speaking at CoinDesk’s invest: Ethereum economy virtual conference where he enthusiastically mentioned about the layer 2 scaling solutions like “rollups”. These solutions keep all the transaction data on-chain while moving the computational load off the chain.

Last week, Buterin explained in a series of tweets of how “rollups” can boost the transaction throughput by 100x. Buterin was explaining the roadmap of Ethereum 2.0. He said that while the arrival of sharding can take some time, users must consider adopting “rollups” in the meanwhile. He noted that “rollups” was not the replacement to sharding but just an additional solution.

Buterin spoke about both – optimistic rollup solutions” and ZK rollups. He noted that using these solutions with the current Ethereum blockchain can increase the transaction throughput from 15 transactions per second to between 1,000 and 4,000.

He also added: In terms of where we are now, for simple payments we are actually there, like you can do ETH transactions inside rollups. The challenge is just getting everyone to actually move over. Generic EVM [Ethereum Virtual Machine] application smart contracts are a bit further behind.”

The crypto community is eagerly waiting for Ethereum’s transition to the Proof-of-Stake (PoS) blockchain. Although buttering didn’t speak much about that, he noted that the launch of phase 0 i.e. the independent beacon chain will happen very soon.

But Buterin added that stakers on the Ethereum proof of stake (PoS) can be net profitable if they stay online for a minimum of 50-60% of the time.

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