dYdX exchange launches testnet for ‘fully decentralized’ version 4

July 5, 2023 Coin Telegraph

The crypto exchange launched a testnet featuring an on-chain order book and matching engine, doing away with the centralized components found on the mainnet version.

Crypto exchange dYdX has launched a public testnet of its V4 iteration, according to a July 5 announcement from the exchange’s development team. This marks the completion of “milestone 4” out of five, paving the way for a future V4 mainnet launch.

Once implemented on mainnet, V4 is expected to allow for “full decentralization” of the exchange.

v4 Testnet is officially live https://t.co/TD5caN6VSQ

Here are all the links you may need for easy access!

Public Testnet: https://t.co/BZ57SvuXNv
Testnet Status Page: https://t.co/7vkrGZs9fx
v4 Documentation: https://t.co/tKTUWacKld

Feedback and Block Explorer links
— dYdX (@dYdX) July 5, 2023

dYdX is a crypto exchange built on Ethereum and StarkEx networks. Because it does not take custody of users’ funds, it is generally considered to be a decentralized exchange (DEX). However, it does feature a centralized order book and matching engine that allows market makers to place limit orders. This contrasts with automated market-maker DEXs like Uniswap that employ on-chain pricing algorithms to match buyers and sellers.

Version 4 of dYdX will eliminate this centralized order book and matching engine, making the exchange fully decentralized, but without relying on an automated market-maker. According to the protocol’s documentation, it will do this by running parts of the app on a separate dYdX network with its own validators, allowing the order book to be stored on-chain.

According to the announcement, users can request testnet funds to try out the app as of 17:00 UTC on July 5, allowing them to place virtual trades, view profit and loss, and perform other basic functions of the exchange. The ability to test bridging from one network to another has not yet been implemented, but will come “over the course of the public testnet.”

Once the testnet phase is completed, the protocol’s team plans to implement the fifth milestone of the roadmap, which will integrate stablecoins into dYdX and will add support for Cosmos Inter-Blockchain Communication (IBC) so that Cosmos users will have access to the app. V4 is expected to launch after this final milestone is completed.

dYdX announced in April that it would wind down its services in Canada due to regulatory issues. In September 2022, it offered a $25 bonus to new users if they proved they weren’t bots, causing some pushback from privacy advocates. The promotion was later abandoned.

3 key Ethereum price metrics point to growing resistance at the $1,750 level

June 16, 2023 Coin Telegraph

3 key Ethereum price metrics point to growing resistance at the ,750 level

basis

Ethereum price looks poised for additional downside as low as the $1,560 level.

Ether (ETH) price plunged 7% between June 14 and June 15, reaching its lowest level in three months and impacting investors’ view that the altcoin was en-route to turning $2,000 to support.

It is worth noting that the $1,620 bottom represents a $196 billion market capitalization for Ether, which is higher than PetroChina’s $186 billion, and not far from chipmaker AMD’s $198 billion.

Being the 66th largest global tradable asset in the world is no small feat, especially considering that the cryptocurrency is merely 8 years old and does not return any kind of direct profit for the project’s maintenance. On the other hand, securities enjoy the benefits of corporate earnings and eventual government subsidies, so perhaps investors should be concerned by the recent price drop from Ether.

Ether price pressured succumbs to regulation and lowered network activity

Regulatory pressure helped to subdue investors’ appetite for Ether as the Securities and Exchange Commission (SEC) proposed a rule change regarding the definition of an exchange. Paul Grewal, chief legal officer of the Coinbase exchange, has pushed back against the proposed change, claiming that it violates the Administrative Procedure Act.

More concerningly, decentralized applications (Dapps) usage on the Ethereum network failed to gain momentum despite gas fees plummeting by 75%. The 7-day average transaction cost dropped to $4 on June 14, down from $16 one month prior. Meanwhile, Dapps active addresses declined by 18% in the same period.

*30-day Ethereum DApp activity. Source: DappRadar*

Notice that the decline happened across the board, affecting decentralized finance (DeFi), NFT marketplaces, gaming and collectibles alike. Curiously, the total value locked (TVL), which measures the deposits locked in Ethereum's smart contracts, declined by a mere 2% versus mid-May to 14.6 million ETH, according to DefiLlama.

To analyze the odds of Ether’s price breaking below the $1,650 support, one should check for a reduced ETH futures premium and increased costs for protective put options.

Ether quarterly futures are popular among whales and arbitrage desks. However, these fixed-month contracts typically trade at a slight premium to spot markets, indicating that sellers are asking for more money to delay settlement.

As a result, ETH futures contracts in healthy markets should trade at a 5 to 10% annualized premium — a situation known as contango, which is not unique to crypto markets.

*Ether 2-month futures annualized premium. Source: Laevitas*

According to the futures premium, known as the basis indicator, professional traders have been avoiding leveraged longs (bullish bets). Despite the modest improvement to 2%, the indicator remains far from the neutral 5% threshold.

To exclude externalities that might have solely impacted the Ether futures, one should analyze the ETH options markets. The 25% delta skew indicator compares similar call (buy) and put (sell) options and will turn positive when fear is prevalent because the protective put option premium is higher than the call options.

*Ether 30-day 25% skew. Source: Laevitas*

The skew indicator will move above 8% if traders fear an Ether price crash. On the other hand, generalized excitement reflects a negative 8% skew. As displayed above, the delta skew has been signaling fear since June 10 and peaked at 21% on June 15 — the highest level in three months.

Ether’s price looks poised to drop down to $1,560

Investors tend to focus solely on short-term price movements and forget that Ether’s price is up 37% year-to-date in 2023. Moreover, by relying too much on Ethereum Network's $24 billion total value locked (TVL), traders might have missed the signals of weakening demand for Dapps use.

For now, bears have the upper hand considering the ETH derivatives metrics, so a retest of the $1,560 support is the most likely outcome. That does not mean that the 2023 gains are at risk, but until the regulatory FUD dissipates, bulls will have a hard time moving Ether above the $1,750 resistance.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

This article is for general information purposes and is not intended to be and should not be taken as legal or investment advice. The views, thoughts, and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Uniswap releases version 4 code, allowing for new types of liquidity pools

June 13, 2023 Coin Telegraph

Automated Market Maker

The new version features “hooks” that will allow for more customized options, but it will not be implemented until more feedback is obtained from the community.

Uniswap Labs has released a draft of the code for Uniswap V4, according to a June 13 blog post from Uniswap’s Founder, Hayden Adams. The new code features “hooks” or plugins that allow developers to create custom liquidity pools.

Uniswap is the largest decentralized crypto exchange in the world by volume. Its latest version is V3 and was deployed on May 4, 2021.

*Uniswap's official user interface. Source: Uniswap*

According to the post, V4’s “hooks” feature will allow future developers to create on-chain limit orders, automatic deposits to lending protocols, auto-compounded liquidity provider (LP) fees, and many other innovations to the exchange once it is implemented.

Releasing the source code is the first step to launching a new version of Uniswap. The team now plans to converse with members of the Uniswap community and iterate on this base code over time. Once enough consensus has been built around a final version of it, V4 will go into a formal proposal and be placed before Uniswap’s governing body, UniswapDAO.

According to Adams’ post, Uniswap V4’s purpose is to “create a way for pool deployers to introduce code that performs a designated action at key points throughout the pool’s lifecycle – like before or after a swap, or before or after an LP position is changed.”

For example, deployers will be able to create time-weighted average market makers (TWAMMs) that allow users to sell large amounts of crypto in small batches over time. This may help traders to avoid being frontrun by EVM bots or to suffer adverse price movements. On-chain limit orders will also be possible, as pools will be able to incorporate logic that lets them fulfill an order only when a token hits a particular price.

Some other examples of “hooks” include code which can redeposit fees back into an LPs pool or lend out inventory when a particular pool isn’t being used.

In a conversation with Cointelegraph, Uniswap Labs Engineer Sara Reynolds said the new version will allow automated market maker (AMM) exchanges like Uniswap to develop more rapidly than ever before, thanks to the inherent customizability it allows:

“In V4 what we really start to see is sort of this ‘primitive’ for customized logic[…]and that’s really exciting because I think it will really start to evolve AMM innovation quite fast.”

Uniswap Labs Head of Comms Bridget Frey echoed this sentiment, stating “Right now, other people have to build new AMMs to do a lot of this work. Now, what you’ll be able to do is to build your project with a hook contract on top of Uniswap’s security and liquidity in ways that hopefully make the innovation faster and easier to do for all sorts of projects.”

Decentralized exchanges have seen an influx of new users recently. The top three DEXs experienced a 444% surge in volume after the United States Securities and Exchange sued their centralized competitors, Binance and Coinbase, for allegedly violating securities regulations. This surge occurred even though the SEC has also tried to change the definition of “exchange” to include decentralized ones. Crypto venture capital firm Paradigm has argued that decentralized exchanges do not fit the definition of an “exchange” found in securities laws.

Decentralized Exchanges See Spike in Market Share Amid Regulatory Uncertainty in the US: IntoTheBlock

June 12, 2023 The Daily Hodl

Paradigm slams SEC’s ‘incoherent’ attempt to police decentralized exchanges

June 9, 2023 Coin Telegraph

Coin Telegraph

DEXes are not securities exchanges, argues crypto venture firm Paradigm.

Crypto venture capital firm Paradigm has slammed the United States Securities and Exchange Commission’s attempt to redefine the term “exchange” — which if accepted, would bring decentralized exchanges under its purview.

On June 8, the firm sent a lengthy 14-page letter to the SEC secretary, Vanessa Countryman, regarding the regulator’s proposed redefinition of the term “exchange” in the 1934 Securities Exchange Act.

The SEC plans to revise the 89-year-old legislation to encompass decentralized exchanges (DEXes) and decentralized finance (DeFi) into the definition of "exchange." Because the term DEX contains the word “exchange,” the SEC wants to treat it the same as a securities or stock exchange.

Today, @paradigm commented on the @SECGov's proposed redefinition of “exchange"

Through haphazard rulemaking, the SEC inappropriately attempts to bring crypto trading platforms, including DEXs, under its remit and regulate them as securities exchangeshttps://t.co/ibv2u1n9VU
— Rodrigo (@RSSH273) June 8, 2023

Paradigm, however, argues that fundamental differences between DEXs and exchanges make treating them as “exchanges” under the Act both “invalid and incoherent.”

“It thus appears that after suing Coinbase for failing to do the impossible — registering as a securities exchange when it was incapable of doing so — the Commission now intends to force DEXs into the same Hobson’s choice.”

Paradigm’s legal counsel, Rodrigo Seira, commented that through this “haphazard rulemaking, the SEC inappropriately attempts to bring crypto trading platforms, including DEXs, under its remit and regulate them as securities exchanges.”

In March 2022, the SEC proposed changes to the Act to include systems that “offer the use of non-firm trading interest and communication protocols to bring together buyers and sellers of securities.” In other words, any platforms that facilitate digital asset exchange or swaps.

Paradigm argues that DEXs neither serve as intermediaries nor have an “organization, association, or group of persons” that maintains the exchange.

Instead, they used market-making algorithms to balance pools of crypto assets that potential buyers or sellers can freely access. Additionally, DEXs run on self-executing code and smart contracts, not associations or groups of people, it argued.

The SEC has pulled no punches this week with twin lawsuits against two of the world’s largest crypto exchanges, Binance and Coinbase.

Furthermore, years of SEC action against crypto have seen the agency deem at least 67 digital assets as securities. However, Congress has yet to pass any official legislation for crypto markets classifying them as such.

Meanwhile, Cointelegraph revealed that enforcement action by the federal regulator targeting crypto companies surged 183% in 6 months after the FTX collapse.

Magazine: Crypto regulation: Does SEC Chair Gary Gensler have the final say?

SEC crackdown on Binance and Coinbase surge DeFi trading volumes 444%

June 7, 2023 Coin Telegraph

Coin Telegraph

Total daily trading volumes on decentralized exchanges have surged by nearly $800 million over the past two days.

The median trading volume across the top three decentralized exchanges (DEX) jumped 444% in the past 48 hours as crypto investors reeled from the United States securities regulator's recent legal actions against cryptocurrency exchanges Coinbase and Binance.

According to aggregated data from CoinGecko, total daily trading volumes on Uniswap V3 (Ethereum), Uniswap V3 (Arbitrum) and Pancakeswap V3 (BSC) — which account for 53% of the total DEX trading volume in the last 24 hours — increased by more than $792 million between June 5 and June 7.

*Trading volume on Uniswap V3 (Ethereum) in the last 7 days. Source: CoinGecko.*

Additionally, the trading volume on Curve, a DEX that allows for the trading of stablecoins spiked by 328%. At the time of writing the bulk of the trading activity on Curve is focused on trading the U.S. Dollar-pegged stablecoins USD Coin (USDC) and Tether (USDT).

Trading volumes on DEXs briefly surpassed those of Coinbase during May’s memecoin frenzy. Crypto investors rushed to purchase tokens such as Pepe (PEPE) and Turbo (TURBO) through Uniswap and a number of other decentralized protocols as the memecoins were not listed on major centralized exchanges.

As DEX volumes surged, net outflows — the difference between the value of assets entering and exiting the exchange — on Binance reached a staggering $778M. It’s worth noting that current net outflows are still much lower than the exchange’s total reserve. At the time of writing Binance maintained a stablecoin balance of more than $8 billion.

Netflow to Binance over the past 24 hours is $778.6M negative on Ethereum - $871.7M in and $1.65B out

Over the past hour, netflow on Ethereum continues to be negative at $35.7M on Ethereum - $14.8M in and $50.5M out

Track it here https://t.co/nwTgpXWhZY and filter for "Binance" pic.twitter.com/jnNAN0QKVy
— Nansen (@nansen_ai) June 6, 2023

The market frenzy comes amid a swathe of legal action against crypto exchanges by the Securities and Exchange Commission (SEC). On June 6, the SEC sued Coinbase alleging it offered unregistered securities and acted as an unregistered securities broker among other charges.

A day earlier on June 5, the SEC sued Binance, Binance.US and Binance CEO Changpeng Zhao (CZ) under similar allegations. The SEC alleged Binance failed to register as a securities exchange and was therefore illegally operating in the U.S.. According to the charges Zhao was sued as a “controlling person."

Magazine: Tornado Cash 2.0 — The race to build safe and legal coin mixers

3 reasons why Ethereum price could struggle at the $1.9K level

May 16, 2023 Coin Telegraph

3 reasons why Ethereum price could struggle at the .9K level

BSC

The ETH price could come under short-term pressure due to a downtrend in deposits, reduced DEX volume market share and futures data showing traders with a bearish bias.

Since May 12, Ether’s price has been struggling to sustain its $1,800 support level, as investors face pressures from a worsening crypto regulatory environment and the Ethereum network’s high gas fees. Also negatively impacting Ether’s (ETH) price are three indicators signaling reduced demand for its decentralized applications (DApps) and a lack of leverage buying demand from professional traders.

Regulators signal their plan to further limit crypto intermediaries

According to court documents filed on May 15, the United States Securities and Exchange Commission (SEC) has given a formal response in court in relation to Coinbase’s petition for clear crypto regulation. The SEC stated that any rulemaking may take years and that enforcement actions will continue in the meantime.

On May 16, the Economic and Financial Affairs Council of the European Union — comprising finance ministers of all member states — approved the highly anticipated Markets in Crypto-Assets (MiCA) regulation, which will come into effect by mid-2024.

Some argue that MiCA facilitates business growth in the region. Others focus on the privacy risks for personal users’ data and the risks imposed on non-custodial solutions, including decentralized finance applications.

The drop in DApp deposits is concerning

The Ethereum network is experiencing problems caused by surging gas fees — the cost associated with transactions, including those performed by smart contracts. For the past four weeks, the average transaction fee has stood above $9, which severely limited the demand for DApp usage.

Total deposits on the Ethereum network in Ether terms plunged to their lowest levels since August 2020. Such an analysis excludes the effects of native Ethereum staking, which recently started to allow withdrawals.

*Ethereum network applications' total deposits in ETH. Source: DefiLlama*

According to DefiLlama data, Ethereum DApps reached 14.9 million ETH in total value locked (TVL) on May 16. That compares with 16.5 million ETH two months prior, a 10% decline. As a comparison, TVL on BNB Smart Chain in BNB (BNB) terms was essentially flat in the same period, while Polygon (MATIC) deposits on the Polygon network increased by 29%.

BNB Smart Chain attempts to take a lead in DEX volume

Ethereum might have been the absolute leader in decentralized exchange (DEX) volume since its inception, but this position is being challenged. Ethereum’s market share by volume on DEXs peaked at 75% in the week ending March 5 but steadily declined to its lowest level ever, 39.6%, in the week ending May 14.

*Weekly DEX volume by chain. Source: DefiLlama*

Gainers since March 5 on DEX trading volume were Arbitrum, increasing to 14% from 7%, and BNB Smart Chain, growing to 31% from 5.6%. One might argue that the success of the Ethereum network’s scaling solutions reflects bullishness for Ether’s price, but that relationship is not so direct.

Data shows pro traders turning bearish

As a result, ETH futures contracts in healthy markets should trade at a 5 to 10% annualized premium — a situation known as contango, which is not unique to crypto markets.

*Ether 3-month futures annualized premium. Source: Laevitas*

Ether professional traders have avoided leverage longs (bullish bets) since early April. Moreover, the current 1% ETH futures premium is on the edge of becoming negative, known as backwardation — if confirmed, this is an alarming red flag, as bearish demand dominates the scene.

In short, these three indicators — namely, the reduced TVL, record-low DEX market share and lack of leverage buying demand — signal the $1,900 resistance will be hard to break in the short term. For now, Ether bears are in control, favoring the odds of a price correction.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

Bitcoin-Based Decentralized Exchange Token Surges 158% in Just Seven Days, Defying Crypto Downtrend

May 13, 2023 The Daily Hodl

Cetus DEX’s IDO oversubscribed after Sui mainnet launch

May 8, 2023 Coin Telegraph

Cetus

According to developers, the fundraising goal of the initial DEX offering was reached in less than one minute.

Just hours after the initial decentralized exchange offering (IDO) for Cetus began on May 8, its hard cap target of 800,000 Sui (SUI) tokens has already been surpassed, with over 6 million SUI committed worth approximately $6.85 million at the time of publication. Developers claimed that the IDO reached its initial goal in less than 30 seconds after the sale went live.

Cetus is a DEX and liquidity protocol built on Sui and Aptos. The IDO, which is scheduled to take place from May 8 to 10, is still ongoing despite the initial target being reached. During the IDO, 20 million Cetus tokens (CETUS) are up for grabs out of a total supply of 1 billion CETUS. Users can commit SUI in exchange for CETUS at an exchange rate of 1 SUI to 25 CETUS. The rules and token metrics of the public sale, along with the price of SUI, would place the Cetus DEX at an initial valuation of $45.8 million.

The IDO has a hard cap of 800,000 SUI. According to developers, when the total commitment surpasses this amount, “Each purchaser’s final purchase amount accepted by the Seller will be a portion of their committed amount, calculated proportional to all the respective committed amounts from all purchasers in the IDO.”

Although IDOs can surpass their initial goals due to popularity, others can also reach this outcome simply by the way their public sale is designed, i.e. "surpassed" on purpose. Like their initial coin offerings counterparts, investments in IDOs are considered to be high risk and can be subjected to rug pulls, scams, or lack of traction thereafter.

A layer-1 blockchain created by former Meta executives, the Sui mainnet officially launched on May 3, along with listings of its Sui token. The SUI public sale took place weeks prior, with an offering price of 0.1 Tether (USDT) per SUI.

Immediately after the listing, the price of SUI opened at $4.50 apiece with a fully diluted market capitalization of $45 billion before plunging 75% to trade at $1.14 at the time of publication. Before the listing, Binance introduced Sui LaunchPools, where users could stake either BNB (BNB) or TrueUSD (TUSD) for a limited supply of SUI rewards. The LaunchPools reached nearly $4 billion in total value locked in just two days.

Magazine: Justin Sun’s SUI-farming sins, PEPE’s wild run, 3AC’s oyster philosophy

Arbitrum’s Chronos reaches $217M TVL with staking, becomes 8th largest DEX

May 4, 2023 Coin Telegraph

Arbitrum

Chronos set a new TVL milestone just seven days after its launch on the Arbitrum blockchain as DEXs draw traders amid regulatory uncertainty in the United States.

Decentralized exchange (DEX) Chronos set a new milestone on May 4, reaching $217 million in total value locked (TVL) at the time of writing, just seven days after its launch on the Arbitrum blockchain.

With the new TVL figures, Chronos ranks eighth among the largest decentralized exchanges, according to DefiLlama. In DeFi, TVL represents the funds held or staked within a protocol.

The TVL milestone was achieved during the first hours of the day after the protocol kicked off Epoch 1, which enabled Chronos (CHR) token emissions to liquidity pools. The initiation of Epoch 1 also allowed stakers to begin collecting rewards.

*Screenshot: Chronos (CHR) Total Value Locked. Source: DefiLlama*

Chronos debuted on April 27 to serve as a liquidity provider and automated market maker for the Arbitrum network, hosting core pools such as Chronos-Ether (CHR/ETH) and Chronos-USD Coin (CHR/USDC), both seeded with 2 million CHR tokens, along with Arbitrum-Ether (ARB/ETH), Ether-USD Coin (ETH/USDC), USD Coin-Tether (USDC/USDT) and Wrapped Bitcoin-Ether (WBTC/ETH) pools.

Decentralized exchanges are at the heart of DeFi and are showing signs of growth and maturity after 2022’s crypto winter. “After [the] FTX bankruptcy, the industry saw the real value of DEXs. Decentralization that DEXs bring matters more than ever," noted Charles Wayn, co-founder of Web3 community platform Galxe, explaining that DEXs and wallets will be the backbones of gaming adoption in the coming years.

Likewise, chief technology officer of Maverick Protocol Bob Baxley told Cointelegraph that the past year has served as a proof-of-concept for DEXs and DeFi. “After all, if you look at some major DEXs, on some days they’re doing more volume than Coinbase," he said, noting that the tightening regulatory environment in the United States is likely to benefit DEXs:

“If centralized on-ramps into the crypto ecosystem continue to get cut off in places like the United States, then we could see more and more people turning to DEXs for performing their trading.”

DEXs are peer-to-peer marketplaces where crypto traders transact without turning over their funds to intermediaries or custodians. Smart contracts power these self-executing transactions. However, as we’ve seen over the past few years, hacks and bugs are among the biggest risks of trading on DEXs.

“I suspect volumes for a wide variety of DEXs will eventually grow at an exponential rate, especially when the underlying blockchains like Ethereum continue to scale and, in turn, offer more throughput for lower gas prices," Brent Xu, founder of Web3 bond-market platform Umee, told Cointelegraph.

Magazine: Crypto regulation — Does SEC Chair Gary Gensler have the final say?

DEX

Ether price pressured succumbs to regulation and lowered network activity

Ether’s price looks poised to drop down to $1,560

Regulators signal their plan to further limit crypto intermediaries

BNB Smart Chain attempts to take a lead in DEX volume

Data shows pro traders turning bearish

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