An auction to recapitalize MakerDAO (MKR) after the mid-March market turmoil successfully concluded on March 28, bringing in over $5 million worth of DAI. Crypto venture fund Paradigm Capital revealed in a March 31 tweet that it won approximately 68% of the auctioned tokens. The company had previously pledged to join a “backstop syndicate” and cover the entire system shortfall if necessary. Acting as a so-called “backstop,” the group would act as the buyer of last resort by purchasing the MKR tokens if their price fell to $100. (The auction’s starting price was $200 and the current market price is $288.)
Many prominent members of the decentralized finance (DeFi) community joined the syndicate, guaranteeing that Paradigm would not have been alone in its effort to preserve MakerDAO’s functionality. But the backstop was ultimately unnecessary because the auction found lots of bidders quickly. Some community members alleged that the Maker Foundation was purchasing the lots, as most of the bids came from a select few addresses. The foundation responded by saying that it provided “limited technical assistance to some bidders.” It is unknown if Paradigm, a major Maker Foundation investor, needed that assistance. Representatives from the fund did not immediately reply to a request for comment. The article will be updated when we learn more.
The Black Thursday market collapse had two sides of losses to it. At a protocol level, MakerDAO became undercollateralized by $5 million as the collateral bids for zero DAI clearly did not return a sufficient amount of DAI to Maker, compromising the stability of its peg to the U.S. dollar. Though in reality, market events broke the peg in the opposite direction as DAI traded at a premium. While the auction successfully recapitalized the system, the individual users who got liquidated lost more than the 13% that MakerDAO advertises, and they have not been compensated yet. Their total losses are between an estimated $1 million and $3 million. The MakerDAO community is currently in the process of deciding how much money token holders should return to the users, if anything at all.
A previously held poll concluded with the vast majority being in favor of a compensation, and more than 60% deciding to compensate all losses. Nevertheless, the discussion continued as the poll is not binding — Maker’s governance is finalized on-chain. The community is now deciding the wording for the on-chain voting, where MKR holders will express an opinion weighted by their stake in the system.
Some members are concerned of setting a “dangerous precedent” of having to compensate users for any loss, while maintaining that they were expected to react and know the risks. These debates highlight some of the differences between Maker users and the protocol’s maintainers. The users are not expected to be tech-savvy, while the software for joining the auctions requires programming knowledge in order to be used — at least for now.
Is Crypto Growing In Africa?
Crypto adoption is making significant advances in Africa, with crypto ownership, trade volume, and regulation all moving toward greater adoption. A recent report by Arcane Research and Luno found that Uganda, Nigeria, South Africa, Ghana, and Kenya are frequently among the top 10 countries by Google searches for the word “Bitcoin.” The report describes the continent as “one of, if not the most promising region for the adoption of cryptocurrencies,” emphasizing Africa’s combination of low existing crypto adoption alongside an “enormous” domain possibility. The firms emphasize that Africa exhibits a young population, frequent monetary crises and currency failures, large unbanked or underbanked populations, and expensive means of payment.
While Nigeria has long dominated the continent’s trade volume, the report found that South Africa has the highest percent of cryptocurrency ownership or use among internet users in Africa with 13%, followed by Nigeria with 11%. Worldwide, South Africa ranks fifth for crypto adoption among connected citizens. This past week saw South Africa post its second-strongest weekly volume on peer-to-peer Bitcoin (BTC) marketplace Localbitcoins, with nearly $1.65 million worth of BTC changing hands.
The surge in trade activity saw total P2P volume for South African trade edge out Kenya last week with $1.95 million in trade across Localbitcoins and Paxful. Last month, South Africa’s financial regulator issued a policy document asserting that crypto-assets and activities relating to virtual currencies “can no longer remain outside of the regulatory perimeter.”
Nigerian P2P trade is rallying to record highs, producing $9.2 million in combined weekly trade. Kenyan trade has also seen a recent spike, with Localbitcoins trade between BTC and the Kenyan shilling producing its second-strongest week on record for the third consecutive time. Morocco and Egypt have also posted record trade activity in recent weeks. The increase in volume across the continent has also seen P2P volume from Sub Saharan Africa beat out Latin America for the first time.
Blockchain May Play A Huge Role In VR-Powered Social Media
Virtual reality media platform, Sensorium, has announced its membership in the Global Blockchain Business Council, or GBBC — a Swiss-based non-profit industry association for blockchain. Sensorium will participate in GBBC’s upcoming virtual forum on May 28, which will see the firm’s director of technology Alex Blagirev discuss his predictions for how virtual social media will change the way that people interact online.
A GBBC representative stated that the convergence of VR and social media is already beginning to gain momentum, noting that major platforms such as Facebook “are providing users with new ways to share and experience content.” “Within this context, blockchain technology will likely play an important role in the creation of digital assets and an online virtual economy,” the representative stated. “Furthermore, blockchain technology could be used to protect ownership and copyright, as well as create new models of advertising in virtual worlds, much as it is already doing in the real world.”
Sensorium’s CCO, Brian Kean, emphasized the security benefits offered by distributed ledger technology, or DLT, stating:
“Identity theft, fake accounts, etc. all will be to a large extent eliminated as human participants in the socially-virtual world will be required to verify their identity via the blockchain.”
Kean also revealed that blockchain will also be used to “facilitate payment for created, third-party content.”
As a GBBC member, Sensorium will participate in a range of GBBC activities aimed at “advancing adoption of blockchain technology and educating regulators, policymakers, and business leaders on the benefits of the technology.” The two entities first began formally working together at the GBBC’s flagship event, Blockchain Central Davos, where Sensorium participated. “We closed out the evening with a special demo of Sensorium’s VR platform and a performance by GBBC Arts and Music Ambassador and Former Drummer for Guns N’ Roses, Matt Sorum,” added the GBBC spokesperson.
Yiedl Speaks About A Marketplace For NFT Rentals and Mortgages
Tokyo-based crypto startup Yiedl has announced that it will launch a non-custodial peer-to-peer, or P2P, mortgage and rental market for non-fungible tokens, or NFTs. Yiedl founder and chief executive Kohshi Shiba asserted that the platform will support a myriad of tokens as most real-world assets are tokenized. “For assets that have persistent external utility, I believe NFT is an appropriate token form,” Shiba stated, listing subscription rights, decentralized autonomous organization, or DAO, memberships, and intellectual property rights, and in-game items as examples of assets that will see increasing tokenization.
Yiedl will comprise a P2P marketplace in which users propose their preferred lending or rental terms. When another user fills the order, Shiba stated that “the agreement is set on Yiedl protocol and [the] transaction occurs,” — with access to the leased NFT being provided following the receipt of initial rent. If loan repayment is not met on time, the NFT is automatically returned to its owner, with the entire process taking place without intermediaries. “I believe Yiedl opens up a new horizon for the NFT ecosystem, and there will be massive new NFT owners in the future,” said Shiba. “Owning NFT will also become an investment since Yiedl enabled NFT owners to earn passive income with their assets.”
To facilitate the platform, Yiedl created a modified version of the ERC-721 standard that has been made available as open-source for other developers to adopt, dubbed ERC-X. Shiba stated that the new toke standard “added two user classes to the existing ERC-721 standard” in the form of “user and lien.” “The idea behind it is that by supporting three user classes as default, application developers can assume that tokens can be rent[ed] out or collateralized,” said Shiba. “With ERC-721, it was impossible, and it caused difficulties when NFT owners rent/collateralize NFTs as the ownership is taken over by the contract address or tenant.”
Many companies are betting that NFTs will emerge as a leading use-case for crypto assets, with blockchain gaming and asset tokenization promising to expose distributed ledger technology or DLT, to wider audiences. However, it is still early days for the NFT sector in terms of infrastructure, with a surprise auction for a limited run of CryptoKitties leading to the Winklevoss-backed top NFT marketplace Nifty experiencing downtime last week.
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