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Decentralized exchanges

Israeli trading firm plans to remove Cardano [ADA] and Tron [TRX] by 2022

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In a new twist of events, Israeli trading entity eToro has decided to remove Cardano [ADA] and Tron [TRX] from its platform for US users, by the end of this year. According to the press release, the latest announcement meant that customers in the US would be unable to open new positions or collect staking rewards with regards to the two native tokens. However, the trading firm specified that it will facilitate users to close existing positions, they deemed fit.

With regards to the dates, the blog post revealed that the aforementioned delisting of ADA or TRX positions will commence from December 26, 2021. Along with that, staking for those crypto assets will close by 31st December. The trading entity said the decision to delist from its exchange was taken considering the current unfolding events in the regulatory environment.

The move raised eyebrows especially in the case of layer one blockchain Cardano which did not appear to be under the prying eyes of the regulatory bodies. In fact, a few months ago, Charles Hoskinson of Cardano joined hands with an analytics provider Coinfirm to ensure compliance with regulatory guidelines such as Anti-Money Laundering rules [AML] and Financial Action Task Force [FATF] recommendations. On the price front, ADA too has witnessed a steady surge and is currently the 6th biggest by market capitalization.

Crypto-Trading Firms under the radar

Lately, firms operating in the crypto industry have come under intense scrutiny from regulatory agencies in terms of delisting coins or terminating certain services. Earlier in September, Crypto exchange platform, Coinbase decided to pull the plug on its future lending project after the Security and Exchange [SEC] issued a warning to take legal action. Another case is the Ripple Vs SEC where the blockchain firm has been accused of selling $1.3 billion worth of the crypto asset XRP in unregistered securities offerings. Similarly, Privacy coin Monero is also facing the heat due to rising concern of being misused for illicit activities.

Nevertheless, the burgeoning growth of decentralized exchanges [DEX] and decentralized finance [DeFi] protocols have provided popular alternatives for those seeking to legally avoid such clampdowns.

Jack Dorsey’s Square discloses White Paper for a new Bitcoin DEX

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Jack Dorsey led Square released a White paper outlining the ambitious intention to build a decentralized Bitcoin [BTC] exchange protocol dubbed tbDEX. In contrast to other exchanges, the proposed decentralized protocol will not have its own governance token but will facilitate users to establish relations directly without the influence of any federation. Besides, there are plans to add more features that would further enhance it to become more decentralized in nature such as implementing know-your-customer [KYC] checks to users and similar region-specific regulations.

In addition to that, the white paper proposed to build blockchain analytic tools designed to monitor transactions on the platform. Such forensic solutions might bring their own set of controversies while revealing users’ identities and wallet addresses by authorities. However, advocates are of the opinion that such measures would be essential to prevent criminal and other illicit activities.

Another unique feature that caught the attention of many crypto enthusiasts was the discussion of chargebacks which are unavailable in most decentralized exchanges. For starters, chargebacks are payment amount that is returned back to a debit/credit card after a user successfully disputes a transaction or in other cases simply returns a purchased item. In the case of successful implementation on the tbDEX platform, the above process could potentially prevent irrecoverable damages endured by investors especially during decentralized finance [DeFi] rug pulls.

Square’s tbDEX key takeaways

Interestingly the white paper was debuted by Square‘s bitcoin-focused business unit called TBD that was created four months ago, this year. Delving further, the newly proposed exchange is a bid to reduce the gap between the fiat and crypto industries. In this way, the paper noted that it would ‘makes crypto assets and decentralized financial services more accessible to everyone ‘. As of now, Square is encouraging feedback on the white paper from the broader community on TBD’s newly created Twitter account. The authors further noted that,

This initial draft of the whitepaper is meant to establish a conceptual understanding of the high-level design of the proposed tbDEX protocol. It should not be considered complete or final. It represents a proposed design for public comment, Future revisions of the whitepaper will address incomplete elements and currently unforeseen issues or challenges.

Uniswap’s users can still bypass censorship of the main UI, trade restricted assets

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The largest decentralized exchange [DEX] Uniswap’s software development studio had earlier revealed restricting access to some tokens, including synthetic stocks and derivatives from the platform interface.

Over the past couple of weeks, several cryptocurrency firms such as Binance have removed their tokenized stock products. But Uniswap’s move is different than most centralized exchanges since it is only restricting access through its own interface.

Dodging Uniswap’s censorship

Uniswap Labs did not clearly mention the actual reason behind the restriction but in the official blog post, the studio had said that the tokens in question represented a very small portion of the overall volume on the Uniswap Protocol. However, it is important to note that there are several ways in which censorship can be bypassed. In fact, the users can still access these tokens through other portals on the DeFi platform that supports them. Parafi Capital’s Nick Chong also revealed that there are “a ton of alternative interfaces.”

Chong observed that the restricted assets accounted for a total of $5.9 million worth of volume over the past seven days which is around 0.076% of the decentralized exchange’s 7-day volume. He called it a “rounding error.” Chong also emphasized the need for bookmarking decentralized interfaces and mirror applications and asserted,

“The world needs decentralized interfaces. Wouldn’t it have been bad if all non-power user DeFi traders woke up one day and the Uniswap Labs interface was gone w/ no alternatives? This is a wake-up call! Bookmark the decentralized interfaces.”

A bad precedent

The latest move has opened a can of worms about the never-ending decentralization and the impact of regulatory oversight on decentralized finance [DeFi]. Interestingly, the development comes days after the United States regulatory watchdog announced that that they would increasingly monitor these types of products. Needless to say, the platform has been at the receiving end of severe backlash from the community.

Joey Krug, the co-CIO of Pantera Capital and co-founder of Augur said that even though he loves Uniswap, he said that the decision sets a bad example. Krug reiterated General Douglas MacArthur’s famous quote and claimed that this would not be the first case of defi censorship.

“History teaches with unmistakable emphasis that appeasement begets new and bloodier wars. It points to no single instance where this end has justified that means, where appeasement has led to more than a sham peace.”

DeFi’s TVL Surpasses $60 Billion As Institutional Interest Surges

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DeFi mania might have subsided, but the influx of capital into the ecosystem has not. Along with their centralized counterparts, these decentralized platforms are slowly becoming essential in attracting attention to many promising projects. It is needless to say that the market has grown by leaps. In fact, DeFi saw an astonishing increase in terms of the value locked by more than 50x in the past 12 months alone.

In yet another development, the TVL [USD] across various decentralized finance projects has surpassed $60 billion on the 16th of April. This was according to the latest chart published by DeFi Pulse.

The figure took a plunge a few times in between, especially in the first week of this month, but has made a strong recovery this week and was now found to be hovering quite close to its peak. Amidst the chaos of the ongoing bull run, institutional entries, the DeFi ecosystem has been quietly flourishing to levels never seen before.

DeFi
DeFi's TVL Surpasses $60 Billion As Institutional Interest Surges 3

Diving Deep Into DeFi

To put things into perspective, USD denominated volumes for decentralized exchanges [DEX] have increased by 65 times what they were this time last year. It was also found that the trade volume on these DEXs, denominated in USD, has risen more than 50 times what it was last year.

With this, the global crypto market cap has also appreciated over 10x since then. Decentralized finance’s adjusted growth rate was, however, down from 10x between the years 2019 and 2020. This was revealed by Bison Trail’s Protocol Specialist, Elias Simos who tweed that “DeFi is roaring back”.

Talking about the rise of the sector, Simos went on to add,

“If you told me in April 2020 that DeFi would be posting these kinds of numbers in a year, I would have told you maybe 2023. Yes, reflexivity plays a huge part in it all. But the growth rates are persistently high when you look at pockets that are somewhat insulated from it.”

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DeFi's TVL Surpasses $60 Billion As Institutional Interest Surges 4

The DeFi marketplaces are constantly shifting and evolving. On further gauging the space, it was that the space is anticipating yet another bull season with major asset management funds and high-street financial institutions are now getting involved. The launch of DeFi ETFs demonstrated the increasing interest among high-value clients, corporates and institutions.

Uniswap Reigns As Collective DEX Liquidity Soars To $10 Billion

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Decentralized exchange or DEXs are growing like never before. While Uniswap remained the undisputed leader.

The world of decentralized finance [DeFi] has consistently proliferated in prominence over the past year owing to a large part to the strong foundations established by decentralized exchanges [DEX]. These platforms have achieved a critical milestone. In the month of February, the collective DEX liquidity raked in a fresh high of a whopping $10 billion.

This was revealed by Researcher Rahul Rai on Messari’s latest edition. The Co-founder and Partner of Gamma Capital revealed that DEXs have surged to $72 billion in volume this February. Despite the rising numbers, automated market makers or AMMs have their own fair share of problems such as impermanent loss [IL], capital efficiency, slippage, gas costs, speed, and multi-token exposure that have caused impediments.

Nevertheless, over the last 24-hours alone, DEX volume was found to be at $1.56 billion. In addition, the figure was up by 18%.

DEX Market Share

Uniswap
Uniswap Reigns As Collective DEX Liquidity Soars To $10 Billion 6

Uniswap remains unbeaten as it accrued more than half of the total liquidity locked up in decentralized exchanges with a total value locked [TVL] of $5.4 billion. Despite its humble beginnings, Uniswap comprises an astonishing 63% of the total DEX volume. It currently accommodated approximately $6.5 billion worth of weekly trade.

TWJ had previously reported that Uniswap held a market share of 48% in January. According to the charts compiled by Dune Analytics, the dominance over the Ethereum-powered decentralized exchange realm was found to have been growing at a rapid pace

Following its trail was its controversial clone platform, SushiSwap whose market share was found to be a little over 14% with a volume of $1.55 billion.

Number of traders on Uniswap stood at 190,873 while that of SushiSwap stood at 10,698, at the time of writing.

In terms of market share, Curve, in the third spot, and 0x Native, in the fourth, were the next in line with a market share of 6.6%, and 5.3%, and weekly trade volume of $686 million and $552 million respectively.

Binance Smart Chain Welcomes New Protocol Under Its Belt

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Binance Smart Chain [BSC] has been bustling this bull market. The latest one to jump into the bandwagon is ‘The Graph’ which happens to be an indexing and query layer of the decentralized web.

According to the latest announcement by the exchange giant’s blockchain system has integrated with the indexing protocol, The Graph which is used for querying networks like Ethereum and IPFS.

The integration is set to allow the developers to create applications on Binance Smart Chain using subgraphs. The official blog post also revealed that The Graph protocol reportedly solves the problem of indexing for blockchain data.

The release further stated,

“Users no longer have to trust teams to operate servers and developers can deploy to reliable public infrastructure. BSC developers can master subgraphs using Graph Docs which will be supported via the hosted service.”

Besides, blockchains based on Binance Smart Chain are set to join ‘The Graph’s’ current support for Ethereum, POA, Polygon, and Fantom.

Owing to the latest integration, the developers can leverage the protocol to explore querying of subgraphs for increased data access. These ‘Subgraphs’ in question already exist for decentralized platforms [DeFi] such as Uniswap, Synthetix, AAVE, Gnosis, Balancer, Foundation, and many others..

Furthermore, the protocol will also assist the Binance Smart Chain to build all kinds of decentralized applications [DApps] for DeFi, non-fungible tokens [NFTs], gaming, marketplaces, and more.

One of the leading decentralized exchanges [DEX], PancakeSwap, has reportedly requested the integration of The Graph on BSC.

Binance Smart Chain: Sneak Peek

Launched in September 2020, Binance Smart Chain made a debut just in time DeFi revolution gained serious traction. As network fees went up on Ethereum, the conversation began to shift to alternative blockchains.

Since then activity on BSC has seen tremendous growth. In the last week of Feb, one of the largest DEX aggregators by trading volumes, 1inch went live on Binance Smart Chain as it branched out from the Ethereum network.

Binance Smart Chain DEX, Pancakeswap Welcomes Injective Protocol Under the Hood

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Pancakeswap, the decentralized exchange on Binance Smart Chain welcomed Injective Protocol [INJ] as the fourth Syrup Pool project on its platform. According to a previous announcement, Pancakeswap was planning for INJ farming for SYRUP stakers to start shortly. Following this, INJ Syrup Pool became a part of the DEX.

Additionally, Pancakeswap further revealed that INJ farming went live on the 21st of October.

This news comes hours after Binance announced the completion of the Injective Protocol lottery draw. Following this development, the crypto exchange listed INJ token and initiated trading for INJ / BTC, INJ / BNB, INJ / BUSD and INJ / USDT trading pairs.

 

Injective in Brief:

Injective Chain is basically a decentralized sidechain relay network that functions as a second layer derivatives platform, a trade execution coordinator [TEC], and a decentralized order book. The core consensus is Tendermint-based. Similar to how CAKE fuels PancakeSwap, INJ is the token used by Injective Labs to unlock many functions, including governance, staking rewards, liquidity mining, etc.

Backed by a prominent group of stakeholders including Pantera Capital, Injective Labs was recently selected as the next project to launch on Binance Launchpad, the exchange’s selective public sale platform. With this, Injective became the first Binance Labs incubated project to debut on Binance Launchpad.

Talking about the introduction of INJ on Pancakeswap, Eric Chen, co-founder and CEO of Injective stated,

“My team has been following the rapid growth of PancakeSwap for quite some time. We were thoroughly impressed by what Chef Hops and the team have built here for the DeFi community. We are excited to introduce INJ to this network in order to fuel its next phase of growth”

Pancakeswap’s Growth

The popular food-themed DeFi platform became one of the six blockchain projects, including AnySwap, Arkane Network, BakerySwap, Bitquery, and Proxima, which is set to receive $350,000 in grants through the firm’s $100 million funds. The Malta-based platform had previously noted Pancakeswap was the “number one liquidity provider” on its smart chain with respect to volume, number of active users, and contribution to gas fees.

Decentralized Exchanges Caught on the Radar of Volume Manipulation by Wash Trading

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A 2019 blockchain report by Bitwise concluded that most of the reported crypto trading volumes by centralized exchanges were fake. This was after analyzing data and trading patterns across different crypto exchanges and finding that the true market value of a major company’s bitcoin traded was only $273.A rather big difference compared to the daily volumes reported was usually hitting an ostensible $6 billion.

While this report had only been limited to centralized exchanges, analysts found out that decentralized exchanges were as well not immune to volume inflation. Whereas the latter are widely loved for their openness, lack of a central authority and lack of custody; all features that reduce the need for trust in their operations; instances of manipulation are also possible.

Fake Volume Manipulation through Wash Trading

Wash trading is one of the methods by which exchanges inflate their volumes. This is an instance where an individual trader acts both as the maker and taker of a trade order (simply trading him / herself). The method is popular among exchanges attempting to manipulate and inflate their reported data. Nonetheless, several exchanges have been noted for implementing reward schemes for wash trading such transaction fee mining incentives.

Self-custody services of decentralized exchanges remain one of their big winning factors. This is because it ensures transparency in the operation of the exchange. Usually, with the self custody ledger, all transactions are recorded on a public database. Hence, making it easier to detect misbehaviors as they take place across the exchange. It is therefore impossible that Decentralized exchanges have not noticed instances of wash trading on their platforms.

Binance DEX Wash Trading

For instance, wash trading has been taking place in DEXs such as Loopring and Binance DEX. Specifically the token Travala (AVA), a project backed by Binance is one of the tokens posting record volumes with Binance’s BNB pair. What signals wash trading on this pair, is its volume chart.

A normal volume curve can have astronomical volumes during high or low volatility periods. Peaks will appear only at times the market prices are moving in a specific direction. It is typically the metric that Bitwise uses to detect fake volume. In this pair therefore, the chart shows a uniform high even though the market is facing low volatility and during spikes, the volume plummets instead of surging.

Even while there are instances of wash trading on these platforms; it is not clear if the perpetrators will reap any benefits from the action. A Binance spokesman for instance denounced having a hand in wash trading and stressed exchange admins neither had the ability to control order flow on the platform.