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‘Robust’, ‘Stable’ Are Not the Words To Describe DeFi, Crypto

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‘Robust’, ‘Stable’ Are Not the Words To Describe DeFi, Crypto

    • Governor of the Bank of Spain said today’s crypto and DeFi cannot be linked with “robustness” and “stability.”
    • Basel Committee is still uncertain about how to deal with DeFi and cryptocurrencies.
    • In 2019, the committee released a paper discussing three guiding principles.

Today’s crypto assets have a long way to go before getting associated with words such as “robustness” or “stability,” says Bank of Spain Governor Pablo Hernández de Cos at the International Swaps and Derivatives Association (ISDA) annual meeting, saying it is still unknown if today’s DeFi and crypto ecosystem “will deliver net benefits to society or not.”

Chairman de Cos explained, on Thursday, that the Basel Committee jury is still uncertain on how to “best” deal with DeFi and cryptocurrencies despite a deeper understanding of the technology today.

“The jury is still out when it comes to ascertaining how best to harness their oft-cited promises and benefits while mitigating their risks and safeguarding financial stability.”

Before fully utilizing DeFi and crypto, de Cos explained that institutions should first explore how many existing problems can be better solved by existing financial architecture. He cited the G20 roadmap that was made to help enhance cross-border payments before cryptos got involved.

He also questioned how a decentralized financial system can be achieved in practice, since “some level of centralization is inevitable and structural aspects could lead to a concentration of power”.

Thirdly, the chairman suggested that the “noise” surrounding crypto should be filtered, pertaining to shilling and other bullish and bearish statements that could affect crypto prices.

“Most cryptoassets today cannot be associated with terms such as ‘robustness’ or ‘stability’,” stressed de Cos. “It’s not surprising to see that most central banks are exploring central bank digital currencies (CBDCs) as a potentially more promising route.”

To address the committee’s uncertainty of whether DeFi and crypto will deliver net benefits to society, de Cos reiterated its mandate to strengthen the regulation, supervision, and practices of banks worldwide.

In 2019, Basel Committee released a paper that discussed three high-level guiding principles. These were simplicity and caution, same risk, same activity, same treatment, and minimum standards.

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Top 3 cryptocurrencies that are faring the best in the 2022 bear market

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Top 3 cryptocurrencies that are faring the best in the 2022 bear market

The crypto market has been in decline over the past six months with its valuation dropping from over $3 trillion in November 2021 to $1.23 trillion in May 2022.

Fears over persistently higher inflation, the Federal Reserve’s hawkish response to it, and the ongoing conflict between Ukraine and Russia prompted investors to limit their exposure to riskier assets. Also, their increasing appetite for the safe-havens, such as the U.S. dollar, weighed down demand for some of the top cryptocurrencies and U.S. equities.

XMR/USD weekly price chart. Source: TradingView
LEO/USD weekly price chart. Source: TradingView
BNB/USD weekly price chart. Source: TradingView

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Understanding Tether’s Peg and Reserves and How They Work

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Understanding Tether’s Peg and Reserves and How They Work

  • How to maintain Tether’s stability.
  • Tether’s reputation and transparency.
  • Financial reserves of Tether are solid, cautious, and liquid.

Given that Terra’s peg has fallen, it’s reasonable to wonder what prevents Tether (USDT) from following the same path.

USDT and Terra utilize distinct designs, mechanisms, and collateral. Terra was a computable stablecoin that wasn’t fully collateralized. It includes a variety of stability-inducing mechanisms, but they all failed in the end.

USDT is fully collateralized, with no credit risk. Each USDT can be exchanged for dollars through Tether, ensuring that when the price falls below $1, investors can acquire USDT at a discount and redeem them with Tether to make a profit.

During periods of high market volatility, the price of USDT might drop below or exceed $1. This does not imply that the peg has been broken. It indicates an increased level of liquidity than what is available on the order books of that exc …

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LTC Social Engagement Jumps 21% After MimbleWimble Activation

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LTC Social Engagement Jumps 21% After MimbleWimble Activation

  • The Litecoin community has recently approved the activation of the MimbleWimble protocol on the LTC mainnet.
  • This upgrade has led to a massive jump in overall Litecoin social engagement.
  • So far, Litecoin’s social engagement has increased by 21%, and even hit its highest point in the last three months.

The Litecoin community has recently approved the activation of the MimbleWimble protocol on the LTC mainnet.

MimbleWimble is a privacy-focused decentralized protocol that enables users to conceal transaction data with its confidentiality feature while providing a foundation for other blockchains to improve the usability of their token.

The Mimblewimble Extension Block (MWEB) hides three critical pieces of information: sender address, receiver address, and the amount of crypto sent.

With the Mimblewimble Extension Block, users can opt-in to confidential transactions. The goal of this is to enhance the visibility of Litecoin as a fungible currency that can be used for real-world transactions by lowering fees and adding privacy, throughput and scalability.

This upgrade has led to a massive jump in overall Litecoin social e …

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