Blockchain Bites: Avanti's New Money, DeFi Deepens and 'How Much Ether?'

Caitlin Long has a new take on money. Russia wants to de-anonymize crypto. And Coinbase wins in court. Here's the story.

'Cash equivalent'
CoinDesk’s Nathan DiCamillo breaks down how Avanti Financial intends to issue its programmable cash equivalent called Avit. This blockchain-based “commercial bank money” can be exchanged for dollars but is not pegged to it like a stablecoin. It’s also not a security token, or a digital representation of an investment that’s expected to generate returns. Issued on Blockstream’s Liquid, Avanti CEO Caitlin Long said it will likely be treated as a “cash-equivalent” by accountants and as cash by the Internal Revenue Service.

Open-source
The Linux Foundation Public Health Initiative (LFPHI), launched in July, will promote the use of open-source tech by public health authorities, during COVID-19 and post-pandemic crises. Tencent, Cisco and IBM are among the core members. The initiative is backing two pandemic-related apps – “COVID Shield” and “COVID Green” – that will bolster cross-jurisdictional coordination and privacy. General Manager Dan Kohn said, “It is totally possible to create an app that’s horrible for privacy that is open source, but what open source does is it stops you from just claiming that it respects privacy, because any expert could check on that.”

Precedent-setting
A California appeals court has ruled in favor of U.S. cryptocurrency exchange Coinbase over its decision not to support the Bitcoin Gold hard fork in 2017. Plaintiff Darrell Archer, who held 350 BTC on the exchange at the time, filed suit in 2018 alleging Coinbase had violated its contract agreement and effectively stole from clients by not supporting the fork. The court found there was no contractual agreement to support forks from third parties. Prominent industry lawyer Drew Hinkes tweeted the decision could set a precedent.

Another vehicle
New York Digital Investments Group (NYDIG) raised nearly $5 million for another bitcoin investment vehicle, in what could become its third securities listing this year. The asset manager raised $190 million for the NYDIG Institutional Bitcoin Fund LP in July and $140 million for a Bitcoin Yield Enhancement Fund the month before. It’s first, the Bitcoin Fund, launched in July 2019 with six investors who invested a total of $1.45 million at the time.

Crypto monitoring
The Russian agency charged with collecting data to counter financial crimes may build its own software to track cryptocurrency transactions and link them to users. The agency is seeking to reduce anonymity in crypto transfers through an artificial intelligence-based system for blockchain analysis, according to a letter from Rosfinmonitoring to Russia's Minister of Digital Development and Communications, cited by RBK. The project could cost more than $10 million to develop. A prototype for the project, dubbed "Transparent Blockchain," has already been developed by the Lebedev Physical Institute based on the Bitcoin blockchain.

Top shelf

• VPN usage surges as Belarus remains offline, following a contentious election
• The dollar value of Grayscale’s flagship Bitcoin Trust (GBTC) increased 90% to $3.5 billion in the first two quarters
• Inflation fears might be overblown, according to The Block’s Frank Chaparro
• Personal tokens are booming on Uniswap
• Bitcoiners launched a cryptocurrency relief fund for Beirut

Market intel

One DeFi trader nearly doubled his assets in a few minutes by slinging stablecoins. “In digital-asset markets, stablecoins like tether and USDC are supposed to represent $1 of value. But their prices often fluctuate on the pubescent trading platforms of decentralized finance,” CoinDesk’s First Mover team writes. In one Aug. 10 transaction on the Ethereum blockchain, a trader appears to have used a series of transactions in tether and USDC on the decentralized cryptocurrency exchanges Uniswap, Curve and dYdX to net a tidy $40,000 profit off a $45,000 initial investment.

Op-ed

Jill Carlson, co-founder of the Open Money Initiative, teases out the similarities between the latest Robinhood Rally and the last bitcoin bull market in her latest CoinDesk column. “Crypto markets in 2016 and 2017 have in many ways foreshadowed the stock market of today. There is inspiration there, but there are also lessons,” she writes. Perhaps the biggest of all: “Markets come and go, and when the bull turns to bear some – but not all – users will go with it.”

Tech pod

CoinDesk’s Will Foxley investigates ether’s supply after a debate between Ethereum and Bitcoin advocates sprung up last week. To cut the debate short: The total supply of ether is 111,562,994 as of publishing time, according to Messari. But the larger issue is the difficulty in verifying this. Ethereum full nodes are labor intensive and third-party scripts often miss important details.

Podcast corner

Former hedge fund manager Hugh Hendry joins the latest episode of The Breakdown to discuss why the Federal Reserve should be less conservative, the decade-long equities bull market and why Joe Rogan should chair the Fed.