To accumulate knowledge, better than accumulating gold and silver
Well-known venture capital firm a16z crypto has sent a message to cryptocurrency founders: You can finally breathe a sigh of relief when it comes to regulation.
a16z noted in a new post: "The good news is that there is now a path for constructive engagement with regulators and legislation that can bring regulatory clarity, and you should all feel empowered to explore all the breakthrough products and services supported by blockchain, including tokens."
The post, written by a16z crypto's head of policy and regulation and its general counsel, expressed optimistic expectations for the relaxation of regulation and governance in the cryptocurrency industry under the new administration, but the "vast majority" of speculation about the details of this system is just "noise."
The post specifically notes that token issuance is an activity founders can feel more confident about: “For many of you who have been put off using tokens to distribute project control and build community due to concerns about overregulation, now you should feel more confident that your project can use tokens as a legal, compliant tool.”
Authors Miles Jennings, Brian Quintenz, and Michele Korver also mentioned a16z’s plans for the next year: “Next year, we will advocate for clear regulatory frameworks that promote and support innovation and decentralization… We will also soon release new guidance on the use of Decentralized Nonprofit Associations (DUNAs) that are designed to be U.S.-based, insulate token holders from liability, manage tax and compliance requirements, and promote more economic activity,” and mentioned Wyoming’s unique law on DAOs.
While the post is generally optimistic, the authors also note that some actions may still fall foul of regulators, “While we may have more flexibility to experiment, we must not forget that the fundamental regulatory principles that apply to blockchain systems remain the same,” and advise founders to “continue to focus on eliminating centralized aspects or reliance on trust in your projects, as these areas will continue to receive regulatory scrutiny.”
Overview of the Restaking Ecosystem in 2024
The restaking narrative first came to public attention at DevConnect 2023, and since then, its adoption has skyrocketed. The restaking industry has grown exponentially, from a single company, EigenLayer, to a thriving ecosystem with numerous restaking platform providers, operators, liquidity restaking protocols, and risk experts across various crypto networks.
● Restaking is still a new industry, and the community should pay close attention to second-order effects, market dynamics, and challenges that may be encountered. It is now clear that restaking has developed into a major sub-industry, and there is a lot of room for competition in the restaking space. From core platforms such as EigenLayer, Symbiotic, Babylon, and Jito, to liquidity restaking protocols and DeFi derivatives, each company has its own unique approach and vision. The restaking market proves that this is not a "winner takes all" market.
● Liquidity restaking protocols (LRTs) are often compared to liquidity staking tokens (LSTs), but they are fundamentally different. LSTs take on homogeneous economic risks, while LRTs deal with heterogeneous economic risks. LSTs have uniform risks associated with the underlying asset (i.e. ETH), while LRTs face multiple risks, such as specific AVS factors (such as inflation, slashing conditions, and technical risks), while supporting various collateral types and processing multi-currency payments.
● The entire year of 2024 may be seen as the year of the "Bitcoin Renaissance", with many teams enabling Bitcoin holders to expand Bitcoin's economic potential to protect the security of other networks without relying on third-party trust or bridging other chains. Babylon is leading this trend, unleashing the cryptoeconomic power of Bitcoin through strong technical expertise. A growing ecosystem has formed around Babylon, including emerging Bitcoin liquidity staking players such as Lombard, Solv Protocol, PumpBTC, etc.
● The Solana staking industry has not attracted much attention due to the widespread adoption of Ethereum, but it is steadily growing with a brand new concept. On Solana, restaking has gained traction, with Jito Network leading the way in this field, and companies such as Solayer, Cambrian, and Picasso also developing shared security projects. These initiatives are intended to fill some of the gaps on the path to full decentralization of the Solana native protocol.
● Oracles play a critical role in the rehypothesis space on multiple levels. They can be part of the core design of a rehypothesis platform while also addressing the growing need for accurate pricing of new crypto rehypothecation assets with different economic and technical characteristics. Additionally, oracle networks provide one of the most compelling use cases for shared security. Rehypothecation collateral allows for innovations beyond traditional oracle design, such as increasing network resiliency and service quality by increasing the cost of data operations, or creating new price feed models powered by a cost-effective rehypothesis data availability layer.
Potential impact of US election results on crypto markets
The outcome of the U.S. election could have a significant impact on the digital asset industry. The next president and Congress could enact legislation targeting cryptocurrencies and could make changes to tax and spending policies that affect broader financial markets.
Current polling data and implied odds from prediction markets such as Polymarket suggest that this is a tight race. However, as of October 15, these data suggest that Republican control of the Senate appears likely. Grayscale Research believes that a change in Senate control could be particularly relevant to cryptocurrencies, given the Senate’s role in confirming presidential appointments to key regulators such as the chairmen of the SEC and CFTC.
However, at the voter level, data shows that cryptocurrencies are a bipartisan issue of concern, with Democrats having slightly higher rates of Bitcoin ownership than Republicans. Additionally, specific candidates from both parties have expressed support for cryptocurrency innovation.
Regardless of which party is in control, Grayscale Research believes that comprehensive bipartisan legislation could be the best long-term solution for the U.S. digital asset industry.
Despite the many issues surrounding the 2024 U.S. election, the digital asset industry has captured some of the candidates’ time and attention. This can be attributed in part to the changing preferences of voters: in a national survey conducted by Harris Poll on behalf of Grayscale, we found that about half of likely U.S. voters were more likely to vote for a candidate who was interested in crypto than for one who was not. The growing focus on crypto also reflects the fact that U.S. rulemaking lags behind other countries, even as the industry continues to grow and innovate, making comprehensive legislation more urgent.
Below we consider potential election scenarios for the White House and Congress and their likely impact on crypto markets. For each outcome, we report the implied odds from Polymarket, a blockchain-based prediction market that has seen a sharp increase in adoption this year.
Most outcomes are highly uncertain: both polling data and prediction markets suggest a highly divided race. However, the data suggest that a shift in control of the Senate (from Democrats to Republicans) seems likely, which could be a particularly relevant change with direct implications for the cryptocurrency industry given the Senate’s role in confirming presidential appointments.
The upshot: A Trump victory could mean more supportive regulators and a larger budget deficit, both of which could provide a boost for Bitcoin and cryptocurrencies. But Trump’s fiscal policy plans would require congressional support, and tariffs could create market uncertainty.
The next president will set the cryptocurrency policy agenda, nominate key regulators, and drive broader economic policy decisions about taxes, spending, and tariffs. Former President Trump enthusiastically embraced the digital asset industry, expressing his desire to make the United States the "cryptocurrency and Bitcoin capital of the world." He also announced the launch of a cryptocurrency lending platform called World Liberty Financial, although details about the project remain limited.
Vice President Harris recently made more supportive comments about digital assets, explaining that her administration will "encourage innovative technologies such as artificial intelligence and digital assets while protecting our consumers and investors." According to media reports, her campaign will also announce plans to "protect" crypto assets and develop "a plan to establish rules for cryptocurrencies and other digital assets."
However, the Harris campaign provided fewer specific details, and it is worth noting that, as seen by some market participants and commentators in the cryptocurrency industry, the current Biden/Harris administration has taken an adversarial approach to industry regulation, including through a series of lawsuits, restricting access to traditional banking services, and vetoing bipartisan legislation. Therefore, Grayscale Research believes that the Trump administration is more likely to nominate regulators interested in supporting innovation in the crypto industry.
Bitwise: What does Harris' statement mean for BTC's 5% rise?
The cryptocurrency market is rising sharply on Monday afternoon. Bitcoin is up more than 5% in the past 24 hours, and Ethereum is up more than 7%. Altcoins are not far behind.
This is the biggest single-day gain in the cryptocurrency space in nearly two months. More interestingly, investors poured $555 million into Bitcoin ETFs on Monday, the biggest single-day gain in four months.
The rise is partly due to a plan unveiled on Monday by Democratic presidential candidate Kamala Harris, which, among other things, advocates for a smart regulatory framework for cryptocurrencies.
Reading U.S. media coverage of the proposal, you would think Harris has embraced cryptocurrencies with both arms.
Bloomberg writes: "Kamala Harris emphasizes capital access and cryptocurrencies to attract black men."
But in reality, the statement doesn't say much. Here is her agenda in full:
Let black men who hold digital assets benefit from financial innovation. More than 20% of black Americans own or have owned cryptocurrency assets. Vice President Harris appreciates that new technologies can expand access to banking and financial services. She will ensure that owners and investors in digital assets benefit from a regulatory framework that protects Black men and others who participate in the market.
That’s it. That creates a $5 billion market cap for Bitcoin.
I hate to spoil the fun, but that was… nothing! No mention of ensuring equitable access to banking services for crypto companies; no mention of changes in regulatory leadership; not even mild comments about “embracing innovation in the digital asset space” or “the United States leading the way in blockchain.”
In fact, Harris’ words read more like a Rorschach test than policy. If you’re against crypto, you’ll see Harris pushing for tight regulation of crypto in the name of “protecting” investors; if you’re for crypto, you’ll see Harris pushing for regulatory clarity and a path forward for the industry.
I’m not close enough to the campaign to know exactly what she means. I’ve seen people who claim to know the inside story argue both sides. From my perspective, you can only know one thing: the statement shows that Harris recognizes that crypto is important to an important demographic group, and she’s taking the time to point that out.
That’s good news. She knows that crypto exists, it’s important, and it’s not going away. But it wasn’t the wholehearted embrace that crypto advocates were hoping for.
Here’s the thing, though: That little bit of good news was enough to send Bitcoin up 5%. Enough to push over $500 million into Bitcoin ETFs. Enough to start people wondering if crypto will finally hit new all-time highs.
And that, to me, is the most interesting thing about today.
Regardless of what Harris actually said, the price action over the 15 days of October tells me there’s a lot of capital sitting on the sidelines waiting to get in once things are clear.
In last week’s memo, I talked about what it would take to push crypto to new all-time highs and for Bitcoin to break $80,000. In terms of the election, I mentioned that either a Republican win or a divided government would be fine. My comments implied we’d have to wait until after the election before we could hit $80,000 again.
After today, I’m not so sure. Monday’s rally tells me that if crypto starts to take off, people don’t want to get left behind. There’s a lot of dry powder on the sidelines. As soon as we get a whiff of clarity, I think we’ll move up quickly.
Telegram founder Pavel Durov posted on his personal channel to reveal the details of his arrest in France. He claimed that he was still in the Paris police station on August 27, 2024 and stayed there for three days without equipment or Internet access. It felt like an extreme digital detoxification, and he was also routinely questioned by the police for hours.
Pavel Durov also said that he remained calm during police detention, but the development of the situation caught him off guard because his lover Julia was pregnant. Fortunately, he was released the next night. He said that some bloggers spread rumors that Julia was a "Mossad agent", and others put forward the absurd idea that it was her posting on social media (rather than her charter information) that prompted the police to meet me at the airport.
There is still a long way to go to solve the problem of privacy autonomy
Reasons for the development of meme coins
The development and rise of meme coins can be attributed to a number of factors, which together constitute a unique phenomenon in the cryptocurrency market:
Social media and virality: The success of meme coins relies heavily on the power of social media platforms. Starting with Dogecoin, virality on social media has been key to these currencies quickly gaining attention and investors. Platforms such as Twitter (now called X), Reddit, etc. have become the main battlefields for the promotion of these meme coins. Through humor, cute images and simple concepts, meme coins easily resonate on social media and spread quickly.
Celebrity effect: Celebrities, especially big figures in the technology world or social media such as Elon Musk, have an impact on meme coins that cannot be ignored. Their tweets or comments can significantly impact the value and attention of these currencies in a short period of time. This is not only because they have a large number of fans and followers, but also because their words can often shape market sentiment.
Community and fan culture: The success of meme coins is inseparable from their communities. Compared with traditional cryptocurrencies, the meme currency community is more like a fan club. Members are not only investors, but also participants and promoters of this culture. The activity of the community, creative activities (such as art, videos, games), and collective decision-making (such as voting on development directions) enhance its cultural and economic value.
Market psychology and speculation: The cryptocurrency market itself is a highly volatile market, and meme coins further promote this speculative culture. Investors hope to earn high returns by participating early in a potential "next big thing." This psychology allows us to see huge price fluctuations even on meme coins that have no practical application scenarios.
Low threshold and entertainment: Meme coins usually do not have high technical thresholds, and their creation and promotion are more like a large-scale online game or social event. This lowers the threshold for participation, allowing more non-professional investors and young people to join, providing a broad user base for its development.
Economic model and incentive mechanism: Many meme coins attract investors and holders through specific economic models, such as rewarding early participants, setting deflation mechanisms, etc. Properly designed, these models can create a sense of urgency and scarcity in the market, driving prices up.
Market Liquidity and Bull Market: When the entire cryptocurrency market is in a bull market cycle, the liquidity of funds increases and investors are more inclined to try new investment opportunities. Meme coins, as a high-risk, high-return asset class, are particularly popular in this context.
To sum up, the development of meme coins is not just an economic or technological phenomenon, but also a cultural and social phenomenon. Its rise and development rely on the communication power of social media, celebrity effect, community culture, market psychology, low participation threshold and specific economic model design. These factors work together to allow meme coins to gain a niche in the cryptocurrency market and may continue to influence the evolution of cryptocurrency culture and economics in the future.
If you want to introduce users to Web3, free their hands first
When we think about how to attract traffic from Web2, some people have already explored the entrance to Web2 - mobile phones.
At present, there are two major channels that continuously introduce users to Web3, namely GameFi based on Telegram and DePin based on Solana mobile phones. The former is a reusable Web2 channel. After the CEX drainage is completed, GameFi's next hype will be aimed at dApps that are eager for traffic. Web3 mobile phones also have a broader imagination space. Mobile phones are not only a communication tool, but also an important carrier of financial transactions. Through mobile payments and banking applications, people can manage funds, pay bills and invest in financial management anytime and anywhere, which greatly improves financial convenience. At the same time, mobile phones are also the guardians of personal privacy, carrying sensitive personal data such as social records, photos, and health information. Therefore, security has become the core focus, and the fingerprint recognition, facial recognition, encryption technology and other functions integrated in the device provide users with higher privacy protection and security. In such a highly digital era, mobile phones are not only tools, but also an extension of digital identity.
Web3 phones redefine how users interact with the digital world by combining decentralized technology with strong security encryption to give users full control over their digital identity, data privacy, and assets. Unlike traditional mobile phones, Web3 phones support blockchain and decentralized applications (dApps), allowing users to conduct secure digital asset transactions and management directly on their phones, while achieving full control of private keys through non-custodial wallets. Its encryption function can effectively protect communications and personal data, reduce dependence on third-party platforms, and thus enhance privacy and autonomy. In a digital age that is gradually moving towards decentralization, Web3 phones represent a new direction for future secure communications, financial transactions, and personal data management.
Solana Seeker
On September 19, 2023, Solana Mobile officially launched the highly anticipated second-generation Web3 phone, Seeker, at the TOKEN2049 conference in Singapore. This Web3 mobile device, which integrates hardware and software, is designed to provide users with a safer and more convenient encrypted digital experience.
Seeker's main features:
l Seed Vault Wallet: A mobile-first wallet developed in partnership with Solflare that seamlessly integrates Seed Vault for self-custody.
l dApp Store Optimization: Updated dApp Store to provide more convenient reward tracking and navigation.
l Seeker Genesis Token: Each Seeker is equipped with a soul-bound Seeker Genesis Token to enjoy rewards, access rights, and content.
l Developer Ecosystem: Attracts a large number of developers and projects to join, providing Seeker with a rich application ecosystem.
Highlights of Seeker:
AI Integration: Use Alethea AI to generate tokenized AI agents to enable new ways to interact and make money.
Games and Assets: Provides a wealth of Web3 games and exclusive assets, including limited edition assets and rewards.
Airship: ZK-Compression Tool: Reduces airdrop costs by 4,000 times, enabling more users to participate in airdrop activities.
Factors required for the success of Web3 mobile phones
Objectively speaking, the ultimate development goal of Web3 mobile phones is network freedom and security, while ensuring privacy. This requires long-term infrastructure construction. Currently, several Web3 mobile phones have not made breakthroughs in network connection and security (satellite communication). Before accumulating enough market scale, the functions of Web3 mobile phones will be very limited. They can only be regarded as the evolution of hard wallets. Even in most regions, their use is still restricted, such as network registration, etc. However, this does not prevent them from becoming a track without a ceiling. After all, in the case of the decline of economic globalization, major regions are doing things that are involuted but isolated from each other.
Commercial value is the second major factor in the success of Web3 mobile phones. The strong expectation of airdrops is the reason for users to consume, and it is also the core advantage of differentiated competition with traditional mobile phones. In terms of quality experience, it can be aligned with traditional mobile phones. After all, as mentioned above, consumers' current expectations for Web3 mobile phones are only the evolution of encrypted wallets. If the Web3 encrypted world + X Phone physical reality world are combined, the scenes catalyzed by freedom may trigger deeper and more extensive innovations.
The third factor is AI integration. Even mobile phones can be used as distributed computing and verification nodes. At present, in terms of AI competition, Web3 mobile phones and traditional mobile phones are at the same starting line. If the production relationship advantages of Web3 are used properly, it may also lead traditional mobile phones in AI performance and experience. Seeker and CoralPhone both integrate AI functions.
Conclusion
There are two positive changes in the traffic thinking of the crypto world. One is the Web2 channel based on Telegram GameFi, which not only delivers users to CEX, but also to project parties. In the 2.0 stage of TG GameFi, its economic model needs to be changed so that it can replace task platforms such as Galxe and become the first entry point for Web3 users. The other is the mini DePin represented by Solana mobile phone, which directly focuses on the entrance of Web2.
The airdrop value of Solana's first-generation mobile phone has exceeded its price. MEW, MANEKI and BONK are worth nearly thousands of dollars, which is also the reason for the surge in second-generation bookings. Due to Solana's active ecosystem, the airdrops available on mobile phones are also very sustainable, making Web3 mobile phones likely to gain more market share, thereby redefining people's digital identity at the entrance and forming a new value network. Previously, Web3 was mentioned at the level of financial applications and products, while Web3 mobile phones can reach a wider user base, making Web3 rise to the network level.
At present, the motivation for Web2 social platforms to transform into Web3 is relatively low, and they will not actively open user data to Web3 applications. The way Web2 maintains its market share is to rely on the monopoly supported by capital VC. If mobile phones can become the entrance to Web3, they will be expected to change this situation and gain more user support.
It is worth noting that Web3 mobile phones need a long development cycle, and sustainable commercial value can push this track further, but mobile phones are the first stop for users to obtain encrypted privacy services, communication services and wealth management services. Everyone can keep a long-term focus on this track. Finally, Web3 mobile phones should not ignore modular design. As an encrypted entrance, they should pay attention to fairness and decentralization in the process of providing services such as hosting.
a16z Accelerator Project Analysis
As a bellwether in the crypto space, a16z Accelerator has been leading the industry innovation. This fall, a16z selected 21 of the most innovative projects from many startups around the world, covering multiple fields such as artificial intelligence and decentralized finance. This article will analyze representative projects to reveal the future development trend of the crypto market.
Project Overview
Anera Labs-Building a Liquidity Infrastructure that Unifies All On-Chain Liquidity
Anera Labs is a liquidity infrastructure built for user intent, introducing a new concept in decentralized systems. Instead of specifying specific operations, users express the results they want through signature conditions. This allows specialized solvers to determine the most efficient way to achieve intent, separating "what" from "how".
jJ2qDmVGd370zbdtk8DGbzRcx4qKZPoTwB6G3xmF.png
Anera Labs uses two auction mechanisms to activate liquidity: first-come, first-served (FCFS) and request for quotation (RFQ). FCFS prioritizes speed and will accept the first qualified bid regardless of price. RFQ, on the other hand, allows competition between fillers, potentially resulting in better prices, but takes more time.
Fillers play a vital role in these protocols, acting as intermediaries between users and the network. Their competition drives better execution quality and lower user fees. However, the potential for censorship by protocols and fillers remains a concern in decentralized systems. Protocol censorship occurs when off-chain components are involved in the execution process, introducing centralization and potentially compromising the fairness of the system. Filler censorship occurs when fillers selectively refuse to service certain orders, limiting user choice and potentially getting into financial difficulties.
Blocksense - Supporting the creation of oracles that can leverage internet data and CPU/GPU computing
BlockSense is an oracle network designed to overcome the limitations of traditional data feeds on blockchains. By leveraging zero-knowledge proofs and a decentralized network of nodes, oracles are made more efficient, secure, and transparent.
BlockSense's Merkle tree-based extension enables cost-effective data publishing and access. Flexible fees and potential chain subsidies promote the development of the DeFi ecosystem. At the same time, anyone can create a data feed, become a data provider, and access the entire world of data. Cryptographic mechanisms also ensure data integrity and minimize trust requirements. Guaranteed data availability and censorship-proof.
Cork Protocol - Risk Pricing Protocol to Accelerate On-Chain Credit
Cork is a protocol designed to simplify the creation and trading of pegged asset collateral swaps. Similar to credit default swaps, Cork's depegged swaps allow users to hedge against volatility in various markets in DeFi.
9bTRcen44xzt4EHfLEiVVSYC95i664aZ5Jt3rFVJ.png
Cork users deposit redeemable assets (RA) into the Cork Pegged Stability Module (PSM). The PSM creates depegged swaps (DS) and collateral tokens (CT) for specific pegged assets (PA). DS holders can redeem their PA for RA during depegging events. DS and CT are traded on the AMM, setting prices and returns for buyers and underwriters. At the same time, the liquidity vault provides passive income for liquidity providers.
Cork's PSM ensures that users can redeem their original principal even in the case of decoupling. And provide cheaper pricing and rewards for liquidity providers. Users can buy, sell and hedge their positions freely. Cork provides a solution for managing risks and maximizing returns in the DeFi ecosystem.
Kuzco-LLM Inference Market
Kuzco is a decentralized GPU cluster based on the Solana blockchain, which aims to provide efficient and economical inference services for large language models such as Llama3, Mistral, Phi3 by utilizing idle GPU resources contributed by network participants. Users can easily access these models through an OpenAI-compatible API. Kuzco's distributed architecture enables it to fully utilize the computing power of the network to achieve inference of large-scale models. At the same time, users are incentivized to contribute idle resources through a reward mechanism.
OpenGradient-Building a blockchain designed to bring world computing to the chain
OpenGradient is building an EVM-compatible blockchain network that aims to become a scalable and secure execution layer for AI.
L9Mf9fLww140eElJH6476synJS6NQqTz0v8AcKB7.png
Since OpenGradient Network provides direct access to inference AI models via pre-compilation in smart contracts, it is able to maximize the composability of smart contracts. Powerful use cases can be created by simply stringing inference calls to different models in smart contracts.
As for interoperability, since OpenGradient is an EVM-compatible network, smart contracts on OpenGradient are able to interact with contracts on other chains through cross-chain queries and cross-chain calls facilitated by major cross-chain solutions. The OpenGradient team is also planning an ERC to build a future architecture for how on-chain agents and models interact with each other on EVM-compatible networks.
PIN AI - Building an open platform for personal AI (data + agents)
The PIN AI platform aims to revolutionize the field of personal AI by combining cryptoeconomic security with privacy, ownership, and a variety of applications. Unlike existing AI solutions, which are often limited by data access and privacy issues, PIN AI leverages blockchain technology to create a secure and open network for AI services.
JtiQpwke3Es8faFqjqWXXYpCpRcBkPdLTp4hG79b.png
The PIN protocol consists of three key components: data connectors and on-chain registries, private storage and computing layers, and agent links and intent markets. These components work together to ensure privacy, data ownership, and effective matching of user intent with AI agents. PIN AI's architecture is designed to balance privacy, performance, and personalization through its hybrid model and personal index. By combining on-device processing with cloud-based computing and leveraging structured knowledge graphs, PIN AI provides contextually relevant and personalized responses while maintaining user privacy.
The PIN economy is driven by a two-sided market where users and their personal AI can access services from external AI. Data connectors and agent services play a vital role in facilitating this exchange and are incentivized through the PoE (proof-of-engagement protocol).
Term Labs - DeFi lending platform that matches borrowers and lenders at fixed rates
Term Finance Protocol is a transparent and scalable non-custodial fixed-rate liquidity protocol for digital assets.
Supports on-chain non-custodial fixed-rate mortgages (Term Repos), which are modeled similar to tri-party repo arrangements commonly seen in TradFi.
Borrowers and lenders are matched through a unique periodic auction process (Term Auctions), where borrowers submit sealed bids and lenders submit sealed offers, which are used to determine the interest rate that clears the market for participants in that auction. Participants who bid above the clearing rate will receive a loan, and participants willing to lend below the clearing rate will provide a loan, with the interest rate in each case being the market clearing rate. All other participants' bids and offers are referred to as "pending".
At the end of the auction, borrowers receive loan proceeds and lenders receive ERC-20 tokens (Term Repo tokens), which lenders will redeem for principal and interest at maturity. The protocol smart contract services these transactions by recording repayments and monitoring collateral health and liquidation.
4SFudLzBGj0lw5mmsTN57Q5DCCz7PpMgxxiC7CAc.png
Term supports the deployment of term repo. Term repo is a specific on-chain implementation of fixed-rate collateralized loans modeled after tri-party repo in the TradFi environment. The main features of term repo include:
Fixed term, fixed rate: term repo involves fixed-term, fixed-rate loans, rather than open-ended floating-rate loans common in DeFi. Borrowers must repay the loan on the maturity date or repurchase date, and must repay within the repurchase window.
Irredeemable: term repo agreements are non-redeemable, i.e. lenders cannot redeem before maturity or repurchase date, and borrowers cannot repay.
Collateralized: term repo is designed to meet short-term liquidity management needs and is overcollateralized by liquid digital assets (e.g. wBTC, wETH, USDC, USDT).
Non-custodial: collateral for term repo is not held in custody, but is locked in a decentralized smart contract that can be verified in real time by both borrowers and lenders. At the same time, collateral re-pledge is not allowed, and only users can access it using their private keys and strictly complying with the terms of the smart contract arrangement. Each repo has a separate repo "locker" associated with it.
Auction mechanism: The interest rate of the repo is determined by the auction mechanism, the so-called "periodic auction". Each repo has its own "periodic auction".
Summary
Through the a16z accelerator project, we can clearly see two major trends, namely infrastructure innovation and the deep integration of AI and blockchain. The crypto industry is expanding from simple digital currency transactions to a wider range of applications. With the continuous advancement of technology and the improvement of supervision, cryptocurrencies will gradually integrate into our daily lives and bring more innovation and change to society.
"We've had two more months of good inflation data since the last Fed meeting, and that's what the Fed asked for," Claudia Sahm, a former Fed economist and chief economist at New Century Advisors, said in an interview on Friday.
The question now, however, is how big a move the Fed should make. Financial markets, a compass for where the central bank is headed, haven't been helpful on that front. Futures markets focused on a 25 basis point rate cut for much of last week, but on Friday traders shifted to almost equal odds of a 25 or 50 basis point cut, according to CME's FedWatch tool
Sahm is among those who think the Fed should go bigger. "The inflation data alone should be enough for us to cut 25 basis points next week and have a series of rate cuts after that," she said. She believes the federal funds rate is already above 5% and has been fighting inflation for more than a year. "The battle is already won, and they need to start cutting rates," she said.
That means a 50 basis point cut from the start to prevent a potential labor market recession.
"The labor market has softened since last July, so part of this is a recalibration," she said. "We are getting more information. Fed officials need to make this 50 basis point cut and be ready to go further."