Coinigy Insights Weekly Roundup #5

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Presenting the Insights team's Weekly Roundup #5! Apart from the original research pieces the Insights team works on, the Roundup series aims to highlight key pieces of work from the community as a whole. Along with this, we briefly describe key industry news developments that took place during the past week that community members may have missed. If you have any questions or think we missed something important, feel free to let us know!

Research and Insights

Understanding the November 15th Bitcoin Cash hard fork by Micah Lerner at Bitwise

  • The outcome of Bitcoin Cash's recent hardfork into two seperate chains (ABC and SV) was a highly anticipated event. But why was there so much controversy, and what caused the disagreements in the first place? Lerner eloquently describes what this fork entails and why members of the BCH community were pushing for CTOR (or not pushing for it). This is the perfect read for anybody wanting to understand what was going on.

The Next Step in Cryptoasset Valuation by investment firm HASH CIB

  • Everyday, new ways of valuing cryptoassets spring up, some far more accurate and reliable than others. As such, the idea of a fundamental method for valuing them is constantly evolving. Here, HASH CIB takes the relatively well-known concept of Network Value to Transactions (NVT) and theorizes a potential rework of it -- Network Value to Future Transactions (NVFT). Further, HASH CIB describes their in-house valuation approach known as Rational Network Value (RNV).

Institutionalization of cryptoassets by KPMG

  • Multinational professional services firm KPMG published their milestone report on where the firm sees cryptoassets are at and where they can go. Some key takeaways about KPMG's thoughts include:
    1. Cryptoassets are a 'big deal' and have huge potential.
    2. Cryptoassets are not a good store of value or medium of exchange (yet).
    3. Institutionalization is needed to take cryptoassets to the next step.

The yellow brick road for consumer tokens: The path to SEC and CFTC compliance by Latham & Watkins LLP

  • The regulatory and legal landscape of cryptoassets and blockchain-based services is changing on a daily basis. It is no doubt that before choices are made, a hard look needs to be had at how well existing regulation applies to them. Still, the SEC has shown that existing precedent can and will be applied to token projects. It is essential that these projects start seeking out relevant counsel to make sure traditional laws cover their tokens.

Mapping out the Security Token Ecosystem by Steven Zheng at The Block

  • Zheng has a knack for putting together well-researched maps of various aspects of the cryptoasset industry. Here, he shows how the security token ecosystem is building within the broader industry and what players are covering the wide range of possible services.

Visions of Ether by Felipe Gaúcho Pereira

  • As one of the most popular cryptoassets, Ethereum has one of the most active communities of users and developers in the industry. Pereira analyzes how this community has evolved over time in their sentiment of Ethereum and what narratives accompany this change over time. It is impossible to make a definitive statement on what Ethereum 'is' or is 'meant' to be, but as mentioned, that might be one of the most exciting things about it.

Crypto Market Cap: An In-Depth Review & Survey Of Emerging Alternatives by Nathaniel Whittemore & Clay Collins

  • Market capitalization is a common comparative method between two cryptoassets (and between more traditional assets too). But is this metric actually applicable to cryptoassets? Here, Whittemore and Collins lay out why it may not be with the main reasons including:

    1. Tokens are not stocks.
    2. Tokens have inflation schedules.
    3. It can be difficult to determine what the circulating supply of a given token is.
    4. The idea of 'Redemption Impact', essentially a measure of liqduity and how tokens can be easily impacted by large buys or sells.

As such, improvements to market capitalization as well as alternatives are presented.

Vision Hill Crypto Hedge Fund Returns: Third Quarter 2018 by Vision Hill Advisors

  • Over the years, hundreds of cryptoasset-focused funds have popped up. As the bear market kicked it in 2018, many of these new funds bit the dust. With so many different levels of trading/investment methods, network participation, and other strategies that these funds deploy, Vision Hill attempts to create benchmark for measuring performance. They develop a solid starting point, but even they note that the benchmark is not perfect (and even include a call for help in developing a better one).

How Does Distributed Consensus Work? by Preethi Kasireddy of TruStory

  • Anybody involved in cryptoassets will hear one word repeated over and over again: consensus. A particular kind of it -- Nakamoto Consensus -- is the key thing that makes distributed systems like blockchains in the cryptocurrencies we know and love chug along smoothly. While this may be well-known information to people who have been in the space for awhile, Kasireddy describes this idea of consensus, different approaches, byzantine fault tolerance, and other concepts fundamental to cryptoassets.

Industry News Bits

Bitcoin Cash (BCH), the long controversial fork of Bitcoin, had its own network hardfork and split into two chains between two factions: ABC and SV. Bitcoin Cash ABC maintains a strong upperhand in the post-fork hashwar and market activity.

Provinces in China have shut down two cryptocurrency mining farms so that the government would be able to conduct 'very strict' tax inspections.

European Central Bank Executive Board member Benoit Coeure had some choice words to say about Bitcoin, namely calling it the 'evil spawn of the financial crisis.'

Multinational financial services giant Bank of America won a patent for a method of storing clients' cryptoasset holdings on an enterprise level.

International Monetary Fund (IMF) Managing Director Christine Lagarde stated that while the idea of digital currencies may not be accepted widely at the moment, institutions should still be investigating them.

Cryptoasset exchange KuCoin raised $20 million in funding in its Series A round.

Fast casual salad chain Sweetgreen has raised a new $200 million round that brings its valuation to over $1 billion, and the company says it plans to explore blockchain use cases for its supply chain.

The United States Securities and Exchange Commission (SEC) is investigating SALT Lending, a decentralized lending platform, about their $50 million initial coin offering (ICO) in 2017.

Chip maker Nvidia saw its stock decline sharply after its third-quarter results showed the effects of an immense drop in demand for GPUs from cryptoasset miners.

Initial coin offering (ICO) projects Paragon and AirFox settled with the U.S. Securities and Exchange Commission (SEC). This move means a lot for other ICOs moving forward as these two targeted projects must a) register as securities, b) pay back investors, and c) pay civil penalties.