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Great opportunities in crypto can come at a price

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While 2020 will go down as one of the toughest the world has faced collectively in many years, the success of the decentralized finance sector stands out as a major milestone for the cryptocurrency community.

Amid the ongoing COVID-19 pandemic, economies have shuddered, and governments and financial institutions have had to introduce drastic monetary policies and stimulus packages in order to revive the global marketplace. As a result of this uncertainty and monetary policy, alternative asset classes such as cryptocurrencies have become an attractive target for investors, businesses and institutions.

2020 has been a big year for Bitcoin (BTC) in particular, with the preeminent cryptocurrency having reached levels that have not been seen since its infamous bull run in late 2017. Perhaps more telling is the fact that Bitcoin has broken a new record for the overall market capitalization.

This period of success has been accompanied by a DeFi boom, which has drawn some parallels to the initial coin offering craze that tagged along as Bitcoin approached the $20,000 mark for the first time in history some three years ago.

DeFi is its own beast, though, and has laid down some impressive numbers in 2020. Its popularity has increased due to a surge of activity and value move into the Ethereum ecosystem and the greater blockchain and cryptocurrency space. At the same time, there are concerns that the DeFi space is going to lead to a large number of users losing funds in projects that don’t work out for whatever reason. This may subsequently hamper any further development potential and the overall image that the sector is trying to build.

The state of the space

The DeFi space has recorded some significant milestones in 2020, as users have clamored to make use of the yields being touted by various platforms and protocols. August 2020 marked a significant milestone for the DeFi space, as the market surpassed $7 billion in value locked into platforms making up the ecosystem, and currently stands at a smidge over $14 billion.

The rise of DeFi applications also added some impetus to the rising price of Ether (ETH) in recent months as investors climbed into the yield farming sector. At the time, decentralized applications running on the Ethereum blockchain accounted for just under 50% of the total value of the Ethereum ecosystem.

As this data shows, the utility and worth of DeFi platforms are clear to see by the sheer amount of value funneling into various platforms. With this kind of interest, the pertinent question is: What will drive adoption and greater use of DeFi projects and products going forward?

Alexey Koloskov, CEO and co-founder of DeFi liquidity provider Orion Protocol, told Cointelegraph that a central cog in the future of DeFi will be integration with centralized exchanges and platforms. Koloskov believes that DeFi projects and decentralized exchanges, in particular, have arisen to provide traders with access to liquidity while retaining ownership of their assets, but they often lack the liquidity, trading pairs, user experience and features traders are looking for:

“Critical to the sustainability of the industry will be providing access to the benefits and opportunities across the market, but in a totally decentralized way: The most valuable opportunities will come from hybrid solutions bridging the gap between the centralized and decentralized worlds of crypto.”

Ish Goel, a founding member of DeFi prediction market PlotX, told Cointelegraph that although scaling continues to be a challenge that is slowly being resolved, two major obstacles need to be addressed to drive use and improve offerings from DeFi projects in user experience and transaction scaling, adding: “Projects need to further simplify their app UX to make it easy for an average user to interact with non-custodial community protocols that have never existed before. An average user doesn’t want to use MetaMask.”

Tackling tough perceptions

While the utility of DeFi platforms has been proven by the sheer amount of value flooding into the space, this has also been an area of criticism for the ecosystem. Yield farming has become a hot topic, as cryptocurrency users with significant holdings of various tokens stand to make sizable returns by staking their holdings to earn yield.

While this has made some users a neat profit on their investments, many more have been fleeced by half-cooked projects and outright scams looking to capitalize on the hype of the space. It’s the proverbial dark side of DeFi, and it’s not lost on our industry insiders. Also, even when the DeFI projects seem to come from prominent developers or ride on the wave of social media hype, investors could still end up in tears over their lost funds.

Goel provided a more optimistic take on the yield farming phenomenon, suggesting that the positives outweigh the projects that have ended badly for some users: “Most DeFi projects are still very young, and at this stage, it is important for them to bootstrap liquidity and kickstart an aligned and engaged community.” He further added that “users are making money on these projects, but that plays a big role in helping bring initial traction for the project if they have a legit product. It’s a win-win in most cases.”

Koloskov agreed that DeFi has become somewhat synonymous with yield farming, and what started as a boon for the attraction of capital to the space began to tarnish the sector due to unsavory market practices and scams: “The execution revealed itself as little more than novel names, coding and viral marketing — centered around speculative price value with little consideration for real utility value through useful technology.” Koloskov noted that this was similar to what led to the demise of initial coin offerings and that it’s slowly happening to the DeFi space:

“The open-source nature of DeFi allowed for a host of ‘me too’ projects, but with the goal of exit scams instead of building a decentralized future of finance. But while the ‘bubble’ may show signs of bursting as a result, the technology that underpins it is here to stay: democratized access to global finance.”

Weighing up the hype

Having addressed the potentially negative perceptions of yield farming within the DeFi space, there is still no denying that the ecosystem is delivering value to users. Data from DeFiPulse estimates that the amount of value locked into various projects and platforms in the ecosystem has been growing exponentially. Goel admitted that the hype around DeFi may well be short of the actual utility that is being delivered by various platforms and projects. He added further:

“DeFi protocols are changing the definition of finance as it stands today. People are transacting billions of dollars worth of digital assets on protocols that are open-source. Finance is being democratized, and this is just the beginning of a new generation of businesses that are community-driven.”

Meanwhile, Koloskov believes that the utility of DeFi platforms means that anything can potentially be tokenized, which could disrupt the global finance sector and various industries. He reiterated that collaborations between industries will be key in driving the future of DeFi and a new financial system: “A successful decentralized financial system won’t be measured by its ability to exist separately to centralized financial institutions, but one that is able to act as an intermediary between the worlds consumers know and the immature world of DeFi.”



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Crypto.com Lands Australian Financial Service License (AFSL)

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The Crypto.com company currently serves up to 5 million customers providing them with a powerful alternative to traditional financial services.

Payment service provider Crypto.com has secured the Australian Financial Service License (AFSL), further advancing the platform’s reach to expand its services to the Australian populace. According to a press release shared with Coinspeaker, Crypto.com secured the Australian Financial Service License following the acquisition of The Card Group Pty Ltd, a New South Wales payment firm that is licensed by the Australian Foreign Investment Review Board.

Finding favor with regulators around the world has proven to be a bit of a task for cryptocurrency-based firms around the world. With different country’s regulators having different regulations when it comes to cryptocurrencies, it is apparent that a company that thrives in one nation may experience hurdles somewhere else. The move by Crypto.com to secure the Australian Financial Service License through the acquisition of a homegrown company is one strategic move that is worth applauding.

“We are extremely proud to secure an AFSL and look forward to having a direct relationship with our Australian customers. We are committed to accelerating the world’s transition to cryptocurrency; working within the regulatory frameworks of the markets we operate in is a key pillar of achieving our mission,” said Kris Marszalek, co-founder, and Chief Executive Officer (CEO) of Crypto.com.

As the company noted, securing the AFSL will make it possible for the company to roll out its crypto-backed cards in Australia. The company also noted that the AFSL license will afford it the opportunity to have a direct relationship with the Australian regulators and the broad financial ecosystem. “Crypto.com looks forward to working with local network schemes to speed the development of new features and functionality of products and services available to Australian customers,” the company noted in the shared press release.

Crypto.com AFS License, Another Milestone Recorded

Since its establishment in 2016, Crypto.com has worked based on its simple principle that everyone has the right to manage their own finances particularly as it relates to their money, data, and identity. The firm has experienced unique milestones as it has rolled out unique products and offerings in all of its bases of operations in line with this principle and the AFS license is yet another Crypto.com milestone recorded.

The role of Crypto.com in the crypto space is vital. The company currently serves up to 5 million customers providing them with a powerful alternative to traditional financial services through the Crypto.com App, the Crypto.com Visa Card, the Crypto.com Exchange, and Crypto.com DeFi Wallet. 

With the latest entry into the Australian market, Crypto.com is billed to promulgate its solid foundation of security, privacy, and compliance.

You can read more updates from the crypto space here.

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Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.



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Ripple’s XRP sees explosive 1,151% trading volume spike in November

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Month-over-month, XRP saw a 1,151% surge in trading activity in November on the eToro investment trading platform, according to the company’s latest report. This comes as XRP price rallied to $0.92 on Coinbase at its monthly peak and closing the month with a 283% gain at around $0.61.

Top 10 traded cryptoassets Source: eToro 

Spike in retail interest, trading activity

Bitcoin (BTC) was nearing $19,000 for the first time since December 2017 when large market cap altcoins like XRP started to surge in November.

XRP/USD daily chart (Coinbase). Source: TradingView.com

The optimistic market sentiment around Bitcoin likely led traders to explore higher-risk short-term trades. The result was a large surge in volume as traders rushed into altcoins.

Simon Peters, a market analyst at eToro, explained that XRP’s increase in month-on-month trading activity is entirely logical. He emphasized that trading volume typically accompanies large price moves. Peters said:

“Bitcoin has been the focal point for much of the crypto community, but altcoins are also making waves as investors look to alternative cryptoassets to diversify and make gains elsewhere. XRP’s increase in month-on-month trades is entirely logical in the context of November’s price rise. The token rose from $0.240 at the start of November to $0.661 at the end of it.”

Other likely factors include historic market trends and a spike in retail interest. In January 2018, the altcoin market saw a mania driven by retail investors. At the time, XRP and Ether (ETH) were the biggest drivers of the altcoin market’s rally.

Google search volume for “XRP.” Source: Google Trends

In fact, over the past month, the Google search term “XRP” surged to its highest levels in three years, suggesting that retail traders were returning. The most likely reasons for this include XRP breaking out of a multiyear downtrend and the perceived “cheaper” value compared to Bitcoin in the eyes of the public. 

As Cointelegraph reported, the demand for XRP also rose so quickly that Coinbase suffered a temporary server outage to the ire of its users.

Altcoins following Bitcoin’s lead in a bull market

Altcoins tend to rally and play catch-up when Bitcoin steadies during a bull market. This trend occurs because traders often look for higher-risk plays when the BTC price is consolidating.

Peters noted that Bitcoin saw an explosive price movement in November, and has seen minor, if not predictable, pullbacks. For altcoins, this is an ideal period for gains as it makes them more compelling for retail traders. Peters added:

“Bitcoin exploded in November, smashing through resistance level after resistance level, with only minor and relatively predictable retracements.

On the other hand, altcoins are always at risk of a major crash in the event of a BTC price correction. During bull markets, altcoins are likely to follow the price movement of BTC albeit with more volatility, which puts altcoins at risk of extreme short-term price swings.

Nevertheless, technical analysis shows a bright outlook for XRP, whose price is now at the highest levels in over two years. 

“The higher time frames give a clearer indication of where XRP is located in the market cycle,” trader Michael van de Poppe noted in his latest XRP price analysis. “A multiyear downtrend was broken to the upside, meaning that dips will likely be considered as entry opportunities for traders.”

With this in mind, if XRP holds $0.45 as support, continuation toward $1.00 is likely, particularly if Bitcoin price hits a new all-time high.