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Lattice Exchange, LTX Token Case and Need for Scalable DEXs



Lattice is set to solve the issues of latency and high transaction fees that hinder exchanges with a streamlined process between Constellation Network and Ethereum for faster settlements on trades, loans, swaps, and other DeFi transactions.

A little over two weeks ago, Ben Jorgensen, co-founder and CEO of the DeFi app Lattice Exchange, spoke of the community values that brought him to work on blockchain technology and shared his ideas about the future of the space. He built Constellation Network, a third-generation protocol that addresses such apps’ scalability issues. Two days prior, Jorgensen had launched LTX token on Uniswap, reaffirming the need for automated market-making (AMM) algorithms and community-owned protocols to become a preferable solution to centralized exchanges and their practices.

“Our platform will be released at the beginning of December, and early next year we will introduce the governance of our network, which we are pushing to be fully decentralized and be owned by the community that owns Lattice tokens. We want them to be responsible for creating value in the exchange,” Jorgensen told Ashton Addison on the CryptoCoinShow channel.

Lattice is set to solve the issues of latency and high transaction fees that hinder exchanges with a streamlined process between Constellation Network and Ethereum for faster settlements on trades, loans, swaps, and other DeFi transactions. A solution that allows the project to scale and provide deep liquidity pools not available in the currently fragmented DeFi environment. More importantly, Lattice Exchange opens doors for multiple asset-specific AMMs that secure the best price and profitability for users.

Investors have flocked to the idea. The project raised over $3 million in a recently closed private round. Heavyweights of crypto investment circles, such as FBG Capital, Alphabit, GDA Capital, Hillside Capital and Moonrock Capital, backed Lattice Exchange.

Following the advice of partners, Lattice worked with three mid-tier crypto exchanges to offer Initial Exchange Offerings (IEOs) prior to launch and each sold out in minutes. However, Lattice was asked to sign a “cumulative clause” specifying, in essence, the following: if the LTX token goes below a certain threshold, Lattice would need to activate additional market-making resources. This meant that in the event of an unexpected and massive sell-off of the tokens, Lattice would provide further funds to compensate for token collapse and help stabilize the market, thus protecting LTX holders.

On November 6, after launching on all three exchanges, a massive sell-off began. More than 210,000 tokens were sold, dropping the price of LTX from $0.60 to $0.11 within minutes.

Numerous analysts monitoring the trade were shocked. How is it possible that a token on a demonstrated platform, backed by a stellar team, and coming out of a successful private round, was collapsing all of a sudden?

Lattice investors immediately appealed to independent analysts with advanced transaction monitoring capabilities. They confirmed the bad news: the sellout was synchronized and happened instantaneously on the participating exchanges. All three benefited from the initial high token price and the subsequent massive sell-off. Further analysis even revealed that LTX tokens had been funneled to personal accounts. More so, the cumulative clause was invoked for Lattice to allocate more resources and stabilize the price.

After these actions became evident, Lattice asked the exchanges to reimburse the market making fees paid under the cumulative clause. Although this was done, LTX was delisted from each of the three exchanges and continued to be unavailable for trading.

The events of the LTX launch make note of one of the better-known issues in the evolving industry of DeFi. Centralized exchanges still exert undue influence on blockchain project launches because decentralized alternatives, such as Uniswap, are unable to solve latent efficiency issues in interoperability, scalability, and access to asset-specific AMMs.

Ironically, Lattice presents a solution to the same problems that affected its LTX launch: it’s a decentralized exchange designed to offer services at the scale of centralized exchanges.

Investment partners have reacted to the news of the LTX dump by rolling out an action plan to assist Lattice stakeholders and the community that is relying on the project’s continuous success. After all, it is an important fragment of the DeFi development in the near future, on the path towards further decentralization and transparency of the digital assets.

Lattice has also addressed the community in a Twitter message and cited “irregular activities and ethical concerns.” In a more recent Telegram post, the team spared any direct blame for the incident and addressed the community on the future of the token and the app.

“We will build tools and solutions that present ‘honest data’ in the same light as Constellation’s mission. Constellation is building the next evolutionary leap of blockchain technology by validating data endpoints – this will most certainly play a role in the tools that we create on Lattice,” the address said.

Lattice is, undoubtedly, ready to bounce back.

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Having obtained a diploma in Intercultural Communication, Julia continued her studies taking a Master’s degree in Economics and Management. Becoming captured by innovative technologies, Julia turned passionate about exploring emerging techs believing in their ability to transform all spheres of our life.

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Large Bitcoin Options Positions May Boost Price Volatility This Week




Bitcoin’s options market continues to grow along with an institutional-led bull run in the leading cryptocurrency. Yet, while many use options to hedge their positions, the large amounts of bitcoin options slated to expire in a few days may themselves lead to wild price swings as January draws to a close. 

At press time, there are 120,300 contracts worth $4 billion set to expire this Friday on major exchanges Deribit, CME, Bakkt, OKEx, LedgerX, according to data source Skew. Much of that amount can be found on Deribit, the world’s largest crypto options exchange by trading volume. It is on track to register a record monthly bitcoin options expiry of 102,162 contracts (nearly $3.5 billion). 

A call option gives the holder the right but not the obligation to buy the underlying at a predetermined price on or before a specific date; a put option represents a right to sell. An out-of-the-money (OTM) call is the one with the strike price higher than the spot price. As of press time, call options at strike prices above the current spot price of $34,500 are OTM. Meanwhile, put options at strikes below the spot price are OTM as well.

Market makers may inject volatility

Option expiries seldom have a direct impact on the spot price. However, when open interest is concentrated in out-of-the-money (OTM) call and put options, which is the case with bitcoin, a sudden pre-expiry move forces market makers to hedge with the underlying asset. That leads to more significant price turbulence.  

Over 80% of the Deribit-based Jan. 29 expiry open interest is set to expire out-of-the-money, or worthless. Notably, more than 52,600 call option contracts and 29,800 put option contracts are currently OTM, as noted by Swiss-based data provider Laevitas. 

See also: Trading Hall of Fame: The Bitcoin Options Bet That Made $58.2M Profit on Just $638K

“If BTC rapidly jumps to all-time highs within the next few days, it’s expected market makers will aggressively hedge their out-of-the-money short call option exposures, which would likely increase overall market volatility and momentum in the underlying price,” Samneet Chepal, quantitative analyst at the quantitative and systematic digital asset investment firm Ledger Prime, told CoinDesk. 

Market makers are individuals or member firms of an exchange that create liquidity in the market and take the opposite side of the transaction initiated by traders/investors. 

Given the recent strong bullish sentiment and massive buying in higher strike, out-of-the-money call options, market makers across the board are likely to be net short gamma (call sellers), according to Chepal. 

Options gamma is the rate that delta will change based on a $1 change in bitcoin’s price. Delta measures the sensitivity of options prices to the changes in the spot market price. 

Being short gamma means being an option writer (seller) regardless of whether call or put. In this case, market makers are short gamma due to call selling. That makes them vulnerable to a sudden move to the higher side. 

Therefore, if bitcoin rallies while heading into Friday’s expiry, the market makers may aggressively hedge their OTM short call exposure by taking a long position in the spot market, leading to heightened price volatility and stronger bull momentum.  

The market makers will likely spring into action if bitcoin jumps to all-time highs above $42,000 ahead of Friday, as most open interest is concentrated in higher strike price calls. “A massive chunk of open interest is in deeper OTM call strikes above $44,000,” Chepal said.

Bitcoin options open interest on Deribit
Source: Deribit

Data provided by analytics platform Genesis Volatility shows the largest concentration of open interest is in the $52,000 call. 

Delta hedging

“In an attempt to protect against an out-of-the-money result, options traders may likely resort to delta hedging strategies,” Sui Chung, CEO of CF Benchmarks, told CoinDesk. 

Delta hedging, or delta-neutral, comprises multiple positions (long and shorts, call/puts) aimed at reducing, hedging the directional risk associated with price movements in the underlying asset. 

For instance, the delta of the $40,000 call expiring on Jan. 29 is currently 0.10. That means the option’s price will change by $0.10 for every $1 change in bitcoin’s price. 

See also: Bitcoin Bounces as Options Market Sees 20% Chance of $50K at Month’s End

Another way to look at it is that investors currently holding a long call position with a strike at $40,000 have a BTC 0.10 delta exposure. To hedge against the exposure, traders can short sell BTC 0.10 in the spot or futures market or else buy a put option with a 0.10 delta. 

Option traders generally hedge delta with options. However, in particularly fraught times they could also resort to hedging with the underlying asset itself, leading to heightened price volatility, according to Chung. 

“This can create a vicious cycle, with increased volatility leading to even more derivatives traders rushing to the same hedging strategies, which ends up having the same effect as pouring oil on an open fire,” Chung said. 

Bitcoin is currently trading near $34,100, having put in lows below $29,000 last week, according to CoinDesk 20 data. As long as these options remain open in the market, the next couple of days could be interesting – and perhaps volatile – for bitcoin. 

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The Bitcoin Whales Won’t Stop Buying




According to a number of different data points, bitcoin whales saw last week’s volatility and price declines as a chance to accumulate.

This episode is sponsored by

Today’s grab-bag episode looks at five different topics:

  • Bitcoin whales kept accumulating during last week’s dip
  • Jim Cramer advises Powerball winner to put 5% in bitcoin
  • Previewing the first FOMC meeting of the Biden Administration
  • Earnings week on Wall Street looks good for Big Tech
  • An insider’s look at the state of crypto venture capital

Image credit: munandme/Getty Images Plus

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We Have Entered the Age of Anonymous Crypto




Recently, following a change to Whatsapp’s privacy policy, hundreds of thousands of people from all over the world left for other services. Signal, an encrypted messenger service, saw so many sign-ups that it temporarily crashed.

This was followed by a mass exodus from social media, as Twitter and Facebook became embroiled in a debate on free speech and censorship, a chain of events that may signal a shift in how users value privacy.

Rachel-Rose O’Leary is a coder and writer at Dark Renaissance Technologies. She was a tech writer for CoinDesk from 2017 to 2018, covering privacy tech and Ethereum. She has a background in digital art and philosophy, and has been writing about crypto since 2015. The views expressed in this article are her own and do not necessarily reflect those of the publication.

Riccardo Spangi or “fluffypony,” the former lead maintainer of privacy-centric cryptocurrency monero, called this a “watershed moment” for privacy. “People are realizing that you don’t get privacy just handed to you. You have to stand up and take it,” he told CoinDesk.

For years, topics including anonymity, censorship resistance and decentralization were the purview of political extremists. Armed with a pessimistic, even paranoid outlook, the forefathers of cryptocurrency engineered tools, like Bitcoin, for a world where civilization had fallen.

But now, spurred on by an information crisis and compounding global unrest, privacy has entered popular consciousness.

As on the popular consumer-facing apps such as Signal, activity on the encrypted anonymous internet, the darknet, is on the rise. While it’s hard to estimate usage due to its anonymity benefits, Tor Browser was downloaded 10% more on average this January than last year. In the past 12 months, the number of hidden websites has increased 180%.

This rising popularity could be driving an increase in monero transactions. In December, darknet market Whitehouse reportedly announced it would no longer accept bitcoin payments, strengthening monero’s foothold as the cryptocurrency of choice for the darknet. 

See also: Steven Waterhouse – The Pandemic Turbocharged Online Privacy Concerns

In fact, despite being delisted from exchanges Shapeshift and Bittrex, monero’s price has steadily grown 140% in the past year, while its daily transactions have increased by a staggering 290%. Zcash has likewise increased nearly 70% in price. 

All of this is to say there’s a growing demand for privacy. What’s more, the privacy scene has never been more prepared for an influx of users. 

A new dawn

Privacy has always been a core value of the crypto-anarchist philosophy. Bitcoin itself was designed to be pseudonymous, but its privacy-protecting features are insufficient to protect users from blockchain analysis. 

In the past 10 years, fully anonymous cryptocurrency has emerged as a Holy Grail of blockchain research. Millions in research dollars have been committed, though until recently no purely private cryptos emerged without substantial trade-offs to scalability and decentralization.

Several small, incremental achievements are beginning to come to fruition. Litecoin is testing a potential privacy upgrade, Mimblewimble. Privacy coin Firo, previously named Zcoin, is pioneering new cryptographic research with its recent release of Lelantus.

Meanwhile, earlier this month, Zcash announced its plan to implement Halo 2, a groundbreaking upgrade that will allow the cryptocurrency to add new assets to its base layer, such as an anonymous stablecoin or wrapped versions of other cryptocurrencies – while Monero is also building toward a multi-chain paradigm, specifically with privacy implications for Bitcoin through atomic swaps.

Further, while Monero’s ring signatures reduce its anonymity, a new upgrade called TRIPTYCH will make this privacy leakage less of a concern.

Bitcoin, too, will see privacy-protecting enhancements with the long-anticipated rollout of its Taproot upgrade. When activated, Taproot will allow smart contracts written in the Bitcoin scripting language to appear like normal transactions, so more complex code can populate the blockchain undetected.

It’s not just traditional cryptocurrencies that are undergoing a renaissance. Privacy apps are proliferating on decentralized finance (DeFi) while private smart contract platforms like Secret Network and Aleo are enabling general purpose, programmable privacy. 

Can the state withstand a full-blown Bitcoin offensive?

Amir Taaki has been working on anonymity tech in crypto for nearly 10 years.

“Zero-knowledge is probably the biggest breakthrough in cryptocurrency since the invention of Bitcoin itself. It enables an entire new class of privacy applications that previously couldn’t exist before,” he said.

The darkening

Advances in privacy tech have the potential to revolutionize not just cryptocurrency, but all aspects of how we interact with the web. The internet is currently dominated by data harvesting and surveillance. In exchange for using a service, user data is collected by companies for increasingly surreal purposes, such as behavior prediction and control. 

By offering a new economic vision for technology, the cryptocurrency ecosystem has the potential to challenge this paradigm. Mixnet provider Nym Technologies is working in this direction, offering privacy-friendly applications the ability to monetize their services.

Still, these new vistas will not be without their challenges. For the last year, crypto has been awash with rumors and headlines foretelling an impending regulatory crackdown. 

In an interview that coincided with her statement that the European Central Bank (ECB) will release its own digital currency – the digital euro – within the next five years, ECB President Christine Lagarde called for global bitcoin regulation. Separately,  U.S. Treasury Secretary nominee Janet Yellen said that cryptocurrencies are a “particular concern” for terrorism financing, and stated the need to “curtail their use.”

Both the U.S. and European Union – formerly a privacy stronghold – have also floated rules that threaten end-to-end encryption and privately held crypto addresses.

See also: Proposed Crypto Wallet Rule Among Those Frozen by Biden Pending Review

If there was ever a need for strong, unhackable, privacy-preserving tools to be built, it’s now. 

Worst-case scenario

Regulatory pressure may have an unintended consequence by making privacy-preserving cryptocurrencies more attractive. In a scenario where crypto is banned, crypto will merely go underground, where it had its beginnings.

A nightmare scenario for an industry overrun by bankers, such a grim regulatory outlook is widely dismissed as FUD. Not only would this cripple the emerging cryptocurrency ecosystem financially, but it would severely damage its core value propositions: openness, accessibility, being permissionless.

Still, perhaps in anticipation of regulatory crackdowns, Bitcoiners are adopting an increasingly militant rhetoric. Rumors of an impending “privacy war” have been circulating on Twitter, with cryptocurrency advocates volunteering themselves for the front line. 

According to Taaki, such a confrontation is effectively preprogrammed.

“I don’t see a resolution between an emerging cryptocurrency industry and the state-backed fiat system,” he said, “These things are [at] loggerheads, and using anonymity to shield participants in a network is of vital importance to our success as a movement.” 

See also: Michael Casey – A World Where Privacy and Saving Lives Can Coexist

The developer of privacy-focused Bitcoin wallet Wasabi, Max Hillebrand, said he is confident Bitcoin’s users will step up to the challenge. Armed with advanced technology and an ideology capable of carrying its followers to the barricades, he wondered:

“Can the state withstand a full-blown Bitcoin offensive?”

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