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Token Daily Newsletter #20


Africa Rising

Stears Business is a business publication based in Lagos, Nigeria that covers Nigerian finance, economics, and development. The team recently sent out a newsletter with the charming title: Why Earning Naira (₦) Sucks. 

The article never mentions cryptocurrency or bitcoin, but man, do some of their points sound familiar. Just gleaning a few thoughts from the article we learn:

1. About 30 or so years ago, ₦5,000 used to get you a new Volkswagen Beetle with a good sum left over. Today it's equivalent to about $13.80. This is the Cantillon effect on steroids.

2. Inflation is over 11% in Nigeria today and prices of goods will 6x by 2035 at current rates. To contextualize this, you'd have to earn six times your present salary in 15 years just to maintain current standard of living.

3. The punch that is the last line - the raison d'etre of the entire article: 

To be clear, this is not a country that has implemented a multiple currency system. Naira is the default medium of exchange in Nigeria, and here is a publication on finance warning Nigerian citizens the most fiscally responsible thing they can do right now is get rid of it. Exchange naira for what exactly, however, the team doesn't say.

In the US, when we talk about how crypto is used abroad, we often talk about Asia or Central and South America, largely disregarding the activity in Africa - at our peril.

Africa's crypto ecosystem cannot be ignored. And if this is not already jarringly obvious to you, here are just a couple reasons:

  • "About half of the world’s fastest-growing economies will be located on the continent [Africa], with 20 economies expanding at an average rate of 5% or higher over the next five years, faster than the 3.6% rate for the global economy." - Foresight Africa: 2019, Brookings Institution
  • In 2035, the number of working-age people in Africa will exceed the rest of the world combined. 

Along with GDP and working-age population growth moving in the only two consecrated directions of economics, up and to the right, cryptocurrency projects are also thriving on the continent. 

Pan-African Blockchain Ecosystem

And this is just Q4 of 2019. For further reading, check out the full post shared by Binance Labs Director, Yele Bademosi. 


⚡️ Hashrate Derivatives

Though a non-trivial number of reputable firms and mining pools have been stealthily working on hashrate futures, Jeremy Rubin just beat a lot of folks to the punch. His project POWSWAP currently works in Bitcoin Core on Mainnet and does not depend on oracles, escrows, or intermediaries. He lists 6 major features of platform

Plus, the thread includes the non-monetary benefits that hashrate derivatives markets can provide.

We expect to see more bitcoin hashrate future markets launch in 2020 and 2021.



🔹  IDEX Upgrade Shows a Way For DeFi L2 Scalability

IDEX, a leading Ethereum decentralized exchange, announced its upgrade to V2.0. The interesting bit about the upgrade is IDEX utilization of a highly anticipated L2 scalability approach called Optimistic Rollups. The implementation is tailored towards IDEX needs and allows it to batch the trades off-chain for on-chain settlement. This way, network gas costs can be significantly reduced. The upgrade is a promising example of how DeFi protocols can scale using L2.

🔹  RealT & Uniswap: The Consolidation of Public and Private Equity Markets 

RealT, a real-estate security token issuer, took an interesting step this week by listing a security token, representing a share in a property, on the public decentralized exchange Uniswap. But before you get excited, you still cannot trade the token unless you are approved and whitelisted by the company.

The listing is interesting because until now, security tokens could only be traded on specialized exchanges that vet investors before giving them access. Listing on a public DEX changes these dynamics by directing investors to use a public infrastructure that is used to trade several other public assets. The move can be the start of a consolidation where both public and private equities would be traded using the same infrastructure. 



💰  Stellar Follows The " Token Project Playbook"

Echoing a move by the token project Numerai in December of last year, the Stellar Development Foundation (SDF) has announced the burn of 55 billion XLM tokens from unallocated development funds controlled by the SDF.  Even with the massive burn, the SDF still controls about 30 billion tokens. Of these, they plan to set aside 10 Billion XLM ( ~ $80M at current prices) for investments in ecosystem projects, aka ecosystem fund which, also is a common approach being used by multiple token projects, e.g, EOS, Algorand. We are likely witnessing the formation of the "token projects playbook". 

 Kadena Launches its "Sharded" Blockchain

Over the weekend, Kadena launched its anticipated blockchain which consists of multiple PoW chains that progress in parallel to form a braided blockchain. The sharding idea is gaining traction in blockchain systems to reduce the computational costs required by nodes and dapps. In sharded systems, a dapp can decide to use only one shard which would save it from keeping the data of all other shards. 


Disclosure: Token Daily Capital and/or its partners may have exposure to some of the cryptocurrencies mentioned in this newsletter.

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