The Block Genesis Recap - November

HE BLOCK GENESIS
L R
A
November 2019
The Block Genesis consists of the most in depth timely and impactful articles giving
you an informational edge over the entire financial and technology industry The
Block Genesis is the first and last word in the world of digital assets
cryptocurrencies and blockchain
DISCLAIMER
Thi e ha been e a ed lel f inf ma i e e and h ld n be he ba i f making in e men deci i n be c n ed a a
ec mmenda i n engage in in e men an ac i n be aken gge an in e men a eg in e ec f an nancial in men he i e
he e f The Bl ck ill n be liable ha e e f an di ec c n e en ial l a i ing f m he e f hi blica i n c mm nica i n i c n en
2
Contents
Contents 2
Meet the Research Team 3
MACRO 1
A look at CFTC regulated, and self reported bitcoin derivative data: 18
hedge funds at an all time high in CFTC net short position this month
Evaluating exchanges based on the liquidity of its Bitcoin pairs 28
Analysis of volume per website visit indicates larger traders are re entering the game 31
Bank runs 2.0: Exploring the relationship between on chain lending and staking 37
Examining the value settled on Bitcoin 44
Projects 2
MakerDAO: Multi Collateral Dai 53
Maker MKR Price to Burn Analysis: Still "relatively expensive" to peer group 67
as investors continue to pay a massive premium for a credit facility
An analysis of Zcash's private transactions 78
CEO of DigixGlobal considers full liquidation of DigixDAO's 54M treasury holdings 84
Stellar lumens token burn displaying market price inefficiencies 87
Company 0
Crypto finally gets its U.S. IPO, and the Cliff of Valinor 91
Overstock 3Q19 Review: Weak earnings and SEC subpoena sends shares tumbling 17 98
Org Chart: Kraken 101
A look at Binance US' growth and volume after its first month in business 109
Trends 113
2019 funding trends within blockchain and crypto sub verticals 114
Crypto exchanges are experiencing a 37 traffic drop since June 120
Transaction fees are less than 3 of the total revenue in the bitcoin mining industry 124
Exchange volumes suggest decreased interest from Asian investors 129
Spot Market Trends: Binance s dominance on the rise while Bitfinex 133
continues to underperform
Money 2.0 Stuff: Making money making money 140
Ecosystem Maps 14
Mapping out Binance Labs' Portfolio 146
Mapping out the 10 most active crypto funds' 2019 investments 154
Mapping out Crypto Custody 173
Org Chart: Huobi Group 179
DISCLAIMER
Meet the Research Team

Larry Cermak Ma eo Leibowit Ryan Todd
DIRECTOR OF RESEARCH RESEARCH ANALYST RESEARCH ANALYST

Steven Zheng Ma hew Yamamoto John Dantoni
RESEARCH ANALYST RESEARCH ANALYST RESEARCH INTERN

DISCLAIMER
Ma e O I g
No ember
P ce
No ember as no a good mon h for cr p oc rrenc in es ors Bi coin s BTC price
fell b more han erasing ro ghl billion of marke capi ali a ion Similarl
E her s ETH price dropped b abo S ellar XLM had he s ronges
performance among he op cr p oc rrencies likel beca se i s go erning
fo nda ion has des ro ed o er half of he s ppl b he price is s ill do n in
No ember XRP had he ors performance do n nearl
So rce CoinGecko The Block
As is apparen from he char belo prices ere closel correla ed in No ember

There ere no da s i h e reme price mo emen s he larges declines occ rred
from No and he larges gains from No
DISCLAIMER
Source CoinGecko The Block
Volatilit
Bitcoin s and Ether s volatility has declined in November After ETH started the year
as signi cantly more volatile than BTC annualized volatility is now nearly
identical about for both BTC and ETH
DISCLAIMER
Source The Block
S e change
Cryptocurrency traded volumes in November continued declining and hit an
eight month low The average daily trading volume on legitimate exchanges was
about 1 billion in November 12 lower than 1 2 billion in October and 1
lower than billion in June
DISCLAIMER
Source CryptoCompare CoinGecko The Block
The most active trading day was Nov 22 when volume reached 3 23 billion There
were two other days when volume surpassed 2 billion Nov 25 2 6 billion and
Nov 2 2 33 billion
Source CryptoCompare CoinGecko The Block
DI CLAIME
As for market share Binance continues to dominate In No ember Binance captured
of the legitimate traded olume its highest market share since March Coinbase
captured about of the olume follo ed b Kraken Bit ne Bitstamp
and bitFl er The remaining e changes all captured less than of the
total olume
Source Cr ptoCompare CoinGecko The Block
I i i al dema d
Gra scale Bitcoin Trust GBTC a closed end fund that in ests e clusi el in bitcoin
ser es as perhaps the best indicator of institutional in estment in BTC because it
gi es in estors an opportunit to get e posure through a traditional in estment
ehicle ith shares titled in the in estor s name
GBTC s assets under management AUM in this case the alue of all the bitcoins
held in the fund currentl sits at around billion B the end of No ember
Gra scale held bitcoins or about of the total circulating suppl Nearl
bitcoins ere added to the fund in
DISCLAIMER
Source YCharts The Block
GBTC s share price trades higher than the net asset value meaning that investors pa
a premium over just bu ing bitcoin directl This is because the price of GBTC is
determined b suppl and demand and the majorit of investors prefer o ning a
securit as opposed to ph sical bitcoin
An increase in the GBTC premium signals more demand for GBTC and therefore also
a gro ing institutional interest The premium has surpassed in t o
months Ma and August It s currentl about much lo er than the
local high of in Jul hich signals that the demand is declining
DI CLAIME
Source The Block
A similar trend can be observed b looking at the monthl traded volume of GBTC
The traded volume in Jul reached nearl billion but has since continued to fall
each month The volume in November was less than a quarter of that about
million
Source Yahoo Finance The Block
DI CLAIME
Futures
Following its underwhelming start in late September Bakkt recently witnessed a
signi cant and sustained increase in the trading volume of its physically settled
bitcoin futures hitting around million on Nov Bakkt s open interest reached
an all time high of million on Nov which indicates that new money is owing
into the market
Source ICE skew The Block
CME continues to dominate Bakkt in terms of futures trading volume but the lead
has been decreasing In early November Bakkt s volume was less than of CME s
but towards the end of the month it was reaching as much as Similarly to Bakkt
CME registered higher volume towards the end of the month reaching as much as
million on Nov
DISCLAIMER
CME s open interest has declined in No ember albeit not drasticall hich co ld
f rther indicate that some traders are s itching to Bakkt The open interest
decreased from million to less than million b the end of the month
So rce CME ske The Block
E cha ge ke
The total market cap of e change tokens declined from billion in October to
billion in No ember Binance s BNB remains the largest e change token b far
ith a market cap of billion It is more than three times larger than the trailing
e change tokens b Bit ne OKE and H obi BNB is c rrentl of the total
e change token market cap trailed b Bit ne OKE H obi
K Coin and FTX
DISCLAIMER
The only exchange token that had a positive return in November is FTX s FTT Smaller
cap exchange tokens performed signi cantly worse than large caps
DI CLAIME
O e Fi a ce
The ecen mon h in O en Finance ha e la gel been de ned b he ma a ion and
inc ea ing o hi ica ion of ma ke c e A he end of No embe he e ee
million ETH million locked in O en Finance nea l inc ea e f om
Oc obe Thi mean ha abo of E he e m ci c la ing l i no locked
So ce DeFi P l e The Block
Mo of he e he i locked in Make follo ed b Com o nd

In aDA Uni a and dYdX
DISCLAIMER
So ce DeFi P l e The Block
On No M l i Colla e al Dai MCD la nched hich allo e o c ea e Dai

ablecoin backed b m l i le colla e al e ini iall e he ETH and ba ic
a en ion oken BAT The ingle colla e al Dai icke ha changed o Sai SAI
The e i c en l million SAI and million DAI in ci c la ion
Along i h he MCD an i ion a he in od c ion of he Dai Sa ing Ra e a in b il

a ing a e fo Dai holde aid fo b bo o e The Make em ill l ima el
com le el mig a e o e o MCD b he e ec ed imeline fo o al mig a ion
emain nkno n
Af e eaching a m ch a in Ma Make DAO S abili Fee no i a The

lo e ing of he S abili Fee ha had a d ama ic effec on econda lending ma ke
hich a e eeing con ide able ablecoin in o a i k a e e ec la o eek o
ake ad an age of do ble digi ield M l i le en e backed con me facing
lending a lica ion Linen O le Finance Go ame la nched o ake ad an age
of hi lo i k high e n abe a ion Since hen ield ha e fallen con ide abl
DI CLAIME
po en iall hrea ening near medi m erm f re lending liq idi gro h and
adop ion of hese neo sa ings acco n al erna i es
So rce The Block
The f re of Open Finance looks increasingl brigh Bo h en reprene rs and

in es ors con in e o embrace he no ion ha non c s odial non cen rali ed
nancial prod c s and nancial ser ices ha e near erm prod c marke and
perfec l ill s ra e he al e proposi ion ha blockchain echnolog pro ides In
mid No ember Compo nd anno nced i had s ccessf ll closed a million Series
A from Andreessen Horo i Paradigm Bain Capi al Ven res Pol chain Capi al and
o hers Q es ions aro nd pa hs o pro abili linger al ho gh mos eams c rren l
priori i e gro h o er earnings as he ai for he reg la or landscape o adap o
his disr p i e paradigm
DI CLAIME
MAC
DI CLAIME
A look a CFTC reg la ed and
self repor ed bi coin deri a i e
da a hedge f nds a an all
ime high in CFTC ne shor
posi ion his mon h
No ember
Q ick Take
● A look a bi coin deri a i e da a incl ding CFTC reg la ed bi coin f re
CME Bakk bi coin op ion Deribi and elf repor ed cr p o e change
perpe al ap and f re da a
● Looking a reg la ed CFTC f re bi coin da a hedge f nd are a all ime
high in he o al al e of ne hor po i ion in he la o eek
Bi coin Deri a i es Upda e

Back in J ne according o CME Gro p i bi coin f re prod c cracked e
ano her all ime record in bo h ol me and open in ere i h more han
billion in no ional al e raded on Frida J ne rpa ing he pre io record b
more han While CME Gro p ni hed he pda e i h a proclama ion ha
in i ional in ere con in e o b ild for i bi coin f re prod c eekl CFTC
COT repor da a con in e o ell a more n anced or m ed o lo er o al
repor able rader and a higher concen ra ion or cro ding of no ional al e i hin
he large bi coin f re rader ha are hor
Since peek e in J l a rader CME ha een a red c ion in o al repor able

rader b abo from all ime high i h o al rader hi ing he prod c
la eek For con e a i peak o al rader p he prod c in he h
percen ile of mo ac i e prod c b o al rader among all f re prod c in he
DISCLAIMER
Traders of Financial Futures report in Comparable products ith the same
number of traders this ear includes the CME S iss Franc at CME Cash Settled
Butter at and month SOFR at
Source The Block CFTC COT report
Weekl CFTC COT reports published Frida and using Tuesda s closing data for that
eek sho that the estimated notional alue of open interest on CME cash settled
bitcoin futures has also declined signi cantl since the highs of Jul do n almost
since then and no at similar le els from Ma at million Currentl
recentl launched ph sicall deli ered bitcoin futures from Bakkt makes up less than
of CME Group Bitcoin Futures open interest
DI CLAIME

DI CLAIME
As open interest has continued to come down over the last three months there
also has been a notable uptick in short concentration among the largest traders and
speci call coming from those that are classi ed as hedge funds This past week
more than of the outstanding short interest came from the top largest traders
Likewise the concentration of net longs among the top traders within CME bitcoin
futures is at an all time low suggesting the largest funds that trade the product are
crowding into a short trade
Interestingl the net short positioning Short OI Long OI among hedge funds that
trade the CME bitcoin product is at an all time high over the last two weeks of COT
report prints This is notable as throughout Q hedge funds have been relativel
net neutral while asset managers and non reportable traders skew heavil long
while Other traders have been net short most likel operating in a
dealer sell side capacit in making markets
DI CLAIME

DI CLAIME
Standardizing the size of open positions across trading groups by the percentage of
total open interest helps highlight which trading groups make up the bulk of open
interest on either the long short or spreading side On the long side hedge funds
have made up as much as 5 of total open interest January 201 however they ve
now ceded a bulk of that of that dominance to non reporting traders the small
accounts which now make up 40 of total long open interest On the short side
hedge funds make up more than of the total short interest which is also close
to all time highs
DI CLAIME
Granted reg lated CFTC f t res and to e en non material e tent for Bakkt make p
a relati el small portion of total ol mes and open interest compared to the largest
bitcoin e changes that self report bitcoin f t res data and are nreg lated In terms
of total trading ol me this past month CME has made p an here from
of the total reported BTC f t res ol me among other e changes bit er BitMEX
Coin e Binance H obi and as m ch as of the total open interest on those
e changes last eek CME at m s self reported bitcoin e change f t res
ol mes of B esterda r according to data from Ske Ho e er hile
CME data is relati el tin to self reported e changes e ha e the bene t of ha ing
greater con iction that the n mbers are indeed more acc rate
So rce Ske The Block
Finall looking at the implied probabilit of a bitcoin price c r e of bitcoin options

data from Deribit co rtes of Ske s ggests bitcoin has a chance of ending
the ear abo e do n from a chance of ending abo e back in
Ma One e planation for the compression on implied price probabilit on the longer
dated options is d e to reali ed da olatilit being near earl lo s nder
hile month reali ed BTC olatilit is near le els last seen in Ma at
DI CLAIME

DI CLAIME
Abo he CFTC COT Re o
The Commi men of T ade Re o i a de ailed blic e o ha o ide a
b eakdo n of each T e da o en in e e on f e ma ke ha ha e o mo e
ade ha hold o i ion a o abo e e o ing le el The e o i bli hed b he
CFTC e e F ida and bmi he nal n mbe f om he io T e da ading
clo e
The COT e o incl de fo main e o i h a ing le el of ade cla i ca ion

and e o ing Fo Bi coin f e hich incl de bo h CBOE and CME G o bi coin
f e od c n il CBOE decided o hal he od c la mon h he T ade
in Financial F e ec ion of he COT b eak o o en in e e and o i ion ac o
main ading ca ego ie
Dealer Intermediar The e a ici an a e he ell ide in he e ec i e f e

ma ke ho de ign and ell nancial a e o clien Deale end o ha e ma ched
book i h off e ing i k
Asset Manager Institutional In i ional in e o ha incl de en ion and
m al f nd in ance com anie and la ge a e manage
Leveraged Funds U all hedge f nd and o he mone manage incl ding CTO
and CPO
Other Reportables T ade all hedging b ine i k he he ha
FX a e o e i e o e Incl de co oae ea cen al bank mall bank
c edi nion e c
Non reporting An ade ha doe n mee he minim m i e o a an
e o ing
Legac COT e o can al o l m he e fo ca ego ie in o ei he Comme cial o

Non Comme cial acco n T ade i hin he Comme cial de igna ion e he
f e fo a hedging o e icall on a commodi in co Non comme cial
acco n end o be ie ed a mo e holi ic of ec la o
Some other terms to know

O en In e e he o al n mbe of o en f e o o ion o i ion ha a e no
clo ed o deli e ed on b T e da clo e
DISCLAIMER
Spreading the number of future positions that are equally held both net and long by
the same trader Can be used for calendar spreads that match different maturates
Example A trader in bitcoin futures holds 2 000 long contracts and 1 500 short
contracts 500 contracts will appear in the Long category and 1 500 contracts will
appear in the Spreading category
DI CLAIME
E aluating e changes based on
the liquidit of its Bitcoin pairs
No embe
Quick Take
● E al a ing e change b o de book dep h i fa pe io o looking a he
ading ol me
● A dep h Binance ha he mo liq id BTC pai i h combined o de
follo ed b Coinba e Bi ne K aken and Bi amp
● A dep h Bi ne ha b fa he mo liq id pai follo ed b Bi amp
Coinba e and K aken
● Af e e al a ing la ge e change i clea ha Bi ne Coinba e K aken
Bi amp and Binance ha e he mo liq id BTC pai
E al a ing e change b o de book dep h i fa pe io o looking a he ading

ol me
Follo ing he Bi i e d i no idel kno n ha he a majo i of he

epo ed ading ol me i no eal In Ma The Block anal ed c p oc enc
e change and fo nd ha p o of o al epo ed ading ol me i likel fake
O de book dep h i a m ch mo e indica i e me ic hen e al a ing diffe en

e change and pe hap he clo e po o eal liq idi on he e change E en
ho gh i can be faked a ell i m ch mo e challenging and e pen i e o do igh
Looking a he en i e o de book o ld be imp ac ical beca e i co ld gi e a fal e

imp e ion of liq idi d e oe eme al e Diffe en da a p o ide e diffe en
po ion of he o de book CoinGecko e hile Coinpap ika e and
To p i impl o de book dep h anal i look a he i e of he open b and ell
o de i hin he ec ion o f om he midpoin p ice
DISCLAIMER
In order to get an understanding of which exchanges have the deepest liquidity, The
Block has analyzed the order book depth of Bitcoin trading pairs on 15 exchanges
(Binance, Coinbase, Bitfinex, Kraken, Bitstamp, Liquid, Gemini, OKEx, CEX.IO, Huobi,
itBit, Bittrex, Poloniex, KuCoin and bitFlyer).
If we consider 1 depth, Binance has the most liquid pair with combined orders of
$6.54 million; followed by Coinbase ($5.81M), Bitfinex ($5.47M), Kraken ($4.99M) and
Bitstamp ($4.39M). The most liquid pair is BTC/USDT but the four trailing pairs are all
BTC/USD.

Source: Coinpaprika, The Block
When looking at 10 depth, Bitfinex has, by far, the most liquid pair with combined
orders of $47.5 million; followed by Bitstamp ($30.8M), Coinbase ($28.5M) and Kraken
($24.3M). The disparity between the results of 1 vs. 10 depth analysis could be
caused by different market making programs as well as traders that have orders of
1 to take advantage of liquidations.
DI CLAIME
Source Coinpaprika The Block
Even though the values above are just measured at a single point in time on Nov
the appear to be consistent with historical order book depth anal sis In
short Bit ne Coinbase Kraken Bitstamp and Binance have b far the deepest
liquidit of Bitcoin trading pairs None of the other retail facing e changes come
close
DI CLAIME
Anal sis of volume per ebsite
visit indicates larger traders
are re entering the game
No ember
Quick Take
● O t of e changes that ere e al ated onl e changes o tside of
Bit ise appear to ha e traf c that ro ghl corresponds to the trading
ol me
● Bit ne and Bitstamp ha e the largest traders hile Polonie Bittre and
Coinbase ha e mostl retail clients
● Vol me per isit increased signi cantl from September to October hich
likel means that larger position traders are entering the game again
San Francisco based Bit ise Asset Management released an in ential st d in Ma

in hich it sed screen scrapers to collect li e trading data from o er e changes
in order to determine hich e changes didn t fake their ol me Onl e changes
passed Bit ise s tests Binance Bit ne Coinbase Kraken Bitstamp bitFl er
Gemini itBit Bittre and Polonie
According to The Block s ndings at least other albeit lesser kno n e changes
also appear to ha e legitimate traded ol me
The Block has anal ed the ratio of the estimated eb traf c and self reported
traded ol me o er a period of months in order to determine hich e changes
appear to ha e legitimate trading ol me
Before getting into the res lts it s important to ca eat three things
● Similar eb hile far from perfect is a good indicator of real acti it b t it s

still onl an estimation
DISCLAIMER
● Web af c c d he e ca be a a ed a ch a eb
fa ha d d a a a ge ca e a d ac c g a e
● I b e ha he eb af c c gf Ch a c d be de a ed
beca e f he e a a d VPN
O f e cha ge ha e e e a a ed e cha ge de f B e
a ea ha e af c ha gh c e d he ad g e I d da
I d e a L Af ca CEX IO U K Za f Ja a Y B GOPAX S h K ea
EXMO R a K b S h K ea C e S h K ea B a ce US USA a d
B ba Ja a
The cha be a add H b a d OKE f efe e ce The B e e cha ge

a e de ed h a d ffe e c Wh e H b a d OKE ce a a ha e ea
d a g ca f he ea ea be fa e
S ce S a eb C Gec C C ae
DI CLAIME
Bi ne and Bi amp ha e he highe raded ol me per i i hich indica e
larger clien rade on heir pla form or ha a lo of he rader rade hro gh API
hich logicall doe n regi er a a i i h re l ing in lo er eb raf c Polonie
Bi re and Coinba e ha e he lo e ol me per i i o of Bi i e hich
indica e ha he a rac he highe n mber of re ail clien
O ide of Bi i e Indoda ha he lo e ol me per i i Thi i likel beca e

Indoda i hea il foc ed on clien in Indone ia and heir a erage income i m ch
lo er han of ho e li ing in he U S or E rope Indoda recorded million i i in
he la mon h hich i ro ghl he ame a Bi re and more han Kraken
Bi ne Polonie Bi amp Gemini and bi Fl er Indoda i follo ed b L no hich
i mainl er icing African clien
So rce Similar eb CoinGecko Cr p oCompare
O erall eb raf c on cr p oc rrenc e change ha been eadil decrea ing in

recen mon h dropping b ince J ne
DI CLAIME

Source: Similarweb
A similar trend can be observed when looking at legitimate trading volume, which is
now down about 54% since June.
Source: Similarweb, CoinGecko
DI CLAIME
Another interesting metric to look at is the weighted average of volume per visit each
month This metric gives us an indication of the involvement of larger traders Volume
per visit increased significantly from September to October, which likely means that
larger position traders are entering the game again
The full table of exchanges that appear to have real volume can be seen below:
DI CLAIME
So rce Similar eb CoinGecko Cr p oCompare
DI CLAIME
Bank r ns E ploring he
rela ionship be een on chain
lending and s aking
No ember
Q ick Take
● In his latest paper Ga ntlet Net ork s Tar n Chitra s ggests that the rise of
on chain lending protocols ma lead to bank r n t pe phenomena in Proof of
Stake net orks
● Chitra s sim lations sho that the e tent of this threat largel depends on the
protocol s monetar polic
S mmar
Cr ptoc rrenc anal sts and researchers often characteri e the rapid emergence of
blockchain based Open Finance protocols as a positi e de elopment a potential
catal st for e er co eted mainstream adoption
While the rate of traction has been impressi e it remains to be seen hether these
prod cts can coe ist ith base la er net orks in a s mbiotic fashion a recentl
p blished research paper b Ga ntlet Net ork s Tar n Chitra b ilds on pre io s ork
from Cornell s Phil Daian pro iding formal proofs indicating that nder certain
monetar policies Proof of Stake based blockchains ma be s sceptible to
debilitating stake based bank r ns
Proof of Work S ake
The Proof of Work S bil resistance mechanism pop lari ed b Bitcoin req ires
miners to pro abl spend capital on energ in ret rn for a reg larl iss ed block
re ard While largel effecti e to date Proof of Work often recei es criticism for both
its e cessi e energ sage and s sceptibilit to economies of scale hich res lts in
DISCLAIMER
he concen a ion of mining po e ind e pe e ima e ha o e of
Bi coin ha hpo e e ide in he Chine e ci of Chengd
P oof of S ake in od ced in p o ide an al e na i e o he

ene g in en i e P oof of Wo k Ra he han b ning ene g he P oof of S ake S bil
e i ance mechani m e ie alida o o po digi al colla e al i h he
p obabili of block p od c ion p opo ional o each alida o pe cen age of o al
ake bonded P oof of S ake can be ho gh of a an a emp o nanciali e P oof of
Wo k hile a oiding among o he hing he economie of cale ha a i e hen
ope a ing i h geog aphicall con ained e o ce like ene g
A i h an mechani m de ign P oof of S ake come i h ce ain ade off The

pa ic la eakne ele an o hi pape i he im l aneo e of digi al a e
a bo h an in men of ec i and he p ima medi m of e change In hi pape
Compe i i e e ilib ia be een aking and on chain lending Chi a de c ibe he e
eakne e a endogeno nancial i k
O e F a ce a a h e
Open Finance b oadl efe o open o ce and pe mi ionle blockchain ba ed

ma con ac enabled nancial e ice and p od c e change lending a e
i ance in ance and mo e In he ab ence of legal eco e a f nc ion of he
inna el p e don mo p ope ie of blockchain p o ocol he e p imi i e el on
economic incen i e alignmen e a ding o en ibl hone beha io hile p ni hing
ho e ha fail o abide b he le
Mo ele an o hi pape i he b geoning lending ec o ea o da e on chain

pee o con ac lending facili ie Compo nd Make DAO and dYdX ha e
c m la i el een o e m in o igina ion p edominan l denomina ed in
n he ic ablecoin Dai The i e of on chain lending po e a c io i k in he
con e of E he e m imminen an i ion o a P oof of S ake fo ma nde ome
i k p o le a mp ion e ma e pec a ional ac o o eamle l i hd a hei
capi al f om alida ion e ice en ma e o cap e highe lending ield Thi
dec ea e in al e aked di ec l affec he nde l ing ne o k ec i lo e ing
he co fo o ld be a acke o e ec e a ack
DISCLAIMER
A ne e f bank n
The phenomenon e plo ed in Chi a pape i ome ha analogo o bank n In

hi pape Bank panic in an i ion economie J ha Pekka Ninimaki de c ibe a
bank n a a f nc ion of d a ion mi ma ch be een depo i o ho ma i h o
i hd a capi al a a momen no ice and bank ho e depo i o capi al fo
longe e m illi id ield oppo ni ie Thi mi ma ch ma be he e l of a
ema ic e pon e o ne mac oeconomic info ma ion ha change depo i o
i k p efe ence o impl a f nc ion of he andom i hd a al phenomenon
p e en ed b Diamond D b ig
The damage o gh in hi o ic bank n he bank fail e i elf he lo of

depo i o a ing impai men of pa men em ide economic lo do n a
loan a e ecalled applie imila l o he neo n e plo ed b Chi a a if
dec ea e in ne o k ec i can fea ibl lead o na i e a e lo ing al e lo e
and mo e p eca io e lemen a ance and a lo do n in blockchain ba ed
ma ke
The e a e f he analogie o be made ega ding he digi al na e of he e

in i ion Canadian cen al banke Ma k Zelme o e in hi independen e ie
of he UK Co ope a i e Bank
If implemen ed p ope l Open Banking ma help bol e compe i ion and inno a ion
in he nancial ec o o he be e men of con me and he econom mo e
gene all Ho e e hi ma come a he co of le able depo i aking
in i ion hi d pa ie ma be highl mo i a ed o mo e mone a a o
enco age hei depo i clien o do o f om a po en iall o bled in i ion a he
hin of an p oblem I o ld no be p i ed if malle in i ion nd hei
depo i ba e become le ick o e ime and mo e likel o na he hin of
o ble
Zelme he e all de o he i k Open and digi al banking pla hen he e

bank ind ced panic occ he f ic ion of hi o ic bank n hich e i ed
depo i o o e e a b ick and mo a bank loca ion ha been elimina ed o he
de imen of depo i abili Simila l he na e of pla fo m like E he e m
DISCLAIMER
enables the seamless mo ement of assets across contracts thro gh the se of
atomic transactions making them partic larl s sceptible to stake instabilit
Where historic bank r ns and stake r ns di erge is the possible remedies The
introd ction of Federal Deposit Ins rance Corporation in the Sec rities Act
alle iated concerns aro nd f t re bank r ns ith the Federal go ernment promising
to nder rite deposits p to Other potential sol tions proposed b
Ninimaki incl de modi cations of the Diamond D b ig model here banks f nd
their illiq id assets b iss ing a combination of demand and time deposits the
former eq i alent to a sa ings acco nt the latter a Certi cate of Deposit B catering
to both risk a erse and risk seeking clients banks can replicate a erage asset
liq idit thro gh deposit liq idit These same remedies cannot be ported o er to the
orld of blockchains as decentrali ed s stems there is no single Federal
go ernment eq i alent that can pro ide FDIC eq i alent ins rance and most sers
req ire their stake to be at least semi liq id at all times
Sim la ion a m ion
Chitra s research le erages agent based models a s bset of sim lation techniq es
here each net ork participant is represented as an indi id al agent ith a req isite
tilit f nction Agents are ass med to ha e different risk preferences and each
agent optimi es their token portfolios based on obser ed ret rns and risk
preferences
The ine tricabl comple m lti ariate nat re of permissionless s stems means that
researchers m st make some simpli ed ass mptions as to the en ironments the are
sim lating Chitra s models ork nder the ass mption that the sampling process in
Proof of Stake is tr l random so that alidators cannot anticipate the timeframe on
hich the ill recei e a re ard the n mber of participants is ed Algorand and
A alanche s formal proofs of Proof of Stake make similar ass mptions lending
acti it onl takes place on chain the block re ard and mone s ppl are
deterministic and kno n to all participants at an gi en time alidator re en e is
onl deri ed from block re ards rather than a combination of iss ance and
transaction fees block re ards are not immediatel rein ested and there is a
DISCLAIMER
1
constant probabilit that an agent regardless of their prior beha iour ma ha e

their deposits slashed
To this last assumption a constant probabilit that an agent ma ha e their

deposits slashed for each block a alidator is selected and a coin is ipped as to
hether the should be slashed ith the probabilit of If the agent is not slashed
the are added to the block re ard set and the stake distribution is updated As for
on chain lending d namics the model orks under the assumption that borro
demand is constant relati e to suppl and suppl o s are the onl determinant on
lending rates This is loosel but not entirel based off Compound s utili ation
ratio dri en rate cur e
Chitra s simulations take inspiration from Marko it s Modern Portfolio Theor hich
pro ides a frame ork for portfolio construction such that the e pected return is
ma imi ed for a gi en le el of risk preference Where Chitra s model de iates is that
each agent in the simulation is designated a particular risk preference hich is
subject to change on a per block basis methodolog that is directl comparable to
that of multi strateg backtesting in quantitati e trading B contrast Marko it s
models sol ed for optimal risk adjusted portfolio allocation o er static time periods
assuming constant returns of underl ing assets
Results
The models described abo e produce four distinct claims regarding the implications
of on chain lending for Proof of Stake based protocols
First the ma imum turno er in each agent s portfolio is bounded b the staking
olatilit di ided b the mone suppl plus the lending olatilit If the mone suppl
goes to in nit i e in ationar then the rst component staking olatilit
o er mone suppl goes to ero and thus turno er is solel a function of lending
olatilit The implication here is that earl in a net ork s life c cle the olatilit in
the amount staked should be lo to a oid rebalancing once a net ork has gro n
this olatilit matters much less
Second if there is minimal ariance in the lending rate either due to rate cur e
parameteri ation or lo borro demand e should not e pect portfolios to
DISCLAIMER
rebalance regularly and rational stakers will tend to keep their tokens locked in a
staking contract
Third as long as we have in ation and the borrowing demand is not too high we can
be sure that the worst case rebalancing is bounded by the variance of lending
volatility Conversely this implies that if borrow demand is too strong we cannot
bound the change in expected returns for validators and lenders
Finally Chitra claims that the alpha excess returns over a benchmark index that
a rational agent generates is usually small but is maximized at a point dependent on
the rate of money supply growth the time over which capital has to be locked in
order to participate in staking and the average time to be matched as a lender
These claims have important implications for monetary policies set by protocols
Given that monetary policies are generally considered to play an outsized role in
protocol social contracts and thus unlikely to be modi ed at later points it is
important that protocol designers heed the following
For a de ationary monetary policy if there are fewer coins left to be issued than
market participants we should expect large rebalances for each staker no matter
their risk preference when borrow demand is high Totally de ationary currencies are
inherently vulnerable to large rebalances that depend strongly on the number of
coins in the system This conclusion is fairly intuitive if issuance falls to zero then
any lending yield above zero will be preferable
For protocols with polynomial in ation i e issuance increases over time but does
not scale proportionally with money supply individual validators will almost never
rebalance their token portfolio provided that the system has a large number of
validators In particular if there aren t many whales then individual rational validators
enjoy a level of stability in their token portfolios that is better than a fully
de ationary model and systems with faster in ation Moreover the simplest form of
polynomial in ation linear in ation e g adding h coins to the system at block height
h provides a simple way for protocol designers to adjust the sensitivity of the
protocol to whales
DI CLAIME
For protocols with e ponential in ation i e issuance as a percentage increases
over time the worst case rebalancing is bounded b the initial token distribution
as opposed to the nal token distribution because there is diminishing pro t to
rebalancing as the number of participants grows Comparativel in the de ationar
case there is increasing marginal pro t from rebalance regardless of the number of
participants as the protocol emitted block returns deca to ero whereas lending
ields still are a constant multiple of the outstanding suppl As most networks
assume that there will be more users than those participating in initial token
distribution events this implies that large rebalancing events should become rarer
once the network achieves an scale greater than the si e of the initial distribution
set
C cl i f e k
Chitra s work is a powerful development as to the understanding of the conditions

necessar for stake based bank runs to occur His simulations indicate that this
behaviour can emerge when man agents collectivel more their tokens from staking
contracts tot lending contracts even when their risk preferences are independentl
drawn As a result we can assert that threat models in Proof of Stake networks that
focus e clusivel on B antine agents agents that purposefull behave in a wa
that is detrimental to a network s stated objectives are insuf cient for describing
securit guarantees
Additionall Chitra s paper shows that the turnover in staked quantit is sensitive to
the precise nature of monetar polic de ationar policies cannot support on chain
lending whereas protocols emplo ing e ponential in ation are largel protected
Future work on this subject should aim to rela some of Chitra s assumptions
Namel how do the results change if we work under the assumption of variable
transaction fees a multitude of lending protocols with var ing lending curves
d namic stake withdrawal dela s and non constant borrow demand Further
researchers should consider the t pe of relationship that e ists between lending
protocol risk premiums and stake suppl and the viabilit of pegging validator
rewards to on chain lending ields
DISCLAIMER
44
Examining the value se led on

Bitcoin
November
Quick Take
● Over the past four quarters the Bitcoin network has settled over billion
a little more than billion per day on average
● Bitcoin has experienced two consecutive quarters of increases in value sent
over it
● Bitcoin is the leader in value being sent over its network averaging a
market share out of the top five cryptocurrencies by market cap
Bitcoin the peer to peer currency has given individuals and businesses the ability to
conduct transactions in an alternate fashion without an intermediary Due to Bitcoin s
highly volatile nature its price is typically the central focus for speculators and the
press
What is often lost in the news is whether Bitcoin is actually providing any utility and
what sort of economic activity is taking place on the protocol We will explore the
Bitcoin blockchain and look at the value taking place across its transactions over the
past four quarters This will give us a better idea if Bitcoin is more of a toy for
geeks and enthusiasts to send money to one another or if it has evolved into
something much larger to where serious economic activity is taking place
DISCLAIMER
Va e Se ed B c
Source The Block Coinmetrics
Over the past four quarters the average total value settled on Bitcoin has been a
little more than 1 billion per day on average with a median value of approximately
1 5 billion per day
DISCLAIMER
Va e Se ed b Q a e
In total over the past ear a little more than billion has been settled over the
peer to peer network
During Q of the Bitcoin network experienced a decline of approximatel in

value transferred over the network from the previous quarter The Bitcoin network
then rebounded with consecutive increases From Q to Q the network
went from settling about billion to about billion a increase Then
from Q to Q it went from billion to approximatel billion
another increase of about
DISCLAIMER
So rce The Block Coinme rics
DI CLAIME
A e age Med a T a ac S e
So rce The Block Coinme rics
When ini iall proposed Bi coin as o ed as a peer o peer c rrenc Man of i s

proponen s spoke of i s abili o perform micro ransac ions for prac icall free
While man of hese se cases ma s ill be possible hro gh second la er scaling
sol ions s ch as Ligh ning Ne ork hen looking a he da a oda i s base la er
has been sed more as a se lemen la er for larger ransac ions O er he pas fo r
q ar ers he si e of an a erage Bi coin ransac ion has been appro ima el
From Q oQ he his oric a erage ransac ion si e decreased in al e b

appro ima el From Q oQ i hen increased b appro ima el
From Q oQ i increased again his ime b appro ima el
Al ho gh he median ransac ion has been drama icall lo er a eraging j s

This s gges s man people are sing he ne ork o send smaller amo n s ho e er
DISCLAIMER
the weight of the economic activity in value is being recorded by the high value
transactions taking place This can be a result of individuals with large holdings
moving funds or exchanges with large holdings moving funds to serve its customers
C a i g he Va e
To get a better picture of the value being settled on Bitcoin we will examine the value
transferred relative to other networks in the ecosystem that rank top five by market
cap Bitcoin remains the leader in value transferred where it has averaged over
the past four quarters Ethereum has been the clear runner up in economic activity
averaging of the market share Over the past quarter we have seen a slight
increase for Bitcoin to about and a decrease for Ethereum to
DISCLAIMER
Dail Fee
Over the past four quarters Bitcoin has averaged in dail fees for miners
while the median has been appro imatel From Q to Q dail
fees collected b miners increased b appro imatel b The dramatic increase
was short lived and dropped b about returning closer to its average for dail
fees Despite the decrease Q still returned more revenue than Q
and about more than Q
C cl i
The Bitcoin network ma still be in its infanc however it is providing utilit to users
with over billion settled For an internet currenc started b an anon mous
creator and sent to a mailing list to a few individuals this should be largel
considered a success With high average transaction si es being much larger
than the median transaction si e this suggests much of this economic activit
DISCLAIMER
i being o ed b ading and coming f om e change mo ing la ge m of
mone Wi h con ec i e a e of inc ea ed al e being en o e i ne o k and
an inc ea e in ela i e ma ke ha e e cen o e he a a e i ill be
in e e ing o ee if hi end follo and if he in e ne c enc can edge clo e o
e ling illion o e he co e of a ea
DI CLAIME

Projec
DISCLAIMER
Ma e DAO M C a e a Da
No ember
Q c Ta e
● On Monda No ember MakerDAO ill of ciall begin he ran i ion o i
M l i Colla eral Dai em
● M l i Colla eral Dai open p ppor for addi ional colla eral pe a ell a
in rod cing e eral impor an em mechani m de ign change
Ma e DAO
MakerDAO i a credi facili and n he ic i ance pla form er ing a he de fac o
cen ral bank for he E here m ba ed Open Finance eco em A he hear of
MakerDAO i he Dai oken a n he ic a e i h a of peg o he US dollar
affording ri k a er e agen all he ad an age of cr p oc rrencie cen or hip
re i ance permi ionle acce cro border al e ran fer e c i ho he
ola ili
The MakerDAO em re ol e aro nd he Colla eral Deb Po i ion CDP prod c In

order o min Dai er m r lock colla eral c rren l in he form of E her
in a CDP Once locked er can borro again he al e of heir E her CDP holder
m main ain a cer ain colla erali a ion ra io c rren l in order o a oid
liq ida ion In he e en ha he al e of he CDP holder E her fall belo of
he al e of heir Dai denomina ed deb a hird par keeper can ep in and rigger
liq ida ion of heir colla eral
Con idering MakerDAO cope of ambi ion Dai ha een enormo cce o da e
Since la nching in December o er m Dai ha been origina ed hro gh he
MakerDAO em here i c rren l mo anding Ro ghl CDP ha e
been opened acco n c rren l hold Dai and ro ghl m of Dai i
ran ferred on a dail ba i Mean hile de pi e an dra do n in E her Dai ha
DISCLAIMER
for the most part, successfully maintained its soft peg, with the average daily
deviation from $1 over 2019 (as of 10/28/19) coming to just 1.24%.
While Ether has so far served as a useful primary source of collateral, there are
benefits to collateral portfolio diversification. The introduction of alternative,
uncorrelated collateral types lowers risk within the system. In the event that
collateral type A sees a period of volatility and, as a result, mass liquidations,
collateral type B will ideally remain stable, saving the system from a state of mass
undercollateralization. Additional collateral types also facilitate the scalability of Dai
supply: because all Dai must be backed by a minimum of $1.50 worth of collateral,
the Dai supply is ultimately constrained by the value of the underlying collateral.
Relying upon a single collateral type limits the extent to which Dai can grow and
serve as a fundamental primitive for a parallel global financial system.
To this end, on Monday, November 18th, the MakerDAO protocol will migrate to the
long-awaited Multi Collateral Dai (MCD) state. The MCD upgrade also contains a
number of significant mechanism upgrades alongside the support of alternative
collateral types. For the remainder of this report, the existing system will be referred
to as Single Collateral Dai (SCD) and its token as ‘Sai.’ CDPs will be referred to as
‘vaults,’ and the MCD token will be referred to as ‘Dai.’
The G ea M g a
The migration process between the SCD and MCD systems is complicated by the fact
that SCD continues to be used and various vault holders still have outstanding debt.
MakerDAO stakeholders cannot unilaterally shut down the SCD system — instead,
they must manage both economies simultaneously while encouraging SCD users to
switch over to the MCD platform. This is somewhat analogous to the Ethereum 1.0 to
Ethereum 2.0 transition, where Ether holders will be required to migrate their
holdings over from the legacy chain to the upgraded sharded network.
There are three sets of immediate, mutually inclusive stakeholders in the MakerDAO
system: Dai holders, MKR holders, and vault holders. Each stakeholder has a tailored
migration process, defined as follows:
DISCLAIMER
K
MKR holder ho go ern he MakerDAO em in re rn for in ere pa men do

no ha e o pgrade heir oken The o ing con rac DS Chief ork for bo h
SCD and MCD o MKR doe no need o be mo ed be een con rac in order o
o e on em ri k parame er and mone ar polic The e con rac c rren l
con ain o er of he o al MKR ppl
AI
Sai holder can migra e o he MCD em b depo i ing heir oken in o a con rac
on ei her he migra e makerdao com or oa i app in erface Thi con rac i i elf
r c red a a a l for each Sai depo i ed a er can i hdra Dai The
colla erali a ion ra io i e a and he abili fee a Oa i al o pro ide a
epara e con rac for con er ing Dai back o Sai
According o da a pro ider Blockl ic clo e o m Sai or of o anding Sai

ppl i locked in Open Finance projec con rac Thi Sai i no niforml
di rib ed m i locked in Compo nd m in dYdX and m in Uni ap To a
cer ain e en he cce of he migra ion proce relie on he migra ion ra egie
of he e par ic lar projec
DI CLAI E
Source dai in de com
Of the three dYdX is currentl the onl project that will handle the migration process
on behalf of its users according to an announcement post weeks after MCD
launches an remaining balances in Sai will be converted automaticall to Dai During
this period both Sai and Dai markets will be paused until the conversion is
completed the team expects this process to take somewhere on the order of
hours Meanwhile Compound and Uniswap expect their user bases to migrate
manuall
DI CLAIME
5
The upgrade schedules for other MakerDAO ecos stem partners can be found below
Source blog makerdao com
Vault
In order to re nance to MCD SCD vault holders must rst repa their outstanding
debt This process entails sourcing Sai Sai can be withdrawn from the MCD Sai vault
this Sai is then used to pa back SCD vault debt while an outstanding interest fees
are paid in MKR SCD vault collateral is then unlocked and dul deposited into a MCD
vault This multi step process is concealed b a one click contract offered on the
oasis app website
This vault migration process is contingent on there being suf cient Sai sitting in the
MCD Sai vault SCD vaults cannot be migrated over in tranches so users with large
volumes of outstanding debt ma be forced to wait for the Sai contract to ll up
DISCLAIMER
before por ing o er Al erna i el SCD a l holders can so rce Sai from secondar
marke s or OTC desks
Challenge
A migra ion of his magni de does no come i ho challenges
The rs challenge is ens ring ha he migra ion akes place o er a reasonabl shor
period of ime As men ioned he abili for SCD a l holders o re nance o MCD is
largel con ingen pon e is ing Sai holders redeeming heir okens for Dai The
Maker Fo nda ion has no ed ha se eral ecos s em par ners i h s bs an ial
holdings ha e commi ed o migra ing i hin a ma er of da s ens ring ha here
ill be a a minim m a base la er of liq idi in he Sai a l con rac Ho e er if
Sai holders hold o on he migra ion process SCD a l holders ma be forced o
acq ire Sai on secondar marke s Depending on a ailable liq idi his co ld lead o
des abili a ion and de ia ion a a from he sof peg as a l holders marke b Sai
a a premi m
The second rela ed challenge is go ernance rela ed Req iring MKR holders o
manage o dis inc s s ems sim l aneo sl ma lead o e cessi e cogni i e
o erload perhaps o he de rimen of risk managemen To his end MKR holders ill
likel se a disco n on he MCD s abili fee in order o incen i i e borro ers in
he SCD s s em o migra e o er Ho e er his co ld po en iall crea e per erse
second order effec s depending on Dai marke ac i i i h he spread l ima el
des abili ing he Dai peg If his is he case MKR holders ma be req ired o lif he
MCD s abili fee abo e he SCD s abili fee hich o ld onl f r her incen i i e
SCD a l holders o remain in he e is ing s s em
An e pec ed imeline for o al migra ion remains nkno n al ho gh ario s Maker

Fo nda ion emplo ees ha e s gges ed ha migra ion i hin se eral mon hs o ld be
considered a s ccess In he e en ha Sai holders ref se o migra e MKR holders
ma consider riggering Emergenc Sh do n programma icall n inding he
e is ing s s em and redeeming o s anding Sai for an eq i alen al e in E her
Ho e er his meas re ill onl be considered once signi can ecos s em par ners
ha e migra ed and o her incen i e mechanisms ha e been e ha s ed
DISCLAIMER
MCD c lla e al a a e e
While the Multi Collateral Dai system is capable of supporting any number of
collateral types, at launch, the system will be solely reliant on Ether and Basic
Attention Token (BAT). Like the SCD system, Ether-based vaults will be required to
maintain 150 collateralization ratios and a liquidation penalty of 13 will be levied
on those that fall below this threshold. The stability fee for Ether-vaults will initially
be set at 4 or a 1 discount from the existing SCD stability fee. BAT-based vaults
will start with the same risk parameters. However, the amount of Dai available to be
minted from these collateral types at any given time — known as the ‘debt ceiling —
will diverge: Ether will start with a 50m Dai debt ceiling, while BAT, an asset with a
significantly lower market capitalization and liquidity, will be limited to just 3m Dai.
For context, the debt ceiling for Sai was recently raised to 120m, so we can expect
the Ether-based Dai debt ceiling to be lifted beyond 50m after a relatively short
period of time.
While BAT and Ether currently share the same risk parameters and stability fees, this
will likely change as more collateral types are onboarded. MKR holders will be
required to vote on collateral specific ‘risk premium rates, which are combined with
the system-wide ‘base rate. As an example, imagine that the system-wide ‘base rate
stability fee is 5 . Collateral type XYZ is then onboarded but considered to be riskier
than Ether, which has a risk premium rate of 0 . MKR holders decide that
prospective XYZ-vault holders should pay a 3 APR premium over Ether-vault
holders. XYZ-based vault borrowers will be required to pay 8 APR, assuming the
base rate remains constant over the proceeding year.
It remains an open question as to which alternative collateral types will be

onboarded. There continues to be discussion in MakerDAO forums as to the benefits
of introducing tokenized, ‘off-chain assets like U.S Treasuries, which would offer
uncorrelated returns and liquidity at the expense of the ‘censorship resistance
afforded by strictly blockchain-native digital assets.
Dai Sa i g Ra e
An equally important element of the MCD transition includes the introduction of the
Dai Savings Rate. To date, MKR holders have had just one monetary policy lever — the
Stability Fee — to pull in order to incentivize market participants to honour the USD
DISCLAIMER
peg The S abili Fee is le ied on all a l holders as a cos of borro ing In he
e en ha Sai drif s belo i s peg he S abili Fee can be ele a ed incen i i ing
prospec i e borro ers o so rce heir f nding else here and e is ing borro ers o
close o heir deb Like ise if Sai drif s abo e i s peg he S abili Fee can be
decreased in order o incen i i e he genera ion of more Sai
Limi ing mone ar polic o he borro side has been s bop imal in ha i onl
applies o one side of he Dai ecos s em marke As a res l e ha e seen he
S abili Fee lif ed o as high as APR in order o comba Sai in a ion This is
considered remarkabl high for colla erali ed lending par ic larl in a global
en ironmen of near ero if no nega i e ra es
So rce mkr ools
The DSR addresses his b direc ing some por ion of a l holder in eres o Dai
holders Considered he Open Finance eq i alen of he risk free ra e he DSR
crea es organic demand o hold Dai as a non ola ile sa ings acco n The emergence
of organic demand means ha he S abili Fee paid b borro ers can also be
lo ered as he beha io r of bo h sides of he marke b ers and sellers can be
adj s ed
The DSR is a h ge posi i e for he MakerDAO ecos s em helping Dai scale as

risk a erse sers seek passi e re rns and borro ers ock o lo ra e a l s for
DI CLAIME
le e age and li idi DSR ill nece a il e ea he lo e bo nd fo a ing
a e ac o Open Finance lending pla fo m no a ional ac o o ld be illing o
lend on ano he pla fo m hich come i h addi ional c edi i k a a lo e ae
o e a ing h o gh he DSR con ac We can h e pec econda lending a e o
mo e in ep i h he DSR hif ing p a he DSR i lif ed and coming back do n a
he DSR i d opped The effec i ene of he DSR i dependen on he a mp ion
ha ma ke pa icipan a e conce ned i h i k adj ed e n e ab ol e
e n If e con in e o eek he highe ma ke ae hen he S abili Fee ill
emain he p ima mechani m fo incen i i ing ma ke beha io
K
While he mig a ion p oce fo MKR holde i a he eamle akeholde m
no e he change in oken mechanic nde he MCD em
To da e MKR ha e ed a a go e nance oken and a claim o in e e paid b

a l holde The Block Re ea ch Anal R an Todd ecen l p o ided commen
and anal i ega ding MKR ea ning o e he pa e en a e A he cha
belo indica e MKR p ice o b n a io nde SCD emain in a ed a
Val e acc al mechani m change d a icall nde MCD To da e a l holde ha e

been igni can bene cia ie f om he Make DAO em ea ning an pl
colla e al f om he li ida ion di co n he Make Fo nda ion Ma c And e D ma
e ima ed ha in Q SCD a l holde ea ned of em income
DI CLAI E

DI CLAIME
So rce The Block
In MCD MKR holders become he primar bene ciaries bene ing dispropor iona el
from liq ida ions hro gh a ne rs price a c ion s r c re he S rpl s A c ion
Moreo er in MCD a l holder in eres pa men s accr e con in o sl hile in SCD
in eres is onl paid a he e en of principal pa men This ens res ha a l holders
pa in eres e en in he e en of liq ida ion
These addi ional al e accr al mechanisms do no come i ho addi ional risk

Under MCD MKR holders become nder ri ers for he MakerDAO s s em In he
e en of ndercolla erali a ion MKR is programma icall in a ed in a Deb A c ion in
order o co er an shor falls Pre io sl nder SCD MKR did no ha e his credi
defa l s ap pe e pos re
DI CLAIME
A c i n
MCD in od ce h ee a c ion pe o he Make DAO em Colla e al A c ion
Deb A c ion and S pl A c ion Each of he e a c ion ake an Engli h A c ion
c e o he i e kno n a a p ice a c ion he e pa icipan bid p blicl
he highe bid in and he highe bid i paid Whe he he e a c ion can be n
in a a ha i e i an o coll ion emain o be een
C lla e al A c i n
The colla e al a c ion eplace he e i ing SCD li ida ion p oce Unde SCD
colla e al locked in a a l i li ida ed in he e en ha he a io be een colla e al
al e and o anding deb fall belo Keepe ep in b ning he al e of
deb in Sai fo a ed di co n on he colla e al An pl colla e al i b n
in a ing he PETH ETH a io in fa o of a l holde
Unde MCD he li ida ion p oce f nc ion a follo A oon a a keepe igge
li ida ion a p ice a c ion commence Le imagine ha he a l o ne ed
E he a colla e al E he i ading a he e a E he depo i ed a colla e al
and o anding deb p incipal pl in e e a Dai Wi h he addi ional
li ida ion penal he Make DAO em need o ai e Dai in o de o co e
he ho fall
The a c ion commence and hi d pa keepe bmi bid in e change fo he

en i e colla e al depo i Le imagine ha he keepe bid Dai fo E he
The econd keepe bid Dai fo E he Finall he hi d keepe bid Dai in
e change fo E he a hi poin he e i eno gh Dai bid o co e he ho fall
The a c ion mo e o he econd pha e he e keepe con in e o bid he ame

amo n of Dai fo inc ea ingl fe e amo n of E he Le imagine ha he
keepe en e a bid fo E he fo Dai The econd keepe hen
en e a bid fo E he Finall he hi d keepe bid E he No mo e keepe
en e bid and he hi d keepe ecei e E he in e change fo Dai a a
po of Dai o The a l o ne i e ned he e ce E he and he
li ida ion penal Dai i depo i ed in o he pl con ac
DISCLAIMER
A i h an a c ion p e e pa ame e m be e Fo colla e al a c ion he
minim m lo i e ha been ini iall e a ETH and BAT o ghl e i alen
o The ea oning behind hi lo i ei o nd a ade off be een
enco aging ide pa icipa ion and con e en l compe i i e bid and if
a c ion e ol ion A c ion pa icipan m bid fo he en i e lo i e
The bid d a ion i min e meaning ha he a c ion ill e le if no highe bid i

made af e min e While keepe e po e hem el e o ome ma ke i kb
being fo ced o ai min e befo e e lemen he can hedge ome of hei
e po e h o gh ho The ma im m pe iod of ime an a c ion can la i da
The minim m bid inc emen i in o de o p e en he a c ion f om aking oo

long in he e en of negligible bid inc ea e Thi minim m bid inc emen i al o
impo an in ha i g a an ee a di co n o keepe ha e hei bid a of
he colla e al al e no a ional keepe ill bid highe a he o ld ecei e no
di co n
S pl A c ion
The S pl A c ion i he p oce ed o ap acc m la ed in e e pa men and

li ida ion penal ie fo MKR In he SCD em i i manda o ha in e e
pa men be paid in MKR i elf hich i d l b n In MCD a l acc e in e e
con in o l al ho gh in e e i onl paid once he a l i clo ed Af e he em
acc e Dai in in e e i a oma icall min Dai hich i hen old
fo MKR in a p ice a c ion A i h he colla e al a c ion he pl a c ion
ha a Dai lo i e and he minim m bid inc emen i Ho e e beca e
pl a c ion a e no a p ice en i i e a colla e al a c ion he bid d a ion ha
been e ended o min e Once MKR ha been p cha ed i i immedia el b n
and once a l holde pa back hei p incipal and in e e he in e e i al o
immedia el b n o co e fo he Dai i ed fo he pl a c ion
A i h he o he o a c ion he pl a c ion pa ame e ae bjec o change

acco ding o MKR go e nance o e I ma eme ge ha bid d a ion a e oo long o
oo ho like i e minim m bid inc emen ma be oo lo o high Fo he pl
a c ion i doe no nece a il make en e o g a an ee a c ion pa icipan a
DISCLAIMER
disco n on he MKR DAI rade as MKR holders sho ld na rall be incen i i ed o
par icipa e in order o reali e di idends
Deb A c
The nal a c ion model is he Deb A c ion here MKR is sold in order o co er
s s em ndercolla erali a ion In heor if he s s em is correc l managed b MKR
holders hese Deb A c ions sho ld ne er occ r The lo si e is Dai bid
d ra ion is min es ma im m a c ion d ra ion is da s and he minim m bid
incremen is
The deb a c ion f nc ions similarl o he second phase of he colla eral a c ion
he s s em no es ha i needs Dai and keepers s bmi he amo n of MKR
he o ld like o recei e in re rn Deb a c ions ha e one addi ional parame er
he ma im m amo n of MKR ha can be req es ed in order o pre en keepers
from bidding for dispropor iona el high amo n s of MKR This ma im m amo n is
o ed on con in o sl b MKR holders ra her han se a oma icall based on an
oracle price of MKR D e o he minim m lo si e of DAI if he s s em does
en er in o a period of ndercolla erali a ion i ill no be co ered n il here is a
leas Dai or h of bad deb
T e a ead
Monda s MCD con rac deplo men is b he s ar of a m l i mon h migra ion
process Whe her he ransi ion can ake place in a coordina ed s able manner
remains o be seen al ho gh he Maker Fo nda ion s pl s emplo ees are
cer ainl prepared for he challenges ahead and capable of addressing hem as he
come If s ccessf l he MCD migra ion hich offers a more rob s and scalable
s n he ic asse iss ance pla form bodes ell for broader Open Finance momen m
in addi ion o E here m s imminen Sereni pgrade
DISCLAIMER
Maker MKR Price to Burn
Anal sis Still relati el
e pensi e to peer group as
in estors continue to pa a
massi e premium for a credit
facilit
November 5, 2019
Quick Take
● Maker (MKR) trailing 12 month Price to Burn multiple has rationalized from
2000x in early 2019; but is still at 200x
● This compares to Binance s trailing 12 mo Price-to-Burn of 35x, and an
estimated trailing 12 mo Price to Earnings (PE) of 6x; which isn t exposed to
nearly as much credit risk
● Binance estimated trailing 12 month Price-to-Earnigns (P/E) puts it well
underneath the 15x P/E traditional brokers (ICE, Schwab, Nasdaq, E*Trade,
etc.) currently trade at
With the help of explicit "earnings" data within the Maker system — visible via smart
contracts on the Ethereum blockchain and courtesy of data from Marc-André Dumas
— we re-calculated relative valuation metrics for Maker such as Price to Burn
(Interest Earnings) and Earnings Yield (Burn Yield) through the third quarter of 2019.
Our findings show that although Maker has achieved a fairly stable peg with its
stablecoin DAI (daily price standard deviation of .015 since Jan 2018), the system
hasn't been able to capture and distribute interest payments (revenue) to its MKR
stakeholders adequate to its current total market value, relative to a peer group (i.e.
DISCLAIMER
investors are paying a massive premium in terms of price to burn, and for a credit
facility exposed to credit risks no less!).
Furthermore, we compare Maker's (MKR) Price-to-Burn (P/B) to Binance and other

exchange tokens to highlight just how large of a premium investors are currently
paying for Maker vs. exchange tokens in terms of P/B, and a pseudo price-to-earnings
(P/E).
*This post is for informational purposes only; none of this information should be
used as a basis for investment.

MKR Token Holders have taken the back seat to PETH holders
Using Stability Fees, or the interest rate paid upon closing a CDP, we can calculate
the total amount of interest paid by CDP holders to date. Considering the current
single collateral DAI system, the only revenue that currently gets distributed to MKR
token holders is via the closure of a CDP, which translates to a realized payment of
interest on the respective outstanding balance at the variable rate set by MKR token
holders (currently ~5.50% and has been as high as ~21% in 3Q19). Interest payments
can be paid in DAI or MKR, both of which will lead to a subsequent burn (removal) of
the dollar value of MKR from the total outstanding supply.
In 3Q19, the equivalent of ~$1.3 million worth of DAI was paid in interest to the
system, and "earned" by MKR holders (seeing how Maker has no operating expenses,
we assume all interest received, and subsequently burned, is equivalent to
"earnings").
DI CLAIME
So rce Marc André D ma The Block Coin Me ric E her can
No e Val e a me DAI hen fee are paid in DAI MKR i bo gh on he

marke and b rned
Con idering he c rren o al marke al e of all MKR oken i abo e million a

rela i e Price o B rn b rn being in ere recei ed m l iple ho ha MKR
in e or are c rren l pa ing an e orbi an premi m in rela ion o i o al marke
al e i h he o al MKR marke al e being o er he prior el e mon h
m of in ere pa men di rib ed o MKR holder ia a oken b rn
DI CLAIME

DI CLAIME
So ce Ma c And é D ma The Block Coin Me ic E he can
No e P ice o b n To al MKR Val e To al MKR Re en e Recei ed Pa mon h
To ge a be e en e of ho inef cien he io mon h o h of al e ca e

ha been fo MKR oken holde he in e e of he P ice o B n o Ea ning Yield
To al Re en e Di ib ed o MKR To al MKR Ma ke Val e i nde b
Meaning fo e e dolla in e ed in MKR oken holde ea ned ia b n nde
b o h of ield Gi en he mon h U S ea i c en l a o nd
MKR ailing ea ning ield ha nde e fo med he i k f ee a e b o ghl
b
DI CLAIME
So ce Ma c And é D ma The Block Coin Me ic E he can
No e Ea ning Yield To al MKR Re en e Recei ed Pa mon h To al MKR

Val e
While no e compa able looking a o he p blicl aded ec ed lending

companie highligh he gap be een Make ela i e al a ion o he lending
companie E en if o a me all CDP o anding m pa off hei po i ion
a in e e fo a o al of million in e en e di b emen he P ice o B n
m l iple o ld ill be o e and ea ning ield o ld be bp
DI CLAIME

DI CLAIME
So ce Ma c And é D ma The Block Me a i Lending Cl b LC Regional Managemen RM Ele a e C edi ELVT
Binance E he can
No e Regional Managemen Ticke RM ha of e en e come f om ec ed

lending One Main Ticke OMF p edomina e ec ed lende Ele a e C edi Ticke
ELVT p o ide lending o Unde banked
DI CLAIME
Binance ake c en o al al e of BNB pa q a e USD al e of BNB b n
So ce Make b n com
In o ie ha mo e elling of he di loca ion in e m of P ice o B n i ha

in e o aec en l pa ing fo Binance and o he e change oken Acco ding o
p io e ea ch b The Block La Ce mak Binance i c en l ading a a ailing
mon h P ice o B n m l iple Mo e p i ing i he fac ha Binance
e ima ed ailing mon h P ice o Ea ning P E of place i no onl ell
belo Make MKR b al o belo he median a e age P E of adi ional e change
aded in he S P Na daq Sch ab TD Ame i ade E T ade ICE e c of
DI CLAIME
S ce The Bl ck Fac Se
S ce Ma le Leaf Ca i al
DI CLAIME
TLDR: Investors are still paying significantly more for a credit facility with credit risk
than exchanges that have demonstrated significant operating leverage and earnings
and subsequent burn power
DI CLAIME
78
An analysis of Zcash s private

transactions
No embe
Quick Take
● U age of f ll hielded an ac ion ha e lo l been g o ing i h i
con ec i e mon h of a lea f ll hielded an ac ion
● Since he Sa ling g ade Zca h ha a e aged o an ac ion e
mon h an inc ea e b a o ima el com a ed o io ea
● De i e ome inc ea e in he age of f ll hielded an ac ion he ha e
onl e e en ed of he an ac ion made on Zca h o e he a ea
Zca h ha been he alded a one of he leading c oc encie in he blockchain

ace hen i come o i ac The nde l ing o ocol a de elo ed h o gh he
d of cien i f om MIT Technion John Ho kin Tel A i Uni e i and UC
Be kele The c oc enc ili e a fo m of Ze o Kno ledge P oof k SNARK
ha allo fo an ac ion o be e i ed i ho kno ing he ende ecei e o
he amo n being en
While Zca h o ide all of he e i ac fea e an ac ion made on i ne o k

a e no i a e b defa l T add e e U e m o in i h hei f nd oaZ
add e oe e ience he i ac offe ed b hielded add e e
We ill no e lo e he Zca h blockchain and de e mine he he e aeo ing

in o he e hielded add e e fo he e a i ac offe ed and o ha e en if an
o an ac ion f ll hielded ha e g o n A o an ac ion inc ea e o
doe i ac fo Zca h
DISCLAIMER
F S d dTa ac b M
So rce The Block Zcashd Electric Coin Compan
Represented in the data abo e are three t pes of f ll shielded transactions that
ha e been possible Spro t addresses are the original shielded addresses Sapling
as the pgrade to shielded addresses that acti ated on Oct and
Migrations are the transactions of sers migrating from a Spro t address to a Sapling
address
The se of f ll shielded transactions has slo l been gro ing ith si consec ti e
months of at least f ll shielded transactions Prior to this there had onl been
three other times this threshold as reached From September to October this ear
e sa a b mp in sage ith transactions increasing b appro imatel
What has likel contrib ted to to sage is the Sapling pgrade Sapling made it
possible for shielded transactions to be performed m ch faster and req iring
DISCLAIMER
less RAM This has made it easier for third part allet pro iders to add s pport
hich e ha e seen ith G arda Wallet Zepio Wallet and Zec allet
Ob e i g he A i Se
So rce The Block Zcashd Electric Coin Compan
The Zcash anon mit set gro s as more transactions happen in the pool O er time it
becomes more ef cient as opposed to other pri ac methods s ch as mi ing Th s
e ill e amine the c m lati e total of transactions in the shielded pools o er time
In total there ha e been f ll shielded transactions since the net ork came
into e istence While Sapling transactions ha e onl been possible for appro imatel
a ear the no acco nt for of all to transactions e er cond cted
DISCLAIMER
P c Ta ac F S d d
Source The Block Zcashd Coinmetrics
Through Zcash s histor up until October this ear full shielded transactions have
onl represented approximatel of transactions on the network However since
the Sapling upgrade that number has increased to about This October also
experienced its highest monthl percentage total representing While
transactions overall have been declining essentiall since June full shielded
transactions have sta ed stead and have slowl increased
The ear prior to the Sapling upgrade the network averaged to transactions
per month Since the upgrade Zcash has averaged to transactions per
month an increase of approximatel
DISCLAIMER
82
Private Transactions on Zcash compared to Monero
So rce The Block Zcashd Coinmetrics
To get a better pict re of pri ate transactions on Zcash e ill e amine to sage
relati e to Monero another pop lar pri ac foc sed cr ptoc rrenc Since Zcash
la nched the net orks ha e had almost an identical n mber of transactions
to a difference of onl abo t The main difference has
been XMR transactions offers its pri ac feat res b design hereas ith ZEC it
req ires o to opt in This has res lted in Monero ha ing more pri ate
transactions
Conclusion
O er the months since the Sapling pgrade la nched for Zcash e ha e seen an
increase in f ll shielded transactions ith more third part allet pro iders offering
s pport Despite this these transactions onl represent appro imatel
altho gh this n mber has been gro ing With a high n mber of pri ate transactions

DISCLAIMER
cond c ed on Monero here ma be room o gro for o sage as cond c ing
s ch ransac ions becomes easier
DI CLAIME
CEO of Digi Global considers
full liquidation of Digi DAO s
M treasur holdings
No ember
Quick Take
● Digi Global he compan behind Digi DAO DGD i con idering a f ll
liq ida ion of Digi DAO rea r balance of ETH and re rning i o
DGD oken holder
● Beca e DGD marke cap c rren l rade a a di co n o he al e of
ETH in i rea r a f ll liq ida ion co ld lead o a po en ial re rn for
DGD oken holder a ming all price held con an
Digi Global he compan behind one of E here m earlie ICO Digi DAO DGD i
con idering a f ll liq ida ion of i rea r and re rning he remaining f nd back
o DGD oken holder
If o recall Digi Global rai ed o er ETH back in or h abo

million a he ime in order o p gold on he blockchain ing a o oken
econom hich con i ed of
● DGX a oken ppo edl backed b ph ical gold ored in The Safe Ho e in
Singapore
● DGD a go ernance oken for Digi DAO he DAO re pon ible for managing he
ICO f nd o f r her he projec de elopmen
A of oda Digi DAO ill hold a o al of ETH ETH in of ine f nd

ETH in online f nd or h appro ima el million In compari on
Digi DAO oken onl ha e a marke cap of million a di co n oi
DISCLAIMER
ea balance If Digi DAO e e o liq ida e i en i e ea and e ni o
DGD oken holde hi o ld ield a e na c en ma ke ae
Fo Digi DAO f ll liq ida ion o f ll di ol ion a efe ed o b he Digi

comm ni i ie ed a a la e o a i o ld effec i el h do n he p ojec
Gi en Digi DAO ha been ading a a di co n oi o al ETH holding fo a hile
di ol ion ha been b o gh p man ime The di c ion a e i ali ed follo ing
ecen commen b Digi Global CEO and Co Fo nde Kai Chng
Di ol ion i on he able a a comp omi e i h he b ne beca eab n

f nc ion i being eq e ed hich e a e again Chng aid on Digi p blic Di co d
e e on F ida
The b n f nc ion efe o a p opo al b o gh p b DGD oken holde hich o ld

allo holde ob n hei DGD fo he ETH in Digi DAO ea S ppo e of he
p opo al gge ed ha hi o ld incen i i e p opo al ha con ib e o he o al
ETH pool a he han ake a a Digi Global ha been oppo ed o he p opo al a
he belie e i o ld be in iola ion of U S ec i ie la In ead of implemen ing a
b n mechani m Chng no ed ha he o ld p efe a f ll liq ida ion of Digi DAO
ea
Ho o ld f ll di ol ion ge pa ed
A f ll di ol ion o ld fall nde a pecial cla of p opo al ha can onl be

p opo ed b Digi fo nde hich Chng aid he a illing o con ide on F ida
Af e a fo nde ha bmi ed he p opo al DGD holde m o e ei he fo o

again i The o ing pha e o ld la fo one mon h allo ing h ee eek fo
commi ing o e and one eek fo e ealing o e
In o de fo i o pa he p opo al o ld need a minim m q o m of of he

Locked DGD S ake a ell a a minim m q o a e o e of
DI CLAIME
H i hi a f he e
A o lined b Maple Leaf Capi al a f ll di ol ion a c en p ice co ld

po en iall e e a an a ac i e oppo ni fo in e o e peciall fo ho e i h
bea i h ie on he long e m de elopmen of he Digi econom gi en ha DGD
ma ke cap i c en l ading a a di co n o he al e of i ETH ea
F ll di ol ion o ld al o allo he Digi Global eam ho con ol a lea of

he o al DGD oken acco ding o Chng o di band he DAO and mo e on o ne
p ojec hile ecei ing a ick pa o in he p oce
Of co e ho e eeking an ea di co n o NAV pla do face ome e io i k
Fi of all he p opo al o ld need o be bmi ed b a fo nde I nce ain

he he Chng o an of he o he fo nde ac all in end o bmi a di ol ion
p opo al de pi e ecen commen I po ible i a all a e in o de o ell DGD
oken a in a ed p ice
I al o po ible ha he o e ma no pa he needed e i emen a no ed

abo e Lo o e no o a high concen a ion no o e co ld p e en a deal
f om going h o gh
La l he de ail and imeline of an po en ial li ida ion a e ill la gel nkno n

Wo ld he e be a e i ed eco d da e fo DGD holde o be eligible Ho long
o ld i ake fo he fo nde o bmi a p opo al Ho long o ld i ake o
ecei e a pa o if he p opo al cce f ll en h o gh
The e a e ill man e ion lef o be an e ed
DISCLAIMER
Stellar lumens token burn
displaying market price
inefficiencies
No ember
Quick Take
● After obser ing diminishing res lts from its token gi ea a s the Stellar
De elopment Fo ndation chose to b rn billion of the e isting billion
l mens XLM rather than mostl distrib te it ia airdrops and partnership
programs
● Altho gh the token s ppl had been effecti el red ced b appro imatel
the price of XLM onl ent p after the anno ncement
● This co ld possibl be a signal that XLM as o erpriced to begin ith
● Gi en the lack of token speci c catal sts and high correlations to Bitcoin
prices perhaps the potential re ard is not orth the risk for short sellers
leading to inef cient market prices
Last eek the Stellar De elopment Fo ndation SDF anno nced that it had b rned
billion l mens XLM or of the e isting s ppl orth abo t billion at the
time of the b rn After reali ing the diminishing effects of its token gi ea a s the
fo ndation made a complete and chose to red ce the token s ppl rather than
tr to force adoption thro gh dil ti e airdrops
Prior to the e ent the fo ndation had controlled billion of the billion e isting
l mens After the b rn SDF no controls billion o t of the e isting billion
Altho gh none of the billion l mens b rned ere part of the c rrent circ lating
s ppl the ast majorit of these tokens had pre io sl been set to be added to the
circ lating s ppl ia airdrops and partnership programs
DISCLAIMER
So rce The Stellar De elopment Fo ndation
In theor one o ld think that o er a red ction in the s ppl of an asset o ld

more than do ble its price Of co rse a in price o ld onl be j sti ed ass ming
the tokens ere pre io sl being priced effecti el Interestingl eno gh the price of
l mens onl increased b abo t follo ing the anno ncement
Gi en the h ge discrepanc perhaps one co ld come to the concl sion that l mens
ere o er al ed to begin ith This o ld feed into man skeptics beliefs that the
ast majorit of cr ptoc rrencies are o erpriced Ho e er if this ere the case h
o ldn t hedge f nds make a fort ne b shorting these tokens
Considering the lack of token speci c catal sts and high correlation to Bitcoin prices
it s likel that the risk re ard is j st not there
Compared to p blic eq ities the transparenc of these tokens is e tremel limited

There are no q arterl nancial reports no insights on ho internal decisions are
made and no req ired disclos res of an kind These cr ptoc rrencies lack an
s bstantial token speci c negati e catal sts beca se the onl information that
comes o t of these organi ations ith a massi e in ence on the token s
de elopment is onl hat the feel comfortable sharing Yo ma get the occasional
DI CLAIME
nega i e headline from a his leblo er or go ernmen en i aking enforcemen
ac ion b hose are fe and far be een
To be clear I am no sa ing ha he S ellar De elopmen Fo nda ion is an less

ransparen compared o o her organi a ions in he cr p oc rrenc space Ho e er if
S ellar reall is he open ne ork for s oring and mo ing mone ha i claims o be
i o ld be nice if he organi a ion ha con rols he majori of he oken s ppl
po en iall or h billions of dollars co ld release p blic nancial s a emen s
Addi ionall cr p oc rrenc prices s ill re ain high correla ions o one ano her Good
l ck shor ing a par ic lar oken o onl ge blo n o of he a er af er a s dden
j mp in Bi coin prices According o ske man of he op cr p oc rrenc prices
ha e an correla ion o one ano her Al ho gh XLM s price correla ion o Bi coin
as onl in comparison i s correla ion as s ill s bs an ial
So rce ske
O er ime he marke ill ge a be er percep ion of he r e inners losers b d e

o he lack of clari e ill ha e o li e i h he po en ial marke inef ciencies for
he ime being
DI CLAIME
Company
DISCLAIMER
Cr pto nall gets its U S IPO
and the Cliff of Valinor
No embe
Q ick Take
● Sil e ga e IPO P and Take f om he c o bank
● E o ean bank Cliff of Dea h No i e
Sil ergate IPO

And j like ha a bank holding com an ha al o e e mo e han c o
clien i no blic on he NYSE Sil e ga e Ca i al Ticke SI a mall So he n
Califo nia comm ni bank ha i o ed o being a co e e ice o ide o digi al
c enc f nd and e change e ea ago li ed i ha e on he Ne Yo k S ock
E change Th da and ni hed i da of ading hich he ha o
co n fo ome hing gi en he a e of e fo mance fo mo IPO in
In ha ha been an nde a ed heme of he blic li ing of Sil e ga e ma k

e ano he e am le of ne a fo b oade in e o o gain a a ene and da e I
a fo m of e o e in o he c o ma ke Thi i n o a en LongFin o
Long I land Blockchain Co b a e angible b ine model b il a o nd
e icing e change f nd and o he com anie i hin c o I al o ma k he
Digi al C enc G o o folio com an o go blic in he U S
I e alked abo hi in e io col mn hi ea b he g o ing n mbe of la ge

blic U S e i com anie ha a e ie l nif ng a o nd i hin he blockchain
and c o andbo i d i ing inc ea ed ecogni ion i hin he ell ide anal
comm ni fo he need o ha e ome kind of info med ie on he ace Thi i
o e f l ff a no onl a e clien i h he ca i al no fo ced o e hink hei
o n o ld ie and o en ial a ack ec o on hei in e men b he eo le
elling he ma ke na a i e ha e ome hing ne and hinn o h
DISCLAIMER
Whe he i S a e JPM gan Faceb k Mic f ICE Fideli he e ha been a
f ann ncemen ff a in c and bl ckchain b la gel c e ed U S
blicl aded c m anie hi ea and e he li ing f Sil e ga e and c ming
c mine Canaan C ea i e IPO gge ha m e e la c c m anie
a e indeed c ming he blic U S ma ke I an e ci ing de el men a ch
in
Back Sil e ga e The Bl ck Ma Yamam e an da ed Q Sil e ga e S
anal i ahead f he IPO ha I ec mmend gi ing a ead if e in e e ed in
lea ning m e ab he c m an a eg and g h ec In h he
c c mm ni bank ha een an im e i eg h in c me
YTD acc n ha an ac c e change C inba e Gemini Bi am Pa
Ci cle in i i nal in e Bl ck e P l chain Ca i al and e en he
c me ch a S Fi Mike Cagne Fig e and Ki a
DI CLAIME
Sil e ga e digi al a e e icing a ed a a g o p ha foc ed on he depo i and
ca h managemen need of he e c ome i hin c p o and g e f om he e
p ima il b o d of mo h and clien efe al In h ee ea ime he compan
ipled depo i all ca h depo i he compan doe n c od c p o e f om
million o billion The bank eal ime ca h pa men ne o k he
Sil e ga e E change Ne o k SEN al o con in e o ee imp e i ego h SEN
p o ide acce o nea l in an aneo USD an fe among he bank
g o ing digi al c enc ela ed clien ba e and no ee mo e han billion in
q a e l ol me p YY
So ce Sil e ga e Capi al Co p The Block
Looking ahead he compan offe a niq e g o h o fo a comm ni bank

ome hing of a a e concep i hin he banking ind In i S ling he compan
gge he e i a pipeline of addi ional clien looking o bank i h Sil e ga e
and be ond ha a o al add e able ma ke fo c p o compan ca h depo i
be een billion he c en l ha e billion Yo d ha e o imagine ha if
Sil e ga e i cce f l in con in ing o g o ha e i hin ha pie ha o he la ge
bank o ld ha e o con ide looking a he pace And in he back of m mind I
keep onde ing ho if a all hi impac a po en ial Coinba e IPO do n he oad
Checking in on Rao l Pal E opean Bank Cliff of Dea h
DI CLAIME
Speaking of bank do o emembe he De che Bank banke bi coin bag aga
Ha d o belie e i a onl fo mon h ago I kno Wha I emembe abo ha
eek a ho he banke bi coin bag image a emblema ic of he b oade conce n
of a o al collap e of he EU banking ec o led b De che I al o emembe call
fo E opean bank o b eak pa he Cliff of Dea h b Global Mac o p ndi and
Co Fo nde and CEO of DoomRealVi ion Rao l Pal
DI CLAIME
Us all I d sa these proclamations in good faith are largel innocent People are
entitled to their o n opinions These are markets after all B t hen some directl
pro t from the fear of total nancial collapse promotional one time sale offers
s rro nding recession programming at Real Vision kicked into high gear directl after
the call and ha e as m ch reach and impact as Rao l I don t think it s o t of line to
q estion some of the intentions
For s in cr pto land it also led man ithin bitcoin circles to b into the fear hook
line and sinker Granted Bitcoiners ha e a er odd penchant for cheering for macro
meltdo ns b t still it s hard to effecti el DYOR Do Yo r O n Research hen
charlatans roam the lands nabated
DI CLAIME
Back in Jul I wrote in this column that people were blowing the DB and European
bank narrative out of proportion warning not to fall for the Pomplovian response
and to ignore the meme
The fact of the matter is DB is a SS of a bank and it has been for over a decade Yet
latching onto the recenc bias of the last decade s nancial crisis mixed with DB
headlines and bitcoin bag photos as a sign of European banks crossing cliffs of
death is a false positive
DI CLAIME
Look I ge i he Pomplo ian e pon e can be i e i ible a ime Who doe n ha e
bank B De che i n Lehman a he a of no i hi e c ing he
a of he m ol enc n ind
Wha i eall i i apo abili i e I a lack of abili o effec i el compe e

again i onge U S pee I a o of emic o gani a ional fail e
emming f om decade of failed global leade hip a decline ha been nde a
ell befo e i a cool o o bi coin a he ingle be hedge again he
adi ional nancial inf a c e le alone Bi coin gene i block And if an hing
i an allego of ha happen o o gani a ion o comm ni ie ha a e oo ck
in old a and fail o e ol e
So ho ha Pal call o ked J abo a ong a o can be i hin Mac o pai
ade The EURO S o inde Pal ci ed a b eaking an da i p ince hen
hile bi coin i do n Wha a ime o be long E opean bank and ho
bi coin igh
So ce Fac Se
DI CLAIME
O erstock Q Re ie Weak
earnings and SEC subpoena
sends shares tumbling
No ember
Quick Take
● Despi e lo ering g idance in Sep ember O ers ock s Q res l s came in less
han e pec ed as sales fell ear o er ear
● ZERO con in es o disappoin as rade ol mes remain lo and miles ones
ge dragged o
● Q ar erl lings re eal ha he compan recei ed a s bpoena from he SEC in
regards o he compan s digi al di idend
● The compan also q ie l anno nces i s plans for an ATM offering for p o
million or h of common s ock
Follo ing he idel p blici ed depar re of i s CEO and CFO O ers ock pos ed
disappoin ing Q res l s on all fron s The compan missed he S ree es ima es on
bo h he op and bo om line as re ail sales and progress on ZERO s sec ri oken
b ildo ere less han e pec ed The re eal of an ATM offering and a s bpoena from
he SEC added o shareholder fr s ra ion leading o a p llback in he s ock
T esda
Retail disappoints despite lo ered guidance
E en i h he compan lo ering i s Q g idance in la e Sep ember near he end

of he q ar er i s nancial res l s came in belo e pec a ions Repor ed re en es
ere million a ear o er ear decrease from las ear s million and
belo he S ree es ima e of million
DISCLAIMER
99
Although the company cited a negative impact from “increased tariffs on goods
manufactured in China (similar to that of its main competitor Wayfair in its 3Q19
earnings call), sales was likely further adversely affected by the company s pullback
in marketing spend (a strategy that Overstock had implemented in April 2018 to
reduce operating losses).
As a result of the weak top-line performance, Overstock s net loss of 30.9 million
( 0.89 a share) came in much higher than the Street estimate of 22 million ( 0.62 a
share).
tZERO once again extends its timeline
Since the launch of tZERO s security token platform in January, progress has come
much slower than originally anticipated. The only tokens that trade on its ATS include
its own two tokens TZROP and OSTKO, and trading volume is nearly non-existent
(TZROP averaging less than 7,000 of volume a day for the past month).
tZERO CEO, Saum Noursalehi, previously estimated that there would be five to 10
tokens available for trading by the end of the year. However, he has now dialed down
expectations to adding only three to five tokens to the platform either in 4Q19 or
1Q20.
The anticipated launch date for tZERO s national security token exchange, BSTX, was
also extended from 4Q19/1Q20 to now 1Q20/2Q20.
150 million ATM offering
Hidden in a separate 8-K filing released this morning, Overstock quietly announced
its plans to sell up to 150 million in new shares via an ATM offering.
Given repeated sizable losses from both the retail business and the blockchain
business, cash has been a reoccurring issue for Overstock. The company just
completed a separate 150 million ATM offering, but a year-to-date net loss of 105
million has chewed through most of the proceeds.
DISCLAIMER
So ce O e ock
B ed cing ma ke ing end and im o ing logi ical co ef ciencie managemen

had ho ed ha e ail o ld be able o gene a e eno gh o i i e ca h o b
o co e lo e f om i blockchain b ine e Highe han e ec ed ale
de e io a ion and lo og e f om ZERO ha ho e e oned do n e ec a ion
S b e af m he SEC
Since Feb a O e ock ha been dealing i h a ending SEC in e iga ion

ela ing o i ZERO ec i oken offe ing In Se embe ne l min ed O e ock
CEO Jona han John on had no ed ha he in e iga ion a almo do man an
in e ie i h Fo B ine Ne a he SEC e e fo info ma ion had lo ed
do n
Acco ding o he Q Q led hi mo ning ho e e he com an e ealed ha i

had ecei ed a b oena f om he SEC on Oc in ega d o a digi al di idend ha
man had acc ed of c ea ing a ho ee e The ling al o no ed ha he
com an had ecei ed ecen e e f om he SEC ega ding fo me CEO Pa ick
B ne a ell a GSR a i aee i m ho backed o of a deal o in e
million in o ZERO
On he ea ning call John on do n la ed he effec he in e iga ion o ld ha e

on he com an no ing ha o ide he legal g o hi ake e li le ime f om
an one el e a he com an Con a o hi he Q a ed ha he com an ha
e ended igni can nancial and legal e o ce e onding he SEC b oena
DISCLAIMER
O C a K a
N embe
Q c Ta
● K aken i ne f he lde c c enc e change c f nded b Je e
P ell in
● The e change i he i h la ge em l e in he bl ckchain ind i h
a ima el em l ee K aken al ank a a f e change in i
de b k de h he li idi i ide and al aded l me
● The Bl ck ha ma ed ke membe f he K aken eam and hei
hi ical le a a m leading hei c en i i n
K aken i ne f he lde c c enc e change c f nded b Je eP ell in

The e change a f med a an al e na i e he n i e change M G
hich h d nd e i infam hack and l f f nd K aken a ne f he
e change be li ed n he Bl mbe g Te minal
The e change ha ecei ed in e men f m me n able c c enc in e

hich incl de Bl ckchain Ca i al Ba Silbe Digi al C enc G and T ace
Ma e I ha al a ac ed in e men f m in e men f m n n c na i e
in e incl ding H mmingbi d Ven e SBI In e men and M ne Pa ne
G
The Bl ck ha e ima ed ha he e change i c en l he i h la ge em l e in

he bl ckchain ind i ha ima el em l ee K aken al ank a a
f e change in i de b k de h he li idi i ide and al aded
l me
K aken ha de el ed be nd a im le e change e anding i ffe ing incl de

ma gin ading f e indice and an OTC ading de k A a fi e an i n
he e change ac i ed N h Ame ican E change C in e e Ca i e and
C Facili ie a B i i h De i a i e Pla f m
DISCLAIMER
The Block has mapped o t ke members of the Kraken team and their historical
roles at past rms leading p to their c rrent position This is part of an ongoing
series e ploring and mapping o t the organi ations in the cr pto ind str
Jesse Po ell
Jesse Po ell is the Co fo nder and Chief E ec ti e Of cer at Kraken Prior to

fo nding Kraken in Po ell as the fo nder of Verge Art a ne art galler Po ell
also fo nded and ser ed as CEO to t o companies that catered to the gaming
comm nit hich incl ded Internet Vent res Holdings and Le t
DISCLAIMER
Da d R e
Da id Ri le i Chief O e a i g Of ce a K ake He j i ed he m i Oc be
P i j i i g K ake Ri le c f ded Glide a a bl ckchai c m a ha a
la e ac i ed b K ake Ri le a al P i ci al a The B C li gG
he e he ad i ed F e e ec i e a daP d c Ma age a S cl
Ka e Ng
Kai e Ng i Chief Fi a cial Of ce a K ake P i j i i g K ake i Ja a

Ng a Head f S di O e a i a d HR a DeNa Ng al f ded Em e i Bi d
Ne a d a a Di ec f Fi a ce a TIO Ne k C
Ma Ma
Ma Ma i Chief Ma ke i g Of ce a K ake P i j i i g K ake i Feb a

Ma a S di Head a NOTH NG a i ai lab f ded b S
Pic e E e ai me Ma ha al held e ec i e le a Bi T e a d
S LBI
DISCLAIMER
104
Nicholas Percoco
N ch a Pe c c Ch ef Sec Of ce a K a e Bef e gKa e

Se e be Pe c c a he Ch ef Sec Of ce a U a e a ed c e
a a c SaaS af Pe c c a a he V ce P e de f G ba Se ce a
Ra d a d a D ec a KPMG US
Steven C.
S e e C G ba Head f C a ce a K a e P gKa e A g
S e e ed a FIU Ma age a OFX S e e a he d e ec e e a he
c c e c c d de Xa a Ch ef C a ce Of ce a d he Ba f
he We a a V P BSA AML I e ga Ma age
Robert Zago a
R be Zag a Ch ef C e c a Of ce a K a e He ed K a e J e
Zag a ha he d e ec e e a CME G a d Ga aghe He a c f ded
a d e ed a Ch ef E ec e Of ce a F hF C g a ae he d
a age e c g
DISCLAIMER
R Wa a abe
R hi Wa a abe i Head f APAC a K ake Bef e j i i g K ake i Ja a

Wa a abe a B a d f Di ec Pa e a C af a i e e ad i He al
held le a Th Re e a a O e a i g Of ce a d N aa a E i
Ma agi g Di ec
Ne M e
Nel Mi ie i Head f OTC Sale T adi g a K ake P i j i i g K ake a d

Ma ch Mi ie ha had e ea fe e ie ce i eai g adi g de k a
i cl di g C edi S i e JPM ga Ci iba k UBS a d M ga S a le
S e eH
S e eH i VP f E gi ee i g a K ake Bef e j i i g K ake i A il H

a CTO f J T adi g H al e ed a VP f Tech l g a G ld a Sach
DISCLAIMER
Ma B B c a a
Ma Be h B cha a i he Ge e al C el a K ake P i j i i g K ake a d

Ma ch B cha a a a Pa e a B a Ca e B cha a ha e ed a a E hic
a d Re ai al Ri k Of ce f The U i ed Na i he e he a e ed he e hic
a d e ai al i k f eacekee i g eai B cha a a al a U i ed
S ae A e f he U S De a e fJ ice
R dH
Reed H i Head f Ba ki g Pa e a K ake Reed H j i ed K ake i Feb a

Reed i he e f P ce i g c a a e ce i gb i e P i
hi i l e e a K ake Reed ked a a Sale B i e De el e
E ec i e a BillP a d Head f C S l i a V g g
B a d Ga
Ba d Ga h i Head f C a e De el e a K ake Ga h j i ed K ake i

Se e be P i j i i g K ake Ga h a he S Di ec C Head a CME
Ve e CME G illi e ef d Ga h al held le a a
A cia e a Ba cla a daC la a Acce e
DISCLAIMER
107
Shimon Lazarov
Shi La a i Head f G h a K ake La a j i ed K ake i Ma P i

j i i g K ake La a a he C F de f Li eC ach a li e c achi g
a ke lace La a al held leade hi le a de ig a Di ec fU e
Ac i i i a dS ka a a Head f Ma ke i g
Kevin Beardsley
Ke i Bea d le i Head f B i e De el e a K ake a d hei f e

d c P i j i i g K ake i J l Bea d le a a Pa e Head f
B i e De el e a El dA e Ma age e Bea d le a al a Ma agi g
Di ec a B C ac c e c OTC li idi ide a d Head f B i e
De el e a Elli ic a da a a d a al ic ide fc c e c a ac i
Maximilian Marenbach
Ma i ilia Ma e bach i Head f Ba ki g a K ake P i j i i g K ake i

Dece be Ma e bach a he I e ai al a d Pa e hi Lead a b
Ma i ilia al held le a I a i S e a a E ec i eA i a a d EDHEC
B i e Sch l a a Re ea ch A i a
DISCLAIMER
Dan Held
Dan Held is the Director of B siness De elopment at Kraken Held joined Kraken in
J l Prior to joining the compan Held orked as the Director of B siness
De elopment for Interchange Held has also had roles at Uber as Head of ASO and at
other blockchain rms hich incl de Changetip and Blockchain
DISCLAIMER
A look at Binance US gro th
and volume a er its rst
month in business
No embe
Quick Take
● Binance US ecen l comple ed i f ll mon h of ope a ion
● The Block anal e he e change ading ol me and g o h
● We fo nd ha e en a e make p o e of he e change ol me
● T ading ol me ha al o ecen l lo ed do n ince he end of he e change
e o fee ading campaign
In ea l J ne Binance anno nced ha i o ld begin blocking U S ade f om ing

i e change La e in he mon h epo faced ha Binance o ld e pand i
e ice in o he U S b e abli hing an independen o gani a ion called Binance US
h o gh a pa ne hip i h BAM T ading Se ice
In la e Sep embe Binance US of ciall opened i doo fo ading nde he

leade hip of CEO Ca he ine Cole a fo me Ripple e ec i e The e change no
ppo a e and h ee ba e pai A Binance US of ciall pa e i
mon h of ope a ion The Block ake a look in o he e change ading ac i i and
ol me
We do no e ha d e o Binance US apid addi ion of ne a e e a e mi ing

hi o ical da a ol me fo a e on he e change The e a e make o ghl
of Binance US a e age ading ol me We belie e hi ading ol me i no
igni can eno gh o impac an concl ion d a n f om o anal i Ho e e e
do plan on doing follo p piece a he e change con in e ogo
DISCLAIMER
The chart below shows Binance US volume since Oct
Source CryptoCompare The Block
The exchange s average daily traded volume is approximately million Binance US

trading peaked on Oct clearing nearly million in volume Since then however
trading volume has slowly dropped On Nov volume dropped over from the
prior day This drop coincided with the end of Binance US zero fee trading campaign
and is one of the exchange s largest single day volume decrease as we see in the
chart below
DI CLAIME
When looking at the historical trading volume distribution on Binance US we see that
bitcoin maintains a large share of trade interest on the exchange Since the beginning
of October bitcoin averages around of total trading volume on Binance US as we
see below
In terms of total trading volume seven assets make up roughly of the

exchange s volume
DI CLAIME
Of the three base pairs that Binance US supports USD is the most popular with a
55 share of total trading volume since Oct 1
DI CLAIME

Trends
DISCLAIMER
funding trends within
blockchain and cr pto
sub verticals
No ember
Quick Take
● Refre hed f nding rend ia da a from Pi chbook
The follo ing f nding and M A da a in o Blockchain Cr p oc rrenc ind r

er ical come from Pi chbook
No e Pi chbook incl de man broader companie i h non core b ine line or

ra egie ha in ol e blockchain or cr p o b ine e i hin i peer gro p ome
of hich incl de radi ional of are IT er ice and c ber ec ri companie The
da a a cleaned and improperl cla i ed companie dollar ran ac ion ere
remo ed i hin he op ro or ed b capi al rai ed I impor an o no e
here ma ill be ome incon i encie be ond he e al e e repor
While a a rr of gro h in bo h he freq enc of o al deal and

o al capi al rai ed o far hro gh eek lef f nding in o he
pace ha of ened igni can l acro ario in e men ca egorie
Corpora e M A Ven re P E and IPO and e en more i ibl i hin la er en re
deal Serie B and be ond and M A ac i i
DISCLAIMER

Source: Pitchbook, The Block
YTD in 2019, the total USD value of venture investment (excluding deals 1.0 million,
Seed and All Series) into the sector has come in at 1.5 billion in 2019 (total number
of deals at 269), down 40 Y/Y (vs total number of deals down 60 ). These
numbers exclude Mike Cagney's, Figure, which raised 1 billion in debt financing early
in 2019 to fund blockchain-based HELOC loans. While the average deal size came in
at 26.2 million in 2018 vs. 11.1 million in 2019, the median for the two values is
significantly smaller (big-ticket deals skewing the average to the upside) at 10
million vs. 5.5 million, respectively; suggesting 2018 saw a larger concentration of
higher value "outlier" deals compared to this year.
Within Seed funding, the average size of the deal has actually slightly increased in
2019, from 2.3 million in 2018 to 2.5 million in 2019, due largely in part to a 60
reduction in deal count year-over-year.
Finally, M A has seen almost a 60 reduction in total value of deals in 2019, due to
muted M A in the year (Kraken Futues and Xapo leading the way at a combined 155
DI CLAIME
million worth of investment) as well as a pair of $400 million deals for exchanges
(Poloneix and Bitstamp) in 2018.
DI CLAIME
So rce Pi chbook The Block
No e n mber e cl de Fig re B deb nancing ro nd o origina e HELOC
Breaking o he Top large M A Seed and All Serie rai e highligh hi

d namic La ear he op large M A deal a o er billion or h of
ac i i led b Polonei million Bi amp million Earn com
million and Cr p oGlobal million So far hi ear ha onl een million
or h a he bear marke impac ed he mining b ine par ic larl hard hich a
one of he larger bene ciarie of cr p o M A la ear We can help b onder if
i e ing p for increa ed M A ac ion a c od and e change pro ider look
o con olida e and aggrega e depo i o
DI CLAIME
We ve listed the top 10 largest deals for both Seed rounds and All Series investments
below:
Source: Pitchbook, The Block
DI CLAIME
Finally DCG continues to outpace total investments in the space in both 2019 and
2018 across both Seed and All Series investments Galaxy has made most non seed
investments this year at seven to DCG s four
DI CLAIME
Crypto exchanges are
experiencing a traffic drop
since June
No embe
Quick Take
● The Block anal ed e change and hei mon hl af c in he la mon h
● Coinba e Binance Bi MEX and Bi h mb combined d e mo e han of he
o al n mbe of i i
● In Sep embe c p oc enc e change eco ded a o al of million
i i hich i le han in J ne
Web i e af c on c p oc enc e change ha been eadil dec ea ing d opping

b mo e han ince J ne
The Block ha anal ed he af c of he mo f eq en l ed c p oc enc

e change f om da a p o ided b Simila Web Simila Web hile fa f om pe fec i a
good indica o of eal ac i i on he e change Simila Web e m l iple algo i hm
and da a o ce b i impo an o ecogni e ha he da a a e ill e ima e
While eb af c co ld heo e icall be manip la ed i fai l ha d o do a a la ge

cale and in a con incing manne I al o po ible ha he eb af c coming f om
China co ld be nde a ed beca e of he e all and VPN
The Block anal ed e change and hei mon hl af c in he la mon h

anging f om Ap il o Sep embe
Coinba e had he la ge n mbe of e ima ed i i o in he e amined pe iod i h

abo million follo ed b Binance i h nea l million Th ee o he e change
eco ded mo e han million i i in he ame pe iod Bi MEX Bi h mb and Upbi
DISCLAIMER
All the other e changes had less than million visitors Coinbase Binance BitMEX
and Bithumb combined dre more than of the total number of visits
Source SimilarWeb The Block
What s far more interesting though is to look at the total eb traf c trend In
September hich is the latest month ith available data cr ptocurrenc e changes
recorded a total of million visits hich is less than in June
DI CLAIME
Source: SimilarWeb, The Block
This trend indicates that retail interest in cryptocurrencies is down on a global scale
after growing until June Perhaps not surprisingly, the traded volume on
cryptocurrency exchanges manifests a very similar trend
DI CLAIME
So ce CoinGecko C oCom a e The Block
DI CLAIME
Transaction fees are less than
of the total revenue in the
bitcoin mining industry
November 0
Quick Take
● In 0 miners have so far generated 0 billion billion from subsidy
and million from fees
● Gold production appears to be at least a 0 times larger than the Bitcoin
mining industry
● Despite reaching more than in December 0 the transaction fees were
on average only about of the total revenue in the last months
Bitcoin miners have generated billion in revenue in 0 billion from

block subsidies and million from transaction fees This year miners have so far
generated 0 billion billion from subsidy and million from fees The
revenue was estimated under the assumption that miners sell their bitcoins
immediately which is not exactly accurate as some companies retain a portion of
their mined BTC to sell at a later date
To put things in perspective Barrick Gold the largest gold mining company in the
world produced tonnes of gold in 0 and generated revenue of billion
The global gold mine production was reportedly tonnes in 0 meaning that
the total revenue generated from mining gold was likely upwards of 0 billion in
0 That would make gold production at least a 0 times larger industry than
Bitcoin mining
DISCLAIMER
Source CoinMarketCap Coin Metrics The Block
The majorit of transaction fees in and were generated in just two

months December and Januar At that time the median transaction fees
were consistentl above and reached as high as on Dec Now that most
of the e changes have implemented batching as well as Segwit the median fees have
sta ed under a dollar this ear with the e ception of Ma and June when median fees
jumped to more than
DI CLAIME
In Ma in months from no the block subsid ill decrease from to

BTC That means that in terms of BTC the revenue generated from subsid ill
be cut in half When that happens a lot of the less ef cient last gen mining hard are
Bitmain S s ill be made obsolete
It s hard to project hat that ill mean in terms of USD since no one kno s the price
of BTC in the future If BTC prices ere to decrease or sta constant it can be
e pected that some less ef cient miners ould be pushed out of the industr and
the hash rate ould likel decrease The more ef cient miners ould all survive but
their pro t margins ould certainl be compressed Hut Mining announced last
eek that despite the BTC price dropping b and the net ork dif cult rate
increasing b the compan reported a pro t margin of
If prices ere to increase the hash rate could either sta at similar levels or increase
depending on multiple different factors
DI CLAIME
Source New Money Review The Block
In the long run though as subsidy continues halving every four years the revenue
from transaction fees will eventually have to replace the subsidy Sometimes in 0
more than of the total BTC supply will be in circulation and the block subsidy
will drop to 0 BTC
DI CLAIME
Despite reaching more than in December the transaction fees were on

average only about of the total revenue in the last months Some mining
companies don t even include transaction fees into their projections because they are
still fairly negligible Whether transaction fees will be able to nance Bitcoin s
security in years still remains to be seen but the recent trend appears to be
quite unfavorable
DI CLAIME
1
Exchange volumes suggest

decreased interest from Asian
investors
No ember
Quick Take
● Among the e changes etted b Bit ise trade olumes are do n
considerabl since June
● As trade acti it has been trended lo er o er the past fe months olumes
ha e been notabl eaker bet een a m and a m UTC a m to p m in
China
● More Asia focused e changes as ell as Bitme ha e e perienced similar
declines during those hours
E change trade olumes remain suppressed from this ear s highs in June and b
looking at the hourl trade olumes the data ould suggest a fall off in interest from
Asian in estors O er the past fe months there has been a notable pull back in
acti it during the orking hours in Asia a m and a m UTC
Bit ise e changes
We took the aggregate monthl trade olume of the etted e changes b Bit ise
and categori ed it b the time of da As sho n belo the most acti e trading hours
ha e generall been bet een p m to p m UTC coinciding ith the orking hours
for those in Europe and U S East
DISCLAIMER
So rce Cr p oCompare Paradigm API The Block
Across all ho rs of he da ho e er aggrega e rade ol mes ha e declined since

o er he pas fe mon hs The o al ol me in Oc ober as do n since J ne
The char belo sho s he segmen ed ol me as a percen age rela i e o he

ho r i h he highes rade ol me of ha mon h
E D ring Jan ar he billion aggrega e rading ol me of he Bi ise

e changes a a m UTC as or less han ha of he billion aggrega e
ol me e perienced a pm
Wi h rade ac i i rending lo er since J ne he ol me has become less e enl

dis rib ed across ime ones O er he pas fe mon hs rade ol mes be een
am o a m UTC am o p m in China ha e generall been o less
han he mos dominan ho r of he da Gi en he no able drop off d ring orking
ho rs in Asia his o ld signal decreased in eres from Asian in es ors
DI CLAIME
A a f c ed e c a ge
Gi en ha mo of he Bi i e Real e change are domiciled in ei her he U S or

E rope i likel ha A ian in e or are nderrepre en ed i hin he ample i e
Beca e of hi e did he ame e erci e a abo e b ing he aggrega e rade
ol me from Binance bi Fl er Bi h mb Upbi OKe and K Coin al ho gh he e
re l ho ld be aken i h a grain of al gi en po en ial a h rading
Aggrega e elf repor ed rade ol me of he e e change ere do n in

Oc ober ince J ne
Un rpri ingl he re l from hi gro p of e change ho ed a higher alloca ion of

rade aking place be een a m and a m UTC am o p m in China
Similar o he Bi i e e change ho e er hi gro p al o e hibi ed a igni can

drop off d ring A ian orking ho r o er he pa fe mon h Gi en he e re l
i po ible ha in e or in ere from A ia ha been grea l red ced Ano her
DISCLAIMER
potential e planation could be that Asian investors are getting their cr ptocurrenc
e posure through other methods besides spot e changes derivatives OTC etc
Bitmex
Self reported trade volumes on Bitme as sho n belo also sho a similar pattern
Activit is most notable during the orking hours for those in Europe and U S East
Source Cr ptoCompare Paradigm API The Block
When comparing volume relative to the most active part of the da the data sho s
that relative performance falls off more signi cantl during the orking hours in Asia
DISCLAIMER
Spot Market Trends Binance s
dominance on the rise while
Bit nex continues to
underperform
No ember
Quick Take
● Among the Bit ise Real e changes Binance s market share has increased
from in J l to this month likel ca sed b increased traf c from its
ne prod ct la nches margin trading f t res lending Y an to cr pto OTC
trading etc
● Altho gh Bit ne has sho n short b rsts of o tperformance d ring periods of
large BTC price s ings its market share has declined from at the start of
the ear to mid single digits
● Polonie e perienced a b mp in market share in No ember thanks to spot
trading fees a promotion that ill last till the end of the ear
While e change trading ol mes contin e to disappoint relati e to the ele ated le els
e e perienced in J ne the market share amongst the e changes is constantl
shifting Within the past fe months reported ol mes sho that the ind str is
becoming less fragmented as Binance s dominance becomes more pre alent
Binance reaf rms its dominance
Back in March Binance controlled of the trading ol me market share amongst

the Bit ise Real e changes Altho gh its allocation declined to in J l the
e change has been q ickl regaining its foothold o er the past fe months
DISCLAIMER
Source: CryptoCompare, The Block
By plotting out Binance s daily market share , we can see its allocation increase
since July with its market share 15 day moving average approaching 70
DI CLAIME
In the chart below we have taken the aggregate trading volume of the Bitwise
e changes and categori ed them b the time of da
Each e change s market share uctuates throughout the da based on its user base s
active time one Relative to other parts of the da Binance has t picall been most
dominant during Asia s active time one a m to a m UTC
DI CLAIME
Despite Binance blocking U S c stomers from trading in September Binance has
appeared to ha e increased its market share across all time ones hen compared to
J l s aggregate trading ol mes as sho n belo
So rce Cr ptoCompare Paradigm API The Block
O erall Binance s ol me allocation increased from in J l to this month

E er other e change lost market share ith the e ception of Polonie hose
allocation increased from to
The timing of Binance s impro ed market share coincides ith the e change s
e panded prod ct offerings s ch as the la nch of its margin trading la nched J l
lending A g st f t res September and Y an to cr pto OTC trading
platforms September
DI CLAIME
Source Multicoin Capital
Although many of these products don t impact Binance s spot trading volumes
directly the culmination of these products onto one location has likely strengthened
the exchange s network effects
Bi e i i c i e de e i a e
After starting the year with around 18 market share Bitfinex has since seen its
position quickly dissipate to mid single digits
DISCLAIMER
While its market share held relativel stead between Ma and August Bit ne has
e perienced a notable drop off within the past few months
In conversations with The Block Paolo Ardoino CTO of Bit ne suggested that
Bit ne tended to underperform relative to its peers during periods of low activit
When the market is slow we do reall low volumes But as soon as there is a price
spike our volume is higher than almost an e change said Ardoino
As shown from the scatter plot above Bit ne has had small bursts of
outperformance when there has been a large shift in Bitcoin prices
● On September Bitcoin s price plunged Bit ne obtained market

share that da
DI CLAIME
● On October Bitcoin s price jumped Bit ne obtained market share
that da Bit ne s elevated trading volume persisted the ne t da before
falling back down to around
Polonie shows signs of life as it reduces spot trading fees to
Polonie has hovered around market share for most of the ear Since its
announced spin out from Circle last month Polonie has temporaril reduced its
spot trading fees to as part of a promotion to increase traf c As a result
Polonie has had its market share increase to nearl although it s uncertain how
sustainable this will be once the promotion ends on December
DI CLAIME
1 0
Money 2 0 Stuff Making

money making money
N embe
Quick Take
● C m nd la e al a i n ld be ab d if he did n ha e a iable a h
m ne i a i n
● The PLA ie MMORPG
Monetizing Open Finance
S me ime c m anie ai e me m ne a me al a i n and hen me e le

i h T i e acc n gi e hei feedback n he ce S me ime a el e
b I e me a lea me f he ime he e T i e acc n a nice hing
like He hi c m an j ai ed Xm a Ym al a i n and c n ide ing hei
cce da e i feel like a g ea deal f b h ide Tha ld be eall nice
M f he ime h e e he e T i e acc n i e me hing n e nice
He hi c m an ai ed Xm a Ym al a i n b like he nl gene a ed Zm in
e en e e he a m n h Im al h gh in eali e ha nin i i el
he e c mmen e e en ac all ffe ed lacemen in he la e nd
Thinking ab hi e change h gh he igh ng f ame ki e ha

mi ing he in i elf l ima el he di ag eemen c me d n e ec ed g h
a e and e ec ed ma gin and e ec a i n ega ding he abili a
c m e i i e d namic ha ill likel la e he c e f e e al m n h
ea The e i a a h e en e gene a i n a a h abili he e i ni
he he he c m an can cce f ll na iga e e ec e ha e e hi ah
B hen e ha e c m anie like C m nd
DISCLAIMER
Compound, the decentralized finance (DeFi) lending protocol, just raised a staggering
25 million Series A led by Andreessen Horowitz, with participation from Bain Capital
Ventures, Polychain Capital, Paradigm, and others.
Leshner said Compound has yet to figure out a viable business model. However, the
handsome Series A funding will sustain the company before it achieves significant
market share.
"In some ways, I think of us similar to Google, which is nobody asks Google what its
business model is because it developed [the business model] after it achieved
significant market share," said Leshner.
Stepping back for a second: take a company like WeWork. WeWork feels like a
disaster but could, in theory, become profitable if it manages to charge more for
desk rentals than it spends on long-term lease payments. Take a company like Tesla,
which feels like a passion project that got slightly out of hand but, in some
multiverse, can produce enough cars to sell for enough cash to cover the
flamethrower R D budget. But then we have Compound, which just raised 25m at a
rumoured 90m valuation. Not only has Compound not generated any revenue, they
don t even have a business model. Some analysts have pronounced the valuation as
‘absurd and, on first look, it feels like they might be onto something?
Open Finance projects, of which Compound is one, have two fundamental, orthogonal
obstacles to overcome before constructing a path to monetization. The first is
defensibility. As open-source systems, Open Finance protocols are exposed to
‘forking risk : the introduction of explicit user fees may perhaps be perceived as
‘rent-seeking , frustrating those initially attracted to this parallel financial system due
to its emphasis on disintermediation. Forking is not exactly free — repos must be
maintained and liquidity itself cannot be duplicated via GitHub — but it is not outside
of the realm of possibility. Given enough goodwill and technical merit, a forked
protocol can feasibly usurp the master platform: although not by definition a fork,
Uniswap has certainly succeeded in bypassing Bancor as the go-to Automated Market
Maker exchange. The reality is that justifying value capture becomes increasingly
difficult as you collapse mediated marketplaces into peer-to-peer networks.
DI CLAIME
The econd mo e h ea ening ob acle i eg la o i k The e al e o o i ion
of O en Finance lie in eg la o a bi age a o e I ha e e io l de c ibed
a e mi ionle o i migh eem i e ob io ha he e eg la o ha a e
being a bi aged ill no ake a ic la l kindl o he mone i a ion of ch e ice
Mo e eci call one migh a g e ha b no manda ing ha e a h o gh
Kno Yo C ome KYC oced e O en Finance la fo m a e iola ing bo h he
Banking Sec ec Ac and he Pa io Ac The e la fo m migh be able o a oid
com liance nde he g i e of innocen l o iding o en o ce ool b hi line of
a g men become inc ea ingl im once he a di ec ing mone i ing
e don mo nancial ac i i
And e de i e he e ob acle a a h doe e i In fac he a h i in od c ion

en i onmen oda On a da he e man a e celeb a ing he im ending an i ion o
M l i Colla e al Dai on a da he e man a e celeb a ing Make DAO cce a he
la ge cale DAO e e imen on a da he e man a e onde ing ho he DSR
change econda ma ke lending a e e fe a e ackno ledging Make DAO
cce in la ing he fo nda ion fo a ainable mone i a ion a eg be een
Q Q MKR holde eali ed o e m in cold ha d ca h ea ning
Make DAO and Com o nd a en all ha diffe en Com o nd al ead e a ide

of acc ed in e e fo an in ance ool in he e en ha an loan en e in o
nega i e e i f nd a e i honed f om he in ance ool o co e o anding
lo e One can imagine a f e in hich he Com o nd eam in od ce a oken
CMPD i h ome claim o hi in ance ool In e change CMPD holde e fo m
MKR like d ie o ing on addi ional colla e al e e ing colla e al eci c i k
a ame e adj ing mone a olic in he e en he la nch hei o n n he ic
ablecoin and e ing a c edi defa l a e co n e a ie in he e en of
e i en nde colla e ali a ion
CMPD ce ainl o nd like a di idend ielding ec i a doe MKR b he e i

ome di inc o ibili ha i i no eg la ed a ch The Ho e Te a e ha
an in men ha he hallma k of a ec i in he e en ha o come f om he
effo of a hi d a If he Com o nd o ocol can each a oin of
elf ainabili hi o ld likel e i e he emo al of admini a i e con ac
DI CLAIME
upgrade po ers and centrali ed control o er the s stem s oracle one could
con incingl argue that this third part no longer e ists
The path is there The remaining outstanding question from m perspecti e is ho

to construct this sale One might ideall ish to re ard the Compound founders and
their in estors ith a substantial CMPD allocation at the outset although this ma
rub prospecti e holders the rong a hile failing to con ince regulators that the
protocol has indeed reached a suf cient point of decentrali ation An alternati e but
similarl regulator ha ardous approach ould be for the Compound team to auction
off tokens themsel es keeping an re enue raised from the sale Ultimatel I imagine
some h brid approach here CMPD is issued to protocol suppl siders on a pro rata
basis ith some percentage of total suppl reser ed for the Compound team on a
conser ati e esting schedule
The approach itself is certainl important I ha e pre iousl ritten that distribution
strategies can make or break a protocol at the outset but is also just an
implementation detail The focus more broadl should be on making this path to
moneti ation more publicl ob ious and encouraging prospecti e entrepreneurs to
embrace e plicit fees the industr cannot gro in a sustainable fashion ithout
them
Mili a game
I often like to describe cr ptocurrencies and blockchain enabled applications as

games Agents include cr ptocurrenc holders miners traders etc and the score is
kept in dollars Things get particularl interesting hen opportunities arise that allo
agents to de iate from pre de ned strategies seeking out alpha at the e pense of
their participating peers
When I describe these s stems as games I am largel e ercising some of m creati e

metaphorical pri ilege but like no e ha e this
DISCLAIMER
The Chinese militar sho ld se blockchain technolog to impro e operations and
re ard soldiers in tokens according to the co ntr s of cial arm ne spaper PLA
Dail
In an op ed p blished last eek PLA People s Liberation Arm Dail said that
blockchain co ld be sed to store militar personnel data s ch as basic information
career path and missions ndertaken Some of this data can then be sed to re ard
soldiers for performance assessments according to the ne spaper
The token re ard s stem sho ld be based on criteria s ch as training specialt

skills task completion and others it said adding To a ard or ded ct tokens
according to one s dail performance and th s generate an objecti e assessment
o ld effecti el energise the h man reso rce management
I ll be candid for a second real orld XP on the blockchain for the Chinese militar
as not in m list of predictions for B t as a pre io sl a id ideo game pla er
I do no ha e an imp lsi e rge to enroll in the PLA so I g ess ell pla ed Xi
Jinping
Oh also there s this
PLA Dail also s ggested e ploring other se cases of blockchain in the militar
incl ding storing militar secrets
DI CLAIME
Eco em Map
DISCLAIMER
14
Mapping out Binance Labs

Portfolio
November
Quick Take
● Binance Labs is the venture arm of cryptocurrency exchange Binance
● The rm has made investments in over cryptocurrency and blockchain
startups
In mid Binance announced the launch of Binance Labs a venture arm aimed at
incubating and investing in various blockchain and cryptocurrency projects
Binance Labs has a two fold strategy making direct investments in working projects
and incubating early stage startups through a week on site program
For its incubator program Binance Labs team of investor provide its startups with
seed investments mentorships with experienced entrepreneurs in the space and
connections with its network of industry leaders
As Binance Labs enters the third season of its incubation program The Block has
mapped out the rm s portfolio of startups
DISCLAIMER
Bac Of ce
Dec e i a c c e c acc i g i
Pa h i a c c e c f i acke a d a i
Ce e i a CRM e ice i gc e da a a b ckchai e k
DISCLAIMER
Content
Pi i ac c e c e a di f ma i ide
C e i ac e ec em e a di g c e c ea a dc me
C stod
SafePal i a c c e c ha d a e alle ma fac e
Ba eZe ide a i eg a ed ha d a e a d f aec c e c c d

l i f i i i al i e
DISCLAIMER
1
Data
Akio Labs provides a platform to collect and anal ing blockchain data
Dune Anal tics is an anal tics platform for quer ing and visuali ing data from the
Etheruem blockchain
DeFi
Injective Protocol is a decentrali ed cr ptocurrenc exchange protocol supporting

margin trading futures and derivatives
Deaux is a prediction market platform
Tellor is a decentrali ed oracle aimed at DeFi projects
Terra is a decentrali ed stablecoin
DISCLAIMER
F a c a Se ce
Xend is a payment services provider leveraging blockchain technology
Cred is a cryptocurrency lending and borrowing service provider
Ga g
FomoSports is a blockchain raffle game based on real-life sports events
Cocos Blockchain Expedition is a multi-platform environment for game development
DISCLAIMER
I f a c e
Torus pro ides a login gate a for decentrali ed applications
Marlin Labs is a blockchain net ork
BitTorrent is a le sharing protocol
Dapi is an interoperabilit protocol
Elrond is a alue transfer protocol
FIO is an interoperabilit protocol
O he
Bit Sika enables users and to send and accept donations
The NFT Compan enables users to create recei e and send non fungible tokens
DISCLAIMER
Raise is a platform for issuing and managing security tokens
Republic is a fundraising and investment platform
Pri ac
Nym is a privacy infrastructure protocol
Oasis Labs is a decentrali ed cloud network with built in privacy
Mobilecoin is a cryptocurrency for private transactions
Sec ri
Keylabs provides cryptocurrency blockchain and hardware security auditing services
PhishFort offers anti phishing solutions
Certik provides an end to end cybersecurity service
DISCLAIMER
T ading
Yell Ca d ide a ba kle la f b i g a d elli g c c e cie
K i T adi g i a c c e c OTC adi g la f
Ca i ali e ide a a ed adi g e ice
DISCLAIMER
Mapping out the most active
crypto funds investments
November
Quick Take
● Mapping out investments made in across the most active investors in
cr pto and blockchain according to Pitchbook
Most Active Crypto Funds in

This is a follo up to our funding trends piece done earlier this month hich
found the total USD value of venture investment e cluding deals million Seed
and All Series into the sector has softened to billion in total number of
deals at do n Y Y vs total number of deals do n
Using Pitchbook e mapped out the investments made b the most active funds in
Seed Earl Stage Late to see if there is a speci c sector funds are allocating
more into than others The top active funds and their investments in are
depicted belo
DISCLAIMER
B ea d b ec
Interestingl ever fund outside of Galax Digital invested in either regional
exchanges South America Europe Middle East or trading services which made up
the largest mix at a majorit of the most active investors in Outside of trading
services exchanges investments into wallets and open nance on ramps and game
studios leveraging blockchain were the next most popular categories in across
the most active funds
DISCLAIMER

DI CLAIME
NGC Ven re
NGC Ventures is a VC focused on investing in blockchain industr and is based in
Singapore
Solana is a compan creating a trustless distributed cr ptographic protocol built on

the back of a veri able dela function
Vid is a blockchain based video social media platform
Nash is a non custodial digital asset e change
CoinFLEX is cr pto e change that also has ph sicall delivered cr pto futures
Dapi is a protocol that enables inter allet interoperabilit
Vega Protocol is a protocol for creating and trading derivatives on decentrali ed

net orks
DISCLAIMER
Cere Ne ork is a blockchain based CRM ecos s em
Elrond is a proof of s ake high hro ghp blockchain ne ork
TEEX is la er sol ion ha le erages r s ed e ec ion en ironmen s TEE
Marlin Pro ocol is an in eroperabili sol ion be een chains ha aims o increase
cross chain hro ghp impro emen s
Helis Ne ork is an on ramp and DeFi aggrega ion pla form
POA Ne ork encompasses an EVM blockchain as ell as prod c de elopmen for

he en ire E here m ecos s em
DI CLAIME
C inba e Ven e
Coinbase Ven res is an in es men arm of Coinbase ha in es s in earl s age
cr p oc rrenc and blockchain s ar ps i h a il o ards open nance sol ions
and is based in San Francisco
Pina a is an IPFS SDK API oolki
Ins aDApp is a decen rali ed nance smar alle
Linen App is an on ramp in o cr p o lending ser ices and has plans o offer o her
n ech prod c s
Sec ri i e is a sec ri oken pla form
NEAR Pro ocol is a sharded proof of s ake blockchain
Te ile offers de eloper ools o scale apps on IPFS
DISCLAIMER
BlockFi offers cr pto backed loans and cr pto wealth management solutions
BLADE is a cr pto exchange
Alchem is a blockchain developer and infrastructure toolkit
Torus offers secured gatewa s and frictionless logins for DApps
Hori on is a video game platform and wallet built on Ethereum
Cadence is an alternative investment platform offering high ield opportunities
o Labs is developer studio building computing s stems that leverage cr ptograph

and cr ptocurrenc
Commonwealth is a multi chain governance portal
Bitski is a digital wallet software solutions that plugs into other apps
DI CLAIME
Digi a C e c G
Digital Currenc Group is an investment rm focused on the cr pto and blockchain
industr and is the most proli c investor in the space with a portfolio of
companies
Bitso is a cr pto e change based in Me ico
Flipside Cr pto offers cr pto data and anal tics tools
Bitmark uses a proprietar s stem to enable digital propert rights
Livepeer offers open source video infrastructure services built on Ethereum
Hori on is a video game platform and wallet built on Ethereum
Digital Assets Data offers a platform that enables enterprise grade cr pto anal tics
and data feeds
DISCLAIMER
Qoha h offer en erpri e grade da a ec ri ol ion
Merkle Science pro ide a ri k moni oring ol ion o help blockchain companie and
la enforcemen de ec and pre en illegal e of cr p oc rrenc
Jackpo i a mobile app ha le o pla local lo erie i h cr p oc rrenc
C r i an in i ional digi al a e alle er ice po ered b MCC
Tagomi i an elec ronic brokerage er ice ha aid in rade e ec ion
Fig re offer home eq i line of credi HELOC loan on i o n blockchain called

Pro enance
Hori en Lab i a blockchain echnolog compan ha enable b ine e o b ild

di rib ed ledger ol ion
Ni a ra i a oma ing he primar marke i ance and admini ra ion of nancial

a e hro gh a cen rali ed em or a blockchain infra r c re
Coinho e i a French cr p o e change
L cid Sigh i a blockchain game de eloper and i he dio ha crea ed MLB

Cr p o Champion
S aked i an al erna i e cr p o eal h managemen pla form
DI CLAIME
Fe b hi Ca i a
Fenb shi Capital is the rst and most acti e blockchain foc sed ent re capital rm
in Asia Fo nded in Shanghai in the f nd has made o er in estments to date
Amberdata is a cr pto and blockchain data compan
SIBEX is a S iss cr pto e change
Verad is a cr pto acco nting ta and a dit ser ice pro ider
Cere Net ork is a blockchain based CRM ecos stem
Sec riti e is a sec rit token platform
InfoCorp is a FinTech and AgriTech compan looking to bring incl si e nancial

ser ices to the li estock ind str in emerging markets ia its blockchain based
platform FarmTrek
DISCLAIMER
BlockApps is an enterprise grade blockchain as a service provider
AlphaWallet is an Ethereum mobile wallet
M thical Games is a blockchain based game developer studio
Edge is a digital wallet and custod solution
nector is a research advisor shop dedicated to blockchain and cr pto
Chronicled is an enterprise blockchain suppl chain solution
OceanEX is cr pto exchange
The Block is a research and media compan speciali ing on cr pto and blockchain
DI CLAIME
Ga a Digi a Ve e
Gala Digital manages a di erse portfolio of earl stage in estments primaril
centered aro nd blockchain infrastr ct re c stod e changes ecos stems and
b siness to b siness B B soft are sol tions In addition to f nding in estments
thro gh its Principal In estments team it also manages a million ent re f nd
that seeks to directl in est in emerging projects and opport nities s pported b the
EOS blockchain
BlockApps is an enterprise grade blockchain as a ser ice pro ider
BlockFi offers cr pto backed loans and cr pto ealth management sol tions
Spring Labs is de eloping sol tions that ses an attestation based approach
red cing the risk and se erit of data breaches for nancial instit tions and
cons mers
Casper Labs is de eloping CBC Casper proof of stake protocol
DISCLAIMER
Imm able is a blockchain based game de eloper crea ors of Gods Unchained
Digi al Asse s Da a offers a pla form ha enables en erprise grade cr p o anal ics
and da a feeds
Bi ski is a digi al alle sof are sol ions ha pl gs in o o her apps
Flipside Cr p o offers cr p o da a and anal ics ools
Bison Trails is a blockchain infras r c re ser ice pro ider
Cipher Trace is a blockchain anal ics compan
M hical Games is a blockchain based game de eloper s dio
Ripple is a ech compan ha de elops a pa men pro ocol ili ing XRP
S mbion is an en erprise blockchain ser ice pro ider
DI CLAIME
P l chai Ca i al
Pol chain Capital is a hedge f nd based in the San Fransisco Ba Area foc sed on
blockchain assets
Coinlist is a digital asset token sale and iss ance platform
J no is a high ield alternati e in estment platform neo bank
Linen App is an on ramp into cr pto lending ser ices and has plans to offer other
ntech prod cts
CoinFLEX is a cr pto e change that also has ph sicall deli ered cr pto f t res
Agoric offers smart contract sec rit sol tions
Hori on is a ideo game platform and allet b ilt on Ethere m
Altonom is a cr pto market maker OTC ser ice
DISCLAIMER
Fold is a bitcoin rewards e commerce app
o Labs is developer studio building computing systems that leverage cryptography

and cryptocurrency
Dharma Labs is an open nance lending aggregation interface
Celo is a payment network that plans to leverage a stablecoin
Ava is a platform for new assets markets and decentralized applications
Anchorage offers crypto custody solutions
CMT Digital
CMT Digital a division of the CMT Group is focused on crypto asset trading
blockchain technology investments and legal policy engagement in the crypto asset
blockchain technology industry To date CMT Digital s investments have largely
focused on infrastructure
DISCLAIMER
Seed CX i an in i ional pla form for rading digi al a e
Flip ide Cr p o offer cr p o da a and anal ic ool
BlockFi offer cr p o backed loan and cr p o eal h managemen ol ion
Digi al A e Da a offer a pla form ha enable en erpri e grade cr p o anal ic

and da a feed
Eri X i an in i ional and re ail cr p o clearing c od and e change
r eDIGITAL i a ar p geared a pro iding bank i h digi al a e ol ion and

ha an e change ha aim o li ph icall deli erable bi coin ap in i bid o
deli er in i ional grade digi al a e prod c
PDAX i a cr p o e change in he Philippine
Rain i a cr p o e change in he Middle Ea
Abra i one op hop allo ing er ob ell ore and in e in

cr p oc rrencie pl manage all cr p o in e men
DI CLAIME
Robo Ven re
Robot Ventures is a pre seed investor in ntech cr pto companies led b Robert
Leshner at Compound Finance
Coinmine offers a retail focused bitcoin mining device
Po nt offers a debit card product
Centrifuge is an open decentrali ed platform to connect the global nancial suppl

chain It allo s an business to transact hile maintaining o nership of their data
including their validated compan details their reputation business relationships
and subsequent transactions
Elementus is a blockchain quer s stem for data anal tics
Bitski is a digital allet soft are solutions that plugs into other apps
Ampleforth is smart commodit mone hatever that means
DISCLAIMER
Compo nd is an open so rce protocol b ilt for de elopers Interest and borro ing
for the open nance ecos stem
Ke less is sec rit a thentication ser ice
M ltis is cr pto allet for open nance lending and ielding ser ices
InstaDApp is a decentrali ed nance smart allet
D ag Ca i al Pa e
Dragon Capital Partners is a cr ptoasset ent re f nd based in San Francisco and
Beijing
Compo nd is an open so rce protocol b ilt for de elopers
CoinFLEX is cr pto e change that also has ph sicall deli ered cr pto f t res
DISCLAIMER
Anchorage offers cr pto custod solutions
Sia is a decentrali ed cloud storage platform
ErisX is an institutional and retail cr pto clearing custod and e change
Tendermint offers developer tools for the Cosmos net ork
Tagomi is an electronic brokerage service that aids in trade e ecution
Coin Metrics offers cr pto and on chain data sets
Nuo is an open nance lending platform based in India
The follo ing funding and M A data into Blockchain Cr ptocurrenc industr
verticals comes from Pitchbook
Note Pitchbook includes man broader companies ith non core business lines or
strategies that involve blockchain or cr pto businesses ithin its peer group some
of hich include traditional soft are IT services and c ber securit companies The
data as cleaned and improperl classi ed companies dollar transactions ere
removed ithin the top ro s sorted b capital raised It s important to note
there ma still be some inconsistencies be ond these values e report
DI CLAIME
Ma C C d
No ember
Q c Ta e
● This is ersion o of The Block s cr p oc rrenc c s od map
● The Block has mapped o c s od ser ice pro iders spli be een
ins i ions and cons mers
● Of he ins i ional onl c s od pro iders e iden i ed ere fo nded
be een and
This map is an pda ed ersion of o r original cr p o c s od piece
Cr p oc rrencies are essen iall digi al bearer bonds O nership of hese asse s
herefore are in rinsicall linked o he possession of i s pri a e ke s D e o his
niq e s r c re being able o properl safeg ard a cr p oc rrenc s pri a e ke s is
especiall cri ical o he s ccess of a cr p o c s odian
and marked a s rge of ne c s od rms and ser ices en ering he marke

offering c s odial ser ices aimed primaril a ins i ional in es ors in an a emp o
ake marke share a a from Bi Go
Coinbase anno nced i s c s od ser ice in and has since gro n o manage o er
billion in asse s hanks o i s acq isi ion of Xapo s ins i ional b siness
Gemini also la nched i s c s od ser ice in mid Along i h hese s ar ps e
also sa legac rms like Fideli and he In erna ional Con inen al E change
la nching cr p o c s od effor s in prepara ion for a po en ial f re in o of
ins i ional mone
In addi ion o hese ne l la nched ins i ional foc sed ser ices e also sa ne
ser ices for he a erage cons mer S ar ps like Casa and Argen began o offer
c s odial ser ices i h a foc s on ser friendliness
DISCLAIMER
In this updated piece, we will map out the current state of crypto custody solutions.
Institutions
Aegis Custody founded 2018 is a San Francisco firm offering cryptocurrency custody
solutions with a focus on self custody.
DISCLAIMER
Anch age f nded i a San F anci c a e cha e ed c m an ffe ing
ali ed c d l i n
Ba e Ze f nded i a San F anci c m ffe ing a ha d a e and f ae

c c enc c d l i n
Bakk f nded i a Ne Y k bi c in de i a i e ide ha al ffe

ali ed c d l i n The m ac i ed Digi al A e C d C m an in A il
Bi G f nded i a Pal Al m ffe ing ali ed c d l i n The m

al ffe aking e ice and clea ing and e lemen e ice
Bl ckchain f nded i a L nd n c c enc e ice ide ha ffe a

i e f l i n incl ding c d While he mi ima il c n me f c ed i
al ffe c d e ice f in i i n ia i Va l d c
C inba e f nded i a San F anci c c c enc e change ha ffe

e ice incl ding c d The m la nched i ali ed c d l i n in
C e f nded i a L nd n m ffe ing clien ide c c enc c d

l i n in addi i n ime b ke age e ice
C Finance f nded i a S i e land c c enc e ice ide

ffe ing a e managemen b ke age and c d
C f nded i a Ne Y k m ffe ing cl d ba ed c c enc c d

e ice
Digi al A e C d Se ice la nched i a Ne Y kc c enc c d

l i n la nched in b Sh le H lding C i h IBM
Fideli Digi al A e la nched i he c c enc b idia f Fideli

In e men The b idia ffe ading and c d e ice
DI CLAIME
Fi eBlock fo nded i a Ne Yo k m p o iding c p oc enc c od
e ice in addi ion o offe ing hi e labeled c od echnolog ol ion
Gemini fo nded i a Ne Yo k c p oc enc e change ha offe a ide

ange of e ice incl ding c od The m la nched i ali ed c od e ice in
He T fo nded i a Hong Kong c p oc enc c od p o ide The m

al o offe oken i ance e ice
Kingdom T fo nded i a Ken ck m offe ing ali ed c od e ice

fo al e na i e a e incl ding c p oc encie
KnØ C od fo nded i a Canadian m offe ing c p oc enc c od

e ice
Koine Mone fo nded i a London m offe ing c od and e lemen

e ice fo c p oc encie
Ledge fo nded i a F ench m offe ing c od p od c and e ice fo

bo h in i ional in e o and con me The m Va l p od c i aimed a
in i ion
Legac T fo nded i a Hong Kong c od e ice p o ide The m

la nched c p oc enc ppo in
Onchain C odian fo nded i a Singapo e c p oc enc c od p o ide
Pa o fo nded i a Ne Yo k c p oc enc e ice p o ide offe ing e change

e ice ablecoin and c od
P ime T fo nded i a Ne ada c p oc enc inf a c e p o ide The

m offe e ice incl ding a e an fe e lemen and c od
DI CLAIME
S iss Cr pto Va lt fo nded is a s bsidiar of Bitcoin S isse a cr ptoc rrenc
ser ices pro ider that offers ser ices incl ding trading lending and c stod
Tangan fo nded is an EU cr ptoc rrenc infrastr ct re pro ider The rm

pro ides an API for rms la nching c stod ser ices
Unchained Capital fo nded in is a Te as based cr ptoc rrenc c stod ser ice

The rm offers a c stod ser ice for both instit tions and cons mers
Vo t fo nded is an EU cr ptoc rrenc c stod ser ice pro ider
Cons mers
Argent fo nded is a London mobile Ethere m allet pro ider
Armor fo nded is a ser ice for sers to create their o n cold storage allet
for bitcoin
Blockchain fo nded is a London cr ptoc rrenc ser ices pro ider that offers a
s ite of sol tions incl ding c stod The rm offers a mobile cr ptoc rrenc allet
for cons mers
BRD fo nded is a S iss cr ptoc rrenc mobile allet
DISCLAIMER
Ca a fo nded i a Ne Yo k Bi coin e ice o ide The m offe f ll node
ha d a e de ice in addi ion o c od e ice
Elec m fo nded in i a e ice offe ing a de k o bi coin alle
Ja fo nded i a Canadian c oc enc mobile alle o ide
Kee Ke fo nded i a b idia of Sha eShif The m de elo

c oc enc ha d a e alle
Ledge fo nded i a F ench m offe ing c od od c and e ice fo

bo h in i ional in e o and con me The m offe a ha d a e alle fo
con me
M Celi m fo nded i a London c oc enc mobile alle o ide
MEW fo nded i a Califo nia m o iding an o en o ce clien ide ool fo

in e ac ing i h he E he e m blockchain I allo e o gene a e alle
in e ac i h ma con ac and manage hei ERC oken
M C o fo nded i a Califo nia m o iding an o en o ce in e face fo

he blockchain he e e can oe end and ecei e c oc enc
Shif C o ec i fo nded i aS i c oc enc ha d a e alle

man fac e
Te o fo nded c oc enc ha d a e alle man fac e
Unchained Ca i al fo nded in i a Te a c oc enc c od e ice The

m offe ac od e ice fo bo h in i ion and con me
Xa o fo nded i a bi coin e ice o ide The m offe e change and

c od e ice ia a mobile a
DI CLAIME
179
Org Chart: Huobi Group

No ember
Quick Take
● H obi Global the Singapore based cr ptoc rrenc e change as fo nded in
b Leon Li
● Across all of H obi s b siness lines the compan c rrentl emplo s the
second most indi id als in the entire blockchain ind str at appro imatel
people b o r estimates
● The Block has mapped o t the ke members of H obi Global s team across
man of their different b siness lines and their historical roles at past rms
leading p to their c rrent position
H obi Global the Singapore based cr ptoc rrenc e change as fo nded in b

Leon Li The compan initiall began as a simple spot trading e change Toda H obi
has gro n into a b siness that o ersees ten different b siness lines Across all of
H obi s b siness lines the compan c rrentl emplo s the second most indi id als
in the entire blockchain ind str at appro imatel people b o r estimates
Some of these b siness lines incl de H obi Global the compan s spot trading
platform H obi Research a research arm that is committed to ad ancing the
ecos stem thro gh research and de elopment H obi DM a deri ati es trading
platform for cr pto assets To e en H obi Capital an in estment arm that has
in ested in o er different blockchain projects across se en co ntries
The Block has mapped o t the ke members of H obi Global s team across man of
their different b siness lines and their historical roles at past rms leading p to
their c rrent position This o er ie is part of an ongoing series e ploring and
mapping o t the organi ations in the cr pto ind str
DISCLAIMER
H b G Se Ma a e e
Le L
Leon Li is the founder and Chief Executive Officer at Huobi Group Before founding
Huobi Group in 01 Li was a computer engineer at Oracle
R b Z
DISCLAIMER
R bi Zh i Chief O e a i g Of ce a H bi G Bef e j i i g H bi G ba i
Se e be Zh ked f O ac e a d Ca ge i i C i g
Ma Che g
Ma Che g i Chief Tech g Of ce a H bi G P i j i i gH bi G ba

i Feb a Che g he d e ec i e e a O eAPM a d Ji b he e he
e ed a he Chief O e a i g Of ce a d VP f Tech g
Ch i Lee
Ch i Lee i Chief Fi a cia Of ce a H bi G Bef e j i i g H bi G ba i Ma

Lee e ed a he Chief Fi a cia Of ce a OKE aH gK g ba ed
c c e c e cha ge
Si W
Si W i Chief Sec i Of ce a H bi G Bef e j i i g H bi i A i

W ked a a Chief Sec i Ad i a Didi W a he d e i e a a
Pa e a P C a d Ma agi g Di ec a Zed G
DISCLAIMER
Cia a S
Cia a S n i Chief of S aff a H obi G o S n joined H obi in Se embe

Befo e joining H obi S n a a Bgogo Digi al A e E change a Chief S a eg
Of ce S n al o e ed a Lead P ojec Manage a Bo on Con l ing G o and
con l ed b ie a bo h G an Tho n on China and Deloi e
Li i g F
Li ing F i he Head of HR Admin a H obi G o Befo e joining H obi in Jan a

F o ked a Be ond of a B ine Managemen Di ec o and iSof S one a
an Acco n Manage
Elai e S
Elaine S n i Chief Com liance Of ce a H obi G o Befo e joining H obi in

Jan a S n held e ec i e o i ion a bo h S a e S ee Bank and OCBC Bank
a Head of Com liance China S n ha al o e ed a Legal Co n el fo Bao S eel
Real E a e
DISCLAIMER
H b G ba Se Ma a e e
L We
Li i We g i Chief E ec i e Of ce a H bi G ba P i i i gH bi i A g
We g he d a Se i Ma age e i i i h he a cia e di g af
Jiedaiba We g a a a P d c Di ec a S h I ca df ded he c a
SXBBM a cia e i ga f c ege de
M Da a
M hi Da a i EMEA Regi a P e ide a H bi G ba Da a i ed H bi i A g

Da a i a he P e ide CEO a T J Ca i a G I he a Da a
f ded a d e ed a CEO a Je i a FZCO a d a a Me be f he I e e
C i ee f he U i ed Na i Ca i a De e e F d
DISCLAIMER

The Block Genesis Recap - November

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HE BLOCK GENESIS

So rce CoinGecko The Block

As is apparen from he char belo prices ere closel correla ed in No ember

Source CryptoCompare CoinGecko The Block

Source Cr ptoCompare CoinGecko The Block

Source Yahoo Finance The Block

Source ICE skew The Block

So rce CME ske The Block

Source CoinGecko The Block

So ce DeFi P l e The Block

Mo of he e he i locked in Make follo ed b Com o nd

On No M l i Colla e al Dai MCD la nched hich allo e o c ea e Dai

Along i h he MCD an i ion a he in od c ion of he Dai Sa ing Ra e a in b il

Af e eaching a m ch a in Ma Make DAO S abili Fee no i a The

So rce The Block

The f re of Open Finance looks increasingl brigh Bo h en reprene rs and

Bi coin Deri a i es Upda e

Since peek e in J l a rader CME ha een a red c ion in o al repor able

Source The Block CFTC COT report

So rce Ske The Block

Finall looking at the implied probabilit of a bitcoin price c r e of bitcoin options

The COT e o incl de fo main e o i h a ing le el of ade cla i ca ion

Dealer Intermediar The e a ici an a e he ell ide in he e ec i e f e

Legac COT e o can al o l m he e fo ca ego ie in o ei he Comme cial o

Some other terms to know

E al a ing e change b o de book dep h i fa pe io o looking a he ading

Follo ing he Bi i e d i no idel kno n ha he a majo i of he

O de book dep h i a m ch mo e indica i e me ic hen e al a ing diffe en

Looking a he en i e o de book o ld be imp ac ical beca e i co ld gi e a fal e

San Francisco based Bit ise Asset Management released an in ential st d in Ma

● Similar eb hile far from perfect is a good indicator of real acti it b t it s

The cha be a add H b a d OKE f efe e ce The B e e cha ge

O ide of Bi i e Indoda ha he lo e ol me per i i Thi i likel beca e

So rce Similar eb CoinGecko Cr p oCompare

O erall eb raf c on cr p oc rrenc e change ha been eadil decrea ing in

Source: Similarweb, CoinGecko

Proof of Work S ake

P oof of S ake in od ced in p o ide an al e na i e o he

A i h an mechani m de ign P oof of S ake come i h ce ain ade off The

Open Finance b oadl efe o open o ce and pe mi ionle blockchain ba ed

Mo ele an o hi pape i he b geoning lending ec o ea o da e on chain

The phenomenon e plo ed in Chi a pape i ome ha analogo o bank n In

The damage o gh in hi o ic bank n he bank fail e i elf he lo of

The e a e f he analogie o be made ega ding he digi al na e of he e

Zelme he e all de o he i k Open and digi al banking pla hen he e

Sim la ion a m ion

constant probabilit that an agent regardless of their prior beha iour ma ha e

To this last assumption a constant probabilit that an agent ma ha e their

Chitra s work is a powerful development as to the understanding of the conditions

Examining the value se led on

Source The Block Coinmetrics

Source The Block Coinmetrics

During Q of the Bitcoin network experienced a decline of approximatel in

So rce The Block Coinme rics

When ini iall proposed Bi coin as o ed as a peer o peer c rrenc Man of i s

From Q oQ he his oric a erage ransac ion si e decreased in al e b

Al ho gh he median ransac ion has been drama icall lo er a eraging j s

Source The Block Coinmetrics

Source The Block Coinmetrics

The MakerDAO em re ol e aro nd he Colla eral Deb Po i ion CDP prod c In

MKR holder ho go ern he MakerDAO em in re rn for in ere pa men do

According o da a pro ider Blockl ic clo e o m Sai or of o anding Sai

Source blog makerdao com

An e pec ed imeline for o al migra ion remains nkno n al ho gh ario s Maker