Blockchain Bites: IBM Blockchain Bleeds, Exchange Tokens Pump, ETH Hits New High

2 February 2021

Happy Groundhog Day. Bitcoin is ticking up, though still rangebound. XRP continues to bleed after a semi-successful orchestrated pump. Exchange tokens are seemingly benefiting from GameStop-style gamesmanship. 

Three stories

1. IBM Blockchain has reportedly missed its revenue goals by a wide margin two years running. The legendary computing giant’s enterprise blockchain unit has atrophied to approximately 10% of its peak size, according to anonymous sources close to the matter.

  • Expectations for enterprise blockchain were too high, they said, adding that IBM “didn’t really manage to execute, despite doing a lot of announcements.”
  • Big Blue is most notable for its work on Hyperledger Fabric, a network of networks that supports the IBM-incubated FoodTrust, a farm-to-supermarket tracking system backed by Walmart, and TradeLens, a shipping container logistics blockchain backed by Maersk.

2. A Financial Crimes Enforcement Network (FinCEN) director spoke publicly for the first time regarding the controversial wallet rule floated late last year.

  • FinCEN Deputy Director Michael Mosier said the rule, which would increase reporting requirements for exchanges, seeks to align crypto with standing regulations related to cash. “It’s a proposal, it’s not all or nothing. Tell us about what works” and what doesn’t on the technical and conceptual front, Mosier said.
  • Others have pointed out that increasing the amount of identifiable information tied to specific accounts on the blockchain would actually diminish crypto’s cash-like qualities.

3. GameStop drama is spilling out into the land of decentralized exchanges, according to CoinDesk’s Muyao Shen. New data suggests that CEX and DEX trading volumes have risen over the past week, bringing exchanges’ tokens to new highs, with at least some action coming from disaffected traders temporarily blocked from trading meme-stocks on Robinhood.

  • Binance’s BNB token hit a new all-time high at $50.27 during early U.S. trading hours on Monday, while FTX’s FTT token logged a record price of $12.95 on Friday, according to data from Messari.
  • Meanwhile, volumes on DEXs hit $55.8 billion in January, up from a previous high of $26.5 set in September 2020. Uniswap saw approximately 45% of total DEX volume, with rival clone SushiSwap reaching 22%.

At stake

Outliers and developers
Outlier Ventures, a fund and accelerator dedicated to Web 3.0, released its latest blockchain developer report, with findings that hew close to previously reported estimates. According to Outlier’s data, Ethereum was the most actively developed blockchain in 2020, followed by Cardano and Bitcoin. The venture firm relied on the number of code commits.

It might seem odd that Bitcoin is only considered the third-most active blockchain (with 441 commits to Ethereum’s and Cardano’s 866 and 761, respectively). But Cardano went through a major upgrade last spring, bringing proof-of-stake consensus to the interoperable network. By contrast, Bitcoin developers have chosen a slow and steady approach towards development, with several rounds of discussions about discussions around upgrading.

Last December, Electric Capital, another venture firm, measured developer activity by counting the number of actual people building these protocols. They found that 2,300 average monthly developers worked on Ethereum across Q3 2020, with Bitcoin in second at a bit under 400. Development was up across the ecosystem.

Outlier’s figures are a bit different, measuring monthly estimates rather than quarterly. They write: “Ethereum also leads the monthly active developer count, with 220 monthly active core developers on average, followed by Hyperledger, Cardano and Bitcoin having 149, 144 and 103 active core developers on average, respectively.”

But not all chains are seeing increased activity. A class Outlier calls “Ethereum killers,” including Tron, EOS, Komodo and Qtum, “[is] seeing a decrease in core development metrics and developer contribution.” Though other protocols many view as Ethereum competitors, like Polkadot and the aforementioned Cosmos, saw an uptick in dev contribution.

It’s hard to put too much stock in reports like this – Outlier readily admits the potential pitfalls in scraping GitHub for determinative data – but they do function as a kind of map of the crypto territory. With the launch of Filecoin, for instance, a much-awaited decentralized file storage network, the protocol jumped into the “top five” of most actively developed projects.

Like all else in crypto, hype begets hype. While it’s easy to get lost in the dazzling amount of capital flowing through this nascent economy, it’s important to remember the human sacrifice, too.

Market intel

The upside is looking bright for both bitcoin and ether, according to CoinDesk’s Omkar Godbole. Bitcoin’s on-chain metrics show demand continues to outstrip supply while the number of coins on exchanges slides – a sign that people expect the price to rise. Grayscale, a CoinDesk sister company, acquired 40,000 BTC in a period when only 26,000 BTC were mined.

Meanwhile, ether hit a new record high on Tuesday, amid expectations the recent GameStop trading saga would accelerate the adoption of cryptocurrencies and decentralized finance (DeFi). The second-largest cryptocurrency by market value climbed to approximately $1,490 a little before noon E.T.

Quick bites

  • DOLLARS AS A SERVICE: METACO and Cobalt want to rewire the financial system for crypto. (CoinDesk)
  • BANK-LIKE: Gemini is offering 7.4% yield on customer deposits, teaming with crypto lender Genesis. (CoinDesk)
  • PRIVACY ISSUES: Russian police may be identifying attendees of pro-Navalny protests using facial recognition tools. (CoinDesk)
  • FORBES 50: Dropped. (Forbes)
  • CYPHERPUNK CHRONOMETER: Decoding the “Bitcoin Full Node Sculpture.” (Bitcoin Magazine)
  • RISE AND FALL: The story of a crypto house in Argentina. (Rest of the World)
  • DARK DOLLARS: An estimated $1.7 billion worth of crypto went through darknet markets in 2020. (Chainalysis)

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