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Mandarin Chinese to English: 前加密货币亿万富豪坚称，比特币将在未来18个月内飙升至25万美元 / Bitcoin will surge to $250,000 in next 18 months, ex-crypto billionaire insists General field: Bus/Financial Detailed field: Investment / Securities
Source text - Mandarin Chinese 风险投资人Tim Draper认为，到2023年底，加密货币的价格将上涨10倍以上。他并不是唯一一个在黑暗中为加密货币叫好的加密货币大亨。
Michael Saylor也是一位真正的比特币信徒，他的软件公司Microstrategy在过去几年里在比特币上投资了约40亿美元。他采取了一种特别的投资方式：主动出击。这位57岁的软件企业家一直在Twitter上发表看涨的帖子，最近还在CNN、福克斯商业频道（Fox Business）和彭博社的电视节目上露面，对外界对他公司资产负债表的担忧不屑一顾。今年3月，MicroStrategy以自己的比特币为抵押借入了2.05亿美元，用来购买——你猜对了——更多的比特币。
Translation - English This is an article translated by me from Chinese news publication Sina Finance.
https://finance.sina.com.cn/blockchain/roll/2022-06-27/doc-imizmscu8964090.shtml
Venture Capitalist, Tim Draper believes, by late 2023, the value of cryptocurreny will go up at least 10 fold. He isn’t the only crypto mogul that's come out of the dark to proclaim his confidence.
This January, when interviewing Forbes, venture capitalist Tim Draper put forth an ambitious forecast: bitcoin price will go to $250,000 within a year.At that time, the bitcoin price was about $41,000.
Draper was the successful bidder of around 30,000 bitcoins valued at $8,700,000 back in 2014 (yes, each bitcoin was worth only $623 back then.)In the interview he firmly states: “this is the year its going to happen.” End of this year or early next year.”
Right now from the looks of it, one could call Drapers prediction a flop. From the start of this year, bitcoins price already dropped by at least half from $47,000 on new years day to about $20,000.Draper is now also among one of four cypto tycoons who is no longer a billionaire due to the crypto crash. But Draper has not backed off. Over emails with reporters, Draper again reiterated his target price. He says: “I’m more certain than any other time, this is going to happen. In later 2022 or later 2023.”
Cryptocurrency exchange, Coinbase founder, Fred Ehrsam also asserted, that the market collapse was nothing more than growing pains. Ehrsam early this week tweeted:
“The big thing allot of people don’t understand: for a new infrastructure-level technology breakthrough (cryptocurrney) to a vibrant ecoysystem of applications for a mainstream audience, it takes a number of years, often decades. This 34 year old computer prodigy's personal net worth is estimated to be at 900 million, that's down from 2.1 billion from March this year.
Ehrsam was able to keep his cool, possibly the reason being that his wealth includes coinbase shares sales getting 367 million in after tax income. Last year each stock was worth $316 (coinbase recently is worth $52). Ehrsam still sees the market capitulation as an opportunity to buy the dip. This year in March, he represented his own cryptocurrency venture capital fund Paradigm Capital which bought $77 million worth of Coinbase shares at $60 to $73.
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Crypto exchange founders and Bitcoin investors, twins Cameron and Tyler Winklevoss’s wealth has fell from 4 billion to 3.2 billion since March. On the 2nd of July, Gemini laid off 10% of its staff, reason being “cryptorency markets cold winter.” But they haven't let the market capitulation depress their style. Their retro rock bank “Mars Junction” is currently touring California. In early June, just a week after they announced the Gemini layoffs, the twins were filmed in Asbury park playing “Don’t Stop Believing.” At the time of writing, tickets for Mars Junction’s performance at Berkeley that night were $15 each.
While the Winklevoss brothers were playing rockstars, the richest man in crypto, Sam Bankman-Fried played a different role as the industry savior. Early this week, the 30 year old FTX founder fell into trouble loaning large amounts of money to crypto companies.He provided $250 million to Crypto institution Blockfi,$500 million to brokerage Firm Voyager Digital (300 million of which was in bitcoin).
He tweeted: “we are trying our best to fulfill our responsibilities to protect users in the crypto currency ecoysystem.” From the 3rd of May, Bankman-Frieds personal net worth only dropped from 24 billion to 20 billion owing to FTX’s 32 billion dollar valuation during its first round of investing in January.
At the same time, cryptocurrency tycoon, the former richest man in crypto, leading crypto exchange Binance founder and CEO Changpeng Zhao (CZ) is a little bit optimistic . “Am I most most bullish in a bear market?” He tweeted on Thursday immediately following up with a second tweet: “not financial advice.” This possibly being a joke, but CZ has a good reason to disclose this information. Bloomberg media early this month reported that Americas security and exchange commission has launched an investigation into Binance’s initial coin offering. Binance and CZ are now receiving attention from U.S Department of Justice, Commodity Futures Trading Commission and the Internal Revenue Service and are being investigated (but neither Binance nor CZ have been charged by any U.S. authorities).
Since the 11th of March, amongst the billionaires that crypto has produced, weather measured as a percentage or in amount, CZ is the one that has suffered the most.
At the time, CZ was estimated to be worth $65 billion, making him the 19th richest person in the world. Today, he’s personally worth about $18.7 billion. But he doesn’t mind this. “I really don’t know how much I’m worth.I don’t really care about that.” He stated in an interview with Forbes last summer.
Michael Saylor is also a true believer in bitcoin. His software company Microstrategy in the past couple of years has invested $4 billion.The 57 year old software entrepreneur made bullish posts on twitter, and recently has been on CNN, Fox and Bloomberg TV to dismiss concerns about his company's balance sheet. This March, Microstrategy borrowed $205 million against it’s own bitcoin to — you guess it — buy more bitcoin.
According to Forbes estimates, Saylor is no longer a billionaire with his net worth at $700 million. From the beginning of March, Microstrategy’s shares fell by 56%, while the Nasdaq fell 14% in the same time period. But Saylor still hasn’t sold any of his precious bitcoin — “not a single satoshi,” he told CNN’s Julia Chatterley this week. Satoshi is a little known term for the smallest unit of bitcoin (1 satoshi is 0.00000001 bitcoin).
“Bitcoin will outlive us.” Saylor asserted. “I’m certain of it.”
Mandarin Chinese to English: 市场动荡，Tether发行XAUt锚定黄金成投资避风港？/ Tether Issues Gold Backed Stable Coin Amidst the Market Turmoil General field: Bus/Financial Detailed field: Investment / Securities
Source text - Mandarin Chinese As the economies of the world tumble amidst the backdrop of fierce inflation expectations owing to the the influence of the pandemic, the geopolitical situation, the excessive printing of fiat money and the fall of US treasury long term interest rates, the markets have become increasingly risk averse. As such hard demand for gold has increased to provide some much needed catharsis. The worlds central banks have significantly increased the currency supply ultimately reducing fiats trustworthiness, causing a steady rise in demand for gold reserves.
Investors have started to re-deploy gold investments. According to the world gold councils latest data in March, global gold backed ETF’s had a net in flow equal to 187.3 tons, the largest since March 2016.
In the modern financial system, there isn’t enough easily accessible and tradable investment grade physical gold products. The global standard for physical gold investments is regulated through the London gold market through the London Bullion Market Association (LBMA). The London Bullion Market Association (LBMA)accredited London Standard delivery for gold bars (London Gold) is typically around 400 troy ounces and is worth nearly $800,000 each at current market prices, so usually only large institutions can buy it. Aside to disadvantages of being difficult to divide and inconvenient to move, the cost of storing physical silver is very expensive with banks usually charging around 5% a year for as custody fee.
For the ordinary investor, they can bulk trade unregistered gold, gold ETF’s and gold futures which are derivatives or securities. The products traded are only worth the comprehensive gold value and this kind of price pegged gold doesn’t come with any legal ownership of the gold. This indicates that for investors to get access to golds liquidity, the price is giving up ownership of real gold.
For this, Tethers parent company has rolled out the creation of Tether Gold (XAUt) which can at least solve the above problem. Tether Golds (XAUt) mission is to realize the goal of digitizing physical gold and promote its efficient flow. Each XAUt token represents 1 troy ounce of London Prime Delivery Gold, stored in a vault in Switzerland.
From buying XAUt on the trade platform, users are able to purchase a minimum order of 0.000001 troy ounce of physical gold. Buying XAUt directly on a Tether Gold verified account requires a minimum purchase of 50 ounces of gold (ie 50 XAUt tokens). Recently, XAUt’s token has already been listed on FTX, Bitfiniex, Gate.io, Bigone and BTSE.
XAUt’s tokens are issued on the ERC-20 protocol. Buyers can purchase XAUt and transfer it to their personal Etherium wallet. All transactions can be queried on chain to make it open and transparent. Each address holding XAUt is connected with real world physical gold. XAUt holders can at any time visit the official website, enter their Etherium address and inquire about the specifics of their gold holdings such as serial number, their golds purity and price.
As long as official minimum redemption requirements are met (holding 430 XAUt), XAUt holders can submit a request to trade in their tokens and exchange them for physical gold through TG Commodities Limited once the verification is completed. XAUt holders can chose to deliver their physical gold at a location in Switzerland. However depending on fluctuations in the gold market, the amount of gold received by XAUt holders can fluctuate. Of course, XAUt holders also can directly request TG Commodities to receive cash for their gold instead. Tether Gold has a global reach and a customer service team available 24 hours a day, 7 days a week , regardless of the timezone. All users can contact Tether Gold customer service to solve any problem with trading.
Compared to investing in physical gold, the XAUt tokens biggest advantage is that it can allow individuals and institutions to be able to more cheaply purchase gold than the market all without having to pay for the storage fee. This is because XAUt’s token runs on the Etherium blockchain, so XAUt’s token can immediately be transferred around the world, making trading gold simpler and faster. Also when investors are buying the XAUt token on crypto trading platforms, the barrier for entry is low as the minimum investment threshold is only 10 dollars. Any institution and individual can invest in gold using the XAUt token, overall improving the liquidity of physical gold.
Compared with gold ETF’s, each XAUt token represents the ownership of a part of the physical gold stored. XAUt’s holders possess the gold whilst all the details are recorded on chain for transparency. Derivatives such as gold ETF’s only represent the comprehensive value of gold, and the ETF price is merely pegged to the gold price so users have no right to the physical gold.
Each XAUt token is anchored to the current price of the London gold market which will be about 3%-5% lower than the price of physical gold sold by banks where users will pay high service fees if they want to make a transfer of their gold.
Tether Gold (XAUt)is not only the very first gold backed stablecoin, over the past few years already dozens of gold backed stablecoin projects have failed. The current leading project in this field is Paxos Standards PAX Gold (PAXG), which according to the crypto market sentiment reader website, Nomics, it was recently evaluated that PAX Golds (PAXG)Market Value at 620 million USD whilst Tether gold (XAUt) has a market cap of 480 million. 24 hour trading volume is around 8.7 million. Although there’s a slight difference with pax gold, Tether Golds (XAUt) market value, trading volume, the number of users and the variety of trading products has steadily been increasing in the past year and the gap with PAX Gold (PAXG) has been narrowing.
The trading products built around them have attracted the favor of professional traders rather than ordinary investors. According to Nomics data, recently XAUt’s trade volume is mainly on Bitfinex and FTX. The derivatives alone traded on FTX accounted for 26% of trading volume.
Sam Bankman Fried is very optimistic about a gold backed stablecoin. He once said that a gold backed stable coin may reach a high of tens of billions of dollars in market value in the future. Paolo Ardoino, chief technology officer of Tether, said that in uncertain times, people want to have access to gold. And Tether Gold is obviously a product that can resonate with this era. The price of gold has repeatedly hit new highs, and the price of the Tether Gold stable currency will also rise.
The financial market in 2022 is in a downturn, and the cryptocurrency market is not as hot as it was in 2021. XAUt can give investors a convenient way to invest in gold, and may have a number of the following applications:
- It lets ordinary investors also have the opportunity to incorporate gold into their “basket of investments” to hedge against the instability of stocks, funds, and cryptocurrency investments. For residents of countries with serious devaluation for their currency, it will be a way of protecting assets from diluting in value
-XAUt could become a borderless currency, becoming a new transaction intermediary for cross borders payments, providing low fees, a highly efficient cross border payment choice and greater market potential.
Mandarin Chinese to English: 密码货币挖矿：本来无一物，劳动力结晶 / Crypto Mining: Simply Nothing But the Crystallization or Labor General field: Bus/Financial Detailed field: Investment / Securities
Source text - Mandarin Chinese 区块链的世界有很多容易引起误解的用语，「挖矿」是其中之一。我嘗试从几个层面，去讲清楚挖矿到底甚么意思。
物理挖矿：用铲子寻找价值
理解了以上的解释，就能体会中本聪为甚么把架起伺服器帮助社群记帐这种行为称为「挖矿」。因为在比特币区块链，伴随着每个新区块都会产生出全新的、生态中本来并不存在的比特币回报矿工。帮助社群记帐这行为是为区块链提供的公共服务，因此挖矿回报不是个别任何人为获得的服务埋单，而是整个群体的所有人为新产生的价值埋单。
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Translation - English There is much technical jargon in the crypto world that is regularly misunderstood - mining being one of them. I’ll try from different levels of understanding to explain what exactly mining is so you can understand better.
Physical mining: digging for value with a shovel
On level 0, one picks up a shovel and digs through the dirt to find minerals in the earth, this is how they capture value.
Well of course everyone knows this, but the confusion lies therein how mining has anything to do with cryptocurrency. However looking at the terminology in the traditional world can help us understand a new interpretation.
The value generated from mining is completely from scratch. Miners can make money because they provide new resources and generate new value. In a normal mine, it is the mine owner who reaps the profit and the mine workers… not so much, but that's not what we are here to discuss.
Compared with the creation of new value from scratch through mining, the selling of goods and services by comparison is a ‘value added process.’ For example delivering goods to ones home, adding a good design, or providing thoughtful customer service; they are all based on existing products or services with additional value added onto it.
Bitcoin Mining: Accounting with Computing Power
After understanding the explanation, you will be able to understand why Satoshi Nakamoto called the act of setting up a server to do accounting work is called ‘mining.’ Because in the Bitcoin blockchain, with each new block, a new Bitcoin that did not exist in the ecosystem before will be generated and rewarded to the miner.
The act of helping the community keep track of its accounting on the blockchain is a public service, therefore the mining rewards are not paid by any individual for the services obtained, rather, the entire group pays for the newly generated value.
Satoshi Nakamotos accounting design made miners endlessly solve a mathematical problem using trial and error that expends a large amount of time and computing power. This process of trial and error can be likened to the mining process; success in solving the code is like randomly digging through the sand to find minerals. The process takes time, electricity and computing power to mine. And its because of all of this work, this mechanism is called ‘proof of work.’
With every new block that's mined, the system will mint a certain amount of bitcoin and awards it to the person who solved the problem first, as confirmed by the other miners. The whole process is very similar to physical mining. In addition to labor, miners also need to bring some luck to mine minerals, but labor is still the key. The mathematical name for luck is nothing more than “probability” and in the long run it everything evens things out. Once the amount of labor reaches a certain level, the mining reward is imminent.
The new model of Crypto mining: proof of stake
The invention of bitcoin is doubtlessly a breakthrough in the storage and transfer of value for humanity. However being a first generation decentralized ledger, it has long transaction times, low capacity, large volumes of wasted energy etc.
Therefore the next new generation of blockchain generally uses new mining mechanisms, the most mainstream one being Proof of Stake (PoS). The second largest blockchain, Etherium also is transitioning from proof of work to proof of stake
Proof of stake, in plain but very crude terms, is voting with money. All the miners responsible for book keeping need to deposit a certain amount of a token. If their account is different to everyone else's, then it will be seen as not correct; regardless if its from deliberate cheating or from a system malfunction and as such they will not receive a reward and in severe cases their stake will be deducted. This encourages everyone to keep accounts correctly, or, conversely, prevents someone from making mistakes or cheating.
From ‘labor power’ to ‘computational power,’ we now go to ‘financial power’ wherefore the industry doesn’t normally call the people keeping account on a proof of stake ledger a miner, instead they are called validators and the more neutral term is called a nodes. There activity is not necessarily mining.
I’ve heard people insist that proof of stake doesn't use computing power so its not mining. But i think the key point of using mining as a metaphor is the generating of new value that didn’t exist in the world before. According to the logic, shouldn’t society insist that it shouldn’t be called mining because Bitcoin nodes don’t use shovels?
Same with ‘wallets,’ ‘keys’ and ‘signatures.’ Mining is just an analogy to help understand blockchain through old concepts but they really don’t have to hold onto it
X-to-earn: Sowing Melons
Aside from PoW and PoS, there is also the system of obtaining a token by doing a certain activity. In recent years this kind of method is rarely referred to as mining but it is more popularly referred to as ‘X-to-earn’.
A good example is the recently popularized STEPN which brings us ‘move-to-earn’ whereby a user is rewarded with tokens by walking. Then there’s Axie Infinity's ‘play-to-earn’ model.’ Applying this logic, I co-founded Likecoin in 2017, which you could call ‘write to earn’ which didn’t exist in the nomenclature back then. So in the whitepaper I called it ‘proof of creativity’ to describe the process of creating social value and at the same time earning Likecoin.
Airdrops: An unexpected Windfall
Stretching out this concept further, peripheral to ‘X-to-earn’ is ‘airdrop.’ Both provide tokens for doing a certain actions deemed valuable. In the blockchain industry, airdrops are a one time only event which usually rewards early participants while ‘X-to-earn’ is on a continual basis. In addition, unlike ‘X-to-earn,’ the conditions for airdrops are generally not disclosed in advance but are instead announced without warning, favoring participants based on their past on-chain behavior. Not only are users unable to predict an airdrop most of the time, even the projects team may not know. Rather, it may end up getting deployed only after a certain stage of development for the project.
With regard to the airdrops deployment, it is an advantage that users do not know the details of an airdrop as its purpose is for rewarding early adopters. The more unpredictable the airdrop, the greater the likelihood that users behavior is sincere. However when the method of airdrop is used repeatedly by different projects, more and more ‘airdrop hunters’ will appear to speculate on future potential airdrops by executing simple on-chain transactions to participate in these projects.
Air drop hunters motives are forgivable. But they greatly reduce the surprise and power of airdrops as now it is difficult for projects to distinguish true users from false users. Only through ‘sudden airdrops’ can sincere users be rewarded.
Nonetheless, avoid over-speculating or being unrealistic and you may get a sudden large airdrop. Carefully study, try and participate in each method and through perseverance you may get a big surprise.
Mandarin Chinese to English: 以太坊硬分叉大戏愈演愈烈 交易所、项目方都是如何站队的？/ Ethereum hard fork drama intensifies. Where do exchanges and Etherium Team stand? General field: Bus/Financial Detailed field: Investment / Securities
Source text - Mandarin Chinese 随着以太坊合并的临近 （预计今年9月10日进行），以太坊即将从工作量证明（PoW）过渡到权益证明（PoS），关于以太坊硬分叉为PoS和PoW两条链的争论不绝于耳。
Translation - English Following the imminence of Ethereums merge (estimated to be on September 10th) with Ethereums move from Proof of Work (PoW) to Proof of Stake(PoS), controversy swirls around the resultant hard fork.
Recently, already part of the crypto exchanges, the merge project team and community have started to stand their ground in preparation for the fork, dubbed the 'fork wars,' which is now close at hand.
Exchange
Gate.io: Supports the upcoming fork and will enable in advance the trade of the resultant fork currency.
Gate.io is one of the exchanges that has recently enabled the trading of Ethereums fork. According to their official website, Gate.io on the 9th of August up until the successful release of Eth 2.0 will allow the trading of ETH for ETHS or ETHW. Users can trade with a 1:1 ratio to ETHS or ETHW. Among them, ETHS represents the token of a new PoS (Proof of Stake) coin; a forked coin named 'candy,' while ETHW represents the token of the currently existing PoW (Proof of Work) chain that may continue to exist.
At the same time, Gate.io announced, "if the hard fork fails, ETHS will automatically be changed into ETH at a 1:1 ratio and the trading for ETHS and ETHW will be closed."
TRON Poloniex: Supports Ethereums potential fork and enables futures trading for fork tokens
Poloniex announced on their official website: "we will fully support a potential fork of ETH. Ethereum may possibly fork into two chains during the upgrade and any holder of Ethereum will then be able to receive the forked coin at a 1:1 ratio.
Huobi: Respect the community consensus, but discourages forks without tangible improvement.
On the 5th of August, Huobi announced its been paying attention to the Ethereum communities discussion on the hard fork and respects their consensus, but doesn't encourage new and altered forks and opposes any form of pre-mining.
Trying to be neutral and objective, Huobi said that under the condition of protecting the security of users' assets on the ETH chain that have been successfully forked (including but not limited to mainnet coins), as long as they meet the asset security requirements, Huobi will be first to support users to receive them. For this, Huobi has developed five standards to handle the distribution of assets after the fork:
1. Inform Huobi Global in advance before the fork, and get a clear reply from Huobi Global.
2. By default, it has strict two-way replay protection, which can make transactions on one chain invalid on the other chain.
3. The new chain will not be overwritten or eliminated by the original chain.
4. Transactions have a different format so that all wallets (including light clients) need to be upgraded to support the new chain.
5. The official client software should be released before the hard fork is activated, and the client software should be publicly tested and evaluated.
In addition, Huobi calls on mainstream platforms in the industry to conduct pre-fork plausibility assessments with reference to the above necessary standards, and formulate reasonable standards.
OKX: The hard fork Token will be launched based on demand assessment
OKX CEO Jay Hao on the afternoon of the 8th of August stated on Twitter, OKX is proactively paying attention to support of the Etherium merge. There may be a hard fork of Ethereum during this network upgrade, and OKX will evaluate the listing of hard fork coins based on demand.
BitMEX: On the 9th of August ETHPoW futures contracts will be released.
BitMEX on the 8th of August announced that on the 9th of the month they will release the ETHPoW futures contract, ETHPOWZ22, with USDT (ERC-20) as the underlying security with a maximum leverage of 2x.
At the time of writing, exchanges; Binance, Coinbase and Kucoin have not yet released a statement on the Etherium fork.
The Etherium Fork Team
At present, the mainstream project parties who have spoken out hold a negative attitude towards the Ethereum hard fork.
Chainlink announced, "during and after the merge period, Chainlink will cooperate and continue to serve Etherium operations and won't support the Etherium fork, including the PoW. This is the consensus of the Etherium community.
Wallet Smart contract, Argent, stated its very excited about Etheriums merge but has no plans for the support of the fork.
Defi wallet platform Debank on the 9th of August stated that Etherium is currently becoming the most promising web3 application chain. The hard fork would spell disaster for the whole Web3 ecosystem. As such, its team will not support any forked chains during Ethereum's PoS merge transition.
Frax Finance co-founder Sam Kazemian launched a proposal against the fork in the community. The proposal calls on the Frax DAO to choose PoS Ethereum as the only Ethereum network recognized by the Frax stable coin.
The proposal says, "Frax is the 5th largest stable coin, with at-least 20% the TVL (total value locked) of Curve, is Uniswaps 10th largest coin and a key part of the Etherium ecosystem. Therefore, it is important to publicly clarify the wishes of FXS holders through governance. "
Last week at South Koreas BUIDL Asia Conference, Vitalik Buterin stated that centralized stable coins like USDC and USDT will be an important determinant of future hard forks. "Now that Frax Finance has gotten behind us, we look forward to the position of other stable coins."
At the same time, Curve Finance has stated, that it's not possible for Curve Dao to force a decision about the fork (owing to their decentralization). However a hard fork will inevitably clone the DAO and the CRV token and the DAO will have to make a decision about which chain will be used for their stable coin and DAO.
Additionally Ethereums second largest mining pool, f2pool stated, that the miners are the Etherium ecosystems unsung hero's. Weather they support Etheriums fork or not isn't important, it's up to the mining community to decide. The community leader stated it will continue to provide mining services for whomever.
The Insiders View
Crypto Pragmatist founder Jack Niewold on Twitter stated, Etheriums PoW hard fork will have no developer activity, no investment, it will be a ghost town of no media coverage and no one trading the assets with fiat. Because the general belief is that the merged chain is the real Ethereum.
Jack Niewold discusses the risks of a hard fork, calling it a civil war within Ethereum. At present, some people in the inner circle have publicly dominated the Ethereum hard fork and continue to support the PoW network. Similar to Vitalik Buterins point of view, Jack Niewold believes that Ethereum's hard fork may depend on stablecoin issuers such as USDT (Tether) or USDC (Circle). But Jack Niewold expressed concern about the potential stance of stablecoin issuers on the Ethereum hard fork.
Because, if the Ethereum chain forks, the stable coins will face the risk of forking into two stable coins. As a stable coin issuer, for every stable coin issued, you suddenly have two debt obligations.
Although allot of people believe the issuers of stable coins will take the PoS chain as the real chain of Ethereum, what if they want to support the PoW chain? After all they (the miners) have enough financial motivation to do so.
For example, they can short Ethereum, announce the redemption of their erc-20 tokens on the PoW chain, and then make billions. This could disrupt the new Ethereum network, causing loans to be liquidated and protocols, exchanges, treasuries etc, to be shut down.
This would be utter chaos, and could destroy the cryptocurrency market. This kind of practice is likely to be illegal, but after making billions of dollars you can have enough money to hire a good enough legal team to defend you, or buy a private island out of the limelight.
However Jack Niewold believes, its not likely that the PoW fork will be accepted, and it is logically not likely possible to occur. Leaving aside the previously mentioned stable coin issues, PoW forks will become a ghost town because the current social consensus is that the merged chain is the "real" Ethereum.
So PoW will have no developers, investors, media coverage, and they have no way to sell their assets into real world fiat currency, not to mention some of the technical challenges associated with the "difficulty bomb".
The impact of the fork
Peoples arguing surrounding the Ethereum hard fork seems to have effected the market. For example, stETH is currently discounted by 3.7%.
stETH (Staked Ether) is a token obtained by staking Ether on Lido, and is pegged 1:1 with the staked ETH. stETH tokens are minted when ETH is deposited and destroyed when redeemed.
Mandarin Chinese to English: 谢田：中国银行挤兑会恶化到何种程度? / To What Extent Will the Bank Run in China Worsen? General field: Bus/Financial Detailed field: Investment / Securities
Source text - Mandarin Chinese 【大纪元2022年06月25日讯】中国银行的挤兑潮，在中国经济每况愈下，政府、企业、和个人债务接连爆雷的情况下，任凭中共政府百般地不乐意和刻意掩盖，终于开始大面积地来临，并且在不久的将来，有拖垮中共的银行业、货币体系、和中国经济的可能。
六月底，网络传出的一段视频显示，中国有四大银行之一的中国农业银行，在未事前告知储户的情况下，突然限制每天支出1000元人民币的额度。储户质问银行职员：“哪条法律规定你要禁止我一天才一千块钱？一千块够干什么用啊？”银行职员的回答是：“不是我规定，是系统自动设置的。”
中国民众已经开始有了对自己的存款是否安全的担忧，有的网民质问说，我的钱还是不是我的钱？也有人建议把钱取出来放家里，别在乎那点银行利息了。
美国历史上，银行挤兑的现像一直在发生，三十年代大萧条的时候自不必说，即便是2008-2009的金融危机的时候，都还发生过小范围的银行挤兑。1933年FDIC（联邦存款保险公司）诞生的原因，就是因应着大萧条时的银行挤兑。除了在银行门前挤破头的真人秀、真刀真枪的挤兑，“沉默的银行挤兑”（Silent bank runs）也可能在大面积的电子转账的时候出现。
2008-09美国金融危机的时候，华盛顿互助银行（Washington Mutual (WaMu)，当时还是美国第六大金融机构，2008年9月被美国财政部的OTS部门关闭。随后的几天内，储户们提取了167亿美元的资金，使该银行的现金一扫而空。第二天，Wachovia Bank 也遇到同样的事，两个星期内150亿美元被提走。
还有，中共目前极力推行的数字货币，是不是有可能避免银行挤兑呢？正如笔者如上所述，大面积的电子转账的出现，会导致“沉默的银行挤兑”（Silent bank runs），所以挤兑的风险呢，仍然是存在的。中国的银行挤兑，究竟会恶化到何种程度呢？中共心里是最清楚的，体制外的人们呢，就只能拭目以待了。
（谢田博士是美国南卡罗莱纳大学艾肯商学院的市场学教授暨约翰奥林棕榈讲席教授）
Translation - English Xie Tian: To what extent will the bank run in China worsen?
Epoch times, 25th of June, 2022 edition.
The run on the Bank of China has made China's economy go from bad to worse. With government, business and individual debt exploding, the run on the Bank of China, under the circumstances of the deteriorating economy and the continuous explosion of government, corporate, and personal debts has finally begun to come to light despite the Communist Party government’s cover-up efforts and unwillingness to act. In the near future, their is a possibility of the collapse of the banking industry, the monetary system and China’s economy.
Towards the end of June, the internet put out a video showing one of the top 4 banks of China, China Agricultural Bank, informing depositors that suddenly there is a restriction on withdrawals of 1000RMB per day. Depositors are asking the tellers at the bank, “what law authorizes you to prohibit me from withdrawing more than 1000RMB? What can I do with 1000RMB?” The response is: “it’s not us, its automatically set by the system.”
The Chinese public already started to have doubts about weather their deposits are safe. One netizen asked, “is my money still my money?” Some people also suggest taking their money out and bringing it home and not caring about the banks interest rates.
In April this year, Pudong Bank, Everbright Bank as well as China Agricultural bank have all announced they are reducing transaction limits related to online business for some or all of their customers, including personal online banking, transfers and online payments. Aside from restricting online account payments, many bank depositors are having their withdrawals limited. Recently their are videos coming out of Shenzhen, Shanghai and Dandong of depositors lining up at the bank. Netizens one by one complained of the difficulty of withdrawing money and suspect the possibility of the bank’s funds being tight, worrying about whether their deposits can be withdrawn in the future.
From mid to late April, depositors of many village banks in Henan have encountered problems withdrawing cash. All over China, the funds of depositors are vanishing out of thin air whilst their health scores are inexplicably turned turned red (Chinese citizens must download an app on their phone that displays their health status. A red score excludes them from regular daily activities). The dark mechanisms of the government who are behind the health code cannot help but shock people.
In Shanghai, from the end of the lock-down in June, many banks have been crowded.
Elderly people who receive pensions in Shanghai, rush to the bank at 2 in the morning to line up may still not be able to receive their money. There is no chance for someone arriving at 5 in the morning.
Depositors in Shenzhen told foreign media, that their was signs of an implosion. In June they said one could no long withdraw money from ATM machines — this situation is already a few months old concerning China Construction Bank and China Agricultural Bank where withdrawing cash became inconvenient.
Consumers in mainland China now mainly use online payment, using things like Alipay which transfer money to and from the bank; usually there is no problem with it. However, there have been several instances of failures in transferring money to Alipay and Yu-E-Bao (another payment service).
Official Chinese state media recently indirectly confirmed the occurrence of a wave of bank runs. The Shanghai branch of the Peoples Bank of China on the 20th of June announced, in the first half of June, cash transfers since this time last year have quadrupled. China News Service said on the 1st to the 15th of June, the total cash supply of the Peoples Bank of China has quadrupled since this time last year. But the bank did not specify weather the cash was enough to settle peoples withdrawal needs.
This kind of situation continues to ferment all over China, shattering the confidence of the Chinese public when the most important domain of finance is trust: it is the deciding factor in weather or not a banks bankruptcy or a bank run will happen. Almost certainly, the Communist Party is struggling to prevent a bank run. But to what degree will the bank run worsen? Enough to bring down the Communist party led banking and finance system? Is digital currency able to avert a bank run? These are important questions.
The word “bank run,” in Chinese vividly paints a dramatic picture of a swarm of people frantically scrambling to withdraw their cash. The meaning of the word bank run in the west is to withdraw your cash and run. As for weather its a crowd is not clear. In western society, even if a bank run were to occur, people would still line up in an orderly fashion and not swarm as a crowd. But if the situation is serious enough, civilized behavior will go out the window.
A run on banks occurs when a large amount of the depositors worry that a bank is possibly unable to pay back their deposits or that they cannot withdraw their cash in a timely fashion; so they race to pull their money out. Because it is impossible for banks to keep too many of their deposits, they have already used most of their funds (around 90% of their deposits) for lending. It’s their business to lend to companies and individuals that need capital.
Are bank runs legal? In America, many states at least on paper have laws to to try prevent people from spreading rumors or malicious remarks that could lead to a bank run. These states even legislate the prohibition of people making inaccurate comments about a banks financial health. The problem for China is that the banks lack transparency and government regulation is unclear and often ineffective.
In current society for example, in a developed country like the United States with relatively transparent information, can a bank run still happen? Even with federal government insurance（FDIC/NCUA， if you need a lot of cash urgently, your bank can’t give it to you right away and so there still might be a bank run.
Many people will ask, where will the rich people put their money? Will they have a problem getting their money out? In America, many millionaires and billionaires put their money in mutual funds, or certificates of deposit (CD), commercial paper and US treasury bills. This can also be considered cash because it can be cashed in at anytime. There are some rich people who will take their money and buy short term government securities called treasury bills and upon expiration, quickly buy more, not withdrawing until they need the cash.
Many billionaires will use zero dollar banks accounts at a private bank in order allocate their money into cash or into the above mentioned cash equivalents. When they need to spend money, they will write a check from their zero dollar bank account. It looks like a bad check but the bankers at their private bank will settle daily, and all that has to be done is for the account holder is to sell some short term bonds, mutual funds or CD’s to settle the check they wrote, then their bank account can be kept at zero.
Basically, the very wealthy only keep 1% of their wealth in cash or liquid assets and the rest of their wealth they keep in commercial paper, stocks, bonds, mutual funds and other financial assets. So the wealthy should have no problem with a bank run. The vested interests of the Communist Party and their elites won’t have to worry about a bank run or a bankruptcy.
In Americas history, bank runs have always happened. Not only in the 1930s great depression, even in the 2008–2009 financial crisis their were limited scale bank runs. In 1933 the FDIC (Federal Deposit Insurance Corporation) was born because of the bank runs during the great depression. In addition to bank runs, “silent bank runs” may also occur during large-scale electronic transfers.
Ever since banks appeared in society, so to has bank runs. In 15th and 16th century Europe, goldsmiths would issue paper receipts that would allow people to use them to exchange for gold. When these written receipts exceed their gold holdings, a bank run will occur. The bank runs during Americas great depression started with the stock market collapse. In 1930, the earliest bank run occurred in Tennessee, leading to the first bank to collapse. At the time these things didn’t attract peoples attention as people thought it was an isolated case. But immediately a series of banks in the American south took place causing the news to spread over the whole country. Nationwide bank runs and bankruptcies then started to occur. Rumors came out that a bank in New York may be unable to make ends meet causing thousands of people to line up to withdraw their cash, and within a few hours 20 million dollars was withdrawn, leading to the bankruptcy of 4000 banks.
During the 2008–2009 financial crisis in America, Washington Mutual Bank was still Americas 6th largest financial institution but on September 2008, the US Treasury OTS Department shut down. Within a few days, depositors withdrew $16.7 billion worth of funds, making the banks cash reserve dry up. On the second day, Wachovia Bank also encountered the same issue where within two weeks, 15 billion was withdrawn.
Over the past 500 years, every country has experienced the pervasive issue of bank runs. Ever since the year 2000, there’s been Argentina (2001), Myanmar (2003), America with the sub prime mortgages crisis (2007), England (2007), Switzerland (2011), China Yancheng Sheyang Rural Development Bank (2014), Bulgaria (2014), Greece (2015), Canada (2017) and most recently Englands Metrobank (2019); all who have experienced bank runs.
In that case, to what degree will Chinas bank run will worsen? The possibility of a larger scale bank run, as we can see today, is increasingly likely. The foolish policy of the Communist party has been to cover up and shutdown, but the more they do it, only the more will the panic increase, making the scale of the bank run worse. When 10% of depositors go to withdraw money from the bank, the communist authorities will definitely not be able to provide the funds; and even if the party resorts to means of suppression, coercion, arrest, and silence, it would not help, because no one would be ok with seeing their savings go to zero!
Will the bank run bring down the Communist Parties banking and financial system? Of course, there are countless examples in history, from the time of the Republic to the Communists. Under the rule of the Communists, a few years ago a bank run on Jiangsu started and today it is even worse.
In addition, the Communist party has been rigorously promoting the digital currency (the E-Yuan), perhaps as a way to prevent more bank runs. As mentioned above, the emergence of large scale electronic transfers will lead to “silent bank runs” so there will still be risk of bank runs. To what extent will the bank run in China worsen? The Communist Party are the ones that most clearly know, and people outside the system can only wait and see.
(Dr. Xie Tian is Professor of Marketing at the University of South Carolina Aiken School of Business and John Olin Palm Chair Professor)
Mandarin Chinese to English: 比特币和黄金无法抵御地缘政治动荡！希腊前财长：比特币取代传统货币将是一场噩梦 / “Bitcoin and Gold Are Useless As a Hedge Against Government Instability!”— Former Greece Finance Minister: “Bitcoin Replacing Trad General field: Bus/Financial Detailed field: Investment / Securities
Source text - Mandarin Chinese 24K99讯 希腊前财政部长雅尼斯·瓦鲁法基斯(Yanis Varoufakis)表示，比特币和黄金无法抵御地缘政治动荡。他说，在政府之外寻求自由是一种危险的幻想。
Translation - English Greece's former finance minister, Yanis Varoufakis, states that bitcoin and gold are not immune to geopolitical turmoil, according to former Greek finance minister Yanis Varoufakis. “Seeking freedom outside of government is a dangerous fantasy,” he said. Varoufakis is also a Phd in economics and a best selling author. He was recently interviewed by Kitco News anchor and producer, David Lee.
Varoufakis said, “I don’t think cryptocurrencies like bitcoin will definitely replace traditional currencies. It shouldn’t, it can’t, but if it could then it would be a nightmare.”
However, he added, cryptocurrency technology will have use for central banks.
Varoufakis says, “Chinas central bank has already implemented a kind of digital currency with the aim to bypass the barriers that commercial banks put up for fiat currencies.” He believes that commercial banks are the source of financial instability.
Varoufakis has long advocated for a European Central Bank Digital Currency (CBDC).
Varoufakis responded to the idea that gold and bitcoin are hedges against government turmoil. “Some people believe the perspective that gold and bitcoin is a tool used to protect oneself against government instability,” Varoufakis replied. [This is] pure stupidity… you need to control the currency supply. Currency supply should be independent from politics and government ideology… its extremely dangerous.”
He explained that in times of crisis, central banks need to provide funding to avoid depression.
Additionally Varoufakis responded to the assertion that Quantivate Easing leads to inflation.
Varoufakis said the reason we have inflation now is not quantitative easing, but two other reasons. He said: “First, because of supply chain disruptions. Lockdowns have basically completely dismantled the supply chains of globalized capitalism. The second reason is that there was a period of increased demand for commodities and at the same time because of supply chain disruptions, these The supply of stuff is constrained. That’s causing hyperinflation.”
Mandarin Chinese to English: 如何看待以太坊 DeFi 的“九死一生”？ / How Do You View Etheriums Narrows Escape From Death? General field: Bus/Financial Detailed field: Investment / Securities
Source text - Mandarin Chinese 在过去几个月中，去中心化金融—以“ DeFi ”广为人知—看起来已经成为了以太坊的杀手级用例。今年早些时候，锁定在 DeFi 应用程序中的资产价值超过了 10 亿美元，而促进基于以太坊的金融生态的智能合约活动也呈现出了强劲的涨势。这种增长大部分与这些协议提供的诱人的高利率有关。
由于这一次暴跌之剧—据 CoinMetrics 的 Nic Carter ，这是 ETH 有史以来最糟糕的单日跌幅—MakerDAO 也被拖入了这场危机。
如上图所示，一旦 ETH 的价格开始出现极端波动的情况，Maker 贷款很快会触发清算。（注：上图呈现的是 Single Collateral Dai（ SCD，单抵押品）贷款的清算，这是稳定币
DAI 一个相对小的变体。）此外还有价值以数百万计的 Multi Collateral Dai（ MCD，多抵押品）贷款，DAI 的主要变体，也被清算了。）
我们来解释一下 DAI 兑美元价格出现偏差的原因—其实很简单，这是因为投资者面对比特币近期波动寻求“安全”且“稳定”的资产所造成的供不应求现象带来的副产品—稳定费（实际上即是 Maker 贷款的利息）目前已经减少到了 7.5% ，理论上 DAI 的供应就会增加，因为贷款更便宜了。
正如先前提到的，还有一个问题是贷款所有人完全损失了他们抵押的资产。目前尚不清楚这是否是为了保证部分借款人的利益完好无损，尽管有一种看法认为被清算的贷款所有人没有收回任何 ETH 是自由市场作用的结果，而不是 Maker 治理造成的问题。
在本文撰稿期间，Maker 社区成员还在不断地讨论能够成功修正当前不稳定性的方案。该项目的论坛上出现了一个话题，该话题正在讨论该协议是否应该支持中心化美元稳定币 USD Coin ，作为一种抵押资产类型，以“帮助建立 DAI 的流动性，并使 DAI 的汇率重新趋近锚定 1 美元。”目前为止，社区中大多数成员都倾向紧急纳入 USDC ，尽管该方案尚未最终拍板，因为如果社区就此达成一致，为了确保方案的顺利实施必须进行技术升级。
截至本文撰稿时间，根据 CoinMarketCap 的数据，考虑到 DAI 相较于 1 美元依旧存在 5% 的溢价，由于尚未解决的债务，人们对 Maker 的稳定性依旧心存疑虑。基金会和 MKR 持有人还在继续尝试寻找新的方法来修正当前状况，同时缓和进一步的风险，这是完全可行的。尚未准备好主流化尽管 DeFi 生态系统的健康已经开始从上周的大崩盘中恢复过来，投资者，尤其是 DeFi 用户，所承受的精神压力却没有消失。
加密货币和区块链投资基金 Multicoin Capital 的合伙人 Tushar Jain 在一条长推文中表达了他的恐惧担忧，写道：“今天，整个 DeFi 生态系统几乎彻底崩溃了。几个大型市场参与者破产了… … 如果说我们不得不接受加密货币可能在一天内下跌超过 60% 的事实，那会‘严重’限制这个技术的可用性。”业内的其他人也响应了他对 DeFi 面对加密市场波动的潜力的怀疑。比特币支持者对这个不幸的崩溃尤其洋洋自得，认为这证明了这些事实上的去中心化银行绝不可能是去中心化的，在这场金融革命中不值一提。闪电实验室首席团队成员 Alex Bosworth 写道：
把高风险的‘去中心化’项目推销给散户投资者，好空口白牙地骗取采用率？六个月后的结果是：损失不断累积，需要紧急财政援助。”
最关键的是 DeFi 可能还没有准备好迎来主流化。正如 DAppRadar 的传播总监 Jon Jordan 在这场危机发生两天后的一次采访中向 LongHash 提到的那样：“我不认为有人会觉得这一代 DeFi 已经能够部署到主流市场。总的来说，使用 DeFi 协议的人可能不到 10000 人—比较一下币安的用户数。”
但是，尽管存在对系统性风险的担忧以及认为 DeFi 还不够成熟的市场情绪，至少它似乎活下来了，而且还在继续发展。根据 DAppRadar 3 月 16 日的数据，按交易量计算，DeFi 应用几乎依旧霸榜以太坊上的 Top 10 应用程序。
Translation - English These past few months, decentralized finance has widely been acknowledged to be the killer user case for Etherium.
Early this year, the total value of assets locked in decentralized applications (dapps) has reached 1 billion dollars, and the smart contract activity that fuels the Ethereum-based financial ecosystem has also seen a strong uptick.
A big part of this kind of increase is related to protocols tempting people in with high interest rates.
On Compound and dYdX’, 20 million US dollars worth of liquidity was pumped into their protocols, while Coinbase praised Defi saying “its the foundation of a free financial system, because its regulation resistant, impartial, programmable, and anyone with a smart phone can use these dapps.
But last weeks market crash almost already destroyed this narrative with etherium falling by 50%, throwing the Defi ecosystem into chaos. Being Defi’s biggest protocol, MakerDAO is undoubtedly the best example of the current situation with them even considering the possibility of closing operations.
About MakeDAO
Its hard to talk about Defi without bringing up MakerDAO — a DeFi protocol that allows users to take loans in the form of DAI — a stable coin pegged to the USS with with algorithmic based interest rates.
For collateral, a borrower must deposit 150% of the value of his desired loan in the form of ETH or BAT. If the collateral for any loan on Maker (this loan is also called CDP) falls below the 150% threshold, then the position will be liquidated and the assets will be auctioned off to protect the integrity of the system.
Its reputation was such that the legendary venture capitalist firm Andreessen Horowitz invested 150 million into the protocols governance token, Maker. At the time this company’s purchase represented 6% of its total supply.
Because loans of DAI on Maker require at least 150% collateral to be issued, last weeks market crisis rapidly exposed a loophole in MakerDAOs. Some analysts call this loophole possibility a menacing threat to Defis survival.
What did defi experience last week?
On the 7th of March when bitcoin was at $9200, the price of bitcoin reversed following the the S&P 500 and other Indexes into a period of price capitualation; all owing to the influence of high leverage on futures exchanges and as such bitcoin tumbled down to as low as $3800.
Of course altcoins followed the trend of bitcoin with Etherium fairing no better. Eth bottomed out at a price of $90 according to trading view, a 64% decline from the previous weeks high.
Because of this price collapse, according to Coinmetrics Nic Carter, this is now the worst single day price decline in Etheriums history with MakerDAO being now dragged into a crisis.
According to this picture, once Etheriums price started to show extreme volatility, many MakerDAO loans quickly triggered their liquidation prices (the picture presents single collateral DAI -SCD- liquidations)。 Additionally millions of dollars of Multi Collateral Dai (MCD) loans had their liquidation price triggered also.
Although loans being liquidated is a very common thing, the problem is: the nature of the liquidations did not abide by what was stipulated in MakerDAOs own white paper.
More precisely put, according to a post made on MakersDAOs subreddit, all the liquidated individuals didn’t receive any part of their collateral ETH, despite theoretically the liquidation fee being only around 13%.
Through decentralized data provider, Defipulse, analysis shows Etheriums crash coincided with an influx of large scale transactions which caused the oracle powered price feeds to collapse. Etherium developer and supporter, Marc Zeller responded to these claims. In Defipulse he writes:
“Gas fees exploded leading to Makers price feed oracles to get stuck at $166, even though the market tanked almost 15%
Zeller points out, 2 factors; the oracle protocol gave a different price to the market price and the network congestion led to liquidated traders not getting their collateral.
For example, owing to the congestion, the protocol, Keep3r， successfully used a total of 0 Dai to bid for 4.5 million USD worth of liquidated Etherium. Within 10 minutes the 0 Dai was successfully auctioned off as other bids failed to be added to the blockchain.
Keep3rs winning bid made a a free few million dollars worth of Eth, but led to a multi million dollar deficit in the Dai collateral.
Since this large scale liquidation event, MakerDaos future became uncertain. The protocol never experienced such a loss before, neither did cryptocurrency as a whole ever experience such a loss (at least in its current ‘mature’ state). Additionally, DAI’s price theoretically should have stayed close to a dollar, however large divergences in price have already begun, with some exchanges reaching $1.20.
On march the 12th, MakerDAO’s foundation and its considered totally shutting down the protocol to mitigate further risks. The shutdown would put a freeze on new loans, put a freeze to the debt auctions and DAI would be redeemed for a fixed price.
According to DAI supporters, its fortunate the protocol never shutdown. Instead Maker must find a different solution to solve the collateral deficit.
Until then, they have already adopted a series of measures to re-stabilize the system.
In order to solve Dais collateral shortage, MakerDAO plans to on the 18th of march (already delayed to the 19th) to auction off newly minted MKR to increase the tokens liquidity. This sale should be enough to make up for the debt, but even then this hurts the interest of the MKR holders because it will diminish their assets prices.
With the many complex details of auctions, data company Messari can explain further.
According to data from Daistats, Dais recent deficit is of 5.3 million, and if Makers market cap is 205 million, then the total increase of supply will go up by 2.6%.
Some industry players such as fiat-to-defi platform, ‘Dharma,’ and crypto asset fund, ‘Paradigm,’ have expressed a willingness to participate in the auction, perhaps in a bid to support the value of MKR and the rest of the Maker ecosystem.
Lets explain the reason for the price deviation of DAI against the US dollar. It is a byproduct of the supply squeeze caused by investors seeking safe and stable assets in the face of bitcoins recent volatility and as such one would be willing to pay a fee for stability. Theoretically, when supply increases, interest for loans become cheaper.
As said before, another problem is that the people being liquidated lost all their collateral. Currently its not clear weather the interests of the borrowers are being guaranteed.
However some people have the outlook that the liquidated people who didn’t receive any of their Eth was simply an outcome of the free market, and not a result of a problem with Makers governance.
At the time of writing, Makers employees haven’t stopped discussing, weather they can successfully repair the instability.
On its forum appeared a topic discussing weather the protocol should support the centralized stable coin, USDC, in order for it to act as a collateral asset to help build liquidity for DAI and bring DAI back to the $1 peg.
Until recently, community members supported including the stable coin USDC, however this plan still hasn’t been executed, because the community agrees that technical upgrades must be carried out first to ensure the smooth implementation of the plan.
At the time, according to Coinmarketcap, DAI still trades at a 5% premium owing to unresolved debts and as such causing people to doubt Makers stability. The maker foundation and its supporters continue to explore new solutions to fix the situation. And at at the same time further mitigate risk.
Not ready for the mainstream
Although the health of the Defi ecosystem since its collapse last week has recovered, investors, especially Defi users, the stress hasn’t disappeared.
Tushar Jain, partner at Cryptocurrency and blockchain investor fund Multicoin Capital, expressed his fears in a long tweet:
Today, the whole Defi ecosystem almost completely collapsed. Some users of some big exchanges were bankrupt,. If we must accept one day 60% declines, then its going to effect technologies possibilities.
Other people in the industry also responded with concern over the possibility of volatility.
Bitcoin supporters are especially pleased with themselves over this unfortunate price decline, they believe this is proof that actually decentralized banks are absolutely unable to decentralize and this so called financial revolution is not worth mentioning. The lightning network lead developer Alex Bosworth wrote:
“Get high risk decentralized programs to give to users to swindle them. 6 months later the result is never ending accumulating loss and now they need to be financially rescued.
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The big focus on Defi is weather its ready to be accepted by the mainstream. As Jon Jordan, Director of Communications at DappRadar puts it, this crisis occurred two days after the meeting with LongHash when he brought up:
“I don’t believe people will feel like this generation of Defi is enough yet to enter the mainstream. As was said, users of Defi protocols possible aren’t even 10,000 people, compare that with the amount of users on Binance.”
Despite the systemic risk concerns and the lack of maturity in the market sentiment of Defi, at least it seems to still be alive and it continues to grow. According to data on DappRader on the 16th of March, market calculations say Defi applications are still in the top 10 applications.
Despite the systemic risk concerns and the lack of maturity in the market sentiment of Defi, at least it seems to still be alive and it continues to grow. According to data on DappRader on the 16th of March, Defi applications still dominate the top 10 Etherium applications.
Mandarin Chinese to English: 最近很火的DeFi，到底是什么？ / So What Exactly is Defi? Decentralized Finance Explained General field: Bus/Financial Detailed field: Investment / Securities
Source text - Mandarin Chinese DeFi就是去中心化的金融，Decentralised Finance的意思。
Translation - English The meaning of Defi is Decentralized Finance.
Through the process of tokenization, the world of cryptocurrency hopes that financial transactions can become fully decentralized using Defi.
However the difficulty in decentralizing finance is not the technology itself but how to replace our current system of derivatives trading.
When Bitcoin and Etherium are transferred to another party, the digital assets sovereignty is transferred in it’s entirety. If I own one bitcoin and transfer it to you, the rights of ownership now belong to you. The nature of this transaction gives the digital asset the special characteristics of being censorship and regulation resistance. This is important because the relationship between borrower and lender is easily controlled by the government. All it takes for the average Joe’s money to be frozen is a directive from the government and suddenly his funds are unavailable.
However when it comes to bitcoin, unless the average Joe is physically coerced by an outside force, the bitcoin he has now will be his in perpetuity and no external force can change that.
Going back to traditional finance, when you seek a bank loan, the funds available for the loan come from depositors of the bank. In theory the bank will not over borrow from its depositors because it has a reserve fund and is supervised by the central bank so if the bank has 1 million, it should be able to lend out 3 million.
But here’s the problem and its got to do with ownership. If I have a camera and let you use it, but now you want to borrow three cameras from me and in exchange you will give me five new camera after you finish taking photos, how can I guarantee you’ll return the camera I gave you? How can I guarantee you’ll hold up your end of the bargain. Now the lack of regulation is a problem.
Defi needs to solve this problem digitally on the blockchain so we can carry out common and advanced financial services.
From the blockchains perspective, advanced financial services are entirely possible because of the implementation of what are known as ‘smart contracts.’ These contracts create and implement agreements for lending, the putting up of collateral or the transfer of ownership . It is a decentralized system of borrowing and lending based on algorithms.
Through the blockchain, Defi has solved the aspect of managing collateral to make leverage possible for margin traders; finally making it possible for derivatives to have a similar function to traditional financial markets.
Lets take bitcoin and Etherium as an example. Supposing there was a blockchain called ‘X chain’ and its native token was called ‘X coin.’
If I want to use bitcoin as collateral to borrow Etherium, I can:
1. Take my bitcoin and lock it in a special location which at that time I can on ‘X chain’ mint a synthetic version of Bitcoin — lets call it Pseudo-BTC (in practice this is called Wrapped BTC or WBTC).
2. Then on this blockchain I can make use of smart contracts to offer up my pseudo-BTC as collateral. This will allow me to mint the native token: ‘X token.’
3. I can then take this ‘X Token’ to purchase ‘Pseudo-ETH’ (again in practice this is called Wrapped ETH or WETH)
4. Then I can use this Pseudo-ETH to get a corresponding amount of Etherium and the transaction is complete.
The whole process is completed using smart contracts without a single humans input. However if by an agreed upon time the loan isn’t repaid, the bitcoin I put up as collateral will be gone as the smart contract will identify a breach in the terms and treat your collateral accordingly.
This is an implementation of an equal collateral to loan ratio. However the financial services offered can be flexible in that you have the option to provide a higher amount of collateral compared to your loan. At the same time you also have the option of providing 1 BTC in collateral, but being able to borrow 2 BTC or even 10 BTC for the use of speculation.
Supposing that this aforementioned ‘X-chain’ we mentioned before acts as a bank, everyone shouldn’t have a problem locking in their bitcoin, which would subsequently be converted into Psuedo-BTC for the ‘banks’ usage. With this pool of funds now available to them, the question is won’t reckless borrowing along with the existence of interest create many bad loans?
Decentralized finance has zero tolerance for bad debts. When there is no possibility of bad debt, then Defi is conversely ‘very tolerant’ as a result. There’s a teaching in Daoism that is along the lines of; ‘when the country is in chaos, there are loyal ministers.’ The idea being that if everyone including the ministers are seen as potential traitors, they will all be on their best behavior. Likewise with Defi, if every loan has no tolerance for failure of any sort, the system will remain in harmony.
And how exactly are bad debts prevented? Through forced liquidations by smart contracts.
The strength of smart contracts is that all the actions taken are done automatically on the blockchain. You can use 1 BTC as collateral and now you can get 10, but after you get it, if the value of the assets in your account drops to 9.05btc, then sorry, the smart contract is going to liquidate your collateral.
This is the same for stocks, futures or margin trading on Forex but the only difference is that its done in a decentralized manner on the blockchain.
There’s leverage, collateral and a pool of funds; all the basic aspects of finance are there and theoretically more complex derivatives can be created in the same place.
Of course there are many pitfalls to this new technology. For example hackers could potentially find a way to overload the blockchain to slow down the workings of smart contracts and in that time the price may change, causing bad debts to arise (due to not liquidating accounts that should have been liquidated).
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DeFi is a very interesting concept. As early as 2018, when I was researching stablecoins, I felt that there would definitely be DeFi in the future. But I also have big concerns about the application DeFi. A decentralized financial derivatives platform that is anti-regulation, anti-censorship, and also depends on the specific implementation of computer technology, can be called a financial jungle; even for bankers, let alone ordinary people. The risks are in fact very big.
Mandarin Chinese to English: 美两党议员推动用数字美元对抗数字人民币 / U.S. lawmakers push for digital dollar to fight digital yuan General field: Bus/Financial Detailed field: Investment / Securities
Source text - Mandarin Chinese 【大纪元2022年08月10日讯】（大纪元记者吴畏编译报导）一些美国两党议员正在推动美联储发行数字美元，以对抗来自中共和其它国家的数字货币，议员们担心有一天数字货币会威胁到美国作为全球储备货币的地位。
《华尔街日报》8月8日报导，两党议员，包括民主党籍众议员马克辛-沃特斯（Maxine Waters）。马克辛和共和党籍众议员弗兰奇希尔（French Hill）正在推动美国对抗其它国家数字货币的能力。他们都在众议院金融服务委员会任职，该委员会可能最快在下个月就相关立法议案进行投票。
Translation - English Xie Tian: To what extent will the bank run in China worsen?
Epoch times, 25th of June, 2022 edition.
The run on the Bank of China has made China's economy go from bad to worse. With government, business and individual debt exploding, the run on the Bank of China, under the circumstances of the deteriorating economy and the continuous explosion of government, corporate, and personal debts has finally begun to come to light despite the Communist Party government’s cover-up efforts and unwillingness to act. In the near future, their is a possibility of the collapse of the banking industry, the monetary system and China’s economy.
Towards the end of June, the internet put out a video showing one of the top 4 banks of China, China Agricultural Bank, informing depositors that suddenly there is a restriction on withdrawals of 1000RMB per day. Depositors are asking the tellers at the bank, “what law authorizes you to prohibit me from withdrawing more than 1000RMB? What can I do with 1000RMB?” The response is: “it’s not us, its automatically set by the system.”
The Chinese public already started to have doubts about weather their deposits are safe. One netizen asked, “is my money still my money?” Some people also suggest taking their money out and bringing it home and not caring about the banks interest rates.
In April this year, Pudong Bank, Everbright Bank as well as China Agricultural bank have all announced they are reducing transaction limits related to online business for some or all of their customers, including personal online banking, transfers and online payments. Aside from restricting online account payments, many bank depositors are having their withdrawals limited. Recently their are videos coming out of Shenzhen, Shanghai and Dandong of depositors lining up at the bank. Netizens one by one complained of the difficulty of withdrawing money and suspect the possibility of the bank’s funds being tight, worrying about whether their deposits can be withdrawn in the future.
From mid to late April, depositors of many village banks in Henan have encountered problems withdrawing cash. All over China, the funds of depositors are vanishing out of thin air whilst their health scores are inexplicably turned turned red (Chinese citizens must download an app on their phone that displays their health status. A red score excludes them from regular daily activities). The dark mechanisms of the government who are behind the health code cannot help but shock people.
In Shanghai, from the end of the lock-down in June, many banks have been crowded.
Elderly people who receive pensions in Shanghai, rush to the bank at 2 in the morning to line up may still not be able to receive their money. There is no chance for someone arriving at 5 in the morning.
Depositors in Shenzhen told foreign media, that their was signs of an implosion. In June they said one could no long withdraw money from ATM machines — this situation is already a few months old concerning China Construction Bank and China Agricultural Bank where withdrawing cash became inconvenient.
Consumers in mainland China now mainly use online payment, using things like Alipay which transfer money to and from the bank; usually there is no problem with it. However, there have been several instances of failures in transferring money to Alipay and Yu-E-Bao (another payment service).
Official Chinese state media recently indirectly confirmed the occurrence of a wave of bank runs. The Shanghai branch of the Peoples Bank of China on the 20th of June announced, in the first half of June, cash transfers since this time last year have quadrupled. China News Service said on the 1st to the 15th of June, the total cash supply of the Peoples Bank of China has quadrupled since this time last year. But the bank did not specify weather the cash was enough to settle peoples withdrawal needs.
This kind of situation continues to ferment all over China, shattering the confidence of the Chinese public when the most important domain of finance is trust: it is the deciding factor in weather or not a banks bankruptcy or a bank run will happen. Almost certainly, the Communist Party is struggling to prevent a bank run. But to what degree will the bank run worsen? Enough to bring down the Communist party led banking and finance system? Is digital currency able to avert a bank run? These are important questions.
The word “bank run,” in Chinese vividly paints a dramatic picture of a swarm of people frantically scrambling to withdraw their cash. The meaning of the word bank run in the west is to withdraw your cash and run. As for weather its a crowd is not clear. In western society, even if a bank run were to occur, people would still line up in an orderly fashion and not swarm as a crowd. But if the situation is serious enough, civilized behavior will go out the window.
A run on banks occurs when a large amount of the depositors worry that a bank is possibly unable to pay back their deposits or that they cannot withdraw their cash in a timely fashion; so they race to pull their money out. Because it is impossible for banks to keep too many of their deposits, they have already used most of their funds (around 90% of their deposits) for lending. It’s their business to lend to companies and individuals that need capital.
Are bank runs legal? In America, many states at least on paper have laws to to try prevent people from spreading rumors or malicious remarks that could lead to a bank run. These states even legislate the prohibition of people making inaccurate comments about a banks financial health. The problem for China is that the banks lack transparency and government regulation is unclear and often ineffective.
In current society for example, in a developed country like the United States with relatively transparent information, can a bank run still happen? Even with federal government insurance（FDIC/NCUA， if you need a lot of cash urgently, your bank can’t give it to you right away and so there still might be a bank run.
Many people will ask, where will the rich people put their money? Will they have a problem getting their money out? In America, many millionaires and billionaires put their money in mutual funds, or certificates of deposit (CD), commercial paper and US treasury bills. This can also be considered cash because it can be cashed in at anytime. There are some rich people who will take their money and buy short term government securities called treasury bills and upon expiration, quickly buy more, not withdrawing until they need the cash.
Many billionaires will use zero dollar banks accounts at a private bank in order allocate their money into cash or into the above mentioned cash equivalents. When they need to spend money, they will write a check from their zero dollar bank account. It looks like a bad check but the bankers at their private bank will settle daily, and all that has to be done is for the account holder is to sell some short term bonds, mutual funds or CD’s to settle the check they wrote, then their bank account can be kept at zero.
Basically, the very wealthy only keep 1% of their wealth in cash or liquid assets and the rest of their wealth they keep in commercial paper, stocks, bonds, mutual funds and other financial assets. So the wealthy should have no problem with a bank run. The vested interests of the Communist Party and their elites won’t have to worry about a bank run or a bankruptcy.
In Americas history, bank runs have always happened. Not only in the 1930s great depression, even in the 2008–2009 financial crisis their were limited scale bank runs. In 1933 the FDIC (Federal Deposit Insurance Corporation) was born because of the bank runs during the great depression. In addition to bank runs, “silent bank runs” may also occur during large-scale electronic transfers.
Ever since banks appeared in society, so to has bank runs. In 15th and 16th century Europe, goldsmiths would issue paper receipts that would allow people to use them to exchange for gold. When these written receipts exceed their gold holdings, a bank run will occur. The bank runs during Americas great depression started with the stock market collapse. In 1930, the earliest bank run occurred in Tennessee, leading to the first bank to collapse. At the time these things didn’t attract peoples attention as people thought it was an isolated case. But immediately a series of banks in the American south took place causing the news to spread over the whole country. Nationwide bank runs and bankruptcies then started to occur. Rumors came out that a bank in New York may be unable to make ends meet causing thousands of people to line up to withdraw their cash, and within a few hours 20 million dollars was withdrawn, leading to the bankruptcy of 4000 banks.
During the 2008–2009 financial crisis in America, Washington Mutual Bank was still Americas 6th largest financial institution but on September 2008, the US Treasury OTS Department shut down. Within a few days, depositors withdrew $16.7 billion worth of funds, making the banks cash reserve dry up. On the second day, Wachovia Bank also encountered the same issue where within two weeks, 15 billion was withdrawn.
Over the past 500 years, every country has experienced the pervasive issue of bank runs. Ever since the year 2000, there’s been Argentina (2001), Myanmar (2003), America with the sub prime mortgages crisis (2007), England (2007), Switzerland (2011), China Yancheng Sheyang Rural Development Bank (2014), Bulgaria (2014), Greece (2015), Canada (2017) and most recently Englands Metrobank (2019); all who have experienced bank runs.
In that case, to what degree will Chinas bank run will worsen? The possibility of a larger scale bank run, as we can see today, is increasingly likely. The foolish policy of the Communist party has been to cover up and shutdown, but the more they do it, only the more will the panic increase, making the scale of the bank run worse. When 10% of depositors go to withdraw money from the bank, the communist authorities will definitely not be able to provide the funds; and even if the party resorts to means of suppression, coercion, arrest, and silence, it would not help, because no one would be ok with seeing their savings go to zero!
Will the bank run bring down the Communist Parties banking and financial system? Of course, there are countless examples in history, from the time of the Republic to the Communists. Under the rule of the Communists, a few years ago a bank run on Jiangsu started and today it is even worse.
In addition, the Communist party has been rigorously promoting the digital currency (the E-Yuan), perhaps as a way to prevent more bank runs. As mentioned above, the emergence of large scale electronic transfers will lead to “silent bank runs” so there will still be risk of bank runs. To what extent will the bank run in China worsen? The Communist Party are the ones that most clearly know, and people outside the system can only wait and see.
(Dr. Xie Tian is Professor of Marketing at the University of South Carolina Aiken School of Business and John Olin Palm Chair Professor)
My name is Dave, I am an Australian born expat living and working
remotely on the island of Dominica. I have been studying Chinese for 10
years now. I lived in Shanghai for 2 years going to Shanghai University
to do an intensive language course and stayed on to work as an English teacher. I have also
lived and worked in Taiwan for 6 months, during which I had a small
e-commerce company shipping goods from China for 4 years. In university I passed the HSK5 exam which is the
second highest speaking level and for the past 3 years I have been
studying for the HSK 6 level which is the highest level. I
regularly watch Chinese daily news, read Chinese newspapers and am
very fond of Chinese culture and history. I also have a Youtube channel related to Chinese history that I have been working on since 2020. My secondary focus in my life is my work is
cryptocurrencies. I have much knowledge on the technical jargon and is the focus of much of my translation portfolio.
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