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Posted on May 21, 2020Coinbase Custody International selected by FTX to be Primary Custodian
Today we’re welcoming FTX, one of the world’s most exciting cryptocurrency derivatives and spot exchanges, to Coinbase Custody International (CCI). As the primary custodian for FTX, Coinbase Custody will be responsible for the storage of its ERC-20 exchange token, $FTT.
FTX selected Coinbase Custody International after reviewing our battle-tested storage solution which includes world-class security, regulatory compliance and insurance coverage. Coinbase is committed to serving a wide spectrum of institutional clients including exchanges, brokerages, hedge funds, family offices, and endowments.
FTX is our largest exchange client to-date and joins a roster of world-class institutions that have chosen to trust Coinbase Custody and Coinbase Custody International with their crypto assets. These include leading crypto firms like Grayscale Investments, Polychain Capital, a16z crypto, and many more.
Our institutional range of products provides a seamless, powerful, secure and compliant ecosystem for our clients to trade, store and interact with their crypto. The suite combines access to the world’s largest pool of regulated, verified crypto liquidity through Coinbase Pro with high performance APIs and a high-touch coverage team. Paired with access to our global OTC trading desk and Coinbase Custody’s highly secure and insured storage platform, Coinbase delivers the trust, security, and performance needed by investors to trade with confidence.
Coinbase Custody is the world’s largest and most trusted crypto custodian. To learn more about Coinbase Custody click here.
**Over the coming days, crypto watchers may notice large $FTT transfers on the blockchain. These are controlled, closely monitored migrations of $FTT onto Coinbase Custody’s secure, offline storage platform.**
Coinbase Custody International selected by FTX to be Primary Custodian was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Posted on May 21, 2020OmiseGO (OMG) is now available on Coinbase
Starting today, Coinbase supports OmiseGO (OMG) at Coinbase.com and in the Coinbase Android and iOS apps. Coinbase customers can now buy, sell, convert, send, receive, or store OMG. OMG will be available for customers in all Coinbase-supported regions, with the exception of New York State.
OmiseGO (OMG)
OmiseGo (OMG) is an Ethereum token that powers the OmiseGo smart contract platform, which allows for businesses and individuals more financial freedom through financial services and investments. The platform’s goal is to facilitate moving funds between payment systems and decentralized blockchains like Ethereum. This allows for better banking and financial services for everyone, including people in developing countries who don’t have access to traditional banking services.
In 2017, the OMG team conducted an airdrop. If you held an ETH balance greater than 0.1 on Coinbase on July 7, 2017 at 4:36 PM UTC, you’ll receive OMG from Coinbase. The amount of OMG you’ll receive depends on how much ETH you had in your account at the time stated above.
One of the most common requests we hear from customers is to be able to buy and sell more cryptocurrencies on Coinbase. Per the terms of our listing process, we anticipate supporting more assets that meet our standards over time. We are also investing in new tools to help people understand and explore cryptocurrencies. We launched informational asset pages (see OMG here), as well as a new section of the Coinbase website to answer common questions about crypto.
You can sign up for a Coinbase account here to buy, sell, convert, send, receive, or store OMG today.
OmiseGO (OMG) is now available on Coinbase was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Posted on May 20, 2020Coinbase Custody launches staking for Cosmos
Coinbase Custody clients now have the ability to use their Cosmos assets to earn rewards through staking without having to put their funds at risk.
By Bryce Ferguson, Product Manager, Coinbase Custody
Coinbase Custody was the first crypto custodian to offer staking and active governance for digital assets held in safe, offline storage. This means that our clients can earn rewards through staking activities and vote without having to put their funds at risk. We are excited to announce that we now provide clients a secure and seamless way to stake their Cosmos ($ATOM).
Cosmos is a Proof-of-Stake (PoS) blockchain designed to improve the interoperability between other blockchains. PoS assets, like Cosmos, incentivize participants to help secure the network by “staking” their assets to a validator who runs open source blockchain software in exchange for sharing in the rewards for mining blocks. Staking is an important ecosystem trend and we are committed to helping our clients get the most out of these types of assets. Coinbase Custody currently offers staking for Tezos ($XTZ) and Algorand ($ALGO).
Coinbase Custody clients will now be able to log into their accounts and use our simple user interface to start staking their Cosmos assets. Clients will be able to choose how much they would like to stake and whether to delegate to Coinbase Custody or a third-party validator.
Secure staking straight from cold storage
Currently, most Cosmos staking services on the market require some level of hot storage to operate. Similar to our Tezos staking services, we have worked to ensure our Cosmos staking service leverages our existing offline storage systems. In doing so, we are able to offer clients the ability to stake their ATOMs without compromising on asset security.
Our Cosmos staking service builds on our experience successfully running a Tezos validator since April 2019. We are currently the largest Tezos validator in the world, have had zero slashing incidents, and have had an uptime of 99.99% since launch. We are applying the same controls to Cosmos staking that we use with Tezos staking.
Industry leading risk management
Assets staked to a PoS network traditionally are exposed to the risk of a “slashing” event, where if a validator breaks the rules users have to forfeit a portion of their staked tokens. This can be triggered in a variety of ways including if the validator experiences any downtime or if the validator double-signs a block. If Coinbase Custody fails to meet certain network standards and slashing occurs, Coinbase Custody will cover this risk and clients will not be impacted by any potential slashing event. Although slashing is unlikely, we want our clients to feel comfortable that in choosing our Cosmos staking service they are choosing an option that aims to mitigate risk.
To participate in Cosmos staking, simply log into your Coinbase Custody account and navigate to the ATOM asset page. To learn more about Coinbase Custody or schedule a personal demonstration of the platform, please visit custody.coinbase.com.
This article may contain links to third-party websites or other content for informational purposes only (“Third-Party Sites”). The Third-Party Sites are not under the control of Coinbase Custody Trust Company, LLC or its affiliates (“Coinbase Custody”), and Coinbase Custody is not responsible for the content of any Third-Party Site, including without limitation any link contained in a Third-Party Site, or any changes or updates to a Third-Party Site. Coinbase Custody is not responsible for webcasting or any other form of transmission received from any Third-Party Site. Coinbase Custody is providing these links to you only as a convenience, and the inclusion of any link does not imply endorsement, approval or recommendation by Coinbase Custody of the site or any association with its operators.
Unless otherwise provided, images herein are by Coinbase.
Coinbase Custody launches staking for Cosmos was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Posted on May 20, 2020Post-COVID-19, Coinbase will be a remote-first company
I sent the note below to employees earlier today. I’m sharing it publicly here in case others find it helpful.
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Posted on May 14, 2020Incident Post Mortem: April 29 and May 9, 2020
By Jesse Pollak, Head of Engineering, Consumer
Over the last two weeks, Coinbase experienced two outages that impacted our ability to serve our customers. For both of these incidents, we promptly discovered the root causes and restored service. However, we want to provide a deeper look at what went wrong and what we’re doing about it going forward. We are committed to making Coinbase the easiest, most trusted place to buy, sell, and manage your cryptocurrency.
4/29 Incident
From 10:28 PDT to 10:40 PDT on April 29, 2020, the API that powers coinbase.com and our mobile applications became unavailable for our customers globally. This was followed by 30 minutes of stability, and then a period of instability from 11:12 PDT to 12:11 PDT, during which we sustained 20 minutes of full unavailability and 40 minutes of degraded performance with elevated error rates. At 12:11 PDT, full service was restored and all systems began operating normally.
This issue affected customers’ ability to access Coinbase and Coinbase Pro UIs, and did not impact trading via our exchange APIs or the health of the underlying markets. It was caused and perpetuated by two separate, but related, root causes.
API error rate (%) during the 4/29 period (all times in PDT) The initial incident was triggered at 17:28 PDT by an increase in the rate of connections to one of our primary databases. This connection rate increase was the result of a deploy creating new connections while our systems were scaled to respond to elevated traffic at the time. When this spike in connections occurred, the host operating system for the database began rejecting new TCP connections to the host, which triggered degraded operations and restarts in the routing layer for the database. When this occurred, our monitoring began reporting an elevated error rate across all API requests that touched the impacted database.
In response to the failures in the routing layer and the corresponding operational failures, our systems attempted to reconnect in order to retry these operations. Unfortunately, due to improper closed connection handling and lack of support for timing jitter in new connection creation, our systems “connection stormed” the database. This connection storm triggered the same failure we saw on other members of the routing layer, preventing new connections to be established. While the initial database was able to recover at 10:40 PDT, this same failure mode occurred with three other, separate database instances, creating the second period of unavailability from 11:12 PDT to 12:11 PDT.
In response to this failure, we’re rolling out a number of changes. First, we’re changing our database deployment topology to reduce our overall connection count, limit connection spikes, and separate the routing and daemon processes of the database to limit competition for host resources. Second, we’re resolving the issue with the driver closed connection logic and implementing better jitter to prevent connection storming when this failure mode occurs. Finally, we’re rolling out safeguards that will allow us to contain the impact of future database failures to as small a subset of requests as possible.
5/9 Incident
From 17:17 PDT to 18:00 PDT on May 9, 2020, the API that powers coinbase.com and our mobile applications experienced an elevated error rate. The error rate peaked at 17:24 PDT and gradually decayed until the issue was fully resolved at 18:00 PDT. This issue affected customers’ ability to access Coinbase and Coinbase Pro UIs, and did not impact trading via our exchange APIs or the health of the underlying markets.
API error rate (%) during the 5/9 period (all times in PDT) At 17:18 PDT, alongside an increase in traffic due to market volatility, our monitoring detected elevated latency and error rates in our API and alerted our engineering team to the issue. In response to these alerts, our engineering team observed elevated latency across all outgoing HTTP requests on the application instances which serve our API traffic. This manifested in our monitoring as dramatically increased % of time spent per API request in outgoing HTTP requests.
% time spent per request during the 5/9 period (all times in PDT) As a result of this increase in latency, we saw an elevated error rate due to timeouts while attempting these outgoing HTTP requests. The elevated error rate was amplified by our load balancer killing otherwise-healthy application instances that failed health checks. The failed health checks were a result of their request queue being saturated due to this shift in request shape.
Upon further investigation, we identified that the increase in latency was due to instance-level rate limiting of the DNS queries used to serve these HTTP requests. As traffic reduced due to the error rate, we dipped below the rate limit, leading to the gradual decay of the error rate. In parallel, we rolled out a previously in-flight change to add per-instance DNS caching, bringing us back into the non-rate-limited range for global DNS queries and ensuring the failure mode would not appear again.
Beyond addressing the specific root cause for this incident, we are making a number of improvements to increase availability in the event of future similar failures. First, we’re adjusting our health check logic to ensure that saturated, but otherwise healthy, application instances are not automatically removed from the load balancer. Second, though this incident impacted all HTTP requests, we’re rolling out improved tooling to ensure we can quickly identify and shutdown errant external services that increase latency. Finally, as with the 4/29 incident, we’re rolling out safeguards that will allow us to contain the impact of future HTTP failures to as small a subset of requests as possible.
Looking ahead
Both of these incidents impacted our ability to serve Coinbase customers at critical moments. One of our company values is continuous learning and we are committed to taking the learnings from these episodes to improve Coinbase. If you’re interested in working on challenging availability problems and building the future of the cryptoeconomy, come join us!
Incident Post Mortem: April 29 and May 9, 2020 was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Posted on May 14, 2020OmiseGO (OMG) is launching on Coinbase Pro
On Tuesday, May 19, OMG began trading on Coinbase Pro.
On Monday, May 18, we began accepting inbound transfers of OMG to Coinbase Pro. Trading began at 9AM Pacific Time (PT) the next day.
Once sufficient supply of OMG was established on the platform, trading on our OMG-USD and OMG-BTC order books began, beginning with post-only mode and proceeding to full trading should our metrics for a healthy market be met. Additional books including OMG-EUR and OMG-GBP may also be supported as soon as 7am PT on Wednesday, May 20. OMG will be immediately available in all Coinbase’s supported jurisdictions, with the exception of New York State.
OmiseGo (OMG) is an Ethereum token that powers the OmiseGo smart contract platform, which allows for businesses and individuals more financial freedom through financial services and investments. The platform’s goal is to facilitate moving funds between payment systems (such as ACH, Visa, or PayPal) and decentralized blockchains like Ethereum. This allows for better banking and financial services for everyone, including people in developing countries who don’t have access to traditional banking services.
Please note that OMG is not yet available on Coinbase.com or via our Consumer mobile apps. We will make a separate announcement if and when this support is added.
The Stages of the OMG Launch
There will be four stages to the launch as outlined below. We will follow each of these stages independently for each new order book. If at any point one of the new order books does not meet our assessment for a healthy and orderly market, we may keep the book in one state for a longer period of time or suspend trading as per our Trading Rules.
We will publish tweets from our Coinbase Pro Twitter account as each order book moves through the following phases:
- Transfer-only. Starting on Monday, May 18, customers will be able to transfer OMG into their Coinbase Pro account. Customers will not yet be able to place orders and no orders will be filled on these order books. Order books will be in transfer-only mode for at least 12 hours. We will communicate the exact timing for this phase via Twitter closer to the date.
- Post-only. In the second stage, customers can post limit orders but there will be no matches (completed orders). Order books will be in post-only mode for a minimum of one minute.
- Limit-only. In the third stage, limit orders will start matching, but customers are unable to submit market orders. Order books will be in limit-only mode for a minimum of ten minutes.
- Full trading. In the final stage, full trading services will be available, including limit, market, and stop orders.
One of the most common requests we receive from customers is to be able to trade more assets on our platform. Per the terms of our listing process, we anticipate supporting more assets that meet our standards over time.
You can sign up for a Coinbase Pro account here to start trading. For more information on trading OMG on Coinbase Pro, visit our support page.
A note on the 2017 OMG Airdrop
In 2017, the OMG team conducted an airdrop. If you held an ETH balance greater than 0.1 on Coinbase Consumer or Pro (then Coinbase or GDAX) on July 7, 2017 at 4:36 PM UTC in 2017, you’ll receive OMG from Coinbase. The amount of OMG you’ll receive depends on how much ETH you had in your account at the time stated above. Coinbase plans to distribute airdropped funds in the near future, following the launch of our OMG order books.For additional information and to learn how to access your OMG, see our FAQ here.
OmiseGO (OMG) is launching on Coinbase Pro was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Posted on May 13, 2020Around the Block #6: Bitcoin’s dominance alongside Coinbase customer behavior, the coming DEX…
Around the Block #6: Bitcoin’s dominance alongside Coinbase customer behavior, the coming DEX revolution, and other recent crypto news
Coinbase Around the Block, sheds light on key issues in the crypto space. In this edition, Justin Mart analyzes Bitcoin’s continued dominance alongside Coinbase customer behavior, the coming DEX Revolution, as well as other notable news in the space.
Bitcoin’s dominance and Coinbase customer behavior
Bitcoin’s market cap dominance relative to other cryptocurrencies is well known. The most commonly cited metric is relative market capitalization, comparing Bitcoin’s network value to other cryptos.
But how does Bitcoin’s dominance extend beyond market cap? Specifically, how does Coinbase customer behavior also demonstrate Bitcoin’s dominance? First, let’s take a look at Bitcoin’s market cap dominance over the years:
In general, Bitcoin’s position as the blue-chip asset has remained unchallenged. That said, we do see a trend where bull markets show increasing traction among alternative assets.
This could be for a variety of reasons, but one is largely psychological. As people feel good about their initial crypto investments (into Bitcoin), they branch out to find other possible categorical winners (as evident in the 2017 bull run). The converse is also possible, as prices drop and fear grips the market (2018–2019), a flight to crypto safety drove Bitcoin back to the forefront.
However we are only looking at market cap dominance, how the market in aggregate values these assets. An alternative metric would be how Coinbase customers trade these assets:
As we can see, the same large-scale trend is evident. Bitcoin is dominant, but was threatened in 2017, and regained dominance in 2018–2019. However, retail volume on Coinbase shows an increased proclivity to purchase and trade alternative assets.
This increasing drive is in part due to Coinbase’s continued addition of new assets, but a deeper cut shows that price volatility significantly swings consumer behavior toward non-BTC assets. This trend first appeared in 2017, and is now evident in large spikes. Notably in late 2019 (with Tezos, Chainlink, BAT, 0x, and Stellar) and again in early 2020 (driven by Ethereum, Tezos, and Chainlink).
On average, Coinbase customers trade non-BTC assets at a ~3% higher rate than their relative market caps would suggest.
So on one hand, Bitcoin is clearly dominant, but on the other hand Coinbase customers show a relative preference to also move into other assets.
The data bears this out. Among customers with at least 5 purchases, 60% start with Bitcoin but just 24% stick exclusively to Bitcoin. In total, over 75% eventually buy other assets.
Why is Bitcoin so dominant in the first place?
It’s the king for good reason:
- Ethos and mission: Bitcoin is disrupting money, and is the world’s first currency with a truly fixed supply
- Mindshare: Bitcoin is the pioneer and carries the most traction
- Security: It’s the most secure PoW asset, and it’s not even close
- Decentralization: Difficult to quantify, but Bitcoin is decentralized with the most nodes, largest distributed hashrate, and arguably the most conservative governance function
- Infrastructure and liquidity: Bitcoin has the most mature services and the deepest pools of liquidity
- Technical simplicity: Where other protocols seek to expand to novel use-cases, Bitcoin’s technology is already capable of achieving its mission
- Creation myth and intangibles: Bitcoin just has the it factor. An anonymous creation myth, an explosive vision, undeniable traction, wrapped in a new economic model that is governed by math
Bitcoin is carrying the flag for the entire cryptocurrency space, and we should embrace it. But the retail preference to branch into other assets shows that new users come to crypto through Bitcoin, but generally begin to look for alternative assets and use-cases. In this sense, Bitcoin is also top of the funnel for broader crypto growth.
To the extent we believe that alternative assets and networks will provide differentiated services (beyond store of value and digital gold as Bitcoin is targeting), it will be important for the industry to build support for these other assets as well.
Bitcoin is king, and likely to remain king for a long time. But it is also paving the way for a thousand flowers to bloom.
The coming DEX revolution
Since the launch of Ethereum we have all speculated on the potential disruption of centralized exchanges with the emergence of decentralized exchanges (DEXs). This is the first of a two-part series examining the DEX space and the potential coming revolution.
Context
Crypto’s killer-app today is investment and speculation, gaining exposure to a technology that could be incredibly transformative in the future.
Most trading is performed on a centralized exchange where one platform holds customer funds, matches buyers to sellers, and offers crypto and fiat services to manage deposits and withdrawals. But centralized exchanges have their challenges. They reside in specific geographic locations and subject to stringent regulations, require customers to open accounts and deposit their funds, place limits and restrictions on their customer’s actions, and have been the target of malicious attackers. In general, they are centralized choke-points that stand in contrast to the open, decentralized ethos of cryptocurrency.
Decentralized exchanges shine where centralized exchanges struggle:
- Safe: Funds are never transferred to any third party or generally subject to counter-party risk, you trade directly from your own wallet
- Global and permissionless: There is no concept of borders, let alone restrictions on who can trade
- Ease of use and pseudonymous: No account signup or personal details are required
- Better execution (potentially): Theoretically, we should see global DEX liquidity accrue to a handful of winning platforms, enabling deep liquidity
Given their clear advantages, why haven’t DEXs already disrupted centralized exchanges?
Turns out, they also struggle with some significant challenges:
- User experience: Trading on a DEX is performed through self-custodial wallets, which are confusing and intimidating for many
- Speed and scale: All trades are settled on-chain, bottlenecked by block times and base transaction throughput. (Try sending 1000s of tx/sec on Ethereum today…)
- Limited trading pairs: DEXs are confined to only trade tokens on single blockchain, there is limited interoperability. For example, it’s very difficult to trade BTC-ETH pairs on a DEX, because bitcoins reside on the Bitcoin blockchain, not on Ethereum (this is changing soon).
- Limited feature parity: Centralized exchanges can quickly build new services, whereas DEXs must work within the limitations of each blockchain, and carefully ship new features that have been audited for security
- Regulation: While DEXs are intended to be decentralized and resistant to regulatory pressure, some hybrid models have run into problems. Increased pressure from regulators could stifle development and traction.
But what gets us excited? All the above issues seem tractable. They boil down to product and technology challenges that have conceptually clear paths forward. Eventually, we should be able to create a DEX that rivals the trading experience of centralized exchanges, while retaining all their native benefits. When this day comes, centralized exchanges could be ripe for disruption.
Current landscape
DEXs today are generally differentiated by two main segments:
(1) How are trades settled?
DEXs generally either adopt a traditional Order Book model or an Automated Market Maker (AMM) model.
Order books match each buyer to a unique seller (identical to trading on centralized exchanges like Coinbase Pro). This model has clear advantages, where price discovery is transparent and efficient for highly liquid books, but can also be subject to some manipulation (spoofing, frontrunning, etc), usually in more illiquid books.
AMM models match each trade against a pool of capital in a smart contract, where the price of the trade is determined by the ratio of assets in the pool. It might sound confusing, but this model does not require a specific counter-party to each trade (trades are performed against a smart contract). This makes AMM models ideal for more illiquid tokens. As a downside, traders generally suffer higher slippage when trading large amounts.
(2) Where are trades settled?
DEXs either settle trades on the base blockchain (usually Ethereum), or look to gain more throughput by routing trades through a sidechain before final settlement is pushed back to the main chain.
While sidechain-based execution shows promise, there are still security, UX, and decentralization tradeoffs with current models, leading to limited traction today. But these are also tractable challenges, and promising models are scheduled to launch over the next couple years. There are also some hybrid models that fuse on-chain and off-chain models, and an emerging number of DEX aggregators that provide best execution.
Today’s popular DEXs almost exclusively settle trades directly on Ethereum, owing to its significant lead in developer traction, large token network, and broad infrastructure and wallet support.
Volume and traction
Due to DEX’s challenges around scale & throughput, user experience, and limited trading pairs, traction has been minimal compared to centralized exchanges. But DEX volume has been slowly growing in market share.
According to Dune Analytics, Uniswap leads in volume and traction today with its AMM model that provides liquidity advantages. DyDx is second with leveraged trading, borrow/lend capabilities, and a recently launched BTC perpetual contracts market similar to BitMEX.
DEX volume is still small in aggregate compared to centralized exchanges, but shows steady growth. Today, total DEX volume amounts to ~6% of Coinbase Pro volume.
Looking into the future
DEX volume is small today, but is primed for substantial growth as the ecosystem matures. The timing is up for debate but their challenges are solvable; it’s more a matter of when and not if.
Key areas to watch:
- Improvements to self-custody: Making it dead-simple to manage crypto in your own wallet will increase the pool of users ready to trade on DEXs
- Interoperability: The ability to bring assets on other blockchains together will enable a larger selection of trading pairs
- Sidechain and L1 scaling advances: Improving the trading experience and mitigating frontrunning and griefing attacks will bring near UX-parity
- Regulatory pressure: This is a double-edged sword — If regulators begin pressuring centralized exchanges, DEXs could emerge as the only viable option for some consumers. Conversely, if regulators pressure DEX developers and teams, these platforms may take longer to emerge at scale.
- Emerging feature differentiation: DEXs are tied to programmable money, and they may create novel new derivatives and synthetic assets, combined with deep composability with other DeFi services, to create a truly differentiated product offering
How close are we to this reality? It’s difficult to say with certainty, but considering the long development timelines associated with shipping code to blockchains, and the slow-but-steady growth in those key areas to watch, it’s not unreasonable to think the DEX revolution is still a few years away.
Quick Hits: Commentary on notable news
UMA performs Initial Uniswap Offering
In a first for DeFi, UMA just performed an Initial Uniswap Offering (IUO). This process is essentially an ICO + Exchange Listing all in one, providing some notable advantages:
- Uniswap is simple: ICOs required bespoke and audited smart contracts, and sold tokens directly to the public. With Uniswap, you forgo all the complexity and simply create a market and add liquidity. A 2-step process that takes ~5 min, no dev experience or audits required.
- Liquidity and price discovery are built-in: ICOs offered a set amount of tokens at a set price, and only later found true price discovery when centralized exchanges listed their tokens. Uniswap provides instant price discovery and continuous liquidity with no need for market makers via their AMM model.
- Issuers can profit from secondary trading: Providing liquidity to Uniswap brings trading-fee revenue (minus impermanent loss)
As a downside, there is no two-sided market initially (only buyers, no sellers), which is likely to result in a large pop in the price before sufficient price discovery takes place. And without any external source of tokens, it also means the price can never fall below the starting price. For UMA, these mechanics induced a race to the blockchain to see who can be first to get a transaction mined and trade at favorable initial prices.
Despite early learnings, UMA’s process was a success. The model has been shown to work, and its simplicity combined with easy liquidity could be compelling for many projects
Just this year:
- Former Coinbase Lawyer Reuben Bramanathan tokenized his time and sold his tokens to the public via Uniswap
- NBA star Spencer Dinwiddie tokenized his current NBA contract
- Saint Fame tokenized commercial goods and developed a community
- Alex Masmej and Kerman Kohli tokenized their future earning potential (!)
DeFi continues to push the boundaries of capital formation. These are the first glimmers of what could be new and pervasive funding mechanisms. Imagine high school athletes tokenizing future contracts as insurance against injuries, or up and coming artists tokenizing their future record sales.
But the details matter. In this case, if tokenization events constitute an investment contract, they could be deemed securities by the SEC. The tension between regulation and DeFi products is palpable, and could hold back adoption until we get further clarity from regulators.
New DEX derivatives platforms make a splash
Futureswap is a DEX with a novel combination of Compound, Uniswap, and BitMEX. They currently only offer a ETH-DAI book, but provide 20x leveraged trading that starts at an oracle’s price (no order book), with a modified Uniswap-style price curve (limiting slippage), kept in check by a dynamic funding rate (ala BitMEX).
It’s a novel idea, ideal for speculators because no underlying assets are swapped. During a 4-day alpha launch they posted $17M in trade volume and gained $1.5M in their liquidity pool, a rate that would place them at #2 in DEX volume only behind Uniswap!
Separately, DyDx launched Perpetual Bitcoin Contracts similar to BitMEX and with 10x leverage. In contrast to Futureswap, DyDx operates a true order book and provides a public-liquidation mechanism on underwater trades. This also marks the first time a Bitcoin-based trading book has been offered at scale through a DEX.
Taken together, these are nascent but strong data points that suggest DEX Derivatives markets could have strong product market fit.
Links
Coinbase news
- Coinbase makes investing easy with dollar cost averaging
- Coinbase welcomes Brett Tejpaul as Head of Institutional Coverage
- Support for Compound Governance added to Coinbase Custody
- Introducing the Coinbase Price Oracle
- Coinbase: Bitcoin’s Third Halving Occurred This Week
News from the crypto industry
- Robinhood raises $280M series F at $8.3B valuation to scale platform and push for global expansion
- BlockFi launches mobile app and hires former Credit Suisse and AmEx execs, targets crypto card and int’l expansion
- Dharma enables social payments via Twitter handles
- Bitfinex launches social trading platform
- FTX to launch US-based spot exchange in May; launches crude oil futures
- Bitnomial approved by CFTC to offer BTC futures and options contracts
- $166B asset manager Renaissance eyes participating in CME’s Bitcoin Futures markets
- Fidelity taps ErisX exchange for crypto trading liquidity
- Baakt CEO Mike Blandina steps down after 4 months
- NYDFS grants Bitlicense to ErisX
- Bittrex to launch Exchange Token in June
- BitMEX to restrict Japanese users amidst increasing regulation
- Greyscale inflows hit all-time-high, over $500M new capital in Q1
- Genesis doubles loan issuance to $2B in record Q1
News from emerging crypto businesses
- Clone of Compound suffers $25M hack, later returns all funds
- Libra hires former Bush and Obama Under Secretary as first CEO; and Checkout.com joins
- Visa teams up with Fold for their Bitcoin rewards card
- Synthetix launches Optimistic Rollup beta to test scalability
- Telegram asks US investors to leave their project and take 72% refund
- BitGO’s wBTC added as collateral type for MakerDAO
- Compound adds USDT for lending / borrowing
- A16z raises $515m for second crypto fund; later invests in NEAR’s $21m round
- Binance launches smart-contract blockchain similar to Ethereum
Tweets
- One of the smartest and most successful investors is now long bitcoin 📈
- Putin knows a thing or two about the blockchain
- Hegic makes a bold claim that bugs are really just “typos”
Something Fun
- Be sure to check out this incredible tale of a recent DeFi hack, investigation, and a remarkable return of all stolen funds!
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Around the Block #6: Bitcoin’s dominance alongside Coinbase customer behavior, the coming DEX… was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Posted on May 8, 2020What is the Bitcoin Halving?
Bitcoin is often called “digital gold” because just like gold, Bitcoin is a valuable, scarce resource that’s resistant to inflation.
But unlike gold, Bitcoin is digital — it can be sent globally almost as easily as sending an email — and its scarcity is known — while it’s estimated that one could fit all the gold ever mined into a box that is only 65 feet wide, there’s no way of knowing for sure how much gold is still in the Earth. Bitcoin, on the other hand, has a finite supply of only 21 million bitcoin, with only around 3 million left to be mined.
But what gives Bitcoin its scarcity? Just like gold, Bitcoin is also mined, but this is done electronically by a global network of computers competing to verify bitcoin transactions. The reward for participating in this virtual mining is Bitcoin. 12.5 new bitcoins, to be exact, and this reward is given out about every 10 minutes. But this May 2020, this reward will be halved to 6.25 new bitcoins created every ten minutes. This event is known as the Halving.
Approximately every four years, the bitcoin mining reward, also known as the “block reward” is halved. And so on and so forth until all 21 million bitcoins are mined, estimated to happen around the year 2140. It’s impossible for more Bitcoin to ever exist.
This is contrary to fiat currencies, where more money can be printed at the discretion of the government or central bank, potentially leading to inflation.
Because of Bitcoin’s Halving, with less supply being made available over time, Bitcoin is designed in a way where it’s more likely to increase in value rather than decrease like fiat currencies. This feature of Bitcoin’s protocol is what makes Bitcoin more scarce over time, and scarcity is one of the reasons why Bitcoin is sought after by millions of people.
Want to learn more about bitcoin? Visit coinbase.com/what-is-bitcoin and download the Coinbase app to buy bitcoin easily and securely.
What is the Bitcoin Halving? was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Posted on May 4, 2020How companies will work post COVID19: embracing a remote-first culture.
Companies are thinking about how and when to have employees come back to work. Due to social distancing requirements, many are realizing that they will only be able to have up to 50% of employees return to offices at most.
At the same time, many companies are realizing that remote work has worked better than they expected. They are now asking themselves whether they should keep some portion of their work force remote indefinitely.
For most companies, it will be a mix of remote and in-office. Here’s why:
- Some employees are unable to stay remote indefinitely, because they are in difficult situations at home (studio apartment, no dedicated working space, distractions etc). Even when schools reopen and caregivers return to work, this will only partially alleviate the problem.
- Some employees don’t want to return to the office, because they are happier and more productive at home. Once given, items are more difficult to take away, and top talent will come to expect remote work as an option.
A common piece of advice one hears is that a hybrid state of remote and in-office is the worst of both worlds. But given the requirements above, most companies will end up here. So what is the solution?
Options B and C likely require a remote-first culture to be successful. The solution is to embrace the hybrid state and give it the best chance of success by turning your company into a remote-first culture.
What does remote-first mean?
Remote first means there is no disadvantage to working at home versus in-office. All employees have the same experience. If you don’t make the culture remote-first, you create a prisoner’s dilemma that encourages people to keep coming into offices.
Here is what remote-first means in practice:
1. Everyone dials in separately to meetings
Even if some employees are in one office, they each dial in separately to meetings.
2. More phone booths in office versus conference rooms
Employees dialing in to meetings from the office can do so from their desk, but they may want privacy in phone booth style small meeting rooms.
3. One floor in ten cities versus ten floors in one city
Companies will start to maintain lightweight offices in more cities (probably managed by third parties like WeWork), for employees who still want to come into an office, or direct employees to join co-working spaces. The rest will work from home. There will be less emphasis on a centralized headquarters with an expensive buildout that is customized to one company.
4. Less assigned seating
In the lightweight offices, companies will allocate some portion of desks that are first come first serve. Consulting companies have been doing this for years.
5. More written and asynchronous communication
Teams will rely more on wikis and written documentation. Gitlab has over 5,000 pages of public documentation about how they operate, and tools like Notion have made this easier than ever.
6. Clustering in certain time zones
Opening up most roles to remote work increases the top of funnel, but for everyone to have an equal experience it is beneficial to have employees clustered in certain time zones so that they can work together during the day.
Benefits to remote work
1. Hiring and retaining top talent
Location and commute are one of the biggest challenges companies face when hiring and retaining team members. I frequently hear “soul crushing commute” cited as a factor in departures here in San Francisco, and several friends have commented to me how much more productive/happy they are with an additional 1–2 hours every day where they are not commuting. Opening roles up to remote also dramatically increases the top of the funnel (probably by 1–2 orders of magnitude). A major part of recruiting effort is spent in convincing candidates and their families, often unsuccessfully, to relocate.
2. Employees will come to expect it
There is a fiercely competitive market for talent out there, especially in major hub cities. I believe that as more companies come to offer remote work options, companies who don’t will be at a disadvantage.
3. It de-risks centralizing too much in one location
As a company headquartered in San Francisco, employees have struggled with the rising cost of housing, long commutes, and to some extent quality of life. Part of the vision for Coinbase is to create a world with more economic freedom, and not being tied to one location is a key part of this. I expect that more companies over time will try to avoid vendor lock in, not just in the traditional sense, but in terms of where they are located.
4. Lifestyle
For those who have a suitable work environment set up at home (which is definitely not everyone), there is an aspect of remote work that just seems more fun. Employees can spend time in different cities without taking vacation days, see their children grow up, and avoid noisy or interruption prone offices.
Of course, it’s true that remote work is not better in all aspects.
Risks of remote work
1. Reduced collaboration and creativity
The early stages of remote work can feel more productive, as you finally get to race through your backlogged todo list. But what happens when alignment (that was largely generated in person), starts to fade? Moreover, how do we replace the unplanned moments of serendipity, walking by someone’s desk or lunch table, that lead to new ideas and innovation. More practically, how do you replace the whiteboard?
Potential mitigant: host regular in person meetups for each team, say twice a year.
2. Reduced camaraderie
Working remotely can get lonely. It will be interesting to learn more about remote work’s impact on morale, belonging, loyalty, and retention.
Potential mitigant: recreate team bonding moments virtually, with a variety of tools coming on the market [1 2], in addition to bi-annual in person meetups.
3. Home office set up
While it’s relatively straightforward to get employees the equipment they need, the real question is whether they have the space to use it. Home offices are a bit of a luxury, and a far cry from what many SF residents experience. High rent means less space and more roommates — not ideal for a home office.
Potential mitigant: Give employees the option to work from co-working spaces, or more lightweight offices that the company maintains in certain locations. Give employees budgets and guidance on great work from home setups. [1] Remote work also opens up hiring to lower cost of living locations where employees may have more space.
4. Performance management
It could be tempting for employees to relax their standards without a manager nearby. Remote work comes with a lot of freedom, so it’s important to have high trust that employees will deliver high quality work. An interesting choice to explore is whether remote work should be the default or an earned privilege.
Potential mitigant: practice measuring outputs, not inputs. Note: this is probably best practice in general, since it’s easy to appear busy in an office as well, without getting much done.
5. Learning and development
It can be more difficult for more new and less experienced employees to get up to speed when there is no neighbor to turn to and ask for help.
Potential mitigant: emphasize in onboarding that it is not just ok, but expected, to ask for help if you are stuck on something for more than 15 minutes. Invest in better documentation using wiki software like Notion and Confluence.
6. Time zones
Remote work suffers when teammates don’t have overlapping times of day where they can collaborate.
Potential mitigant: Publish a set of tier 1 (preferred), tier 2 (tolerated), and tier 3 (only approved by exception) time zones to focus your recruiting efforts.
Conclusion
I was initially skeptical of remote work as a way to build a top tier company, but I must say that this forced experiment, brought about by COVID19, has really made me reconsider. Companies have an incredible amount of overhead maintaining various offices and getting employees to show up in the right places physically. It reminds me of companies managing their own data centers before AWS. A remote company can be more nimble and dynamic.
I also can’t wait to see how remote work tools advance with this new wave of investment. VR, whiteboards, and getting all the little details right around lighting, sharing, knowing when to speak, etc will improve greatly in the coming years. Today, an in person meeting is still better than remote (all else being equal), but that gap is closing.
We are trying to figure this out, along with everyone else, and I would say my thinking on it is still evolving. I wanted to collect my thoughts in one place here to help us learn, share with others, and get additional feedback. I’m sure our thinking will continue to evolve over time.
If you are interested in figuring out the future of remote work with us, please check out our open roles and apply for a position. You may be seeing more remote roles open here soon!
How companies will work post COVID19: embracing a remote-first culture. was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
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Posted on May 1, 2020Coinbase makes investing easy with with dollar cost averaging
By Rhea Kaw, Product Manager
Our mission is to create an open financial system for the world. A key part of accomplishing this is giving customers the information they need to begin investing in crypto. We’re always listening to our customers and building what will help you most. One thing we often hear is you want more tools and education on how to manage your crypto assets.
In the past, we’ve demonstrated how dollar cost averaging (DCA) and recurring buys have the potential to make crypto market volatility work in your favor. Following the launch of recurring buys, we’re now making it easier for you to learn about DCA directly in your iOS and Android mobile apps with an interactive crypto tutorial.
Here’s an overview of what you’ll discover about DCA:
- DCA is a popular strategy used by new and experienced investors to make steady gains while hedging market risk. While timing a volatile crypto market can be impossible, with DCA you can turn that market volatility into an opportunity.
- By investing the same amount on a regular basis, you buy more crypto when the dollar value is lower, and you buy less when the dollar value is higher. Over time, the investment costs average out.
- Getting started with recurring buys on Coinbase is an effortless way to implement the DCA technique into your investment strategy. Access this tutorial from your home screen, trading drawer, or on an individual crypto page.
The DCA crypto tutorial is one more way we are helping you make informed decisions when managing your crypto assets.
Please keep in mind that the content of this blog and our interactive tutorial are intended for educational purposes and should not be construed as investment advice.
Sign up for a Coinbase account or download our iOS or Android app to get started.
Interested in a career in crypto? If you enjoy working on high-impact, crypto-first challenges, check out all our open positions here. We’d love to hear from you.
Coinbase makes investing easy with with dollar cost averaging was originally published in The Coinbase Blog on Medium, where people are continuing the conversation by highlighting and responding to this story.
