Prices: A bitcoin ETF might be a divisive idea for some in the industry, but it's all the market has on its mind.
Insights: The dYdX Foundation's Charles d'Haussy talks about the future of the platform post-Ethereum, and what he sees as developing regulatory trends.
BTC/ETH prices per CoinDesk Indices, as of 7 a.m. ET (11 a.m. UTC)
Bitcoin Opens Week Defending $30K Support Level
A bitcoin ETF is the only thing on the market’s mind.
BlackRock CEO Larry Fink’s embrace of bitcoin – an about-face for the finance executive – is dividing analysts and the industry at large.
“So-called mainstream adoption will bring waves of new entrants to bitcoin, and the risk is that they won’t care, and won’t protect the decentralization properties that make it valuable over centralized alternatives in the first place,” Alex Thorn, head of research at Galaxy, wrote last week in his report.
But the market, at large, doesn’t seem to mind, not caring about the nuances of decentralization.
The world’s largest digital asset continues to defend the $30,000 mark, opening Asia’s trading week at $30,171. Ether is also holding above $1,800, trading at $1,863.
“In a largely uneventful week, we saw bitcoin trending downward to test support levels near $30K,” BitBull Capital’s Joe DiPasquale said in a note to CoinDesk. “However, the market leader managed to defend the key level despite news of the SEC calling ETF filings inadequate.”
BlackRock has refiled its application, and DiPasquale says the market awaits more clarity around this development.
“We still maintain that continued trading above $30K will see more attempts to go higher. Meanwhile, $27K remains a strong support for now,” he said.
Looking ahead to later this week, the market will have its eye on inflation numbers and jobless claims, two figures that the Fed will consider when making its next moves on rates. Expect crypto to trade accordingly.
DYdX Foundation CEO Calls Move to Own Blockchain From Ethereum a Prelude
DYdX announced last year that it was leaving Ethereum for its own proprietary blockchain, on Cosmos, over concerns about the scalability of the blockchain. In early April, the exchange announced it had launched a V4 of its private testnet, a pivotal step in its roadmap.
In a recent interview with CoinDesk at the IVS Crypto Conference in Japan, Charles d'Haussy, the CEO of the dYdX Foundation, explained the move by equating it to tech sovereignty. Having its own blockchain, he explained, allows dYdX to control its full tech stack and not depend on the speed and trade-offs of Ethereum's roadmap.
“When you sit on someone else’s blockchain, you have a dependency on their roadmap. It’s not yours,” he told CoinDesk. “By having our own chain, we are able to execute much faster by moving away from a general purpose blockchain.”
DYdX isn’t a new platform, but there’s renewed interest in it as the Securities and Exchange Commission (SEC) goes after its centralized counterparts. The platform isn’t without its growing pains, and the question at the end of the day will be if its new technology stack is the cure. Its token is down roughly 6% in the last month as the price of ether is up 1.3%, meaning the market is taking a cautious look at this as the exchange prepares for its next chapter.
Part of Broader Trend
D'Haussy views dYdX owning its own blockchain as part of a broader trend where major crypto applications are optimizing for specific uses, thus making general-purpose blockchains less suitable.
“At the beginning, you start with a Swiss knife, doing everything, but eventually, you want to become a craftsman and have specialized tools,” he said. “So I think we’ll see a lot of application chains and more interconnectivity between blockchains.”
But this doesn’t mean that dYdX will be centralized around its own chain. D'Haussy also highlighted that dYdX is "blockchain agnostic," continually evolving and upgrading its technology. He believes this kind of adaptability is a key characteristic of successful decentralized finance applications.
DYdX’s new blockchain will be open for other platforms to build on, but D'Haussy pointed out that it's specifically designed for its own uses, and likened it to a "Formula 1 for decentralized finance."
Diversity of validators
To prevent centralized failure, dYdX aims for diversity among their validators in geographies, underlying service providers, and types of providers. D'Haussy foresees a rise in domestic validators due to certain regions lacking regulatory clarity.
“We work on this to make sure that we've got a diversity of geographies, diversity of underlying service providers, a mix of cloud providers, a mix of what we call bare metal providers,” he said.
D'Haussy predicts that in the coming years, regulations may require financial institutions to access public networks via domestic nodes, in order to ensure that activities on-chain fall under the purview of local regulators, which will significantly increase the demand for domestic validators.
Which means regulated crypto derivatives trading — if you’re in the right part of the world.
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