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Bitcoin Ethereum DeFi CBDC News of the Week

Square to bring DeFi to Bitcoin as EU’s CBDC effort intensifies

2021.07.18 Rick Delaney

Jack Dorsey announces a Bitcoin-focused developer platform to simplify the creation of permissionless financial services.

The market remains cool after dropping from the all-time high prices set in late spring. Yet, as usual in the mile-a-minute crypto industry, there has been no shortage of news over the past week. Long-time BTC supporter Jack Dorsey and his payments company, Square, announced plans to create developer tools to bring DeFi to the Bitcoin network, Paraguay revealed new cryptocurrency regulations to considerably less fanfare than expected and Europe is pushing ahead with its digital currency plans. 

Here are the need-to-know facts about these stories, and more, in OKX Insights’ latest edition of News of the Week. 

DeFi on Bitcoin? Square announces new developer-focused division

Jack Dorsey announced a new division of his financial services company, Square, via Twitter on July 16. The Twitter and Square CEO stated that the still-to-be-named department would focus on developing tools to promote decentralized finance on Bitcoin. 

Key takeaway

  • Square’s still-unnamed division will focus on “non-custodial, permissionless and decentralized financial services” based on the Bitcoin network.     
  • Engineer Mike Brock, who formerly led the introduction of BTC features to the company’s Cash App, will head the division.
  • Previously, developers have largely preferred to build DeFi applications on networks offering more flexible programming languages, such as Ethereum. 

Paraguay introduces crypto regulation, to Bitcoiners’ disappointment

Much to Bitcoiners’ delight, Paraguayan politician Carlos Rejala appeared to be following in El Salvador’s footsteps with the swift introduction of a bill focused on cryptocurrencies to the nation’s legislature on July 14. However, despite Rejala’s vocal support of BTC on Twitter and his laser-eyed profile picture, the bill itself has not been well received in the industry.

Key takeaway

  • The Paraguayan bill makes no explicit mention of BTC, instead collectively grouping all digital assets under the umbrella term “cryptocurrency.”
  • Should the bill pass, all cryptocurrency mining operations in Paraguay would require government approval. 
  • The bill specifically states that BTC will not be recognized as legal tender in Paraguay. 

Uniswap’s DeFi Education Fund dumps $10M in UNI

The newly formed DeFi Education Fund has attracted criticism after suddenly liquidating 500,000 UNI tokens on July 12. As per the Uniswap governance proposal submitted by Harvard Law Blockchain and Fintech Initiative members in May, the funds were intended for “political, educational and legal engagement” and were presumed to be sold gradually over four or five years. 

Key takeaway

  • DEF was established via a Uniswap governance vote and sold half of its 1 million UNI allocation to Genesis Trading, receiving $10.2 million in USDC in an OTC deal.
  • The distribution of funds and their quick sale has prompted questions concerning the decentralization claims of the Uniswap governance process. 
  • The DEF has since defended its decision but has also committed to publishing its annual budget and plans to introduce a measure to allow Uniswap governance to revoke future transactions. 

Axie Infinity’s AXS hits new ATH, bucking the wider crypto market trend

Amid widespread cryptocurrency price declines, the governance token of the NFT-based video game Axie Infinity has been rallying hard. Priced at around $5.50 on July 1, the Ethereum-based AXS tokens hit an all-time high just shy of $29 on July 15. 

Key takeaway

  • AXS is the governance token of the Axie Infinity marketplace, which is central to the play-to-earn digital pet battling video game. 
  • Data from Token Terminal shows Axie generated more than $8.2 million in revenue on July 15, making it among the most lucrative projects tracked by the website. 
  • Axie Infinity is rapidly gaining in popularity in developing nations like Brazil, Venezuela and Indonesia, where gamers turn to it for a source of income.
While most cryptocurrencies continue to decline, AXS hit multiple ATHs since July began. Source: CoinGecko

Europe enters investigation stage of its CBDC 

The Governing Council for the European Central Bank announced it had entered into a two-year investigative phase for the digital euro project on July 14. According to the ECB, its forthcoming digital currency would complement physical cash rather than replace it. 

Key takeaway

  • As part of the announcement, ECB President Christine Lagarde described central bank money as “the safest form of money.” 
  • Fabio Panetta, a member of the ECB’s executive board, stated that a digital euro could launch by 2026.  
  • In an accompanying blog post, Panetta directly compared the European CBDC effort to BTC, stating that its environmental impact would be “negligible compared with the energy consumption and environmental footprint of crypto-assets such as bitcoin.”

OKX Insights presents market analyses, in-depth features and curated news from crypto professionals.

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