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Sep 25, 2020

Our Weekly Crypto Recap

Kraken stole the show


Kraken wakes as world’s first Crypto Bank

One of 2020’s more promising trends—the mainstreaming of the crypto world—took a further positive turn last week. Kraken, operator of the fourth-largest cryptocurrency exchange by volume and owner of a diverse group of other businesses, including CF Benchmarks, became the first crypto exchange to win a U.S. bank charter. Kraken Financial, the putative name of the new entity aiming to offer bank services, announced that the State of Wyoming had approved its application to become a Special Purpose Depository Institution (SPDI). It won’t be an ordinary bank (SPDIs are prohibited from offering loans from customer deposits and must hold reserves worth 100% of deposits). But it will still be a fully-fledged bank in the legal sense. As such, the surprise news is a game changer for Kraken and the crypto industry as a whole, with benefits sought for years that became available almost overnight. These include reduced frictions for digital asset companies in securing banking facilities and easier access to financial services for consumer holders of crypto. Just as importantly, the new license paves the way for Kraken to apply for an account with the Federal Reserve, a conduit to ‘soft power’ and objective influence, with far-reaching implications, including increased market confidence that can underpin prices. More

Ether bounce keeps DeFi defying gravity

In the latest sign that top digital currency prices are over their recent sharp correction, on-chain data showed the total amount of Ether held in non-exchange addresses has risen by a fifth since mid-July, according to Blockchain intelligence firm Santiment. That’s despite a drop in Ether’s market price of around 20% so far in September, as the second-largest crypto by market-cap led digital assets’ part of a global market downturn. Meanwhile, there’s no sign of a let-up in the frantic pace of Ethereum-based DeFi, sending network fees doubling to their second-highest level ever last week. Governance token UNI is the latest example of ERC-20 asset volatility. It surged from $0.30 to $6.90 within 24 hours of its launch this week. Despite a hefty Ether haircut and questions around the space’s stability, the DeFi sector’s buoyancy means ETH’s place as a formidable No.2 in our Ultra Cap 5 index is secure for the foreseeable future.

Bitcoin holds 50% 2020 gain

Crypto’s ‘original gangster’ has also stabilised, enabling the dominant token to maintain its lead against all global liquid markets, with an advance of more than 50% in 2020 to date. Bitcoin has thus burnished its emerging role as a relative stabiliser of the crypto market. The Ultra Cap 5 benchmark index has undershot the fall of most prices in the portfolio after BTC—around 76% of UC5’s total weight—posted relatively contained drops in recent weeks.

The Returns

It’s been a torrid year for all markets, though the price of keeping digital assets at arm’s length continues to look higher on a slightly longer-term view. This week’s return chart shows our ETH-USD benchmark Reference Rate sitting on a 1-year return of 100% despite its recent tumble.

ETH-USD Reference Rate rebased to 25-09-2019 ETH-USD-RR-rebased-to-25-09-2019

Featured benchmark: ETH-USD

All the Ether you can trade

For CF Benchmarks, Ether supply is ‘case closed’ but #Supplygate remains wide open

First, a reminder.

Enter #Supplygate

  • Certain idiosyncrasies of Ether mining and Ethereum protocols make working out how much Ether exists trickier than calculating the supply of other cryptocurrencies – like Bitcoin. The Unspent Transactions Output (UTXO) parameter is one example. UTXO is simpler to determine on the Bitcoin blockchain and more opaque on the Ethereum one
  • These difficulties have been known for years but have largely been overlooked. Until, that is, the prominent Bitcoin evangelist Pierre Rochard provoked a colourful Twitter debate, reminding everyone that there is little agreement about the level of total Ether supply
  • The tweets embedded below among hundreds of others - many tagged #supplygate - sum up the polarised nature of the discussion


  • Rochard went as far as offering a nominal bounty to anyone able to resolve the quandary
  • One computer scientist known on Twitter as @lastmjs recently reported “beyond reasonable doubt that the total amount of ETH issued up to and including block 9193265 (the last block of 2019) is 109,094,014.21823”. He went on to clarify that “The total amount of ETH issued is different than the total supply”
  • Although it appears progress has been made, to date, the wider ‘project’ has yet to achieve its ultimate aim. Even if it ever does, consensus on an ultimate supply number looks almost impossible
    As such, whilst appearing to limit the scope of the discussion to Ether’s total circulating supply, Rochard continues to assert that the unknown quantity of Ether undermines confidence in the asset, and by extension, other cryptocurrencies as well

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