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Daily: Fairwin scam, Galaxy Digital&XBTO, NYDIG Bitcoin Strategy Fund
October 07  |  3 min read

Gamble Aware

BeQuant Analytics, a daily cryptocurrency market analysis contributor

Trading volumes are expected to pick up as this year’s Golden Week holiday in China comes to an end and market participants re-position for any market-moving announcements that may come out of the annual gathering held by the Ethereum Foundation. Devcon 5 is due to take place on Oct. 8 – Oct. 11, and apart from focusing on the planned transition to Proof of Stake (PoS) from Proof of Work (PoW), there will be plenty of discussions on the fast-growing field of Decentralised Finance (DeFi) applications.

Fairwin will also likely get a mention. Fairwin is a gambling platform that has been running one of the biggest contracts on the entire Ethereum network. In the last 30 days, the platform has spent more than 51% of all gas, the fuel that powers Ethereum, according to ETH Gas Station. That’s almost double the funds spent by the stablecoin network Tether, which has used 28% of gas supplies. According to an analysis by Ethereum developer Philippe Castonguay, Fairwin received a total of 687,598 ETH, or around $125,000,000. But all of a sudden, all the funds were promptly drained.

What is particularly concerning is that the outcry by miners amid the capacity full blockchain network and exuberant gas usage, the Ethereum miners have increased the gas limits to allow for more transactions per block. This is roughly equivalent to increasing the block size for Bitcoin blocks. Since the disappearance of Fairwin, the amount of gas used has nearly halved from 62 billion to 38 billion, and network utilization has fallen to 64%. The freed-up space is a blessing for developers, but the relief in sentiment may be short-lived and prompt another fresh wave of speculative short positions, citing scalability issues.

Looking elsewhere, despite the slow start of Bakkt, it was announced last Friday that Galaxy Digital and over-the-counter (OTC) trading firm XBTO have conducted the first-ever block trade of Bakkt’s bitcoin futures contract. Bakkt is the first live market in the US for bitcoin futures that are physically delivered. Elsewhere, given the focus on stablecoins and in particular Facebook’s Libra project, Philadelphia Federal Reserve bank president Patrick Harker said it is “inevitable” for the central banks, including the Fed, to start issuing digital currency.

Finally, late last week asset management firm Stone Ridge has filed a prospectus with the US Securities and Exchange Commission (SEC) for a new bitcoin futures fund. The so-called “NYDIG Bitcoin Strategy Fund” aims to achieve capital appreciation by investing in bitcoin futures contracts. Stone Ridge said the fund will invest only in cash-settled bitcoin futures traded on exchanges registered with the US Commodity Futures Trading Commission (CFTC), and not in physically-settled bitcoin futures, such as the one offered by Bakkt. The fund will also not invest in bitcoin or other cryptocurrencies directly.

Thank you for reading,

The BeQuant’s Analytics team