Could This Ever Really Work?

What about this: give everybody a set amount of money every month, with no strings attached? It could help alleviate poverty, enable people to live more fulfilling lives and thus increase their productivity. As AI-powered machines take all our jobs, could this be the answer to the question of work in the 21st Century?

If the above sounds familiar, then don’t be surprised. The idea of universal basic income or UBI isn’t a new one. Many believe that it could be the solution to the rampant inequality and technological threats that loom over the global economy. A radical solution to some of our most pressing problems.

UBI has been discussed in varying forms ever since rapid technological progress began to disrupt the world of work in the 18th Century. No nation or government has yet dared to take this step, but, as the fourth industrial revolution prepares to wash over us, an ever-increasing number of trials are being conducted to see whether it might actually work.

In today’s video, we unpack what UBI is, how it might work and why it’s an idea that just won’t go away. We examine whether it really could offer a solution to the problems we face, or whether it could in fact make them a whole lot worse.

You can watch that video here.

📈 Crypto Market Forecast 📈

After a sluggish August, September is finally here with a whole new set of (hopefully) bullish surprises. Of course, one of the biggest surprises will come later this week when the unemployment rate for August is published on Friday. To refresh your memory, the unemployment rate for July came in higher than expected, leading to fears of a recession. This caused BTC to fall below 50k.

If you watched our video breaking down these recession fears however, you’ll know that another higher-than-expected unemployment print could be paradoxically bullish for the markets. This is simply because it would trigger the Sahm Rule again. For those unfamiliar, the Sahm Rule was developed to tell the government when to send out stimmy checks.

It seems that most people don’t know that the Sahm Rule was only developed in 2019, and that the first time it was triggered was in 2020 when the pandemic began. The result was that trillions of dollars of stimulus checks were sent out to ensure that the recession didn’t become a depression. It’s safe to assume that there’s a desire to stimulate ahead of the US election.

Speaking of historical trends, September has historically been a bearish month for the markets, so much so that the phenomenon has a name: the September effect. Nobody knows for sure why this effect occurs, but it’s assumed to be related to the fact that September is when money managers have all come back from vacation, and are taking profits and adjusting their portfolios.  

Naturally, this has led to the assumption that September will probably be a bad month for the crypto market, particularly because there’s historical data to back this up. As you can see in this handy chart, BTC has gone down in 8 of the last 11 Septembers. BTC’s average (and median) drawdown in September has been 5%, which could translate to a 10% drawdown in altcoins.

There are just two caveats. The first is that BTC went up in September back-to-back in 2015 and 2016. Since BTC went up last September, it’s possible that it will experience another consecutive September gain (2023 and 2024). While the sample size is too small to say for sure, BTC could be at the same stage in its bull market (2024 could be a pre-parabolic year, like 2016).

The second caveat is that there seem to be a lot of altcoin catalysts scheduled in the coming weeks. The first mover seems to be Cardano with its Chang Hard fork which should be live by the time you read this. It seems that lots of crypto projects are also planning on making big announcements at the TOKEN2049 conference in Singapore on the 18th and 19th.

If you want more specifics, BitMEX co-founder Arthur Hayes revealed in an interview with us that Aptos will be making big announcements sometime in September. Meanwhile, Sui is planning on making some big announcements at the Korea Blockchain Week event which begins today. And, spoiler: Near Protocol will also be making big announcements later this month at TOKEN2049.

It’s possible that Trump’s DeFi protocol has also been launched by the time you read this too.

In sum then, it looks like it’s going to be a very bullish September for BTC and altcoins. The caveat is that this bullishness will be accompanied by a lot of volatility. That’s just because degens will insist on going max long when everyone’s feeling the FOMO, and max short when everyone’s feeling the FUD. Ignore the day-to-day, focus on the long term and don’t F this up!

🎥 Don’t Forget CB Live! 🎥

Third time’s a charm! It seems that so many of you are fans of the new weekly Coin Bureau live show - we love to hear it.

We will be going live again tomorrow at 9am Eastern Time (2pm UTC/3pm CET/5pm Gulf Time) and you can set a reminder by following this link here.

This week, we hope to pick out a number of comments from live viewers so that Nic and Guy can answer them on stream. See you there!

🤔 Maker's End? 🤔

Maker, the decentralised lending protocol often described as ‘DeFi’s Central Bank,’ made a major announcement this week.

The project announced that, starting September 18th, it will be rebranding to ‘Sky.’

Notably, this rebranding signifies the implementation of Phase One of ‘Endgame’ - a five-phase plan proposed by protocol co-founder Rune Christensen.

If you’ve been following the project closely, you’ll know that Endgame has been a hotly debated and controversial topic within the Maker community since it was proposed two years ago. The successful implementation of Endgame is expected to completely revamp Maker’s existing tokenomics and governance structure.

This includes, among other changes, the introduction of new ecosystem tokens (SKY and USDS) and the delegation of protocol governance to a set of smaller subDAOs called ‘Stars.’

While Endgame supporters see it as an effective solution for better governance and regulatory risk management, detractors claim that the plan deviates the project from its original vision of being a censorship-resistant decentralised currency.

Notably, most of this criticism seems to be around the inclusion of a new ‘freeze’ function within the code of USDS. This feature, present in most centralised stablecoins, allows the issuer to remotely freeze the asset. Critics argue this feature goes against the decentralised ethos MakerDAO pioneered at its launch.

In fact, many critics believe Maker’s transition under Endgame is nothing more than an attempt to appease regulators around the globe. Some even seemed to hint that Rune himself was being held hostage to force the changes through.

In an attempt to push back against these allegations, Rune made a post last week clarifying that the freeze function is only an ‘option’ built into the code, and that it will not be live at launch. He also clarified that upgrading DAI to USDS is ‘optional,’ establishing that DAI and MKR will continue to exist in parallel to the new SKY and USDS tokens.

However, it’s prudent to note that the announcement seems to indicate that only holders of the new tokens will be able to unlock functionality and yield within the new Sky website when it goes live. Moreover, in a previous iteration of Endgame, Rune expressed plans to allow DAI to become a free-floating currency. In other words, DAI would cease to maintain its peg to the US dollar.

Irrespective of the vision Rune may have for the future of the protocol, it’s an indisputable fact that the primary demand driver for DAI has always been its stability and censorship-resistant narrative. The introduction of SKY and USDS has now presented an unwitting change in perception towards the protocol, including towards MKR and DAI.

Some are speculating that this change in perception will present an opportunity for other decentralised stablecoins to steal the crown held by DAI within the DeFi ecosystem.

For what it’s worth, any decentralised stablecoin that hopes to steal this crown will likely have most, if not all of five key qualities: the inability to be frozen, no counterparty, no dependence on external oracles, a reasonably stable peg to the US dollar and a novel mechanism that improves on DAI’s existing design.

Based on these five qualities, there are currently three stablecoin projects that we believe present the most promise – Curve’s crvUSD, Ampleforth’s SPOT and Dyad’s DYAD stablecoin.

Each of these stablecoins presents a unique improvement to DAI’s mechanism. That said, Curve’s crvUSD arguably has the most promise given its issuance model is almost identical to Maker’s collateralized debt position (CDP) model for DAI.

It also differentiates itself from other CDP stablecoin issuers through its novel liquidation mechanism called LLAMMA (Lending-Liquidating AMM Algorithm). Notably, LLAMMA allows crvUSD minters to minimise losses from liquidations by creating soft, continuous and fractional liquidations, instead of an instantaneous liquidation that results in 100% loss for the borrower.

It achieves this by effectively creating an LP position with a collateral token-stablecoin pair in a special-purpose AMM that gradually rebalances as prices fluctuate. crvUSD can also maintain its peg without massive USDC PSM (Peg Stability Mechanism) reliance like MakerDAO’s DAI. This once again removes the reliance DAI had on centralised counterparts.

That said, some DeFi enthusiasts have been known to pray for the existence of a stablecoin that pegs itself to purchasing power rather than the depreciating unit-of-account that is the US dollar. If you happen to be one of these, then Ampleforth’s SPOT token is right up your alley.

Technically, SPOT is a flatcoin derivative that mimics regular stablecoins. To explain it simply, flatcoins are ‘units of account’ designed to track purchasing power better than modern fiat currencies. In other words, one coin will always be able to buy the same number of goods irrespective of the passage of time. Ampleforth’s AMPL token was the first attempt at creating such a currency.

However, its volatile supply mechanism made it far too complicated to use as part of everyday commerce. This is why the team created SPOT as a dollar-pegged token backed by AMPL. To ensure this peg remains stable, SPOT introduces a mechanism known as tranching. This reorganises the volatility of AMPL into derivatives with varying degrees of volatility. SPOT has already seen some adoption within decentralised applications on the Base ecosystem.

As for our final contender, DYAD is a CDP stablecoin similar to DAI and crvUSD. While it may be the newest and most untested contender among the three, it features a unique mechanism that significantly improves the capital efficiency of CDP stablecoins while creating a sustainable link between the protocol TVL and its native utility token.

For context, there are two consistent criticisms of CDP stablecoin protocols. The first is that they are relatively less capital efficient than their centralised counterparts. To illustrate, most CDP stablecoin protocols require users to deposit collateral worth at least 150% of the stablecoins being minted/borrowed. The second is the apparent disconnect between the price of the protocol’s native token and the protocol’s TVL. Notably, the demand for MKR has always been independent of the growth of DAI.

DYAD’s unique minting mechanism presents a solution to both problems. Notably, DYAD allows users to increase the capital efficiency of their debt positions by depositing the protocol’s native KEROSENE token in their accounts. This typically involves depositing a proportional percentage of the KEROSENE token supply relative to the collateralization ratio sought to be achieved.

On paper, this may sound similar to the mechanism employed by Terra’s UST ‘stablecoin’. However, DYAD prevents a negative feedback loop by ignoring the market value of KEROSENE and instead requiring KEROSENE deposits to be valued deterministically on the amount of excess collateral in the protocol. This protects protocol health and creates a direct link between the price of its native token and TVL growth. Our peers over at Blocmates wrote an insightful piece detailing how this mechanism works at depth. We recommend you check it out.

Nevertheless, Maker’s recent fumble is a blessing in disguise, as it presents an opportunity for stablecoin innovation in DeFi to flourish again.

🔥 Hot Deal of The Week 🔥 

Right now, the Coin Bureau store is running a CRAZY SALE where most items have a discount of 40% to 50%.

👉 Support the Coin Bureau and bag yourself a deal by heading over to our store!

🔮 Video Pipeline 🔮 

* Near Update: Potential for 2024?
* Bitcoin ETF Buyers: Who’s been buying?
* Crypto Regulations: Outlook and analysis
* WEF Summer: What happened in China?
 
  🏆 What's New at CoinBureau.com This Week? 🏆

* Bitrefill Review 2024: Spend Crypto on Everyday Items!
* How to Buy Crypto with Apple Pay in 2024: Complete Overview
* Top Anonymous Crypto Wallets 2024: No KYC Crypto Wallets!

📖 Quote of the Week 📖

There has been a great deal of apathy about whether we are going to see Bitcoin break through its all-time high again and whether altcoin season will ever come around.

Study Bitcoin’s 4-year cycle and you will come to appreciate that it’s only a matter of time.

“The four most dangerous words in investing are: ‘this time it’s different.'” - Sir John Templeton

Team Coin Bureau

Disclosure: Authors may own cryptoassets named in this newsletter. These are unqualified opinions, and a Coin Bureau newsletter, is meant for informational purposes only. It is not meant to serve as investment advice. Please consult with your investment, tax, or legal advisor.