Evening Must-read | Cryptocurrency Cycles and US Monetary Policy

1. “5% World” Gateway Pre-Opening: Understanding the Current Situation of RWA Track Projects

On August 17th, the 10-year US Treasury yield rose to 4.307%, reaching a near 15-year high; the 30-year Treasury yield rose to the highest level since 2011, at 4.4219%. In response, strategists at Bank of America stated that investors should prepare for the return of the “5% world”. Before the start of the US zero interest rate era during the 2008 global financial crisis, medium to long-term bond yields were typically around 5%. Click to read more

2. Why Friend.tech is Not the SocialFi App We Need?

Friend.tech is terrible, it is not the SocialFi (social finance) app we need. Why do we say that? Given some recent comments we have seen about Friend.tech, this may be an unpopular viewpoint. But please read this article patiently. We are very eager to see a new SocialFi app that can replace or be an alternative to Twitter, and we will make efforts to like it. Click to read more

3. Dismissing Validium? Reinterpreting Layer2 from the Perspective of Danksharding’s Proposer

Recently, Dankrad Feist, the proposer of Danksharding and a researcher at the Ethereum Foundation, made some controversial remarks on Twitter. He explicitly pointed out that a modular blockchain that does not adopt ETH as the data availability layer (DA layer) is not a Rollup, nor is it an Ethereum Layer2. According to Dankrad’s statement, Arbitrum Nova, Immutable X, Metis, and ApeX may be “excluded” from the Layer2 list because they disclose transaction data outside of ETH (they have built their own off-chain DA network called DAC). Click to read more

4. Cryptocurrency Cycles and US Monetary Policy

This article explores the volatility of the cryptocurrency market and its relationship with the global stock market and US monetary policy. The researchers identified a single price component, called the “cryptofactor,” which explains 80% of cryptocurrency price fluctuations and indicates that its correlation with the stock market increases in line with the entry time of institutional investors into the cryptocurrency market. The researchers also observed a phenomenon similar to stocks, namely that the Federal Reserve’s tightening monetary policy reduces the impact of the cryptofactor through risk-bearing channels, contrary to the view that cryptocurrency assets provide a hedge against market risks. Finally, the researchers present a time-varying sample heterogeneity agent model of overall risk aversion that can explain their empirical results and highlight the potential for the cryptocurrency market to transmit risks to the stock market as institutional investor participation increases. Click to read more

5. How to Regulate DeFi to Protect Consumers and Promote Innovation

The decentralized finance (DeFi) ecosystem has become a disruptive force in the financial world, with the potential to achieve democratization, transparency, and financial inclusion. Blockchain technology enables peer-to-peer financial transactions, eliminating intermediaries and thereby eliminating costs, lengthy waiting times, and related risks. Click to read more

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