TRUST ME, BOND MARKET, PLEASE. James Glynn at The Wall Street Journal had a piece this week about how the Federal Reserve is considering following Australia’s lead in using “yield caps” as a policy tool to keep long-dated interest rates down. The thinking is if the central bank explicitly signals it will always institute bond-buying if the yield on a benchmark asset such as the 10-year Treasury note rises above some predefined ceiling, the market will be less inclined to prematurely believe the Fed is going to start tightening monetary policy. In other words, we won’t see a rerun of the 2013 “Taper Tantrum,” when the U.S. bond market, worrying that the Fed would start tapering off its bond-buying, or quantitative easing, drove down bond prices, which pushed up yields. (For bond market newbies, yields, which measure the effective annual return bondholders will earn off a bond’s fixed interest rate when adjusted for its price, move inversely to price.)
That’s not to say there aren’t risks in DeFi. Many are worried that the frenzy around speculative activities such as “yield farming” and interconnected leverage could set off a systemic crisis. If that happens, maybe Bitcoin can offer an alternative, more stable architecture for it. Either way, ideas to improve DeFi are coming all the time – whether for better system-wide data or for a more trustworthy legal framework. Out of this hurly burly, something transformative will emerge. Whether it’s dominated by Ethereum or spread across different blockchains, the end result will show more cross-protocol synergy than the chains’ warring communities would suggest.
So, let’s dismiss claims like those of Ethhub.io co-founder Anthony Sassano. He argued that because bitcoin token transactions on Ethereum deny miners fees they would otherwise receive on the bitcoin chain, bitcoin is becoming a “second-class citizen” to ether. You’d hardly expect people in countries where dollars are preferred to the local currency to think of the former as second class. And just as the U.S. benefits from overseas demand for dollars – via seignorage or interest-free loans – bitcoin holders benefit from its sought-after liquidity and collateral value in the Ethereum ecosystem, where it lets them extract premium interest.
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BIS Plans New Central Banking Fintech Research Hubs in Europe, North America. The Bank of International Settlements – the central bank to the world’s central banks – is getting serious about its money tech R&D centers, opening innovation hubs in Toronto, Stockholm, London, Paris and Frankfurt. A coordinated, standardized approach to developing central bank digital currencies? Danny Nelson reports.
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BITCOIN & ETHEREUM THE GOLD & SILVER OF BLOCKCHAIN TO BOOST XRP ALTCOINS!
Like other blockchains, Ethereum has a native cryptocurrency called Ether (ETH). ETH is digital money. If you’ve heard of Bitcoin, ETH has many of the same features. It is purely digital, and can be sent to anyone anywhere in the world instantly. The supply of ETH isn’t controlled by any government or company – it is decentralized, and it is scarce. People all over the world use ETH to make payments, as a store of value, or as collateral. The latest news about Ethereum mostly concerns the move to Serenity the last post-development phase of Ethereum as well as changing Ether mining’s concept from Proof-of-Work to Proof-of-Stake in order to reduce the power cost of the process.
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