30th September 2023 > > Warriors for Social Justice!

tl;dr

The CCC is outed as a Warrior for Social Justice.

Market Snap

Market Wrap

It looks like a US government shutdown is going to happen.

At some point there must be some recognition that the US cannot keep running a deficit in the trillions of dollars every year. At some point the rest of the world will run out of assets to finance that deficit. But it seems it is now politically unacceptable to suggest that any Western government should rein in its spending. The only suggestions to be seen from any political party is for more government spending. You may cling to the hope that this unprecedented experiment in fiscal incontinence will work out fine in the end.

I suspect it won’t.

Curious Cryptos’ Commentary – How to make money the way banks do

Retail banks’ basic business model is to borrow short, and to lend long.

What does this mean?

Retail account holders deposit money into their current account, on which interest is paid at the overnight rate. The bank will lend out that money (leveraged because of the beauty of fractionalised reserve banking, which is the only reason you have an iPhone in your hand, but let’s not get into that for now) for a longer term. In general, one expects short-term interest rates to be lower than long-term interest rates.

OpenTrade (https://www.open-trade.io/) is an “Institutional grade platform for lending and yield products.” All blockchain based of course, which is really the only viable option for tokenisation.

Yep, we are back in that world. Tokenisation – a concept and a process that will bring financial freedoms to the masses without TradFi gatekeepers deciding who should be eligible for the club, and how much they should pay for their eligibility.

Centralised cryptocurrency exchange WOO X (a white label of the same backend that powers most exchanges) has announced a partnership with OpenTrade that allows investors to borrow USDC against tokenised US Treasury bonds.

Investors will be borrowing short, and lending long.

One of the advantages of borrowing USDC against Treasuries is the total absence of FX risk, though one should be aware of depeg risk.

Assuming you set up the trade for positive carry (otherwise why else would you do it?) you can then tootle off to use the USDC as you wish. Perhaps splitting it into half to buy USDT, and adding both as liquidity to a DeFi pool, reaping liquidity provider rewards to boost the overall return.

Or investing in more tokenised US Treasury bonds against which you borrow more USDC. Rinse and repeat depending on your personal risk profile.

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I admit I get excited about these types of initiatives, that drive crypto adoption, and provide real world use cases.

But most of all, I get excited about the prospect of bringing financial freedoms to those who have previously been denied them.

Who knew my middle name means “Warrior for Social Justice”?

Curious Cryptos’ Commentary – Financial privacy

Financial privacy is a fundamental, inalienable, human right. A right that is being increasingly trampled on by governments across the world. This includes the liberal West, aided, and abetted by Covid which was somehow allowed to usher in a cultural change so damaging to our freedoms and liberties.

Under the pretence that using cash might somehow present a health risk, those in power saw an opportunity to force a change in favour of centrally recorded transactions. Once that objective had been largely achieved, we saw the power that could wield when Justin Trudeau (you know the one, him of “Blackface” fame, laughably lauded in some circles as a liberal) shut down the bank accounts of legitimate protesters. Protestors who were exercising their fundamental right to protest illegal and immoral restrictions on peoples’ everyday movements, freedoms, and liberties.

Cryptos provide an escape from the dystopian future desired by Trudeau and his ilk.

EIP-7503, a proposal that may or may not be implemented on the Ethereum blockchain, offers the prospect of an extraordinary degree of financial privacy.

I do not pretend to understand the mathematics behind EIP-7503, but that need not concern us, just as long as you are familiar with the principles of ZKP (zero-knowledge proof). If not, you need to be, as ZKP is going to play an ever-increasing role in the crypto world. Start here:

https://en.wikipedia.org/wiki/Zero-knowledge_proof

Back to EIP-7503.

The concept is that you can burn any amount of ETH, then using ZKP, you can re-mint that ETH into a new wallet, with no reference to the original burn. Your new ETH is essentially just that – ETH with no transaction history.

That gets the totalitarians, the authoritarians, and the dictators, going to bed very worried every night. Which pleases the CCC team no end.

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The CCC team are all Warriors for Social Justice.