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Easy-To-Use DeFi Protocols Will Become The New Gatekeepers To Crypto

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It has arguably never been easier to participate in the crypto ecosystem. After centralized exchange powerhouse Coinbase recently began allowing its users to deposit part of their fiat paychecks into the exchange in the form of crypto, more people are beginning to realize the potential of the industry and participate in this ever-growing ecosystem. 

But, crypto is commonly perceived as fundamentally intricate or lacking the proper interfaces, and whether this is right or wrong, this has been the perception for some time. To some people, the premise of digital currencies will always seem far too complicated. More recently, however, there has been an emergence of easier avenues into the crypto space for those keen to learn more.

It’s important to establish just why people should consider getting into crypto. As with the rest of the world’s industries, digitalization is revolutionizing every facet of our lives. To be able to understand it early on will help more people to comprehend the benefits of this technology in the financial world and become accustomed to a future that will likely heavily feature digital currencies.

Related: Listing frenzy! Coinbase adds nearly 100 crypto assets for trading in 2021

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Because of this, making the entry points into crypto as easily accessible as possible should be an endeavor for all developers in the space to consider. But, that’s not to detract from the fact that the industry has come a long way and is continuing to prove why decentralization is the key to a fruitful financial future.

What entry points to crypto are there currently?The current entry points into the digital currency industry are certainly more easily found than they were as little as a year ago. However, far more needs to be done to ensure that the existing avenues into the space for crypto newbies are maintained, continuously improved and promoted to the right people.

There are tools that not only help you learn about and purchase crypto but also applications that put those assets to work. Yield farming is a relatively easy entry point into crypto: a form of high-interest returns on your deposits that were once perceived as an intricate feature within decentralized finance (DeFi) but has matured into a product that almost anyone can comprehend and quickly start earning on their portfolio. By simply purchasing some tokens, you can stake them into a liquidity or lending pool and let them accumulate value.

Furthermore, we are now seeing a more recently renowned entry point with nonfungible tokens (NFTs). NFTs are “one-of-a-kind” assets in the digital world that can be bought and sold like any other piece of property but may have no tangible form of their own. The space has seen meteoric exponential growth during 2021 with the first half of the year $2.5 billion of sales volume for NFTs alone.

Fundamentally, NFTs are new and quirky to the mainstream. Since they have only come to the attention of mainstream audiences recently, there is plenty of clout and this increases their desirability and demand. The “art” world has seen explosive growth in the NFT sector as digital artists can reach millions of people/customers cheaply and instantly.

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Related: 2021 ends with a question: Are NFTs here to stay?

Another reason behind the burgeoning popularity of NFTs is the sense of status they carry. Some NFTs themselves have grown their own cult-like communities such as Crypto Punks and Bored Apes and by owning one you are perceived to be a member of their very exclusive club, not to mention potentially very rich. We are seeing some NFT artworks sell for tremendous amounts, and this is only just the start of a very young ecosystem.

What is the problem with these existing entry points?In order to increase the accessibility of crypto, projects have to be able to adapt as things like high gas prices drive people away from the Ethereum network. Because of the nature of these extortionate gas fees, this has driven a lot of projects and users onto other cheaper blockchains like Solana — who recently saw something of an NFT boom with the launch of Solana Monkey Business, Degenerate Ape academy and Meerkat Millionaires Country Club.

Work needs to be done to keep crypto approachable and issues with accessibility, high gas fees and complex UX’s are preventing new users from reaching their full potential. But, more education is needed to help build the confidence of these new users to be able to use these products with conviction and not worry about losing the money that they may have invested into digital currencies.

Related: DeFi picks up the pace as alternate blockchains and NFTs boom

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There is discernible progress being made in DeFi that is helping to create more easy access points into crypto, but the NFT space is still a way off just yet. Given the eye-poppingly high prices of some of the most popular NFTs such as Bored Apes and Crypto Punks that have sold for hundreds of thousands of dollars, this is almost acting as a deterrent as those not in crypto are left wondering why on earth people would pay this kind of money for a digital image that can be easily replicated.

This also relates back to the point about education and how NFTs can have utility when implemented appropriately and more people need to realize that. This will come from the NFT projects maturing and demonstrating why these tokens can be valuable and useful in everyday life instead of just solely being limited to a quirky piece of internet art.

What does the future hold for DeFi projects and NFT projects?In its early phases, cryptocurrencies and blockchain applications were essentially proof-of-concepts and were not so much focused on ease of use. There was less media coverage, the prices of certain currencies such as Bitcoin (BTC) and Ether (ETH) were still relatively low and the focus was on developing these technologies into something viable. But, now after the initial coin offering (ICO) boom of 2017, the DeFi summer of 2020, the rise of NFTs and the soaring prices of BTC and ETH, more people want to learn and get involved with this digital revolution. Whereas before, there was no demand for easily understandable entry points into crypto, but now we are at the cusp of the mainstream population wanting to engage with digital assets.

Related: What’s ahead for crypto and blockchain in 2022? Experts answer, Part 3

One cold hard fact of the digital finance industry is that due to the turbulence and unpredictability of the space, some DeFi projects and NFT projects will last and others will fail. It’s important to showcase the utility of as many projects as possible to prolong their longevity and secure external interest by boosting the number of users, while also underscoring the risks.

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Many of the NFTs in the space are immature or are simply an exploitation of the current hype and speculative atmosphere around digital art, leading many buyers into holding digital images that are valueless beyond their visual aesthetic. Digital assets are still intimidating to many people and it is going to take a coordinated effort in education to help digital finance agnostics understand the true value proposition of digital assets. The existing entry points into crypto have a good starting foundation, but we also need more educational systems and support to ensure as wide a reach as possible so that many people have the opportunity to engage with a potential life-changing space.

This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Redmption, a.k.a “Red,” is a community moderator of Harvest Finance, a DeFi hedge fund aggregator, providing high returns, low gas fees and automated strategies. Red is a sought-after yield farming expert whose insights and opinions appear regularly in numerous international publications.

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Leading Crypto Exchanges See Negative Funding Rates, Have The Bears Taken Over?

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Leading Crypto Exchanges See Negative Funding Rates, Have The Bears Taken Over?

Prices have been declining across the crypto market and with it has come to a lot of doubt on the part of investors. This is reflected in the deposit and withdrawal trends recorded across the various crypto exchanges. One of these has been the funding rates which had remained flat for the better part of the first half of 2022. However, there has now been some movement in the funding rates and it is unfortunately not for the better.

Funding Rates Turn Negative

Two leading crypto exchanges have seen negative crypto funding rates for the past week. Binance and ByBit consistently appear on the top of the list for the exchanges with the most trading volume and have become a natural home for perpetual traders. That is why changes across these platforms can be significant to market movements.

Related Reading | Holding Back The Bears: Why Bitcoin Must Break $22,500

Funding rates have been fluctuating at and below neutral for the better part of the month but the latter looks to have finally won out. After bitcoin had dropped below $20,000 last week, expectations had been that more traders would want to get in given the low prices. However, it has gone the other way as average funding rates are now in the negative.

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Both Binance and ByBit have recorded average funding rates of -0.0015 for last week. A significant drop from the neutral 0.01% average aggregated funding rates. What this shows is that the bearish sentiment among the perp traders has been growing. As such, they have been leaning towards short traders.

Funding rates turn negative | Source: Arcane Research

It comes hot on the heels of open interest reaching a new high. Most of which have come from both Binance and ByBit. These two metrics expressly show that short traders are more active compared to their long counterparts.

Crypto Sentiment Still Bad

Crypto perp traders are not the only ones that are currently bearish on the market. The same is the case across the space where investors have chosen to hold their cards closer to their chest than they normally would. The Fear & Greed Index puts the crypto market sentiment in the extreme fear territory for another day yet again. Meaning that the market has now closed out two consecutive months with the extreme fear sentiment.

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Total market cap falls below $900 billion | Source: Crypto Total Market Cap on TradingView.com

This is apparent in the exchange inflows and outflows, both of which have declined in the last couple of days. However, the ratio of inflows to outflows shows that investors are refusing to take any risk in the market. Bitcoin’s net flows came out to -$29.7 million after outflows had touched $901.6 million for the past day, according to Glassnode.

📊 Daily On-Chain Exchange Flow#Bitcoin $BTC

➡️ $872.0M in

⬅️ $901.6M out

📉 Net flow: -$29.7M#Ethereum $ETH

➡️ $261.0M in

⬅️ $211.2M out

📈 Net flow: +$49.8M#Tether (ERC20) $USDT

➡️ $221.3M in

⬅️ $207.1M out

📈 Net flow: +$14.2Mhttps://t.co/dk2HbGwhVw

— glassnode alerts (@glassnodealerts) July 1, 2022

Related Reading | Bitcoin Records Worst Performance For June, Will It Get Better From Here?

Tether inflows have remained muted as investors are sentiment less money into exchanges to purchase tokens. With positive net flow only coming out to $14.2 million for the past day. Sell-offs have also continued, threatening to drag the market even lower.

Featured image from Analytics Insight, charts from Arcane Research and TradingView.com

Follow Best Owie on Twitter for market insights, updates, and the occasional funny tweet…

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Financial Companies Report First Deal With Digital Assets Under Russian Law

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Financial Companies Report First Deal With Digital Assets Under Russian Law

Two companies have carried out Russia’s first transactions with digital financial assets as defined by the country’s current legislation. The deal involved the tokenization of debt issued by a third party and its subsequent acquisition.

Russian Companies Conduct Issue and Placement of Digital Financial Assets

VTB Factoring, a subsidiary of Russian majority state-owned Vneshtorgbank (VTB), and the fintech firm Lighthouse have announced the first transactions for the issuance and placement of digital financial assets (DFAs). The latter is a broad legal term in Russian law that encompasses various types of digital assets, including cryptocurrencies, until dedicated legislation is adopted.

As part of the deal, commercial debt from an unidentified issuer was first tokenized on the platform of Lighthouse, a registered “information system operator” authorized to issue and transact with DFAs, and then VTB Factoring bought the digital assets, the companies detailed in a press release.

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By working with debt in the form of DFAs, the parties are able to reduce the time necessary to receive financing, while also taking advantage of relatively low transaction costs, the RBC Crypto news outlet explained in a report. This lowers the overall costs for the issuing entity. Anton Musatov, CEO of VTB Factoring, elaborated:

In contrast with the standard factoring procedure, the client does not need to conclude a service contract to assign commercial debt. It is enough for the issuer to issue a DFA and [obtain] the factor’s consent to purchase it.

The news of the successful DFA operation comes after in early June, Lighthouse and Tinkoff Business, the e-commerce division of the Russian neobank Tinkoff, announced the establishment of a platform to facilitate digital asset transactions. It will allow large and medium-sized businesses to raise funds using blockchain technology.

Later in the month, deputy chairman of the management board of Sberbank Anatoly Popov unveiled that the first DFA deal on a platform developed by Russia’s largest bank will take place within a month. Also known as Sber, the state-controlled financial institution accounts for about a third of all bank assets in Russia and is also a registered information system operator authorized to issue digital financial assets.

The developments in the DFA space come as Russian authorities are working to expand the country’s regulatory framework to more comprehensively regulate decentralized digital assets such as bitcoin as they are only partially covered by the existing law “On Digital Financial Assets.” A new bill “On Digital Currency,” designed to achieve that, should be reviewed by Russian lawmakers in September.

Do you expect more transactions and deals with digital financial assets in Russia in the near future? Tell us in the comments section below.

Lubomir Tassev

Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.

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Image Credits: Shutterstock, Pixabay, Wiki Commons

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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EU Agreement Reached On Anti-Money Laundering Rules For Cryptocurrencies

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EU Agreement Reached On Anti-Money Laundering Rules For Cryptocurrencies

European institutions have reached an interim consensus on a set of EU regulations that will burden crypto companies with the obligation to help prevent money laundering, among other illicit activities potentially involving digital assets. The progress comes as the Union seeks to comprehensively regulate the continent’s cryptocurrency market.

EU Officials and Lawmakers Agree on AML Measures in Crypto Space

Negotiators representing the key participants in the EU’s decision-making process have reached an agreement on anti-money laundering (AML) rules that will require businesses in the crypto industry to verify the identities of their customers and report suspicious transactions. In the future, Europe’s Transfer of Funds Regulation (ToFR) will also cover cryptocurrency transactions.

The regulations are yet to be finalized and approved by the relevant European institutions but the provisional deal signals an upcoming tightening for the sector. Crypto firms will have to assist financial authorities in efforts to crack down on dirty money, the European Parliament and EU Council indicated on Wednesday.

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The improved oversight should ensure that crypto assets can be traced just like traditional money transfers, Reuters reported, referring to a released official statement. Quoted by the news agency, Spanish Green Party lawmaker Ernest Urtasun, who took part in the process, elaborated:

The new rules will enable law enforcement officials to be able to link certain transfers to criminal activities and identify the real person behind those transactions.

The EU bodies further noted that the rules would also cover ‘unhosted‘ crypto wallets, a term used by European officials to designate wallets held by private individuals that are not managed by a licensed platform. That will apply to transactions with crypto service providers exceeding €1,000 in fiat value (around $1,040).

The proposals have not been met with enthusiasm by the crypto industry. In a letter addressed to the finance ministers of the 27 EU member states, sent in mid-April, businesses working with crypto assets urged European policymakers to ensure that their regulations did not go beyond the standards adopted by FATF, the global Financial Action Task Force (on Money Laundering).

On Thursday, the EU also seeks agreement on a broad framework designed to regulate crypto-related activities across the Union. Members of the European Parliament and representatives of the EU states need to align their positions on the new Markets in Crypto Assets (MiCA) legislative proposal, which is expected enter into force before the end of next year. Crypto companies will have 18 months after that to obtain a MiCA license to operate in the European Union.

What effect, do you think, will the upcoming EU regulations have on the crypto industry? Share your opinion in the comments section below.

Lubomir Tassev

Lubomir Tassev is a journalist from tech-savvy Eastern Europe who likes Hitchens’s quote: “Being a writer is what I am, rather than what I do.” Besides crypto, blockchain and fintech, international politics and economics are two other sources of inspiration.

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Image Credits: Shutterstock, Pixabay, Wiki Commons, Alexandros Michailidis

Disclaimer: This article is for informational purposes only. It is not a direct offer or solicitation of an offer to buy or sell, or a recommendation or endorsement of any products, services, or companies. Bitcoin.com does not provide investment, tax, legal, or accounting advice. Neither the company nor the author is responsible, directly or indirectly, for any damage or loss caused or alleged to be caused by or in connection with the use of or reliance on any content, goods or services mentioned in this article.

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