Tesla Recorded $101M Impairment Losses on Bitcoin Holdings in 2021

Tesla said that it investment an aggregate of $1.5 billion in bitcoin in the first quarter of 2021.

By Jamie Crawley

Tesla recorded around $101 million of impairment losses from changes in the value of their bitcoin holdings in 2021.

Elon Musk's electric vehicle company disclosed these losses in a filing with Securities and Exchange Commission (SEC) explaining how its digital asset holdings could affects its profitability.

"In the year ended December 31, 2021, we recorded approximately $101 million of impairment losses resulting from changes to the carrying value of our bitcoin and gains of $128 million on certain sales of bitcoin by us," the filing said.

Tesla said that it made an aggregate investment of $1.5 billion in bitcoin in the first quarter of 2021. The market value of its bitcoin holdings as of the end of 2021 was $1.99 billion.

A year ago, the company announced that it had purchased $1.5 billion worth of bitcoin and thereafter began accept it as a form of payment. In May, Tesla CEO Elon Musk went back on this announcement over concerns about the environmental impact of bitcoin mining.

Musk later said that the company would accept the crypto once it is confirmed that 50% of mining is carried out using clean energy.

Source : coindesk.com

Read More

Aleo Blockchain Raises $200M for Privacy-Minded DeFi

The lovechild of Ethereum programmability and Zcash privacy is getting a funding boost from SoftBank, Tiger Global and others.

By Danny Nelson

Pledging to launch its private, programmable Aleo blockchain network “later this year,” crypto startup Aleo Systems Inc raised $200 million in a recent funding round.

SoftBank and Kora Management co-led the company’s Series B, with big-name venture capital firms such as Andreessen Horowitz (a16z), Tiger Global, Samsung Ventures and others joining in.

The round comes as Aleo shifts into layer 1 launch mode. Its privacy-focused tech differs substantially from decentralized finance’s most popular programmable blockchains, like Ethereum with its built-in openness. That makes Aleo’s success hardly a guarantee, even in a frothy market.

The timing is perhaps more interesting given recent privacy-related developments in the wilds of DeFi. The Avalanche-based DeFi platform Wonderland was crippled following revelations that a pseudonymous executive was previously involved in the infamous QuadrigaCX collapse.

Nonetheless, Aleo’s backers believe there’s demand for scalable privacy networks. In an interview with CoinDesk, COO Alex Pruden, an a16z veteran, said regulators, consumers and businesses could all benefit from the system Aleo plans to deploy.

Privacy tech

Pruden said Aleo will promote privacy-focused DeFi programmability.

“The way to think about it is, Aleo is like if the Ethereum model and the Zcash model had a baby,” he said. (Ethereum is a dominant smart contracts blockchain and Zcash is a privacy-focused transaction platform.) An alternative analogy: “Zcash with smart contracts.”

Aleo’s privacy chops derive from the same privacy tech underpinning Zcash. Zero-knowledge proofs (ZKPs) are a method of authenticating the validity of a crypto transaction without broadcasting its details; this allows users to keep their money matters private.

“Zero-knowledge execution,” or Zexe (pronouced “sexy” with a Z), is Aleo’s smart contracts-friendly evolution of ZKPs. It will see users execute off-chain transactions that pair with on-chain cryptographic proofs. Crunching often complex transactions off-chain promises more “scalability, efficiency and privacy” than doing it all on-chain, according to Pruden.

Read more: A16z Leads $28M Funding Round for Data Privacy Platform Aleo

Ethereum’s on-chain computations slow down that network, he said. That on-chain, off-chain dichotomy is part of the reason why Aleo’s smart contracts will not be Ethereum Virtual Machine-compatible.

A new smart contracts programming language called “Leo” takes the place of Solidity, Ethereum developers’ lingua coda.

A critical company

Aleo Systems Inc. is poised to wield an outsize role in its eponymous blockchain’s growth, according to Pruden’s account. Acting as a caretaker, core developer and hype man for the network, it plans to ultimately build a profitable business atop the open-source blockchain.

“What better team or company to build a business on top of an existing layer one than the team that built the layer one, right?” Pruden said. “It’s like a flywheel, a virtuous cycle.”

Pruden said the company hasn’t committed to decentralizing Aleo’s governance, but it hasn’t ruled it out, either.

Regardless, the $200 million will help Aleo Systems pump life into its pet project.

“That’s really what the Series B is all about: Raising additional capital for that purpose to build products and services on top of the Aleo Network,” Pruden said.

Source : coindesk.com

Read More

Japan's Biggest Bank to Issue Yen-Pegged Stablecoin for Settlement: Report

The trust banking arm of Mitsubishi UFJ plans to use blockchain technology for securities trading with the stablecoin acting as a payment instrument.

By Jamie Crawley

Mitsubishi UFJ Trust is set to issue a stablecoin as a means of payment to enable instant settlement of securities transactions, according to a report by Nikkei.

The trust banking arm of Mitsubishi UFJ, Japan's largest bank by assets, is planning to use blockchain technology for securities trading and set up the stablecoin as a payment instrument.

Mitsubishi UFJ is looking to expedite the settlement process, which now takes a couple of days, saving millions of dollar by making it instantaneous. In this sense, it will be similar to JPM Coin by U.S. banking giant JPMorgan, which is focused on speeding up wholesale payments such as bond transactions.

The stablecoin will be pegged to the Japanese yen.

Banks and other financial institutions will be allowed to issue stablecoins next year under new legislation designed to limit the issuance of such digital currencies by private companies.

Source : coindesk.com

Read More

Neopets Pitched a Metaverse Pivot. Fans Balked

 For many Neopets fans, an effort to bring the early-aughts classic into Web 3 is throwing up red flags.

By Cheyenne Ligon

What’s crypto’s hottest play-to-earn, NFT-based pet game?

If you guessed Axie Infinity, you’re right – but the Neopets Metaverse team wants to change that. At least, that’s the stated plan.

The project, which launched last September, aims to bring the once-popular pet collecting game – which peaked in the early 2000s and has been on a slow decline ever since – into the Web 3 era.

According to an October 2021 Medium post, the Neopets Metaverse team plans to create a “vast immersive environment where players can interact” and establish a “sophisticated economy integrated on the Solana blockchain” where players can earn real money, all based on the original Neopets game.

It may sound like a dream come true for many of Neopets’ remaining die-hard players, but the Neopets Metaverse project has been received more like a nightmare. Fans of the original game have banded together to push back against the project, taking to social media and fansites to voice their complaints.

At first glance, the critics of the Neopets Metaverse project could be dismissed as blinded by nostalgia, hostile to any changes to the 25-year-old game many of them played as children. Many of the project’s detractors, too, seem inclined towards the knee-jerk negative reaction towards non-fungible tokens (NFTs) seen in many online communities.

The blowback has led to a changing of the guard among the project’s staff, current project leads said. And despite the Neopets Metaverse’s efforts to reform, fans still remain suspicious of the project – for what appear to be legitimate reasons.

Underwhelming NFT drop

In November 2021, the Neopets Metaverse team announced its upcoming NFT collection: 20,500 randomly generated Neopets that would, in theory, be compatible with the future Neopets Metaverse.

But after getting a less-than-enthusiastic reaction from fans, the team behind the project decided to slash the number of NFTs in its genesis drop from 20,500 to 10,500, with 500 NFTs reserved for the project team.

Despite the drop, however, the collection failed to sell out – only 4,225 NFTs were sold. The rest were burned, angering fans who requested NFT buyers be airdropped the remaining supply. Buyers took to Twitter to complain about the clunky minting process, a floor price around $240 to $960 and bots driving up prices within seconds.

The quality and style of the NFTs was also an issue. Herdy, a pseudonymous Neopets player who says he has been playing since 2001, told CoinDesk the NFTs were “very low quality and ugly looking compared to the majority of comparable customizations available on the classic site.”

While the NFT art may have been messy, the sale netted a clean $2 million for the Neopets Metaverse project, according to fansite Jellyneo.

A string of scandals

The shoddy quality of some of the NFT art was not the biggest issue for the Neopets Metaverse team, however.

Allegations swirled online that the Neopets Metaverse project had used art generated by a Neopets fan site called Dress to Impress (DTI) as an example NFT before the drop – and even that the DTI website was used to make all of the NFTs. Users pointed to the presence of a glitch unique to the fan site’s software in the image, and it was quickly taken down and replaced without an explanation.

In an interview with CoinDesk, project manager Danning Chen declined to comment on the incident, but sent a follow-up email from the project team saying the current Neopets Metaverse team was new, having made staffing changes in December 2021 after the sale of the NFTs.

“Some of the original team members that worked on the project have left already, we are looking into what happened,” the email read.

Fans of the project have demanded an acknowledgment and an apology from the Neopets Metaverse team, as well as from its owner JumpStart – the company behind a popular series of educational computer games for children.

JumpStart, which was acquired by Chinese gaming company NetDragon in 2017, did not respond to CoinDesk’s request for comment, but has verified the partnership with Neopets Metaverse as an official one in other interviews and on social media.

In addition to the allegations of art theft, the culture clash between crypto, which is often harsh and irreverent, and Neopets, which has cultivated a gentle, family-friendly atmosphere through the use of strict filters, has plagued the project.

Fans including Herdy have pointed out that a lack of moderation in the project’s Discord and occasionally antagonistic social media presence have failed to keep up the wholesome and welcoming culture of the original Neopets site.

“The project has fostered homophobia, racism and transphobia in their Discord,” Herdy wrote to CoinDesk, referring to an incident in the project’s Discord chat where an anti-gay slur was allowed to remain up for hours, and a moderator accused complaining users of “fudding,” referring to FUD, the popular crypto acronym for “fear, uncertainty and doubt.”

“[This] is especially damaging given that Neopets has a high LGBT+ membership,” Herdy added. “[They] have never apologized.”

Last October, the Neopets Metaverse Twitter account had to delete a tweet containing a “soyjak” meme mocking “NFT Hateoooors” after Twitter users complained it was offensive.

A roadmap to nowhere?

Neopets players might be willing to let bygones be bygones if the project succeeded in resuscitating their childhood favorite, but that’s looking increasingly unlikely.

In an updated roadmap released on Monday, the project team released details of its plans to take Neopets into the Web 3 era.

The project’s plans for the first and second quarters of 2022 are vague: hiring game developers, releasing a teaser trailer and telling fans about the plans for the game’s structure.

According to the roadmap, by the third quarter an alpha version of the game will be available for those with “priority access.”

These are lofty goals for a project that, according to Chen, currently has only five full-time team members.

The lack of resources appears evident with some cursory googling. A search for “cartoon fantasy village” pulls up the backdrop of the project’s website, a Shutterstock image that can be licensed for $12. It’s unclear if the team’s current roster includes a digital artist.

What does appear to be concrete in the team’s roadmap, however, are financial milestones: in the second quarter, a Medium post touts plans for a “private sale of native tokens to strategic investors and advisors.” There’s also a planned “initial metaverse offering (IMO).”

By next year, the project hopes to launch the beta version of the Neopets Metaverse game, as well as hold a “primary NFT sale of Neopets lands, where Neopians can expand their Neohome on their own plot of land, interact and traverse to other lands.”

When asked how the game would be funded, the Neopets Metaverse team told CoinDesk the initial seed investment would come from the NFT sale’s proceeds, “combined with additional investments from our mother company, NetDragon Websoft,” as well as funds raised from the IMO and “private sales to investors.”

Who is it for?

Many Neopets fans have voiced fears that this project looks a lot like a cash grab – if not an outright rug pull waiting to happen. If at best, it’s just a failed experiment, it wouldn’t be the first in the Neopets canon.

The brand has promoted and failed to deliver on a host of projects, including a mobile app (stalled indefinitely), an animated series (stalled) and even another crypto project – Neopets CryptoQuest, a short-lived, Ethereum-based trading card game from 2018 that died after a few months.

Fans like Herdy are outraged that NetDragon’s money is being used to spin up new projects while their original beloved game is on life support, held together with spaghetti code.

“Leeching money and resources away from the rest of the Neopets brand [could] potentially lead to things like the classic site being shuttered,” Herdy told CoinDesk. “It’s quite certainly the last thing fans of the Neopets brand want.”

Source : coindesk.com

Read More

Market Wrap: Bitcoin Bounce Pauses on Low Volume

Buyers are taking a breather, awaiting a catalyst that could push prices higher or lower.

By Damanick Dantes, Angelique Chen

Bitcoin (BTC) traded lower on Wednesday after a brief price bounce over the past two days. Buying activity has been weak following the January sell-off, which is why some analysts remain uncertain about BTC's short-term price direction.

Market indicators such as volatility and trading volume remain low, indicating a lack of conviction among crypto buyers and sellers. "Bitcoin’s seven-day volatility is now at the lowest level since November 2020," Arcane Research stated in a report. The firm expects short-term rises in volatility to remain limited as BTC trades in a tight range.

Still, a BTC breakout above $40,000 or breakdown below $30,000 could be a catalyst for a surge in trading activity.

"Since the early November peak, there have been four marked, step-like drops in the crypto market," FundStrat, a global research firm, wrote in a Wednesday briefing. "After each drop there has been a recovery averaging 8.9% leading into the next drop. A noticeable difference between the current recovery and the previous ones is the volatility," FundStrat wrote.

The firm noted that during the past three price recoveries bitcoin had an average true range (ATR, a volatility indicator) of 151, but the current recovery's ART is only 109.

Latest prices

●Bitcoin (BTC): $37557, −2.55%

●Ether (ETH): $2724, −1.56%

●S&P 500 daily close: $4589, +0.94%

●Gold: $1807 per troy ounce, +0.34%

●Ten-year Treasury yield daily close: 1.77%

Bitcoin, ether and gold prices are taken at approximately 4pm New York time. Bitcoin is the CoinDesk Bitcoin Price Index (XBX); Ether is the CoinDesk Ether Price Index (ETX); Gold is the COMEX spot price. Information about CoinDesk Indices can be found at coindesk.com/indices.

Ether outperforms bitcoin

Ether (ETH), the second-largest cryptocurrency by market capitalization, is starting to outperform bitcoin. The chart below shows a series of higher relative price lows in the ETH/BTC ratio since July 2020. The next level of resistance in ETH/BTC is at 0.08, a significant barrier which could limit additional upside in ETH relative to BTC.

ETH/BTC price ratio on daily chart shows support/resistance with RSI on bottom (Damanick Dantes/CoinDesk, TradingView)

Altcoin roundup

- Solana Pay ushers in a new payments era: Solana Pay, a decentralized, open and peer-to-peer payment protocol, was launched Tuesday. It aims to pave the way for a future where digital currencies are prevalent and digital money moves through the internet like data – uncensored and without intermediaries taxing every transaction. The company says the protocol provides a specification that allows consumers to send digital dollar currencies, such as USDC, from their wallets directly into a merchant’s account, settling immediately with costs measured in fractions of a penny. 

- Sushi 2.0: SushiSwap is advancing into Sushi 2.0 with plans for some key improvements and product releases this year. Developers are aiming at three overriding goals: scalability, sustainability and efficiency – key factors even prevalent tokens are having difficulty balancing. 

- Cardano developers propose block size increase: Input Output, the development company behind the Cardano network, proposed increasing the network's block size by 11% on Wednesday. The proposal will increase block size by a further 8 KB, taking it from 72 KB to 80 KB, according to CoinDesk’s Shaurya Malwa. 

Source : coindesk.com

Read More