The Short STOry

I was having a bit of a hiatus, but I think I've quite a decent excuse, because I was extremely busy. Apart from my other project I was working on the Bancor release v2.1 where I was retained to write the economic analysis paper. This was actually very exciting, and I _will_ make a podcast or two about it I promise. More exciting however is my new **Botcast** project which I believe is a world first: all TheShortSTOry podcasts will be available via a Telegram chatbot. This bot is, not unsurprisingly, called @TheShortSTOrybot. Go check it out! 1. https://t.me/TheShortSTOrybot 2. https://blog.bancor.network/proposing-bancor-v2-1-single-sided-amm-with-elastic-bnt-supply-bcac9fe655b 3. https://drive.google.com/file/d/1en044m2wchn85aQBcoVx2elmxEYd5kEA/view

Today we will be discussing the second part of the Uniswap paper [1]. If you found yesterday's episode a bit dry, worry not. This one is more fun and economics, the mathematics stuff is mostly over. We are now moving on to the economics implications, and those are very interesting. Also honorable mentions of Sushiswap [3]. 1. https://theshortstory-podcast.com/papers/202009-uniswap-multipool/#part2 2. https://theshortstory-podcast.com/papers/202009-uniswap-formulas/ 3. https://thedefiant.substack.com/p/sushiswaps-vampire-scheme-hours-away

I am currently working quite heavily on formalising my understanding of Uniswap and Uniswap-style pools like the infamous Sushiswap pool that provided a fair amount of drama over the weekend. So instead of a news podcast today a short podcast on those two papers. The first one is simply a collection of important formulas [1], and the second one is a series of charts showing how Uniswap pools prices change with the volume [2]. 1. https://theshortstory-podcast.com/papers/202009-uniswap-formulas/ 2. https://theshortstory-podcast.com/papers/202009-uniswap-multipool/

Today's podcast is with Jeff Bandman [1], principal at Bandman Advisors [2,3] and an esteemed colleague at University of Nicosia where he is teaching a course on blockchain regulations [4]. He is an expert on regulations, in particular in the US, and today we will be talking about SEC's exciting move to extend the definition of accredited investors [5,6,7] 1. https://www.linkedin.com/in/jeffbandman/ 2. https://www.linkedin.com/company/bandman-advisors/ 3. https://www.bandmanadvisors.com/ 4. https://www.unic.ac.cy/blockchain/u-blockchain-law-regulation-and-policy/ 5. https://www.linkedin.com/posts/jeffbandman_sec-modernizes-the-accredited-investor-definition-activity-6704379921923379200-UGgx 6. https://www.sec.gov/news/press-release/2020-191 7. https://www.sec.gov/rules/final/2020/33-10824.pdf

Today's podcast is with Jeff Bandman [1], principal at Bandman Advisors [2,3] and an esteemed colleague at University of Nicosia where he is teaching a course on blockchain regulations [4]. He is an expert on regulations, in particular in the US, and today we will be talking about SEC's exciting move to extend the definition of accredited investors [5,6,7] 1. https://www.linkedin.com/in/jeffbandman/ 2. https://www.linkedin.com/company/bandman-advisors/ 3. https://www.bandmanadvisors.com/ 4. https://www.unic.ac.cy/blockchain/u-blockchain-law-regulation-and-policy/ 5. https://www.linkedin.com/posts/jeffbandman_sec-modernizes-the-accredited-investor-definition-activity-6704379921923379200-UGgx 6. https://www.sec.gov/news/press-release/2020-191 7. https://www.sec.gov/rules/final/2020/33-10824.pdf

The Japanse messaging giant LINE, creator of the Line friends, launches a blockchain development platform called LINE Blockchain Developers, and a crypto wallet called BITMAX. 1. https://www.coindesk.com/line-launches-digital-asset-wallet-and-blockchain-development-platform 2. https://cointelegraph.com/news/line-expands-blockchain-and-crypto-product-portfolio-with-two-new-additions

In a true man-bites-dog story [1], Korea's largest blockchain firm ICON [2] now offers KYC services to Shinhan Bank, Korea's second largest bank [3] as Coin Telegraph reports. 1. https://cointelegraph.com/news/icon-app-offers-remote-kyc-for-south-koreas-second-largest-bank 2. https://cointelegraph.com/news/four-of-the-top-five-south-korean-banks-to-offer-crypto-services 3. https://icon.foundation/?lang=en

Today's podcast is on @danrobinson's [4] medium post "Ethereum is a dark forest" [1] (the reference being of course the famous book from the Three Body Problem series [2,3]) where he describes how in Ethereum's mempool everyone raising the head gets sniped. 1. https://medium.com/@danrobinson/ethereum-is-a-dark-forest-ecc5f0505dff 2. https://en.wikipedia.org/wiki/The_Dark_Forest 3. https://www.amazon.co.uk/dp/B00U7G0UYI/ 4. https://twitter.com/danrobinson

I started writing a paper on the Uniswap protocol, and in particularly how it imposes a _bleed_ on its liquidity providers, akin to the bleed option traders with negative Gamma experience. The full paper is here paper but below is the non-technical summary and conclusion. 1. https://theshortstory-podcast.com/2020/08/what-color-does-uniswap-bleed/202008-LOESCH-What-color-does-Uniswap-bleed.pdf

Today's podcast is about Thomas Naegele's assessment of EU law, and Liechtenstein law in particular, with respect to security tokens and their (in)ability to be traded on regulated trading venues. Warning: my pdf of the post clocks in at 67 pages plus 40 pages of references. 1. https://medium.com/@thomas.naegele/secondary-market-for-security-tokens-the-need-for-a-new-regulatory-approach-at-the-european-e922e4ca04

A few days ago we had the reorganisation of the Ethereum Classic chain that was initially attributed to the mistake of a miner who has been disconnected from the network for 12 hours. Turns out it was an attack, and he or she made $5.6m out of it. Interestingly the playbook followed is well known [3], ht @edmund_schuster. https://www.coindesk.com/ethereum-classic-undergoes-likely-51-attack-with-3693-block-chain-reorganization https://blog.bitquery.io/attacker-stole-807k-etc-in-ethereum-classic-51-attack https://arxiv.org/abs/2002.10736 https://twitter.com/Edmund_Schuster

In our series on interesting deals in the STO space, today a particular gem because of the unusual asset class and the people involved. Asset class first: this is a security token [1,2,3] giving the investors economic interest in an online game called Infinite Fleet. This security token is not to be confounded with Infinite Fleet's in game currency [4]. In terms of people involved there is obviously Samson Mow who is heading Pixelmatic, the developer of the game, and who also has quite a high profile as CSO of Blockstream, a crypto infrastructure company. The backers include Adam Back, Blockstream's CSO, Max Keiser, of the Keiser Report, and Charlies Lee the founder of LiteCoin who famously sold his holdings just before the market crashed. The main deal platform seems to be BnkToTheFuture [5] who has supported quite a lot of companies raising fund in the crypto space, including Kraken [6,7]. The issuance is a SAFT, but they are planning to use the Liquid Network [10] eventually. Also involved STOKR [9] hence the deal being registerd both in the US and in Luxemburg. For those interested in the legal framework under which the offering takes place, STOKR seems to only have an agent payments license from the French ACPR. 1. https://coinjournal.net/news/infinite-fleet-raises-3-1m-in-private-security-token-offering/ 2. https://www.coindesk.com/charlie-lee-adam-back-private-sto-round-blockchain-game-infinite-fleet 3. https://cointelegraph.com/news/samson-mows-infinite-fleet-game-raises-31m-on-bnktothefuture 4. https://www.infinitefleet.com/gamecurrency 5. https://bnktothefuture.com 6. https://app.bnktothefuture.com/companies 7. https://www.coindesk.com/over-2000-investors-back-kraken-crypto-exchanges-13-million-crowdfunding 8. https://www.coindesk.com/bnktothefuture-ceo-50-percent-of-funding-will-be-through-security-tokens-in-2020 9. https://stokr.io 10. https://stokr.io/legal 11. https://liquid.net 12. https://www.businessinsider.com/litecoin-founder-charlie-lee-on-decision-to-sell-entire-crypto-holding-2018-4

tZero [1] -- the subsidiary of Overstock who is one of the most active players in the STO market -- just updated their investors, and whilst this do not make a particularly happy reading it provides good insights into what is, and is not, happening in the STO market at the moment [2,3]. This comes after a very positive update only in June [4], and might be related to real estate tokenisation not delivering as expected [5]. 1. https://www.tzero.com 2. https://www.businesswire.com/news/home/20200729005299/en/tZERO-CEO-Saum-Noursalehi-Update-Company-Progress 3. https://www.coindesk.com/tzero-jobs-salaries-gears-another-funding-round 4. https://thetokenizer.io/2020/06/14/tzero-delivers-record-results-in-may-2020/ 5. https://cointelegraph.com/news/tokenized-real-estate-hasnt-lived-up-to-the-hype-property-researcher

After the podcast on German ship finance I made two weeks ago [1] I have come across another German platform because of an pretty extensive interview in BTC Echo [2] and some other news in German media [5]. It turns out that those guys have been around for a while, there was a very good article on them in February [3] and an even earlier one last October [4], so it might well be that this is part of a concerted media push. IMPORTANT DISCLAIMER: THIS IS NOT INVESTMENT ADVICE, I HAVE NO VIEW AS TO WHETHER THIS IS A GOOD INVESTMENT OR NOT, AND I AM IN NO WAY RELATED TO THAT PARTICULAR ISSUANCE. What I found interesting was that (a) there are two retail-focused German shipping offerings in the news, the one I talked about recently [1,8-11] and this one [6,7], and they have chosen markedly different investment structures. 1. https://theshortstory-podcast.com/2020/07/the-green-ship-security-token-offering/ 2. https://www.btc-echo.de/ahoi-tokenisierung-investmentgelegenheiten-auf-hoher-see/ 3. https://www.ico.li/de/new-shore-invest-lanciert-digitale-schiffsfinanzierungsplattform/ 4. https://hansa-online.de/2019/10/featured/137096/hamburger-online-plattform-will-kg-modell-wiederbeleben/ 5. https://blockchainwelt.de/sto/new-shore-invest-sto/ 6. https://new-shore-invest.de/ 7. https://new-shore-invest.de/wp-content/uploads/2020/05/WIB_RHAS-5_Stand-12_05_2020.pdf 8. https://de.cointelegraph.com/news/vogemann-raises-investment-capital-with-its-first-sto 9. https://www.vogemann.de/green-deal/ 10. https://greenshiptoken.com/ 11. https://www.fma-li.li/files/wp/20200703-green-ship-token-prospekt-final.pdf

In this article [1] I want to discuss the dynamics of Ampleforth [2,3], which is a crypto currency with its twist. Instead of issuing a fixed number of units, Ampleforth monetary supply expands and contracts dynamically to keep one Ampleforth valued at around 1 USD. The expansion and contraction is executed in a pro-rata manner, meaning that they do not impact the percentage of overall supply an investor holds. On first sight this looks like a stable coin, but on second sight it is clear that this is not quite the case -- it is a regular crypto coin whose price dynamics has been moved to play out in the volume space. What I mean with this is that when Ampleforth market cap goes up / down 10% then investors will feel the impact of that -- not by a change in price, but by the fact that they suddenly hold more / less currency units.

Banque de France selected the firms for its announced CBDC trial [1]. Four out of the eight companies chosen are old economy giants who are venturing into the brave new world, but the remaining four are more recent upstarts: Iznes, LiquidShare, ProsperUS, and SEBA Bank. 1. https://www.fintechdirect.net/2020/07/21/banque-de-france-turns-to-grateful-eight-for-cbdc-tests/ 2. https://www.btc-echo.de/cbdc-frankreich-startet-testlauf-fuer-digitalen-euro 3. https://www.crowdfundinsider.com/2020/07/164330-banque-de-france-announces-cbdc-candidate-selections/ 4. https://www.banque-france.fr/communique-de-presse/liste-des-candidatures-retenues-pour-les-experimentations-de-monnaie-digitale-de-banque-centrale 5. https://business.inquirer.net/303055/philippine-treasury-is-asia-pioneer-in-leveraging-distributed-ledger-technology-blockchain-for-treasury-bonds 6. https://cointelegraph.com/news/kazakhstan-needs-national-crypto-to-fight-corruption-says-local-official 7. https://www.seba.swiss/news/banque-de-france-candidates-testing-integration-cbdc/ 8. https://www.iznes.io/en 9. https://www.liquidshare.io 10. https://prosperus.tech

Before we start: this is not a financial promotion, I am in no way related to this token offering, and I have no views whatsoever of whether or not this token is a good investment. With this out of the way, I am excited that there is another major security token offering coming out of Germany, a $50m subordinated debt token for investing into green shipping assets. The article announcing this is so far only available in German [1], but there is a lot of information on the sponsor's page [2] and the subscription page [3]. The prospectus has been approved by the FMA Liechtenstein [4]. 1. https://de.cointelegraph.com/news/vogemann-raises-investment-capital-with-its-first-sto 2. https://www.vogemann.de/green-deal/ 3. https://greenshiptoken.com/ 4. https://www.fma-li.li/files/wp/20200703-green-ship-token-prospekt-final.pdf

It is interesting how technology gives a new lease to old principles. The medieval banking systems relied heavily on bearer instruments to assert ownership of financial assets, and this has over time be replaced with centralised registers. Now we see the rise of a new class of bearer instruments, eg via Corda, or now via CloudCoin which uses a very different -- and in many respects much more pedestrian -- way of avoiding the double spend problem. 1. https://cointelegraph.com/news/blockchain-free-cloudcoin-claims- secure-email-to-email-transactions/amp 2. https://cloudcoin.global 3. https://cloudcoin.global/uploads/CloudCoinWhitePaper2020.pdf

It is interesting how technology gives a new lease to old principles. The medieval banking systems relied heavily on bearer instruments to assert ownership of financial assets, and this has over time be replaced with centralised registers. Now we see the rise of a new class of bearer instruments, eg via Corda, or now via CloudCoin which uses a very different -- and in many respects much more pedestrian -- way of avoiding the double spend problem. 1. https://cointelegraph.com/news/blockchain-free-cloudcoin-claims- secure-email-to-email-transactions/amp 2. https://cloudcoin.global 3. https://cloudcoin.global/uploads/CloudCoinWhitePaper2020.pdf

Before we start: this is not a financial promotion, I am in no way related to this token offering, and I have no views whatsoever of whether or not this token is a good investment. With this out of the way, I am excited that there is another major security token offering coming out of Germany, a $50m subordinated debt token for investing into green shipping assets. The article announcing this is so far only available in German [1], but there is a lot of information on the sponsor's page [2] and the subscription page [3]. The prospectus has been approved by the FMA Liechtenstein [4]. 1. https://de.cointelegraph.com/news/vogemann-raises-investment-capital-with-its-first-sto 2. https://www.vogemann.de/green-deal/ 3. https://greenshiptoken.com/ 4. https://www.fma-li.li/files/wp/20200703-green-ship-token-prospekt-final.pdf