Cardano’s 120M ADA DeFi Bet, Ethereum UTXO Shift and EMURGO Exit

All right, here are the roundup news for this week in the Cardano ecosystem. We have Cardano Prime launching their treasury proposal. We also have RealFi coming on the testnet. We have Ethereum ecosystem looking at UTXO, copying what Cardano has built, and also announcements from EMURGO around SecondFi, their updates, and EMURGO stepping down from the pentad.

Let’s get into it, guys. Now, if this is your first time here, my name’s Peter. I do all things crypto. I look at regulations.

I look at a lot of stuff that’s happening in Australia and also everything that’s happening in the Cardano ecosystem. So if that’s of any interest to you, thumbs up, like, subscribe, notification bell. Let’s get right into it, guys. The first one here is the Alpha Prime news.

Now, I’ve done interviews with these guys. I’ve talked about them for the last couple of weeks, but their proposal here is to grow the Cardano DeFi ecosystem. They have worked in the DeFi space across multiple different protocols and chains, and they’re bringing their knowledge and skills to the Cardano ecosystem. Now, the really interesting thing here is that they’re taking an approach by not consulting with the Cardano ecosystem and builders and everything there.

They’re looking at it from an external perspective, looking into what are other ecosystems doing, what Cardano is missing out on. And with the proposals that they are putting together, they will be giving out grants to various projects in the DeFi space to say, hey, you guys need to build these certain aspects. So you’re missing X, Y and Z. Here’s some money.

Go build X, Y, Z. Go make that happen. So then we can piece together our piece of the puzzle to build up the DeFi ecosystem. So one example that the guys gave me in the interview, and I highly encourage that you check out the interview up there, links in the show notes as well.

But they talked about their involvement with a protocol called MoFo, and they brought in a lot of liquidity onto that DeFi protocol. And that was because they worked with Coinbase to make that happen. So they worked in the background, connecting the Coinbase app to MoFo. So when you go and use the Coinbase app and to participate in DeFi, or it wasn’t even DeFi then, it didn’t look like DeFi.

It just looked like you’re using an app. It actually connected to the backend, to Ethereum ecosystem via that DeFi layer. So that is the really interesting thing. And Cardano doesn’t have anything like that.

We don’t have any connectors into really big dApps with millions of users. And this is what the Cardano Prime proposal is looking at offering the Cardano ecosystem. So this is, I think, one of the biggest initiatives in the space that we could possibly have this year. So we’ve got USDC, we’ve got Pyth, we’ve got Layer0, we have the June analytics.

So we have a lot of things working for us at the moment. We have Laos coming around the corner. We have Prius with the finality, faster finality as well. So we’ve got lots of things coming into the space here.

And then to wrap it all up with a massive growth of DeFi, I think is really, really important. So this is something that the dReps in the Cardano space are looking at, at the moment. This is the alpha growth proposal. This is what it’s looking like on chain.

So it’s only been online for about six or so, seven or so hours. The dReps are already voting for it. You can see who’s voting yes, who is voting no. And based on this, you can move your Cardano delegation to a particular dRep that is voting for or against it.

So if, for example, you’re voting with William Doyle here, and he’s your dRep, and you don’t like that he voted no, then you can switch your vote to Karun here, who voted yes, or Crypto Crow, who voted yes, so that you can put your ADA to work and allocate your voting power to these particular dReps and vote this proposal in. Or if you’re against it, you can vote for the no one. So it’s totally dependent on where that delegation is going. So really important to have a look at what’s going on with this one, if you agree with what Alpha Prime is doing.

If you look at the comments down below, there’s a link to the video interview, if you’re interested. But the majority of people that are commenting at the moment are very positive for this. They’re very gun-ho, and we’re going to try and make this happen. Now, the big thing here is this is, if we have a look at the metadata for this, this is 120 million ADA.

So it is a big price tag. In US figures, it’s roughly around 19 million USD. So in USD, for this type of work, it’s not that much. And remember, some of this money is going back to Cardano Protocols as grants to make their protocols up to standard to make it all work.

So it isn’t exactly a massive amount of money when you look at it in USD value, but in terms of ADA, because the prices are low, it is kind of high. But the other interesting thing around this is that the net change limit, the limit of what we can actually pull out of the Treasury or the guidance rails that we have, is limited to 350 million ADA. And I’ve said this in previous videos, but we’re pretty much at that limit. So we need to change this up to the 500 million ADA limit to be able to pass this type of proposal through.

So again, you can see the various DREPs that have voted for this one here. You can see the yeses and nos. And again, you can allocate your ADA to these various DREPs so that they can have that voting power and vote for these particular proposals, yes or no, and push them through on the ecosystem. Now, the downside to all of this, spending more ADA, spending more of the ecosystem funds, does drive down the price.

Now, the thing here is that they aren’t all using the ADA all at once. They have to meet milestones. So this amount of ADA will be spent progressively over a 12-month period, not all at one go. So we won’t see massive drops down or bumps down.

We’ll see the price go fluctuate up and down, probably stabilize and move sideways for maybe another 12 months due to the high spending that is going on at the moment. But really, we need to spend so we are in a better position to be able to capture when the market does go up again. Imagine if we’re still in a position where we don’t have LAOS, we don’t have PRIOS, we don’t have things like the alpha growth for a prime proposal in place, and we suddenly say, yeah, let’s start investing in that stuff now and the rest of the market skyrockets and goes forth with DeFi and everything else. And we’re just like, okay, let’s think about spending the money out.

So I really do believe as a Cardano enthusiast person, whatever you want to call them, that we really need to invest in this type of stuff right now. So it’s really interesting to see where this one goes and hopefully this one does get through. Again, highly encourage you to watch that video interview that I did with the guys there and learn more about the proposal and what it has to offer. All right, next news item here.

This was very interesting to see, and it looks like now the Ethereum boys, the big EVM side of things, have realised the value of UTXO or unspent transaction outputs. The model that Bitcoin uses and what Cardano uses, as well as some other chains as well. There’s a whole bunch of blockchains that understand the value of UTXO and how it can scale up and not be as expensive as what account-based models are when they come to scaling. And that is a massive benefit that Cardano has at the moment.

It’s taken a long time to get here, but Ethereum is now finally turning around and going, hey, there’s some value here. And you can check out this research paper here, and essentially, not research paper, but this big post here that talks about the values of UTXO. And it essentially just spits out everything that the Cardano ecosystem has been benefiting from for the last seven or so years. So it’s interesting to see that the space externally is now seeing the value in it and is potentially completely pivoting over to where the Cardano ecosystem is.

Will they catch up? Can they fork the Ethereum chain to make it UTXO based? That is extremely hard to do from where they are at the moment. Extremely hard.

And it’s not just the changing of the chain itself and going from account-based to UTXO. It’s all the tools, it’s all the libraries and everything that has been built in the ecosystem for the account-based model. It’s even the thinking of the engineers and devs now that they have to think about UTXO as opposed to account-based, how that actually works. So it’s a massive undertaking, not only from a code and development side of things, but support libraries and everything else that is in the ecosystem, including how developers think.

So that’s a massive change for the Ethereum ecosystem if that does happen. Will it happen? Maybe. Will they probably borrow a lot of stuff that the Cardano ecosystem has built?

Maybe. Maybe Ethereum can just be a side chain and become a partner chain of Cardano and benefit that way. Who knows? Anyway guys, I’ll leave the links down below to these various posts here about Ethereum UTXO and their roadmap to eventually integrate in UTXO, so you can find out a little bit more about it.

If you’re interested in deep dive, let me know and I’ll try and break down more of the research that they’ve been doing to try and get to this point. All right, next news item here. This one here is really cool guys. Now Realfi is bringing in what Cardano has been trying to do for years.

This was the initial goal and ideas or ethos of what Cardano was trying to do. Bank the unbanked. And finally Realfi, headed up by John O’Connor, is making this a reality. So the whole idea and premise here is that we can use the platform to fund microfinance, developing countries, people that don’t have access to these type of funds to actually make things happen.

The cool thing here is that this actually would generate real yield as opposed to inflationary tokens that comes from a lot of the DeFi space. And that is something of really big value that you really want to look into when it comes to DeFi yield. If you’re just inflating a currency that you made up, it doesn’t really bring any value for the users. But if you’re tapping into real world economies, this is where the value comes in.

If you’re tapping into bonds and that type of yield, this is where the yield comes from. This is why USDC is really appealing in the Circle ecosystem and on Coinbase, because they do have the yield there from the US Treasuries, those bonds. So when we tap into that and actually have a real yield coming back, this is what makes things really exciting. And Realfi here have put up their pre-prod testnet and you can see a little bit of their platform here.

And I’ll just shrink that. Oh no, don’t need to shrink it. We can see how their platform is actually working. Now the interesting thing here that they put down is where the Realfi portfolio composition could possibly come from.

So you can see here, part of it’s from bonds, some of it’s from CLOs. I don’t know what CLOs are. We can see here, tokenized treasuries and MMFs. And then also down here, Realfi private credit.

And that’s where you’re lending out the USD assets from the protocol to someone that actually needs the funds for their business or whatever it is. So for example, here in this case here, Realfi private credit, I could take out a loan on the platform to build up my YouTube channel. And then once I get in profit and actually deliver more value for the ecosystem, I can repay that fund. I can repay that and anyone that lent me that USD would get a return on that particular investment.

So I think this is really cool. This is really, really beneficial for anyone that wants to use it and give access to people that need the funds for it too. So Realfi are bringing real finance to the DeFi space. So I absolutely love what they’re doing.

Now I’ve become a Realfi SPO as well, so I’ll be involved a lot more on this project as well. So I’m interested to see what comes up next. But if we have a look at their platform here, what else you can do? You can actually connect and play around on testnet and mint the USDR.

That’s their stable coin. That’s their stable coin within their ecosystem. But use USDCX or USDM at the moment to mint USDR. So it’s a one-to-one peg and they convert it over.

I’m assuming this is like a programmable token. They’re going to do some cool fancy things with it. So we’ll see what’s going on there. But I don’t know too much more about that.

Either way, keep an eye on this one, guys, because it is something quite interesting to see and see how this one develops, especially with the private finance side of things. All right, next and last big news story for this week is around the SecondFi update. Now at this point in time, we should have seen the quarantine mode for the wallet come out, and I haven’t seen that yet. So for anyone in the YouTube comments down below, you’ve been asking a lot of questions here.

If you know what you’re doing, if you understand that as soon as you do a transaction within your Yoroi SecondFi wallet, that you’re exposing yourself to the hackers, if you realise that and understand that clearly, then you should be able to manage your wallet and do a one single transaction migration out. If you don’t understand how to do that, if you don’t realise that unregistering your wallet from delegation is a transaction and will expose your wallet, if you understand what you’re doing here and understand how the hack works, then you’re probably safe to migrate and move your wallet. If you don’t, please wait for the updates from SecondFi for the quarantine mode so that you’ll be able to migrate your wallet out.

Okay, very big important thing there. Don’t go and migrate your wallet if you don’t know what you’re doing. So they do have a full hardware wallet guide that they posted the other week. It’s in their knowledge base.

Again, I’ll put links down below for you guys. If you follow that and completely understand it, go ahead and migrate yourself out. If you haven’t purchased a hardware wallet yet, and for whatever reason you can’t afford one, whatever, that’s cool, but you can buy a hardware wallet. It will protect your assets.

No one’s been hacked from having a hardware wallet. There are wrench attacks and phishing scams to release your seed phrase from it, but you physically need that hardware device to sign transactions. If you’re after one, I’ve got links down below to Keystone and Ledger’s there as well. It’s via my affiliate links, so it does help support the channel.

But if you haven’t got a hardware wallet, get one. Follow their guide and you can learn how to actually migrate out. If you don’t, wait for the quarantine mode. Next week, they’ve got the secure wallet export functionality, and this will allow you to export your wallet out.

So we should, maybe by the time I publish this video, the quarantine mode will be out. You’ll be able to check and see if your wallet’s being compromised and lodge a support ticket. And next week, you can start moving your assets out. So a little bit more of a wait, guys.

We’re almost there, and we’re almost out of this terrible phase that EMURGO is going through with SecondFi at the moment. Please watch out for those scams. There’s lots of scam emails going out. The hacks are still active as well.

So if you, at this point in time, get your wallet compromised, you won’t be covered by the returned funds that they’ve put together. So please be careful, guys. Now, because of all this debacle and this fallout from the SecondFi side of things, EMURGO have stepped down as one of the Pentads, one of the founding entities to help push the Cardano ecosystem forward. So let me just read you the statement here.

Today, we formally notified the entities that we are stepping down from our duties as members of the Pentad. We want to thank the members for their shared commitment to Cardano throughout our time working alongside them. Our immediate priority is the SecondFi recovery process, and we are concentrating our resources where they are needed most. So, fair enough.

Fair enough. I don’t know what will happen to EMURGO next. They’re not saying they’re completely stepping out of the Cardano ecosystem. They’re stepping out of their role and their work within the DeFi space and Cardano ecosystem.

But that work with the Pentad and providing funds and doing all the contracts and everything else with those ecosystem partners, unfortunately, that’s gone now. And that falls into the hands of the Cardano Foundation, Midnight Foundation, and IOG and Intersect. So I’m sure it’s in capable hands, and I’m sure the rest of the team will be able to pick up some duties. But from my understanding, I did understand that EMURGO did pick up some of the contracts.

So they may pass it on to one of the other Pentad members. So we’re down to four as opposed to five. But hey, we’ll see where things go next. Very unfortunate fall for EMURGO at the moment.

Definitely dropped the ball there on the SecondFi side of things. But we hopefully can recover from this overall. Anyway, guys, those are the big top news stories for this week within the Cardano ecosystem. I try and keep these concise to the really big ones that are hitting the ecosystem and will directly affect all you guys out there.

So hopefully you’ve got a lot out of this one here. If you did, make sure you hit that thumbs up, like, subscribe, notification bell. I’ve got YouTube memberships down below. I’ve got buy me a coffee links there as well.

Great way to support the channel. But if you can’t, just hit that thumbs up. Like always, guys, stay positive, have a good weekend, and I’ll see you in the next video.