Basis

basis

USA v. Samuel Bankman-Fried Court Filing, retrieved on March 15, 2024 is part of . You can jump to any part in this filing . This part is 30 of 33. HackerNoon’s Legal PDF Series here I. Applicable Law As the Court is well aware, “[c]riminal forfeiture statutes empower the Government to confiscate property derived from or used to facilitate criminal activity. Such statutes serve important governmental interests such as separating a criminal from his ill-gotten gains, returning property, in full, to those wrongfully deprived or defrauded of it, and lessen[ing] the economic power of criminal enterprises.” Honeycutt v. United States, 581 U.S. 443, 447 (2017) (citation and internal quotation marks omitted). Forfeiture is mandatory in cases involving fraud and money laundering. United States v. Torres, 703 F.3d 194, 204 (2d Cir. 2012); 28 U.S.C. § 2461(c) (“If the defendant is convicted of the offense giving rise to the forfeiture, the court shall order the forfeiture of the property as part of the sentence in the criminal case.”). Where forfeiture is sought in the form of a personal money judgment, the district court “must determine the amount of money that the defendant will be ordered to pay.” Fed. R. Crim. P. 32.2(b)(1)(A). The court’s determination “may be based on evidence already in the record,” Fed. R. Crim. P. 32.2(b)(1)(B), including evidence from trial. United States v. Capoccia, 503 F.3d 103, 109 (2d Cir. 2007). The “calculation of forfeiture amounts is not an exact science. ‘[T]he court need not establish the loss with precision but rather need only make a reasonable estimate of the loss, given the available information.’” United States v. Treacy, 639 F.3d 32, 48 (2d Cir. 2011) (quoting United States v. Uddin, 551 F.3d 176, 180 (2d Cir. 2009)). A court “may make reasonable extrapolations from the evidence established by a preponderance of the evidence at the sentencing proceeding.” Treacy, 639 F.3d at 48. As “an aspect of sentencing,” Libretti v. United States, 516 U.S. 29, 49 (1995), forfeiture amounts are determined by a preponderance of the evidence, Capoccia, 503 F.3d at 116. The purpose of forfeiture is “punitive rather than restitutive.” United States v. Roberts, 660 F.3d 149, 166 (2d Cir. 2011). Absent Eighth Amendment concerns, the defendant’s ability to pay a money judgment is irrelevant. United States v. Awad, 598 F.3d 76, 78-79 (2d Cir. 2010); United States v. Viloski, 814 F.3d 104, 114-15 (2d Cir. 2016) (upholding forfeiture money judgment exceeding $1 billion as consistent with defendant’s future ability to “earn[] a living upon his release from prison.”); United States v. Bonventre, 646 F. App’x 73, 92 (2d Cir. 2016) (upholding forfeiture money judgment exceeding $19 billion in Madoff Ponzi scheme). There are two bases for the underlying forfeiture here. First, under 18 U.S.C. § 981(a)(1)(C), any property “which constitutes or is derived from proceeds traceable” to wire fraud or securities fraud, among other offenses, is forfeitable. 18 U.S.C. § 981(a)(1)(C); see also 18 U.S.C. §§ 1956(c)(7), 1961(1); see also 28 U.S.C. § 2461(c) (allowing forfeiture for any crime “for which the civil or criminal forfeiture of property is authorized”). Whether the proceeds subject to forfeiture include all property obtained from the offense or whether the proceeds subject to forfeiture are limited to the net gain or profit depends on whether the conduct involves “illegal goods, illegal services, [and] unlawful activities.” See 18 U.S.C. § 981(a)(2). “[E]mbezzlement, soliciting funds as part of a Ponzi scheme,” among other types of conduct, are “inherently unlawful.” United States v. Milton, 21 Cr. 478 (ER), 2024 WL 779210, at *3 (S.D.N.Y. Feb. 26, 2024) (citations omitted). For such “inherently unlawful” acts, the term “proceeds” is defined as “property of any kind obtained directly or indirectly, as the result of the commission of the offense giving rise to forfeiture, and any property traceable thereto, and is not limited to the net gain or profit realized from the offense.” 18 U.S.C. § 981(a)(2)(A). In other words, “[p]roceeds” are “property that a person would not have but for the criminal offense.” United States v. Daugerdas, No. 09 Cr. 581 (WHP), 2012 WL 5835203, at *2 (S.D.N.Y. Nov. 7, 2012) (quoting United States v. Grant, No. 05 Cr. 1192 (NRB), 2008 WL 4376365, at *2 n.1 (S.D.N.Y. Sept. 25, 2008)). There is a second basis for forfeiture, which does not involve proof that the funds are “proceeds.” Under 18 U.S.C. § 982(a)(1), for a money laundering “offense in violation of section 1956,” a court “shall order that the person forfeit to the United States any property, real or personal, involved in such offense, or any property traceable to such property.” Besides seeking a personal money judgment, the Government can also seek forfeiture of specific property. The Court “must determine whether the government has established the requisite nexus between the property and the offense.” Fed. R. Crim. P. 32.2(b)(1)(A). The applicable law to determine if the requisite nexus is shown is the same as the underlying forfeiture law: here, 18 U.S.C. § 981(a)(1)(C) and 18 U.S.C. § 982(a)(1). See, e.g., Capoccia, 503 F.3d at 115. Once again, to determine whether specific property is forfeitable, the court may consider “evidence already in the record,” or “any additional evidence or information submitted by the parties and accepted by the court as relevant and reliable.” If forfeiture of specific property is contested, the court must conduct a hearing. Fed. R. Crim. P. 32.2(b)(1)(A). Continue Reading . Here About HackerNoon Legal PDF Series: We bring you the most important technical and insightful public domain court case filings. This court case retrieved on March 15, 2024, from is part of the public domain. The court-created documents are works of the federal government, and under copyright law, are automatically placed in the public domain and may be shared without legal restriction. storage.courtlistener

Exploring the Legal Basis for Criminal Forfeiture

This is an introductory article explaining the basic intuition, mathematical idea & scope of radial basis functions in the development of predictive machine learning models. Table of Contents Introduction Basic intuition of a Radial Basis Function Types of Radial Basis Function The concept of the RBF Network Scope & Advantages of RBF Conclusion References Introduction In machine learning, problem-solving based on hyperplane-based algorithms heavily depends upon the distribution of the data points in the space. However, it is a known fact that real-world data rarely follows theoretical assumptions. There are a lot of transformation functions that can convert the natural shape of the data points into theoretically recommended distributions persevering the hidden patterns of the data. Radial Basis is one such renowned function which is discussed in a lot of machine learning textbooks. In this article, we will learn about basic intuition, types and usage of the Radial basis function. The Basic Intuition of a Radial Basis Function The radial basis function is a mathematical function that takes a real-valued input and outputs a real-valued output based on the distance between the input value projected in space from an imaginary fixed point placed elsewhere. This function is popularly used in many machine learning and deep learning algorithms such as Support Vector Machines, Artificial Neural Networks, etc. Let us understand the concept and the usage of this mathematical function. In real-time, whenever we solve complex machine learning problems using algorithms such as SVM, we need to project all of our data points in an imaginary multidimensional space where each feature will be a dimension. Let's assume we have a classification problem to predict whether a student will pass or fail the examination. We have the following features as independent variables: Marks in internal exams Marks in projects Attendance percentage So, these 3 independent variables become 3 dimensions of a space like this- Let’s consider that our data points look like this where- The green colour represents the students who passed the examination The red colour represents the students who failed the examination Now, SVM will create a hyperplane that travels through these 3 dimensions in order to differentiate the failed and passed students- So, technically now the model understands that every data points which falls on one side of the hyperplane belong to the students who passed the exams and vice versa. In our example, it was easy to create the hyperplane because a linear and straight hyperplane was enough to discriminate the 2 categories. But in real-time complex projects, these relations may get violated in many scenarios. Especially when you have hundreds of independent variables, there is no possibility of getting a linear relationship between data points such that it will be difficult to create an optimal hyperplane. In such scenarios, researchers usually apply the Radial basis function to each of the data points so that they will be able to pass a linear hyperplane across the data points to easily solve the problem. Consider that our data points are looking like this in the space- It is clear that we cannot use a linear hyperplane such that it can group the data points according to their classes. RBF will help us in these kinds of scenarios. Some researchers will usually project these data points in much higher dimensions so that the distance between the data points will be increasing so that they can apply some function (RBF or any other function) to build a hyperplane. But it is not necessary to build high dimensions since it is always the decision of the statistician/researcher who understands the patterns in the data. Next, we have to mark an imaginary point in the space like this wherever we need. After that, we need to draw some concentric circles based on this imaginary point. The distance between the centre and any data point positioned in the boundary of the circle is called the radius. After calculating the radius, we need to pass this value inside a mathematical function (RBF) that will return a real value. The returned value will be the transformed magnitude of a particular data point used for further proceedings. Types of Radial Basis Functions There are multiple types of radial basis functions. Each of them will transform the input value in a different way. Some of them are- Radial Basis Function Multiquadratic Where, r is the radius ε is a constant The function will look like this with respect to time, Radial Basis Function Inverse Multiquadric Where, r is the radius ε is a constant Radial Basis Function Gaussian Where, r is the radius ε is a constant I will explain intuitively what these functions will do intuitively in the space. There are 2 different processes that are done by these functions- Expanding the data points across the horizontal direction Compressing the data points across the vertical direction The process of expansion will visually somewhat look like this- The process of compression will visually somewhat look like this- After the expansion and compression, the data points would have been transformed like this- Now, we can easily construct a linear hyperplane that can classify the data points like this- The Concept of the RBF Network Sometimes, RBF is also used along with artificial neural networks with one hidden layer. In such types of networks, RBF will be used as activation functions in the hidden layers. Apart from the hidden layer, there will be an input layer that contains several neurons where each one of them represents a feature variable and the output layer will be having a weighted sum of outputs from the hidden layer to form the network outputs. Such networks are called RBF networks. Scope & Advantages of RBF With the help of the RBF function, it is possible to solve the problems in datasets that have complex non-linear distributions. RBF function has a strong tolerance to input noise In RBF neural network, there will be only one hidden layer which is very easy to handle. Hidden patterns in the distribution can be generalized better after applying the RBF function. In RBF neural network,  we can easily interpret what is the meaning/function of each node in the hidden layer of the RBNN. This is difficult in Multi-layer perception. Some of the hyperparameters present in Multi-layer perceptron such as the number of nodes in the hidden layer, number of hidden layers etc. are difficult to optimise. But these are not found in RBF neural networks. Conclusion In this article, we discussed one of the most useful transformation functions in machine learning. I have tried to explain this complicated concept without many in-depth mathematical calculations in a lucid manner targeting beginners in the AIML learning space. This function is available as an inbuilt library in most data science-oriented programming languages such as Python or R. Hence, it is easy to implement this once you understand the theoretical intuition. I have added the links to some of the advanced materials in the references section where you can deep dive into the complex calculations if you are interested. References Radial Basis Functions - Wikipedia 2014-04-23 at the Radial Basis Function networks Archived Wayback Machine Broomhead, David H.; Lowe, David (1988). (PDF). . : 321–355. Archived from (PDF) on 2014-07-14. "Multivariable Functional Interpolation and Adaptive Networks" Complex Systems 2 the original (1977). "Restart procedures for the conjugate gradient method". . (1): 241–254. : . . Michael J. D. Powell Mathematical Programming 12 doi 10.1007/bf01593790 S2CID 9500591 Sahin, Ferat (1997). (M.Sc.). . p. 26. : . Radial basis functions were first introduced by Powell to solve the real multivariate interpolation problem. A Radial Basis Function Approach to a Color Image Classification Problem in a Real-Time Industrial Application Virginia Tech hdl 10919/36847

Radial Basis Functions: Types, Advantages, and Use Cases

Funciones de base radial: tipos, ventajas y casos de uso

Fonctions de base radiales : types, avantages et cas d'utilisation

रेडियल बेसिस फ़ंक्शंस: प्रकार, लाभ और उपयोग के मामले

放射基底関数: タイプ、利点、および使用例

Funções de base radial: tipos, vantagens e casos de uso

Các chức năng cơ sở xuyên tâm: Loại, Ưu điểm và Trường hợp sử dụng

径向基函数：类型、优点和用例

What is Happening? The DeFi version of tokenized stocks which reflect AMZN stock on the crypto market, has long been influenced by the stock market, but Amazon’s move of the stock directly affects these DeFi tokenized stocks. Each existing share of AMZN stock is divided into 20 separate units as part of the 20 for one stock split which became effective on June 6. This provides new investors with additional investment options because, before the split, most small buyers couldn’t afford to buy Amazon stock. splitting The dAMZN, the tokenized version of the DeFi stock, split similarly to the AMZN stock mirroring its market movement and change in fundamentals. The dAMZN tokens are minted and traded on DeFiChain, which tracks the price of Amazon shares but does not have ownership of the underlying stocks. With the use of oracle feeds and other DeFiChain features, the dAMZN attempts to imitate the price movements of real-world stocks by mirroring the market movement through the feeding of live data. Due to this, buyers will have the identical amount of dAMZN they had before the split since DeFiChain will refresh the price from the oracles based on the input received ~ talk about the future of finance! What is DeFi Chain? DeFiChain is a decentralized blockchain-based platform dedicated to enabling decentralized financial services that are efficient, efficient, and transparent by building technologically, providing unparalleled high transaction throughput and reduced risk of errors.  The ultimate purpose of this project is to provide the infrastructure based on the Bitcoin network with complete DeFi capabilities with a focus on scaling. Every few blocks, the network anchors to the Bitcoin blockchain (through Merkle root) and uses a hybrid Proof of Stake/Proof of Work consensus process. to Messari, there are reduced smart contract flaws on DeFiChain since it is non-Turing complete, allowing transactions to move swiftly at minimal gas costs and reducing the chance of smart contract failures. According Why are Tokenized Stocks Important for the Future of Finance? Tokenized stocks or equities are the same as a share of equity in a publicly listed corporation, like equities on the Nasdaq or S&P 500, depending upon their underlying legal structure. Tokenized stocks are represented by digital tokens that reflect or mirror the price movement of the traditional stock in the market. Investors normally get their shares in their account through a brokerage after purchasing a standard stock on an exchange or in an initial public offering (IPO). It’s the same approach for tokenized stocks, where the tokenized stocks can be exchanged on a cryptocurrency market as they are issued and traded on the blockchain. The process of generating a tokenized stock generally involves a custodian and an investment or brokerage institution. The custodian receives the underlying stock, which the institution purchases and deposits. Tokens are created on a blockchain, based on the custodian’s reserves based on the amount of the shares held by the custodian. Tokenized stocks can then be listed on a cryptocurrency exchange, where they can be purchased and sold just like any other kind of cryptocurrency. It is almost like owning the underlying stock, with dividends being paid out in some cases depending upon the type of tokenized stocks. Tokenized stocks are revolutionary in nature as the token transactions can be settled in a couple of minutes, whereas the settlement of regular stock is based on T+2 settlement. Further, tokenized stocks provide exposure to US financial markets to crypto and international investors who may not have any exposure to US securities due to regulations or jurisdictional constraints. Understanding Why Crypto Investors Should Care About DeFi-based Tokenized Stocks One of the reasons why dAMZN and other DeFiChain-based tokenized stocks are seeing adoption is because the typical investing method does not provide exposure to the stock market to crypto investors if the investor does not liquidate their position to buy that particular stock. Further, tokenized stocks have lesser compliance hassle in contrast to traditional securities, with a long processing time and compliances, making the process slow and cumbersome. Furthermore, many investors cannot invest in their favourite US equities due to regional limitations, trading restraints and local regulations. These traders and investors now have global price exposure to these assets via DeFiChain’s dTokens (tokenized stocks). For example, the tokenized stock of Twitter, the social media firm, a mirror of TWTR, over the previous three months, the token’s price has fluctuated between $41.23 and $67.77, in line with the market trends in the traditional financial markets giving exposure to crypto investors on the Elon musk bid to buy Twitter. Final Thoughts on Splitting of Tokenized Amazon Stock Tokenized stocks are novel instruments which, in my opinion, serve a larger purpose of providing exposure to US-based stocks to international investors because, in various jurisdictions, it is difficult to buy and hold US-based technology stocks directly. Gaining exposure to US tech companies via tokenized stocks is an excellent tool for investors who can invest and trade such instruments without liquidating their crypto assets portfolio to fiat. Don’t forget to like and share the story! Image credits: , , and ANIRUDH. Christian Wiediger Meriç Dağlı Aditya Vyas

Tokenized Stock Representing Amazon on DeFiChain Splits on a 20-for-1 Basis 

The pursuit of calculating cost basis for cryptocurrency is one that has been hindered by obstacles from three separate external factors; a gap in guidance for crypto regulation; a lack of legally approved best practices for crypto accounting and taxation; and smart technology to automate and increase accuracy and remove human error out of cost basis results. To help the crypto community, tax professionals and to keep the world informed on how to calculate cryptocurrency cost basis, here are the most important questions and answers that crypto owners must know. What is the difference between traditional and crypto cost basis? Cost basis is a traditional accounting term that refers to the purchase price + fees + other associated purchase costs. The core of “basis” is the same for cryptocurrency cost as it is for traditional cost basis for calculating gains & losses. Essentially, anyone and everyone that makes a profit is expected to pay annual taxes on capital gains. Traditionally, when calculating gains and losses, professionals will rely on general ledger software such as Quickbooks, accompanied by spreadsheets, calculators and lots of manual data entry and calculations. Additionally, traditional cost basis has clear regulations for tax obligations and compliance, while also having a more understandable financial ecosystem. This makes calculations more simple and predictable to calculate. To describe crypto cost basis more easily, if Jack purchased a Bitcoin in 2015 for , the basis on that Bitcoin is . If Jack sold his Bitcoin one-year later for , he would owe taxes based on his gains of . (Fees & other difficult factors are removed for this example) $400 $400 $2000 $1600 Jack’s Original Purchase 2015:	$400 Jack’s Basis with Fees 2016: 	        $400 Jack’s Sale Price of Bitcoin:	        $2000 Jack’s Taxable Gains:		        $1600 For calculating cryptocurrency cost basis, the process becomes far more complex. There are thousands of different types of cryptocurrencies that operate in different ways. Crypto also contains far more variables such as gas fees for fueling transactions within a crypto network, exchange or transfer fees, mining profits, soft and hard forks, airdrops and dozens of intricate taxable nuances. It's simple to see that crypto can be far more perplexing. Why is cost basis important to me? Cost basis is used to calculate a company or investors total gains or losses on an annual basis, usually for auditing or tax purposes. In the U.S, the government requests and requires all holders of cryptocurrencies to disclose their entire financial portfolio and have it reported annually for capital gain taxes. For the IRS to properly audit and assess an investor or businesses financials, they will require a complete overview of asset and transaction history to understand how much or how little a company or individual earned in crypto annually, By effectively and accurately reporting cryptocurrency holdings, gains or losses, in adherence to the tax obligations issued by the IRS, cryptocurrency investors that report their earnings not only remain legally safe, but can also see exemptions and other possible benefits of reporting promptly and properly. What happens if I don’t calculate or report my crypto cost basis? While the regulation and legal framework are still being built, the consequences of neglecting to disclose a complete history of a digital asset portfolio can be punished by the federal tax arm of the government, the Internal Revenue Service. It is essential for cryptocurrency owners, investors, businesses and any operations that transacts with crypto to report and pay their annual taxation requirements. New tax forms now officially include sections to disclose your cryptocurrency earnings for the year. While the issue of disclosing personal crypto portfolio information has been disputed by many in the crypto community, this is an official law approved by the American federal government, making it unequivocally legal and enforceable. There is destined to be edge cases where no legal framework exists, such as if an exchange is defunct and investors lost access to their transaction history. Every case is different, but reporting honestly and proactively, as well as staying informed is the best way to stay on the right side of the law. How do I calculate my crypto cost basis? Calculating cost basis for crypto is exceptionally difficult due to the secure nature and wild web of complex transactions and taxable financial events. is by noting down all wallets, exchanges, accounts and portfolios to ensure investors have the full picture of their crypto portfolio. The best place to start Investors and businesses alike may rely on third party accounting services to help calculate crypto cost basis, while small investors will look for software and more feasible solutions. It is not recommended to manually calculate cost basis due to the extreme complexities of transaction activity and the behavior of the ecosystem. Moreover, calculating gains and losses on 100 transactions manually can take hundreds of hours, pouring over spreadsheets, documents and hoping for an accurate result. Unless your are a well-trained finance professionals, leveraging technology, or accounting firms is usually the safest best for investors and businesses. Are there tools to help me calculate my crypto gains and losses? For investors and businesses of any size, there are of calculating cryptocurrency gains and losses easily. Blox, a leading platform for crypto accounting, tax and asset management has developed the industry’s first automated and accurate technological solutions capable cryptocurrency cost basis tool. Other software of startups such as TokenTax exist with the goal of helping crypto businesses and investors with the day-to-day and back office software solutions for managing their crypto or calculating gains and losses. Tech and software can work together to help keep investors and professionals more organized and connected to their crypto with full control and management of assets. It is always important to investigate the right platform for each business and individuals, and leveraging technology on a day-to-day basis. This will ultimately help to keep track, organize and prepare for tax season, auditing, financial accounting and other tax obligations. What is next for cost basis? The dominance of bitcoin, despite its epic price fluctuations, has made it more important than ever, to begin calculating gains and losses for investors, businesses and institutions. In the eyes of the IRS, anyone and everyone is entitled and liable to pay taxes on crypto earnings. The evolving landscape of crypto taxation is slowly changing everyday, and creating new rules and regulations for how to calculate gains and losses and navigate the financial world of cryptocurrencies. For businesses, they may already have an internal finance team, or hire external accounting firms to handle bookkeeping and taxation. But for small individual investors, they must rely on more localized and cost effective means for calculating cost basis. Regardless, businesses and investors of all shapes, sizes and networth are all governed by the same tax laws. ( : ) Disclaimer The Author is a co-Founder at Blox.io

Questions On Crypto Cost Basis That You Need to Ask

First and foremost I want to say that we have a ton of respect for the Basis team. We’ve always viewed them as one of the more intellectually impressive and credentialed teams in the stablecoin space and they have done more than most other groups to drive the conversation forward and advance the crypto industry as a whole. All this being said, while we understand that Basis felt that outside regulatory agencies made their plan untenable and less promising to investors than they originally intended, we feel that there are lessons to be learned and we are certainly trying hard to absorb them. We also understand how they might have came to the conclusion that they needed to fold up shop, but we disagree that the SEC’s guidance was somehow a “surprise”. As a company we have made many contrarian choices. One of the most difficult choices was to not pursue a token sale last spring. (We have actually spent a fair amount of time trying to figure out how Basis was navigating securities laws). While we are committed to eventually going algorithmic if the market will eventually support that, we weren’t comfortable with how vulnerable any non fiat-collateralized system at this point in time or their ability to effectively compete for liquidity. On a very high level for Basis’s system to remain robust, Baseshares needs to trade at a very healthy price. The system’s ability to survive drops in demands correlates to the liquidity of the bond market. The bonds would never be traded at a premium over shares as shares have no upside cap (there is a scenario in which the payout order on the bonds could command a premium but this would only happen when the system was exposed to existential risk). The pricing of Baseshares depends entirely on aggregated expected demand for the stablecoin discounted based on both system confidence and capital lock up costs. Consequentially the systems robustness was tied directly to the pricing of Baseshares. The the lower the price, the higher the probability of total collapse. Having close a billion dollar valuation likely would have lead to a substantial sell off on launch which would have further reduced partner and investor confidence. Most investors are chosen based off their ability to support projects and poor performance on launch would significantly reduce supporters willingness to help drive adoption. Like most networks, the challenge is getting it to scale. Being dubbed a security, having credible competitors, and the market contraction substantially increase the risk of the system failing to achieve enough scale to become robust. Basis failed at least in part because of their inability to effectively navigate evolving market conditions. We laud the humility demonstrated by the Basis team through their decision to return investor funds. We strongly encourage other projects in the space that raised with tokens to assess the viability of their respective visions, and, if it makes sense, follow in Basis’s footsteps. We fully expect the SEC to continue to pursue groups that sold unregistered securities and believe good faith actions on the behalf of projects is the best way to navigate this risk.

Our thoughts on the Demise of Basis

Reserve’s Analysis of the Basis Protocol

Looking to Provide the Stability Crypto Needs You may not have heard of the year-old startup known as . But the company based out of Hoboken, New Jersey has roared out of the ICO gates and raised over $133 million in the past year to go toward creating a new stablecoin for the masses. The token (formerly known as Basecoin) is a that is programmed to maintain its value closely to the value of one US dollar at all times. Basis works to solve this problem. We at the investing platform, , recently spoke with them to better understand their intended and expected purpose for the future of cryptocurrency. The Basis team explains, Basis cryptocurrency stablecoin In cryptocurrency, it is not always a practical or available option to simply trade Bitcoin for dollars and vice versa. Level “Cryptocurrencies have been too volatile for mainstream use. Loans, salaries, and other basic financial contracts are poorly served by volatile currency.” The soon to be public non-collateralized stable token, founded by , utilizes an algorithmic bank embedded in its code. This algorithm sets out to: Nader Al-Naji Buy back Basis tokens when demand falls in order to shrink its supply Sell off Basis tokens when demand rises in order to inflate its supply By doing both of the above, the algorithm can optimally maintain that one Basis token is equal to one US dollar at all times. Although Basis will peg itself to the US dollar, it has plans to peg to a consumer price index once mass adoption is achieved and it is (hopefully) being regularly used to make real life purchases of goods and services. In a discussion with Josh Chen, a co-founder at Basis, he stated, “Basis is designed to offer a fully-decentralized, counterparty-free system to users, independent from any centralized source of value in the long term. has shown that users find real value in the safety of a decentralized cryptocurrency. We think users will find similar value in Basis, but with added stability regulated by its algorithmic central bank.” Bitcoin Founder Nader Al-Naji, a former Bitcoin miner during the early years of cryptocurrency in 2012, has received tremendous backing for his revolutionary idea to create a coin that algorithmically adjusts its own supply as needed. The coin is intriguing not only for its uniqueness among other stablecoins, but also for its designed purpose of being a consistent force in such a volatile market. To give an idea of the excitement surrounding Basis, a large chunk of their money raised came from the likes of GV (previously known as Google Ventures), Bain Capital Ventures, fed reserve governor Kevin Warsh, and Lightspeed Venture Partners. Investors know there is a major market opportunity for a coin like Basis, which offers a stable store of value in an otherwise heavily turbulent field. According to the , Basis website “Basis is designed to maintain a stable value and serve as a medium of exchange accessible to anyone with an internet connection.” Theoretically, this means that the only thing separating it from that green paper money sitting in your wallet is having an active connection to the world wide web. If the coin actually establishes itself as a relied upon currency that can be used without significant fluctuations from its intended value, then this will be a big deal for the future and mainstream usage of cryptocurrency as a whole. With one Basis coin equalling one US dollar, it has the potential to be used as an alternative to purchase goods and services. Trust Issues The designed purpose of Basis (pegging its value to the dollar) is the same as other already existing popular stablecoins like Tether (USDT) and True USD (TUSD). These coins have been circulating through exchanges as relatively easy ways to convert one’s Bitcoin or other altcoin holdings into something stable while circumventing FIAT central banks. However, there has been a lack of proof in fund backing for USDT, as well as slightly wavering values that stray away from the dollar in both coins’ histories. As a result, exchanges have seen many traders avoid these coins as options to stabilize their portfolios. There has instead been an increased demand for regular USD trading pair options on popular trading sites. But is this really what is best for the future of cryptocurrency? Cryptocurrency may eventually rest on the viability of stablecoins like Basis. This lack of trust in the relatively new existence of stablecoins is precisely what is holding back cryptocurrency from separating itself from the Federal Reserve and central banks as a viable alternative to traditional currency. The struggles and controversies other stablecoins like Tether (USDT) have experienced in trying to make a name for themselves have if they can accomplish what they hope to do. And if Basis does succeed, it will be a concern for the Federal Reserve’s monetary policy. opened up the door for Basis to become the first reliable dollar-pegged coin Andrea O’Sullivan, an analyst at CoinCenter, points out that there is: “fear that if cryptocurrencies are adopted on a wide enough scale, it could have a negative externality, or spillover effect, on the economy as a whole in the form of monetary instability.” goes on to explain that $100 billion of Bitcoin’s market cap only accounts for 1.3% of the world’s actual hard Fiat currency. Therefore, it is fairly unlikely that Bitcoin or another cryptocurrency coin actually makes a dent in the US dollar, Euro, or another major currency any time soon. However, 1.3% is not nothing. And as more people eventually adopt crypto as a means for making legitimate transactions, there will come a time where the Fed will need to actually take Bitcoin and others seriously. Stablecoins such as Basis could be the ones to eventually stir the pot, as their coinciding values with the dollar will give it appeal as a direct alternative. Her article Threat to the Fed It will be very intriguing to see how Basis will coincide and interact with the Federal Reserve’s monetary policy. The Fed currently manages its monetary policy based on the economy’s need to achieve stable prices in the dollar. They can contract their policies when unemployment is too low, and they can conversely expand monetary policy when interest rates are high and economic growth is needed. However, they often These decisions are made and announced on a quarterly basis through press conferences that do not always include all details in how they came to their conclusions. lack transparency in their decision making and there is significant lag time in their decision making. Basis and other stablecoins, on the other hand, adjust to its demand virtually immediately. And with the assumption that they will live up to the transparency they promise, it may ultimately force the Fed to be much more accountable and transparent with their actions. A truly decentralized stable currency will either: Be taken as a legitimate threat by the Fed. They can address their own monetary policies to become more honest, proactive, and fair in dealing with public and economic needs. Be ignored and scoffed at as a non-serious threat. The Fed can shrug their shoulders at the presence of the decentralized alternatives that are offered to users. This may backfire if stablecoins like Basis enjoy mass adoption and become a more intriguing and trustworthy option for Americans. Randal Quarles, who is a vice chair for the Federal Reserve, made national headlines when he addressed the threat that digital assets were posing to the Fed in the midst of the crypto boom on November 30, 2017. During , he went over the threat of cryptocurrency overall to their reserve banking system. He stated, his speech “While these digital currencies may not pose major concerns at their current levels of use, more serious financial stability issues may result if they achieve wide-scale usage.” Quarles and the Fed understand that under the currently stable economic conditions the US is in, there is not a great deal of fear that people will abandon the dollar. However, the Fed also understands that if the economy begins to slip into another recession or crisis situation, Once people find an alternate space they can trust to store their funds, it may self-perpetuate the dollar’s demise. the existence of an attractive space like cryptocurrency (and particularly stablecoins) will make it that much harder for the dollar and economic state to recover. Many suggestions have been tossed around regarding how the Fed may be able to address the threat of cryptocurrency diluting the need for mainstream currency. One suggestion is for the Fed to actually develop its own cryptocurrency, theoretically known as a “FedCoin”. Kevin Warsh, a former U.S. Fed Reserve governor, believes there could be merit to conduct monetary policy after the next U.S. crash. Their own cryptocurrency would hypothetically allow them to hedge themselves in case of crisis, and with the assumption that a growing number of the population continues adopting cryptocurrencies. However, this has not seemed to garner much serious consideration with others currently within the Fed. to the notion of the hypothetical Federal Reserve run cryptoasset idea by stating, Quarles responded “I am particularly concerned that a central-bank-issued digital currency that’s held widely around the globe could be the subject of serious cyberattacks and could be widely used in money laundering and terrorist financing,” This would certainly be a real concern, as the creation of this coin, which would be intended as a safety precaution for crisis, could have real potential of causing more harm for the Fed than good. There is a risk of the Fed’s version of a crypto token being completely counterintuitive to what they are trying to accomplish, thus there is not a strong push for it currently. Creating a “FedCoin” does open up the risk of their currency being used for immoral purposes. So how does the threat of cryptocurrency to the Fed relate specifically to Basis? Well, a coin that can function off of its own centralized bank can efficiently do everything that the Fed can with its flawed, often criticized monetary policies. And if Basis can improve upon this and allow for more precise levers to dictate the purchasing power the US and other countries have, and doing so through the inclusion of their own real-time central bank that is sustainable, there will be less and less need for the Fed and central banks to dominate the decisions pertaining to when our economy is supposed to “heat up” and “cool down”. Probably the most obvious reason that Bitcoin is not currently taken seriously as a threat to the Fed’s monetary policies is because it is just far too volatile. But a coin that intends to be the same value as the Fed’s dollar and has its own policies? That can and should be taken a bit more seriously. Shifting Away From Traditional Currency Al-Naji and the Basis team believe they can actually replace fiat currency for every day purchases of goods and services. He has recently stated, “I think the fact that the value is stable and not expected to appreciate really solves almost a perverse incentive with spending it that makes it much more useful as a medium of exchange.” Indeed, the large swings in Bitcoin and other tokens often dissuade users from utilizing them as actual currencies for making transactions. Basis can solve this problem and become a pioneer for mainstream crypto adoption as a regular mean of exchange for goods and services for the first time. If this is accomplished, it would be a savior for many coins that have great, real world use cases, yet are struggling due to the lack of mass adoption they covet. The team behind the token truly believe a coin can be created to emulate and accomplish the same goals as the Federal Reserve. According to their , Basis blog “Central banks apply monetary policy to mitigate currency volatility. Until now, there’s been no way to create a cryptocurrency with comparable benefits. And no way for cryptocurrencies to become true currencies.” With a coin that does not have the looming threat of major volatility that Bitcoin and others coins have, or the delayed, often inaccurate monetary needed adjustments that are implemented by the Fed a handful of times a year at most, we may have a currency that meets the standard of what we hope a currency can be. Even if it does not become a household name or a commonly used coin for real-world transactions, Basis can at least accomplish the task of raising the bar for the Fed and forcing them to improve upon the policies they currently have in place. When even a small percentage of people are aware of better alternatives like Basis and other stablecoins, central banks will wake up and rise to the occasion with the threat of having their monopolization on monetary policy usurped from them. I write in depth cryptocurrency analysis at Level , the passive investing tool for crypto. See what we’re doing at Lvl.co and see our other analysis at our magazine . If you love what you see, give this article 50 claps! If you hate it, show your displeasure with 49. This article and related content is for informational purposes only. It should not be considered investment advice, and you should consult a financial advisor and do your own research and due diligence prior to making any investments. Where securities or commodities are referenced, it is only for illustrative purposes only, and does not imply any position on securities or commodities classification. To the extent that Level services are offered or discussed, those services are available only for Level whitelisted assets only.

Cryptocurrency’s New Stablecoin On the Block — Basis

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Table of Links Abstract and 1. Introduction Key Concepts
2.1 Append-Only Log and 2.2 Virtual Machine State
2.3 Transactions As Curried Functions
2.4 Natural Names of State
2.5 Ground Truth
2.6 Efficient Representations of State
2.7 Checkpoints
2.8 Execution Parameters: callData
2.9 Execution Ordering
2.10 Deciding on the Correct State


Ideal Layer 2 Design
3.1 VM Job Queue and Transaction Order Finality
3.2 Data Availability and Garbage Collection
3.3 State Finality
3.4 Checkpoint Finality


Conclusion and References A. Discrepancy Detection Security Parameters 2.8 Execution Parameters: callData When we name states via transaction order, it is a “natural” name as a sequence of state-transformation functions as applied to the genesis or a checkpoint state. The state-transformations must be fully specified, i.e., the transaction data (callData) are function parameters to the transaction call that, when curried, allow us to view the transaction as state transforms. In order for the commitment of transactions to make sense, it must include all callData for the state to be computed. This is a data availability requirement. Transactions (their callData) does not have to be directly in the blocks, though that is the simplest design choice. If a highly available data repository, i.e., a data availability layer (e.g., IPFS [3]), can be used, then lists of transactions can be stored there and the on-chain data can simply be the name by which the transaction list can be obtained. Here, feasibility must include some notion of verifying data availability, e.g., signatures from a quorum of availability providers. It is not enough to use a simple content-addressable storage (CAS) without availability guarantees, since otherwise we face the following dilemma when an adversary computes the CAS name without actually making the data available. In such a scenario, we either sacrifice liveness, having to wait indefinitely for the callData to become available, or try to use timeouts and treat unavailable callData as implicit aborted transactions and move on. This latter choice sacrifices finality: a user can nullify their transactions after the transaction’s execution order has been decided—by making their callData unavailable— if the user decides that the execution order is not to their advantage, so until state finality has been reached, transaction order finality does not uniquely specify a resultant state. Note that Ethereum’s stateRoot has a symmetric CAS availability problem. The state output from a transaction is needed as input to the next transaction, and a lack of availability here means that the new state’s representation cannot be easily computed, destroying liveness.[4] 2.9 Execution Ordering Execution ordering can be quite important, since any given two state transforming functions might not commute with each other. The notion of “front running” is not new with blockchains but has been unethically (and illegally) practiced in stock and commodities markets [12]. Front-running uses the ability to influence execution ordering results, where additional orders are injected in front of (and often also behind) orders that may move the market. For example, if Trey submits a transaction g to buy a large amount of some commodity, it is likely to cause a price increase (“move the market”). If Fanny knew about his order and can inject in a pair of transactions to sandwich his: the net is a pseudo-conjugate transaction g’ = f; g; f∗ , where f denotes a transaction to buy the same commodity at market price, and f ∗ denotes a “pseudo-inverse” transaction to sell the same amount, at what will be a higher market price, to exit the market and reap profits.[5] In Bitcoin, Ethereum, and most layer 2 rollup designs, the (layer 1) miners choose transactions from a mempool of proposed transactions and can choose and order transactions within the new block in any order that they want. Ideally, transactions that offer approximately the same gas fees should perhaps be handled on a first-come, first-serve basis, with the order decided based on approximate timestamps. Standard Bitcoin, Ethereum, and rollup designs are all vulnerable to order conjugation, though there are research on ways to maintain fair ordering for some definition of fairness [9, 13, 4]. How to decide on an execution ordering is a largely orthogonal design decision. The scheme used in Bitcoin and Ethereum (v1) is leaderless and probabilistic, since miners can independently choose the transactions to include in the blocks they mine. For L2 rollups with decoupled ordering and state value determination, the transaction order can be determined in many ways: (1) as a “null hypothesis”, in L1 submission order (susceptible to L1 front running); (2) via trusted off-chain schedulers that (fairly) order batches of transactions; (3) via trustless decentralized applications on other blockchains that perform batch scheduling, using commit-reveal of transaction details to prevent biased ordering; etc. The potential design space is large, and exploring this is on-going research. Authors:
(1) Bennet Yee, Oasis Labs;
(2) Dawn Song, Oasis Labs;
(3) Patrick McCorry, Infura;
(4) Chris Buckland, Infura. This paper is available on arxiv under ATTRIBUTION 4.0 INTERNATIONAL license. [4] Obviously the input state can be reconstructed by transaction replay, but that is not efficient. Table of Links Abstract and 1. Introduction Abstract and 1. Introduction Key Concepts
2.1 Append-Only Log and 2.2 Virtual Machine State
2.3 Transactions As Curried Functions
2.4 Natural Names of State
2.5 Ground Truth
2.6 Efficient Representations of State
2.7 Checkpoints
2.8 Execution Parameters: callData
2.9 Execution Ordering
2.10 Deciding on the Correct State Ideal Layer 2 Design
3.1 VM Job Queue and Transaction Order Finality
3.2 Data Availability and Garbage Collection
3.3 State Finality
3.4 Checkpoint Finality Conclusion and References Key Concepts 2.1 Append-Only Log and 2.2 Virtual Machine State 2.3 Transactions As Curried Functions 2.4 Natural Names of State 2.5 Ground Truth 2.6 Efficient Representations of State 2.7 Checkpoints 2.8 Execution Parameters: callData 2.9 Execution Ordering 2.10 Deciding on the Correct State Key Concepts 2.1 Append-Only Log and 2.2 Virtual Machine State 2.1 Append-Only Log and 2.2 Virtual Machine State 2.3 Transactions As Curried Functions 2.3 Transactions As Curried Functions 2.4 Natural Names of State 2.4 Natural Names of State 2.5 Ground Truth 2.5 Ground Truth 2.6 Efficient Representations of State 2.6 Efficient Representations of State 2.7 Checkpoints 2.7 Checkpoints 2.8 Execution Parameters: callData 2.8 Execution Parameters: callData 2.9 Execution Ordering 2.9 Execution Ordering 2.10 Deciding on the Correct State 2.10 Deciding on the Correct State Ideal Layer 2 Design 3.1 VM Job Queue and Transaction Order Finality 3.2 Data Availability and Garbage Collection 3.3 State Finality 3.4 Checkpoint Finality Ideal Layer 2 Design Ideal Layer 2 Design 3.1 VM Job Queue and Transaction Order Finality 3.1 VM Job Queue and Transaction Order Finality 3.2 Data Availability and Garbage Collection 3.2 Data Availability and Garbage Collection 3.3 State Finality 3.3 State Finality 3.4 Checkpoint Finality 3.4 Checkpoint Finality Conclusion and References Conclusion and References Conclusion and References A. Discrepancy Detection Security Parameters A. Discrepancy Detection Security Parameters 2.8 Execution Parameters: callData When we name states via transaction order, it is a “natural” name as a sequence of state-transformation functions as applied to the genesis or a checkpoint state. The state-transformations must be fully specified, i.e., the transaction data (callData) are function parameters to the transaction call that, when curried, allow us to view the transaction as state transforms. In order for the commitment of transactions to make sense, it must include all callData for the state to be computed. This is a data availability requirement. Transactions (their callData) does not have to be directly in the blocks, though that is the simplest design choice. If a highly available data repository, i.e., a data availability layer (e.g., IPFS [3]), can be used, then lists of transactions can be stored there and the on-chain data can simply be the name by which the transaction list can be obtained. data availability data availability layer Here, feasibility must include some notion of verifying data availability, e.g., signatures from a quorum of availability providers. It is not enough to use a simple content-addressable storage (CAS) without availability guarantees, since otherwise we face the following dilemma when an adversary computes the CAS name without actually making the data available. In such a scenario, we either sacrifice liveness, having to wait indefinitely for the callData to become available, or try to use timeouts and treat unavailable callData as implicit aborted transactions and move on. This latter choice sacrifices finality: a user can nullify their transactions after the transaction’s execution order has been decided—by making their callData unavailable— if the user decides that the execution order is not to their advantage, so until state finality has been reached, transaction order finality does not uniquely specify a resultant state. Note that Ethereum’s stateRoot has a symmetric CAS availability problem. The state output from a transaction is needed as input to the next transaction, and a lack of availability here means that the new state’s representation cannot be easily computed, destroying liveness.[4] 2.9 Execution Ordering Execution ordering can be quite important, since any given two state transforming functions might not commute with each other. The notion of “front running” is not new with blockchains but has been unethically (and illegally) practiced in stock and commodities markets [12]. Front-running uses the ability to influence execution ordering results, where additional orders are injected in front of (and often also behind) orders that may move the market. For example, if Trey submits a transaction g to buy a large amount of some commodity, it is likely to cause a price increase (“move the market”). If Fanny knew about his order and can inject in a pair of transactions to sandwich his: the net is a pseudo-conjugate transaction g’ = f; g; f∗ , where f denotes a transaction to buy the same commodity at market price, and f ∗ denotes a “pseudo-inverse” transaction to sell the same amount, at what will be a higher market price, to exit the market and reap profits.[5] In Bitcoin, Ethereum, and most layer 2 rollup designs, the (layer 1) miners choose transactions from a mempool of proposed transactions and can choose and order transactions within the new block in any order that they want. g pseudo-conjugate transaction Ideally, transactions that offer approximately the same gas fees should perhaps be handled on a first-come, first-serve basis, with the order decided based on approximate timestamps. Standard Bitcoin, Ethereum, and rollup designs are all vulnerable to order conjugation, though there are research on ways to maintain fair ordering for some definition of fairness [9, 13, 4]. How to decide on an execution ordering is a largely orthogonal design decision. The scheme used in Bitcoin and Ethereum (v1) is leaderless and probabilistic, since miners can independently choose the transactions to include in the blocks they mine. For L2 rollups with decoupled ordering and state value determination, the transaction order can be determined in many ways: (1) as a “null hypothesis”, in L1 submission order (susceptible to L1 front running); (2) via trusted off-chain schedulers that (fairly) order batches of transactions; (3) via trustless decentralized applications on other blockchains that perform batch scheduling, using commit-reveal of transaction details to prevent biased ordering; etc. The potential design space is large, and exploring this is on-going research. Authors: (1) Bennet Yee, Oasis Labs; (2) Dawn Song, Oasis Labs; (3) Patrick McCorry, Infura; (4) Chris Buckland, Infura. Authors: Authors: (1) Bennet Yee, Oasis Labs; (2) Dawn Song, Oasis Labs; (3) Patrick McCorry, Infura; (4) Chris Buckland, Infura. This paper is available on arxiv under ATTRIBUTION 4.0 INTERNATIONAL license. This paper is available on arxiv under ATTRIBUTION 4.0 INTERNATIONAL license. available on arxiv available on arxiv [4] Obviously the input state can be reconstructed by transaction replay, but that is not efficient.

Understanding CallData in Blockchain Transaction Execution

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