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China’s DCEP Testing Limited to Small Scale Transactions, Report Says

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The People’s Bank of China (PBOC) has clarified the spreading rumors that the testing of its DCEP involves large cash transactions.

According to news reports, China’s apex bank, the People’s Bank of China (PBoC) has announced clarifications to curb the spreading rumors that the testing of its digital yuan (DCEP) involves a large amount of money.

The Global Times noted that there were rumors over the weekend that a housing transaction in Shenzhen, south China’s Guangdong Province, was conducted using the flagship Central Bank Digital Currency (CBDC) and that the transaction involves a large sum of money. Responding to the rumors which also alleges that the digital currency could not be converted into banks notes, the People’s Bank of China said that the trial phase is only focused on small retail transactions and has not yet expanded to scenarios that require large volume transactions.

The latter rumor was appropriately countered by an employee of the PBoC who confirmed that the DCEP is the same as yuan in legal tender and is a two-way convertible with banknotes at a rate of 1:1.

The Global Times also quoted Wang Peng, assistant professor of the Gaoling School of Artificial Intelligence at the Renmin University. The professor noted:

“At its current stage, the test’s primary goal is to ensure the digital currency’s operation runs smoothly and safe, and to determine how DCEP is distributed from the central bank to financial institutions. Only when trials in retailing are successful will they be carried out in large transaction scenarios.”

DCEP Testing Has Been Extensive

Earlier this month, Coinspeaker reported that China plans to extend the testing of its digital yuan to the nation’s recognized prosperous cities. The testing plans were made known by China’s Commerce Ministry and will see the government expand its pilot testing program of the DCEP to Beijing, and nearby Tianjin and Hebei province in the north; the Yangtze River Delta to the South; and, along China’s wealthy Southern coast, Guangdong province and the neighboring cities of Hong Kong and Macau.

According to the ministry, the less prosperous provinces with the prerequisite requirements will also develop a model to conduct the trials for the digital yuan in the coming days. Of the countries developing a Central Bank Digital Currency (CBDC), China is arguably ahead of the pack as the CBDC project entered its testing phases earlier in the year, which are being led by the People’s Bank of China.

China’s stride with respect to the advancement of its government back digital currency dates back to around 2016 and the project debuted its first testing earlier in the year amid the coronavirus pandemic in Shenzhen, Xiongan, Chengdu, and Suzhou, where the DCEP is being incorporated into such use cases including transportation, education, healthcare, and other consumer goods and services.

The transportation use case is been carried out in partnership with China’s Uber Didi while Meituan Dianping is helping the PBoC to test the DCEP using its food delivery system.

DCEP Project Perceived as a Threat

The digital Yuan or DCEP has been persistently seen as a threat amid the growing US-China economic tensions. Besides these two warring nations, other countries like Japan are motivated to fast track the development of their own CBDC in a bid to curtail any economic dominance that the DCEP may want to wield when it fully goes live.

Nonetheless, China aims to use the DCEP to steer a digital economy and a means to keep the yuan relevant in today’s age of growing digital currencies and tokens.

Altcoin News, Cryptocurrency news, FinTech News, News

Benjamin Godfrey is a blockchain enthusiast and journalists who relish writing about the real life applications of blockchain technology and innovations to drive general acceptance and worldwide integration of the emerging technology. His desires to educate people about cryptocurrencies inspires his contributions to renowned blockchain based media and sites. Benjamin Godfrey is a lover of sports and agriculture.



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Aave price hits two-month high on Wall Street’s DeFi adoption hopes

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Demand for Aave has boomed dramatically in the previous 24 hours as traders assessed its involvement in Bitwise Investment’s upcoming institutionally focused investment vehicle.

The San Francisco-based asset management firm announced Wednesday that it would invest directly in Aave to back its “Bitwise Aave Fund,” a fund created to build a bridge between accredited investors and the emerging decentralized finance (DeFi) sector.

“There is growing demand from financial advisors, hedge funds, institutions, and other professional investors for exposure to the fast-growing DeFi markets,” Matt Hougan, chief information officer of Bitwise, said in a press release, adding that the investment products would simplify access to DeFi markets for professional investors.

The announcement helped to send the bids for Aave higher across spot exchanges. As a result, the DeFi protocol token surged 9.90% to $333.84 and continued its upside momentum heading into the current session.

Aave eyes a clear bullish breakout above the triangle range. Source: TradingView

It established an intraday high of $372.71 on Thursday, a level it last approached on June 9.

Behind the demand

The latest bout of uptrend pushed Aave’s year-to-date gains a little over 320%, asserting its growth in the emerging DeFi sector. In detail, Aave enables users to earn interest rates on deposits and borrow assets with a stable or variable interest rate option.

The protocol also enables “flash loans,” wherein users can borrow funds for ultra-short durations without needing to provide collateral.

Meanwhile, the token Aave (formerly known as LEND) allows the community to govern the protocol’s ecosystem. In doing so, Aave holders can propose, vote and decide on new additions, features and assets to the protocol.

Additionally, a pre-programmed algorithm burns Aave based on the fees earned by the protocol, thereby ensuring that the token remains scarce in the long run.

As a result, the total value locked (TVL) inside the Aave reserve pools has climbed from $519.9 million to $11.2 billion year-over-year, per data provided by DappRadar. The total outstanding loans issued via Aave also have grown 70 times in the previous 12 months.

Aave TVL in the past 12 months. Source: DappRadar

Ty Young, a researcher at crypto data aggregator Messari, noted that investing in DeFi projects makes more sense for institutional investors than putting capital in Bitcoin (BTC), explaining that protocols like Aave “generate cash flow and have intrinsic value.”

“DeFi tokens’ cash-generating properties allow us to frame discussions about these assets’ worth using traditional valuation methods,” he added.

“As familiar frameworks gain traction and valuation standards coalesce, DeFi assets will gain greater appeal from financial institutions and investors.” 

Part of the reason is the dismissive returns on savings offered by the traditional sector.

Related: Finding the sweet spot: Traditional financial institutions ready for DeFi

According to Bankrate.com, the average interest rate on saving accounts in the United States is just 0.06%. Conversely, DeFi projects offer depositors annualized returns anywhere between 1% and 10% — and sometimes even higher — on U.S. dollar-backed stablecoins, such as Tether (USDT), Dai, USD Coin (USDC), etc.

What’s next for Aave?

A strong fundamental backdrop has pushed Aave to new highs, but its ability to continue its uptrend relies on a technical structure.

As spotted by PostXBT, a pseudonymous market analyst, AAVE/USD wants to break above a stern technical resistance level that constitutes an ascending triangle pattern. As long as the pair trades under the said price ceiling, it could face possibilities of a pullback.

Cointelegraph’s VORTECS™ Score also suggested a bullish outlook as price bounced off the $300 mark. The VORTECS™ Score is an algorithmic comparison of historical and current market conditions derived from a combination of data points, including market sentiment, trading volume, recent price movements and Twitter activity.

Aave price (white) vs VORTECS™ Score (green) chart. Source: Cointelegraph Markets Pro

As seen in the chart above, the VORTECS™ Score for Aave rebounded from 64 (orange) toward 80 (green) on Wednesday, suggesting that more upside is likely.

Aave’s price is currently around $350 at time of publishing.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.