November 30, 2022 • 50 mins
FTX is still making the headlines and the contagion continues to spread. Companies and projects across the industry are reeling and much of the talk is about which could be the next domino to fall. Welcome to crypto winter.
One project that many are concerned about is Solana, which was heavily backed by FTX and Alameda Research. SOL’s price has tumbled in the wake of FTX’s collapse as a result of this exposure, and the road ahead looks rocky. In the first part of today’s episode, you’ll hear a bit of background about Solana, as well as some significant developments it has undergone in recent months. You’ll also hear the details of its relationship with FTX and Alameda, as well as how the projects in its ecosystem are also under threat. Can Solana survive, or is the sun about to set on one of crypto’s biggest projects?
Next up, something a little different. There’s enough bad news floating around the cryptoverse at the moment, so let’s take a look at a fascinating geopolitical issue instead.
Africa is poised to become an economic powerhouse in the coming decades, thanks in large part to its high birth rate and abundance of natural resources. As populations across much of the rest of the world decline and grow steadily older, African nations are set to reap the benefits of having younger and more productive workforces. They’ll need them to get all those metals and minerals out of the ground.
Other nations are slowly waking up to this fact, but Western ones are lagging behind. China however is well aware of Africa’s potential and has invested heavily across the continent in recent years. As a result, Chinese power and influence have increased, making it arguably the pre-eminent foreign power across much of Africa.
But, as countries like Sri Lanka have found to their cost, Chinese money doesn’t necessarily come cheap. Defaulting on debts owed to the world’s second-largest economy can be ruinous and China hasn’t been shy of appropriating collateral in such situations. As African nations look to develop further in order to harness their future potential, is China the best business partner to have? Have a listen to our deep dive on this issue and see what you think.
We hope you enjoy the show.
Producer for iHeartMedia: Noel Brown
Editor: Semir Mutapcic
Theme music composed by: Noel Brown
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Transcript
Episode Transcript
Available transcripts are automatically generated. Complete accuracy is not guaranteed.
Speaker 1 (00:00):
Hello everyone, and welcome to the latest episode from the
midweek edition of the coin Bureau podcast. Every week, I
pick out two of my favorite videos from coin Bureau's
YouTube channel to present to you in podcast form. The
audio you're about to hear is from those videos I've
chosen this week, and I hope you enjoy listening. The
fallout from the collapse of f t X and Alameda
(00:20):
Research continues to dominate the crypto headlines and is likely
to do so for some time. There are well founded
concerns that the contagion from this disaster could spread to
other crypto companies and projects in due course. One project
that could be most at risk is Slana, thanks to
the fact that f t X and Alameda were its
(00:41):
biggest investors. Slana is, or rather was, f t x's
day facto exchange chain too. The project is therefore uncomfortably
exposed to the fallout, and Soul's price has already crashed
much harder than most other cryptos. It's not just Slana itself, though,
the projects in its ecosystem are also at risk, which
(01:03):
means a lot more pain is coming for them. For
Salana and for the crypto market as a whole. So
here's a breakdown of what Salana is all about, why
it's so threatened by ft x IS collapse, and why
there may still be hope for the future. Next up,
it's mercifully time to move away from crypto for a
while and look at something happening in the wider world.
(01:24):
Aging populations in the West and elsewhere mean that Africa
is projected to become increasingly influential in coming decades as
it reaps a demographic dividend from its higher birth rates
as well as young working age people. The continent is
also rich in other resources too, and as such is
attracting increasing amounts of investment from countries looking to capitalize
(01:46):
on its riches. One country has been more proactive than
any other in this regard, and that is China, which
has invested billions of dollars across Africa as part of
its Belt and Road initiative. An increasing amount of Africa's
infrastructure has been built using Chinese money, and naturally, China's
influence across the continent has grown with every railway laid
(02:07):
and airport terminal built. But as some nations have discovered
to their cost, Chinese money can come with some unpleasant
strings attached, and many are worried that the ultimate cost
of China's largesse may be greater than what many in
Africa bargained for. In the second part of today's episode,
you'll hear the story of China's own scramble for Africa,
(02:27):
how it's gone down with Africans themselves, and what the
future might hold. Thanks for listening to today's episode, and
there'll be more coming your way soon. And if you
want even more content from coin Bureau, be sure to
subscribe to our YouTube channels and visit us on social
media too. And one more thing. This year at the
coin Bureau, we're celebrating Black Friday with up to fifty
(02:51):
off items in our merch store. There's a link in
the description of the podcast, so please do check it
out and see if there's something you fancy. The collapse
(03:20):
of f t X and Alameda Research has done serious
damage to the crypto market, and it seems that Slana
was one of the most affected crypto projects. Now this
makes sense given that Salana was the day facto exchange
chain of f t X, and that both f t
X and Alameda were big investors and participants in Salana's ecosystem. Today,
(03:43):
I'm going to give you a quick recap of Salana,
tell you what's been going on with the project, and
examine whether Soul will survive the f t X Alameda meltdown.
I want to start with some transparency, and that's that
I no longer hold Soul as part of my crypto portfolio.
If you're subscribed to my weekly newsletter, you'll know that
(04:04):
Soul accounted for almost eight percent of my portfolio until
last weekend. Note that you can find the link to
my weekly newsletter in the description. Now, my decision to
sell Soul was based on many factors, including the current
state of the crypto market, but there is no denying
that the ft X Alameda situation was top of mind
(04:25):
for me. Now, I must also stress that this is
not financial advice. It's just my opinion, and you will
obviously have yours. That said, I will give both a
bearish and a bullish case for Salana in today's video.
That's because there does seem to be some hope for
Soul on the horizon. It just looks very far away
(04:49):
from where I'm standing. That's just my perspective, though, and
I would love to get yours in the comments section now.
As many of you will know, Slana was founded in
twenty seventeen by former Qualcom engineer and a Toty Yakovenko.
The Salana blockchain was built by Salana Labs, which is
based in the United States, and its ongoing development is
(05:11):
coordinated by the Salana Foundation, which is based in Switzerland.
Salana raised twenty five million dollars across various I c
o s between twenty eighteen and twenty, and raised an
additional three hundred and fourteen million dollars from crypto vcs
last year. F t X and Alameda Research were two
(05:32):
of the largest investors in Salana and were two of
the largest investors in Salana's ecosystem, that is, crypto projects
building on Salana. This is because Salana's original goal was
to become a decentralized alternative to centralize stock exchanges like
the NASDAK. Now this is a goal that f t
(05:53):
X and Alameda founder Sam Bankman Freed could get behind,
given that his endgame was also to displace the existing
institutions with his own infrastructure. Salana's main net went live
in twenty twenty and its blockchain is still technically in beta.
Recent comments by anatotally suggest that Salana may soon be
(06:16):
entering its alpha stage, which is surprising given that the
Salana blockchain continues to experience issues. More about all that
later on. Under the hood, the Salana blockchain uses a
novel proof of state consensus mechanism that time stamps transactions
using a technology called proof of history. This consensus mechanism
(06:38):
makes it possible for the Salana blockchain to process up
to sixty five thousand transactions per second. Until recently, the
Salana blockchain was secured by almost twenty two hundred validators.
Salana's validate account was just eighteen hundred and fifty when
ft X and Alameda collapsed. This suggests that f t
(06:59):
X and a meda we're running lots of Salana validators.
Note that Salana transactions are processed by clusters of up
to one hu fifty validators now. Soul is the native
cryptocurrency coin of the Salana blockchain. Like all cryptocurrency coins,
Soul is used to pay for transaction fees. Of every
(07:21):
transaction fee is burned, with the other half going to validators. Obviously,
Soul is also used for staking staking rewards are currently
around eight percent for both validators and delegators with a
five day lock up. There is no minimum stake for
validators or delegators, though the hardware requirements for running of
(07:41):
validator are very high. Misbehaving validators are also slashed. Staking
soul as a delegator can be easily done using the
Phantom Browser extension wallet, which also acts as a gateway
to Salana's ecosystem. The Phantom extension has been downloaded over
two million times on Chrome and dab Radar's data suggests
(08:05):
that Salana's DAPs have at least half a million monthly
active users. The focus of Slana's ecosystem was initially defy.
This was in large part due to f t X,
which had its own defied project called projects Serum. What's
crazy is that the order book based Serum decks lay
(08:25):
at the heart of Salana's entire defy ecosystem, providing liquidity
and pricing data to many other major DeFi protocols. To
my knowledge, most of Serum's liquidity came from f t
X and Lameter. Now, the massive draw down in the
total value locked in Salana's DeFi protocols following terrorist collapse
(08:46):
in May. Therefore, suggests that this is when ft X
and Alameda started to experience the issues that ultimately lead
to their collapse. You can learn more about the ft
X an Alameda situation using the in the description I
digress now. It's barely been three months since our last
covered Salana, but a lot has happened since then, and
(09:08):
not just stuff that's related to Alameda and f t X.
Shortly after our last update, a group of Salana projects
announced the creation of a cross chain messaging protocol. If
you watched our Cosmos update from around that time, you'll
know the announcement seems to have been a not so
subtle response to cosmos announcement about its upcoming interchain security.
(09:31):
To my mind, Salana's subsequent announcement underscored the multi chain
future of crypto. Institutional crypto custodian fire Blocks also announced
that it had added support for Salana DeFi protocols and
Salana n f t s in case you missed the memo,
Salana was becoming increasingly popular with institutions. This was in
(09:54):
large part due to Salana's close relationship with f t
X and Alameda. In early September, a crypto project called
Sui announced that it had raised three hundred million dollars
from various crypto vcs. Now this is significant because suey
has its roots in Facebook's failed digital currency project d
(10:15):
M a k A. Libra, just like Aptos, and Aptos
is considered by many to be a Salana killer. This
arguably makes Sue a Salana killer too. This is in
part because both Sue and Aptos are coded in Move,
a novel programming language developed by d MS developers. Move
(10:38):
is based on the Rust programming language used by Salana,
but is much more developer friendly, or so I've heard.
For those who don't know, Sue and Aptos are considered
to be Salana killers because they're all backed by the
same entities. Ft X Ventures was a big investor in
both Aptos and Sue, and aptos co founder Mohammed Shake
(11:00):
confirmed in an interview that the project was working very
closely with fd X. Fortunately for Slana, Aptoss and Sue's
exposure to ft X so early on in their development
could set them back quite a bit. Unfortunately for Slana,
it's even higher exposure to f t X could mean
(11:21):
that it will be the crypto project that picks the
shortest straw. More on that in a moment anyways. Another
Salana related announcement in early September came from coin base,
whose cloud division spun up archival notes for the Salana blockchain.
This is significant because Salana's full transaction history was only
(11:42):
being stored on Google Big Table, which made it quite centralized.
In mid September, sec chairman Gary Gensler said that proof
of state cryptocurrencies could be securities. Although Gary's comment was
likely about Ethereum's transition to proof of steak, Slana Labs
was recently accused of selling securities that is soul, which
(12:05):
could put it at risk. At the end of September,
the Helium community voted to migrate it's peer to peer
networks from the Helium blockchain to the Salana blockchain. This
is something we had predicted in one of our earlier
Salana updates. Were it not for the f t X
Alameda situation, this would have been bullish for h and However,
(12:28):
the ft X Alameda situation wherein has made Helium Salana
integration incredibly bearish for h n T, and not just
because it's a part of Salana's ecosystem. Back in February,
Helium raised two d million dollars in a funding round
co led by you guessed it, f t x Ventures.
(12:51):
At the end of September, Circle also announced that it
would be expanding its USDC stable coin to five additional
smart contract cryptocurrencies and introducing its own cross chain interoperability protocol.
Now this is evidence that Circle is moving away from Salana,
which is apparently the official chain for USDC. In early October,
(13:17):
the Salana blockchain experienced yet another outage. This time it
was due to a misconfigured validator node. For context, most
of Slana's outages have been due to spam transactions facilitated
by its block chains fixed transaction fees, which are extremely low.
In mid October, app toss announced its main net launch,
(13:39):
and if you watched our video about the project, you'll
know that the launch was pretty badly botched. It's still
boggles my mind that a project with so much funding
and backing managed to make so many mistakes, but hey,
let's not go there. At the end of October, a
crypto project called trip Protocol announced it would be creating
(13:59):
a decentralized alternative to right sharing apps like Uber built
on Salana Now, this is the kind of DAP that
could reach serious mass adoption, and it's such a damn
shame that it's been set back by recent events. In
early November, almost half of Salana's validators went offline after
(14:20):
a German cloud service provider called Hetzner banned all crypto
companies and projects from using its services. The huge impact
this had on the Salana blockchain raised even more questions
about Salana's supposed decentralization. Luckily, for Solana, this bearish news
was quickly overshadowed by all the bullish news that came
(14:43):
out of Salana's annual Breakpoint conference in Lisbon. The biggest
news was that Google Cloud had begun running a validator
on Salana, which logically means that Google had purchased lots
of soul. Google Cloud also announced that it had released
software too, in decks. Slana's transaction history, which your recall,
(15:03):
is being stored on Google Big Table. Now. This is
significant because Anatole had mentioned in earlier interviews that it
was extremely difficult for developers to analyze Salana's transaction history.
Helium also announced that it was building out a mobile
network and would be giving out simcards with a free
(15:23):
thirty day trial to everyone who purchased Salana's upcoming Saga phone.
Helium also recently partnered with telecoms Giant T Mobile to
increase five G coverage in rural areas, another great initiative
now under threat now. The announcement that everyone seemed to
miss was that Salana's Neon layer would be launching sometime
(15:46):
in December. If you've been keeping up with our Salana updates,
you'll know Neon supports the Ethereum Virtual Machine or e
v M. E v M compatibility could supercharge Salana's adoption.
As a cherry on top, Circle announced that it would
be bringing it's recently released eurostable coin to the Salana
(16:06):
blockchain next year, making Salana the second smart contract cryptocurrency
to support euroc after Ethereum. This suggests that Circle hasn't
given up on Salana just yet. And then f t
X and Alameda blew up. Not surprisingly, the price of
every single cryptocurrency that f t X and Alameda had
(16:28):
invested in instantly plummeted. As ft X is day facto
exchange chain, Soul was at the top of the list.
Souls price was only the tip of the Iceberg, However,
as its entire ecosystem also went into crisis mode, loans
were liquidated, wrapped tokens issued or backed by f t
(16:48):
X and Alameda d pegged. The total value locked in
Slana's DFI protocols fell off a cliff. The upgrade keys
for Project Serum and the Serum DECKX were revealed to
be in the hands of f t X, causing the
community to fork what was left of the protocol. Soul
holders also feared that nearly a billion dollars of Soul
(17:11):
set to be unlocked would be sold now. Their fears
were calmed after the Salana Foundation announced it would be
postponing the unlock of the thirty or so million Soul
once again, though calling Salana's decentralization into question. To add
insult to injury, Google Cloud announced that it will also
(17:31):
run validator notes for the ap toss blockchain, and that
it had partnered with the project for a developer accelerator program.
The timing couldn't have been worse given the circumstances. So
as you can see, Soul's price was holding up quite
well until the FTX Alameter situation. Now this is impressive
(17:52):
considering that Soul's supply has increased by around fifteen millions
since August. Assuming an average price of around thirty dollars
per soul, this means Soul experience up to five hundred
million dollars of cell pressure. On the demand side, it
seems that Solana's n f T marketplaces were absorbing most
(18:13):
of this supply shock. Institutional investment vehicles for Soul also
still have more than one hundred million dollars invested at
Soul's current prices. This is scary considering some of these
et f s were seemingly issued with the help of
f t X. What's even scarier is that analytics on
(18:33):
the Salana Explorer show that transactions on Salana have fallen
off a cliff over the last week. The silver lining
is that the analytics also suggests the drop in Salana's
validate account was due primarily to Hetzner's crypto ban and
not the f t X Alameda situation. In any case,
(18:53):
it's clear that the demand for Soul is down, and
it's easy to understand why some have begun to question
Solana's future. And this is in large part due to
the massive amount of Soul that f t X and
Alameda will be forced to sell when the time comes
to compensate their creditors. According to the coindesk article that
(19:15):
kick started the concerns about f t X and alamedas
balance sheets, Alameda held roughly one point to billion dollars
of soul in June. Assuming the price was around forty
dollars per soul at the time, This works out to
around thirty million soul held by the market maker. As
for f t X, recent leaks suggests the exchange held
(19:37):
around one billion dollars of soul as of a few
weeks ago. Assuming an average price of around thirty three
dollars per soul, this means that f t X held
an additional thirty or so million soul now. It's not
clear how much soul f t X and Alameda currently
hold for what it's worth, these numbers are consistent with
(19:59):
the recent disc closures by Solana Labs and the Salana
Foundation about their exposure to f t X and Lameter.
Slana Labs and the Salana Foundation sold a total of
fifty eight million soul to f t X and Alameda
over the course of more than two years. At current prices,
this soul is worth roughly nine million dollars and accounts
(20:22):
for more than fifteen percent of souls total supply. While
not all the Soul held by f t X and
Alameda is liquid, the fact of the matter is that
it will inevitably be sold at some point as part
of their bankruptcy proceedings. As I mentioned a few moments ago,
Soul managed to survive half a billion dollars of cell
(20:43):
pressure over the last three months. However, this assumes that
the fourteen million Soul that entered circulation were sold, which
is unlikely. This means that Soul may not be nearly
as resilient to sell pressure as it seems. More importantly,
the demand for Soul is not nearly what it was
(21:03):
even just two weeks ago. This could make it difficult
to absorb the hundreds of millions of dollars of cell
pressure that's coming. And that's just from f t X
and Lameter. There are certainly other institutions and retail investors
who will sell their Soul, never mind all the promising
Salana projects that will die because of their exposure to
(21:25):
f t X and Lameter. To make matters worse, the
bottom of the cryptobar market probably isn't in yet. This
means that Soul will go lower even without all the
cell pressure from these entities. It's long term price charts
suggests Soul could fall to eight dollars. This would be
(21:46):
consistent with the estimated percentage loss in other large alts. Now,
if you're wondering how long this cryptobear market will last,
be sure to check out our video about that from
a few months back. I reckon it still holds true
and be doing another video about the potential catalyst that
could take us out of the crypto bear market lows
in the next week or two, so stay tuned. Now.
(22:10):
Whether Soul will ever rally back to its all time
highs and beyond depends on the project's upcoming milestones. These
can be found in an October blog post on the
Salana GitHub and in interviews with Salana founder Anatoly Yakovenko.
The October blog post in question is called quote Salana
Network Upgrades, and it appears to have been published in
(22:32):
response to the outages Solana had experienced earlier that month.
The next milestone on the list is the introduction of
different fee markets for different types of transactions. After that,
Solana will be increasing the size of the blocks on
its blockchain. This should make Salana even faster, but it
(22:53):
will likely make its blockchain even more centralized and could
further compromise its security. As a alt more about the
tradeoffs of tps using the link in the description. The
third milestone noted in the blog post is compact vote state,
which can be simply understood as reducing the size of
certain transactions. This could further increase Salana's TPS while protecting
(23:17):
against some of the centralization and security issues that could
arise from the block size increase. Now, what's funny about
these milestones is that they're eerily similar to aptosses milestones.
Ap toss is currently working on implementing different fee markets
for different types of transactions. Salana's inspiration doesn't stop at
(23:38):
transactions either. That's because a repository on the Salana gitub
suggests that it's looking to make it possible to build
on its blockchain using the move programming language. This is
significant because the difficulty of building on Salana has been
one of the project's biggest drawbacks. The Salana gitub also
(23:58):
contains many repositi trees related to on chain governance, something
that's been in the works for a while now. I
don't imagine Solana is in a rush to roll out
its on chain governance now that a significant chunk of
Soul's supply is in limbo via f t X Alameda
and other affected crypto vcs. Speaking of which, anatotally dropped
(24:20):
a bombshell about Salana's development during a panel discussion at
the project's aforementioned Breakpoint conference earlier this month. He basically
said that he will consider Solana to be out of
beta once a second validator client has been completed. Now,
this is huge news that seems to have flown under
(24:41):
everyone's radar because of the ft X Alameda situation. To
be fair, and it's only only said that he would
consider Salana to be out of beta at that point,
not that it necessarily would be. Even so, it's the
closest thing we've got to an alpha timeline thus far.
The thing is that Salana still seems to be unreliable,
(25:04):
and its block chain and especially its ecosystem seem to
be in a more vulnerable position than ever. This makes
it hard to understand how Salana could be considered complete
when it's still experiencing so many issues. This brings me
to my concerns about Salana, and my first concern has
(25:25):
to do with Salana Labs and the Salana Foundation, specifically
their balance sheets. The blog post detailing their exposure to
f t X and Alameda suggests that the Salana Foundation
only has around one hundred million dollars of cash on hand.
In case you're wondering, the foundation only had around one
(25:46):
million dollars of cash on ft X when it collapsed. However,
it had two hundred million dollars worth of f t
T and s r M sitting there. These tokens are
now essentially worth nothing, along with the three point two
million shares of ft X the foundation also holds. Frustratingly,
the blog post didn't reveal how much runway Salana Labs has,
(26:09):
but Anna Totally mentioned on Twitter that it has enough
money in the war chest for another thirty months or so.
Anna Totally specified that this runway is in dollars, which
begs the question of how much soul Salana Labs holds,
and a Totally also confirmed that Salana Labs had no
assets on ft X, which is certainly good news. The
(26:31):
bad news is that f t X and Alameda were
the primary money funnel for the Salana ecosystem. What's more
is that Salana's association with ft X and Alameda could
make its ecosystem unattractive to other vcs. What this means
is that the Salana Foundation and Slana Labs might be
the only entities willing to invest in Salana's ecosystem for
(26:54):
a while, and the cash they currently have on hand
won't be nearly enough. This means they might have to
start selling Soul, which would cause its price to fall
even further. This relates to my second concern, and that's regulation.
As I mentioned earlier, the SEC is watching proof of
(27:15):
state cryptocurrencies very closely, and Salana Labs is already involved
in a security suit. The fact that the SEC and
others are now investigating FTX means that Salana could come
under additional scrutiny. Now, my final concern about Salana is straightforward,
and that is competition. Anatoly admitted in an interview that
(27:37):
the Salana team is anxious about Aptos and Suey because
of how developer friendly they are. Aptos and Suey also
have an absurd amount of big tech backing due to
their d M origins. There are also other smart contract
cryptocurrencies like Polka Dot, Near Protocol, Avalanche, Cardana, and Ethereum,
(27:57):
which are fundamentally fighting for dominance of the same critical
crypto niche. These crypto projects aren't nearly as exposed to
f t X and Alameda as Salana was and continues
to be. In the race for superpower dominance, resources and
(28:20):
influence are the currency's worth accumulating, and this is something
that China has been doing for years in a continent
many in the West seem to have forgotten about. I am,
of course talking about Africa, home to some of the
largest deposits of natural resources in the world, a continent
that contains sixty of the world's arable land, a continent
(28:45):
that by twenty fifty will have a quarter of the
world's population. Today. I'm going to tell you exactly what
China has been up to in Africa and what it
could mean for the balance of global power. Before we
dive into China's strategy in Africa, it's important to appreciate
how important the continent will be in the next few decades.
(29:07):
As I mentioned, it's a vast and largely untapped resource
for all types of minerals and commodities, everything from copper
to cobalt, gold to diamonds, and aluminium to titanium. For example,
according to estimates from the United Nations, Africa is home
to thirty percent of the world's mineral reserves of the gold,
(29:29):
twelve percent of its oil, and nine of its chromium
and platinum. This map over here is pretty handy, and
it shows exactly how resource rich Africa is. It's color
coded by those countries with the most abundant minerals. All
of these resources are important for any country that is
(29:49):
looking to continue growing economically. They're even more important at
a time when older minds are starting to become exhausted
and older wells are running empty. What's perhaps most surprising
about this is the fact that Africa only accounted for
about five point five percent of the world's total mind
minerals in twenty nineteen. Those deposits are sitting there waiting
(30:14):
to be extracted, and it's not only the mineral wealth
that much of Africa is sitting on. Those vast tracts
of arable land mean that the continent could become a
bread basket for the world. This is particularly relevant now
when you realize how dependent we've become on farmland in
regions such as Ukraine and Russia. And finally, we also
(30:36):
have to consider African's human capital potential. The continent has
the fastest growing population in the world. Sub Saharan Africa's
population is expected to double by twenty fifty. This is
important because of the fact that population decline is one
of the biggest threats the world faces. It's something that
Elon Musk is most concerned about and it's the subject
(30:59):
of a video I did recently that is in the
description for you. The point is that countries cannot continue
to grow economically if they have declining populations. Hence, as
Africa is going to have plenty of new young people
entering the workforce in the coming decades, it can continue
its rapid economic growth. By some estimates, Africa is well
(31:22):
on its way to becoming a five trillion dollar economy,
as household consumption is expected to increase at a three
point eight percent yearly clip. This growing population also presents
economic advantages for key trading partners. All of these African
citizens will be important consumers of products and services and
(31:42):
hence will offer strong export demand for countries that have
tapped out Western markets. Not only that, but all these
people could be potential allies or adversaries based on how
they view other countries. In a game of international influence,
the more people and country that you have on your side,
the more geopolitical clouds you have. So it's quite clear
(32:05):
that there are a number of reasons why Africa is
a continent which cannot be ignored and China is now
involved in a modern day quote scramble for Africa. Take
a look at this chart over here. This is the
total amount of f d I, or foreign direct investment
that China has been sending to Africa over the past
(32:27):
seventeen years. As you can see, it has gone from
a mere seventy four million dollars in two thousand and
three to over forty five billion in two thousand and eighteen,
although it shrunk slightly during COVID. All of this makes
China Africa's fourth largest investor and places it ahead of
the United States in this regard. Not only that, but
(32:50):
Chinese loans to African countries have totaled one hundred and
fifty three billion dollars between two thousand and two thousand
and nineteen. More about that, in a bit. The vast
majority of this investment in and loans to Africa has
gone into the development of infrastructure. This is all part
of China's so called Belt and Road Initiative or b
(33:13):
r I for those unfamiliar. This is a global infrastructure
initiative unveiled by the Chinese government in twenty thirteen. It
forms the centerpiece of Zijimping's foreign policy and calls for
China to play a greater role in world diplomacy. Essentially,
it's a strategy to win the hearts and minds of
foreign populations. Of course, this is all infrastructure that the
(33:37):
Chinese could also eventually use themselves. Now. As of August
twenty nineteen, one hundred and forty nine countries were listed
as having signed up to the b r I. Chinese
investments in infrastructure for African countries have been particularly outsized, however.
For example, according to this report in twenty eighteen, China
(33:59):
provided over twenty of the overall funding contributed towards infrastructure
development projects in Africa, and in this seventeen McKinsey report,
Chinese firms and construction companies one almost half of all
engineering and procurement projects continent wide. However, while China has
(34:20):
been ramping up its infrastructure development on the continent under
z it's not in fact a new phenomenon. That's because
China first entered Africa back in the nineteen seventies and
one of its first projects was a railway that connected
ports in Tanzania to towns in Zambia. This was done
under the leadership of Chairman Mao and it was the
(34:41):
most expensive infrastructure project that China had ever attempted. It
was also a godsend to Zambia, which was effectively cut
off from seaports further south thanks to the actions of
the Zimbabwean government. With this new railway, Zambia could export
its copper to world markets, including co incidentally enough, a
(35:01):
fast growing China. I'll leave a link to the story
about the Tazara railroad in the description for you. It
is truly fascinating now. Of course, infrastructure developments like this
and many subsequent ones mean that China has strong ties
with politicians and business leaders in the African countries it
has been built in. This means that they can enter
(35:24):
into mutually beneficial trade agreements which shake up the status quo.
According to data from China's Customs Agency. Trade between China
and Africa rose to its highest level last year. It
increased by thirty five percent from twenty to two hundred
and fifty four billion dollars last year. You can see
(35:44):
what that looks like here. Not only that, but China
looks set to overtake the EU as Africa's biggest trading
partner by This will be a symbolic moment given that
many European nations are viewed by any in Africa as
the colonizers of yesteryear now being overtaken by new colonizers
(36:06):
so to speak. What do I mean by that, Well,
it all really depends on the terms that China has
attached to much of its infrastructure spending. While f DI
is great loans for bridges eight and Africa has been
racking up quite a number of loans over the past
few years. If you take a look at this infographic here,
(36:28):
you can see those countries that are most in debt
to China. African ones stick out like a sore thumb.
Those countries with the highest debt loads were Jibooty and Angola,
where the aggregate Chinese debt exceeded forty of their gross
national income. In the case of Jibouti, China holds seventy
(36:50):
of its total debt. According to the World Bank and
the i m F, these loans are structured more like
commercial loans, and they have shorter repayment windows. Their conditions
are also confidential, and they're usually used for the purpose
of building infrastructure rather than broader humanitarian goals. Now, of course,
(37:10):
I would argue that the i m F and World
Bank don't exactly have much right to opine on the matter,
but perhaps that's just me. Either way, the point is
that when someone owes you money, you have a great
deal of sway over them. That's why people have accused
China of engaging in what is termed quote debt trap diplomacy. Essentially,
(37:31):
if you owe China money, you're more likely to dance
to its tune, not only when it comes to concessions
within your own country, but also on the international stage.
For the clearest example of this, you only need to
look at how countries in Africa tend to vote on
u N resolutions. For example, in fifty countries issued a
(37:52):
statement supporting China's crackdown in Hong Kong, more than half
were African Some African countries have also been silent on
China's human rights record in places like Sinjang. The president
of Burkina FASO has stated, quote, some Western forces hyping
up the so called Sinjang related issues are actually launching
(38:13):
unprovoked attacks on China to serve their own ulterior motives.
That same meeting was attended by the presidents of Sudan
and the Republic of the Congo. Or if you want
to take a look at a much more sensitive issue
with China, you can see how support for Taiwan has
almost completely evaporated across Africa. This wasn't always the case.
(38:39):
Back in the nineteen sixties, Taiwan outpaced China in its
efforts to cement diplomatic ties with African nations. However, ever,
since a ninety one vote that denied Taiwan a seat
at the UN table, African countries have been switching their
allegiances in Burkina FASO officially cut ties with Taiwan, and
(39:00):
now there is only one African country that retains ties
with the island. That's the Kingdom of es Swatini, one
which has been under represented in Chinese investments and wasn't
invited to numerous Africa China summits. It does make me
wonder how long they can hold out. The point is
(39:22):
that China knows that these investments, as well as debts,
give it a great deal of clout with these countries.
But what happens if a country finds itself in a
position where it can no longer service its debts. Well,
like any hard up individual debtor, it could lose some
of its collateral. Up until a few years ago, the
(39:44):
notion that a nation state would seize another country's key
infrastructure over a bad debt was laughable. However, this happened
a few years ago when China took over the hambn
Tota Port in Sri Lanka. This was a port built
by the Chinese with debt financed by Chinese banks. When
(40:05):
Sri Lanka struggled to repay its debt, it was forced
to hand over the port on a nine year lease.
More about Sri Lanka's economic woes in the description. So
given Sri Lanka's experience with bad Chinese debt, African countries
are naturally beginning to worry too. You only need to
take a look at the number of Chinese built ports
(40:27):
around the world and where they are concentrated. The alarm
over this was raised three years ago in Kenya, for example,
by the country's Order to General. He said that Kenya
could be made to surrender control of its port in
Mombassa if it defaulted on a three point six billion
dollar loan from China used to build a railway. It's
(40:49):
not just ports either. Quite recently, there were concerns that
China may attempt to grab Uganda's sole international airport. This
was due to the fact that China had extended a
two hundred million dollar loan to expand the facilities there.
A parliamentary probe in Uganda concluded that China had imposed
onerous conditions on the loan, including potential forfeiture of the
(41:13):
airport in case of default. The Ugandan finance minister was
hauled before parliament and grilled about the loan. He apologized
profusely and said, we shouldn't have accepted some of the clauses,
but they told us you either take it or leave it.
Whether that is indeed the case is hard to tell.
(41:34):
The Chinese, for their part, have adamantly denied the claim
that they were attempting to seize the airport. Moreover, the
concerns that were raised about the Mombassa port appeared to
be as a result of a misunderstanding over a key
clause in the contract, and as of yet, China still
hasn't seized any African infrastructure. However, concerns do remain. Now
(41:57):
remember that chart I showed you about how in debt
Djibouty was to China. Well, it turns out that China
has been investing heavily in the country. This has been
happening ever since China's People's Liberation Army or p l
A established its first and only overseas military base. China
is said to have spent five hundred and ninety million
(42:19):
dollars on both this military facility and the door Allah
Multi Purpose Port, the deepest port in East Africa. The
port is also of great strategic importance given its location.
It sits on the Horn of Africa and near key
shipping routes. More recently, a Chinese company agreed to finance
Djibouty's port revamp in a three hundred and fifty million
(42:43):
dollar investment deal. The company already owned twenty three and
a half percent of the port, so this could be
a further ploy to embed its influence. Given the parallels
that this shares with the Sri Lankan port prior to
its seizure, you have to worry. Let's also not forget
that military base near the port, one that the Chinese
(43:03):
seem dead set on keeping in place. Either way, the
prospect of infrastructure seizures or more onerous concessions will always
dog those African countries that have taken on Chinese debt. Okay,
So that's a concern that many have with Chinese engagement
in Africa. But what do Africans themselves think of this?
(43:24):
And are these characterizations by the Western media fair. Most
Africans view China in a positive light. For example, a
survey last year of thirty four African countries by Afro Barometer,
a research group, found that six of the respondents thought
China had a very or somewhat positive influence. The US meanwhile,
(43:48):
only scored Quite surprisingly, the African Union has a lower
rating than both countries. The Economist magazine also conducted a
similar survey earlier this year, where the majority of the
respondents thought China had a good rather than a bad influence,
and in another survey by the Ichi Kowitz Family Foundation,
(44:10):
the vast majority of African youth see China as the
most influential player on the continent. This survey targeted four
and a half thousand younger Africans between the ages of
eighteen and twenty four. It's also important to note that
US influence in the minds of these citizens has also
dropped over the years. China's impact on the continent was
(44:32):
also seen as more positive than that of the US.
According to the survey's authors, quote, young Africans are telling
us that they are seeing tangible, visible and very impactful
signs of the role that China has played in the
development of Africa. This is all quite telling. It shows
that despite the concerns in the Western media about China's
(44:55):
intentions in Africa, African people themselves still view China as
a end rather than a foe. That is interesting in itself,
but it also shows that mistrust of the West runs
deep in Africa. China is definitely not making these investments
for charitable purposes, but as long as local citizens see
(45:16):
some of the returns from said investments, it's an improvement
on the status quo. So what if China is funding
the construction of an airport or a road. It's better,
surely than not having them at all. Let's also not
forget that the i m F and World Bank have
a really shoddy record when it comes to growth and development.
(45:37):
I talked about this in my video on the I
m F, which I'll leave in the description for you. Moreover,
I happen to think that the often patronizing way in
which Western governments, media and other organizations portray Africa could
play a factor in these surveys. Africa is sometimes made
out to be a somewhat hapless place that's unwittingly being
(45:58):
taken advantage of by ruthless foreign governments, an image that
many Africans doubtless take issue with. African leaders also want
to make it clear to Western governments that they have
no option but to deal with China on account of
the lack of engagement from the West, and they have
a point. Despite this, though, it's encouraging to see that
(46:21):
many Africans do also have a healthy dose of skepticism
when it comes to China. According to that aforementioned Afrobarometer survey,
the majority of the respondents are concerned about being heavily
indebted to China and say that their governments have borrowed
too much money. The respondents also think that China's influence
(46:42):
is on the decline. The proportion of Africans who said
China's economic activities in their countries have some or a
lot of influence on their economies has declined over the
past five years from se to But if China can
in us to be viewed more favorably by Africans than
(47:02):
the West, then it will be well positioned to take
advantage of a continent that is poised to become a
global powerhouse in a few decades time. Okay, time for
a few of my thoughts on China's scramble for Africa.
It's quite clear that Africa is going to become one
(47:24):
of the most important, if not the most important, continent
in the not too distant future. Therefore, it makes logical
sense for China to be positioning itself to make the
most of the opportunities there. China cannot continue to power
its economic engine unless it has the resources to buy
goods as well as the buyers to consume them. It
(47:46):
also needs to curry favor with countries around the world,
especially at a time when it's vying for allies against Taiwan,
and its initiatives on the continent have had a great
deal of success. This is affected in the growth of
Chinese trade and the favorable perceptions the citizens of Africa
have of China's influence. However, practices that threatened to entrap
(48:10):
countries into debts they cannot pay back threatened to sustain
that reputation. This is something that China seems to have
appreciated more recently, and it has in fact forgiven the
debt of a number of African countries. I also think
that African countries have a healthy skepticism about these loans
and Chinese involvement more generally from the era of European
(48:32):
colonialism to the I m F, World Bank and USSR
in the nineteen sixties, seventies and eighties. They know that
other countries have long been eager to feed at their trough.
But if they're able to craft deals and agreements with
the Chinese that give them infrastructure and trade that they
wouldn't have with the West, then they are in a
(48:52):
strong position. It doesn't have to be a zero sum game,
and for the West's part, he should also try and
engage more with Africa, but it shouldn't be with the
same playbook that many Western countries used in the past. Moreover,
viewing Africa as a victim of exploitation isn't flattering, and
trying to present yourself as the white knight who can
(49:14):
save it is insulting. Quite simply, global superpowers should treat
Africa as they would like to be treated. They should
show its leaders respect on the world stage and foster
mutually beneficial relationships that can take advantage of its growth.
It could be an investment that pays off handsomely in
thirty years time. Thank you so much for listening to
(49:38):
the coin Bureau podcast. If you'd like to learn more
about cryptocurrency, you can visit our YouTube channel at YouTube
dot com forward slash coin Bureau. You can also go
to coin bureau dot com for loads more information about
all things crypto. You can follow me on Twitter at
at coin bureau or one word, and I'm also active
on TikTok and Instagram too. You ll known call Cong
(50:03):
Kong Kong
Hello everyone, and welcome to the latest episode from the
midweek edition of the coin Bureau podcast. Every week, I
pick out two of my favorite videos from coin Bureau's
YouTube channel to present to you in podcast form. The
audio you're about to hear is from those videos I've
chosen this week, and I hope you enjoy listening. The
fallout from the collapse of f t X and Alameda
(00:20):
Research continues to dominate the crypto headlines and is likely
to do so for some time. There are well founded
concerns that the contagion from this disaster could spread to
other crypto companies and projects in due course. One project
that could be most at risk is Slana, thanks to
the fact that f t X and Alameda were its
(00:41):
biggest investors. Slana is, or rather was, f t x's
day facto exchange chain too. The project is therefore uncomfortably
exposed to the fallout, and Soul's price has already crashed
much harder than most other cryptos. It's not just Slana itself, though,
the projects in its ecosystem are also at risk, which
(01:03):
means a lot more pain is coming for them. For
Salana and for the crypto market as a whole. So
here's a breakdown of what Salana is all about, why
it's so threatened by ft x IS collapse, and why
there may still be hope for the future. Next up,
it's mercifully time to move away from crypto for a
while and look at something happening in the wider world.
(01:24):
Aging populations in the West and elsewhere mean that Africa
is projected to become increasingly influential in coming decades as
it reaps a demographic dividend from its higher birth rates
as well as young working age people. The continent is
also rich in other resources too, and as such is
attracting increasing amounts of investment from countries looking to capitalize
(01:46):
on its riches. One country has been more proactive than
any other in this regard, and that is China, which
has invested billions of dollars across Africa as part of
its Belt and Road initiative. An increasing amount of Africa's
infrastructure has been built using Chinese money, and naturally, China's
influence across the continent has grown with every railway laid
(02:07):
and airport terminal built. But as some nations have discovered
to their cost, Chinese money can come with some unpleasant
strings attached, and many are worried that the ultimate cost
of China's largesse may be greater than what many in
Africa bargained for. In the second part of today's episode,
you'll hear the story of China's own scramble for Africa,
(02:27):
how it's gone down with Africans themselves, and what the
future might hold. Thanks for listening to today's episode, and
there'll be more coming your way soon. And if you
want even more content from coin Bureau, be sure to
subscribe to our YouTube channels and visit us on social
media too. And one more thing. This year at the
coin Bureau, we're celebrating Black Friday with up to fifty
(02:51):
off items in our merch store. There's a link in
the description of the podcast, so please do check it
out and see if there's something you fancy. The collapse
(03:20):
of f t X and Alameda Research has done serious
damage to the crypto market, and it seems that Slana
was one of the most affected crypto projects. Now this
makes sense given that Salana was the day facto exchange
chain of f t X, and that both f t
X and Alameda were big investors and participants in Salana's ecosystem. Today,
(03:43):
I'm going to give you a quick recap of Salana,
tell you what's been going on with the project, and
examine whether Soul will survive the f t X Alameda meltdown.
I want to start with some transparency, and that's that
I no longer hold Soul as part of my crypto portfolio.
If you're subscribed to my weekly newsletter, you'll know that
(04:04):
Soul accounted for almost eight percent of my portfolio until
last weekend. Note that you can find the link to
my weekly newsletter in the description. Now, my decision to
sell Soul was based on many factors, including the current
state of the crypto market, but there is no denying
that the ft X Alameda situation was top of mind
(04:25):
for me. Now, I must also stress that this is
not financial advice. It's just my opinion, and you will
obviously have yours. That said, I will give both a
bearish and a bullish case for Salana in today's video.
That's because there does seem to be some hope for
Soul on the horizon. It just looks very far away
(04:49):
from where I'm standing. That's just my perspective, though, and
I would love to get yours in the comments section now.
As many of you will know, Slana was founded in
twenty seventeen by former Qualcom engineer and a Toty Yakovenko.
The Salana blockchain was built by Salana Labs, which is
based in the United States, and its ongoing development is
(05:11):
coordinated by the Salana Foundation, which is based in Switzerland.
Salana raised twenty five million dollars across various I c
o s between twenty eighteen and twenty, and raised an
additional three hundred and fourteen million dollars from crypto vcs
last year. F t X and Alameda Research were two
(05:32):
of the largest investors in Salana and were two of
the largest investors in Salana's ecosystem, that is, crypto projects
building on Salana. This is because Salana's original goal was
to become a decentralized alternative to centralize stock exchanges like
the NASDAK. Now this is a goal that f t
(05:53):
X and Alameda founder Sam Bankman Freed could get behind,
given that his endgame was also to displace the existing
institutions with his own infrastructure. Salana's main net went live
in twenty twenty and its blockchain is still technically in beta.
Recent comments by anatotally suggest that Salana may soon be
(06:16):
entering its alpha stage, which is surprising given that the
Salana blockchain continues to experience issues. More about all that
later on. Under the hood, the Salana blockchain uses a
novel proof of state consensus mechanism that time stamps transactions
using a technology called proof of history. This consensus mechanism
(06:38):
makes it possible for the Salana blockchain to process up
to sixty five thousand transactions per second. Until recently, the
Salana blockchain was secured by almost twenty two hundred validators.
Salana's validate account was just eighteen hundred and fifty when
ft X and Alameda collapsed. This suggests that f t
(06:59):
X and a meda we're running lots of Salana validators.
Note that Salana transactions are processed by clusters of up
to one hu fifty validators now. Soul is the native
cryptocurrency coin of the Salana blockchain. Like all cryptocurrency coins,
Soul is used to pay for transaction fees. Of every
(07:21):
transaction fee is burned, with the other half going to validators. Obviously,
Soul is also used for staking staking rewards are currently
around eight percent for both validators and delegators with a
five day lock up. There is no minimum stake for
validators or delegators, though the hardware requirements for running of
(07:41):
validator are very high. Misbehaving validators are also slashed. Staking
soul as a delegator can be easily done using the
Phantom Browser extension wallet, which also acts as a gateway
to Salana's ecosystem. The Phantom extension has been downloaded over
two million times on Chrome and dab Radar's data suggests
(08:05):
that Salana's DAPs have at least half a million monthly
active users. The focus of Slana's ecosystem was initially defy.
This was in large part due to f t X,
which had its own defied project called projects Serum. What's
crazy is that the order book based Serum decks lay
(08:25):
at the heart of Salana's entire defy ecosystem, providing liquidity
and pricing data to many other major DeFi protocols. To
my knowledge, most of Serum's liquidity came from f t
X and Lameter. Now, the massive draw down in the
total value locked in Salana's DeFi protocols following terrorist collapse
(08:46):
in May. Therefore, suggests that this is when ft X
and Alameda started to experience the issues that ultimately lead
to their collapse. You can learn more about the ft
X an Alameda situation using the in the description I
digress now. It's barely been three months since our last
covered Salana, but a lot has happened since then, and
(09:08):
not just stuff that's related to Alameda and f t X.
Shortly after our last update, a group of Salana projects
announced the creation of a cross chain messaging protocol. If
you watched our Cosmos update from around that time, you'll
know the announcement seems to have been a not so
subtle response to cosmos announcement about its upcoming interchain security.
(09:31):
To my mind, Salana's subsequent announcement underscored the multi chain
future of crypto. Institutional crypto custodian fire Blocks also announced
that it had added support for Salana DeFi protocols and
Salana n f t s in case you missed the memo,
Salana was becoming increasingly popular with institutions. This was in
(09:54):
large part due to Salana's close relationship with f t
X and Alameda. In early September, a crypto project called
Sui announced that it had raised three hundred million dollars
from various crypto vcs. Now this is significant because suey
has its roots in Facebook's failed digital currency project d
(10:15):
M a k A. Libra, just like Aptos, and Aptos
is considered by many to be a Salana killer. This
arguably makes Sue a Salana killer too. This is in
part because both Sue and Aptos are coded in Move,
a novel programming language developed by d MS developers. Move
(10:38):
is based on the Rust programming language used by Salana,
but is much more developer friendly, or so I've heard.
For those who don't know, Sue and Aptos are considered
to be Salana killers because they're all backed by the
same entities. Ft X Ventures was a big investor in
both Aptos and Sue, and aptos co founder Mohammed Shake
(11:00):
confirmed in an interview that the project was working very
closely with fd X. Fortunately for Slana, Aptoss and Sue's
exposure to ft X so early on in their development
could set them back quite a bit. Unfortunately for Slana,
it's even higher exposure to f t X could mean
(11:21):
that it will be the crypto project that picks the
shortest straw. More on that in a moment anyways. Another
Salana related announcement in early September came from coin base,
whose cloud division spun up archival notes for the Salana blockchain.
This is significant because Salana's full transaction history was only
(11:42):
being stored on Google Big Table, which made it quite centralized.
In mid September, sec chairman Gary Gensler said that proof
of state cryptocurrencies could be securities. Although Gary's comment was
likely about Ethereum's transition to proof of steak, Slana Labs
was recently accused of selling securities that is soul, which
(12:05):
could put it at risk. At the end of September,
the Helium community voted to migrate it's peer to peer
networks from the Helium blockchain to the Salana blockchain. This
is something we had predicted in one of our earlier
Salana updates. Were it not for the f t X
Alameda situation, this would have been bullish for h and However,
(12:28):
the ft X Alameda situation wherein has made Helium Salana
integration incredibly bearish for h n T, and not just
because it's a part of Salana's ecosystem. Back in February,
Helium raised two d million dollars in a funding round
co led by you guessed it, f t x Ventures.
(12:51):
At the end of September, Circle also announced that it
would be expanding its USDC stable coin to five additional
smart contract cryptocurrencies and introducing its own cross chain interoperability protocol.
Now this is evidence that Circle is moving away from Salana,
which is apparently the official chain for USDC. In early October,
(13:17):
the Salana blockchain experienced yet another outage. This time it
was due to a misconfigured validator node. For context, most
of Slana's outages have been due to spam transactions facilitated
by its block chains fixed transaction fees, which are extremely low.
In mid October, app toss announced its main net launch,
(13:39):
and if you watched our video about the project, you'll
know that the launch was pretty badly botched. It's still
boggles my mind that a project with so much funding
and backing managed to make so many mistakes, but hey,
let's not go there. At the end of October, a
crypto project called trip Protocol announced it would be creating
(13:59):
a decentralized alternative to right sharing apps like Uber built
on Salana Now, this is the kind of DAP that
could reach serious mass adoption, and it's such a damn
shame that it's been set back by recent events. In
early November, almost half of Salana's validators went offline after
(14:20):
a German cloud service provider called Hetzner banned all crypto
companies and projects from using its services. The huge impact
this had on the Salana blockchain raised even more questions
about Salana's supposed decentralization. Luckily, for Solana, this bearish news
was quickly overshadowed by all the bullish news that came
(14:43):
out of Salana's annual Breakpoint conference in Lisbon. The biggest
news was that Google Cloud had begun running a validator
on Salana, which logically means that Google had purchased lots
of soul. Google Cloud also announced that it had released
software too, in decks. Slana's transaction history, which your recall,
(15:03):
is being stored on Google Big Table. Now. This is
significant because Anatole had mentioned in earlier interviews that it
was extremely difficult for developers to analyze Salana's transaction history.
Helium also announced that it was building out a mobile
network and would be giving out simcards with a free
(15:23):
thirty day trial to everyone who purchased Salana's upcoming Saga phone.
Helium also recently partnered with telecoms Giant T Mobile to
increase five G coverage in rural areas, another great initiative
now under threat now. The announcement that everyone seemed to
miss was that Salana's Neon layer would be launching sometime
(15:46):
in December. If you've been keeping up with our Salana updates,
you'll know Neon supports the Ethereum Virtual Machine or e
v M. E v M compatibility could supercharge Salana's adoption.
As a cherry on top, Circle announced that it would
be bringing it's recently released eurostable coin to the Salana
(16:06):
blockchain next year, making Salana the second smart contract cryptocurrency
to support euroc after Ethereum. This suggests that Circle hasn't
given up on Salana just yet. And then f t
X and Alameda blew up. Not surprisingly, the price of
every single cryptocurrency that f t X and Alameda had
(16:28):
invested in instantly plummeted. As ft X is day facto
exchange chain, Soul was at the top of the list.
Souls price was only the tip of the Iceberg, However,
as its entire ecosystem also went into crisis mode, loans
were liquidated, wrapped tokens issued or backed by f t
(16:48):
X and Alameda d pegged. The total value locked in
Slana's DFI protocols fell off a cliff. The upgrade keys
for Project Serum and the Serum DECKX were revealed to
be in the hands of f t X, causing the
community to fork what was left of the protocol. Soul
holders also feared that nearly a billion dollars of Soul
(17:11):
set to be unlocked would be sold now. Their fears
were calmed after the Salana Foundation announced it would be
postponing the unlock of the thirty or so million Soul
once again, though calling Salana's decentralization into question. To add
insult to injury, Google Cloud announced that it will also
(17:31):
run validator notes for the ap toss blockchain, and that
it had partnered with the project for a developer accelerator program.
The timing couldn't have been worse given the circumstances. So
as you can see, Soul's price was holding up quite
well until the FTX Alameter situation. Now this is impressive
(17:52):
considering that Soul's supply has increased by around fifteen millions
since August. Assuming an average price of around thirty dollars
per soul, this means Soul experience up to five hundred
million dollars of cell pressure. On the demand side, it
seems that Solana's n f T marketplaces were absorbing most
(18:13):
of this supply shock. Institutional investment vehicles for Soul also
still have more than one hundred million dollars invested at
Soul's current prices. This is scary considering some of these
et f s were seemingly issued with the help of
f t X. What's even scarier is that analytics on
(18:33):
the Salana Explorer show that transactions on Salana have fallen
off a cliff over the last week. The silver lining
is that the analytics also suggests the drop in Salana's
validate account was due primarily to Hetzner's crypto ban and
not the f t X Alameda situation. In any case,
(18:53):
it's clear that the demand for Soul is down, and
it's easy to understand why some have begun to question
Solana's future. And this is in large part due to
the massive amount of Soul that f t X and
Alameda will be forced to sell when the time comes
to compensate their creditors. According to the coindesk article that
(19:15):
kick started the concerns about f t X and alamedas
balance sheets, Alameda held roughly one point to billion dollars
of soul in June. Assuming the price was around forty
dollars per soul at the time, This works out to
around thirty million soul held by the market maker. As
for f t X, recent leaks suggests the exchange held
(19:37):
around one billion dollars of soul as of a few
weeks ago. Assuming an average price of around thirty three
dollars per soul, this means that f t X held
an additional thirty or so million soul now. It's not
clear how much soul f t X and Alameda currently
hold for what it's worth, these numbers are consistent with
(19:59):
the recent disc closures by Solana Labs and the Salana
Foundation about their exposure to f t X and Lameter.
Slana Labs and the Salana Foundation sold a total of
fifty eight million soul to f t X and Alameda
over the course of more than two years. At current prices,
this soul is worth roughly nine million dollars and accounts
(20:22):
for more than fifteen percent of souls total supply. While
not all the Soul held by f t X and
Alameda is liquid, the fact of the matter is that
it will inevitably be sold at some point as part
of their bankruptcy proceedings. As I mentioned a few moments ago,
Soul managed to survive half a billion dollars of cell
(20:43):
pressure over the last three months. However, this assumes that
the fourteen million Soul that entered circulation were sold, which
is unlikely. This means that Soul may not be nearly
as resilient to sell pressure as it seems. More importantly,
the demand for Soul is not nearly what it was
(21:03):
even just two weeks ago. This could make it difficult
to absorb the hundreds of millions of dollars of cell
pressure that's coming. And that's just from f t X
and Lameter. There are certainly other institutions and retail investors
who will sell their Soul, never mind all the promising
Salana projects that will die because of their exposure to
(21:25):
f t X and Lameter. To make matters worse, the
bottom of the cryptobar market probably isn't in yet. This
means that Soul will go lower even without all the
cell pressure from these entities. It's long term price charts
suggests Soul could fall to eight dollars. This would be
(21:46):
consistent with the estimated percentage loss in other large alts. Now,
if you're wondering how long this cryptobear market will last,
be sure to check out our video about that from
a few months back. I reckon it still holds true
and be doing another video about the potential catalyst that
could take us out of the crypto bear market lows
in the next week or two, so stay tuned. Now.
(22:10):
Whether Soul will ever rally back to its all time
highs and beyond depends on the project's upcoming milestones. These
can be found in an October blog post on the
Salana GitHub and in interviews with Salana founder Anatoly Yakovenko.
The October blog post in question is called quote Salana
Network Upgrades, and it appears to have been published in
(22:32):
response to the outages Solana had experienced earlier that month.
The next milestone on the list is the introduction of
different fee markets for different types of transactions. After that,
Solana will be increasing the size of the blocks on
its blockchain. This should make Salana even faster, but it
(22:53):
will likely make its blockchain even more centralized and could
further compromise its security. As a alt more about the
tradeoffs of tps using the link in the description. The
third milestone noted in the blog post is compact vote state,
which can be simply understood as reducing the size of
certain transactions. This could further increase Salana's TPS while protecting
(23:17):
against some of the centralization and security issues that could
arise from the block size increase. Now, what's funny about
these milestones is that they're eerily similar to aptosses milestones.
Ap toss is currently working on implementing different fee markets
for different types of transactions. Salana's inspiration doesn't stop at
(23:38):
transactions either. That's because a repository on the Salana gitub
suggests that it's looking to make it possible to build
on its blockchain using the move programming language. This is
significant because the difficulty of building on Salana has been
one of the project's biggest drawbacks. The Salana gitub also
(23:58):
contains many repositi trees related to on chain governance, something
that's been in the works for a while now. I
don't imagine Solana is in a rush to roll out
its on chain governance now that a significant chunk of
Soul's supply is in limbo via f t X Alameda
and other affected crypto vcs. Speaking of which, anatotally dropped
(24:20):
a bombshell about Salana's development during a panel discussion at
the project's aforementioned Breakpoint conference earlier this month. He basically
said that he will consider Solana to be out of
beta once a second validator client has been completed. Now,
this is huge news that seems to have flown under
(24:41):
everyone's radar because of the ft X Alameda situation. To
be fair, and it's only only said that he would
consider Salana to be out of beta at that point,
not that it necessarily would be. Even so, it's the
closest thing we've got to an alpha timeline thus far.
The thing is that Salana still seems to be unreliable,
(25:04):
and its block chain and especially its ecosystem seem to
be in a more vulnerable position than ever. This makes
it hard to understand how Salana could be considered complete
when it's still experiencing so many issues. This brings me
to my concerns about Salana, and my first concern has
(25:25):
to do with Salana Labs and the Salana Foundation, specifically
their balance sheets. The blog post detailing their exposure to
f t X and Alameda suggests that the Salana Foundation
only has around one hundred million dollars of cash on hand.
In case you're wondering, the foundation only had around one
(25:46):
million dollars of cash on ft X when it collapsed. However,
it had two hundred million dollars worth of f t
T and s r M sitting there. These tokens are
now essentially worth nothing, along with the three point two
million shares of ft X the foundation also holds. Frustratingly,
the blog post didn't reveal how much runway Salana Labs has,
(26:09):
but Anna Totally mentioned on Twitter that it has enough
money in the war chest for another thirty months or so.
Anna Totally specified that this runway is in dollars, which
begs the question of how much soul Salana Labs holds,
and a Totally also confirmed that Salana Labs had no
assets on ft X, which is certainly good news. The
(26:31):
bad news is that f t X and Alameda were
the primary money funnel for the Salana ecosystem. What's more
is that Salana's association with ft X and Alameda could
make its ecosystem unattractive to other vcs. What this means
is that the Salana Foundation and Slana Labs might be
the only entities willing to invest in Salana's ecosystem for
(26:54):
a while, and the cash they currently have on hand
won't be nearly enough. This means they might have to
start selling Soul, which would cause its price to fall
even further. This relates to my second concern, and that's regulation.
As I mentioned earlier, the SEC is watching proof of
(27:15):
state cryptocurrencies very closely, and Salana Labs is already involved
in a security suit. The fact that the SEC and
others are now investigating FTX means that Salana could come
under additional scrutiny. Now, my final concern about Salana is straightforward,
and that is competition. Anatoly admitted in an interview that
(27:37):
the Salana team is anxious about Aptos and Suey because
of how developer friendly they are. Aptos and Suey also
have an absurd amount of big tech backing due to
their d M origins. There are also other smart contract
cryptocurrencies like Polka Dot, Near Protocol, Avalanche, Cardana, and Ethereum,
(27:57):
which are fundamentally fighting for dominance of the same critical
crypto niche. These crypto projects aren't nearly as exposed to
f t X and Alameda as Salana was and continues
to be. In the race for superpower dominance, resources and
(28:20):
influence are the currency's worth accumulating, and this is something
that China has been doing for years in a continent
many in the West seem to have forgotten about. I am,
of course talking about Africa, home to some of the
largest deposits of natural resources in the world, a continent
that contains sixty of the world's arable land, a continent
(28:45):
that by twenty fifty will have a quarter of the
world's population. Today. I'm going to tell you exactly what
China has been up to in Africa and what it
could mean for the balance of global power. Before we
dive into China's strategy in Africa, it's important to appreciate
how important the continent will be in the next few decades.
(29:07):
As I mentioned, it's a vast and largely untapped resource
for all types of minerals and commodities, everything from copper
to cobalt, gold to diamonds, and aluminium to titanium. For example,
according to estimates from the United Nations, Africa is home
to thirty percent of the world's mineral reserves of the gold,
(29:29):
twelve percent of its oil, and nine of its chromium
and platinum. This map over here is pretty handy, and
it shows exactly how resource rich Africa is. It's color
coded by those countries with the most abundant minerals. All
of these resources are important for any country that is
(29:49):
looking to continue growing economically. They're even more important at
a time when older minds are starting to become exhausted
and older wells are running empty. What's perhaps most surprising
about this is the fact that Africa only accounted for
about five point five percent of the world's total mind
minerals in twenty nineteen. Those deposits are sitting there waiting
(30:14):
to be extracted, and it's not only the mineral wealth
that much of Africa is sitting on. Those vast tracts
of arable land mean that the continent could become a
bread basket for the world. This is particularly relevant now
when you realize how dependent we've become on farmland in
regions such as Ukraine and Russia. And finally, we also
(30:36):
have to consider African's human capital potential. The continent has
the fastest growing population in the world. Sub Saharan Africa's
population is expected to double by twenty fifty. This is
important because of the fact that population decline is one
of the biggest threats the world faces. It's something that
Elon Musk is most concerned about and it's the subject
(30:59):
of a video I did recently that is in the
description for you. The point is that countries cannot continue
to grow economically if they have declining populations. Hence, as
Africa is going to have plenty of new young people
entering the workforce in the coming decades, it can continue
its rapid economic growth. By some estimates, Africa is well
(31:22):
on its way to becoming a five trillion dollar economy,
as household consumption is expected to increase at a three
point eight percent yearly clip. This growing population also presents
economic advantages for key trading partners. All of these African
citizens will be important consumers of products and services and
(31:42):
hence will offer strong export demand for countries that have
tapped out Western markets. Not only that, but all these
people could be potential allies or adversaries based on how
they view other countries. In a game of international influence,
the more people and country that you have on your side,
the more geopolitical clouds you have. So it's quite clear
(32:05):
that there are a number of reasons why Africa is
a continent which cannot be ignored and China is now
involved in a modern day quote scramble for Africa. Take
a look at this chart over here. This is the
total amount of f d I, or foreign direct investment
that China has been sending to Africa over the past
(32:27):
seventeen years. As you can see, it has gone from
a mere seventy four million dollars in two thousand and
three to over forty five billion in two thousand and eighteen,
although it shrunk slightly during COVID. All of this makes
China Africa's fourth largest investor and places it ahead of
the United States in this regard. Not only that, but
(32:50):
Chinese loans to African countries have totaled one hundred and
fifty three billion dollars between two thousand and two thousand
and nineteen. More about that, in a bit. The vast
majority of this investment in and loans to Africa has
gone into the development of infrastructure. This is all part
of China's so called Belt and Road Initiative or b
(33:13):
r I for those unfamiliar. This is a global infrastructure
initiative unveiled by the Chinese government in twenty thirteen. It
forms the centerpiece of Zijimping's foreign policy and calls for
China to play a greater role in world diplomacy. Essentially,
it's a strategy to win the hearts and minds of
foreign populations. Of course, this is all infrastructure that the
(33:37):
Chinese could also eventually use themselves. Now. As of August
twenty nineteen, one hundred and forty nine countries were listed
as having signed up to the b r I. Chinese
investments in infrastructure for African countries have been particularly outsized, however.
For example, according to this report in twenty eighteen, China
(33:59):
provided over twenty of the overall funding contributed towards infrastructure
development projects in Africa, and in this seventeen McKinsey report,
Chinese firms and construction companies one almost half of all
engineering and procurement projects continent wide. However, while China has
(34:20):
been ramping up its infrastructure development on the continent under
z it's not in fact a new phenomenon. That's because
China first entered Africa back in the nineteen seventies and
one of its first projects was a railway that connected
ports in Tanzania to towns in Zambia. This was done
under the leadership of Chairman Mao and it was the
(34:41):
most expensive infrastructure project that China had ever attempted. It
was also a godsend to Zambia, which was effectively cut
off from seaports further south thanks to the actions of
the Zimbabwean government. With this new railway, Zambia could export
its copper to world markets, including co incidentally enough, a
(35:01):
fast growing China. I'll leave a link to the story
about the Tazara railroad in the description for you. It
is truly fascinating now. Of course, infrastructure developments like this
and many subsequent ones mean that China has strong ties
with politicians and business leaders in the African countries it
has been built in. This means that they can enter
(35:24):
into mutually beneficial trade agreements which shake up the status quo.
According to data from China's Customs Agency. Trade between China
and Africa rose to its highest level last year. It
increased by thirty five percent from twenty to two hundred
and fifty four billion dollars last year. You can see
(35:44):
what that looks like here. Not only that, but China
looks set to overtake the EU as Africa's biggest trading
partner by This will be a symbolic moment given that
many European nations are viewed by any in Africa as
the colonizers of yesteryear now being overtaken by new colonizers
(36:06):
so to speak. What do I mean by that, Well,
it all really depends on the terms that China has
attached to much of its infrastructure spending. While f DI
is great loans for bridges eight and Africa has been
racking up quite a number of loans over the past
few years. If you take a look at this infographic here,
(36:28):
you can see those countries that are most in debt
to China. African ones stick out like a sore thumb.
Those countries with the highest debt loads were Jibooty and Angola,
where the aggregate Chinese debt exceeded forty of their gross
national income. In the case of Jibouti, China holds seventy
(36:50):
of its total debt. According to the World Bank and
the i m F, these loans are structured more like
commercial loans, and they have shorter repayment windows. Their conditions
are also confidential, and they're usually used for the purpose
of building infrastructure rather than broader humanitarian goals. Now, of course,
(37:10):
I would argue that the i m F and World
Bank don't exactly have much right to opine on the matter,
but perhaps that's just me. Either way, the point is
that when someone owes you money, you have a great
deal of sway over them. That's why people have accused
China of engaging in what is termed quote debt trap diplomacy. Essentially,
(37:31):
if you owe China money, you're more likely to dance
to its tune, not only when it comes to concessions
within your own country, but also on the international stage.
For the clearest example of this, you only need to
look at how countries in Africa tend to vote on
u N resolutions. For example, in fifty countries issued a
(37:52):
statement supporting China's crackdown in Hong Kong, more than half
were African Some African countries have also been silent on
China's human rights record in places like Sinjang. The president
of Burkina FASO has stated, quote, some Western forces hyping
up the so called Sinjang related issues are actually launching
(38:13):
unprovoked attacks on China to serve their own ulterior motives.
That same meeting was attended by the presidents of Sudan
and the Republic of the Congo. Or if you want
to take a look at a much more sensitive issue
with China, you can see how support for Taiwan has
almost completely evaporated across Africa. This wasn't always the case.
(38:39):
Back in the nineteen sixties, Taiwan outpaced China in its
efforts to cement diplomatic ties with African nations. However, ever,
since a ninety one vote that denied Taiwan a seat
at the UN table, African countries have been switching their
allegiances in Burkina FASO officially cut ties with Taiwan, and
(39:00):
now there is only one African country that retains ties
with the island. That's the Kingdom of es Swatini, one
which has been under represented in Chinese investments and wasn't
invited to numerous Africa China summits. It does make me
wonder how long they can hold out. The point is
(39:22):
that China knows that these investments, as well as debts,
give it a great deal of clout with these countries.
But what happens if a country finds itself in a
position where it can no longer service its debts. Well,
like any hard up individual debtor, it could lose some
of its collateral. Up until a few years ago, the
(39:44):
notion that a nation state would seize another country's key
infrastructure over a bad debt was laughable. However, this happened
a few years ago when China took over the hambn
Tota Port in Sri Lanka. This was a port built
by the Chinese with debt financed by Chinese banks. When
(40:05):
Sri Lanka struggled to repay its debt, it was forced
to hand over the port on a nine year lease.
More about Sri Lanka's economic woes in the description. So
given Sri Lanka's experience with bad Chinese debt, African countries
are naturally beginning to worry too. You only need to
take a look at the number of Chinese built ports
(40:27):
around the world and where they are concentrated. The alarm
over this was raised three years ago in Kenya, for example,
by the country's Order to General. He said that Kenya
could be made to surrender control of its port in
Mombassa if it defaulted on a three point six billion
dollar loan from China used to build a railway. It's
(40:49):
not just ports either. Quite recently, there were concerns that
China may attempt to grab Uganda's sole international airport. This
was due to the fact that China had extended a
two hundred million dollar loan to expand the facilities there.
A parliamentary probe in Uganda concluded that China had imposed
onerous conditions on the loan, including potential forfeiture of the
(41:13):
airport in case of default. The Ugandan finance minister was
hauled before parliament and grilled about the loan. He apologized
profusely and said, we shouldn't have accepted some of the clauses,
but they told us you either take it or leave it.
Whether that is indeed the case is hard to tell.
(41:34):
The Chinese, for their part, have adamantly denied the claim
that they were attempting to seize the airport. Moreover, the
concerns that were raised about the Mombassa port appeared to
be as a result of a misunderstanding over a key
clause in the contract, and as of yet, China still
hasn't seized any African infrastructure. However, concerns do remain. Now
(41:57):
remember that chart I showed you about how in debt
Djibouty was to China. Well, it turns out that China
has been investing heavily in the country. This has been
happening ever since China's People's Liberation Army or p l
A established its first and only overseas military base. China
is said to have spent five hundred and ninety million
(42:19):
dollars on both this military facility and the door Allah
Multi Purpose Port, the deepest port in East Africa. The
port is also of great strategic importance given its location.
It sits on the Horn of Africa and near key
shipping routes. More recently, a Chinese company agreed to finance
Djibouty's port revamp in a three hundred and fifty million
(42:43):
dollar investment deal. The company already owned twenty three and
a half percent of the port, so this could be
a further ploy to embed its influence. Given the parallels
that this shares with the Sri Lankan port prior to
its seizure, you have to worry. Let's also not forget
that military base near the port, one that the Chinese
(43:03):
seem dead set on keeping in place. Either way, the
prospect of infrastructure seizures or more onerous concessions will always
dog those African countries that have taken on Chinese debt. Okay,
So that's a concern that many have with Chinese engagement
in Africa. But what do Africans themselves think of this?
(43:24):
And are these characterizations by the Western media fair. Most
Africans view China in a positive light. For example, a
survey last year of thirty four African countries by Afro Barometer,
a research group, found that six of the respondents thought
China had a very or somewhat positive influence. The US meanwhile,
(43:48):
only scored Quite surprisingly, the African Union has a lower
rating than both countries. The Economist magazine also conducted a
similar survey earlier this year, where the majority of the
respondents thought China had a good rather than a bad influence,
and in another survey by the Ichi Kowitz Family Foundation,
(44:10):
the vast majority of African youth see China as the
most influential player on the continent. This survey targeted four
and a half thousand younger Africans between the ages of
eighteen and twenty four. It's also important to note that
US influence in the minds of these citizens has also
dropped over the years. China's impact on the continent was
(44:32):
also seen as more positive than that of the US.
According to the survey's authors, quote, young Africans are telling
us that they are seeing tangible, visible and very impactful
signs of the role that China has played in the
development of Africa. This is all quite telling. It shows
that despite the concerns in the Western media about China's
(44:55):
intentions in Africa, African people themselves still view China as
a end rather than a foe. That is interesting in itself,
but it also shows that mistrust of the West runs
deep in Africa. China is definitely not making these investments
for charitable purposes, but as long as local citizens see
(45:16):
some of the returns from said investments, it's an improvement
on the status quo. So what if China is funding
the construction of an airport or a road. It's better,
surely than not having them at all. Let's also not
forget that the i m F and World Bank have
a really shoddy record when it comes to growth and development.
(45:37):
I talked about this in my video on the I
m F, which I'll leave in the description for you. Moreover,
I happen to think that the often patronizing way in
which Western governments, media and other organizations portray Africa could
play a factor in these surveys. Africa is sometimes made
out to be a somewhat hapless place that's unwittingly being
(45:58):
taken advantage of by ruthless foreign governments, an image that
many Africans doubtless take issue with. African leaders also want
to make it clear to Western governments that they have
no option but to deal with China on account of
the lack of engagement from the West, and they have
a point. Despite this, though, it's encouraging to see that
(46:21):
many Africans do also have a healthy dose of skepticism
when it comes to China. According to that aforementioned Afrobarometer survey,
the majority of the respondents are concerned about being heavily
indebted to China and say that their governments have borrowed
too much money. The respondents also think that China's influence
(46:42):
is on the decline. The proportion of Africans who said
China's economic activities in their countries have some or a
lot of influence on their economies has declined over the
past five years from se to But if China can
in us to be viewed more favorably by Africans than
(47:02):
the West, then it will be well positioned to take
advantage of a continent that is poised to become a
global powerhouse in a few decades time. Okay, time for
a few of my thoughts on China's scramble for Africa.
It's quite clear that Africa is going to become one
(47:24):
of the most important, if not the most important, continent
in the not too distant future. Therefore, it makes logical
sense for China to be positioning itself to make the
most of the opportunities there. China cannot continue to power
its economic engine unless it has the resources to buy
goods as well as the buyers to consume them. It
(47:46):
also needs to curry favor with countries around the world,
especially at a time when it's vying for allies against Taiwan,
and its initiatives on the continent have had a great
deal of success. This is affected in the growth of
Chinese trade and the favorable perceptions the citizens of Africa
have of China's influence. However, practices that threatened to entrap
(48:10):
countries into debts they cannot pay back threatened to sustain
that reputation. This is something that China seems to have
appreciated more recently, and it has in fact forgiven the
debt of a number of African countries. I also think
that African countries have a healthy skepticism about these loans
and Chinese involvement more generally from the era of European
(48:32):
colonialism to the I m F, World Bank and USSR
in the nineteen sixties, seventies and eighties. They know that
other countries have long been eager to feed at their trough.
But if they're able to craft deals and agreements with
the Chinese that give them infrastructure and trade that they
wouldn't have with the West, then they are in a
(48:52):
strong position. It doesn't have to be a zero sum game,
and for the West's part, he should also try and
engage more with Africa, but it shouldn't be with the
same playbook that many Western countries used in the past. Moreover,
viewing Africa as a victim of exploitation isn't flattering, and
trying to present yourself as the white knight who can
(49:14):
save it is insulting. Quite simply, global superpowers should treat
Africa as they would like to be treated. They should
show its leaders respect on the world stage and foster
mutually beneficial relationships that can take advantage of its growth.
It could be an investment that pays off handsomely in
thirty years time. Thank you so much for listening to
(49:38):
the coin Bureau podcast. If you'd like to learn more
about cryptocurrency, you can visit our YouTube channel at YouTube
dot com forward slash coin Bureau. You can also go
to coin bureau dot com for loads more information about
all things crypto. You can follow me on Twitter at
at coin bureau or one word, and I'm also active
on TikTok and Instagram too. You ll known call Cong
(50:03):
Kong Kong
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