Friday, 11 March 2022

Market Summary

Market Summary 11 March 2022

Bitcoin Price: US$ 39,422.01 (-6.01%)
Ethereum Price: US$ 2,606.70(-4.41%)

 

BTC Calls, Upcoming NFT Mints, & The Frax Expansion

  • The put/call ratio for BTC open interest hit a 6-month high of 0.69 in Feb. 2022, as bearish market sentiments sent traders to buy puts. Since that peak, however, it has started to fall sharply to 0.55.
  • Yesterday, the volume-adjusted put/call ratio hit its monthly lows of 0.44, as the volume for calls spiked. Deribit traders were buying up Apr. 29 BTC calls for $42k, $50k, and $60k strikes. This boosted the notional value for Apr. 29 calls up to $193M on Deribit.
  • This might indicate that traders are turning bullish, even in an uncertain macro environment. All eyes will be on the CPI release today as economists predict inflation to rise to 7.8%.
  • FRAX is a hybrid algorithmic stablecoin whose model is similar to that of UST. However, while UST is now 7.5% backed by exogenous collateral (i.e. BTC), FRAX is 84.5% directly backed by exogenous collateral, making it less reliant on the algorithmic component. This model is in contrast to an overcollateralized stablecoin such as DAI, whose CR ranges from 101-175%. Importantly, FRAX’s collateralization ratio is not static, but rather increases or decreases based on demand for the stablecoin
  • FRAX + 3CRV has amassed a large liquidity pool on Curve worth nearly $3B. This does a few things. First and foremost, this makes FRAX extremely liquid on-chain and has contributed to a rock-solid peg. Given its amplification parameter, this Curve pool can absorb hundreds of millions in selling pressure without pushing FRAX off its peg. Secondly, since ~58% of this liquidity is owned by the protocol, it allows FRAX to run one of the most profitable farming operations in all of crypto from CRV and CVX emissions. Thirdly, it gives FRAX unique flexibility to run its Curve AMO strategy, which will be explained below.

 

Ethereum’s ‘consensus layer’ contract hits 10M ETH staked

  • Quantitative analysis conducted on popular blockchain site Etherscan indicates that 184,441 transactions have been responsible for 10.2 million Ether (ETH) staked into the Eth2 (consensus layer) deposit contract since inception on Nov. 4 last year. This figure is equivalent to over $26 billion, based upon current Ethereum prices.
  • Mathematical calculations suggest that the milestone was surpassed during block 14348729 in the evening of March 8, identified by mainstream cryptocurrency publications and community advocates in the last few hours.

 

Report: Axie Infinity accounted for nearly two-thirds of blockchain-game NFT transactions in 2021

  • According to a recent report curated by NonFungible, players of the monster-battle nonfungible tokens, or NFTs, game Axie Infinity transacted nearly $3.5 billion worth of NFTs in 2021. This accounts for almost two-thirds of all NFTs transacted in the entire blockchain gaming industry in 2021. In second and third place were sports highlights marketplace NBA Top Shot with $827 million and community gaming platform Loot with $242 million, respectively.
  • Created by Vietnamese video game developer Sky Mavis in 2018, the game contains creatures called “Axies” that players collect and use to complete daily quests, duel other players, etc. Every Axie is an NFT minted on the Ethereum (ETH) blockchain. Completing tasks with Axies rewards players with Smooth Love Potions (SLPs), which can be sold for cash on cryptocurrency exchanges, thereby generating a stream of income for players. On the whole, Axie Infinity accounted for 19% of the estimated $17 billion in total NFT transactions last year.

 

FBI director: Russia overestimates its ability to bypass US sanctions using crypto

  • Christopher Wray, the director of the Federal Bureau of Investigation, said that fiat was a more likely avenue for Russia to explore in circumventing sanctions, given the United States’ ability to block efforts using crypto.
  • In a Thursday hearing of the Senate Select Committee on Intelligence, New Mexico Senator Martin Heinrich asked the FBI director if Russia might respond to the economic impact of the United States banning imports of the country’s oil and gas by using reserves of gold, China’s currency or cryptocurrency. Director Wray said the FBI and its partners had “built up significant expertise” on digital assets, citing the department’s recent work in seizing large amounts of tokens as evidence there were vulnerabilities in using crypto to get around sanctions.
  • “The Russians’ ability to circumvent the sanctions with cryptocurrency is probably highly overestimated on the part of maybe them and others,” said Wray. “We are, as a community and with our partners overseas, far more effective on that than I think that sometimes they appreciate and there’s a lot of expertise in terms of tools and strategies to help block that kind of effort. Ultimately, what they really need to do is get access to some form of fiat currency, which becomes more challenging.”

 

HBAR Foundation launches $100M climate-focused impact fund, declaring DOVU as inaugural grantee

  • The HBAR Foundation, a philanthropic and independent subsidiary of distributed ledger firm Hedera Hashgraph, has announced the launch of the environmentally-conscious Sustainable Impact Fund (SIF), conceived to foster the development of climate-conscious solutions within the Hedera ecosystem.
  • The first recipient, a Welsh blockchain company called DOVU, has been granted an undisclosed portion of the $100 million treasury to pursue their open-source Guardian technology to develop publicly transparent mechanisms, such as their audit trail, to verify carbon-offsetting data.
  • A supporter of the Crypto Climate Accord, Dovu’s carbon-centric market capitalization platform aggregates an abundance of real-time quantitative data on all Ethereum-based projects, tracking and openly publishing their carbon debt based upon transaction output, and suggesting tokenomic negation measures through investment in Dovu’s native asset, DOV.

 

FTX joins other crypto goliaths to promote autonomy over sensitive information

  • Centre, an open-source technology project developed by Coinbase and Circle, has onboarded crypto exchange FTX and Alkemi Network as its latest partners to collaborate on Verite. Verite is a set of shared decentralized identity protocols — developed by Centre — to empower crypto-centric individuals and businesses by granting total control of personal information. 
  • Supporting Verite’s commitment to collaborate on shared decentralized identity standards, FTX and Alkemi have added to the list of 14 crypto companies, which include Coinbase, Circle, Hedera Hashgraph, Ledger, the Solana Foundation and more.
  • Verite protocols are designed to help people and businesses keep track of their personal information and provide total control over how businesses use this information in the crypto economy. According to the company:
  • “Verite is returning autonomy over sensitive information to the individual while continuing to enable businesses to interact with identity-verified participants.”

 

Russian Parliament working group: There should be ‘mechanisms to control crypto transactions

  • Amid the ongoing discussion between the Central Bank of Russia (CBR) and the nation’s Finance Ministry on the future of crypto, a State Duma (the lower chamber of Parliament) working group has voiced their support for regulating rather than banning digital assets.
  • The working group called for the “clear regulation of the digital assets industry” as the most effective approach to lower the risks associated with crypto’s adoption in the country.
  • As reported by local media, some 50 experts took part in the panel session called by the Duma’s working group “On the questions of the regulation of cryptocurrency.” The participants came to the conclusion that the “effective and transparent” regulation of the digital asset industry in Russia demands the mechanisms “to control the cryptocurrency transactions.” Such mechanisms already operate in other countries, as experts mentioned, though there is no public information as to what jurisdictions they referred to.

 

CBDCs will not impact private stablecoin market, says Tether CTO

  • Paolo Ardoino, the chief technology officer at Tether, believes that the growing developments around central bank digital currencies (CBDCs) globally wouldn’t really impact the role of private stablecoins.
  • Ardoino shared his two cents in a Twitter thread on the growing discussion around CBDCs and what their role could be in the current payment system. He said CBDCs would only replace the age-old centralized payment networks as SWIFT and use private blockchains to fulfill most transactions.
  • He went on to explain that CBDCs are not about digitizing the fiat currency as it has already been done, given most modern-day transactions are digital. The main goal of CBDCs is to use private blockchains as a modern and cost-controlled tech infrastructure, where most of the bank transfers and credit/debit card transactions will be settled via CBDCs.
  • Tether CTO claimed that private stablecoins such as USDT will remain relevant even in the age of government-issued digital currencies given, private stablecoins would give users the option to transfer across chains and would be available across multiple blockchains of their choice, something CBDCs won’t do.

 

Blockchain Halt – MATIC

  • Polygon developers have announced that the team is looking into an issue with the Tendermint implementation used by the Polygon PoS chain. The team stated that no user funds are at risk, but users may experience sporadic downtime.
  • The Polygon team has released a temporary hotfix to unblock Bor and resume producing blocks while a longer-term, more permanent upgrade is worked on. Node operators are asked to apply the hotfix to their sentry nodes first, and after the sentry node is caught up to the latest height, apply the hotfix to their validator nodes. The chain still currently remains halted.

 

Yoon Suk-yeol, who pledged to deregulate South Korea’s crypto sector, wins presidential election

  • Yoon Suk-yeol, a conservative South Korean presidential candidate, has prevailed in that country’s national election.
  • Yoon, representing the opposition People Power Party, won by a margin of less than 1%, according to the BBC’s election coverage. 
  • During the campaign, Yoon pledged to deregulate the country’s crypto industry. As reported by Yonhap News in January, Yoon declared that “we must overhaul regulations that are far from reality and unreasonable” during an event in Seoul.

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