Wednesday 17, August 2022

Market Summary

Market Summary 17 August 2022

Bitcoin Price: US$ 23,854.74 (-1.00%)
Ethereum Price: US$ 1,876.67 (-1.18%) 

 

Total ETH Staked On A Steady Uptrend As The Merge Approaches

  • a16z invests $350 million in Flow, a real estate start-up by Adam Neumann of WeWork infamy. This marks the largest check written by the firm in any funding round.
  • The European Union announces a new anti-money laundering regulator to oversee cryptocurrency.
  • BTG Pactual, the largest investment bank in Latin America, launches a crypto exchange called Mynt.
  • Hodlnaut, crypto lender based in Singapore, files for judicial management. This will place a moratorium on legal claims against the company.
  • CryptoPunks IP rights agreement goes live, allowing holders to unlock IP rights for their NFT’s artwork.
  • The total amount of ETH staked continues to climb higher, reaching a new all time high of 13.29M ETH staked across a total of 415,314 validators, as of August 16.
  • The total amount of ETH staked has almost doubled over the past year, despite the price of ETH declining by 43% over the same period. Currently, the price is down 62% since the all time high in Nov-21.
  • The staking contract, which was introduced on the Beacon Chain in Nov-20, holds ~11% of the total ETH in circulation (currently, worth about $25 billion). This signals increasing confidence in Ethereum’s future and advantages of the new proof-of-stake consensus mechanism.
  • The Merge, scheduled to take place on September 15–16, will see Ethereum switch from proof-of-work to proof-of-stake. Withdrawals of staked ETH will be enabled after the Shanghai upgrade, tentatively scheduled 6-12 months after the Merge.
  • Following the Merge, MEV on Ethereum could make up more than half of total ETH staking rewards, especially with Flashbots’ implementation of MEV-boost. This will allow validators to auction off their block space to an open market, while maintaining decentralization.
  • MEV or Maximal Extractable Value is the maximum amount that a validator can add to their balance given the actions at their disposal. These can include the capacity to censor blocks, reorder transactions, or attempt to reorganize the chain. Typical forms of MEV include sandwich attacks, arbitrage, and liquidations.

 

Google invested a whopping $1.5B into blockchain companies since September

  • Google parent company Alphabet poured the most amount of capital into the blockchain industry compared to any other public company, investing $1.5 billion between Sep. 2021 and Jun. 2022, a new report shows. 
  • In an updated blog published by Blockdata on Aug. 17, Alphabet (Google) was revealed as the investor with the deepest pockets compared to the top 40 public corporations investing in blockchain and crypto companies during the period.
  • The company invested $1.5 billion into the space, concentrating on four blockchain companies including digital asset custody platform Fireblocks, Web3 gaming company Dapper Labs, Bitcoin infrastructure tool Voltage, and venture capital company Digital Currency Group.
  • This is in stark contrast to last year, where Google diversified its much smaller $601.4 million funding effort across 17 blockchain-based companies, which again included Dapper Labs, along with Alchemy, Blockchain.com, Celo, Helium and Ripple.

 

Bank of China unveils new e-CNY smart contract test program for school education

  • According to local news outlet Sohu.com, on Tuesday, the state-owned Bank of China announced a new program to bridge primary school education with smart contracts. In a combined partnership with local education and financial authorities, parents residing in the city of Chengdu, located in China’s Sichuan province, will be able to enroll their children in after-school or extracurricular lessons using the digital yuan central bank digital currency, or e-CNY.
  • Under the pilot test, parents start by paying a deposit to a private educational entity for a series of lessons. Afterward, a smart contract binds each lesson on a pro-rata basis to the deposit. This way, should their children miss a lesson, the e-CNY payment is automatically credited back to their account via smart contract. The Bank of China stated:
  • “The program seeks to explore the benefits brought forth by e-CNY smart contracts. One potential use case is replacing the role of regulatory authorities to monitor payment transactions between parents and private education entities. Another is improving transactions’ liquidity via zero transaction fees embedded in the e-CNY design.”

 

Coinbase will ‘briefly pause’ ETH and ERC-20 token deposits and withdrawals during Ethereum Merge

  • United States-based cryptocurrency exchange Coinbase has announced it will be temporarily suspending certain token deposits and withdrawals when Ethereum’s core developers transition the blockchain to proof-of-stake, or PoS.
  • In a Tuesday blog post, Coinbase product manager Armin Rezaiean-Asel said that during the Merge event, the crypto exchange will “briefly pause” deposits and withdrawals of Ether (ETH) and ERC-20 tokens “as a precautionary measure” to handle the migration. The exchange also warned users against scammers offering ETH2 tokens, saying crypto users did not need to take additional action to receive staked ETH prior to the Merge.
  • “Although the Merge is expected to be seamless from a user perspective, this downtime allows us to ensure that the transition has been successfully reflected by our systems,” said Rezaiean-Asel. “We do not expect any other networks or currencies to be impacted and expect no impact to trading for ETH and ERC-20 tokens across our centralized trading products.”

 

Huobi Global suspends derivatives trading in New Zealand

  • Crypto exchange Huobi Global has announced the suspension of derivatives trading in New Zealand. The statement from Huobi said the new restrictions against derivatives offers are in light of compliance with local regulations. 
  • Users in New Zealand will no longer have access to derivatives trading services, which include coin-margined futures and swaps, Tether (USDT)-margined contracts, options and exchange-traded products.
  • The new restrictions will take effect on Aug. 23. On the same day, Huobi Global will no longer accept users with New Zealand Know Your Customer-verified location, along with IP addresses from the area. Users wishing to close out active positions can do so only on and after the effective date of the restrictions.

 

Tornado Cash shows that DeFi can’t escape regulation

  • The United States Treasury Department’s Office of Foreign Assets Control (OFAC) issued sanctions against Tornado Cash this month, marking its first action against a decentralized finance mixer in what may prove to be a watershed moment for DeFi regulation.
  • A lack of response and regulatory preparation from the industry is perhaps unsurprising of a mindset honed outside the rule of law. Yet, the potential of DeFi is threatened if its leaders do not face the reality that regulation in this space will only increase. Taking steps to work with regulators is now the only way forward.
  • On Aug. 8, OFAC targeted Tornado Cash for processing transactions totaling more than $1.5 billion on behalf of illicit actors, including North Korean cybercriminals. The consequences of the action are severe: US individuals and companies, including crypto exchanges and financial institutions, are now prohibited from transacting with Tornado Cash addresses.
  • This will hinder criminals’ ability to launder funds through the service, which has become a prolific part of the cybercrime ecosystem. However, OFAC’s action against Tornado Cash sends a clear message to everyone in the space: DeFi is now firmly in regulators’ crosshairs and won’t escape regulation.

 

Optimism fading? Regulatory discussion on stablecoins postponed until fall

  • Among a rich range of anxieties both for the crypto industry and the global economy at large, the summer of 2022 will be remembered as the time when stablecoins proved themselves to be not so stable and thus came into the focus of regulators’ attention. 
  • The shock of the TerraUSD (UST) depegging in May opened a season of heated-up discussions on stablecoins around the world. The top financial officials from the Group of Seven largest advanced industrial economies had to send their private jets to the 40,000-populated German town of Koenigswinter to push the international body of the Financial Stability Board into speeding up the crypto regulation process. The Chinese government signaled its desire for even tighter regulations on cryptocurrencies and stablecoins. Japan played proactively limited stablecoin issuance to banks and trust companies.
  • In the United States, an immediate reaction came from the Congressional Research Service, which dubbed the UST crash as a “run-like” scenario and emphasized that there is a significant risk of such failure repetitions due to the existing policy lacunas. And though some, like United States Treasury Secretary Janet Yellen, refused to follow such an alarming tone, the American crypto community witnessed several major initiatives to regulate the stablecoins in the following months.

 

Newly built Miami residential tower becomes bridge between cryptocurrency and real estate

  • The cryptocurrency market is often recognized for its uncertainty; its underlying technologies represent a major disruption across industries, such as finance, gaming and supply chain. Consequently, asset prices rise and fall alongside changes in regulatory measures and new applications for the technology. 
  • Most successful investors would agree that investing is about balancing high-risk and low-risk assets to minimize loss and maximize earning potential through diversification. As a result, investors often build portfolios that combine real estate assets, stocks and digital currencies to ensure their portfolio is properly diversified for success.
  • With this in mind, PMG and Greybrook have partnered with FTX US, a crypto exchange platform, to launch The Elser Hotel & Residences Miami which will enable investors to utilize volatile crypto assets to purchase more stable real estate property in a more accessible way.

 

Brazil brokerage giant with 3.6M clients launches BTC and ETH trading

  • Brazilian brokerage giant XP Inc has officially launched its crypto trading platform XTAGE in Brazil, bringing a potential 3.6 million users to the crypto markets. 
  • The news was broke in a Monday post by the Nasdaq Exchange Twitter account, noting that XP had rung the exchange’s “Opening Bell” to celebrate the launch of the XTAGE digital assets trading platform.
  • Initially, XP Inc’s 3.6 million clients will have access to Bitcoin (BTC) and Ether (ETH) trading, but the broker told Cointelegraph back in May that there were plans to “support other digital assets and investment products based on crypto assets in the future.”

 

Bitcoin miners hodl 27% less BTC after 3 months of major selling

  • According to a fresh prediction from crypto analysis firm Arcane Research, miners will continue to sell more Bitcoin (BTC) than they earn.
  • At one point, fears abounded that miners’ production cost was far higher than the Bitcoin spot price, and that heavy sales would result in order for miners to stay in business. Worse still, many may have to retire altogether due to their activities no longer being financially viable.
  • “Even though the public miners sold less than half the amount in July as in June, we still see that they are draining their holdings if we look at the percentage of the bitcoin production sold,” Arcane analyst Jaran Mellerud explained:

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