Tuesday, 17 May 2022

Market Summary

Market Summary 17 May 2022

Bitcoin Price: US$ 29,874.01 (-4.64%)
Ethereum Price: US$ 2,023.66 (-5.67%)


GBTC Discount, BTC’s Surging Dominance, & Crypto Hell Week

  • The GBTC discount deepened late last week to a new low of -30.8% on Thursday. The steepening discount reflects waning demand for GBTC as better alternatives emerge, namely exchange-traded funds, which allow redemption and creation to alleviate such dislocations.
  • GBTC’s price has underperformed bitcoin, returning -42.5%, while bitcoin’s price has fallen by -37.8%.
  • Separately, GBTC’s parent company, Grayscale Investment LLC launched its first European ETF tracking a basket of digital asset companies rather than the price of a digital asset directly. This comes as the company is still in talks with regulators to convert its bitcoin trust into an ETF.
  • Crypto markets tumbled last week, with bitcoin trading as low as $25.3k. Bitcoin dominance spiked amidst the sell-off and is sitting at its highest this year, indicating an even worse time for altcoins.
  • Bitcoin’s price has closed negative for the 7th week in a row, a new historical record for its price performance.


Lido DAO Preps for the Merge and 1inch Searches for Political Parties

  • Bancor launches their V3 and tells CT that they will unveil the new version at Permissionless.
  • Convex announces Boosted Frax staking.
  • Ribbon Finance and Porter Finance announce a partnership.
  • Shreyas of Llama DAO tweets that DAOs should consider debt and M&A during current market conditions.
  • Stepn publishes an article that opens a debate on the nature of Gaming Guilds and their potential to be value-extractive to the games they play.
  • Tennessee becomes the second state to recognize DAOs legally.
  • VeDAO announces an airdrop for Convex lockers.
  • Will Papper, Co-Founder of Syndicate, publishes a thread on re-conceptualizing decentralization.
  • ENS publishes the 6th edition of their newsletter.
  • Frax Finance discusses moving its collateral ratio to 100%.
  • Gnosis DAO considers letting GNO holders vote with locked or staked tokens. Meanwhile, Trustlines Network proposes migrating its protocol to Gnosis Chain.
  • Maker DAO re-brands Maker Wormhole to Maker Teleport.
  • Merit Circle receives contribution posts from YGG, DeFiance Capital, Mechanism Capital, and Maven11.
  • Nexus Mutual discusses allocating capital to Maple Finance.
  • Reflexer Labs receives a proposal from their new lead DAO operations candidate, Bacon.
  • Secret receives a proposal from the SCRT Labs CEO on building their algo-stable based on UST.
  • The Terra forum has dozens of threads proposing ideas on how Luna/UST can recover from its recent turbulence. We recommend that users check in on the forum periodically to stay abreast of developments. Do Kwon posted his proposals here and here.
  • To increase governance participation, 1inch contributor Roxan has proposed onboarding ‘meta-delegates’ and consortia to participate and govern 1inch DAO. Meta-delegates are just committees that govern the protocol – like Standford Crypto or Blockchain Edu. Roxan recommends sourcing these groups from existing University clubs as this has a strong precedent in DeFi.


Do Kwon proposes Terra hard fork to save ecosystem

  • On Monday, Do Kwon, co-founder of the troubled Terra Luna blockchain, announced a revised plan to restore the ecosystem after a combination of significant market volatility and inherent protocol design flaws wiped out a vast majority of the blockchain’s market cap. As told by Kwon, Terraform Labs will put forth a new governance proposal on May 18 to fork the Terra Luna blockchain called Terra (token name: LUNA). 
  • However, the new chain will not be linked to the TerraUSD (UST) stablecoin. Meanwhile, the old Terra blockchain will continue to exist with UST and will be called Terra Classic (LUNC). Under Kwon’s plan, if passed, the new LUNA blockchain will go live on May 27. 
  • Under the proposal, new LUNA tokens will be airdropped to LUNC holders, UST holders and essential developers of the Terra Classic blockchain. In addition, Terraform Labs’ wallet with the address terra1dp0taj85ruc299rkdvzp4z5pfg6z6swaed74e6 will be removed from the whitelist for the airdrop, thereby making Terra a fully community-owned chain. The proposed supply of LUNC is capped at 1 billion, with 25% going to the community pool, 5% to essential developers and 70% going to LUNC and UST holders at various snapshots of events in May, subject to vesting conditions. 


Polygon and others extend helping hand to Terra blockchain projects

  • Numerous developers have been left in uncertainty in the aftermath of the Terra (LUNA) collapse. These Terra-based projects, which are already under a lot of pressure, may be able to save their communities and projects by migrating to other networks.
  • In a move that is expected to benefit both the Polygon (MATIC) community and Terra projects, Polygon Studios’ CEO Ryan Wyatt tweeted on Monday that Polygon is working with a number of Terra projects to assist them migrating to the Polygon Network. The Polygon community, according to Wyatt, “is ready to welcome the developers and communities of these Terra projects.” He also stated that Polygon would provide the capital and resources needed to assist them in their migration.
  • Polygon founder Sandeep Nailwal added his two cents by detailing the options most suitable for Terra projects. He suggested that Polygon’s proof-of-stake (PoS) chain may be utilized by community projects needing a common chain. Nailwal noted that zk-Rollups will be available on the PoS network soon. 
  • Layer-1 blockchain project Fantom (FTM) also extended its support to the Terra community by stating that Fantom is prepared to assist any project or developer who desires to move away from Terra blockchain. The team at Fantom also detailed a grant program to help with integration, marketing and connections.


Bitcoin investment giant Grayscale debuts ETF in Europe

  • Crypto investment giant Grayscale is expanding operations by launching a new crypto-linked exchange-traded fund (ETF) in Europe.
  • Grayscale officially announced its first European ETF, called Grayscale Future of Finance UCITS ETF, on Monday. A spokesperson for Grayscale told Cointelegraph that the ETF will begin trading on Tuesday.
  • The new investment product is getting listings on major European stock exchanges, including the London Stock Exchange, Borsa Italiana as well as Deutsche Börse’s electronic trading platform Xetra. Listed under the ticker symbol GFOF, the ETF will also be passported for sale across Europe.
  • Launched in partnership with Bloomberg, GFOF UCITS ET tracks the performance of the Bloomberg Grayscale Future of Finance Index. Bloomberg and Grayscale jointly introduced the index in January 2022, aiming to track the digital economy, focusing on the three main directions of technology, finance and digital assets.
  • According to the announcement, the new ETF includes companies directly involved in cryptocurrency mining, energy management and other activities in the digital asset ecosystem. According to the official information about the fund, the ETF tracks firms like the crypto-friendly trading app Robinhood, PayPal, Block, Coinbase, Canaan and others.


UK Treasury en route to legalizing stablecoins amid Terra’s UST crash

  • United Kingdom’s Department of Treasury, or Her Majesty’s Treasury, has reportedly decided to go ahead with regulating stablecoins as legal tender. While welcomed by the crypto community, the decision comes as a shocker due to its proximity to the recent fall of the popular algorithmic stablecoin, TerraUSD (UST).
  • A local report from The Telegraph highlighted the Treasury’s intent to regulate stablecoins across Britain, which was revealed during the Queen’s Speech. During the speech, Prince Charles announced the introductions of new legislation across various sectors, including measures to drive economic growth to improve living standards in the region, adding:
  • “A bill will be brought forward to further strengthen powers to tackle illicit finance, reduce economic crime and help businesses grow [Economic Crime and Corporate Transparency Bill].”


Crypto capital gains one of four key areas for Australian Tax Office

  • The Australian Taxation Office (ATO) has outlined crypto capital gains as one of four key areas of focus in 2022.
  • A capital gain or loss refers to the price difference between the time an asset was purchased and the time it was sold. The percentage owed to the ATO varies between income brackets and duration of ownership, but in general, the rate is reduced for assets held longer than 12 months.
  • The ATO, which has fired off many warnings to crypto investors over the past few years, has also directly mentioned nonfungible tokens (NFTs) as an asset class that will be scrutinized for correct tax reporting.
  • According to a Monday announcement, alongside capital gains from crypto, property and shares, the ATO will also look at record-keeping, work-related expenses and rental property income/deductions.


Square Enix plans to issue tokens and invest heavily in Web3 gaming

  • Gaming giant Square Enix has revealed in its Q1 earnings report that it will expand nonfungible tokens (NFTs) into more game products as part of its medium-term business strategy in 2022.
  • Square Enix (SE) is a Japanese game developer with $3 billion in assets under management, according to its latest earnings report. The firm owns the Final Fantasy property and sold the Tomb Raider franchise for $300 million on May 3.
  • The report states that the firm piloted NFTs on the Shi-San-Sei Million Arthur game starting in February this year. The success of the pilot program will lead to the second season of the game’s NFTs and will ultimately see the firm pursue broader activities in the NFT and blockchain industries.
  • Among the top priorities of its blockchain domain initiatives, SE plans on establishing regulatory clarity and guidelines for blockchain games, tackling scalability in NFT economies and considering founding a corporate capital venture unit.
  • The firm also stated that it plans on establishing an overseas entity that will handle “issuing, managing, and investing our own tokens,” suggesting the firm will begin creating an expansive gaming-token economy.


Hard Fork – ONE

  • A hard fork on the Harmony network has been scheduled for epoch 999, corresponding to a block height of 26,345,516. The activation block will arrive on May 27, 2022, at approximately 09:41 UTC.
  • This upgrade brings support for HIP-16, which enforces a 6% max keys par shard limit for each validator. Harmony client v4.3.9 is the latest release that supports the upcoming hard fork.


Perp V1 Discontinuation and Immediate Shutdown – PERP

  • The Perpetual Protocol team has paused Perp V1 and will execute shutdown immediately. The team stated “this shutdown comes after a week of effort by the team to keep v1 running amid the market conditions and the v1 design created an unsustainable situation”. Perpetual Protocol v2 continues to operate. The team will work on proposals to handle traders’ positions in the next few days.

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