Thursday, 17 November 2022

Market Summary

Market Summary 17 November 2022

Bitcoin Price: US$ 16,662.76 (-1.41%)
Ethereum Price: US$ 1,216.17 (-2.96%) 

 

ETH Staking Yields Rise Above 10% APR

  • Staking APR on stETH has reached an all-time high of 10.7% since the Merge. Since stETH is a rebasing token, holders can expect a higher increase in the number of stETH tokens held.
  • Lido attributes this increase to higher-than-expected execution layer rewards. Recently, the liquid staking protocol also had to increase rebasing oracle limits from 10% to 17.5% to let the increased rewards flow to stETH token holders.
  • As a result of the increased rewards, the yield earned by recursive borrowing strategies such as icETH has also reached an all-time high of 25.5% since the Merge.
  • Interest Compounding ETH (icETH) is an investment strategy by Index Coop that offers amplified exposure to ETH staking yield in the form of an ERC-20 token. Currently, icETH has a total value locked of $12M.
  • The strategy collateralizes stETH tokens on Aave to borrow WETH that is used to purchase additional stETH tokens. While the target leverage ratio is 3.1x, the current leverage ratio stands at 2.7x.
  • Apart from smart contract risk, investors in icETH need to consider the liquidation risk from borrowing ETH from Aave and interest rate risk from the spread between borrowing cost and staking return.

 

ASX cancels years-long blockchain settlement and clearing system project

  • The Australian Securities Exchange (ASX) is dropping a long-in-the-making blockchain-powered replacement for its CHESS settlement and clearing system.
  • The announcement caps a process subject to delays and controversy that once appeared to be an early win for enterprise adoption of distributed ledger technology. ASX announced in 2017 that it had tapped blockchain startup Digital Asset Holdings to develop the system to replace CHESS. 
  • ASX will “will reassess all aspects of the CHESS replacement project following completion of an independent review, conducted by Accenture, and its own internal assessment,” according to a press statement. 
  • “The CHESS replacement capitalized software will be de-recognized in light of the solution uncertainty, resulting in a charge of $245-255 million pre-tax ($172-179 million after tax) in 1H23. This will have no impact on dividends,” ASX said.
  • That translates into  a pre-tax charge of $165 million-$172 million at today’s exchange rates.

 

Republicans Secure US House Majority, Will Shift Path for Crypto Bills

  • The U.S. Congress will officially be split between the two major parties after results from the Nov. 8 election put a 218th seat in the Republican column, giving that party a majority in the House of Representatives as the crypto industry awaits legislation that could define its future.
  • The Associated Press reported late Wednesday that California Republican Mike Garcia won reelection in the state’s 27th Congressional District, giving the party the 218 seats needed for control.
  • The Republicans had long been expected to win the House, though their eventual majority will be unexpectedly slim, and Democrats managed to fend them off from taking over the Senate. While a small number of House races still await final results, Republicans can now expect to soon install their new speaker of the House and – importantly for the crypto industry – new leaders for House committees.
  • The digital assets lobbyists, trade associations and political action committees had prepared for a divided Congress and the industry can now focus attention on a handful of committees and a few bills expected to be recycled from the current session. Republicans will soon be running the agendas on the House Financial Services Committee – expected to be chaired by Rep. Patrick McHenry (R-N.C.) – and the House Agriculture Committee, where Rep. Glenn Thompson (R-Pa.) is currently the ranking Republican. Those panels will be crucial for future crypto bills.

 

Crypto Exchange Gemini Suffers $485M Rush of Outflows Amid Contagion Fears

  • Gemini, a crypto exchange and custodian founded by the Winklevoss brothers, has suffered a rush of withdrawals as crypto firms wrestle with the reverberations of the FTX-Alameda bankruptcy and subsequent contagion within the digital asset industry.
  • Data by blockchain intelligence platform Nansen shows that Gemini saw $485 million in net outflows in the past 24 hours, the largest among crypto exchanges. Outflows totaled $563 million, and were offset by only $78 million in inflows. In the past seven days, Gemini experienced a total of $682 million net outflows – the difference of $866 billion of inflows and $1.55 billion of inflows provided by Nansen – suggesting that most of the withdrawals have occurred on Wednesday.
  • Gemini, a crypto exchange and custodian founded by the Winklevoss brothers, has suffered a rush of withdrawals as crypto firms wrestle with the reverberations of the FTX-Alameda bankruptcy and subsequent contagion within the digital asset industry.
  • Data by blockchain intelligence platform Nansen shows that Gemini saw $485 million in net outflows in the past 24 hours, the largest among crypto exchanges. Outflows totaled $563 million, and were offset by only $78 million in inflows. In the past seven days, Gemini experienced a total of $682 million net outflows – the difference of $866 billion of inflows and $1.55 billion of inflows provided by Nansen – suggesting that most of the withdrawals have occurred on Wednesday.
  • CoinDesk – UnknownGemini endured the largest net outflows among crypto exchanges in the last 24 hours. (Nansen)
  • Digital asset balances on crypto wallets identified as Gemini dropped to $1.7 billion from about $2.2 billion a day ago, according to blockchain data platform Arkham Intelligence. Arkham and Nansen do not cover data from the Bitcoin blockchain and may not include all Gemini’s wallets.

 

OKX exchange plans $100 million market recovery fund

  • OKX, the world’s second-largest crypto-only exchange by trading volume, said it would support an industry struggling with the collapse of the rival FTX exchange with a $100 million market recovery fund.
  • The company said in an email to The Block that the fund would provide assistance to projects struggling due to issues such as lack of financing.
  • “Having been in the industry for almost a decade, healthy development for all projects and ecosystems is of utmost importance to OKX,” the company said in the statement. “The company will therefore provide resources and integration support to high-quality projects, alongside provision of technical, liquidity, and other necessary support.”

 

South Korean Prosecutors Raid Terra Co-Founder’s Company in UST Probe

  • South Korean prosecutors investigating the collapse of the terraUSD (UST) algorithmic stablecoin raided the headquarters of Chai Corp., whose CEO Daniel Shin was a co-founder of Terraform Labs.
  • The Tuesday raid on the Seoul-based payment services company was conducted by the Seoul Southern District Prosecutor’s Office’s Financial and Securities Crime Joint Investigation Team.
  • The value of UST fell to zero after it lost its peg to the dollar, and the subsequent contagion across the crypto industry led to numerous lenders, brokers and exchanges filing for bankruptcy protection. In April a South Korean court issued an arrest warrant for Terra’s CEO Do Kwon, whose location is unknown, along with five others. Officials have also raided seven cryptocurrency exchanges in South Korea as part of a fraud probe in connection with the now defunct coins.
  • “Prosecutors suspect that Chai Corporation leaked customer payment information to Terraform Labs without permission in the process of launching the Terra payment service in 2018,” according to a statement sent to CoinDesk.

 

Luna Foundation Guard Spent $2.8B Defending UST Peg, Third-Party Audit Finds

  • Luna Foundation Guard (LFG), the entity behind the collapsed Terra ecosystem, spent $2.8 billion of crypto trying to defend the peg of algorithmic stablecoin TerraUSD (UST) in May, according to a third-party audit by JS Held, a Jericho, N.Y.-based consultancy firm.
  • The audit also suggests that Terraform Labs (TFL), the developer of the Terra blockchain, spent $613 million trying to defend the peg. A stablecoin is an asset that is designed to mirror the value of another asset, commonly fiat currencies. UST was an algorithmic stablecoin, designed to maintain its peg through market forces.
  • The efforts of LFG and TFL ultimately failed, with the value of UST falling to zero as the $60 billion ecosystem met its demise. The collapse led to widespread contagion across the crypto industry, with numerous lenders, brokers and exchanges filing for bankruptcy protection due to exposure to the ecosystem.

 

Binance gets regulatory nod for institutional crypto custody in Abu Dhabi

  • Binance has secured permission from regulators in Abu Dhabi to operate as a crypto custodian for institutional clients.
  • The crypto exchange received the regulatory nod from Abu Dhabi’s Financial Services Regulatory Authority. This body is a unit of the Abu Dhabi Global Market, which functions as the financial center of the United Arab Emirate’s capital city.
  • Binance previously received in-principle approval from Abu Dhabi authorities to operate as a crypto broker-dealer. Wednesday’s regulatory nod expands the company’s presence in the UAE and the Persian Gulf at large. The exchange giant also has license approval from regulators in Dubai, UAE’s commercial capital.

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