Thursday, 21 July 2022

Market Summary

Market Summary 21 July 2022

Bitcoin Price: US$ 23,223.30  (-0.74%)
Ethereum Price: US$ 1,521.58 (-1.34%) 


Opyn Squeeth Doubles, Concentrator IFO, Uniswap vs. Curve

  • Over the past week, ETH has gained 48% from $1,041 to $1,543 as the broader market experiences a relief rally. Over the same period, oSQTH has doubled in value and gained 117% from $62 to $135.
  • Opyn Squeeth (oSQTH) is a new financial primitive that tracks the price of ETH squared. Squeeth works like a power perpetual, using an index price and funding rate to ensure that the contract trades at equilibrium price.
  • Opyn Squeeth is an ERC-20 token, and users can simply buy oSQTH from the Uniswap v3 oSQTH / ETH pool. Users can also mint oSQTH by providing ETH as collateral to Opyn.
  • Long Squeeth provides exposure to pure convexity, offering an asymmetric payoff with a higher upside and lower downside. As indicated in the chart above, oSQTH makes more when ETH goes up, while it loses less when ETH goes down.
  • However, long Squeeth holders pay a high funding rate to maintain this asymmetric payoff. Therefore, holding Squeeth over extended periods during sideways and bear markets may cause a loss in exposure to ETH squared.
  • Concentrator by AladdinDAO extends the Curve/Convex ecosystem by helping Convex farmers earn up to 50% more with less hassle and less gas fees. Yields from multiple Convex pools are sold to buy cvxCRV, which is staked to earn maximum rewards while still maintaining exposure to the Curve/Convex ecosystem.
  • Rather than buying more of the deposited token, Concentrator helps farmers accumulate yields from multiple Convex vaults into cvxCRV. The resulting rewards from staking cvxCRV are auto-compounded to grow those returns even more. When it’s time to withdraw, users can choose from cxvCRV, CRV, CVX or ETH.
  • Uniswap and Curve are two of the largest exchanges within all of crypto. While the two were not always competitors, Curve’s foray into unpegged assets and Uniswap’s move to drop fees for stablecoin trades have turned the two into rivals.
  • With v3, Uniswap moved away from its popular constant product (XYK) liquidity curve to a more dynamic model where LPs decide what price range they want to provide liquidity in. The concept came to be known as “concentrated liquidity,” as it effectively allowed LPs to compress their liquidity curve inside a tighter band.
  • As a rebuttal, Curve launched its v2 – a similar answer with a different approach. Curve v2 also relies on concentrated liquidity. Except, unlike Uniswap, LPs don’t choose their liquidity range – Curve’s market making algorithm does, enabling a passive LP experience.
  • At the moment, Uniswap holds just under 90% market share on ETH and WBTC volume. As a result, it’s been able to attract significantly more liquidity utilization (volume/TVL) than Curve’s Tricrypto (a Curve v2 pool made up of ETH, WBTC, USDT).


Breaking: Tesla sold 75% of Bitcoin holdings in Q2

  • Electric vehicle maker Tesla sold most of its Bitcoin (BTC) holdings in the second quarter, according to new financial disclosures released on Wednesday.
  • “As of the end of Q2, we have converted approximately 75% of our Bitcoin purchases into fiat currency,” Tesla said in its quarterly report. “Conversions in Q2 added $936M of cash to our balance sheet.”
  • According to the financial statements, Tesla’s net Bitcoin holdings were relatively stable for three consecutive quarters. By the end of March, Tesla had $1.261 billion worth of digital assets on its books. Following the liquidation, the firm now has $218 million in digital asset exposure. 
  • As Cointelegraph reported, the electric vehicle maker sold a portion of its BTC reserves in March 2021, realizing a net profit of $128 million. At the time, CEO Elon Musk explained that the sale, which amounted to 10% of Tesla’s holdings, was to “prove liquidity of Bitcoin as an alternative to holding cash on balance sheet.”


UK financial markets bill authorizes regulation of stablecoins, service providers

  • The Financial Services and Markets Bill was introduced into the United Kingdom’s Parliament on Wednesday. The comprehensive bill, which was meant to preserve the U.K.’s leading place in the financial world post-Brexit, repealed retained EU laws, reformed certain insurance laws, supported victims of financial fraud and established new growth and competitiveness objectives. The bill also regulated stablecoins. 
  • The presence of stablecoin regulation in the bill was confirmed the evening before in the programmatic speech delivered by hancellor of the Exchequer Nadhim Zahawi. Although stablecoin regulation was intended to be part of the bill from its inception, the fate of that regulation had become a matter of concern for some observers after the recent upheaval in crypto markets and the departure of pro-crypto members of the government earlier in July, which included Economic Secretary to the Treasury John Glen and Zahawi’s predecessor Rishi Sunak.
  • The bill extended the Banking Act of 2009 and Financial Services (Banking Reform) Act of 2013 to cover “digital settlement assets” (DSAs) and authorized the Treasury to regulate DSAs, payments made with DSAs, DSA service providers and DSA insolvency arrangements. Those regulations will be made in consultation with the Financial Conduct Authority (FCA), the Bank of England and other regulators as appropriate.


South Korean authorities raid 15 entities linked to Terra collapse: Report

  • Prosecutors in South Korea behind the investigation of Terraform Labs have reportedly executed a search and seizure in 15 firms, including seven crypto exchanges.
  • According to a Wednesday report from News1 Korea, the Joint Financial and Securities Crime Investigation Team of the Seoul Southern District Prosecutors Office raided the offices of Upbit, Bithumb, Coinone, Korbit and Copax as well as other businesses connected to the collapse of Terra. Authorities reportedly obtained data related to TerraUSD (formerly UST) and Terra (LUNA) — now Luna Classic (LUNC) — transactions, in which roughly 200,000 Korean investors suffered losses following the tokens’ severe price devaluation and subsequent collapse in May.
  • Some of the victims of Terra’s collapse and UST’s depegging reportedly appointed local law firm L.K.B. & Partners to represent them in a suit against Terraform Labs and its co-founder Do Kwon, alleging that the company committed fraud. More than 100 people who filed complaints with the prosecutors’ office reportedly had losses totaling roughly $8 million.
  • “The defendants did not properly inform about design errors and defects in the algorithm while designing and issuing Luna and Terra coins in a collusion to attract investors,” said a spokesperson from L.K.B. & Partners.


Breaking: Zipmex suspends withdrawals as CEO denies financial trouble rumors

  • Thai cryptocurrency exchange Zipmex has paused withdrawals on its platform following a “combination of circumstances” beyond its control. Cointelegraph reports that Zipmex could be in trouble were dismissed as “rumors” by CEO and co-founder Marcus Lim following the failed acquisition of the Thai exchange by Coinbase.
  • Coinbase made an offer to acquire the Thai cryptocurrency exchange Zipmex early in quarter one 2022. On June 9, the acquisition fell through. Instead, Coinbase made a “strategic investment” into the company — the amount has not been disclosed.
  • Lim told Cointelegraph that while Coinbase is an interesting partner, “an investor makes more sense at this stage.” He explained that the group speaks to a number of different parties at any point in time, citing the bear market as the reason why Coinbase opted out of the acquisition:
  • “The acquisition fell through due to market conditions. They’ve pulled out in many countries around the world such as Turkey and in Latin America. Coinbase is a great strategic partner to the business.”


Gemini receives virtual asset service provider license in Ireland

  • New York-based crypto trading platform Gemini claims to be the first one to get registered as a virtual asset service provider (VASP) by the Central Bank of Ireland (CBI). Earlier in February 2022, a company received an electronic money institution (EMI) authorization from the CBI. 
  • The news was reported on Gemini’s official blog on Tuesday. As Gillian Lynch, head of Ireland and the European Union for Gemini, commented on the release:
  • “Gemini was founded on the ethos of asking for permission, not forgiveness. Since day one, Gemini has engaged with regulators around the world to help shape thoughtful regulation that both protects consumers and fosters innovation.”
  • Individuals and institutions in Ireland now can access Gemini’s exchange and custody services to buy, sell and store over 100 cryptocurrencies along with the euro and Great British pound. 


Monero v18 Network Upgrade

  • The Monero team released v0.18.0.0 of its network software on Jul. 20, 2022. This release contains hard fork support for the previous v15 upgrade release and is scheduled to be activated on mainnet on Aug. 13, 2022. The complete list of changes can be found in the release notes.
  • This upgrade will introduce the following feature:
    • A ring-size increase from 11 to 16, which the team states is ” the largest ever absolute increase in the base anonymity set of every transaction in the network.”
    • Bulletproofs+, an upgraded algorithm that will reduce the typical transaction size and improve performance by 5-7%.
    • View tags to reduce wallet sync times by 30-40%.
    • Fee changes to improve the security and resilience of the network.
    • “Major” multi-sig fixes and improvements, including critical security patches.


The Future is Now for Ethereum Scaling: Introducing Polygon zkEVM

  • Polygon has announced that their zkEVM source code has been open-sourced and will go live on testnet “shortly.” According to Polygon co-founder Mihailo Bjelic, the Polygon Hermez, Zero, and Miden teams contributed to the development of the zkEVM.
  • Polygon’s zkEVM is considered EVM-equivalent, meaning that existing Ethereum infrastructure and tooling are compatible with the zkEVM. Developers will be able to have the same experience on Polygon zkEVM as they are used to on Ethereum mainnet.

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