Thursday, 23 June 2022

Market Summary

Market Summary 23 June 2022

Bitcoin Price: US$ 19,987.99 (-3.55%)
Ethereum Price: US$ 1,050.19 (-6.72 %) 


ETH Hashrate Declines, Liquity Stability Pool, GMX Grows

  • The Ethereum hashrate is the processing power used by miners to secure the Ethereum Network.
  • Since April, the Ethereum hashrate suffered a ~10% drawdown as the profitability of mining was affected tremendously.
  • Over the past three months, the price of Ethereum has trended downwards from ~$3,500 to a low of ~$900. The drawdown in prices means that miners now earn less in dollar value. This is further exacerbated by the surge in energy prices due to the war, with the energy price index rising to a five-year high.
  • Moreover, the difficulty bomb is delayed to mid-September, which is when the Merge is expected to happen. Once The Merge happens and Ethereum transitions to a Proof-of-Stake chain, the difficulty bomb will be applied, making it completely unprofitable as miners stop earning rewards.
  • The triple whammy of reduced income, increased operating costs, and the impending Merge has caused some miners to stop their mining operations. Their exit has also resulted in the supply surge of GPUs on secondary markets.
  • Liquity is a decentralized borrowing protocol that allows users to draw interest-free loans against Ether used as collateral. Loans are paid out in LUSD (a USD pegged stablecoin) and need to maintain a minimum collateral ratio of 110%. In addition to the collateral, the loans are secured by a Stability Pool containing LUSD and by fellow borrowers collectively acting as guarantors of last resort. Liquity as a protocol is non-custodial, immutable and governance-free.
  • GMX offers spot swap and margin trading, allowing users to execute the full size of their trade with zero slippage by pricing assets using an oracle. GMX launched Sept. 1, 2021 on Arbitrum and Jan. 5, 2022 on Avalanche. It’s worth noting GMX doesn’t technically offer perps, but the integrated margin trading model reflects the simplicity of opening or closing a perp position. For this reason, we believe it’s a genuine competitor to the projects listed in this report.
  • Users provide liquidity to GMX through GLP. GLP is a basket of assets that includes BTC, ETH, AVAX, UNI, LINK, and stablecoins. Unlike a traditional AMM, GLP does not incur the cost of finding or readjusting to prices as they change, it instead uses a fast oracle to borrow the “true price” from other trading venues. This allows GLP to be extremely capital-efficient, and doesn’t require it to maintain a certain ratio of one asset to another at all times, allowing it to handle large trades.


Meta set to begin testing NFTs on Instagram Stories with Spark AR

  • Instagram’s parent company, Meta, announced Wednesday that it will begin testing NFTs on Instagram Stories using its augmented reality platform Spark AR.
  • CEO Mark Zuckerberg said of the news, “We’re expanding our test so more creators around the world can display their NFTs on Instagram.” The company also stated in an announcement, “Creators and collectors will be able to share their digital collectibles across Facebook and Instagram after we begin rolling out the feature on Facebook with select US creators at a later date.”
  • Zuckerberg also confirmed that Facebook is set to support NFTs in the future:
  • “We’ll bring this feature to Facebook soon too — starting with a small group of US creators — so people can cross-post on Instagram and Facebook. We’ll also test NFTs in Instagram Stories with SparkAR soon.”


dYdX moves to Cosmos-based blockchain for v4 to optimize decentralization and trading flow

  • On Thursday, crypto derivatives platform dYdX, which is currently built on Ethereum layer 2, announced that it would be moving to a standalone blockchain based on the Cosmos SDK and Tendermint proof-of-stake consensus for its v4 update. The firm cites the Cosmos blockchain’s decentralization and performance as reasons for being a “best fit” for building dYdX for v4.
  • Currently, the existing dYdX protocol processes about 10 trades per second and 1,000 order placements and cancellations per second, with the goal of scaling to magnitudes higher. However, the firm says that neither Ethereum layer 1 nor layer 2 solutions can meet its requirements for throughput speed while also satisfying its 100% decentralization requirement by the end of the year. 


Chainalysis launches reporting service for businesses targeted in crypto-related cyberattacks

  • Blockchain analytics firm Chainalysis has launched a hotline that will accept reports o incidents of hackers demanding cryptocurrency payments from platforms or companies.
  • In a Wednesday blog post, Chainalysis said its “Crypto Incident Response” hotline would operate 24/7 for victims of a “hack, ransomware attack, code exploit or flash loan attack” in which “cryptocurrency funds are either demanded or stolen.” The company attributed the launch of the reporting service on crypto-related ransomware attacks presenting “national security concerns” as well as potentially undermining confidence in the crypto industry.
  • According to Chainalysis, hackers were responsible for the loss of more than $3 billion in crypto value through theft and ransom demands from 251 attacks in 2021, with transactions to and from illicit addresses representing 0.15% of total transaction volume in the space. Upon receiving a report, the firm said a team would work with the victim to trace funds, if necessary, and potentially coordinate with local authorities.
  • “Attacks are increasing in frequency and severity, presenting a significant barrier to building trust in cryptocurrency,” said Chainalysis. “We’re investing in this service not just to assist organizations in their times of need, but also to help bring bad actors to justice and demonstrate that crypto is not the asset class of anonymity and crime.”


Shopify unveils tokengated commerce as part of new connect-to-consumer experience

  • As part of a new series of connect-to-consumer initiatives developed this year, Shopify will allow merchants to connect with fans and drive sales by creating exclusive merchandise for tokenholders. The initiative, dubbed “tokengate,” is available in early-access beta mode.
  • To get started, vendors can create a tokengate shop directly on the Shopify app or add the feature directly in-store. Buyers would then need to connect their crypto wallet and verify they are owners of applicable nonfungible tokens, or NFTs, to shop gated merchandise or access exclusive events. The feature serves as a gateway between NFT communities and consumer brands on the platform. 
  • In addition, vendors can partner with other brands for upcoming NFT drops and team up with Shopify’s merchandising partners to develop premium products. Furthermore, vendors can mint custom NFTs on popular blockchains like Ethereum (ETH), Polygon (MATIC), Solana (SOL) and Flow (FLOW). Afterward, they can list and sell them right from their store.


ECB head calls for separate framework to regulate crypto lending

  • A week after the major American crypto lending platform Celsius had to freeze the withdrawal option for its users, European Central Bank (ECB) president Christine Lagarde voiced her conviction on the necessity of tighter scrutiny over this part of the crypto market. 
  • During a testimony before the European Parliament on Monday, Lagarde expressed her thoughts not only about the looming inflation in Europe and around the globe but also about the increasing activities of crypto-asset staking and lending. In Lagarde’s opinion, this trend demands additional regulatory efforts from the European Union. Referring to the major regulatory package making its way through the legislative routine, Markets in Crypto-Assets (MiCA), she even coined the term “MiCA II”:
  • “MiCA II should regulate the activities of crypto-asset staking and lending, which are definitely increasing.”
  • Lagarde warned about the risks, posed by the lack of regulation in this segment of the market:
  • “Innovations in these unexplored and uncharted territories put consumers at risk, where the lack of regulation is often covering fraud, completely illegitimate claims about valuation, and very often speculation as well as criminal dealings.”
  • The official made a separate mention of decentralized finance (DeFi), which, from her point of view, also poses a “real risk to financial stability” and thus should be covered by the separate regulatory framework.


USDC’s ‘real volume’ flips Tether on Ethereum as total supply hits 55.9B

  • USD Coin (USDC) is taking a run at the title of the top stablecoin in crypto after its daily ‘real volume’ on the Ethereum network doubled that of Tether’s (USDT) on Tuesday. 
  • According to crypto market data tool Messari, Circle’s USDC posted $1.1 billion in daily real volume on the Ethereum network on Tuesday, which was double USDT’s real volume of $579 million.
  • Messari’s real volume metric is calculated by compiling data only from exchanges that it believes have “significant and legitimate crypto trading volumes” and thus differs from the more commonly seen “total volume” metric.
  • Exchanges included in Messari’s Real Volume metric include Binance, Bitfinex, Bitflyer, Bitstamp, Bittrex, Coinbase Pro, Gemini, itBit, Kraken, Poloniex and those tracked on OnChainFX.

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