Wednesday, 23 November 2022

Market Summary

Market Summary 23 November 2022

Bitcoin Price: US$ 16,226.94 (+2.82%)
Ethereum Price: US$ 1,139.60 (+2.91%) 

 

Chainlink Verifiable Random Function Activity Surges

  • Chainlink has recently seen a large spike in the number of Verifiable Random Function (VRF) requests. In the past week, there have been 246K VRF requests fulfilled, an increase of 259% over the week prior. The vast majority of this activity is on Polygon.
  • The Chainlink VRF is a verifiably fair random number generator that enables smart contracts to obtain random values. Chainlink VRF produces an on-chain cryptographic proof demonstrating how the values were determined.
  • Random values are needed in applications that rely on unpredictable outcomes such as blockchain games, NFT mints, assignment of duties (such as governance roles), and choosing a representative sample for consensus mechanisms.
  • In May 2022, Chainlink released VRF v2 on Polygon, which provides a better solution while reducing transaction costs by up to 60%. The number of weekly VRF v2 requests fulfilled has increased by 579% from 30K to 204K in the past week.
  • The increase comes most likely due to the beta launch of PLANET IX, an NFT-based strategy game.

 

Crypto Insider Talks: The FTX Aftermath (1H 6min.)

  • Jason and Ceteris sit down with Ash Bennington of Real Vision to discuss the fallout from the FTX collapse, the events leading up to its eventual demise, and the outlook for crypto going forward in its aftermath. They cover many topics in this interview, some of which include:
  • The origins of the FTX collapse and how it can be traced back to the market drawdown in May 2022 with the collapse of the LUNA/Terra ecosystem. We revisit this time-period and discuss how and when things likely went wrong for many of the industry’s biggest players, especially FTX/Alameda.
  • The short to medium-term implications of the FTX collapse as it relates to contagion, and more specifically, the rumors swirling around the DCG/Genesis/GBTC situation, and what to look out for.
  • Collateral damage as it pertains to ecosystems in which FTX/Alameda were heavily involved and invested in, including, but not limited to, Solana.
  • How the liquidation process differs in conventional markets (e.g. commodities) versus crypto and the benefits/drawbacks of auto-liquidations compared to traditional margin calls.
  • The difference between the current cycle and what has transpired versus previous cycles, and what those differences mean for the market going forward on the road to recovery.
  •  What role crypto plays in the aftermath of everything that has happened. Are there any sectors, such as decentralized exchanges, that are poised to benefit from the breakdown in trust of centralized counterparties?

 

Crypto Mining and Staking Firm Foundry Buys Some of Troubled Bitcoin Miner Compute North’s Assets

  • Crypto mining and staking firm Foundry will buy two “turnkey” crypto mining assets with a total of 17 megawatt (MW) computing capacity from bitcoin miner Compute North, which filed for Chapter 11 bankruptcy protection in late September
  • Foundry will buy Compute North’s sites in North Sioux City, S.D. and Big Springs, Texas that have a fully operational capacity of six MW and 11 MW, respectively, according to a statement on Tuesday.
  • Compute North, one of the world’s largest bitcoin mining firms, said in September that it couldn’t fulfill debt obligations worth up to $500 million. Since then, its assets have been sold off to different entities, including its own lender, Generate Capital, which bought the company’s stake in two mega-mining facilities for $5 million, earlier this month.
  • As part of the deal, Foundry will also have rights to completely build out and operate Compute North’s facility in Minden, Neb. The deal will also include rights to a fleet of mining machines owned by the miner, as well as its intellectual property, the statement said.

 

Digital Currency Group Says No Imminent Threat Despite Owing Genesis $575M

  • Amid concerns over the health and future of Digital Currency Group (DCG) following the collapse of crypto exchange FTX, company CEO Barry Silbert told shareholders of the crypto conglomerate that while it owes its own Genesis Trading arm $575 million, the firm aims to emerge “stronger” from the crypto winter.
  • Silbert said in the letter to investors, according to The Wall Street Journal, that the $575 million worth of intercompany loans are due in May 2023, and that DCG took out the loans like any other crypto firm would, “structured on an arm’s length basis and priced at prevailing market interest rates.”

 

US Senators Ask Fidelity to Reconsider Bitcoin 401(k) Offerings Following FTX Collapse

  • Fidelity should reconsider allowing retail clients exposure to bitcoin in their retirement accounts in light of the FTX collapse, said three Democratic senators in a letter on Monday.
  • The U.S.-based financial services firm said in April that it wanted to allow investors to put bitcoin into their 401(k) accounts. Fidelity’s retirement accounts are big business: The company had an estimated $2.4 trillion in 401(k) assets in 2020, or more than a third of the total U.S. market at that time, according to research firm Cerulli Associates.
  • The senators – Richard Durbin (D-Ill.), Elizabeth Warren (D-Mass.) and Tina Smith (D-Minn.) – had previously expressed their trepidation over the plan in July, and the Department of Labor had similar concerns in April.
  • “The ill-advised, deceptive and potentially illegal actions of a few have a direct impact on the valuation of bitcoin and other digital assets,” according to this latest letter.

 

Bahamas FTX Liquidators Agree to Transfer Bankruptcy Case to Delaware

  • Court-appointed liquidators overseeing collapsed crypto exchange FTX’s assets in the Bahamas have agreed to transfer a related case they’d filed in New York to Delaware, where the company had already filed for bankruptcy protection.
  • While the embattled company FTX Trading Ltd. had filed for Chapter 11 bankruptcy in the U.S. Bankruptcy Court for the District of Delaware on Nov. 11, the Bahamian liquidators later filed a Chapter 15 suit in the Southern District of New York for FTX Digital Markets, one of the companies under the broader FTX umbrella and the name of the entity located in The Bahamas. The liquidators at the time said FTX, which was headquartered in the Bahamas, was not allowed to file for bankruptcy in the U.S.
  • Before reaching an agreement on the transfer of the case, FTX filed a complaint seeking a court order to make the liquidators file their Chapter 15 case, which targets cross-border insolvency, in Delaware.
  • “We had filed with your Honor a motion to transfer that case from the Southern District of New York to the district of Delaware, and we are pleased to report that we have reached an agreement with the joint provisional liquidators to do just that to bring the case from New York and here to Delaware,” James Bromley, a partner in Sullivan & Cromwell’s Finance and Restructuring Group said during the first FTX bankruptcy hearing on Tuesday.

 

Core Scientific warns of ‘substantial doubt’ to continue operations, posts $435 million loss

  • Bitcoin miner Core Scientific will need extra liquidity to keep operations going past November 2023 — and it’s facing a steep uphill battle to do so.
  • “The ability to raise funds through financing and capital market transactions is subject to many risks and uncertainties and current market conditions have reduced the availability of these capital and liquidity sources,” the company said in a Securities and Exchange Commission filing. “Substantial doubt exists about the Company’s ability to continue as a going concern through November 2023.”
  • The miner also posted revenue of $162.6 million in the third quarter, down 0.9% from the previous period. Net loss was $434.8 million, compared to $862 million in the second quarter, and a total of $1.7 billion in the first nine months of the year.

 

Bankman-Fried, Golden State Warriors hit by lawsuit over FTX’s alleged false advertising

  • A new lawsuit looks to represent FTX’s international users using California’s laws against false advertising. 
  • In a case filed in a district court in San Francisco, Canadian citizen Elliott Lam is suing FTX CEO Sam Bankman-Fried, Alameda Research CEO Caroline Ellison, and the Golden State Warriors.
  • Lam v. Bankman-Fried takes aim at FTX’s massive advertising blitz, including sponsorship deals with stadiums and professional sports teams, particularly the Golden State Warriors. The case argues that the ad campaign presented FTX and, particularly, its yield-bearing accounts, or YBAs, as safe investments.
  • “Defendants’ claims that YBAs and FTX were viable and safe for investing in crypto are untrue due to the house of cards nature of FTX’s business and movement of funds, as evidenced by the immense collapse in fall 2022,” the complaint reads. The case leans particularly heavily on California’s False Advertising Law, which may explain why it takes aim at the Golden State Warriors rather than, say, the Miami Heat or the Washington Capitals.

 

Curve releases whitepaper and official code for its stablecoin

  • The developers of decentralized exchange Curve Finance have released code and official documents for Curve’s soon-to-be launched decentralized stablecoin called crvUSD.
  • While an official announcement from Curve is still pending, the repository published on the projects’ official GitHub account shows the project is all set to finish work on its crypto-backed stablecoin that’s soft-pegged to the US dollar.
  • Per the whitepaper, authored by Curve Finance founder Michael Egorov, crvUSD will have similar functionality to MakerDAO’s stablecoin called DAI. Matching DAI, it will be overcollateralized with crypto assets. 
  • The whitepaper states that users will be able to mint the stablecoin by depositing excess collateral in the form of a cryptocurrency loan in a reserve, a mechanism called a collateralized debt position (CDP).
  • The stablecoin will also rely on a novel algorithm dubbed Lending-Liquidating AMM (LLAMMA), which will work to continuously liquidate and sell the deposited collateral to better manage potential collateralization risks.

 

Ethereum Metaverse Game The Sandbox to Launch LAND Sale With Playboy, Tony Hawk, Snoop Dogg

  • The Sandbox, an Ethereum-based metaverse game, is kicking off its three-part LAND sale on Thursday in collaboration with popular brands like Tony Hawk, Snoop Dog, and Playboy, among others, the platform told Decrypt. 
  • The Sandbox is a crypto-powered game akin to Roblox or Minecraft, but which harnesses blockchain technology to provide users with ownership of in-game assets via NFTs and the ability to trade virtual land on marketplaces such as OpenSea. 
  • The upcoming sale will auction 1,967 LANDs—50 estates, 695 regular LANDs, 134 premium LANDs, and 19 1-of-1 pieces of LAND—with standard and premium LAND sales allocated via a blind ballot system. An estate is several LANDs that have been connected to make a larger parcel in the game. 
  • LAND is an NFT-ified virtual piece of real estate that makes up the building blocks of The Sandbox game. Users can purchase plots of land, similar to traditional real estate, and use the space to host experiences or simply trade them on marketplaces. The game has a total supply of 166,464 LANDs currently valued at 1.119 Ethereum a piece.

 

Magic Eden expands NFT support to Polygon network

  • Magic Eden has added support for trading of non-fungible tokens on the Polygon network, a move that will boost its ability to work with gaming projects on the network. Rather than acting merely as a venue for NFT trading, the firm wants to expand and capitalize on the emerging blockchain gaming niche on Polygon.
  • Magic Eden is the largest NFT marketplace on Solana by trading volume. Earlier this year, the project went multi-chain, first releasing its marketplace on the Ethereum blockchain in August. 
  • Polygon is now the third blockchain that Magic Eden has integrated after Solana and Ethereum. Polygon, a proof-of-stake sidechain running parallel to Ethereum, allows for cheaper transactions for Ethereum-based applications. 
  • By leveraging Polygon, the Magic Eden team noted that it is able to support game developers that want to integrate NFTs. “Given Polygon’s popularity amongst game developers as a low cost EVM-compatible chain, integrating Polygon will continue to cement Magic Eden as the go-to web3 gaming platform,” Zhuoxun Yin, co-founder of Magic Eden said.

 

Mango Exploiter’s Funds Get Liquidated After Roiling Aave Using $20M of Borrowed Curve Tokens

  • A well-known crypto trader linked to last month’s $114 million Mango Markets exploit is at it again – but this time appears to have gotten hung up.
  • The trader, identified on Twitter and tagged by blockchain analysts as Avraham Eisenberg, borrowed 40 million curve (CRV) tokens (worth $20 million at the time) using the decentralized lending platform Aave, then transferred them to the OKEx crypto exchange.
  • But after a series of wild swings in the CRV price, Eisenberg’s position appears to have gotten liquidated.
  • According to the blockchain analysis firm Arkham, Eisenberg borrowed the majority of CRV tokens on Aave by pledging $40 million in USDC stablecoin as collateral.
  • According to blockchain data, he then sent the 40 million CRV to crypto exchange OKEx in two transactions – possibly putting the tokens in position for a quick sale.

 

Glassnode in Youtube

  • In this edition, we assess the reaction of #Bitcoin Whales and HODLers, with both cohorts appearing shaken by recent events.

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