Wednesday, 29 June 2022

Market Summary

Market Summary 29 June 2022

Bitcoin Price: US$ 20,281.29 (-2.22%)
Ethereum Price: US$ 1,144.12 (-4.06 %) 


L1 Recovery, Gearbox Strategic Raise, Searching for Market Bottoms

  • The crypto markets experienced a tumultuous June as lenders faced liquidations with various large institutions becoming insolvent.
  • This, along with increased macroeconomic uncertainty, caused BTC and ETH to drop to a low of $17.7k and $897 in recent weeks. Since their peaks in 2021, BTC and ETH have dropped -74.3%  and -81.6%, respectively. This, of course, had a knock-on effect on the rest of the market, including other L1s.
  • Over the past ten days, AVAX and ATOM have grown 30% and 28%, respectively, peaking at over 40% growth on the 25th of June. ATOM’s outperformance can be attributed to dYdX’s announcement of dYdX V4 being developed as a standalone blockchain built on Cosmos-SDK. dYdX is the largest decentralized derivatives exchange built on StarkEx.
  • SOL also rallied following the announcement of Solana Mobile Stack (SMS), a Web 3.0 mobile toolkit. SMS will be released first on Saga, Solana Mobile’s flagship phone.
  • Gearbox contributor Ivangbi has put forth the idea to do a small strategic raise for Gearbox. He initially proposed raising $5m through selling 3.766% of the GEAR supply at 150m FDV. Tokens sold this way will have a 1-year vest and come from the existing DAO allocation. The funds will be used for continued operations. Additionally, Ivangbi proposes to allow certain organizations and angels in the round at the same terms. As a reminder, the GEAR token is live but not currently trading, so there is no price attached to it.
  • Pro arguments: Many in the forum are supportive, with a few commenters even offering funds for the raise as well. If a DAO with no cash flow needs operational funds, the only real choice is to initiate a raise. Otherwise, the DAO would be forced to cease operations.
  • Con arguments: There was some pushback in the forum regarding this raise, mostly around the terms and the prospect of accepting VC money. Gearbox’s prior raise was fairly unique and involved credit account mining [CAM], where users paid ETH to create credit accounts and deploy their core contracts. The FDV of the CAM raise was around 150m. Users wanted to ensure that the FDV remained similar to that raise, regardless of market conditions. There were also some concerns about VCs coming to dominate the protocol and future governance. Finally, numerous users felt that the 1-year vest was far too short and advocated for a long 2-4 year vest.
  • Fast forward and we’re seeing this exact dynamic play out. Consumers are feeling the pressure of higher prices, forcing them to dip into their savings to keep up. Retail sales are weaker than expected while the average household is paying over 50% more at the pump compared to this time last year. Transportation is the second-largest expense for U.S. households behind housing, so real people are really hurting. And higher energy costs increase the cost to transport everything, which is feeding into higher prices. All this contributes to the growing pressures on consumers, and there’s little end in sight.
  • Regardless of how bullish we are on crypto long-term, we have to recognize that external macro headwinds are in the driver’s seat right now. We can’t lean on decades of historical data but if this shakes out anything like the 2017-2019 tightening cycle, we are bound to see at least one more big move to the downside.


Russian Duma passes bill to remove VAT, lower income tax rates on digital asset sales

  • The State Duma, the lower house of the Russian legislature, has passed a bill on the taxation of digital assets that exempts their sale from value-added tax (VAT) in the Russian Federation. Some other services of digital asset exchanges will also be exempted, according to state-run news service RIA Novosti. 
  • In addition, the bill established income tax rates of 13% for Russian exchanges on the first 5 million rubles (currently about U$93,000) of the taxable base annually, 15% on amounts above that limit and 15% across the board for foreign exchange operators. The current tax rate for companies is 20%.
  • The taxation of digital assets under the bill is analogous to securities taxes, RIA Novosti reports. The government noted in the bill that a separate tax procedure for digital assets is key to the creation of an effective and competitive digital economy.
  • Russia has tempered its skeptical stance on cryptocurrency as the country has increasingly felt the pressure of Western economic sanctions stemming from its invasion of Ukraine. Major Russian banks have been blocked from the SWIFT system and G7 countries this week banned the purchase of newly mined or refined Russian gold. Those moves, along with a host of other sanctions, led to Russia’s reported default on foreign debt servicing Monday.


NEAR Ecosystem Insights: 5 Biggest Announcement In Q2

  • On April 12 Sweatcoin announced its partnership with the NEAR Foundation to launch SWEAT, a token that incentivizes a movement economy. By downloading the Sweatcoin app, users can be rewarded for their movement and use the SWEAR token to access goods and discounts from over 300 different partner brands.
  • In April Decentral Bank announced the launch of $USN, the first NEAR-native semi-algorithmic stablecoin. This new stablecoin is soft-pegged to the US Dollar and also backed by a Reserve Fund containing $NEAR, and $USTD–for a complete overview of how $USN achieves stability check out this video.
  • $USN’s design was inspired by the best practices of other stablecoins, making it one of the most resilient stablecoins during bear markets.
  • On May 17th Aurora presented Aurora+, an exciting membership program that unlocks a new set of benefits for its users such as, 50 free transactions per month, one-click wallet configuration, staking and rewards, as well a superior UX. In the coming months even more new features will become available such as premium plans, single point KYC, governance participation, and private transactions.
  • On the 10th of June Deadline Hollywood disclosed the news that the famous actress Mila Kunis and creator Sharad Devarajan from Graphic India are going to launch Armored Kingdom Media Inc on NEAR. Armored Kingdom Media Inc is new sciFi-fantasy media platform that works on the intersection of digital comics, animation, card game and film creating new experiences on Web3.
  • During Consensus, taking place the second week of June, NEAR announced a groundbreaking collaboration with Brave. NEAR and Brave will collaborate to integrate Aurora, the NEAR Protocol’s EVM into Brave Wallet achieving greater multi-chain functionality and expanding utility for the Basic Attention Token (BAT).


KPMG enters the metaverse, invests $30M in Web3 employee training

  • KPMG, one of the Big Four accounting firms in Canada and the United States, has revealed the opening of its first metaverse collaboration hub to help its employees and clients pursue growth opportunities in the digital era.
  • KPMG is entering the metaverse with a new collaboration hub that will connect employees, clients and others with Web3. The company is making a collective $30 million investment this year in Web3 experiences, with the metaverse hub as the “signature piece.”
  • According to a Tuesday report by Fortune, the hub will be focused on education, collaboration, training, events and workshops with Cliff Justice, KPMG U.S. leader of enterprise innovation claiming that it is presently being utilized for such things but that KPMG intends to hire people to build it and expand it over time.
  • The long-term objective for the company is to examine other potential metaverse use cases such as health care, consumer, retail, media and financial services.


Celsius denies allegations of Alex Mashinsky trying to flee US

  • Troubled crypto lending firm Celsius is putting their best foot forward to recover operations alongside CEO Alex Mashinsky, who currently stays in the United States, the company has claimed.
  • A spokesperson for Celsius has denied rumors that the company’s CEO tried to flee the U.S. last week amid the ongoing liquidity crisis of the Celsius Network.
  • The representative told Cointelegraph on Monday that the firm continues working on restoring liquidity, stating:
  • “All Celsius employees — including our CEO — are focused and hard at work in an effort to stabilize liquidity and operations. To that end, any reports that the Celsius CEO has attempted to leave the U.S. are false.”
  • Celsius’ statement came shortly after Mike Alfred, co-founder of the crypto analytics firm Digital Assets Data, took to Twitter on Sunday to claim that Mashinsky attempted to leave the country last week via Morristown Airport in New Jersey.
  • Citing an anonymous source, Alfred alleged that Celsius’s CEO was trying to go to Israel. “Unclear at this moment whether he was arrested or simply barred from leaving,” he added.


Crypto community confused as Celsius continues with weekly rewards

  • Members of the crypto community on Twitter have been left bewildered by the beleaguered Celsius Network continuing to pay weekly rewards despite pausing withdrawals two weeks ago.
  • As previously reported, crypto lending platform Celsius paused withdrawals on June 13 after citing extreme market conditions amid the current bear market. Reports soon followed that the firm was undergoing liquidity issues and may be heading toward insolvency, potentially putting users’ funds at risk.
  • Figures such as Simon Dixon, Bitcoin (BTC) OG and CEO and co-founder of online investment platform BnkToTheFuture, tweeted his bewilderment to his 59,300 followers on Monday over receiving nearly $4,000 worth of crypto rewards but being unable to withdraw them:
  • “Email on one of my accounts. Can’t withdraw but @CelsiusNetwork is still paying out. I’m curious if you think the rewards should still be coming? Thoughts?”
  • Upon searching “Celsius still paying” on Twitter, there are countless users raising questions over the lending platform, with some such as CryptoStylesUSA calling it “insulting” that Celsius continues to pay weekly rewards while keeping their “crypto hostage.”
  • According to Celsius’ website — which is currently undergoing revamp due to the liquidity issues — the company is still advertising annual percentage yields (APYs) of up to 18.63% on crypto deposits, which many have argued is unsustainable.


The Ronin Bridge Is Open 

  • We are thrilled to report that after three audits, the Ronin Bridge is officially open and ready for use. This means that users can now easily make deposits and withdrawals to and from the Ronin (RON) network.
  • We are on track to release Land Staking this week.
  • The new bridge design includes a circuit-breaker system as a contingency plan which increases the security of the bridge by halting large suspicious withdrawals.
  • Following the Ronin exploit in March, Sky Mavis conducted a full reassessment alongside independent auditors Certik and Verichains. These audits enabled us to identify and implement a number of opportunities for improvement.

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