Thursday, 3 November 2022

Market Summary

Market Summary 3 November 2022

Bitcoin Price: US$ 20,151.84 (-1.62%)
Ethereum Price: US$ 1,518.33 (-1.15 %) 

 

Uniswap Daily Active Addresses Rise Despite the Bear Market

  • Deribit halts withdrawals after hackers drain $28M from the exchange’s hot wallet.
  • J.P. Morgan executes its first DeFi transaction under a pilot program by Singapore’s central bank.
  • The U.S. Federal Reserve announces 75 bps rate hike during latest FOMC meeting.
  • South African grocery chain, Pick n Pay, will allow customers to pay using Bitcoin.
  • Singapore’s central bank approves the major payments institution license for Circle and the digital payment token license for Paxos.
  • In October, the average number of daily active addresses on Uniswap increased by 20% over the previous month to reach 41K. This comes despite the bear market with ETH trading 68% below its all-time high of $4.8K.
  • Uniswap previously recorded similar levels of activity in November 2021 when average daily active addresses reached 47K. This was the same month when ETH traded at an all-time high.
  • Despite the increase in user activity, UNI has underperformed with a 30-day return of 13% as compared to 20% for ETH. This difference in user activity and token performance highlights the importance of value accrual for token holders.
  • In August 2022, a proposal outlining a pilot program to collect fees from three trading pairs was overwhelmingly passed by the Uniswap community. Such value accrual mechanisms can potentially tie user activity with token performance.
  • Uniswap Labs, the corporate entity building the protocol, also announced a $165M Series B funding round on Oct. 13, 2022.

 

Bitcoin Tumbles With Stocks Following Fed Chair Remarks on Inflation

  • Bitcoin quickly followed stocks in a sell-off Wednesday—erasing modest gains—after Federal Reserve Chairman Jerome Powell said the central bank might continue its aggressive monetary policy.
  • Things were looking bright for the largest cryptocurrency by market cap—at first. 
  • The Fed announced its expected interest rate hike of 75 basis points and traders interpreted the news as perhaps the last time the Fed would do so. Bitcoin, Ethereum and the wider crypto market rose with stocks following the announcement. 
  • But Fed Chairman Jermone Powell said shortly after in a press conference that the central bank would keep upping interest rates until inflation was down—spooking Wall Street and crypto traders. 

 

Lightning Network developers fix critical bug that caused node downtime

  • Developers of Bitcoin’s Lightning Network have issued a fix for a critical bug that led to downtime for some nodes.
  • The fix came after a user, identified as Bitmatrix founder Burak Keceli, made a large 998-of-999 multi-signature Taproot transaction — one that required 998 private key signatures to send the bitcoin. This was an abnormally large number of signers, and Lightning nodes failed to support the multisig transaction of that size.
  • Lightning Labs said the transaction triggered a series of events that completely disrupted the ability for nodes on the network to sync with each other, though it did not result in a loss of funds. As soon as the transaction was made, the network’s nodes rejected the specific block that included it, as well as subsequent blocks that came after it.
  • Keceli made the same kind of transaction last month, causing similar issues for the network — although due to a slightly different bug.
  • Keceli knew in advance their transaction would disrupt the network. Rather than disclosing the security bug in a responsible disclosure practice called CVE, short for Common Vulnerabilities and Exposures, Keceli proceeded to make the transaction anyway. He defended his actions, claiming the act was for the “ultimate good.”
  • “As a Bitcoin wizard, I summoned chaos theory in the name of darkness for the latter good,” said Keceli in a tweet. “Responsible CVE is weaker magic,” he added.

 

Singapore Tests Institutional DeFi on Ethereum, Welcomes USDC Issuer

  • The Monetary Authority of Singapore’s (MAS) decentralized finance pilot program just executed “the first real-world use case for institutional-grade DeFi protocols,” Aave founder Stani Kulechov told Decrypt. 
  • J.P. Morgan, DBS Bank and SBI Digital Asset Holdings yesterday used the Aave protocol on Polygon—a layer-2 scaling solution—to complete foreign exchange and government bond transactions on the Ethereum network. The banks exchanged tokenized versions of Singapore government securities bonds for Japanese government bonds, and Japanese Yen for Singapore Dollars as a test. 
  • “We look forward to welcoming more innovation that leverages composable DeFi protocols to provide access to many underserved markets and enable a more inclusive system,” Kulechov told Decrypt over Telegram.

 

Instagram Users Will Soon Be Able to Mint and Sell NFTs

  • Instagram announced that in the near future, they will allow digital creators to mint and sell non-fungible tokens (NFTs) directly from the social media platform.
  • The image-focused app recently launched its Digital Collectibles feature in 100 countries, allowing users to connect to their digital wallets and showcase NFTs that they either created or bought. The connected NFTs can be shown in your feed and include a shimmery effect to indicate authenticity.
  • The latest update will allow creators to make their own digital collectibles and sell them both on and off Instagram, giving them an “end-to-end toolkit” for creating, displaying and selling NFTs.
  • The update will initially be tested among a small group of creators, including Amber Vittoria, Refik Anadol, Jason Seife, Dave Krugman and several others.

 

SWIFT Is Partnering With Chainlink: Here’s the Down-low on the Blockchain Data Provider

  • Chainlink announced recently it is helping Belgium-based SWIFT make token transfers and communicate across all blockchain environments.
  • “That’ll accelerate the adoption of DLT [distributed ledger technology] blockchains and benefit various institutions all over the capital markets,” Nazarov said at the conference.

 

BTC Markets Entering a New Phase in Potential Accumulation Season

  • Asset managers appear comfortable with increasing their exposure to bitcoin.
  • Call the current crypto winter the season of accumulation.
  • Bitcoin and ether’s significant decline in recent months is providing bullish investors the opportunity to accumulate at a favorable cost basis. Larger crypto investors are continuing to explore this opportunity.
  • Bitcoin has been trading in a narrow range for nearly five months, with support at about $19,000 a good portion of the time. Ether has dipped as low as $1,000 but has mostly hovered around $1,300 over the same period. Now, both have stepped up a rung, with support above $20,000, and $1,500, respectively.
  • The increases come amid a fourth consecutive 75 basis point interest rate hike by the Federal Open Market Committee (FOMC) in the Federal Reserve’s fierce battle to stem inflation without throwing the U.S. economy into a steep recession. Crypto markets have largely responded to the central bank’s monetary gyrations and other macroeconomic events, usually rising with encouraging news and dipping when investors are more pessimistic. Such reactions are normal in asset markets of all stripes.

 

JPMorgan Trade on Public Blockchain ‘Monumental Step’ for DeFi

  • JPMorgan has used the Polygon blockchain to trade tokenized cash deposits — the latest instance of banks moving into DeFi markets. 
  • The trade occurred as part of the Monetary Authority of Singapore (MAS) Project Guardian pilot, first said in May. The tokenization experiment completed trials for foreign exchange (FX) and the trading of government bonds, powered by crypto lending protocol Aave and decentralized exchange (DEX) Uniswap.
  • JPMorgan’s Onyx — the bank’s blockchain division for wholesale payments — joined Singapore’s DBS Bank, Japan’s SBI Digital, Singapore Exchange’s digital asset platform Marketnode and Temasek in the first phase of testing.
  • For FX transactions, Onyx successfully tokenized Singaporean dollar (SGD) deposits, as well as SBI Digital Assets tokenized Japanese yen (JPY) assets.
  • “[SGD] is a deposit token which is a general liability of JPM,” Ty Lobban, head of Onyx Digital Assets, tweeted, adding that the native token gives “stable on-chain value without the scalability issues of stablecoins.” 
  • In the second trial, DBS and SBI Digital Assets traded against liquidity pools of tokenized government bonds with DBS tokenizing SGD currency and Singapore Government Securities bonds. SBI did the same for Japanese bonds and JPY currency.

 

OpenSea Rolls Out Two New NFT Theft Protection Features

  • Leading non-fungible token (NFT) marketplace OpenSea said Wednesday it is offering two new features to prevent theft on its platform.
  • The features, one to prevent NFT theft and the other to detect it, come as part of the company’s larger effort to reduce scams and exploits by bad actors within the industry.
  • “Trust and safety issues – specifically scams and theft – are some of the biggest barriers to broader NFT adoption today,” OpenSea said in a blog post. “Ultimately, the goal of this work is to help make the ecosystem safer by reducing the downstream sales of stolen items … and thus reduce the incentive for NFT theft in the first place.”
  • The platform’s new theft prevention feature will proactively scan URLs to prevent malicious links from appearing on fraudulent collection listings. These types of links have been a major problem in recent months, commonly used as “wallet drainers,” where a bad actor can trick a user to sign over control of their NFT wallet to drain funds or transfer digital collectibles.
  • The second theft protection feature they are testing will auto-detect and flag potentially stolen or suspiciously transferred NFTs and then bar them from being traded on the platform. OpenSea expects this feature to reduce the incentives for NFT theft by lowering the value of any stolen goods. The platform had previously flagged stolen NFTs with a warning sign but still allowed them to be traded. The new feature will bar any trades and mark the NFT as “under review” for seven days while the previous owners are contacted to confirm or deny if the sale was legitimate.

 

Australian crypto ETFs to be delisted

  • Three Australian crypto exchange-traded funds (ETFs) intend to delist their offerings amid the slump in asset prices.
  • Cosmos Asset Management plans to delist the Cosmos Purpose Bitcoin Access ETF (CBTC) and Cosmos Purpose Ethereum Access ETF (CPET) funds, according to a Nov. 2 letter posted to the securities and derivatives exchange Cboe Australia. In a separate letter, One Managed Investment Funds Limited also informed the Cboe that it will request to revoke the quotation for the Cosmos Global Digital Miners Access ETF.
  • The three Cosmos funds soon to be delisted each have net asset values under A$1 million. 
  • Cosmos had filed a letter with the Cboe on Oct. 31 requesting that trading related to the CBTC and CPET ETFs be halted. One Managed Investment Funds Limited also requested a trading halt on the Cosmos Global Digital Miners Access ETF (DIGA) in a separate letter.

 

Arbitrum Responsible for 62% of All Ethereum Transactions

  • Arbitrum, a layer-2 rollup for Ethereum, has seen its network activity spike to new heights as anticipation mounts for an airdrop.
  • The buzz has boosted the total value of digital assets locked on the network (TVL) by more than 13% over the past month. Arbitrum’s TVL is $1.05 billion as of press time, eclipsing Ethereum rival Solana and even direct competitor Optimism.
  • Not to mention, transactions have shot up more than 550% since the launch of its Nitro network upgrade in August, now representing 62% of the weekly transactions on Ethereum, research firm Delphi Digital reported earlier this week. Before the surge, Arbitrum handled just 9% of Ethereum activity.
  • That has coincided with a spike in unique wallet addresses, which topped out at over 1.66 million for the first time on Monday. It should be noted that figure counts multiple addresses owned by individuals.
  • “Much of the activity is likely from speculators trying to boost their on-chain activity in the hopes of receiving a larger airdrop,” Delphi said.

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