Tuesday, 31 May 2022

Market Summary

Market Summary 31 May 2022

Bitcoin Price: US$ 31,734.22  (+7.69%)
Ethereum Price: US$ 1,998.78 (+10.21%) 


Real World Crypto Loans? ByBit Shorts, Intro to Danksharding

  • Goldfinch Protocol is a credit protocol that allows for uncollateralized loans for real-world businesses or trusts. These loans are flowing towards emerging markets and try to serve underbanked businesses and individuals. The borrowers are audited by the ‘Auditors’ who are also GFI stakeholders. The ‘Auditors’ are incentivized to act honestly to earn GFI or face slashing for malicious acts.
  • Over the past year, Goldfinch has served ~$100M in uncollateralized loans, with a superb utilization rate of ~98% — maximizing its capital efficiency.
  • Within Goldfinch, there are two different pools — Senior and Backer pools. The Senior pool is a lower-risk pool that diversifies its deposits throughout multiple loans and has priority to first-loss of capital. Backers have a higher risk but are rewarded with early backer rewards and 20% of the Senior pool’s yield.
  • Although yields are attractive, we must also take into account that these are basically high-risk bonds that can potentially have more defaults. That being said, the TAM of microloans is rather large and is expected to hit $343B by 2027, which Goldfinch can tap into with cryptocurrencies.


The Lido ‘Monopoly’ and The ICS721 Standard

  • In response to criticisms from the likes of Vitalik, Superphiz, and Danny Ryan, who argue that liquid staking protocols should have a limited stake in a chain, Lido developer Vsh, has created a thread where Lido DAO can debate whether they should self limit their stake on the Ethereum network. Lido controls 30% of all staked ETH, according to the forum thread. Some feel it may become a centralizing force for Ethereum and pose a risk to the entire ecosystem.
  • Some in the forum see the utility in Lido limiting its stake. One user argues that a temporary limit is reasonable, but only to allow time for competitors to catch up. Other users wonder how long Ethereum will allow Lido to exist as a potential threat to its decentralization – especially if it controls a large portion of the stake. They worry that Ethereum could hard fork and slash Lido validators in the name of decentralization.
  • Twitter thread king, Adam Cochrane, argued that Lido limiting itself would allow for less altruistic competitors to emerge and steal its market share. He cites centralized exchanges as being the main competitive threat to Lido. He feels that Lido should instead work on building centralization guardrails rather than limiting itself. Some users feel that the argument that Lido should limit itself lacks nuance and understanding of Lido’s incentives – with one user posting a lengthy, technical rebuttal. Additionally, Adam reminds everyone that stETH doesn’t represent ETH staked in a single host, so Lido controlling a large percentage of stETH is immaterial. Sadcat argues that the proposed solutions disproportionately harm Lido and instead proposes a deposit fee when Lido’s stETH share is above a certain threshold. However, Cobie presents a strong argument that changing fee structures for users who can’t exit is potentially fraudulent. He also points out that if a system requires DApps to act altruistically, it probably won’t survive when mercenary capital enters the space.
  • Balancer and BeethovenX have both voted to join the rush for Optimism by allocating $250k each for Optimism incentives. Due to recent bugs in boosted pools, Balancer and BeethovenX will use these incentives with traditional liquidity mining programs rather than gauges.
  • Gravity Bridge has voted to create and fund a working group that will work on the ICS721 standard – the Cosmos version of ERC721 (NFTs). The IRISnet team created the ICS721 standard, which is needed for Cosmos NFTs to become interoperable with IBC and cross-chain NFT applications.
  • Stargate has voted to create a process to better manage its emission schedule. The proposer thinks Stargate has deeper liquidity than they need for their current users, and as such, should reduce incentive emissions. The proposal recommends using historical bridging data to create a process where Stargate targets a certain TVL in the pools. Stargate will manage incentives to reach the targeted TVL. If the model is successful, the proposer predicts that STG emissions should better match their liquidity requirements.


MoneyGram to open transfer platform with Stellar, eyes wallet deal in El Salvador

  • MoneyGram International, one of the world’s largest cross-border transfer services, is partnering with the Stellar blockchain to create a stablecoin-based platform for money transfers. The new service will allow Stellar wallet users to send Circle’s USD Coin (USDC) to recipients, who will be able to cash them out for fiat currency through the MoneyGram network.
  • “We’re trying to be a bridge from the crypto world to the fiat world,” MoneyGram CEO Alex Holmes said in an interview.
  • Holmes also said MoneyGram is in talks with third-party companies that provide digital wallets in El Salvador alongside the government-backed Chivo wallets, which were introduced when the country made Bitcoin (BTC) legal tender last year. Through a deal with one of those companies, MoneyGram would be able to compete for BTC transfers as well.
  • “If a country like El Salvador is going to make Bitcoin seamless with US dollars in country, I think that consumers, through MoneyGram, should be able to transfer Bitcoin to El Salvador or transfer dollars and convert them to Bitcoin,” Holmes told Bloomberg. “If that’s where the world is going, let’s participate in that world and let’s see how we can help fulfill that opportunity.”


Bitcoin’s recent gains have traders calling a bottom, but various metrics remain bearish

  • On May 30, the total crypto market capitalization gained 4% and currently is within reach of a $1.3 trillion market capitalization. The move was enough to erase the losses from the previous seven days and was driven mainly by Bitcoin’s (BTC) 4.9% gain during that time frame.
  • Bitcoin’s turn-around happened after the United States stock market presented gains for the first time after seven consecutive negative weeks. The longest losing streak in over a decade for the S&P 500 was followed by a 6.6% positive performance at the closing bell on May 22.
  • Curiously, JP Morgan sent out a research note to clients on May 25, claiming that $38,000 was the fair value for Bitcoin. The global investment bank also said that Terra’s (LUNA) collapse did not harm the crypto venture capital demand.
  • Perpetual contracts reflect mixed sentiment as Bitcoin and Ether held a slightly positive (bullish) funding rate, but altcoins signaled the opposite. For example, Solana’s negative 0.20% weekly rate equals 0.8% per month, which is irrelevant for most derivatives traders.
  • The data suggests that investors are not rushing in to confirm that the recent price recovery represents a trend change. While the total crypto market capitalization broke above the $1.3 trillion support, traders are pricing higher odds of a downturn. So far, there is no clear indication of a market bottom according to trading metrics.


City of Shenzhen airdrops 30M in free digital yuan to stimulate consumer spending

  • According to local news outlet Shanghai Securities News, the city of Shenzhen will airdrop 30 million digital Chinese yuan (e-CNY) to local residents in an attempt to revitalize consumer spending. 
  • The airdrop is a joint effort between the city of Shenzhen and Meituan Dianping, China’s leading food delivery app. As per instructions, users would need to first login to the Meituan app, sign up for the incentive, and then potentially receive the e-CNY rewards as part of a lottery draw.
  • If chosen, the e-CNY is then dispensed to users and can be spent at more than 15,000 in-app merchant terminals that accept the state-owned digital currency. Previously, the People’s Bank of China had identified the e-CNY as a potential tool for advancing regional economies and improving the efficiency of select financial services. Meanwhile, sources at Meituan say that the e-CNY plays a vital role in boosting spending and revitalizing local businesses. Shenzhen is also currently one of three cities in China where residents can pay municipal taxes and charges with the e-CNY.


Pangolin Integrates Rabby — a multichain extension wallet powered by Debank

  • We are pleased to announce that Pangolin has integrated Rabby
  • The Pangolin community now has easy access to a better-to-use, more secure multichain wallet experience.
  • Both Pangolin and Rabby envision a future that offers seamless multichain compatibility.
  • Our integration will create an easy path for new users to operate on other chains the first time and easily navigate back to Avalanche when needed.


South Korean authorities reportedly probe staff behind Terra

  • The South Korean government continues to investigate Terraform Labs, the firm behind the Terra Network as well as Luna Classic (LUNC), previously known as Terra (LUNA), and TerraUSD (UST) tokens, by reportedly summoning subpoenas to employees.
  • South Korean authorities have reportedly summoned all employees at Terraform Labs as part of a full-scale investigation of the collapse of UST and LUNC, the local news agency JTBC reported on Saturday.
  • According to the report, the probe is conducted by the joint financial and securities crime investigation team of the Seoul Southern District Prosecutors Office. The authorities are looking into the case to check for signs of intentional price manipulation and whether the tokens went through proper listing procedures.
  • The investigators also reportedly alleged that the Terra token’s mechanism was faulty in the first place, as stablecoin UST is not pegged to a stable collateral or profit model. “At a certain point in time, there is no other way but to collapse because it cannot handle interest payments and fluctuations in value,” the authorities reportedly said.


Bitcoin Lightning Network capacity crosses 3900 BTC marking a new ATH

  • Unwithered by the ongoing bear market, Bitcoin’s (BTC) underlying architecture continues to outperform itself — further securing, decentralizing and speeding up the impenetrable peer-to-peer (P2P) network. The same holds true for the Bitcoin Lightning Network (LN).
  • The Bitcoin Lightning Network capacity attained an all-time high of 3915.776 BTC, as evidenced by data from Bitcoin Visuals, displaying a commitment to the cause of improving BTC transaction speeds and reducing fees over the layer-2 protocol.
  • Moreover, statistics data from 1ml shows that all other aspects of the Bitcoin Lightning Network continue to grow parallel to Bitcoin’s global adoption drive.


Investors dumping on Terra as LUNA 2 tanks 70% in two days

  • The price of Terra (LUNA) has tanked around 70% since the re-launch of the Terra ecosystem via Terra 2.0 on May 28.
  • Under the revival plan of Terraform Labs founder Do Kwon, new LUNA tokens, also referred to as LUNA 2, are being airdropped to investors that previously held Luna Classic (LUNC), TerraUSD Classic (USTC) and Anchor Protocol UST (aUST).
  • At this stage, the sharp plummet seems to suggest a relative lack of faith in Do Kwon’s revamp moving forward, with many investors indicating on Twitter that they are instead looking to recover a small portion of their previously lost capital and wipe their hands clean of the project.


Land Sale Announcement – Illuvium – ILV

  • The Land sale will start on Jun. 2, 2022 at 13:00 UTC and will end on Jun. 5, 2022 at 13:00 UTC. Tier 1-4 Land plots are sold via Dutch Auction, which has a high starting price and decreases at 2.5% per minute, over two hours or until sold. Tier 5 Land is sold using an English Auction format. Bidders will push the price upwards with their bid until the auction time limit is reached. This auction shares the same start and end times as the overall Land sale. In-depth details about the sale can be found in the announcement.

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