Thursday, 5 May 2022

Market Summary

Market Summary 5 May 2022

Bitcoin Price: US$ 39,690.00 (+5.20%)
Ethereum Price: US$ 2,940.65 (+5.71%)

 

Evmos Relaunches, SPool Farms, & Aurora’s Ecosystem

  • After an unsuccessful upgrade during its initial launch in March that led to the team halting the entire chain, Evmos re-launched last week on Apr 28th.
  • With a fresh start, Evmos started gaining TVL on its various native projects, with Diffusion Finance taking the lead as its native DEX. To check if you have an EVMOS or Diffusion airdrop, visit Diffusion.fi and click on “Claim Diffusion Airdrop” to claim it. You can also yield farm on Diffusion in the USDC/WEVMOS pool (311% APR) and DIFF/WEVMOS (723% APR).
  • Evmos’s TVL has been rising consistently and just crossed $10M. We will have to see when Evmos releases more native projects if it can attract users, and their capital, back onto the chain.
  • Spool serves as DeFi middleware, that allows users to participate in a subnet of yield generating protocols in a risk diversified, automatically managed, and efficient fashion. 
  • Aurora is the EVM (Ethereum Virtual Machine) implemented as a smart contract on Near. An important distinction here is that it is a smart contract on an L1, not a rollup posting to an L1. Before diving further we should have a high-level understanding of Near, the sharded blockchain that Aurora is built on.
  • Near is the latest L1 to garner attention in crypto due to its $800M+ ecosystem fund and the momentum of Aurora. A PoS chain with dynamic sharding and 2-second finality, it is viewed in some aspects as the ETH 2.0 roadmap. There are differences, however, as Near’s use of dynamic sharding is how it plans to scale vs Ethereum being rollup-centric. Another big difference vs other ecosystems is that they are not trying to depend on one environment or language. While Rust is the main language native to Near, if a developer wants to use the EVM (Aurora), Substrate (Octopus Network), JavaScript, whatever, they can. From a user perspective, the goal is that they will be able to use apps built using any of these languages seamlessly. Cross-contract calls are what allow Near to compose like this, and there are already some things happening between Near native apps and Aurora.

 

CryptoUnicorns Launch, Phantom Network & Aftermath of the Otherside Land Sale

  • Not a lot has changed this week in terms of total marketplace volumes — it appears that we are still in a consolidation pattern. OpenSea sales volumes crept up slightly this week to $1.4B, a decent showing in a relatively slow week for crypto overall. Since its launch on 20 Apr, the trading volume on Coinbase NFT has been insignificant relative to OpenSea and LooksRare currently.
  • Looking back at April, we can see that the number of unique wallets remains high with over 350,000 buyers recorded — a slight increase since March. This indicates a sustained level of buying interest in NFTs in general. Will we see a continued rise in buyers through the rest of the year? Time will tell.
  • Solana has the 2nd highest volume of NFT sales by chain after Ethereum. Magic Eden remains the dominant player in the space by far, crowding out almost all other marketplaces on the chain except for OpenSea.  The Solana transaction volumes on OpenSea however are still a tiny fraction (<10%) of Magic Eden’s volume. Magic Eden has been receiving some flak lately as it is still a permissioned marketplace, requiring project owners to apply to be listed on the platform. The hottest collection on Solana right now? Okay Bears, who some are touting as the “BAYC-equivalent” of Solana. Its mint price was 1.5 SOL; it is now sitting at a floor price of 70 SOL after a week of trading.
  • Also noteworthy: Solana experienced downtime on 1 May when the network become overloaded by NFT minting bots.
  • CryptoUnicorns is a blockchain-based game centered around unicorn NFTs that can be used in a farming simulation and various battle loops. It’s one of the games that our team at Delphi has been excited about for a while now (Note: Delphi Ventures is an investor in CryptoUnicorns). Farming and breeding gameplay has just launched this week (3 May), while other gameplay types will be coming later in the year: Jousting (Q2), Racing (Q3), Team RPG (Q4).

 

Fed hikes interest rates by 50 basis points in effort to combat inflation

  • The United States Federal Open Market Committee (FOMC) concluded two days of meetings Wednesday with a widely anticipated announcement of an interest rate hike of 50 base points, or 0.5%. It is the second of an expected seven rate adjustments this year. In March, the Federal Reserve raised its benchmark rate by 25 basis points, or 0.25%, marking the first upward adjustment since 2018. 
  • Markets were braced for Wednesday’s hike, which was the steepest since 2000, so the immediate reaction was expected to be moderate given that Fed chair Jerome Powell had already hinted at a 50 basis-point adjustment earlier in April. However, risk assets such as stocks and even crypto rallied in the immediate aftermath of the Fed announcement.
  • In its policy statement on Wednesday, the Fed also announced it will begin selling off some of its balance sheet of bonds and mortgage-backed securities, which has doubled in size to $9 trillion since the pandemic began. In the best case, this will cause a temporary shock to financial markets, but potentially could have longer-term negative effects.

 

European watchdog lists crypto next to lawyers, accountants as an AML threat

  • Europe’s Anti-Money Laundering and Combatting the Financing of Terrorism (AML/CFT)  watchdog, MONEYVAL, has listed monitoring the crypto sector along with “gatekeeper” professionals, such as lawyers and accountants, as priorities in European nations’ push to combat money laundering.
  • In a media release based on the findings of its annual report, MONEYVAL called upon European jurisdictions to assess compliance with international standards and implement stricter regulatory policies to combat money laundering facilitated by crypto assets.
  • Elżbieta Frankow-Jaśkiewicz, chief of MONEVYAL, cited the Pandora Papers as an example of how professionals serving as “gatekeepers” could aid the rich and corrupt to launder their money. She also claimed that the popularity of crypto assets for money laundering is on the rise:
  • “A newer money laundering trend is related to the emerging virtual assets sector, the increasing global use of cryptocurrencies, and other components of the rapidly evolving ecosystem of so-called “decentralized finance” (DeFi).”

 

Polkadot launches cross-chain messaging system to solve blockchain’s bridge problem

  • Blockchain platform Polkadot has launched a new cross-chain communications protocol, saying it will do away with cumbersome bridging mechanisms that have cost the crypto industry billions in cyber attacks. 
  • The newly launched XCM messaging system is intended to promote Polkadot’s multichain ecosystem, which is being built on the premise of full interoperability. XCM channels are said to be secured at the same level as Polkadot’s central hub, dubbed Relay Chain, and are also available for use by parachains. In other words, XCM will enable communication between parachains themselves as well as smart contracts.
  • Future iterations of XCM will allow messages to be sent between parachains without having to be stored on the Relay Chain, thereby improving scalability and eliminating governance processes for individual chains.

 

Proposed digital euro designs lack privacy options, ECB presentation shows

  • Next to the fears of government overreach that the European Union’s ambitious digital euro project stirred, the main concern of the public is the prospective currency’s privacy framework. It appears that this worry might not be overblown after all, as the European Central Bank’s (ECB) latest presentation hints that user anonymity is not a desirable design option.
  • On Tuesday, crypto venture adviser and European digital asset regulation whistleblower Patrick Hansen drew public attention to the ECB’s presentation titled “Digital Euro Privacy options.” The document is relatively short and contains nine slides that lay out the possible options for user privacy in the EU’s Central Bank Digital Currency (CBDC), also known as the digital euro.
  • Acknowledging the public concern for the CBDC’s privacy, the presentation stresses the need to assess the issue “in the context of other EU policy objectives, notably anti-money laundering and countering the financing of terrorism (AML/CFT).”

 

Global private bank LGT opens Bitcoin and Ether trading

  • LGT Group, a top family-owned private banking and asset management group, is moving into cryptocurrency by launching Bitcoin (BTC) and Ether (ETH) investments at LGT Bank in Liechtenstein.
  • Managing over $292 billion of assets, LGT Bank has debuted digital asset custody and trading services in cooperation with Swiss cryptocurrency bank Seba, according to a joint announcement released on Wednesday.
  • “LGT Bank has been offering direct investments in Bitcoin and Ether since May. The private bank has entered into a partnership with Seba Bank, which will act as broker and custodian to provide this service,” Seba Bank’s chief marketing officer Sandra Frank told Cointelegraph.
  • LGT Bank will initially offer custody and trading services for BTC and ETH. Seba supports more than 14 cryptocurrencies, including altcoins like Litecoin (LTC), Polkadot (DOT), Tezos (XTZ), the Tether (USDT) stablecoin and others.

 

Virginia county wants to put pension funds into DeFi yield farming

  • The Northern Virginia county of Fairfax has already invested a part of its pension funds in crypto and blockchain startups. Now, it’s mulling over deeper involvement with decentralized finance (DeFi) yield farming.
  • The Fairfax County Police Pension System’s chief investment officer Katherine Molnar said on Tuesday at the Milken Institute Global Conference that the system aims to fund two new crypto-focused hedge fund managers in the next three weeks. The next few days will see a decision made, which, if approved, would be the first time pension fund money was used in DeFi.
  • According to Molnar, Fairfax has already committed pension funds to seven crypto allocations across two pension funds, including venture capital funds and one structure that holds early-stage illiquid tokens and later-stage liquid tokens. A different approach to profit from volatility is one of the seven categories. It includes a hedge fund that employs various techniques in cryptocurrency, including yield farming, basis trading and cross-exchange arbitrage.

 

South Korea’s new president delays crypto taxes in favor of consumer protections

  • South Korea’s newly-elected president Yoon Suk-yeol announced Tuesday he would push to defer taxation on crypto investment gains at least until a new set of regulations called the Digital Asset Basic Act (DABA) is enacted.
  • South Korea’s crypto tax was initially set to come into effect for the 2022 fiscal year but was pushed back to 2023 last December. E-daily reported that Yoon will ensure the crypto tax law does not come into effect until reasonable legislation is in place to protect consumers, which could be by 2024.
  • The president-elect’s presidential transition team has been exploring its options in delaying the tax since March, when Yoon won the election on the grounds that there was insufficient legislation in place to justify levying taxes on digital assets.

 

3 key metrics signal Terra (LUNA) price is preparing for a recovery

  • Terra (LUNA) price lost 31% over the past four weeks, erasing all of the gains accrued year-to-date and even though the token continues to outperform the broader cryptocurrency market by 20%, Terra is struggling to hold above the $85 support.
  • Previously, a few bullish catalysts were Terra’s USD (UST) stablecoin flipping Binance USD (BUSD) to become the third-largest stablecoin on April 18 and the April 26 announcement that Fireblocks, a digital asset custody platform had seen institutional clients invest over $250 million into the Terra decentralized finance (DeFi) ecosystem.
  • This positive newsflow was not enough to instill confidence in Terra investors and there were also a few changes that might have partially subdued the continuous inflow of deposits on the network.

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