Thursday, 7 April 2022

Market Summary

Market Summary 7 April 2022

Bitcoin Price: US$ 43,170.47 (-5.11 %)
Ethereum Price: US$ 3,168.51 (-7.00 %)

 

L2s Lead Gas Surge, LendFlare Yields, & Maple’s Loan Growth

  • Layer-2 rollups post all their transactional data to L1s. This allows L2s to inherit the security of the L1 it settles on.
  • In March 2022, L2s settling to Ethereum hit a new monthly high in terms of gas spent, surpassing 35B. (Note: gas expenditures are not to be confused with gwei, or the price of gas in ETH.)
  • The surge in gas spent was propelled by activity from several L2s. The main contributors were:
  • Arbitrum, the largest contributor to L2 gas settlements, saw transactions start to trend upwards, likely due to the attention from TreasureDAO and Stargate. Read our Delphi Pro report to learn more about TreasureDAO.
  • Metis also played a significant part as the launch of Hermes Protocol (a Solidly Fork) attracted yield farmers over to Metis, which was not surprising given that Solidly had a great launch in Fantom.
  • ImmutableX started spending more gas as activity re-ignited. The activity will likely remain high if transactional volumes on IMX continue to soar. IMX now has the 2nd largest daily transactions of NFTs by Chain.
  • As Ethereum remains one of the most secure and decentralized L1s, we can expect continuous development by L2s to utilize its security.
  • LendFlare allows Curve investors to borrow against their LPs for a certain amount of period with a fixed borrow rate and no concerns for assets being liquidated due to price fluctuations. Curve LPs will not be lent out again but reinvested in Convex to ensure the maximum profit and give all back to borrowers. Investors who supplied loan liquidity will gain one of the highest supplied interest rates compared to current lending platforms.
  • Undercollateralized lending makes up less than 5% of the $50B in total value locked across crypto money markets. In traditional finance, the vast majority of credit is extended in an uncollateralized or under-collateralized fashion, allowing companies and individuals access to efficient debt financing. The lack of infrastructure surrounding these loans has acted as a massive bottleneck within the crypto economy. Maple Finance provides a solution via under-collateralized loans to approved borrowers while taking advantage of the composability and efficiency of public blockchains.
  • Maple’s loans outstanding have grown over 70% in 2022 with its utilization hovering above 90%. This high utilization rate versus TrueFi can be attributed to the caps that Maple has on its lending pools alongside the 90-day lock-up period. By doing this, Maple can reduce the amount of capital that is idly collecting yield while providing limited value to the protocol.

 

Aku, The Moon God & The New Age of Web3 Media

  • Aku is arguably the most powerful NFT-based character today. His likeness and storyline have resonated with thousands of people, many of which had little to no interaction with NFTs previously.
  • One of the hallmarks of the Aku community is its high percentage of “diamond hand” holders, or NFT owners who refuse to part with their chapters. Across all 10 chapters, only ~2% of total editions (320/15,435) are available for sale on secondary marketplaces. The current cost to achieve “Moon God” status, which requires owning at least one edition from every chapter, is roughly $75K.
  • The next major milestone for Aku is the highly anticipated launch of Akutars, a collection of 15,000 unique 3D avatars that will come pre-equipped with base traits, OG Traits, Mega OG Traits, or traits from one of 6 Brand Collaborators.

 

Meta may introduce tokens and digital currency lending services to apps: Report

  • Social media giant Facebook’s parent company, Meta, is reportedly planning to introduce virtual currency as well as lending services to apps it owns, with Facebook, WhatsApp, Instagram, and Messenger potentially being among those impacted. 
  • According to a Financial Times report on Wednesday, this move toward tokens and digital currency is aimed at exploring alternative sources of revenue as interest in Facebook and Instagram drops. Meta’s potential digital currency, which employees have reportedly internally dubbed “Zuck Bucks” after CEO Mark Zuckerberg, will be aimed at use in the metaverse.
  • The report does not claim that Meta is exploring traditional cryptocurrencies tied to a blockchain, but rather centrally controlled tokens to be used within its apps, similar to an in-game currency. The company is also reportedly considering creating “social tokens” for engagement rewards, as well as “creator coins” for influencers.

 

Ethereum traders eye the 61.8% Fib level if ETH fails to hold the $3.2K support

  • The cryptocurrency market is nearly completely red on April 6 after hawkish comments from multiple members of the Federal Reserve highlighted their opinion that aggressively raising interest rates and cutting bond purchases would need to happen in order to combat inflation. Members did concede that this would result in negative pressure being placed on financial markets and this seems to be exactly what happened on April 6. 
  • The outlook for Ether following a rejection of the monthly resistance at $3,400 was discussed by market analyst and pseudonymous Twitter user Rekt Capital, who posted the following chart noting that if this were to happen, “Ether could revisit $3,000” as indicated by the black line on the chart.
  • Based on the chart provided, this would result in a potential drop to $2,602.

 

UST staking goes live on Binance as Anchor reserves fall

  • On Wednesday, centralized cryptocurrency exchange Binance launched its new TerraUSD (UST) staking program. Although Binance did not name the underlying decentralized finance protocol responsible for the staking rewards, Do Kwon — Terra Luna’s (LUNA) co-founder — attributed the origins of the high yield to Terra’s flagship Anchor protocol. 
  • Terra’s (Luna) ecosystem consists of its algorithmic stablecoin UST and governance/equilibrium token LUNA. The Anchor protocol alleges that it operates as a “crypto savings account,” allowing users to deposit their UST and earn up to 20% APY. The savings rate is funded via a combination of borrowers paying interest on UST loans and staking income from their collateral.
  • At the time of publication, there is a continued imbalance between borrowers and lenders, with 12.4 billion UST worth of deposits relying on income generated by just 3.47 billion UST of loans. Anchor must tap into its reserves to pay out its promised APY when this occurs. According to data from an unofficial tracking resource called Terra.engineer, Anchor has less than 340 million UST remaining in its reserves, compared to approximately 450 million UST last month. Despite the declining reserve count, the Terra development team is using initiatives such as injecting more reserve capital and launching more income-generating methods to maintain protocol. 

 

Sweden’s central bank completes second phase of e-krona testing

  • The Swedish central bank’s digital currency project, a proposed CBDC, known as the e-krona has successfully finished its second phase of trials. According to Riksbank, the nation’s central bank, the asset is now technically ready to be integrated into banking networks and facilitate transactions. 
  • During the second phase of the e-krona pilot project — which began in February 2021 — the CBDC was investigated on the matter of its technical ability to function within the country’s existing digital banking infrastructure. Participating banks included Handelsbanken and Tietoevry.
  • The report indicated that the e-krona could indeed be successfully exchanged for fiat money and used in transactions, both online and offline. This phase of testing also brought legal clarity to the project in terms of whether the e-krona should be regarded as an “electronic form of cash.”

 

Starbucks announces NFT initiative as union-busting controversy continues

  • Nonfungible tokens (NFTs) have seen their fair share of controversy, but now they have found their way into the midst of the battle between multi-billion dollar corporations and workers trying to unionize their workplaces in the United States.
  • On his first day back as the CEO of Starbucks, Howard Schultz promised additional worker benefits to workers and digital innovation using NFTs. In a partner open forum, Schultz mentioned that “sometime before the end of the calendar year, we are going to be in the NFT business.”
  • The announcement received its fair share of backlash. In a tweet, user smchatter1 wrote that “corporations could just pay employees living wages instead of burning profits to maintain illusions.” 

 

DeFi can breathe new life into traditional assets

  • Traditional finance experts are warming up to the idea of crypto, but outlandish headlines of record-breaking hacks and overhyped projects don’t necessarily reverse its bad rap. Unfortunately, we’ve seen the total value locked in decentralized finance (DeFi) recently nosedive, which isn’t exactly helpful in changing skeptic’s minds.
  • Tokenization of commodities enables blockchain-based ownership of a physical asset, which is essentially just a decentralized version of an already-existing practice in traditional finance. Tokenized precious metals are somewhat similar conceptually to a share in a gold exchange-traded fund (ETF), as they represent the investor’s stake in physical gold stored elsewhere and largely work toward the same purpose. Projects like VNX offer digital ownership of tokenized commodities that are backed by physical assets including gold, giving the investor the same benefits as investing in physical gold but have the versatility of a crypto asset on top of that.

 

Axie Infinity creator raises $150M led by Binance to reimburse stolen funds

  • Sky Mavis, the creator of the popular play-to-earn nonfungible token game Axie Infinity has raised $150 million in a new funding round led by Binance. 
  • The fundraiser is aimed at reimbursing lost funds from the recent exploit on Axie Infinity’s Ronin Bridge, which resulted in the loss of over $600 million. The funding round also saw participation from Animoca Brands, a16z, Dialectic, Paradigm and Accel.
  • Apart from the $150M raised funds, the remaining amount would be reimbursed from Sky Mavis and Axie Infinity’s balance sheet. The developers have also identified a small validator set on Axie DAO as being the root cause behind the exploit and have decided to increase the number of validator groups to 21 in the next three months.
  • The developers behind the project estimate that it could take several weeks before the Ronin Bridge becomes active again, as they are working on the security update and subsequent audits before re-opening it for users. In the meantime, Binance is helping Axie Infinity users to deposit and withdraw ETH on the Ronin Network.

 

Litecoin price risks 20% drop as LTC whale activity spikes to monthly highs

  • The daily transactions involving the richest Litecoin (LTC) addresses — “whales” that hold 10,000 to 1 million LTC — have jumped to their highest levels since December 2021.
  • On-chain analytics platform Santiment detected a total of 3,458 LTC transactions, worth over $100,000, on April 5, calling it “an indicator of mid-term price direction shifts.”

 

HSBC debuts metaverse investment fund in Asia: Report

  • Global banking giant HSBC Holdings has rolled out its metaverse investment product for wealthy clients in Singapore and Hong Kong, according to multiple media reports.
  • Called the Metaverse Discretionary Strategy portfolio, the new product is managed by HSBC’s asset management arm, HSBC Asset Management. The fund aims to provide high net worth professional investors and accredited investor clients with exposure to new investment opportunities in the metaverse industry.
  • According to a Wednesday report by Reuters, HSBC’s metaverse fund will focus on investment within five major segments in the metaverse ecosystem; namely, infrastructure, computing, virtualization, experience and interface.

 

Binance​.US completes $200M seed round to hit $4.5B valuation

  • Binance​.US, the American partner of Binance, the world’s largest cryptocurrency exchange by trading value, has completed its first-ever external funding from investors like Circle Ventures.
  • Binance.US has raised more than $200 million in a seed round to reach a pre-money valuation of $4.5 billion, the firm announced to Cointelegraph on Wednesday.
  • The funding round also involved VanEck, one of the first United States-based asset managers to file for a Bitcoin exchange-traded fund. Other investors included venture capital firms like RRE Ventures, Foundation Capital and Original Capital as well as firms focused on diversity, equity and inclusion, such as Gaingels and Gold House.

 

Blockchain.com launches asset management for institutional investors

  • Blockchain.com, a cryptocurrency exchange and financial services firm, has reportedly launched an asset-management service for its wealthy customers.
  • According to Bloomberg, the service is known as BCAM and will serve institutions, family offices and high-net-worth individuals. BCAM was founded in collaboration with Altis Partners, a futures portfolio manager that also manages investment portfolios using blockchain technology. Blockchain.com is the underlying platform that powers BCAM.
  • The new service, which has yet to be officially announced by either Blockchain.com or Altis Partners, is based on a strategy that tracks the price of Bitcoin (BTC) versus the U.S. dollar. It’s also developing a new approach for investors, called “algorithm-based risk-managed exposure,” which aims to reduce the volatility of Bitcoin investment, as per the report.

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