Friday, 8 July 2022

Market Summary

Market Summary 8 July 2022

Bitcoin Price: US$  21,624.98 (+5.16%)
Ethereum Price: US$ 1,237.49 (+4.29%) 


The Great cvxCRV Lockening

  • Convex Finance has experienced a record-breaking period which is being dubbed the “Great Lockening.” The protocol received its largest supply increase of cvxCRV within any two-week period since its inception. Since June 27th, a whopping 35M CRV has been locked, taking the total supply of cvxCRV up to ~274M.
  • This massive increase in cvxCRV supply was primarily driven by the recent proposals by Frax and Convex. Previously all the CRV farmed by Frax was being sold. Now, Frax has been admitted to the veCRV whitelist and will adhere to the following conditions:
  • Lock at least 5% of CRV farmed as veCRV
  • Use the remaining CRV to support the cvxCRV peg or convert it directly into cvxCRV
  • Since Frax is the largest stablecoin player in the Curve ecosystem and also a massive holder of CVX, this proposal’s importance cannot be understated. Having Frax help maintain the cvxCRV peg is a huge advantage to Convex and the Curve ecosystem.
  • Currently, cvxCRV is absorbing significantly more supply than is being emitted to Curve pools through gauge emissions. The percentage shown in the chart above being greater than 100% indicates that either old CRV, or CRV supply from investor and team tranches is also being locked into cvxCRV.
  • The massive increase in cvxCRV supply equates to more gauge power controlled by each CVX, thus allowing Convex to direct a larger share of Curve’s future emissions. Each locked CVX now controls over 5.4 max locked veCRV, a ratio not seen since March 3rd, 2022.


Ethereum testnet Merge mostly successful — ‘Hiccups will not delay the Merge.’

  • Ethereum has now completed its second-to-last major Merge trial on the public test network Sepolia, paving the way for its transition to the proof-of-stake (PoS) consensus mechanism.
  • While it’s been judged mostly a success, it was not incident free.
  • The final trial of the Merge is set to occur on the Goerli network over the next few weeks before the official Merge on the Ethereum mainnet can be given the go-ahead.
  • Ethereum educator Anthony Sassano, who hosted the Sepolia Merge livestream on YouTube on Wednesday, confirmed on Twitter that the Merge transition went through “successfully” and added that the testnet will be monitored over the next few days.
  • Terence Tsao, an Ethereum protocol developer, also said the Merge transition itself had been a success but noted around 25-30% of validators went offline after the Merge due to “wrong configs.” However, he added that “hiccups will not delay the Merge.”
  • Superphiz, a founding member of the ETHStaker Community, cautioned during the stream, however, that the actual success of the Merge won’t be known “for several hours or even until tomorrow.”
  • The final trial will occur on the Goerli test network. Superphiz added that the timing of the Merge will depend on the reviews of the Sepolia test.
  • The testnet Merges are a form of “dress rehearsal” that is essential to allow Ethereum developers and independent project developers to understand what they can expect when the actual Merge takes place.


Crypto owners banned from working on US Government crypto policies

  • US government officials who privately own cryptocurrencies are now banned from working on regulations and policies that could affect the value of digital assets.
  • A new advisory notice released by the US Office of Government Ethics (OGE) on Tuesday stated that the de minimis exemption — which allows for the owners of securities who hold an amount below a certain threshold to work on policy related to that security — is universally inapplicable when it comes to cryptocurrencies and stablecoins.
  • “As a result, an employee who holds any amount of a cryptocurrency or stablecoin may not participate in a particular matter if the employee knows that particular matter could have a direct and predictable effect on the value of their cryptocurrency or stablecoins.”
  • The notice provided an example scenario whereby an employee who owns a mere $100 of a certain stablecoin, is asked to work on stablecoin regulation — the employee in question cannot participate in work concerning regulation “until and unless they divest their interests in [that] stablecoin.”


All aboard! Elon Musk’s Vegas Loop now taking Dogecoin payments

  • Elon Musk’s tunnel construction firm The Boring Company (TBC) has begun allowing customers to pay for rides on its Las Vegas transit system using Dogecoin (DOGE)
  • A Wednesday report from CNBC said the new payment option via BitPay surfaced on July 1, a day after the opening of its new Loop station at the Las Vegas Convention Center.
  • While The Boring Company has not officially confirmed the new payment method, founder Elon Musk seemingly did when he responded to a tweet about the news, saying: “Supporting Doge wherever possible.”


WSJ editorial slams SEC’s ‘bewildering’ Bitcoin ETF denials

  • The Wall Street Journal Editorial Board has come out swinging against Gary Gensler’s “legendary” resistance to approving a spot Bitcoin (BTC) exchange-traded fund (ETF). 
  • The hard-hitting opinion piece, published on Wednesday, called out the Gensler-led Securities and Exchange Commission (SEC) for overt inconsistencies in how the commission handles applications for Bitcoin-related exchange-traded products (ETPs) compared to more traditional assets and other commodities.
  • So far, Gensler’s SEC has rejected every proposal for a spot Bitcoin ETP, including two in the last week from Grayscale and Bitwise, which resulted in Grayscale launching legal action against the SEC.
  • The editorial board said the SEC hold-up was even more “bewildering,” given the agency had approved several ETPs for Bitcoin futures last year.
  • These consistent rejections led SEC Commissioner Hester Peirce to declare Gensler’s resistance to spot crypto ETPs as “becoming legendary,” questioning:
  • “At what point, if any, does the increasing maturity of the Bitcoin spot markets and the success of similar products elsewhere tip the scale in favor of approval?”


Multichain Bridge to Integrate TomoChain for the Future of Interoperatibility

  • We’re exhilarated to announce a strategic partnership with one of the pioneering cross-chain bridges Multichain (previously “Anyswap”), which will connect the TomoChain network to the larger ecosystem.
  • With the support of Multichain bridge, users will be able to swap their TomoChain based tokens to other blockchains for trading and other purposes. At the same time, we can also expect more liquidity and projects flowing into the efficient, secure and cost effective TomoChain network.


Genesis Trading CEO confirms 3AC exposure, parent company helps plug losses

  • Digital Currency Group’s market maker and lending firm Genesis Trading has confirmed that it had investment exposure in the now-liquidated Three Arrows Capital (3AC).
  • The insolvency and subsequent liquidation order of the embattled company sent shockwaves through the cryptocurrency space last week amid an ongoing downturn across crypto markets. A major talking point was the stake other prominent companies had in the now-defunct cryptocurrency hedge fund and the ongoing fallout.
  • Genesis Trading is among prominent lending firms that had exposure to 3AC, which has now been confirmed by CEO Michael Moro. The company’s chief said the firm had managed to mitigate losses after 3AC had failed to meet a margin call on capital borrowed from Genesis.


The Moscow Exchange is a good base for crypto trading, Russian lawmaker says

  • Russia continues sending mixed messages about the legal status of cryptocurrency, with a parliament official urging the launch of crypto trading on the country’s largest stock exchange.
  • The Moscow Exchange (MOEX) is the best match for hosting a regulated crypto exchange in Russia, according to Anatoly Aksakov, head of the Russian Banking Association and a financial committee within the State Duma.
  • At a recent press conference, Aksakov stressed the importance of building a crypto exchange under the strict requirements of the Russian central bank, local news agency Prime reported on Thursday.
  • The lawmaker pointed out that MOEX is likely to do a great job in launching a crypto trading division due to its full compliance with the rules of the Bank of Russia.
  • “That division — which will work as part of a respected organization with great traditions and highly engaged in actively interacting with the central bank — will do an excellent job with the task of handling cryptocurrency operations,” Aksakov noted.


Bitcoin miners sell their hodlings, and ASIC prices keep dropping — What’s next for the industry?

  • Crypto companies are going belly up left and right, and Bitcoin mining companies also appear to be taking on water faster than they can bail. In mid-June, Compass Mining CEO Whit Gibbs and chief financial officer Jodie Fisher abruptly resigned after allegations that the Bitcoin mining hardware and hosting company had failed to pay hundreds of thousands of dollars in overdue electricity bills to Dynamics Mining, a facility provider for Compass.
  • Bloomberg recently reported that many industrial-size Bitcoin miners took on a significant amount of debt by leveraging their equipment and BTC as collateral for loans to either acquire additional gear or expand their operations. According to the report, and data from Arcane Research, miners owe some $4 billion in loans and now that Bitcoin price trades near its 2017 all-time high, the trend of miners liquidating their BTC holdings at swing lows to cover capital costs and operational costs is expected to pick up speed.
  • In the last month Marathon Digital, Riot Blockchain, Core Scientific, Bitfarms and Argo Blockchain PLC have each sold between 1,000 to 3,000 BTC to cover debts, operational (OPEX) and capital expenses (CAPEX).
  • The troubles faced by miners are also having a knock-on-effect on ASICs and their pricing at major mining hardware merchants like Big Sky ASICs, ASIC Marketplace, Bitmain and Kaboomracks shows popular top and mid-tier ASIC miners selling up to 70% down from their all-time highs in the $10,000 to $18,000 range.
  • With data from Arcane Research showing publicly traded industrial miners now selling more Bitcoin than they mined in May, it’s possible that some will either reduce their footprint and scale back, or go out of business if they are unable to cover OPEX and CAPEX debt.


US Treasury issues framework addressing engagement on crypto with foreign regulators

  • The United States Department of the Treasury has delivered to President Joe Biden a framework on crypto for U.S. government agencies to work with their foreign counterparts.
  • In a Thursday announcement, the U.S. Treasury said it had reported on a regulatory framework for cryptocurrencies in consultation with the Secretary of State, the Secretary of Commerce, the Administrator of the U.S. Agency for International Development and other government agencies as required by President Biden’s executive order on digital assets issued in March. According to the Treasury Department, the framework aimed to encourage the development of digital assets while respecting “America’s core democratic values” and ensuring the stability and safety of the global financial system and international monetary system.
  • President Biden’s executive order required the Treasury Department to lead an interagency effort in developing policy recommendations for mitigating risks associated with crypto. The government department cited the need for “international cooperation among public authorities, the private sector, and other stakeholders” given the potential risks to investors with “uneven regulation, supervision, and compliance across jurisdictions.”
  • “Inadequate anti-money laundering and combating the financing of terrorism (AML/CFT) regulation, supervision, and enforcement by other countries challenges the ability of the United States to investigate illicit digital asset transaction flows that frequently jump overseas, as is often the case in ransomware payments and other cybercrime-related money laundering,” said the Treasury report.


FDIC reportedly scrutinizing Voyager Digital marketing; complex SBF ties come to light

  • Some Voyager Digital account holders were surprised when they discovered that their deposits did not have the protection they thought they did after the crypto brokerage and lender filed for bankruptcy Tuesday. This could mean additional consequences for Voyager Digital. 
  • Voyager Digital filed for bankruptcy under Chapter 11, citing debts of up to $10 billion to 100,000 creditors in a crisis brought on after Singaporean hedge fund Three Arrows Capital (3AC) default on a loan of 15,250 Bitcoin (BTC) and 350 million USD Coin (USDC) a week earlier.
  • According to Voyager Digital’s website, “Your USD is held by our banking partner, Metropolitan Commercial Bank, which is FDIC insured, so the cash you hold with Voyager is protected.” The bank holds $350 million in Voyager Digital customers’ deposits.
  • The United States Federal Deposit Insurance Corporation (FDIC) insures accounts for up to $250,000 per depositor in case of the failure of the bank, the Metropolitan Commercial Bank explained in a statement, adding that the FDIC does not provide protection against Voyager Digital’s failure or against the loss of cryptocurrency.

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