Thursday, 9 June 2022

Market Summary

Market Summary 9 June 2022

Bitcoin Price: US$ 30,204.77  (-2.96%)
Ethereum Price: US$ 1,791.88 (-1.18%) 

 

FTX Overtakes Coinbase, Tarot Optimism Pools, Decentralized Derivatives

  • Since the middle of May, FTX’s aggregated daily volume for Bitcoin spot trades has exceeded that of Coinbase.
  • According to Coinbase’s company filings, monthly transacting users on Coinbase came in at 9.2m in the first quarter of this year, down from 11.4 million in the previous quarter. Trading volume also dropped from $547 billion in Q4 to $309 billion in Q1.
  • Volume data from Skew showed that the trend of declining volumes continued to persist in Q2 as crypto markets tumbled further in May.
  • Tarot is a decentralized lending protocol on Fantom and now Optimism, where users can participate as lenders or borrowers in isolated lending pools. Lenders can supply tokens to any lending pool in the Tarot protocol to earn passive yield without impermanent loss. Borrowers can deposit LP tokens in a lending pool to borrow additional tokens in the token pair. This enables borrowers to leverage their LP tokens for even more LP tokens, allowing more leveraged yield farming and enhanced LP rewards.
  • Currently, the top DEXs account for nearly 11% of all crypto spot volume. This figure has been slowly growing, sitting at roughly 6% a year ago. As these products become more advanced alongside the underlying blockchains, we expect activity to expand and DEXs to capture more market share.
  • DEXs have had significant improvements since the launch of Bancor and Uniswap’s X*Y=K liquidity pools in 2018. We are now unearthing more efficient models like concentrated liquidity and, if the chain is fast enough, oracle-based pricing as well as orderbooks.
  • However, the end game is not yet in sight for DEXs. There’s still a long, arduous path of painstaking innovation and consumer adoption to make these platforms truly competitive with CEXs like Binance, Coinbase, and FTX. Blockchains are beginning to find their feet in the race to build scalable distributed systems. As we expand the speed and amount of activity these networks can support, the design space for DEXs progressively becomes more inviting.
  • Derivatives are cumulatively the largest market in the world by notional size. Crypto is no stranger to this phenomenon, with volume dominated by derivative instruments.

 

Despite bearish trend, hedge funds are dipping their toes in crypto: PwC

  • Traditional hedge funds are slowly embracing cryptocurrency investments but are keeping their exposure limited as the market continues to mature, according to new research from PricewaterhouseCoopers, or PwC.
  • In its 4th Annual Global Crypto Hedge Fund Report 2022, PwC said roughly one-third of traditional hedge funds surveyed are already investing in digital assets such as Bitcoin (BTC). So-called “multi-strategy” hedge funds were most likely to invest, followed by macro strategy and equity strategy firms, respectively.
  • Of the hedge funds currently invested in the crypto space, 57% have allocated less than 1% of their total assets under management. Two-thirds of the firms currently invested plan to increase their exposure by the end of 2022.
  • Respondents cited “regulatory and tax uncertainty” as the single greatest barrier to investing. Specifically, hedge funds are concerned about a fragmented regulatory environment globally as well as unclear guidance on how the asset class will be governed.
  • A total of 89 hedge funds were included in the survey, which was conducted during the first quarter of 2022.

 

US central bank digital currency commenters divided on benefits, unified in confusion

  • Appropriately for its purpose, the Fed paper provides a broad overview of central bank digital currencies and CBDC-adjacent topics without great depth. The discussion begins with the results of previous analyses that determined a U.S. CBDC would have the best results if it is privacy-protected, intermediated, widely transferable and identity-verified. It goes on to consider the potential uses, benefits and risks of a U.S. CBDC. Stablecoins and cryptocurrency are mentioned briefly, and 22 questions are offered for discussion.
  • The paper also looks at current developments in electronic money. On the wholesale side, the FedNow Service is expected to enable real-time, around-the-clock interbank payments beginning in 2023. Meanwhile, the private Bank On initiative and other programs strive to increase financial inclusion by promoting low-cost banking services to those who are unbanked and underserved.
  • One thing in short supply in the stakeholder comments Cointelegraph examined is neutrality. The response from the Institute of International Finance is an exception in this regard. 
  • The IIF answered all of the 22 questions suggested by the Fed while remaining agnostic on the merits of creating a U.S. CBDC.
  • “A decision like this merits serious thought, so the IIF wanted to be quite constructive in its submission to support the Fed’s ability to evaluate the pros and cons,” Jessica Renier, the IIF’s managing director of digital finance, told Cointelegraph.
  • The IIF response is not unopinionated. It lists 12 policy considerations the authors feel need to be addressed before a CBDC can be launched, including environmental issues, which went unmentioned by the Fed. It offers practical suggestions on validators and other technical issues and takes pains to emphasize the need for input from the private sector for a retail CBDC.
  • “The business model needs to work,” said Renier. “If the risks outweigh the incentives, you may only attract intermediaries that depend on selling user data, like tech firms. That’s not good for consumers.” She added:
  • “If the Fed proceeds, it needs to work closely with the banks to understand the real impact on their ability to lend, and to test the actual operation of a potential CBDC.”

 

Bill to ban digital assets as payment introduced in Russian parliament

  • In recent months, Russian legislators have been preparing measures to fully institutionalize crypto as a properly taxable investment asset and a possible tool for foreign trade in Russia. Now, they want to make clear that the upcoming regulatory turn won’t include any windows for adopting digital financial products as a payments method. 
  • On Tuesday, Anatoly Aksakov, the head of the Financial Markets Committee of the Russian parliament’s lower chamber — the State Duma — introduced a bill that would prohibit the use of “digital financial actives” (DFA) to pay for any kind of goods or services. As the cover note specified:
  • “The ruble is the official monetary unit (currency) of the Russian Federation. The aforementioned article sets a prohibition against the introduction of other monetary units or monetary surrogates on the territory of the Russian Federation.”
  • The bill refers to already-existing legislation, which doesn’t explicitly prohibit using DFAs as a payment method, although de facto, such operations still aren’t considered legal in the country. The new document would make this ban official and oblige DFA exchange managers to withhold any deals implicating the usage of crypto as a monetary surrogate.

 

Major South Korean crypto exchanges delist Litecoin

  • Major cryptocurrency exchanges in South Korea have delisted Litecoin (LTC) weeks after flagging its privacy-focused MimbleWimble (MWEB) upgrade.
  • In a public announcement on Wednesday, Upbit cited the Act on the Reporting and Use of Specific Financial Transaction Information, which prohibits anonymous transactions as the key reason for ending support for LTC.
  • The delisting comes in the light of the much-awaited MWEB upgrade that made LTC transactions private, hiding some of the key identifiers. The upgrade was released earlier this year, nearly two years after its first proposal.
  • The crypto exchange reached out to the Litecoin Foundation to understand the privacy-focused upgrade, and after a thorough review, the exchange decided to end support for LTC transactions. Exchange users have 30 days to withdraw their LTC funds. Upbit in its official report said:
  • “We decided to terminate the transaction support for Litecoin (LTC), as it was determined that the optional function that does not expose transaction information included in this network upgrade corresponds to an anonymous transmission technology under the Specific Financial Information Act.”

 

IMF recommends eco-friendly CBDCs and non-PoW mechanisms for payments

  • An International Monetary Fund study on energy consumption has reveale the importance of design choices within the crypto ecosystem to build an environmentally friendly mainstream payment system.
  • In the study, titled “Digital Currencies and Energy Consumption,” the IMF examines the energy consumption of crypto assets based on their distinct design elements to evaluate the ideal mechanism for developing central bank digital currencies (CBDCs).
  • The IMF recommends the central banks “design CBDCs with the explicit goal to be environmentally friendly.” This means selecting platforms, hardware and design options with “a lower carbon footprint than the central banks’ legacy systems” right from the experimentation phase.
  • In addition to eco-friendly components, the IMF recommended central banks include other features in CBDCs, such as compliance, higher resilience and offline capabilities.

 

Solana Ventures sets up $100M fund for GameFi and DeFi in South Korea

  • Solana Ventures and the Solana Foundation have formed a $100-million fund to help support the growth of nonfungible token (NFT), blockchain gaming and decentralized finance (DeFi) projects in South Korea.
  • In addition to supporting projects built on Solana, the fund will help keep some Terra-based projects afloat following the collapse of that ecosystem last month.
  • The Solana Foundation believes the developers from Terra should not be held responsible for what happened on the blockchain network. In an interview reported by Bloomberg on Wednesday, Johnny B. Lee, general manager for games at the Solana Foundation, said:
  • “The developers did nothing really wrong, but they’re left in the lurch.”
  • The new fund helps solidify Solana’s aim to become an ideal blockchain for gaming. Solana Ventures launched a similar $100-million gaming fund with crypto exchange FTX and Lightspeed Ventures last November. It also has a $150-million fund with game-focused firms Forte and Griffin Gaming Partners.

 

Beer, gambling and crypto: Budweiser races into Zed Run’s NFT games

  • Popular beer manufacturer Budweiser has teamed up with Zed Run to deploy tokenized Clydesdale draft horses in its virtual NFT-based horse racing and wagering game.
  • The latest move from Budweiser adds to the $120,000 it spent on nonfungible token fan art and the beer.eth domain name it purchased via the Ethereum Name Service in August 2021.
  • Zed Run was founded by Sydney-based Virtually Human Studio in early 2019, and its racing horse NFTs initially went for around $30 to $80 to mint but have since gone on to be highly sought-after assets that trade for thousands of dollars on secondary markets. One user sold a single racehorse for as high as $125,000 in April 2021.
  • As part of the deal with Zed Run, the two companies will launch a Budweiser-themed race track, Budweiser NFT passes, prize pools for Bud-sponsored virtual horse races starting at $45,000, and three tiers of airdropped Clydesdale NFT skins that are usable in Zed Run.
  • There will be 2,500 Budweiser Pass NFTs in total that will go up for sale (to users aged 21 and over) for a maximum of 24 hours starting on Friday. The NFTs will cost $225 a pop, plus gas fees.

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