A “close look” is being taken at money laundering and terror financing laws by FinCEN as it asked banking sector players for feedback on DeFi’s crime risks.
US regulator to seek feedback on DeFi’s impact on financial crime
Vitalik Buterin discusses his ‘excitement’ for the future of Ethereum
Buterin was specifically bullish on the rise of decentralized blockchain identities to enhance user privacy.
ApeCoin geo-blocks US stakers, two Apes sell for $1M each, marketplace launched
The U.S. made the list of regions blocked from using an upcoming website for ApeCoin staking with the related DAO claiming regulations are to blame.
Survey Suggests Institutional Investors Still Interested In Crypto
The crypto market is undergoing one of its lowest cycles since the turn of the year. Some crypto forecasts predicted a more positive outlook for the crypto market for November. However, events changed things negatively.
The U.S. Federal Reserve (Fed) held onto the rates hike, and FTX’s collapse further plunged the market into chaos. After recent events, investors withdrew most of their crypto holdings from FTX and other major exchanges.
Institutional Investors Increase Crypto Holdings
According to a Coinbase report in the Institutional Investor Digital Assets Outlook Survey, professional investors have added to their portfolios. The survey conducted on 140 investors between September 21 and October 27 revealed this information.
The total crypto assets of these investors were $2.6 trillion. This survey was before the FTX incident, before the latest price downtrend.
Of the survey participants, 62% already in possession of crypto holdings increased the size of their portfolio. This increase took place within a year. Notably, just 12% of the survey participants decreased their assets in the same timeframe.
It implies that institutional investors have taken a long-term stance on crypto assets with optimism for the future. Up to 58% of these investors will likely increase their holdings in the next three years.
Overall, the general sentiment for cryptocurrency was optimistic, with around 72% of the respondents affirming their belief in cryptocurrency. This survey highlights the increasing adoption of cryptocurrencies globally.
The three main reasons for crypto investment noted in this survey are: investing in innovative technology, improved funding, and access to profitable opportunities.
Coinbase Stocks Under The Weather
Coinbase stocks have taken a significant hit in the prevailing bearish market cycle. The stock (COIN) fell to a low of $40. It is currently up to around $45.57. COIN is trading at almost less than 90% of its all-time high value of $357, achieved on November 2021.
Binance has now officially surpassed Coinbase Pro as the largest holder of Bitcoin. According to the information from CryptoQuant. With over $8 billion worth of crypto removed from central exchanges, Binance exchange; now has the largest store of BTC holdings.
Coinbase CEO Brian Armstrong has moved to dissuade fears of a possible collapse similar to FTX. In his tweets, he expressed sympathy and stated that Coinbase has no material exposure to FTX and its affiliates.
He blamed the collapse of FTX on risky activity and misuse of investors’ funds. He assured users of the safety of their assets and transparency in dealings.
He stated that the crypto industry should build a better financial system based on DeFi and self-custodial wallets in the future.
Although cryptocurrencies have suffered losses recently, institutional investors’ positions suggest there might be hope for a recovery.
Featured image from Pixabay, chart from TradingView.com
Crypto and fiat savers are making a fatal error — and DeFi can come to the rescue
Across crypto and fiat, many consumers are making a fatal error: they’re letting their assets sit idle in accounts without earning interest.
NYDIG Analyzed The FTX Collapse And Its Implications. What Did We Learn?
It’s time for NYDIG to chip in. The FTX fiasco is the theme of the month in the crypto world, and the show’s just beginning. The NYDIG research team avoids the temptation to summarize the whole saga and goes straight to the implications of the fall of Sam Bankman-Fried’s empire. “Some signs of contagion have appeared but a full accounting of the damage and regaining of investor confidence will likely take time,” they say understating the harsh reality.
Taking a page from NYDIG’s book, let’s skip the intro and go straight to the conclusions.
Contagion Is Around The Corner
Speaking about “signs of contagion,” NYDIG mentions BlockFi and the Genesis/ Gemini combo. However, there might be much more to come.
“Several other service providers have piqued the curiosity of crypto sleuths as potential next dominoes, but we hesitate to speculate too much without hard evidence. Regardless, industry participants are on edge for even the slightest signs of stress and continue to pull balances off exchanges.”
In the contagion section of the paper, we find a rare mention of a conspiracy theory that’s making the rounds in crypto twitter. Rarely do big players bring this up. Of course, NYDIG ends up doubling down on the thesis about Terra/Luna that they put out in a previous paper titled “On Impossible Things Before Breakfast.”
“There have been accusations that Alameda caused the initial de-peg of UST, and while that may have been the case, uneconomic rates paid by the Anchor Protocol and insecure economic design of LUNA/UST ensured its ultimate destruction, destroying $60B worth of crypto wealth in a few short days.”
In the previous paper, NYDIG printed a great segway to the next section. “DeFi is not decentralized. The Terra ecosystem was not decentralized. Terra initially sourced funding from LUNA token issuance apportioned to Terraform Labs at inception.”
FTT price chart on Bitstamp | Source: FTT/USD on TradingView.com
NYDIG On DeFi Vs. CeFi
Even though they’re clearly not fans of DeFi, NYDIG gives them some credit. “Most DeFi protocols operated as advertised through the volatility this year, minus the ongoing hacks within the ecosystem.” True, but the ongoing hacks are not a minor factor. It’s a billion-dollar problem with no apparent solution available. However, according to NYDIG, this time the problem lies with centralized finance, and those companies “did the rest of the damage” by engaging in these behaviors:
“Poor risk controls, conflicts of interest, excessive leverage, unclear accounting, counterparty risks, and poor management were just some of the factors at play. Furthermore, the use of an equity-like token, FTX Token (FTT), as collateral exacerbated the issue.”
Is More Regulation The Answer?
According to NYDIG, the industry was expecting “improved regulatory clarity for US investors.” However, thanks to the FTX crash and Sam Bankman-Fried’s political lobbying, “the path in DC has grown more complicated. Regulators will now be on their toes and increasingly more likely to use their current authority to enforce existing regulations and possibly issue new ones.”
It is what it is, however one has to take into account that “FTX.com wasn’t even a US entity, which raises the question of how impactful improved US regulations would have been, at least with respect to preventing the specific recent events surrounding FTX.” That’s true, but FTX was in business with several US fully regulated entities. If effective, shouldn’t Silvergate’s AML procedures have detected Sam Bankman-Fried’s shenanigans?
A related question would be, shouldn’t the due diligence of the highly regarded entities that invested in FTX have detected that something was off?
Featured Image by Kaleidico on Unsplash | Charts by TradingView
DeFi platforms see profits amid FTX collapse and CEX exodus
On-chain data flashed positive for DEXs and an increase in protocol revenue, even as markets corrected due to FTX’s insolvency.
Solana entities sold 50M tokens to FTX — How long will SOL price suffer?
Most of FTX’s Solana exposure stands vested, meaning the defunct exchange will gradually gain access to millions of SOL up until January 2028.
Solana Loses 60% Of Its Value After FTX Collapse – Can SOL Bounce Back This Week?
The Solana (SOL) ecosystem, according to Laguna Labs Chief Executive Officer (CEO) Stefan Rust, took a harder hit compared to other major digital coins such as Bitcoin and Ethereum following the collapse of the FTX crypto exchange.
Here’s a quick glance at SOL performance:
- Following the collapse of FTX, Solana lost almost 60% of its market value
- SOL has gone up by 2% over the last 24 hours, trading above the $14 marker
- Solana coins deposited on blockchain decreased sharply, from 68 million in June to just almost 25 million now
“In the current crypto shakeout, the most unfortunate innocent victim is the Solana ecosystem,” Rust said.
The CEO noted that the network’s native token, SOL, dropped by nearly 60% since FTX collapsed.
In comparison, Bitcoin fell by 19% and Ethereum went down by almost 20%.
Rust and other crypto players have reasons to believe that FTX and its trading firm Alameda Research sold large quantity of Solana crypto to mitigate its losses and stay afloat, affecting the cryptocurrency and its trading price.
Whether the altcoin can make a comeback during the next few days or not, it’s anyone’s guess up to this time especially that its technical indicators are considered underwhelming from the bulls’ perspective.
How Solana Is Performing And Where It’s Headed
After dipping all the way down to $12.07, SOL mounted a recovery of its own, going up by 2% over the last 24 hours to trade at $14.21 at the time of this writing according to tracking from Coingecko.
Source: TradingView
Over the last seven days, the crypto asset’s price action has twice indicated the formation of a bullish block that was supposed to be an encouraging sign for its investors.
The first was in November 10 when Solana swung between the narrow range of $18.3 and $12.35, establishing the mid-point of $15.33 as a crucial support and resistance zone.
The second instance was in November 14 when the altcoin ignored its lower timeframe bearish structure as it climbed all the way up to $14.43, flipping its bias to bullish.
With this, traders and investors looking to take profit should put their focus in the $13 to $13.25 region as an optimal entry point although it is not without risks as the asset continues to struggle right now.
Its Relative Strength Index (RSI) settled at the 50-55 score region, indicating that SOL volatility could easily ruin any plans for long trade set-up.
Image: Altcoin Buzz
Investors And App Developers Leaving Solana
In the aftermath of the FTX implosion and the negative effects it had on the crypto asset’s ecosystem, app developers and investors appeared to have abandoned the sinking ship.
According to data from DeFiLlama, the current number of Solana coins deposited in the blockchain that is widely used for decentralized finance applications stands at 24.74 million. The number is substantially lower than the 68.2 million tally that was recorded back in June.
In light of this development, co-founder Anatoly Yakovenko allayed the fears of investors, saying Solana Labs didn’t have any assets deposited on FTX and as far as financial stability, under its current condition, it will be good for business for the next 30 months.
Meanwhile, Raj Gokal, another co-founder of the company, also expressed his sentiments, saying this is a crucible for Solana which will make it even stronger in the future.
Crypto total market cap at $805 billion on the daily chart | Featured image from The New Daily, Chart: TradingView.com
Tron’s stablecoin USDD loses dollar peg on suspected selloff by Alameda Research
Wallets associated with Sam Bankman-Fried’s Alameda Research could be behind the dollar de-peg, alleges Tron’s founder.
Founders should consider VC firms their allies as they build in the bear market
Venture capital firms offer value to startups beyond simply cash. They also bring business experience, broad networks and critical services to the table.
Bitcoin could become the foundation of DeFi with more single-sided liquidity pools
More options for single-sided Bitcoin staking could lead to a consolidation of decentralized exchange aggregators — meaning improved liquidity for users.
Automation opens up pathway to a simplified, more user-friendly DeFi
Hunting for the best opportunities in the world of DeFi is often time consuming. But automation is changing that.
SushiSwap Suffers Monthly Drop In TVL – How Will SUSHI Perform This November?
Traders and investors in SushiSwap face a unique conundrum as optimistic and bearish signals battle for control of the market. The recent inclusion of SushiSwap on Boba Network may account for the increased number of whale sightings on the site.
Even while this points to a strengthening bullish market for SushiSwap, the TVL numbers act as a counterpoint to the recent events. As reported by DeFiLlama, Sushi’s TVL numbers fell on November 3 but have since risen, reversing the monthly decline.
The listings and whale sightings are exciting, but how will Sushi do in November and, if at all possible, in December?
Let’s welcome BobaBNB!
We’re excited to announce the launch of scaling solution for @BNBCHAIN!
BobaBNB caters to the massive user base and dev community enabling smarter contracts and lightning fast transactions
1/X pic.twitter.com/8IwGCbooJr
— Boba Network
x #BNBChain (@bobanetwork) November 1, 2022
The Bulls Edge Out The Bears
Today’s excitement for SushiSwap isn’t just due to TVL. CoinGecko has predicted a brighter future for Sushi, the native token of SushiSwap.
There is positive momentum over a variety of time horizons, with the monthly time frame showing the most impressive growth at 59.2 percent. In part, this is because of the exposure gained via SushiSwap’s inclusion on the Boba Network.
Image: TradingView
Recent reports about SushiSwap’s reorganization may possibly be a contributing factor. On October 26, it was announced that the DAO underlying SushiSwap would split into three legal organizations incorporated in Panama and the Cayman Islands.
The community voted on the decision, with a unanimous vote in favor of the restructure. The modification was prompted by the Commodity Futures Trading Commission’s (CFTC) lawsuit against Ooki DAO, since the commission claims Ooki breached US investing laws.
How Will Sushi Fare This Month?
Sushi bulls can start being optimistic this November, as Sushi enters a positive market structure. Currently, the EMA ribbon indicator suggests that the most profitable position in current bull market is long. This is confirmed by a rising Stoch RSI reading, which showed an optimistic market sentiment.
However, Chaikin’s money flow indicator reveals a different reality. The CMF is at a neutral 0 level, indicating that market volatility is high with the possibility of a bullish or bearish break. However, as the currency approaches its peak, a bearish reversal becomes more probable.
Sushi investors and traders should monitor the Stoch RSI to determine whether to increase their holdings or sell, because if the indicator exceeds the overbought upperband, keeping the position could result in quick losses during the correction phase.
SUSHI total market cap at $240 million on the daily chart | Featured image from Japan Centre, Chart: TradingView.com
Disclaimer: The analysis represents the author’s personal understanding of the crypto market and should not be construed as investment advice.
‘Great cryptocurrencies have to go through several collapses,’ says Cardano founder
According to Charles Hoskinson, projects that have survived both bull and bear markets over the years were “resilient under an adversarial load” — and many DeFi protocols weren’t.
How Aave Helped JP Morgan Complete Its First DeFi Transaction
Legacy financial institutions are embracing crypto and decentralized finance (DeFi), and the Ethereum-based protocol Aave is proof. Today, the team behind the protocol announced that banking giant JP Morgan Chase completed its first DeFi transaction.
5/5 @jpmorgan transacting on a public blockchain using Aave smart contracts is a huge milestone for DeFi, and represents a massive step towards bringing traditional financial assets into DeFi, to fully realize the opportunities afforded by smart contract based dApps.
— Aave (@AaveAave) November 2, 2022
This represents a major milestone for the sector that continues to see high demand and adoption despite the downside trend in the crypto market. Two years ago, the total value for the DeFi sector, as measured by the total value locked (TVL), was less than $5 billion.
In a short period, this metric will increase by over 20-fold, reaching an all-time high of around $170 billion by 2021, according to data from DeFi Llama. Today’s milestone marks a new era for the nascent sector and digital assets.
Aave Supports Major JP Morgan Transaction
According to the official announcement, JP Morgan leveraged a “modified” version of the Aave protocol. Due to its higher scalability, the project used Ethereum’s second-layer solution, Polygon. The team behind the protocol said:
The Aave protocol was utilized by involving the supply and borrowing of tokenized foreign exchange transactions, using SGD tokenized deposits (1st issuance of tokenized deposits by a bank!) issued by J.P. Morgan and JPY tokenized assets issued by SBI Digital Asset Holdings.
The transactions are part of the Monetary Authority of Singapore (MAS) led “Project Guardian.” The initiative explores ways to bridge legacy financial institutions with decentralized finances “across a broader range of use cases.”
WORLD! J.P. Morgan has executed its 1st *LIVE* trade on public blockchain using DeFi, Tokenized Deposits & Verifiable Credentials, part of @MAS_sg Project Guardian
https://t.co/XI212SG4zg Many world 1sts here, & since this is public
here’s a transparent
— Ty Lobban (@TyLobban) November 2, 2022
In addition to JP Morgan, other major banking institutions are participating in the initiative, including DBS Bank, SBI Digital Asset Holding, and the Oliver Wyman Forum. These transactions are the first in a series of pilot tests to explore the potential for DeFi and digital assets to improve the interoperability and efficiency of legacy financial markets.
Project Guardian was announced in May 2022, its objective is to “identify” the key areas where traditional financial institutions and DeFi protocols can collaborate. So far, the initiative has identified pilot programs to “unlock economic value,” the study of regulatory and risk management, developing technology standards, and others as areas of interest. Chief FinTech Officer at MAS, Sopnendu Mohanty, said:
The live pilots led by industry participants demonstrate that with the appropriate guardrails in place, digital assets and decentralised finance have the potential to transform capital markets. This is a big step towards enabling more efficient and integrated global financial networks. Project Guardian has deepened MAS’ understanding of the digital asset ecosystem (…).
Bank for International Settlements will test DeFi implementation in forex CBDC markets
The centralized financial institution says the automated market making technology in DeFi can serve as a “basis for a new generation of financial infrastructure.”
Scary stats: $3B stolen in 2022 as of ‘Hacktober,’ doubling 2021
Blockchain security firm Peckshield shared the stats on Halloween night, but also added the month saw $100 million in crypto returned.
Reports Show Bear Market Didn’t Affect Crypto Fundamentals
Notably, the first half of the year brought the most drastic phase of crypto winter ever witnessed in the history of cryptocurrency. Coupled with the collapse of Terra and some crypto-related companies, the market was thrown into a state of crisis.
However, a report from Fidelity Digital Assets implies that the crypto fundamentals remained unscathed through the bearish trend. This information sprung following the manager’s annual report tagged 22 Institutional Investor Digital Assets Study. This occurred as the firm x-rayed the crypto industry from an institutional perspective.
According to the research, the crypto market has fully repositioned to wade off the impact of macroeconomics it’s been facing recently.
Survey Indicates Strength Of Crypto Fundamentals
Tom Jessop, the President of Fidelity Digital Assets, reacted to the research. According to him, digital fundamentals have stood firm through the storm. Also, he noted that the institutionalization of the crypto market for some years had fortified it to withstand recent impacts.
According to Jessop, institutional investors exhibited their experience scaling through different market cycles. He mentioned that the attractive factors in the market maintained their relevance as they moved across the bearish phase.
The research surveyed about 1,052 experts from different firms during the year’s first half. As a result, it revealed the varying levels of crypto adoption among different types of investors.
According to the survey, adoption among institutional investors increased in some regions compared to the year’s value. The US and Europe recorded an increase of 42% and 67%. Asian institutional investors have a slight drop. But the overall outcome showed that they had the highest adoption of crypto assets with an allocation of 69%.
In terms of investor type, crypto adoption and consideration topped among high-net-worth investors, venture capital investors, financial advisors, and crypto hedge funds. The lower-scale adoption investors are endowments and foundations, pension plans, family offices, and traditional hedge funds.
Fidelity Digital announced its provision of Ethereum trading options for its institutional market earlier this month.
Top Appealing Features For Institutional Investors
The research from Fidelity Digital also recorded some appealing features, as noted by institutional investors. The surveyed participants’ most appealing ones include innovation technology, decentralization, and high potential upsides.
According to the survey, the surveyed investors cited that crypto has no correlation to other assets as the fifth most appealing feature. But the crypto markets have shown a high correlation to tech stocks this year.
Additionally, the research covered investors’ plans for cryptocurrency investments or purchases. It noted that 74% of the participants still had such plans, slightly higher than the 71% recorded last year.
The value is commendable, considering that 2021 was bullish while the bears dominated the 2022 digital asset market.
Featured Image From Unsplash, Charts From TradingView
MakerDAO Revenue Experiences A Major Drop, Here’s Why
For the first time since 2020, MakeDAO has crashed in its quarterly net income. The DAO is the autonomous community that governs the Maker Protocol. The project is based on the Ethereum blockchain and supports the lending and borrowing of crypto assets without a third party.
MakerDAO has just witnessed a drastic drop in its 2022 third quarterly revenue. The decline in its income is linked to a plunge in loan demand and some liquidations. However, despite the pathetic situation, the community has high expenses within the quarter under review.
A Messari analyst and co-author of ‘The State of Maker Q3 2022’, Johnny_TVL, gave insight regarding the situation. In his tweet, the analyst reported that the DAO experienced a revenue decline of over $4 million in Q3.
Further, he noted that the value dropped by 86% from the second quarter. Such a revenue loss for MakerDAO has been recorded in the community’s report in the first quarter of 2020.
MakerDAO value statement. Source: Messari
Possible Reasons For Revenue Decline
According to the analyst, a few liquidations in the system spiked the revenue drop. Also, he mentioned that weak loan demand is a contributory factor.
The research analyst highlighted Ether and Wrapped BTC as the biggest earners of the protocol. However, he noted that they performed poorly in the third quarter. While BTC-based assets dropped by 66%, Ether-based ones plummeted by 74%.
ETH grows by 3% on the chart l ETHUSDT on Tradingview.com
Usually, borrowers provide other crypto assets as collateral for DAI loans. However, the analyst noted a fall in the collateral ratio of MakerDAO from 1.9 to 1.1 within the same period last year.
Also, there’s a consideration of the expenses within the quarter, which are not flexible. The report indicated higher costs in Q3, which reached $13.5 million, with just a dip of 16% from the last quarter.
Maker quarterly revenues. Source: Messari
Steps For MakerDAO Increased Growth And Expansion
MakerDAO is putting in a few steps for the growth and continued sustainability of the Maker Protocol. First, the DAO has focused on Real World Asset (RWA) backed loans. Following its goals, it launched its largest RWA-backed loan to Huntingdon Valley Bank (HVB) in Q3 2022.
The collaboration with HVB is a win-win integration on both sides. The bank leverages the loan to increase its legal lending limit to create more expansion opportunities. The MakerDAO believes that more banks will follow after the smooth sailing of its partnership with HVB.
Currently, RWA-backed loans represent up to 12% of the total revenue for the Maker Protocol. The loan involves the creation of a vault with 100 million DAI tokens and comprises a new collateral type in the protocol. Also, it could yield additional revenue through vault stability fees from vault maintenance and DAI minting.
Additionally, the DAO has initiated steps to improve its return on assets held as collateral. For example, it drew an investment proposal of about $500 million in treasuries and bonds. The aim is to ensure the protocol gets additional yield associated with low risk.
Featured image from Pixabay and chart from TradingView.com
