Crypto Market Monitor – 28th September 2022
Powered by 21Shares
This Week in Crypto
Markets performed better than last week, despite the biggest cryptoassets still in capitulation zone. Bitcoin declined by almost 2% over the past week, while Ethereum grew its total value locked (TVL) by 3%. As shown in Figure 1, the three winners of the major categories in the cryptoassets industry were Solana and Metis, jumping by 6%, 5.5%, while Curve grew its TVL by a whopping 13.6%.
Figure 1: TVL and Price Development of Major Crypto Sectors
Source: 21Shares, Coingecko, DeFi Llama
- New York judge ordered Tether to provide proof of USDT’s backing
- Cardano’s most recent upgrade is triggered, Polygon streamlining supernet development.
- Stablecoins carry on proliferating across chains.
- Decentraland will introduce mintable NFT “Emotes” at Metaverse Music Festival
Spot and Derivatives Markets
Figure 2: FOMC Meeting’s Effect on Derivatives Volume
Source: Glassnode, Swissblock Technologies
The figure above plots this year’s meetings of the Federal Open Market Committee (FOMC) against spot and derivatives 28-day rolling volume. The chart reveals that Bitcoin is under-levered for the first time this year, which in itself is a sign of true capitulation.
Figure 3: Ethereum’s NUPL Ratio
Ethereum’s NUPL ratio is currently at -0.09, which means that the second-largest cryptoasset by market capitalization is still in the capitulation zone. The current level is similar to levels seen in December 2016 when ETH was at $8.4, with a market cap of $626M, a few months before it jumped within the belief and euphoria levels for a little over a year.
Macro and Regulations
In its third consecutive meeting, the Federal Reserve rose the interest rate by 75 basis points, making it the highest level in 14 years. Dow and major indices haven’t seen such low levels since 2020. Stablecoins transfer volume has declined by 30% over the past week after a whopping 50% increase during the week prior. This could be attributed to the potential ban of non-collateralized stablecoins in the US.
A new White House draft bill proposed to put a ban on algorithmic stablecoins for two years. Given the depegging of UST last May, it comes by no surprise that algorithmic stablecoins aren’t being upheld like their dollar-pegged counterparts. However, imposing an outright ban on emerging technologies like algorithmic stablecoins can impede the progress of this vertical and future improvements.
On that note, a New York judge ordered Tether to provide financial statements to prove the 1:1 backing of the company’s dollar-pegged stablecoin, USDT. The court order is attached to a 2019 case, where a group of investors accused Tether’s parent company iFinex of manipulating the cryptoassets market by issuing unbacked USDT with the intention of inflating the price of Bitcoin and other cryptoassets. Tether’s rival, Circle, the issuer of USDC, became the first stablecoin to be featured on Robinhood. In fact, USDC has been dominating stablecoin transfer volume in the past 30 days, by 56%.
Crypto companies no longer require a license to operate in the state of California, after a controversial bill has been vetoed by the governor. The bill was meant to mimic what New York had in place for years, dubbed as the “BitLicense”, and thus disputed. The governor explained that a “more flexible approach” should be sought instead, in addition, that such a bill would cost more than what the state budget can currently afford.
Ethereum Competitors: Cardano triggered its long-anticipated Vasil upgrade after achieving three significant indicators. The fork will chiefly focus on enhancing the capabilities of the smart-contract platform via releasing Plutus V2. Amongst the core improvements will be reduced transaction size and batched transactions, resulting in cheaper dApp interactions and increased throughput.
In other news, Helium will migrate to the Solana blockchain, after a community vote ratified the resolution. The decentralized wireless provider struggled with scaling their network, so porting the ecosystem to Solana will help the developers focus on the application itself instead of maintaining their own infrastructure. Solana also offers superior transactional capacity and ecosystem interconnectedness where the HNT token will enjoy higher utility via integrating with the L1’s wider DeFi vertical. In addition, Helium announced a 5-year partnership with T-Mobile to unleash their envisioned 5G phone wireless service expected to reward users for using the network and sharing data. These developments could greatly benefit Solana, especially as they build their Saga phone. A functioning web3 native smartphone connected to a crypto-powered cellular 5G service could open the floodgates of adoption as all of crypto’s complexity gets abstracted in the backend, whilst users only get to enjoy the benefits of the blockchain economy. This is also exciting for other networks like Polygon, who are building their own web3 native ‘nothing’ smart phone.
Interoperability: Although Polygon revealed their app-specific, EVM-compatible and interoperable chains called supernets back in April, the technology hasn’t picked up much traction yet. That’s why Polygon announced a new partnership with ANKR, the L1’s official approved infrastructure vendor, to streamline the development experience of supernets. Ankr’s Appchains-as-a-Service will offer an end-to-end engineering solution to build custom blockchains on top of Polygon seamlessly. Another critical development is the enduring expansion of service providers into the Aptos network, the spin-off for the meta-led Diem blockchain. The network, expected to launch its mainnet in Q4, welcomed the specialized oracle solution PythOracle and the cross-chain messaging protocol Wormhole to its devnet last week. This is crucial as it signals the foundation team’s seriousness in equipping the network with its core infrastructure needs that will prepare it to host a vibrant L1 with functioning DeFi and NFT ecosystems once it goes live.
Upticking scalability: Last week, Optimism publicized its latest endeavor in attracting users to its embryonic ecosystem. Akin to Arbitrum’s incentivized program dubbed Odyssey, where users were rewarded with NFTs in exchange for exploring the Arbitrum-based ecosystem, Optimism is adopting a similar approach for its ecosystem via manifesting its educationally-rewarding OptimismQuest program. Users will earn NFTs on the back of completing an array of on-chain tasks, quests and quizzes. Another key development was Boba network spearheading Avalanche’s first L2 deployment. Launched last September as an optimistic rollup anchored to ETH, the move by the scalable solution won’t be the first as they have already expanded to Moonbeam and Fantom following Ethereum’s initial launch. Finally, crypto’s acclaimed node provider Infura revealed their latest integration with the zk-based roll-up solution, Starknet. The new partnership should allow aspiring developers to deploy their solutions and interact directly with the scalable L2 alongside Ethereum, Filecoin, Optimism, Abritrum Avalanche, NEAR, and Aurora.
Figure 4: Top 10 DeFi Assets Weekly Performance
Source: 21Shares, Coingecko
Stablecoins: Tether, the issuing company behind USDT, announced that they will expand the stablecoin native support onto the Polkadot network. After the last integration, USDT is now deployed on a total of 12 networks. Binance also took cue as they revealed they’ll be expanding BUSD native deployment towards Avalanche and Polygon. Similarly, the all-in-one DeFi shop Coin98 disclosed they would be releasing an overcollateralized stablecoin following suit of Aave and Curve’s decision towards amalgamating their ecosystems. Dubbed CUSD, the new stablecoin is expected to be backed by a 1:1 ratio of USDC (on SOL, ETH) and BUSD (BNB) reserves. Finally, USDC became the first stablecoin to be integrated into the world of Neobanking as Robinhood announced the fiat-backed stable would be listed on the incumbent’s exchange.
ETH-Ecosystem: Ribbon’s consolidation plans are off to a good start as they revealed Wintermute and Folkvang to be amongst the first borrowers on RibbonLend, the uncollateralized lending sub-product. Ribbon has reportedly been in direct communication with the credit oracle solution, credora platform, to validate the financial health of Wintermute, particularly after their recent $160M hack.
In other news, Alameda will launch a permissioned pool on the institutional capital market protocol, Clearpool. The HFTF firm will now join the ranks of Jane Street and BlockTower to support the uncollateralized lending marketplace to grow further. Finally, the MakerDAO community approved a new proposal that would see the blue chip accept GNO, of the Gnosis chain, as new collateral. On the one hand, the proposal benefits Maker as DAI is the main stablecoin used to pay gas fees on the GNO sidechain. On the other side, Gnosis intends to leverage the profits generated from Maker’s vault to elevate the development of its L2 sidechain. The proposal will now be presented with an internal technical and financial assessment of the suggested token, followed by a second round of voting.
NFTs and Metaverse
NFT “Emotes” will be making a special appearance at Metaverse Music Festival on Decentraland in November. NFT Emotes are animated graphics that repeat the movements of their creators, which made their first-ever Metaverse Fashion Week back in March. This time, things will be a little different as Decentraland calls on creators to experiment with NFT Emotes, design dance moves or anything that comes to mind and sell them on Decentraland’s marketplace as NFTs.
On September 29, Web3 game platform Iskra will host its first token generation event on Gate.io for which it had raised $40M from Korean tech giants Krust, Wemade, Netmarble, LINE Studio among others. Starting September 28, 6 AM UTC, eligible users can receive up to 500,000 ISK tokens by staking USDT for the following 24 hours.
Next Week’s Calendar
Source: 21Shares, Forex Factory