Infinity Newsletter, RUNZ & #FastCrypto [01.16 — 01.20]
20 Jan 2023 Market Commentary
Well. What a week, eh? Crypto markets up ~10% this week, with BTC & ETH topping $21.5k & $1.6k, CME futures back to (slight) contango, yet the 7d accumulated Perp FRs implying a short-lived rally - perhaps best exemplified by the vol side, where BTC|ETH 30d atm IV spiking to 68|75, drifting back to 51|63. Question is whether we’ve just witnessed a bull or vol trap.
In Crypto news, industry titans are playing musical chairs, as the new FTX CEO John J. Ray the third is coming forth with a plan to possibly revive FTX, its international exchange. On the illiquid side, Genesis has filed for Chapter 11 bankruptcy protection, with $3.5B+ owed to creditors including Gemini - mainly through its Earn program. Begs the question whether Circle (via its Yield program) is still owed by 3AC or DCG?
On the traditional side, USTs handled the week of Fed speakers surprisingly well, at least better than equity markets (lower on the week). Eyes will be on the upcoming FOMC meeting (minutes to be released 2pm EST on 1-Feb), where the market anticipates a 25bps hike (vs. 50bps) - are they looking at the right metrics to justify whether this is a dovetail?
Lucky for us, Arthur Hayes’ piece this week Bouncy Castle summarizes his views on the FOMC outcomes: Scenario 1 (bullish, ultra) vs. Scenario 2 (bearish, ultra - his view). Hayes unpacks why recent CPI (even PCE) readings aren’t going to steer ‘Lord Powell’ away from pulling off another Volcker period, as the US dollar system ultimately benefits from higher rates - question is how high is higher.
If we look back in history, what Volcker did to break the prices (CPI/PCE) and wage cycle fits relatively somewhat into Hayes’ scenario 2 with 10y USTs doubling to 7%, ES/NQ dropping 3k/8k levels, but his point to BTC dropping and holding $15k has, in Hayes’ own words, “Like a deer caught in the headlights”, caught us off guard.
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Self-proclaimed 'safest' DeFi lender loses $6 million in hack
LendHub lost $6 million of crypto assets in an attack. This vulnerability involved the presence of two IBSV ctokens on the platform; one of which had been replaced by the other. LendHub had failed to delete the old one from its protocol. This created a vulnerability due to the discrepancy in asset pricing for both tokens on the lending platform. "Exploiting this vulnerability, the attackers were able to manipulate the minting and redeeming process in the old market while borrowing in the new market, ultimately stealing significant protocol funds from the new market."
MetaMask Staking beta now live with Lido and Rocket Pool, ConsenSys says
MetaMask will now support liquid staking through Lido and Rocket Pool. In a public beta, users that want to stake ETH, may do so directly within MetaMask by selecting a desired staking provider and confirming the amount of ETH to be allocated with a signed transaction.
Tether’s 2022 Settlement Volume Flips Visa and Mastercard
USDT processed $18.2 trillion in transactions in 2022, placing it ahead of traditional payment processors like Visa and Mastercard. In comparison, Mastercard and Visa processed transactions worth $14.1 trillion and $7.7 trillion, respectively. Some attributed the metrics to wash trading.
Avalanche [AVAX] confirms plans to host a new stablecoin called USP
Avalanche will support the stablecoin USP created by Platypus DeFi whose collateralization mechanism will use other stablecoins. The stablecoin rollout will facilitate more utility for the Avalanche network. A move that will likely fuel more demand for AVAX.
Iran and Russia want to issue new stablecoin backed by gold
The “token of the Persian Gulf region” would serve as a payment method in foreign trade. The token is projected to be issued in the form of a stablecoin backed by gold, aimed to enable cross-border transactions instead of fiat currencies like the US dollar, the Russian ruble or the Iranian rial. The crypto would operate in a special economic zone in Astrakhan.
Coinflex says new exchange with 3AC founders won't use GTX name after Twitter ridicule
Coinflex won't use GTX for its name after being mocked on Crypto Twitter. Nic Carter, of Castle Island Ventures, compared the venture to "arsonists returning to the scene of the crime, hawking buckets of water to their victims," while Wintermute founder Evgeny Gaevoy warned anyone that invests in the exchange might find it difficult to work with his firm in the future – "on the relationship building side." Wintermute won't participate in venture rounds where they appear on the cap table.
Alameda wallet under liquidator control incurred $11.5M in losses
The liquidators have incurred at least $11.5 million in losses since taking control of Alameda's trading accounts. One wallet under the control of liquidators has seen a string of "significant losses" due to liquidations, some of which were "preventable losses."
Binance Will Allow Institutional Investors to Keep Collateral Off the Crypto Exchange
The exchange will enable investors to post collateral with Binance Custody, which will hold the assets off the internet, in cold storage wallets, Binance said in a statement. Once trades are settled, the assets would then become accessible to the user again.
Framework Ventures leads Parfin’s $15 million raise to provide web3 rails in LatAm
The round, was led by Framework Ventures includes Alexia Ventures, Valor Capital Group and L4 Venture Builder. Parfin evolved from developing a regulated stablecoin, into an infrastructure provider offering digital asset custody, trading, tokenization and management tools to some of Latin America’s largest financial institutions.
Diva closes $3.5 million seed round for distributed liquid staking protocol
The seed round was led by A&T Capital. Diva is an ultra-light client connecting to existing ETH execution and consensus clients via standard APIs.
HashKey Capital closes third fund at $500 million
Dubbed HashKey Fintech Investment III, the fund targets investments across crypto areas, with a focus on infrastructure and application builders.
OSL latest crypto outfit to slash workforce
The Hong Kong-based company is cutting costs by about 30%, including "headcount reduction" as a result of "current market conditions.
FalconX, OP Crypto & Arthur Hayes invests in market maker Elixir amid dearth of providers
DeFi protocol Elixir closed a $2.1 million seed. FalconX, Commonwealth, OP Crypto, ChapterOne and Bitmex founder Arthur Hayes participated in the round. Elixir is designed to enable anyone to participate in market making on both centralized and decentralized exchanges through a decentralized protocol.
Pantera and Archetype co-lead $12.5 million Series A funding round for Obol Labs
Pantera Capital and Archetype co-led the round, with participation from BlockTower, Nascent, Placeholder, Spartan and IEX. Obol intends to make proof-of-stake blockchains more secure with its Distributed Validator Technology, which allows multiple machines to simultaneously run an Ethereum proof-of-stake validator.
Silvergate Reports $1B Net Loss in Q4 Amid Industry’s ‘Crisis of Confidence’
The firm’s Q4 report indicated a $1 billion net loss attributable to shareholders, citing a “transformational shift” in the crypto industry which led to a “crisis of confidence across the ecosystem.”
DCG Suspends Dividends Amid Distress at Genesis Unit
Cryptocurrency conglomerate Digital Currency Group has informed its shareholders the firm is suspending dividends until further notice.
"In response to the current market environment, DCG has been focused on strengthening our balance sheet by reducing operating
LDO Token Tanks After Jump Crypto Sells Tokens
LDO token has fallen almost 17% as institutional investors, including Jump Crypto, dumped LDO. Jump has sold more than $15M of LDO since Jan. 10, amounting to two-thirds of its holdings
US Charges Crypto Exchange Bitzlato With Laundering $700M
Bitzlato, a Hong Kong-based platform, has been shut down, and founder Anatoly Legkodymov was taken into U.S. custody, disrupting "a busy corner of this Russian criminal ecosystem." The exchange offered peer-to-peer services and hosted wallets buying and selling illegal goods, involving $700 million in direct and indirect transfers.
Genesis is planning to file for bankruptcy: Report
Genesis Global Capital, is preparing to file for bankruptcy as early as this week. Genesis previously said it was considering a bankruptcy filing if it were unable to raise cash amid a liquidity crunch — Many of the reported liquidity issues may stem from the collapse of crypto firm 3AC.
Binance registers as virtual asset service provider in Poland
Binance Poland sp. z o.o., will adhere to Polish regulatory standards for virtual asset service providers (VASPs). Binance now has regulatory approval in several EU states, including France, Italy, Lithuania, Spain, Cyprus, Sweden, and now, Poland.
21Shares debuts crypto staking ETP on BX Swiss exchange
The company launched the 21Shares Staking Basket Index ETP, a crypto staking index designed to track up to 10 PoS cryptocurrencies. The ETP immediately starts trading on the local stock exchange BX Swiss under the ticker STAKE.
SEC of Thailand issues crypto custody provider rules
The Thai SEC issued regulations requiring virtual asset service providers (VASP) to establish a digital wallet management system to guarantee efficient custody. The new rules target crypto custodians or VASPs that provide crypto storage services.
Coinbase Announces 'Difficult Decision' to Shutter Operations in Japan
“Due to market conditions, our company has made the difficult decision to halt operations in Japan and to conduct a complete review of our business in the country,” Coinbase said.
National Australia Bank creates stablecoin called AUDN: AFR
The stablecoin will launch on the Ethereum network and Algorand blockchain. The stablecoin will be backed one-to-one with Australian fiat, and the money will be held by the NAB. The stablecoin will primarily be used as a settlement token between multiple transacting parties.
Central African Republic working to integrate Sango coin into its economy
The Central African Republic (CAR) has set up a task force to explore modalities for integrating its national crypto, called the Sango coin, into the country’s economy.
MakerDAO voting to limit DAI exposure to Gemini amid insolvency fears
MakerDAO has begun voting on governance polls designed to limit exposure of DAI to Gemini. GUSD, is one of the collateral assets used for minting the DAI stablecoin issued by the Maker protocol. GUSD collateral in the Maker protocol is now $489 million against a $500 million debt ceiling — the maximum amount of DAI that can be minted from Gemini dollar.
Paxos Courts MakerDAO With Paying Yield for Holding Up to $1.5B USDP Stablecoin
Paxos proposed paying a fee to MakerDAO for holding $1.5 billion of USDP among its reserves. The daily “marketing fee” would generate some $29 million of extra income annually for Maker if used at full capacity.
MakerDAO Votes to Keep Gemini USD in DAI Stablecoin’s Reserves
MakerDAO’s community voted to keep GUSD as part of its reserve system for DAI. 50.85% of the votes favored keeping the GUSD debt ceiling at $500 million level in Maker’s Peg Stability Module (PSM), while 49.15% voted for decreasing to zero.
Circle, Uniswap Research Says DeFi Can Solve $2T FX Risk Problem
A new paper from Circle and Uniswap Labs contends that crypto’s innovations could answer major ongoing financial-stability concerns for regulators. “On-chain FX can offer faster and more affordable transaction processes, as well as greater liquidity and stability.” The researchers also say remittances – could see their costs cut by 80% through DeFi.
Flashbots seeks up to $50 million at a billion-dollar valuation
Flashbots has invited investors to pitch for the chance to participate in the round. This reverse-pitching process, in theory, means investors must convince the company to take their money. The round is split into two tranches, with a portion of each earmarked for “ecosystem allocation.”
New billion-dollar Abu Dhabi fund will look far and wide for web3 deals
Venom Ventures Fund’s announced that it’s ready to plough $1 billion into web3 applications. “On the Venom Ventures side, our view is we will do from seed to Series, A, B, C to IPO”.
ZK tech developer Nil Foundation raises $22 million at a $220 million valuation
The round, led by Polychain Capital, saw participation from Blockchain Capital, Starkware and Mina Protocol. Nil is the developer of the Proof Market protocol, which enables Layer 1 and Layer 2 blockchains and protocols to generate zero-knowledge (ZK) proofs on demand.Web3 credential protocol
Gateway raises $4.2 million
Reciprocal Ventures led the round, with 6th Man Ventures, Spartan Group, Figment and others participating. The dapp provides web3 organizations with a "no-code" platform to create and issue credentials for their communities.
FTX CEO says he is exploring rebooting the exchange
John Ray, who took over as CEO of FTX has reportedly set up a task force to consider restarting FTX.com. Ray reportedly was considering reviving the crypto exchange as part of efforts to make users whole.
Binance Named as Counterparty in FinCEN Order Against Bitzlato
Bitzlato’s top three receiving counterparties were: (1) Binance, a VASP [virtual asset service provider]; (2) the Russia-connected darknet market Hydra; and (3) the alleged Russia-based Ponzi scheme “TheFiniko”.
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