All you Burning Man fans, you should check out the Kumbh Mela; far more raw, far more earthy, and far more authentic than a bunch of nerds trying to act all cool and counter culture-ish in the desert can ever hope to be. Yeah. Sorry!
Binance Stablecoin – We have been fans of stablecoins for a while, and we are eagerly looking forward to Binance’s play in this space. Clearly there are stand-alone stablecoin businesses that are in it to basically play the float, effectively make money from the collateralized fiat backing the stable coins, but the really big stablecoin businesses are all about platform benefits, across the whole range of products and services they offer. This is indeed the case for Binance’s USD stablecoin, BUSD, which is being launched in partnership with PAXOS, as well as with blessings from the New York regulator, following similar stablecoins it launched for GBP and BTC (yes!). Stablecoins are a key advantage for a platform like Binance. It could for instance provide a virtual fiat on-ramp, without needing a bank. A Binance stablecoin also keeps traders locked in within the Binance ecosystem. Presumably, investors might want to move from BTC or ETH or some token to BUSD before going back in for the next trade. There is of course the float and stuff, but that is small change (sats!) for Binance.
It remains to be seen how existing incumbents in the US – Coinbase, Circle, Gemini et al react to this move from Binance. Just by virtue of being in the US, these companies have had to tread lightly in order to not fall afoul of regulations. Asian crypto firms like Binance are basically waltzing in to the US, after having made merry in the regulatory wild west that Asia mostly is, at least when compared to the US. It is a bit of an unfair advantage, even though it might not have been something the Binances of the world planned for.
Imagine CZ (or more likely someone from his legal/leadership team, given that CZ takes no chances and stays clear of the US, unlike, say, Arthur Hayes of Bitmex) in front of the regulator in NY, basically making the case that, hey, you know, we had to do what we had to do in Asia, but we are really good at building at-scale crypto businesses, and we want to come in and play by the rules here, and build a similar massive crypto business that we want you to regulate. What exactly is the NY regulator going to say? In the unlikely instance that they do not play ball, CZ will gladly take his business to another state like, say, Wyoming, for instance. Regulators need to be seen as tough AND fair, especially in a sunrise sector like crypto, And given the early, necessarily collaborative nature of the industry, it is not like any of the American crypto firms are going to actually sue Binance. Or will they?
Alan Howard, of the hedge fund Brevan Howard, is launching a $1B ‘fund-of-fund, Elwood Asset Management’ that will invest in other crypto funds. Institutions are unsurprisingly taking a closer look, especially in a year where crypto has rebounded, and outperformed most of the core asset classes. We had a take on crypto investing some time ago, and it is worth a revisit now. It remains to be seen how long a traditional fund house like Brevan Howard takes to get to grip with the fairly un-structured nature of the inchoate crypto asset management industry, where features like custody are just about evolving and maturing.
But we can safely say that institutions are increasingly looking at crypto seriously. What more proof does one need than this photo of Ray Dalio of Bridgewater himself from the desert this year, partying at Burning Man with other crypto faithful.
Yet another decade, yet another crisis in Argentina after another IMF loan default saga. It is deja vu all over again, as the Argentinian currency has depreciated by more than 87% against the USD over the past few years. As investors are looking to abandon the weakening peso for USD, the Argentinian govt in a recent move to curtail the flight of domestic capital has imposed limits on the purchase of USD by investors. The new law limits the purchases of USD to $10k per month per citizen. In fact, BTC prices in Argentine Peso were trading at a 4% premium to the global average, highlighting the demand for BTC in the face of a currency devaluation crisis. Pretty much the same situation the has been playing out in Venezuela, then!
We think the Argent app looks promising. The promos are quite reminiscent of the Apple campaigns, and the app simplifies the whole process of lending and borrowing from the various DeFi platforms using some compelling, clearly Apple-inspired UX design. And now on to our regular Friday DeFi metrics coverage.
Ethereum Locked in DeFi
MakerDAO still accounts for a lion’s share of ETH locked up in collateral, with more than 1.39 million of ETH locked up. Compound showed a strong w/w growth of 4% in ETH locked up, while Augur improved by 4%.
Lightning Network Growth:
Capacity per channel fell by 0.4% w/w. The total number of nodes increased w/w by 1%, and the total number of channels was flat w/w.
Trading volumes on DEXs have increased on a w/w basis, with the average daily trading volume averaging 35k ETH for this week. IDEX remains the biggest DEX in terms of trading volume and DAI is the highest traded cryptocurrency on DEXs.
Crypto Loans Tracker:
Total loans issued on Compound for the last week stands at approx. $2.6 million for the week, a strong decrease from $5.7 million in the previous week. WETH is the most borrowed cryptocurrency on Compound followed by DAI and BAT.
Total loans issued on dYdX for the last week stands at approx. $2.6M for the week, a 50% decline from $5.2M last week. DAI is the most borrowed cryptocurrency on Compound followed by WETH and USDC.
DAI loans issued on MakerDAO for this week stand at ~$2.1M, a slight decrease from $2.4M last week. The total outstanding DAI debt currently stands at ~$86 million.
You can also check out last week’s Metrics Watch here.
Use of digital assets in Venezuela, Palestine, and natively by Tony Sheng
The Future of Wealth Management with Tyrone Ross Jr.