Weekly Market Wrap – 11 July, 2022
Market Update
With the crypto winter setting in and markets at all time lows, we are still witnessing firms that are facing liquidity issues – the latest addition to the list being Vauld a crypto lending platform that was set-up in 2018. The company was offering monthly investment options to retail investors (SIP) and higher interest on crypto holdings. Vauld would use the funds from depositor for yield-farming which was the major source of income. With the crash the arbitrage or the so-called yield farming opportunities slumped drastically. Not just the tokens crashed, even the margin calls were triggered, adding more to the selling pressure. There is also a lot of money now chasing yield farming thereby turning it into a herculean task to generate returns. Nexo the London-based crypto lending firm is now set to acquire the firm by buying up 100% stake in the firm.
Three Arrows Capital & Voyager Digital– file for Bankruptcy
Voyager Digital suspended trading and withdrawals, citing unpaid loans to Three Arrows totaling $646 million and hence issued a notice of default. Following which 3AC was ordered by the court to liquidate due to an inability to pay off debt. The Monetary Authority of Singapore reprimanded Three Arrows on Thursday for providing it with “false information” and being “misleading.” Post which Voyager Digital has reported a $661 million exposure to 3AC who failed to meet margin calls from several lenders and eventually has also filed for bankruptcy; making it the second high-profile crypto firm to file for bankruptcy.
BTC Miners buckle up amid crypto sell-off
BTC miners have been selling off their reserves following the decline in crypto asset prices, putting pressure on their balance sheets.
- Core Scientific sold roughly $165 million worth of Bitcoin last month. The firm sold 7,202 Bitcoin during June at an average price of $23,000, leaving it with just 1,959 Bitcoin.
- Argo sold 637 Bitcoin (BTC) in June at an average price of $24,500. The firm is left with a holding of 1,935 Bitcoins
Until recently many miners have been holding significant treasuries in Bitcoin, but the bear market has made the practice less profitable and forced some to drop those holdings to cover costs. This has increased fears that these dumps could push Bitcoin prices down, further worsening conditions.
Solana & Polygon launch mobile Web3 Initiatives
The creators behind major blockchain networks Solana and Polygon eye the mobile market as a way to introduce Web3 and crypto to potentially hundreds of millions of new users around the world; a concept that was tried but initially by Samsung and HTC but didn’t work. With any Android or Apple phone, you log in with either a Google ID or an Apple ID, and to an extent, Apple or Google owns the customer. In a bid to help the user take back control Solana and Polygon will launch their own phone Solana Saga and Nothing Phone (1) respectively.
Stolen NFT’s on OpenSea
According to a Dune Analytics a crypto data aggregator, 130 Bored Ape Yacht Club NFTs and 268 Mutant Ape Yacht Club NFTs have been marked as “reported for suspicious activity” on OpenSea, meaning that previous owners of those NFTs have contacted the marketplace and identified them as stolen. The value of those NFTs adds up to over $18.5 million. This doesn’t include the 153 Azuki NFTs that have been frozen, the 202 stolen CloneX, or the 70 Moonbirds amounting to another $6.9 million. The OpenSea market place mark and NFT as suspicious or stolen if a former owner raises a complaint that the NFT sale transaction was not authorized. These NFTs are then disabled from being transacted on the network. This hence leaves the owners with the option to sell the same on other marketplaces. Many users argue that this has resulted in too much of “centralization”, which is not the aim of Web3.0. This can also be used as an exploit wherein, once an owner sells the NFT, he can then mark the same as stolen. This will result in the owner now being forced the sell the same on any other marketplace since it will drop in value once it is marked as “suspicious” on Opensea. The original owner can buy the same NFT back now at a much lower rate.
Ape Now, Pay Later
Teller’s new NFT buy now, pay later service that runs on Ethereum scaling platform Polygon helps ill a need in the market to enable prospective buyers to access pricier NFT assets by paying over time. The platform will enable NFT buyers to buy NFT’s by only paying a down-payment and match them with potential lenders. A smart-contract will be set-up for regular repayments of the borrowed capital and in case of a default the lender will have the right to sell the NFT and recover the borrowed amount. Only a few NFT projects that are supported include – Bored Ape Yacht Club and Mutant Ape Yacht Club, as well as Moonbirds, Doodles, Cool Cats, Azuki, Meebits, Adidas Originals: Into the Metaverse, RTFKT-MNLTH, and Murakami.Flowers Seed. This is a welcome move towards the NFT and DeFi industry integration.
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