Latest Stablecoins, Bitcoin, Ethereum and DeFi News in August 2024 | Coinchange.io

Stablecoins Update

Total Stablecoin Market Cap Hits ATH

End of August, the stablecoin marketcap (excluding algorithmic stablecoin) has reached an all time high of $168 billion dollars. The previous ATH was in mid March 2022, 894 days as of August 31st 2024. The past two month have seen a mean monthly change of +9.2% across the top 15 non algorithmic stablecoins. The total marketcap change of the top 15 has change around +1.84% in July and +3.63% for the month of Ausgust.

Source: DeFi Llama

This is due to new entrant USD0 (stablecoin backed by yield bearing stablecoins) soaring an average 88% between June/July and July/August. Despite decreases in market cap of USDe of -11% (-10% in July), BUSD with -15% (-0.39% in July), USDBlast with -19.4% (-13.7% in July) and USDP with -6.88% (-5.5% in July), the other top 11 non algorithmic stablecoin are seeing inflows. Leading the pack is rather new entrant FDUSD by First Digital Labs, getting 51% increase in August, PYUSD with 48% in August and 22% in July; GHO recording 19% increase in August,  USDY with 14.51% in August and 2.94% in July.

Although low in %, the dominant USDT is back at 70% market share with an increase of 3.22% this month and USDC recording a 4.1% increase. Those represent $3.7 billions and $1.36 billion increase for USDT and USDC respectively, accounting for 86% of the total market cap change for the sector.

MakerDAO Rebrand To Sky – Change Its Token Name

In the governance forum on August 27th, Rune, MarkerDAO co-founder announced the successful vote by the community to rebrand MakerDAO to Sky. The post begins with “Sky is the best and easiest place to get rewarded for saving. Built on the oldest and most profitable decentralized finance protocol. Powering a scalable ecosystem of Stars.

After more than 2 years of meticulous work by the ecosystem, Sky is here! MakerDAO is now Sky, and the long anticipated upgrades to the protocol and ecosystem – known by the codename Endgame – are now coming to life.”.

The two new tokens; $USDS and $SKY will gradually replace $DAI and $MAKER. $USDS can be converted from $DAI or $USDC at a 1:1 ratio while $MAKER holder will be able to convert 1 $MAKER for 24,000 $SKY. Alongside with the dilution to the governance token supply, it will decrease de-facto the price of MAKER; The exact price is still to be determined as the change from MAKER to SKY is voluntary by the user. We can estimate that $MAKER price of $1,500 might drop to $0.06 per $SKY token, which would equate to the 24,000 inflation/dilution to the supply. It is still to be seen what would be the impact on prices and how the change will be handled on CEX. We can also forecast some interesting arbitrage opportunities between MAKER and SKY as price discovery kicks in on both sides.

Sky has plans of combining its launch with the Spark Lend airdrop of SPK which has been anticipated for quite some time now. This alongside the substantial amount of governance token Sky.money will have to distribute to USDS holders and staker, this launch is poised is make some noise in the DeFi sector amidst neutral to bearish sentiment on both protocol as seen with the decreasing TVL for Spark since July and MakerDAO since March this year.

Tether Not Planning To Launch its Own Blockchain Anytime Soon

Tether has announced that a blockchain launch is not in the works. In a recent interview with Bloomberg, Tether’s CEO Paolo Ardiono announced the firm’s decision, citing market saturation and the potential commoditization of the technology.

While the company is diversifying its business into various investment due to its excessive profits, the CEO says that existing solution are already robust and already offer solutions needed from users. He stated “For us, blockchain are just transport layers”.

Their core business being fiat backed stablecoin issuance on various blockchain, Tether has announced plan to issue a dihram-pegged stablecoin together with Phoenix Group PLC and with the support form Green Acorn Investment LLC, which could well become a staple as we all know Dubai and the UAE are on course to become the world’s hub for crypto. This new stablecoin woud join the growing set that Tether issues so far: USDt, EURT, CNHT, MXNT, XAUT and aUSDT

Ripple To Issue USD Backed Stablecoin – RLUSD

In a sudden move, Ripple issued a statement where it share that it has began testing of Ripple USD (RUSD) on the XRP Ledger (XRPL) and Ethereum mainnet. The statement continues: “This is a significant milestone and a step closer to bringing more high-quality assets to the XRPL, driving new opportunities, liquidity, and institutional use cases for users, developers, and applications. The mainnet version of Ripple USD is also available on Ethereum, with plans to expand to additional blockchains and decentralized finance (DeFi) protocols over time.” RUSD is for now in beta phase and only tested by enterprise partners of Ripple Labs in an effort to ensure that it meets enterprise requirements on security, feature, efficiency and reliability. Its reserve are composed of short date US treasuries and other cash equivalents like reverse repo notes with plan to have them audited by a reputable third party.

RUSD is planned to be used together with XRP in its cross border payment solution.

This was bound to happen as we analyzed the issue that the use of XRP as a medium of exchange for cross border payment poses to XRP. Specifically, XRP has seen one of its biggest partnerships be canceled by Western Union as they ultimately chose to partner with Circle and use USDC for cross border payment. You can read more about this story in our recent stablecoin research.

Bitcoin Update:

WBTC join justin SUN pushing DAO away from it as collateral

In a recent announcement BitGo shocked many in the industry by announcing a joint venture with Bit Global, a company tied to controversial personality Justin Sun. the annoucement continue with “BiT Global is a global custody platform with regulated operations based in Hong Kong, registered as a Trust and Company Service Provider (TCSP). This is a strategic partnership between BitGo, Justin Sun, and the Tron ecosystem, which is the leading blockchain that presently hosts the largest circulating supply of USDT stablecoins in the world, totaling over $60 billion”.

This joint venture, more an acquisition, will leave BitGo with a minority share while Bit Global will retain the majority, which can seem surprising but in such a scenario it would make sense that BitGo would be the minority as the operator as it has all of the technology in place but not the distribution and network that Bit Global has in Asia, which is further exemplified by the purpose of this JV, which is to increase adoption of WBTC. BitGo cold storage operating under a 2 of 3 key scheme would have 2 of the keys held in Hong Kong and Singapore with one of them held in “cold storage” by BitGlobal, while the remaining in possession of BitGo and Bit Global would be used for operations.

Something to note, is the jurisdictional risk that WBTC with BitGo had prior this JV. Indeed, by being registered and operating only from the US, BitGo could have been shut down by the US warrants and court orders. With this JV, the jurisdictional risk is spread between the US, Hong kong and Singapore.

This joint venture is expected to go live at the beginning of October.

So far the peg is maintained with a slight bias downward averaging 13 bps (0.13%) as shown in the chart below.

MakerDAO governance forum was quick on jumping on the subject with Monet supply providing a clear overview of the concerns related to Justin Sun and the track record of protocol and companies he has been involved with (LUSD, stUSDT) while also noting that last years, Galaxy Digital pulled out of a deal to purchase BitGo with BitGo claiming it was because of “sustained bear market with losses” while Galaxy Digital claiming “non-compliant” documents pertaining to BitGo financial health.

Aave which always seems to have a more measured approach, as a fundamentally different protocol with different users and requirements. Aave seems to be waiting for the JV to take effect then action would be taken. In the meantime, other BTC stablecoin are available on the market with our next story talking about it.

Coinbase Unveil cbBTC

https://x.com/coinbase/status/1823501582006411614

Coinbase unveiling their wrapped bitcoin token cbBTC make me think of the following: “There are no friends amongst competition in crypto, they are all sharks, circling, waiting for traces of blood to appear”. We can safely assume that Coinbase jumped the gun at teasing and then launching their owned bitcoin backed stablecoin as BitGo announced their JV with Bit Global which has ties with Justin Sun.

Coinbase has hardly provided lots of details regarding the security setup and architecture apart from the usual “the biggest institutions in the world use our custody setup for their assets, just trust us”. On a more serious note, mid-August their was a single tweet teasing the launch:

As of September, more info is available on Coinbase website but the specifics of the custody setup aren’t shared apart from “we have 10+ year of track record and secure billions of dollars for institutions”.

For now, cbBTC offers opportunities to diversify your wrapped bitcoin holdings while the Coinbase team has already onboard the asset on many protocols in DeFi.

Not a hedge against inflation, shine in the recovery and turmoil

NYDIG recent research highlights that bitcoin isn’t a hedge in political and financial turmoil while it does shine in the recovery phases.

The narrative given to bitcoin as “digital gold”, “store of value” or “hedge against inflation” is used to describe specific purpose or future use but in reality they are all but narratives. Bitcoin is a “peer-to-peer electronic cash system” enabling anyone to send, receive and hold bitcoin, the fixed supply digital asset native to the system.

Bitcoin is one of, if not, the most liquid asset in the world as it can be traded 24/7/365, as we’ve continually seen anticipation sell off during weekends as traders and institutions tend to sell their most liquid position prior traditional market opening.

The report further analyzes 1 day drawdown and multiple day drawdown from 2011 to 2024. The data shows that actual hedge against sudden drop are US T -Bill, with gold and bitcoin following the same fate as the traditional financial indices (SPY, R2000, etc..). On the reverse, during recovery phase, bitcoin shines while US T-Bill, since inversely correlated, would go down. Recovery phases favor gold as well with significant win rate compared to stock market indices but much lower median, average and standard deviation while bitcoin is literally multiple higher in those metrics with double digits in the 30s for the average, 15% as the median, and 53% in Std deviation with a win rate a bit higher than Gold’s at 66%.  

Goldman Sachs Reveals $420M Exposure to Bitcoin spot ETF in Latest Filing

Goldman Sachs has recently disclosed significant holdings in various spot Bitcoin ETFs in the second quarter of 2024. The details were first reported by an X account, citing the banks 13F filling to the SEC. The total position rounds up to $420 mln of which 57% ($238 mln) is invested into Blackrock’s iShares Bitcoin Trust.

Blackrock’s iShares Bitcoin Trust has been the most successful at attracting AUM since launch, far surpassing the inflows seen in the competition with close to $10 billion more than second position Grayscale’s GBTC.

Ethereum Update

ETH To Death Spiral Soon?

Ethereum dropped around 40% in August, while have a rebound at the end of the month to finish at 30% decline. Since the Dencun update on Ethereum mainnet, that implemented proto danksharding, which improved block storage and made layer-2 networks cheaper, fees have been divided by a factor of almost 40x on mainnet ! In March, the total fees paid by users daily was nearing $40M. Now this number is around $1M a day to $500k depending on the demand for block space each day.  

Source: Artemis

The direct positive effect for users is that they now can do transactions on Mainnet again, after the L2 rush away from mainnet due primarily to high fees.

Another consequence is that less fee paid by users means less ETH to burn (EIP1559) in comparison to ETH issuance via block validation. The result is Ethereum is still deflationary but at the rate that the inflation is growing (more block reward than ETH burned) we could enter back into net inflationary pressure sooner than we think.

Another impact is centered around ETH demand driver which gas fees was a big component. As fees are low now, investors and protocols do not need to purchase lots of ETH to pay for gas thus participating in the week performance of the asset. Furthermore the ETH spot ETFs are not helping the situation, despite seeing some inflows at the beginning, the general trend is outflows across the board, pushing price lower thus negating even more the effect of burning ETH from the circulating supply.  

Source: Ultra Sound Money

Is a death spiral soon to come for Ethereum ? We think it is unlikely as Ethereum ecosystem still hosts the highest amount of TVL compared to its L2 and the majority of blue chip protocols still have power users on mainnet while tokenized treasury funds worth billions of dollars are on mainnet only. However this situation could become a concern if sustained as it could have impact on its economic security.

Indeed, Ethereum is secured by validators required to stake 32 ETH to earn the right to validate block in exchange for ETH reward, currently earning around 4.5%. In the situation where the price continues to decrease, the inflation become net positive, in turn eating away the profit made by validators while they continually sell the rewards into a weak market could trigger them to unstake and move to validate other networks. Ethereum staking rate would increase again perhaps to 6% or 7% APY via supply/demand forces but investors cautiousness might prevent inflows into staking and in the ecosystem in general. This could lead to the economic security of Ethereum (value stored on the network / value securing the network) decreasing as the value of the stake would decrease faster than the value stored on the network, thus leading to investors being cautious before entering the Ethereum ecosystem.

Metamask introduces a Visa Debit Card

This month Metamask proudly announced its debit card, here is the quote from the PR:

“MetaMask, in collaboration with MasterCard and Baanx, introduced the MetaMask Card, a debit card that enables users to spend funds directly from their self-custody MetaMask wallet at any location that accepts MasterCard. The payment card will initially be available to a limited group of users in the EU and UK as part of a pilot rollout. MetaMask Card will leverage Linea, an EVM-equivalent ZK-rollup by Consensys, to facilitate cost-effective and secure crypto-to-fiat transactions. The card will support spending USDC, USDT, and WETH and integrations with Apple Pay and Google Pay. Users can check their MetaMask Portfolio dapp to determine eligiblility for the pilot.”

Base Layer 2 Is One Year Old

Earlier this month, Base network proudly celebrated 1 year old. When it launched earlier last year, the layer 2 by Coinbase built on the OP stack has rapidly gained significant TVL while today it surpassed $6 billion, overtaking the Optimism mainnet, becoming the second biggest rollup behind Arbitrum.

ETH Daily reported that: “Base has processed over 500 million transactions and generated over 16,000 ETH in sequencer revenue. Throughout the past year, Base has implemented upgrades like EIP-4844, RIP-7212, and enhanced data compression, which have significantly reduced transaction fees. The improvements have brought transaction costs down to as low as $0.01 for most token transfers on the network.”

DeFi Updates

Eigenlayer announce staking for any ERC20 token

EigenLayer announced plans to introduce permissionless support for adding any ERC-20 token as a restakable asset on the protocol. The new feature will enable Actively Validated Services (AVSs) to secure their protocols using a broader range of assets. EigenDA will be the first AVS to utilize the permissionless ERC-20 token feature. A protocol-level upgrade for EigenLayer on the mainnet is scheduled for deployment early September. Soon, EigenLayer will also release a web app update allowing restakers to deposit and delegate ERC-20 tokens to operators. The update comes as Symbiotic, a competing restaking protocol, introduced support for staking tBTC, a Bitcoin-pegged asset.

EtherFi introduces eBTC LRT following EigenLayer permissionless ERC20 staking

Along with Symbiotic support of tBTC as a restaked asset, EigenLayer released a liquid staking vault using eBTC as the underlying asset. From their documentation: “eBTC is backed by LBTC, through a partnership with Lombard, to bring the first dual yielding (staking + restaking) Bitcoin product to market. Staking will be conducted through Babylon, with restaking services through a combination of Eigen Layer, Symbiotic, and Karak. Users are able to deposit LBTC & WBTC”

Puffer Finance Adopts xERC20 – Bridging

Puffer Finance announced couple of days prior to EigenLayer that it has adopted the xERC-20 bridge token standard for its liquid restaking token, pufETH. The standard allows for seamless token bridging without requiring multiple representations of the same asset, enabling users to transfer pufETH across chains with minimal slippage. It allows Puffer to support restaking deposits from any chain. xERC-20, also known as ERC-7281, is an extension of the ERC-20 standard. It was developed by the interoperability protocol Everclear (formerly Connext Network). It enables token issuers to manage bridges, set minting limits, and authorize approved bridges to mint the same token representation, allowing protocols to maintain control over their token contracts.

Key DeFi Stats for August:

Image: DefiLlama

In August, the TVL moved down significantly, ending the month $14 billion below where it started around $96 billion dollars, reaching $82 billions. DEX 30 day volumes have gone up slightly reaching $145 billion from around $140 billion last month .

A look at the top DeFi protocols based on the fees generated

Let’s look at the top 5 DeFi/NFT protocols/ecosystems with the most fees generated over 30 days, which generally translates to the most active protocols. In some cases, the protocols take a % of the fee as revenues (eg. Lido Finance) in other cases its distributed almost entirely to the Liquidity Providers Stakeholders (eg. Uniswap Liquidity Providers) hence their revenue varies based on such parameters.

Here are the top 5 protocols for the month of July in terms of Fees generated:

Image by Coinchange, data sourced from DeFillama

Unlike the previous trend of the last couple of month, only one protocol of the top 5 is on Solana (Raydium) while the remainder are all on Ethereum and Layer2. AAVE has reclaimed its second place followed by UNiswap, MakerDAO (rebranding to Sky) and Raydium, while Lido is still king. 30 days fees have significantly reduced from last month which had a total 30 day fees of around $250 mln combined while this month the fees combined are $74 mln.

Macro View

AI taking on India outsourcing job

AI is Coming for India’s Famous Tech Hub as per a recent article by the Wall Street Journal. AI is set to transform India’s technology outsourcing business, and as the industry pivots to adapt the changes could affect a large number of jobs. Big outsourcing companies are already using AI and have plans to integrate it through their systems, which might cause trouble for smaller companies running call centers as the bigger companies could scale much faster and snatch their client away.

The article continues with “India’s $250 billion outsourcing industry, which employs 5.4 million people and contributes about 8% of the country’s economy, could have reeling impacts from the AI disruption: ”more than 80% of companies in the S&P 500 outsource some operations to India, according to HSBC.””

The Wall Street Journal reports that about 60,000 jobs were added to the industry in the year end in March, while India’s three largest tech companies Tata Consultancy Services, Wipro and Infosys saw a combined employee count drop of 60,000 over the same time period.

AirBnb Shares Nosedived, Booking Decreased

AirBnB have slid significantly the past month, not seen since 2022 following a weak outlook for the industry the company shared to its investors, anticipating a slow down from US vacationers. This correlates well with the rather neutral inflation and consumption indicator that we share below in the article.

Wall Street Journal article provided more numbers to this news by adding : “Although bookings grew 8.7% in the second quarter, they were still well below analysts’ estimates. AirBnB also expects “sequential moderation” of growth bookings in the third quarter. The company’s latest bookings outlook is set to be the lowest pace of growth since 2020.” Notably, large group bookings for parties five and more was the fastest growth segment in North America for a fifth quarter, again showing that consumer spending is not yet back on.

Home Owner Rejoice – US mortgage

A rather good news arrived for prospective homebuyers in the US as mortgage rates fell to the lowest level in more than a year. The average rate on a 30-year fixed mortgage fell to 6.7%, last seen in May 2023, and the sharpest weekly decline in nine months.

If sustained, lower mortgage rates could help bring priced-out Americans back into the market for homes. Home sales were lowest in almost 30 years in 2023. With the inventory of homes for sale still below historic averages, the big drop in mortgage rates is giving hope to buyer, sellers and the banks.

Mortgage rates aren’t directly tied to the Fed’s moves, but they tend to loosely follow the yield on the benchmark 10-year Treasury note, hence as the market seems to be pricing a rate cut, refinancing your mortgage in the 4th quarter or early net year could be a good move.

Fed Cuts Rate After 28 Months Of Hawkishness

Just 28 months after the Fed’s first increase of the Federal Funds rate, Jerome Powell has finally caved in and adjusted it. The timeline has been the following:

• Hikes in February, 2022
• Pause in July, 2023
• Cuts in August, 2024

We specifically had 17 months of hike and around 13 months of “on-hold” while market conditions have generally improved and no recession has started, so far, Jerome Powell is on track to pull off an extraordinary feat of rate cuts after prolonged tightening without causing a recession.

The US Treasury market, specifically the 2 year and 10 year UST market, have been forecasting such a move since months now. The 2 year UST market is trading around 158 bps inverted to the federal funds rate, meaning that the market expect the cuts to be at least 158 bps from today’s rate of 5%

CPI is showing signs of easing off since a couple of months now compared to last year, while the monthly changes remained positive with August being the second increase of 0.2% since June that recorded negative growth of -0.1%.

PPI numbers, leading indicators for consumption of goods and services are showing signs of cooling off as well this month with a decrease of -3.7% for unprocessed goods from the prior month and a decrease of -4.3% from 12 months ago. Processed foods are still somewhat neutral with a mild decrease of -0.1% from last month and -1.1% from 12 months ago.

Final demand goods are still in mild increase with 0.2% from last month and at around 1.7% increase from last year in August.

Regulations Update

Russia To Start Trials For Business to Accept Crypto Payments

Following the recent shift in legislation in Russia, in July, to start accepting cryptocurrencies as a means of payment, Russia is set to start trial for businesses to accept crypto payments using the countries settlement rail and bank credit card that would instantly convert crypto to ruble.

Trials for exchange platforms will also reportedly begin around the same period, potentially leading to the establishment of two crypto-focused exchanges within the coming year.

In time of geopolitical tension and continuous strain of the western sanctions due to the  special military operation in Ukraine, Russia has been pushed to adapt and overcome.

Nigeria’s SEC Issues First Crypto License

In a recent move, the Nigerian Securities and Exchange Commission has issued Quidax, an Africa-based crypto exchange, its first provisional operating license.

This signal a shift in how the cryptocurrency sector is perceived, which now will be able to be integrated within the economy as clear this shows clear recognition and oversight.

The recent moved is welcomed by the crypto currency in Nigeria and is motivating locals for more investment and innovation in the sector. Cointelegraph report’s “The regulatory approval now enables Quidax to collaborate with banks and other financial institutions, pending the Central Bank of Nigeria’s approval. The SEC’s licensing follows a comprehensive amendment to its rules on June 21, which covered digital asset issuance, offering platforms, exchange and custody.” An accelerated incubation program has been structured as part of this regulatory overhaul in an effort to have local service providers fall in line with regulatory requirements.

OpenSea Receives Wells Notice

Devin Finzer, CEO of OpenSea, an NFT Marketplace, reported receiving a Wells Notice from the US SEC. The Wells Notice as per usual site the fact that the marketplace may qualify as unregistered securities. Devin reported that OpenSea was ready to “stand up and fight” any potential enforcement action.

OpenSea wil extend $5 mln to help cover legal fees that NFT creators and devs that receive Wells Notice. Stating that every creator should be able to innovate, whether big or small. This event follows the long list of companies in the industry that have received Wells Notice, hopefully OpenSea will come out on top, as this could have major implications for the NFt sector and innovation in art ownership.

Capital Raises in August 2024

Source: ICO Analytics

1. BitGo raised its series C for $100 mln at a $3 billion valuation. BitGo is a digital asset security company  trusted by some of the largest institutions in the world, specializing in safeguarding cryptocurrency for institutional clients. Their comprehensive solutions, including custody services and cybersecurity measures, cater to the needs of institutions like banks, hedge funds, and exchanges.

Total raise: $100 mln

1. ZetaChain is an EVM-compatible Layer 1 blockchain that connects multiple blockchains into a unified ecosystem, enabling interoperable dApps and seamless cross-chain asset transfers without the need for wrapped tokens or bridges. ZetaChain offers externally-managed smart contract capabilities for chains like Bitcoin and Dogecoin, making it a versatile and efficient solution for multichain DeFi, NFTs, governance, and more..

Total raised: $27 mln

1. Jada AI provides AI services to enhance decision-making and operational efficiency in organizations within a blockchain-based ecosystem. Jada’s goal is to create a Level 3 AGI (Artificial General Intelligence) that can self-learn and autonomously perform tasks across industries, prioritizing human safety. The project is currently in its Incubation Phase, with private access to the Jada Mark I Prototype Series available to select early adopters.

Total raised: $25M

1. ZTX (ZepetoX) is a decentralized metaverse that emphasizes self-expression through personalized avatars, land ownership, asset creation, social interaction, DeFi tools, and governance. ZTX empowers creators, players, and communities in a dynamic 3D open world, building on ZEPETO’s foundation.

Total raised: $13M

1. Mahjong Meta is a Web3 gaming platform on Ethereum, offering a rewarding and innovative gameplay experience for Mahjong enthusiasts. It aims to build a vibrant community where players can compete, interact, and learn about the rich cultures of Mahjong, while also providing a streaming entertainment field with live matches, expert commentary, and educational resources.
   Total raised: $12M

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