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

Stablecoins Update

Total Stablecoin Market Cap Hits ATH

End of October, the stablecoin marketcap (excluding algorithmic stablecoin) reached an all time high again at $171 billion from $168 billion dollars. The previous ATH was in mid March 2022. 

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Source: DeFi Llama

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This is due to USDe seeing significant inflows while USDC and USDT are seeing inflow of 4.56% and 4.82%. USDT is now just shy above 70% market share at 70.67%.

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Bitcoin Update: 

Bitcoin Bull Market, Low CEX Reserve And Diamond Hands

Since the beginning of the year CEX bitcoin reserves have been decreasing in linear fashion reaching 2.5 million bitcoin mid-October worth at the time $174.2 billion. Since 2022 we have constantly seen a decrease in bitcoin reserves, even when leading up to Mars of this year after the dip in price in January 2023 which we could have expected to see an increase in reserve as investors would sell part of their position to realize some profits. 

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When looking at the HODL waves, this general trend of CEX reserve decreasing correlates with the 6-12 months increasing over time. In general the long term holders of 5 years+ are in constant uptrend. The chart below provide the overview of the HODL waves since January 2022. 

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Michael Saylor Reveals End Game Plan for Microstrategy

The Block reported in a blog the interview Michael Saylor, did with Bernstein, where he explained that Microstrategy's endgame is to become the leading bitcoin bank in the world and achieve a trillion dollar valuation.
Rather than lending out funds like traditional banks, MicroStrategy seeks to borrow money at low rates, offer slightly higher rates to lenders, and invest those funds into bitcoin — with a “base case” estimated average annual return of 29%.

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Michael Saylor's thesis is that Bitcoin is the top performing asset of the 21st century with the best characteristics for long term storage value storage. Bitcoin volatility and a long term price appreciation is repricing every other asset where their P/E ratio will be adjusted downward of their current elevated multiples of 30 on average. 

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“This is the most valuable asset in the world. The endgame is to be the leading bitcoin bank, or merchant bank, or you could call it a bitcoin finance company,” Saylor said. “If we end up with $20bn of converts, $20bn of preferred stock, $10bn of debt and say $50bn billion of some kind of debt instrument and structures instrument, we'll have $100-$150bn of bitcoin.”

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“The company trades at a 50% premium, with more volatility and ARR, we can build a company that has a 100% premium to $150bn worth of bitcoin and build a $300-400bn company with the biggest options market, the biggest equity market,” he continued. “And then we basically start to chew into the fixed income markets, and we just keep buying more bitcoin. Bitcoin is going to go to millions a coin, you know, and then we create a trillion dollar company.” 

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Bitcoin’s underlying average annual growth yield is attractive enough to continue making money on capital markets arbitrage and not lend out bitcoin like a traditional banking model. The theory is that it is much more profitable and less risky to borrow fiat on fixed income market, lend it to Bitcoin at 50% ARR with no counterparty risk, than to lend the bitcoin reserve to a third party at 12%-14% p.a. 

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MSTR Announce Q3 Result and $42 Billion Capital Plan 

On October 30 Microstrategy announced a $42 billion capital plan along with its Q3 2024 financial result. 

Key numbers of the financial results are:

• 5.1% “BTC Yield” KPI
• $21 billion at-the-market (ATM) equity offering
• Target raise $21 billion using fixed income securities
• Revise annual target BTC yield from 6% to 10% for 2025 through 2027.

The $42 billion capital plan will span 3 years, comprising $21 billion of equity and $21 billion of fixed income securities, which Microstrategy refers to as their “21/21 Plan.”
The BTC Yield target has been increased from 6% to 10% in an effort to continually increase the % of BTC per share backing. Microstrategy aims to provide a range of financial products acting as proxies to Bitcoin with different risk/reward profile and volatility. The screenshot below of the Financial result presentation provides some insight of the types and their volatility/leverage ratios.

You can read more about Microstrategy financial results in their presentation slide here or directly watching the presentation here. 

MicroStrategy now holds around 252,220 bitcoin valued at $23.39 billion dollars while last month it was worth $15.34 billion dollars. 

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DATUM by OCEAN, Increasing Decentralized Mining

DATUM (Decentralized, Alternative, Template for, Universal, Mining) was born out of a need to restore Bitcoin mining to its decentralized roots. Back when mining pools did not exist, miners were in charge of constructing their template with each miners having its own and submitting them to the network. 

Over the years, mining has drifted toward centralization, with large pools dominating the process which reduces miners to mere sellers of hash power. And we are not even talking about pool payout structure which is also flawed and harms decentralization while sometimes can jeopardize company solveability or steal revenue from individual miners. DATUM brings back the core principle of Bitcoin: decentralization, giving miners direct control over the block construction process once again.

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Initially, Stratum V2 (Sv2) was considered, a protocol that promised to address some of these issues. However, technical challenges and long development cycles convinced OCEAN that a new framework was necessary.

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Microsoft December Shareholder Meeting to “assess investing in bitcoin”

Microsoft is apparently considering investing in Bitcoin as per its latest U.S. Securities and Exchange Commission filing on Thursday 24th of October. The voting item to “assess investing in Bitcoin” will be decided at its next shareholders meeting scheduled December 10th.
The proposition appears to come from The National Center for Public Policy Research, a conservative think tank. As of October 29th, the board recommendation for the item is "AGAINST" with the rationale that the current processes and investment are sufficient to maintain high liquidity and stability to fund its operations while protecting the treasury against inflation. The board further shared that bitcoin, other cryptocurrencies and a wide range of other assets have been and currently are evaluated by Microsoft’s Global Treasury and Investment Services team.
The National Center for Public Policy Research supporting statement for the item is heavily related to inflation and its risk on businesses' treasury. Citing businesses fiduciary duty to maximize shareholder value from operation and investing its profits while protecting it from debasement. With true inflation rates most probably higher than the CPI rate of 5.03% a business asset needs to increase by at least those rates to breakeven. In Q1 2024, Microsoft had $484 million in total assets of which the majority are US government treasury bills that barely outpace the CPI rate, meaning T-Bill barely keeps up with real inflation rates in turn eating away at Microsoft treasury.  

It then makes the case that bitcoin price as of June 30th 2024 has appreciated by more than 99.7% YTD (even more today with 121% YTD) which clearly outperforms bonds and any other investable asset. This is evidenced by Microstrategy stock which outperformed Microsoft’s by 364.63% while Microsoft has a performance of 15% YTD.
If the item gets majority of voting share “FOR” it will mean the Microsoft’s Global Treasury and Investment Services team will need to once again evaluate bitcoin as an option for diversifying its treasury, however this does not mean Microsoft will invest in bitcoin regardless if the evaluation is in favor of bitcoin, as such a major investment by Microsoft would need to be voted again. 

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Ethereum Update

Uniswap Integrate Bridging Natively

In October, Uniswap integrated Across natively to its interface and wallet enabling users to bridge assets across 6 different blockchain in a seamless manner. This is one step further toward Uniswap’s vision to enable cross chain swaps.
Across Protocol is the only intent based protocol in production today as per Uniswap Labs team. Unlike other bridges, Across is a permissionless bridge that operates through a decentralized network of liquidity pools and relayers. Ethereum, Base, Arbitrum, Polygon, OP Mainnet, Zora, Blast, World Chain, and ZKsync are supported for now. Only native assets (e.g., ETH on Ethereum or ARB on Arbitrum) and stablecoins will be supported for bridging. 

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OP Chain Delegation Program Live

Optimism unveiled the first participants in its OP Chain Delegation Program, an initiative that allocates OP token delegations to OP Stack chains to encourage their involvement in Optimism governance. The program grants between 250,000 and 1.5 million OP to eligible chains, equipping them with sufficient governance power to approve or reject proposal drafts. Among the first recipients are Cyber Network and Mint, both OP Stack chains. Each delegation is active for 12 months, providing the chains with a boost while they grow their user-based delegations organically. To maintain eligibility, participating chains must uphold a voting participation rate above 70% throughout the delegation.

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STRK Staking To Launch Q4

As per Starknet twitter post, the staking contract has been deployed and tested, staking parameters have been voted by community governance of which the results are found in the image below. 

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Testnet of the first phase has been completed with success which enables the team to release mainnet launch in Q4. as part of phase 1, staking permissionlessly and delegation will be enabled. Only in phase 2 will validators start attesting blocks. Phase 3 will see the validators validate and vote on blocks sequenced by the sequencer. Phase 4 will make Starknet decentralized with validators fully responsible for maintaining and securing the network by producing, attesting and proving blocks.  

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Ethereum Upgrades And Catalysts

Christine Kim, a researcher at Galaxy, published a post detailing upcoming Ethereum upgrades and catalysts. She highlighted Ethereum's continued commitment to a rollup-centric roadmap, noting that the Pectra upgrade may be among the last significant Layer 1 (L1) updates to directly impact end-users. Initially planned to include 20 EIPs, Pectra was split and will feature only about 9 EIPs, with the upgrade expected to launch in H1 2025. Pectra will introduce improvements in user experience, data availability, and network efficiency. The remaining EIPs have been pushed to future forks, such as Fusaka, which will focus on implementing EOF and PeerDAS.

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Vitalik On The Future Of Ethereum

Ethereum creator Vitalik Buterin published a blog post discussing potential improvements to Ethereum’s proof-of-stake (PoS) system, focusing on both technical and economic challenges. The TLDR is that single-slot finality and a lower minimum staking requirement are key for the next phase of Ethereum. He notes that the current 32 ETH minimum is the main barrier preventing wider solo staker participation as this threshold was established at first to bootstrap the staking network making sure professional validators would be prioritized. 

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Buterin proposed achieving single-slot finality (SSF), which would allow blocks to be finalized within a single 12-second slot, and reducing the staking requirement to 1 ETH to encourage more solo stakers. Currently, block finality takes 2-3 epochs or about 15 minutes. To address the challenges of validating a large number of transactions and operational costs for validators, Buterin suggested three potential solutions:

The first is using ZK-SNARKs to process millions of signatures efficiently. The second is implementing Orbit Committees to reduce overhead by selecting a random subset of validators to finalize each block. And third, is introducing a two-tiered staking system where higher-tier stakers provide finality while lower-tier stakers participate in other roles.

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DeFi Updates

TON Adoption future

While DeFi has grown tremendously in the little over 4 years it exist, there is still lots to do in terms of broader adoption. DeFi use cases today are mostly targeted at DeFi native investors that already know about smart contracts and are confident cross chain investors. However the next wave of adoption should target the masses and TON is doing just that. TON blockchain native integration within Telegram make its growth potential enormous.
Telegram has around 200 millions daily active users on Android and close to 1 billion active monthly users. The conversion has already started with TON Space, (Telegram’s native TON wallet) release in September 2023. The native wallet seems to have helped kickstart the bootstrapping of around 10 millions monthly active users. This is almost equal to Ethereum’s numbers that hover around the 10 millions mark per months. 

In a recent interview by The Block of Midas CEO, Telegram has a huge head start in terms of user conversion/reach than other crypto exchanges with just considering its massive user base of around 900 million monthly active users. Also the simpler UX and cheap transactions fees makes it a prime candidate for new users onboarding. 

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Kraken Unveil Own Layer 2 Called Ink

Ink is Kraken own layer 2 built on Optimism Superchain and is the next step towards seamless bridging to DeFi with confidence. Via direct integration to DeFi protocols Ink enables easier access to its user to the world of DeFi. It is built on the OP Stack which means it will benefit from Ethereum security and the interoperability that comes with it across L2. 

Ink will focus on enabling access to DeFi to its user base without going through various challenges like bridge interfaces, external wallet etc. Kraken will now enable onramp and off ramp in a seamless experience. Ink will get full fledged support to developers and builder on its environment.  

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Unichain: Savior or Catastrophe

While the Uniswap Protocol and other DeFi protocols have made great progress, DeFi on Ethereum still faces challenges. Unichain is Uniswap Labs' contribution to fixing these problems with a Layer 2 built on the OP stack. This means Unichain will support cross chain swapping within a single block of the Superchain layer 2, while for chains outside the superchain external message passing protocol will be integrated. 

Decentralization in DeFi has led Ethereum to make compromises on speed and affordability to maintain security and decentralization. Since the Merge around 2 years ago, Ethereum has enabled scaling of transactions onto Layer 2 which benefit from Ethereum L1 security.

Unichain is designed to leverage and accelerate Ethereum’s scaling roadmap, moving execution to L2. In practice, this means Unichain will offer low transaction fees similar to Optimism, Base, Arbitrum etc… However the network at launch will not be decentralized in its block validation, which will be introduced at later stages. Sequencer will be centralized as well but it is planned to decentralize it over time.

Unichain will launch with one-second block times, and will soon introduce 250ms “sub-blocks” that will make user experiences feel instant. Faster blocks also boost market efficiency and lower value lost to MEV. This improvement is made possible through a block builder developed in collaboration with Flashbots, that uses a trusted execution environment (TEE). In addition to improving speed, the TEE is designed to improve the transparency of transaction ordering and prevent failed transactions.

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Key DeFi Stats for October:

Image: DefiLlama

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In October, the TVL moved up by around $3 billion dollars from September at $87 billion reaching $91 billion. TVL is moving closer to $109 billion, the previous local high reached in June 2024. DEX 30 day volumes have gone up around $47 billion after losing around $45 billion in September, reaching $147 billion. 

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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. 

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

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Image by Coinchange, data sourced from DeFillama 

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At the end of October, Jito and Raydium moved up to reach second and first place respectively, while Uniswap is still 3rd with Lido in 4th place and Pancakeswap 5th. 30 days fees have increased again, evidencing increased DeFi activity, from $174 million to $387 million. The top 5 protocol 30day fees this month increased by 222% from September, reaching higher cumulative revenue than in July total fee of $250 million.

Macro View

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US Crypto Industry Path

While last month we reported that the US crypto market was likely to follow a different path than the rest of the world, is this still true now that we know the 47th POTUS is Donald Jr Trump ? 

Look no further than his stance on crypto alongside the ones from his VP, JD Vance. Furthermore, republican Senator Cynthia Lummis’s Bitcoin strategic reserve initiative to purchase 1 million bitcoin over the span of 5 years, 200,000 bitcoin per year, which means the USA would purchase almost the equivalent of Microstrategy holdings every year for 5 years. This bill has yet to pass the Senate but we can be confident it will pass in the near future, early 2025, as Republicans have a super majority in the House and Senate.

Though Stephan Lutz, CEO of crypto exchange BitMEX, does have a point where the crypto industry will likely consolidate around traditional finance with banks, stock markets etc… Looking at the major asset managers like Blackrock, Vanguard, Franklin Templeton venture in tokenized TBill, Bitcoin and ETH ETFs while the biggest publicly traded bitcoin miners are located in the US. As we explain below about the BRICS summit, the USA adoption of crypto does not prevent other countries to also have their own initiatives which use Bitcoin, Ethereum, Stablecoin or even CBDCs. Anthony Pompliano recently shared his thoughts about this global adoption race and frankly,front-running opportunity, in an interview on Yahoo Finance: “There is a global race for Bitcoin going on right now. Whether you are a local, state, or federal government official, you should be figuring out how to get as much Bitcoin onto the balance sheet as possible. This is not like gold where we can just go dig up more of it out of the ground.”

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China’s Economy Struggling Continued

China's latest stimulus measures will not meaningfully boost domestic demand, leaving a major source of trade friction intact, U.S. Treasury Secretary Janet Yellen and International Monetary Fund chief economist Pierre-Olivier Gourinchas said in separate statements. 

"Our view has been that raising consumer spending in China as a share of GDP (gross domestic product) is really important, along with measures to address problems in the property sector," Yellen said at a press conference at the start of the International Monetary Fund and World Bank annual meetings in Washington.

Gourinchas said that China’s fiscal measures so far lacked detail and thus were not included in the IMFs latest growth outlook. Specifically the monetary policy stimulus to boost lending last month have yet to materially lift growth as per his comment. 

Another issue is the lack of consumer spending according to Janet Yellen which could be a solution to reduce the trade deficit and the massive production surplus that China is facing right now on top of the real estate market slowing down. Gourinchas supported this argument, explaining that the massive surplus going to exports would need to be consumed by domestic demand to curtail the trade deficits. 

The PBoC has decreased its policy interest rate by 25 bps reaching 3.1% while last month it was expected that it cut it by 20bps. This recent cut was at the upper end of the range signaled by Pan Gongsheng, PBoC governor, which said further easing might come before the end of the year. Banks reserve requirements was cut by 50bps last month while it could be cut by another 25 to 50bps by the end of the year. 

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US Economy Has Soft Landed? 

St Louis Fed research division dives into soft vs hard landing and what the current economic outlook falls into. 

Paulina Restrepo-Echavarria, an economic policy advisor in the St. Louis Fed’s Research Division, describes soft landing as follows: “a soft landing is when we increase interest rates and we manage to decrease inflation, but without causing unemployment to go up drastically and GDP growth to go negative”. A hard landing would the inverse, interest rate increase causing inflation to decrease at the cost of employment and recession. 

While the media is jumping the gun saying a soft landing has been achieved, the St Louis Fed Research Division says that this usually is certain around 2 years after the event as there are some lags for the economy to register the impact of the change in policy.  

As i wrote last month, the impact of such policies could be uncertain as some argue it could lead to major run up like in the late 20s similar to the 2020 bubble while it could also lead to major melt up like in the late 90s early 2000s. 

Remember the target inflation rate at 2% has been set arbitrarily by Central Banks around the world while the idea has been proposed since the 50s by John Meynard Keynes, the father of our current Modern Monetary Theory. You know, “the money printer goes BRRR…”.   

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Regulations Update

IMF Begs Again El Salvador to Narrow Its Bitcoin Law Scope

At a recent press conference the International Monetary Fund reiterated its stance on narrowing the Bitcoin Law in El Salvador to limit the public sector exposure to Bitcoin risks. Ironic as all stats of its economics show confidence and boost to all sectors thanks to the Bitcoin Law. 

The statement came from Julie Kozack, director of communications at the IMF, which noted that the IMF has ongoing engagement with the Salvadoran authorities. The Block reports that Kozack said that the IMF aims to reach an agreement with El Salvador on a new IMF-supported program that would “help with macroeconomic stabilization and adjustment and also growth-enhancing reforms.” Moodys has had the same stance as the IMF (to be expected) with cautions and downgrading El Salvador credit rating on the cause of risks that have “yet to materialize” because of Bitcoin adoption as legal tender.
This begs the question, why are those NGO are so adamant to meddle with the experiment? Is it because they fear its success or simply want to kill it while it's in its infancy? Only time will tell as we keep an eye on these developments while other major nations like the USA start to adopt Bitcoin in different shapes or forms.  

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BRICS Summit Pushes For Dedolarization

At the recent BRICS summit in Kazan the nation members pushed for alternatives to the Dollar as a medium of exchange. The Presidents of Russia, China, and Iran all stressed the need for new digital platforms with CBDCs and Blockchain based BRICS Pay. A mockup of the BRICS bill has been shared during the summit.

Source: Twitter

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Russia is spearheading these efforts, in August it passed new crypto mining regulation providing clear operational guidelines for miners and data centers operators. Specifically, Russian mined cryptocurrencies can be used for international settlements. This makes circumventing western sanctions easy while forcing it to embrace digital assets faster than other countries. 

In a related development, Russia’s BitRiver and the Russian Direct Investment Fund (RDIF) have partnered to launch a BRICS-wide mining initiative aimed at establishing crypto and AI data centers across member nations. This strategic collaboration is designed to enhance computing power and reduce dependence on Western sanctions, technology and push for increased efficiency for cross border settlement between BRICS nation. 

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Hong Kong Consider Easing Tax on Crypto

Crypto is among a list of proposed investment types that could receive new tax concessions, Christopher Hui, Hong Kong’s Secretary for Financial Services and the Treasury, revealed at Hong Kong Fintech Week on Oct. 28. Other than crypto, candidates for tax concessions are immovable property situated outside Hong Kong, emission derivatives/allowance, insurance linked securities, interest in non-corporate private entities and loans and private credit investments. No further elaboration was provided as to what would be the requirements for eligibility but it seems that it will be targeted as institutional investor. 

The city currently offers tax concessions to privately offered funds and family-owned investment holding vehicles. Hui said tax breaks around virtual assets was a common thing the government was asked about. By expanding availability of these tax break, the government is able to pull more development onto this emerging market. 

As we reported last month regarding derivatives market standard update to follow EU regulations, there are further regulatory updates in the works for the crypto industry, including regulatory regimes for stablecoin issuers, OTC trading services and custodians. 

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Capital Raises in October 2024

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Source: ICO Analytics

1. Animoca Brands is a global leader in the Web3 space, specializing in the development and investment of blockchain-based games and experiences. With a diverse portfolio, the company empowers developers and creators to shape the future of gaming, contributing to the growth of the Web3 ecosystem. Animoca Brands stands at the forefront of the Web3 revolution, transforming the gaming industry with innovative and immersive blockchain-powered projects.

Total raise: $50mln

2. Blockaid is a Web3 cybersecurity company that offers security tools designed to prevent malicious transactions, thereby safeguarding Web3 users from scams, phishing attempts, and hacking threats. Their primary focus is to enhance the security of the Web3 ecosystem and protect users from potential cyberattacks.

Total raised: $33 mln

3. Blackbird is a restaurant discovery and rewards platform that enables users to discover, book, and earn rewards for dining at various restaurants. Users can explore curated restaurant lists, read reviews, make reservations through the app, and earn cashback rewards for their dining experiences, which can be redeemed for future meals or other perks.

Total raised: $24M

4. SynFutures is a decentralized futures exchange designed for users to trade any asset pair, including long-tail assets and NFTs. The platform offers low fees and high liquidity, with an innovative Oyster Automated Market Maker model combining concentrated liquidity and order book for improved trading experiences. It is built on the Solana blockchain to ensure speed and security.

Total raised: $22M

5. Neon Machine is a game studio based in Seattle known for developing the upcoming first-person shooter game, Shrapnel. Shrapnel is a sci-fi extraction shooter featuring in-game content, such as weapon parts, weapons, and cosmetics, offered as NFTs on its private crypto network built on Avalanche, providing both solo and team-based gameplay. It places a significant focus on user-generated content, enabling players to create their own game items using Shrapnel’s technology, which can then be minted as NFTs.
   Total raised: $20M

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