6/24/22 FAL Weekly Digest
The FAL Weekly Digest is a source for this week’s biggest cryptocurrency-related news and updates. This newsletter features excerpts and links to this past week’s biggest news articles written by members of FAL Consulting’s writing team or gathered from other listed sources.
StableCoins
Tether to Launch British Pound Pegged Stablecoin
Tether emphasized that this project was prompted by the UK Treasury’s goal to make the country into a cryptocurrency hotspot. Tether Operations is responsible for the number three top cryptocurrency Tether (USDT), with a marketcap of $66.924 Billion. Tether tokens are pegged to a fiat currency and therefor offer price stability, as stablecoins.
All Tether tokens are pegged 1-to-1 with the matching fiat currency.
USDT looks to have just recovered from the UST crash when USDT fell to lows of $0.97. The recently released Tron stablecoin USDD fell to a low of $0.9317 on June 19th and is now hovering around $0.9994.
Most recently Tether released MXNT, a stablecoin pegged to the Mexican peso. GBPT will be pegged to the British Pound and will be an ERC-20 (Ethereum based) token. GBPT will initially only be available on the ETH network.
Tron’s USDD Under $1 For Over a Week
The newly released Tron stablecoin USDD, is currently trading under a dollar, a price it has crept below since depegging on June 13th.
On June 19th USDD reached an all-time low of $0.9255, at the time of writing the former stablecoin trades at $0.9608, according to data from CoinMarketCap. A stablecoins intended value is always a dollar, USDD presently sits a couple of cents lower.
The Tron DAO Reserve claimed on Twitter that USDD was not depegged, on June 17th. “USDD is a decentralized stablecoin that depends on an on-chain mechanism & collateralized assets,” the tweet claims. Continuing it argues that USDD is different from centralized stablecoins like Circles USDC in not being attached to the dollar “in a very close spread by banking mint and redemption.
Initially, USDD depegged due to short-sellers attacking its network native token TRX, on the crypto exchange Binance, according to Tron's founder Justin Sun. Even with Sun's pledge of $2 billion from the Tron DAO Reserve, in an attempt to combat the short-sellers, the coins sadly still sits below a dollar.
Jerome Powell Comments on Stablecoins at Senate Banking Committee Hearing
During his testimony to the Senate Banking Committee yesterday, Federal Reserve Chairman Jerome Powell expressed confidence in the strength of the U.S. economy and maintained that a recession is not yet a guaranteed outcome. However, in light of rising inflation and slowing growth, Powell admitted further interest rate hikes for the next few months are likely and this will cause stress to the economy and general population. Despite these remarks, the markets were not highly reactive to the hearing as Powell had echoed many of his statements from last week's FOMC press conference.
For now, the engagement between the Fed and digital assets like stablecoins remains very limited. The purview of the Fed includes banks, bank holdings, and how they manage those holdings. As interest from the public has increased, banks have begun exploring the world of cryptocurrencies and stablecoins as an offering to their customers. Powell revealed that in the onset of such interest, the Fed has had numerous discussions with the FDIC and OCC with regard to these digital assets. In the absence of oversight and directory, Powell commented that the Fed and other agencies will continue to engage with crypto space as it fits into their perceived jurisdiction, but stressed that it is not a substitute for congressional action.
Solana’s Solend Liquidity Risks Brought By Single Whale Account
Solend is a Solana-based lending protocol with a decentralized autonomous organization (DAO). DAOs allow users to vote on proposals to help determine the future of the protocol.
The first governance proposal voted to mitigate liquidity risks brought by a single whale account. The account in question has about 5.7M SOL deposited, borrowing around $108M in USDC and USDT. This single account makes up 95% of SOL deposits in the main pool and 88% of USDC borrows from the main pool.
The account becomes liquidatable for up to 20% of their borrows ($21M) should the price of SOL drop to $22.30. Due to these concerns, many users withdrew, causing stuck positions and disabling other depositors from withdrawing.
After numerous attempts to contact the whale since June 13 and after the governance proposals, the whale finally responded by moving $25 million USDC debt from Solend to Mango Markets.
While this is just a temporary solution, the Solend team noted that they are working to create a long term fix with the whale and the Mango team. The lending protocol also passed SLND3 which introduces borrow limits. This was voted in with 99.7% approval (1.504 million votes).
Metaco is Building Digital Asset Custody for Citibank
Citibank announced that they selected the Swiss digital custody firm Metaco to integrate their upcoming crypto custody services. This partnership will enable clients to store and settle digital assets. Citibank plans to fully integrate Metaco’s Harmonize- a bank-grade crypto custody and orchestration platform.
Many crypto custody firms take advantage of IBM’s cryptographic key management infrastructure. An article from February 2022 revealed that Metaco was the latest firm to do so. IBM supplies a good portion of banks with hardware security modules. IBM quickly realized that partnering with crypto custody firms would be the better outcome over competing with them.
Cardano Delays Vasil Hard Fork Due to Bugs
Input Output Global (IOG) is the company behind Cardano’s decentralized smart contract platform
Hard forks are updates that would change the way the blocks are being produced
Like most projects and upgrades, the upgrade to the testnet will mark the countdown to the real (mainnet) upgrade
Since the beginning of June, IOG has been testing Vasil through a semi-public developer testnet (Devnet), along with 35 developers across 27 projects testing their DApps. Devs are still looking to mitigate 7 bugs before releasing.
On June 21, IOG and the Cardano Foundation agreed on a new target date to hard fork the testnet at the end of June. Once completed, we will then allow four weeks for exchanges and SPOs to carry out any required integration and testing work. This is only reasonable and should not be rushed. The working assumption should therefore now be a Cardano mainnet hard fork occurring during the last week of July.
Market
Market Cap: $954.76 B; up from $895.93 B last week
24h Volume: $66.9 B; down from $73.294 B last week
BTC Dominance: 42.6%; down from 44.1% last week
ETH Dominance: 15.4%; up from 14.7 last week
None of our posts or newsletters are meant to be taken as financial advice.
