BTC spot ETFs delayed by the SEC
Welcome to Stay on-chain! Don't stress if you're not glued to your screen, watching the markets like a hawk. We are happy to fill you in on what's been happening. Here's the scoop on the past week's events - sit back, relax, and let us do the heavy lifting!
In today’s edition:
BTC spot ETFs have been delayed in bulk
Ark 21 Shares files for an ETH spot ETF
Solana’s catalysts
Prisma Finance launches LST-backed stablecoin
Edge: DeFi 1.0 is back on the radar, and why you should care
Reading time: 5 min
What is up with GALA? Co-founders sued each other for the alleged theft of $130M in GALA tokens.
BTC spot ETFs delayed by the SEC
Widespread fervour following Grayscale’s victory against the SEC was met with equal sorrow by the markets as SEC delayed other BTC spot ETF filings, due to expire between the 1st and the 4th of September. Following the decision, BTC experienced a 10% retracement, lying down on the support at $25,300.
Setting aside market’s drama, the SEC move comes without surprise for most — after years of lobbying against an easy way for US retail investors to add BTC to their basket of investments, it was highly unlikely that they’d approve the financial instrument within the first deadline. The regulator cited no particular reason for the pushback, citing the need for additional time to consider all the filings.
Did you know? The Winklevoss twins (yes, the ones from The Social Network), Gemini co-founders, have been the first to try filing for a BTC spot ETF back in 2013.
There’s now little we can do, but marking mid-October on our calendars for the second deadline outcome.
Ark 21 Shares files for an ETH spot ETF
21 Shares sees ahead, and is already hands down working to get their ETH spot ETF approved. Named Ark 21 Shares to represent the partnership between 21 Shares and Cathie Wood’s Ark Invest, it’d be the first Ether spot ETF to be approved.
Filed on September 6, the news had no significant impact on ETH’s price. Ethereum is the #2 biggest cryptocurrency in terms of market cap, and has significant appeal to the average investor looking to diversify with cryptocurrencies — similarly to the Bitcoin case, many investors would be eager to use an US-guaranteed instrument instead of having to interact with foreign exchanges.
On gentlmen agreements: Nima Capital sold 9M SYN tokens before the formal lockup period ended — link
Solana and Maker’s “Endgame”
Following the FTX setback, which impacted Solana's reputation, the number of active users on the chain declined pretty much, now standing at 204,000.
However, there are some promising initiatives that could reverse this downward trend:
Visa, the payment giant, expanded its USDC settlement capabilities to Solana, partnering with Worldpay to make fiat cross-border digital payments more accessible.
The Solana Foundation has recently announced a new hackathon to incentivize the creation of new dApps, offering up to $1M in prizes and seed funding.
And Lido is investing $1.5 million to foster the growth of Solana's liquid staking ecosystem.
A lot is going on also with MakerDAO, which is entering the final phase of its "Endgame" plan. This phase involves the complete reimplementation of the Maker Protocol on a new, independent blockchain. And interestingly, MakerDAO’s co-founder calls Solana the most promising codebase.
Fun fact: Vitalik Buterin just liquidated his stake in MakerDAO, worth $580,000, for a slight profit.
Prisma Finance launches mkUSD stablecoin, backed by staked ETH
Liquid Staking Derivatives protocols (so-called LSDfi) are flourishing. Built as LEGOs on top of Liquid Staking Tokens (LST) such as Lido’s stETH and Frax’s frxETH, they let you unleash DeFi’s full potential. No clue on what LSDs are? Get up to speed with our insight here.
Prisma Finance enables you to create a Collateralized Debt Position (CDP) using LST tokens that let you borrow mkUSD, Prisma’s stablecoin — letting you secure the Ethereum network, accrue rewards along the way, and increase capital efficiency.
Given the hype around LSDs and the rumors of an airdrop (they haven’t launched a token yet!), the 20M mkUSD cap sold out in just a few hours after the mainnet launch, making Prisma the 12th biggest CDP protocol in DeFi.
Major ETH staking services are committing to self-limit their LST token market share to 22% to keep Ethereum neutral, while 99.81% of Lido refused the proposal — link
The crypto gambling platform Stake.com has been compromised in a $41M exploit — link
Curve has been deployed to Base
BUSD was labelled a security by the SEC, Binance and Paxos announce their ending support for it by Feb, 24 — link
Algorand’s main dex Pact Finance can’t secure funding because “uninvestable” by VCs— link
UniSwap is set to release Uniswap V4 after the Deneb-Cancun ETH update — link
Following sDAI success, Frax governance wants to create sFRAX — link
USDC has been natively deployed on Base and Optimism
Executives keep fleeing Binance: red flag? — link
$AAVE and the DeFi 1.0 narrative
Aave stands as the third-largest DeFi protocol, following Lido and MakerDAO, with a huge TVL of $4.5 billion. By being around for more than five years, Aave is the go-to borrowing and lending protocol for many. It’s available on many EVM chains and ranks within the top 5 by generated revenue. Aave Companies, the company backing the protocol, consistently delivers innovative products like Aave v3 and $GHO, which we’ll be covering in-depth in our next DeFi Dive.
Today’s Edge speculates around traditional investment funds delving into DeFi. These entities would likely adopt a crypto-value-investing strategy, by prioritizing investment in DeFi protocols that do in fact generate revenue consistently. DeFi 1.0 coins, such as $AAVE, $UNI, and $MKR, stand as the prime contenders. A narrative of investing in revenue-generating protocols is already growing among many investors, who expect $AAVE, $MKR, and $UNI to outperform $ETH in the long term. As we can see below, this thesis is already showing early signs of realization on a 90-day time period.
The key trigger that could send $AAVE's price soaring is $GHO starting to gain traction. A scenario some speculate is Aave teaming up with a fintech/payment company, boosting $GHO’s adoption and consequently its market cap. Aave seems to have set itself up smartly for this to happen. Take the recently approved governance vote to buy $2 million worth of CRV tokens from Egorov, Curve Finance's founder. This move brings Aave significant voting power, making it possible to channel CRV rewards to $GHO’s liquidity pools, giving it a big boost in liquidity and making it more stable overall.
And if $GHO steps up as a big player in the stablecoin world, it could give Aave the chance to offer lower stablecoin borrowing rates and undercut the competitors. That move might even influence market interest rates, making Aave kind of like a DeFi central bank.
Let's now look at the risks that, as always, we need to keep on our radar. First up, there's market risk. Because $AAVE isn't as big as Ethereum, it might take a harder hit than $ETH if rough market times continue. Then, there's the challenge of high competition in the stablecoin space. This could make it tough for $GHO to gain momentum. The third risk is contract risk; an exploit could hurt Aave as a protocol.
Also, worth noting, $AAVE can bring an additional yield of 6.94% APR with staking ($stAAVE). This increases our profit potential but also adds the risk of our investment being slashed by 30% in case of exploits.
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Disclosure: Authors may own crypto assets named in this newsletter. Stay on-chain is meant for informational and educational purposes only. It is not meant to serve as investment advice. Please consult your investment, tax, or legal advisor before making investment decisions.