Round Tripping
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tl;dr: Celsius & 3AC leading the pain and liquidations, downstream effects, stETH coverage, takeaways, & difficulty in finding marginal buyers
BTC dominance 41.5% | ETH dominance 14% | DeFi TVL $70.3B |
Total Crypto Market Cap $905B | Stablecoin Supply $154B |
thoughts & notes:
Ongoing *Things*
3AC
The obvious elephant in the room is the remaining dominoes to fall regarding Three Arrows Capital. 3AC was blown out by three core positions: GBTC, stETH, and LUNA. In LFG’s latest funding round, 3AC committed $200M+ to locked LUNA tokens which is now worthless starting the initial fallout. Large, levered positions on declining, relatively illiquid products GBTC and stETH exacerbated their troubles as stETH to ETH ratio declined, stETH has fallen 50% this month and the GBTC discount to NAV has reached all time lows at ~34%.
3AC has been liquidated by FTX, Deribit and BitMEX and while they largely remain in radio silence, there was a WSJ article Friday morning with quotes from Kyle Davies saying that they’re “exploring options including asset sales and a rescue by another firm”. According to the article, 3AC is still operating as it hopes to tap creditors giving them more time while seeking solutions.
Celsius
Celsius is now approaching a week long freeze on customer account withdraws as they continue working to “preserve and protect assets”. Similar to 3AC’s illiquidity troubles, Celsius was one of the largest holders of stETH as they converted user deposits to return yield through DeFi protocols. As Celsius is a private company, information regarding their assets, liquidity, and asset to liability mismatch is difficult to come by.
As of Thursday, we do know that Citigroup is now advising Celsius on possible solutions and that their once worrisome 20k BTC price Maker vault liquidation level now sits at ~13.6k. While the result of Celsius’ fate remains unclear, the developments this week have led to other prominent lenders (BlockFi, Genesis, others) publicly reassuring their clients they are unaffected and functioning properly. Unfortunately, the fallout and resolution regarding both Celsius and 3AC will likely result in regulatory oversight that damages the industry while simultaneously drug through the legal system over the coming months and years.
Takeaways
Good news, the week is over; bad news, the week occurred. The rumor mill has somehow been churning faster than our token prices decline as BTC and ETH are down 30%+ and various alts are expectedly declining worse than that. The selloff accelerated quickly and even saw ETH wick to $950 on Uniswap as peak FUD ensued around Celsius, 3AC and stETH. While the stETH to ETH ratio currently sits at 0.935, some of the largest stETH holders have shown confidence in their ability to capture the spread as the 7d change in amount held has largely increased according to data from DexGuru (f in the chat for #11 and #13’s acquisition prices).
On the bright side of things, DeFi protocols operated as they’ve been programmed to do once again showing their robust, trustless nature highlighting the important differences between transparent protocols and CeFi black boxes. As far as the markets go, sentiment is obviously in peak fear and uncertainty highlighted by Flood pointing out that over the past week, for the first time ever, the total stablecoin market cap has overtaken the ETH market cap.
For now, 20k BTC and 1k ETH remain the critical levels with large amounts of pain lurking below. 10-14k BTC and 400-600 ETH unfortunately seems likely if those levels are broken as Arthur outlines the forced selling and hedging that would occur as large positions are unwound like the $150M+ ETH position sitting at $895 ETH. The down stream effects of LUNA, the illiquidity of Celsius and 3AC’s wipeout have certainly exacerbated the sell off, but it’s important to remember macro remains in control. Last Friday’s CPI print and the FED’s 75bps hike led to a broad asset selloff as risk asset valuations are continually repriced. Finding marginal buyers for BTC/ETH will be a cumbersome task over the coming months and you can imagine what that means for NFTs, DeFi, and altcoins. Stay safe friends.
funding:
Foresight Ventures launches $200M fund for private-round liquidity
Coinhouse, crypto service provider, raises $42.5M to expand offerings
Exchange Huobi Global launches Ivy Blocks fund with $1B+ to deploy
NFTPort, NFT infrastructure developer, raises $26M
Wildcard Alliance raises $46M for Polygon based gaming venture
Atmos Labs raises $11M to develop & build metaverse sports gamefi products
$IMX launches $500M developer and venture fund for NFT and gamefi builders
Molecule, decentralized science research incorporating NFTs, raises $13M
NFT and social token advisory firm ScienceMagic.Studios raises $10M
zCloak Network, zk-rollup scaling solution startup, raises $5.8M
Clockwork Labs, gamefi developer building MMORPG BitCraft, raises $22M
news:
Nansen, analytics provider, launches wallet connect, end-to-end encrypted messaging app allowing group formation based on holdings & on-chain activity
$IMX enters strategic partnership with Turner Sports (TNT, TBS, Bleacher Report) to build gamefi for “premier sports” powered by StarkWare (L2 ZKR)
Circle (USDC creators) launches Euro backed stablecoin EUROC
Tag Heuer, Swiss watch maker, releases NFT integration for smartwatches
OpenSea officially migrates to Seaport lowering gas costs and other features
FTX acquires Canadian exchange Bitvo expanding their operations to Canada
Goldman Sachs starts trading derivative product linked to ETH
tokens:
Helium (HNT), HIP51, and the launch of “Network of Networks”
Helium is expanding their services introducing two new tokens MOBILE (this month) and IOT (~August) with corresponding sub-DAOs to advance their coverage and 5G network capabilities
Arbitrum (Optimistic ETH Rollup) Odyssey goes live June 21st
Espresso Systems, zk enabled scaling & privacy L1, launches CAPE (configurable asset privacy on ETH) application to testnet
Aurory (AURY), gamefi on SOL, releases updated developments and patches
Stargate (STG) stakers proposal passes quorum updating 6bps transfer fee
StarkWare (tokens coming 2h of year) partners with Bison Trails for increased security and LayerSwap for direct L2 onboarding
Aura Finance is live with auraBAL deposits, Aura locking, and airdrop claims
Solend governance debacle regarding the liquidation of $100M+ SOL position
around the ecosystem:
Arthur with a long post evaluating macro and various protocols titled “Floaters”
tl;dr: lots of incoming pain before up, bottom maybe July 4th weekend
coverage on UNI, CAKE, SUSHI, LOOKS, DYDX, GMX, CRV, & ENS
king zachxbt with an incredible tracing of influencer Machi Big Brother
Vitalik with great insights outlining blockchains non-financial applications
ZeePrime Capital’s detailed breakdown of the interoperable, multi-chain future
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