Cybrid Weekly DeFi Digest - June 17th

Market Take

Hold onto your hats, this has been a particularly punishing week for crypto. The charts are a sea of red with asset prices on the decline, across the board. The question is, are we near or at the bottom?

Plunging markets have all but wiped out altcoin dominance. By contrast, Bitcoin's dominance index has reached its highest levels since October 2021.The UK's The Guardian is reporting that the stock market is facing its worst week since 2020 and DeFi is not fairing any better. For the first time since January 2021, total market cap has fallen below USD$1 trillion.In other news, USDC has come out well but at the expense of USDT as investors react to fears concerning asset backing. The volume of USDC surged by 120% over a 24-hour period earlier this week, only to be eclipsed by DAI at 220%.  

News of the Week

Celcius's fate hangs in the balanceOn Sunday, crypto lender, Celcius, announced on Twitter that it was pausing all withdrawals due to “extreme market conditions.”. Its native token, CEL, suffered a 70% crash within an hour of the announcement. The protocol, which had declared holdings of over USD$10 billion earlier this year, had been offering users 18.6% APY on staked assets.

The move to prevent withdrawals was taken after staked ETH (stETH) depegged from the price of ETH. When unfavorable macroeconomic conditions prompted customers to redeem their staked assets en-masse, Celcius, which had a significant portion of its collateral tied up in stETH, found itself illiquid.

Nexus has since stepped in with an offer to buy out the struggling quasi-bank. Although it's unclear what next steps may entail, Celcius continues to face possible liquidation should the price of BTC fall to USD$14,000.

Multibillion hedge fund 3AC also at riskThe post-Luna fallout continues to play out, threatening to destabilise some of DeFi's biggest players. Following on from Celcius' pain, it was soon discovered that Singapore-based Hedge fund, Three Arrows Capital (3AC), is also in serious trouble. The fund, which was another large holder of Terra, was discovered dumping at least USD$40 million of stETH on the market. The volume of this selloff far outstrips that of Celcius, prompting fears of a cascade of liquidations.

With stETH down 40% in a week, theories have been circulating that the fund may be insolvent. Given that it has significant positions in major-league projects such as Ethereum, Axie Infinity, BlockFi and Solana, there are concerns about the broader implications for the DeFi ecosystem.

American Express announces first crypto rewards cardThis Monday, American Express (AMEX) publicly revealed its first crypto rewards card, by the name of Abra. Abra will transact in USD$ and offer "crypto back" on purchases. The rewards, which will be free of annual or international transaction fees, will be tradable with hundreds of cryptocurrencies. It also promises to offer users convenient in-app purchasing and managing of NFTs.Expected to be officially released late this year, Abra is the latest crypto card to join the ranks of BlockFi, Visa, and Gemini.

EU regulators to flesh out billHot on the heels of the US Senate, which released their landmark bill on crypto last week, the European Union, has announced the planned release of one of their own this month. Some of the main concerns to be addressed in the proposed Markets in Crypto-Assets bill (MiCA) include consumer protections, in the face of the collapse of the TerraUSD stablecoin, money laundering rules and environmental measures.

Jamaica successfully launch CBDC In a clear example of digital "leapfrogging", the cash-driven Caribbean island economy has become the first in the world to make legal tender out of CBDC. The Jamaican Digital Exchange, or Jam-Dex, is due to launch a pilot this summer. Initially rolling out a hybrid model, it is hoped that the shift towards CBDC will increase efficiency and security as well as provide easy access for the island nation's unbanked to app-based financial products and services.

Crypto 101 - Token Standards

Following up on last week’s spotlight on soulbound NFTs (aka “ERC-4973”), we thought highlighting the different Ethereum token standards currently available to build with might spark some innovative thoughts and ideas! You may have heard about ERC-20 or ERC-1155, but what does it really mean?

Simply put, token standards are sets of rules that can be used to create and govern smart contracts. These smart contracts are then used to create tokens that follow the set of rules, which ultimately ensures compatibility within the existing decentralized network.

Just like any tool, each standard has its own set of advantages and disadvantages with some being created for specific use cases, so choosing one that best meets your needs is vital! But how do you know which standard to develop with? That’s a hard question to answer, but you should start with whether or not the token needs to be fungible or not.

Aside from soulbound (ERC 4973), what standard has been receiving attention lately? Check out ERC-4626 as it has potential to replace vaults within Decentralized Finance (DeFi)!

Further Reading

If you haven't done so yet, head over to the Cybrid blog and make sure to follow us!

• Making your card “top of wallet” for your customers: Why you should add crypto rewards to your card program. This piece explores why you might want to rethink your standard cashback offerings in favor of a far more exciting - yet accessible - alternative.

• To kick everything off we had Product Head, Lee Cocking, share his analysis of Crypto-Led Growth. In this article, Lee maps out the landscape and demonstrates why now is the time to position your business to make the most of crypto's explosive gains.

Upcoming Webinar - Next Week!

For more on what the crypto revolution means for you and your business, don't forget to join us live for our event on Launching Crypto Trade and Rewards in Your Fintech this coming Wednesday. We hope to see you there!

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