Weekly DeFi Digest - Aug 5

Market: Hot Take

📈 Market Summary

The markets are feeling somewhat flat this week with bitcoin ($BTC) and ether ($ETH) only making slight moves compared with last week’s price action. Crucially, the Total Market Cap for crypto remains safely above USD$1tn and continues to creep upward.

Despite some cause for optimism these past few weeks, BTC and ETH both have a way to go before returning to All-Time Highs (ATHs). Interestingly though, in terms of recovery, ETH has been fairing a lot better over the past 30 days than BTC. ETH is up by 49% with BTC increasing by a less ecstatic 14.6% over the same period.

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News of the Week

👮🏼 Policy & Regulation

While the US House of Representatives breaks for recess, Senators Stabenow and Boozman have been making moves to strengthen regulatory frameworks around cryptocurrencies. The Digital Commodities Consumer Protection Act bill, which was launched this Wednesday reinforces the role of the Commodity Futures Trading Commission (CFTC) in overseeing the sector.

The UK also continues to take steps towards positioning itself as a “global home of crypto investments”. On Thursday the Crypto and Digital Assets All Party Parliamentary Group (APPG) announced that it will be launching an enquiry to define the role of the Bank of England and the Financial Conduct Authority (FCA) in relation to crypto as well as to explore implications around Central Bank Decentralized Currencies (CBDCs).

Meanwhile, in Japan, the Japan Crypto-Asset Business Association (JCBA) and the Japan Crypto-Asset Exchange Association (JVCEA) hope to incentivize uptake of crypto within the country by recommending 20% tax cuts on crypto-related earnings.

💻 Technology & Exploits

The week kicked off with cross-chain crypto bridge, Nomad, being drained of USD$200m on Tuesday after a loophole in its smart contract was exploited. USD$9m was returned to the platform by hackers the following day.

The following day, Peckshield Inc sounded the alarm that Hong Kong-based, ZB Exchange, was undergoing an attack. The exchange, which had halted operations, saw losses of USD$4.8m worth of assets due to the hack.

On Thursday, Solana wallet providers Slope and Phantom became the target of an exploit that resulted in the draining of approximately 8,000 wallets and theft of an estimated USD$4-5m.

To round off a tough week for hacks, some relief for investors of the disgraced crypto lender, Voyager Digital. The US Bankruptcy Court overseeing the case approved the return of USD$270m to those affected on Thursday.

🏪 Market & Ecosystem

Institutional investors will soon have Euro-denominated bitcoin ($BTC) and ether ($ETH) futures contracts available to them via a regulated exchange. Derivates marketplace heavyweight, Chicago Mercantile Exchange (CME), announced the launch of the contracts on Thursday.

Fintech gaming platform, Zebedee, has announced a new integration that leverages Bitcoin’s Lightening Network for instant payments and transfers. Businesses and retail users will be able to communicate and make transfers seamlessly by using the new ‘Log in with ZBD’ feature.

Fashion lovers will be delighted to hear that the haute couture brand, Gucci is due to expand the basket of cryptocurrencies it currently accepts as payment. News of the decision to include ApeCoin ($APE) and Euro Coin ($EUROC) as tender was released on Wednesday.

💰 Funding & Acquisitions

Parisian-based Aglaé Ventures is setting its sights on replicating its Web 2.0 successes within web3. The Venture Capital firm, which has Airbnb, Slack and Netflix amongst its recipients, confirmed on Wednesday that it will be launching a €100m fund to invest in crypto startups.

Crypto exchange giant, Coinbase, announced a partnership with Blackrock on Thursday that seeks to strengthen access-points for institutional investors. Blackrock’s institutional clients will soon be able to connect directly to Coinbase Prime’s suite of institution-centered trading, financing and staking capabilities.

Elsewhere, nascent fund, Nine Blocks Capital Management, has been granted USD$75m from a principal backer as well as provisional regulatory approval to operate by Emerati authorities. The Dubai-based fund is headed by Henri Arslanian, former Head of Crypto at PwC.

US pension-fund, Fairfax County Retirement Systems, is looking to make the most of bear market buying opportunities by investing USD$70m into crypto yield-farming funds. The move further expands the USD$1bn fund’s existing crypto portfolio.

Crypto 101 - Crypto Wallets

Digital wallets have been around for a while, especially with the advent of smartphones and the integration of debit and credit cards, but blockchains and cryptocurrency bring wallets to a whole different level.

Some have referred to web3 technologies as read-write-own, versus web2 technologies which were just read-write. Blockchain-based wallets are what enables that ownership, since the cryptocurrency coins and tokens you own, if you hold them in your own wallet, are literally in your wallet.

There are three core types of Wallets that are used for various purposes in the crypto industry:

Many individuals interacting with crypto are using hot wallets for convenience and simplicity, but there's a greater risk of hacks. Warm wallets are effectively enterprise-grade hot wallets, typically used by crypto products providers who need additional security and policy control. Finally, cold wallets are often used for long term holding of crypto, particularly if there are large amounts involved.

If you haven't done so yet, head over to the Cybrid blog to check out our latest articles!

• Crypto Banking as a Service: Embedded Finance’s Newest Use Case: Crypto has many exciting possibilities, this blog post focuses on the power it can have when being embedded as a financial service.

• Why a Crypto Bear Market is the Time for Fintechs to Build: While the “crypto winter” is officially upon us, now is not the time to abandon crypto but rather to build in prep for the next bull run.

Helpful Guides

You might find the following two guides helpful on your learning journey in Crypto.

• Crypto Tech Primer: Get an understanding of the basics of blockchains, cryptocurrency and decentralized finance

• Fintech Guide to Crypto Products: This is the "Hitchhicker's Guide to Crypto" for fintechs looking to launch cryptocurrency based products

How Cybrid Can Help

Cybrid enables FinTechs and Neobanks to unlock crypto-led growth with an array of crypto products including crypto trade, earn, rewards and more. Book a sales demo, or access the sandbox.