Contagion: Genesis Trouble and DCG Rumors
DAR Crypto Weekly: 25 November 2022
SUMMARY / KEY INSIGHTS
- Market Performance: The broader digital asset market stagnated as the prices of BTC and ETH went below $16,000 and $1,100, respectively, before recovering in the past few days. Market participants are fearing further contagion as Genesis, a notable crypto lender and prime brokerage firm, warned of potential bankruptcy without further funding.
- Newsmakers: Gemini Dollar loan rates on the Aave DeFi lending protocol surged after Gemini announced that withdrawals from its Earn product, which was utilizing Genesis’ services, were halted.
- Taxonomy: USDT, the largest stablecoin by market capitalization, conducted a $1 billion chain swap from Solana to Ethereum.
- Events Calendar: Cardano (ADA) plans to launch its own stablecoin in Q1 2023 and the Cosmos (ATOM) community rejected the Atom 2.0 proposal.
- Regulatory Development: US Senators asked Fidelity to stop offering Bitcoin in 401(k) plans.
MARKET PERFORMANCE
The broader digital asset market experienced a slump as the total industry market capitalization dipped below $850 billion. BTC and ETH went under $16,000 and $1,100, respectively, before retracing towards the end of the week. Verifiable trading volume spiked last week and has since sustained more than $50 billion per day.
Market participants are fearing further contagion as Genesis, a notable crypto lender and prime brokerage firm, warned of potential bankruptcy without further funding. Concern surrounding Digital Currency Group (DCG), the parent company of Genesis, also rose as market participants speculated that there might have been related party transactions and loans between DCG and Genesis. To address these concerns, Barry Silbert, the CEO of DCG, released a memo to shareholders.
To learn more about DAR’s market data offerings, including prices for 8,000+ digital assets and verifiable volumes from hundreds of exchanges, click here.
NEWSMAKERS
Gemini Dollar Lending Rates Spiked
The borrowing rates for Gemini’s GUSD stablecoin increased to over 83% on the AAVE decentralized lending platform following an announcement that the Gemini Earn program would be paused. Gemini is one of the many large crypto companies impacted by the suspension of customer redemptions at Genesis. Increased interest rates reflected a rapid increase in demand for the stablecoin as the protocol approached total usage of available GUSD.
TAXONOMY
Tether Launched a $1B Chain Swap to Convert Solana USDT
Following the insolvency of FTX, stablecoin issuer Tether is set to swap 1 billion USDT on Solana to the Ethereum blockchain. The swap will be conducted with the help of a third party. The announcement was also followed by a statement about how on-chain swaps are utilized to transfer USDT from one blockchain to another. USDT’s price remained relatively unaffected by the announcement, while SOL rebounded from a weekly low.
Fiat Collateralized Stablecoins is one of the DATS Subsectors.
The Digital Asset Taxonomy System (DATS), developed in partnership with the Wilshire Digital Assets Advisory Group, was designed from the bottom up to capture the nuances of the digital landscape. To learn more about the different classifications of more than 1,300 digital assets, click here.
EVENTS CALENDAR
Cardano Stablecoin in Q1 of 2023
EMURGO, a Cardano founding corporation based in Singapore, announced it will launch a USD-backed stablecoin named USDA. USDA is expected to launch in Q1 2023 on the Anzens platform. Users will be able to tokenize USD via credit/debit cards, wire transfers, or conversion of Cardano’s native ADA token. Alongside the tokenization of USD, EMURGO plans to enable the conversion of other stablecoins, such as USD Coin (USDC) and Tether (USDT) to USDA, with long-term ambitions to allow the conversion to and swapping of BTC, ETH, and other digital assets.
ATOM 2.0 Proposal Rejected
The Cosmos community voted against the latest ATOM 2.0 proposal to redesign the ecosystem’s native ATOM coin. In late September, the ATOM 2.0 whitepaper was unveiled with plans to provide economic scaling and make ATOM a key collateral token inside the Cosmos ecosystem. In the vote, 47.51% of participating token holders were in favor of the proposal, while 37.39% voted against it with a veto, 1.82% voted no, and 13.27% abstained. In the Cosmos ecosystem, voting no with a veto shows stronger disapproval of the proposal than voting no alone.
To learn more about the comprehensive listing of critical events and updates impacting leading digital assets and blockchains, check out DAR’s events calendar product here.
REGULATORY DEVELOPMENT
US Senators Asks Fidelity to Stop Offering Bitcoin
Three US Senators made a statement urging Fidelity, one of the world’s largest asset managers with $4.5 trillion in AUM, to stop its 401(k) sponsor partners from offering Bitcoin. In a letter sentto Fidelity CEO Abigail Johnson, Democratic Senators Elizabeth Warren, Dick Durbin, and Tina Smith said that the crypto market’s risks and the recent FTX collapse make Bitcoin an unsuitable investment for retirement plans.
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