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SVB Fallout: Circle, Signature & More

After losing its peg over a tumultuous weekend where SVB and Signature were taken over, Circle says USDC reserves are safe. Plus stories about Tether, Meta, Coinbase, Do Kwon, and recent VC raises.

Author

Ryan Allis
March 15, 2023

Social Links: Twitter | Telegram | Podcast | Newsletter | NFTs

Ether (ETH) is up 119% in token price since we began writing Coinstack in January 2021

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💵 Weekly Crypto Fundraises & Deals

Here are all the larger crypto fundraises we heard about this week, ranked by size…

🗞️ Crypto News Recap: The Top 5 Stories

Welcome back to This Week in Crypto… everything you need to know in one scannable format. Here are the top 5 stories of the week…

  1. 🚀 Circle Boasts New Banking Partner To Calm Markets After USDC Depeg- After losing its dollar peg over a tumultuous weekend for crypto, USDC issuer Circle says its reserves are safe and sound, and it’s moving on to a new banking partner: Cross River Bank. 

  1. 🚩 Meta ‘Winding Down’ NFT Efforts- The “winding down” of its digital collectibles efforts comes as the company scrutinizes its priorities, according to Stephane Kasriel, the company’s head of commerce and fintech.

  1. ⚔️ Coinbase Halts Payments With Silvergate Bank- Coinbase, the largest cryptocurrency exchange in the U.S. in terms of trading volume, today announced it is halting payments to and from Silvergate bank. Citing recent developments around the San Francisco-based crypto bank and “out of an abundance of caution,” Coinbase said it is “no longer accepting or initiating payments to or from Silvergate.”

  1. ⚖️ Tether Has No Exposure to Sinking Crypto Bank Silvergate, Says CTO- The chief technology officer of Tether has said his company has no exposure to Silvergate, as companies across the crypto industry line up to distance themselves from the troubled bank.

  1. 😑 Justice Department Probes Collapse of Do Kwon’s TerraUSD Stablecoin- The Justice Department is investigating last year’s collapse of the TerraUSD stablecoin, adding the risk of U.S. criminal charges to the pressure on its creator, South Korean crypto entrepreneur Do Kwon, people familiar with the matter said.

💬 Tweet of the Week

Source: @nic__carter

📊 Key Stats of the Week

Here are the most important and interesting stats in crypto this week...

1. Ethereum leading the way in Last 365 Day revenues among all blockchains and dapps

2. March 11 Marked the Highest Amount of Daily ETH Burned Post-Merge at 9.4k, Outperforming the Previous Record Set by the BLUR Airdrop

Source: @rebeccastev

3. $1.3 Billion ETH Net Outflow From Exchanges (Bullish)

Source: @dlawant

4. The Volume of GBTC Jumped to $103 Million on March 7, the Highest Since Nov, As the First Hearing in Grayscale’s Case Against the SEC for Rejecting Its Bitcoin Spot ETF Went Well for Grayscale

Source: @rebeccastev

5. Liquidity Improving Across Exchanges in USD, Largely Due to Price Effects Rather Than a Shift in Sentiment

Source: @KaikoData

6. The price of USDC dipped to $0.88 with some exchanges seeing wicks as low as $0.80, due to panic selling. USDC trades at ~$0.999 on most exchanges, reflecting an improved market confidence that Circle will maintain USDC’s peg.

📝 Highlights from the Top Crypto Reports

Here are the top highlights from the best crypto research reports this week…

Top Incentivized Applications

Optimism’s grants cycles are typically separated into two categories: Growth Experiments and Builders. In Growth Experiments, we find on-chain applications oriented towards DeFi, consumer platforms, and more. In the Builders section, there are teams and solo devs creating developer tooling for a variety of use cases, including user targeting, transaction decoding, and others.

Twelve protocols were selected as finalists in the Growth Experiments category for this cycle. The three top protocols are of interest based on their prior organic growth, their potential for accelerated growth from incentives, and their respective competitive outlooks.

Kyberswap (250,000 OP, ~$625,000 USD)

Kyberswap is a DEX aggregator and liquidity platform originally deployed to Ethereum in 2019. It had good growth in Q1 leading up to its potential selection to receive incentives, with Optimism-based volumes growing ~9x YTD. That’s been good enough to gain and maintain the #3 spot for Optimism DEXs by transaction volume.

That said, the gap between volumes on Kyberswap at #3 and Velodrome and Uniswap is significant at the 24hr, 7d, and cumulative levels, as of writing. Velodrome and Uniswap outpaced Kyberswap by ~$173 million and ~$129 million in 7d volumes, respectively.

A meager ~$500,000 in incentives doesn’t seem likely to close those $100+ million gaps – even if we account for an overly exuberant market response to the incentive program. There’s mixed evidence on the ability of new platforms to meaningfully take market share from first movers. My teammate Ally Zach’s recent research on DEX user segmentation gives color:

From a user count perspective, Uniswap has dominated Optimism by network penetration (defined as unique users vs. total Optimism users) since day one of its deployment on chain.

However, Uniswap on Arbitrum faced a different fate. After initially taking a big lead with respect to network penetration, Uniswap has since fallen to second place behind SushiSwap in terms of network penetration.

​In the case of users, it seems possible for Kyber to gain meaningful share. But volume is a different story. Despite Uniswap losing Arbitrum-based market share with respect to network penetration to SushiSwap, Uniswap still had almost 4x the 7d Arbitrum-based volume of SushiSwap. Check out the rest of Ally’s piece on DEX user segmentation for more stats on DEX users.

Interestingly, the two chains flip roles in the case of volumes. Despite losing their network penetration lead on Arbitrum, Uniswap still had almost 4x the 7d volume as SushiSwap as of March 10. On Optimism, where Uniswap still maintains a large lead in terms of network penetration, the 7-day volume gap between it and Velodrome at #2 is much closer ($238.6 million vs. $194.3 million).

For DEXs, volume share beats user share. Luckily for Kyber, Optimism is the L2 with the most precedent of shifting volume shares. Financial incentives and the speculative interest that comes with those may be enough for Kyber to really start to gain momentum.

🎧 Top Crypto Podcasts of The Week

Here are the crypto podcasts that are worth listening to this week...

📈 Top Performers This Week

Here are the top 15 performers in the last week from all tokens with a market cap of $20M+.

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📰 The Coinstack Newsletter:

Tracking the most important blockchain stories of the 2020s, including a decentralized internet and the creation of a new open global monetary system that works for everyone. As always, published for informational purposes only. Please do your own research. Just our opinions. Not intended as financial advice as we are not financial advisors. We may own some of the digital assets we write about as we believe strongly in the sector. Please do your own research. Published and written weekly by Ryan Allis and Mike Gavela.

Coinstack is a news and analysis newsletter for the digital asset industry. None of the information here is a recommendation to invest in any securities or other types of investments. Past performance is no guarantee of future results. Any historical returns, expected returns, or probability projections may not reflect actual future performance. All investments involve risk and may result in loss.

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