The Celsius Fire Sale 🔥

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💵 Weekly Crypto Fundraises & Deals

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

1. Futureverse, a startup formed out of 11 different firms, has raised $54M in Series A round, led by 10T Holdings 

2. Xterio, a leading Web3 game platform, has been committed with $15M by Binance Labs

3. Skyplay, a Seoul, South Korea-based provider of a platform that integrates blockchain technology, has raised $10M, led by LDA Capital

4. Ethena, a startup building Ethereum-backed stablecoins, has raised $6M in a seed funding round, led by Dragonfly Capital

5. PWN, a DeFi mortgage protocol, has raised $2M in funding, led by Digital Finance Group

🗞️ 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. 💰 Celsius Crypto Liquidation is Starting: $63M out of $160M Sent to Exchange - Crypto investors holding bags of Polygon (MATIC), Chainlink (LINK), Synthetix (SNX) and Aave (AAVE) look out in the short-term: Celsius’ estate is apparently liquidating $160 million in crypto ahead of user payouts.

   
   

    

2. ⚖️ SEC Launches Review of Latest Bitcoin ETF Applications- The SEC has launched its review of the latest Bitcoin ETF applications. While the regulator published documents seeking public consultations last week, the clock on the review process doesn't formally start until the filings are published in the federal register.

   

3. 🎭 ‘Carbon-Negative’ Celo to Return to Ethereum as layer-2- The primary architect of the Celo blockchain, cLabs, plans to become an Ethereum layer-2 network using the Optimism stack.

   

4. 🔍 Ethereum Layer 2 Mantle Network Unveils Mainnet alpha at EthCC- Mantle Network announced it mainnet alpha at EthCC in Paris, alongside a $200 million ecosystem fund, following six months of testnet development.

5. ⚖️ Gensler responds to Ripple decision, says he's disappointed over treatment of retail investors - SEC Chair Gary Gensler said the agency was “assessing” the opinion that came from a New York judge last week in the long-running case against Ripple Labs.

   

💬 Tweet of the Week

📊 Key Stats of the Week

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

1. Arrakis Finance is the largest liquidity management protocol in the DeFi space, with nearly $200M in total value locked, placing it ahead of competitor Gamma Strategies.

2. Unisat's Bitcoin NFT marketplace supremacy was challenged by Magic Eden, which has captured 61% of total sales and is closing in on Unisat's secondary volume and total sales.

3. Infrastructure deals were the main focus of the most active investors in Q2'23. Polygon Studios and Animoca Brands allocated a significant portion of their portfolio toward NFT-based projects.

4. Heading into Q3, two-chain bridges remain dominant over multi-chain bridges in terms of TVL, gaining $153M over the course of Q2, led by growth in the zkSync Era, Optimism and PulseChain bridges.

5. Total value locked in DeFi on Layer 1s was mostly unchanged MoM for the largest ecosystems. The exception was BNB Chain, which took a $920M loss following the SEC Binance lawsuit.

📝 Highlights from the Top Crypto Reports

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

U.S. Treasuries Fuel Real World Asset Growth

Introduction

Incorporating real-world assets (RWAs) as DeFi collateral has been a dream for many in the crypto space since the advent of smart contract platforms. Tokenizing assets from the analog world promises to give DeFi greater collateral diversity, revenue streams, fractionalized ownership, and reduced costs and volatility.

After an initial wave of tokenized real estate projects failed to get off the ground in 2018 and 2019, RWAs seemed to gain their first sense of legitimate traction during the 2021 bull market on the back of private credit protocols. The idea of these protocols is that stablecoin lenders can enjoy above-average returns by lending to undercollateralized borrowers that are vetted by the protocol.

In theory, borrowers use this capital to finance productive endeavors in the real world. However, a closer look shows that the majority of the borrowing growth in 2021 and early 2022 was mostly due to crypto-native businesses using Maple Finance and Truefi. These businesses likely used the funds for cheap leverage or on-chain arbitrage strategies rather than producing net-new services in the real world.

While some private credit protocols such as Centrifuge and Goldfinch are enjoying steady growth, their numbers pale in comparison to the rise of a newer RWA subcategory experiencing consistent growth throughout 2023: on-chain U.S. Treasuries.​​

The demand for U.S. Treasury yields has ballooned over the last 15 months during the Fed’s historic rate hike that has increased the Federal Funds Rate from 0.25% in March 2022 all the way to 5.25% today. With crypto’s top lending protocols offering ~3% on stablecoin yields today, Treasury yields offer a more attractive low-risk alternative. This has led to the rise of a handful of protocols that bring these off-chain yields on-chain. The two most notable include:

Franklin Templeton’s U.S. Government Money Market Fund — The largest on-chain fund with almost $300 million invested. The fund is tokenized on Stellar, but its filing with the SEC statesthat any of the fund’s off-chain ledger supersedes the blockchain in case of disputes. Robert Leshner’s newly announced Superstate will employ a similar approach to handling on-chain and off-chain record keeping.

Ondo Finance’s OUSG — A stablecoin that essentially wraps a U.S. Treasury bill ETF and passes the interest to its holders. Ondo’s service is only available to qualified purchasers (individual or family-owned business with >$5 million in investments) and OUSG can only be transferred between whitelisted addresses. Ondo offers a fork of Compound V2, Flux Finance, that allows OUSG to be used as collateral to borrow stablecoins such as USDC, USDT, and Dai.

While these types of projects are a step in the right direction, their restrictions render them almost unusable to the average crypto investor. Most protocols restrict their offerings to non-U.S. users and the KYC enforcements block the tokenized assets from composing with DeFi’s permissionless services. Once again, clear regulations will be required for tokenized treasuries to gain legitimacy within the cryptoeconomy.

In the short term, U.S. Treasuries will continue to play a significant role in two of crypto’s largest stablecoin protocols. On June 21, MakerDAO purchased another $700 million worth of U.S. Treasuries to bring its total holdings to $1.2 billion. The protocol’s $2.3 billion worth of RWA collateral is now the protocol’s largest collateral type comprising 49% of Maker’s assets. These RWA components of MakerDAO are generating substantial fees for the protocol as well. According to MakerDAO’s strategic finance core unit, stability fees from RWAs have accounted for 78.5% of all stability fees generated year-to-date. This shift is indicative of Maker’s commitment to building a diversified collateral base that can become decoupled from DeFi’s volatility.

On the same day as Maker’s latest Treasury purchase, Circle recommitted to using Treasuries to back its USDC stablecoin. The company had previously liquidated all of its $24 billion holdings during the U.S. debt ceiling standoff last month in favor of overnight repurchase (repo) agreements. With the debt ceiling conflict passing on June 3, Circle resumed Treasury purchases in its BlackRock-managed USDC Reserve Fund and plans to split its exposure between short-term Treasuries and repos going forward.

🎧 Top Crypto Podcasts of The Week

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

1. Bankless - The SEC vs Ripple Lawsuit is a HUGE Win for Crypto

2. Real Vision Crypto - Forget the FUD: Why Web3 is Bigger Than You Think

3. The Breakdown With NLW - Judge Hands SEC a Massive Loss Denying Theory That Tokens Are Always Securities

4. The Defiant - Linea is a new ZK Rollup from Consensys - but how is it different from the others?

5. Coin Bureau - Have You SEEN THIS REPORT?! Institutions Want CRYPTO!!

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📚 How To Get Started With Crypto Learning

1. Crypto: Explain It Like I’m 5 (Article)

2. The Infinite Machine by Camila Russo (Book)

3. Crypto Theses for 2021 by Messari (PDF)

4. Bankless - The DeFi community (Substack + Podcast + Discord)

5. Understanding Polkadot - The Next Generation Blockchain Tech (Website)

6. The Ethereum 2.0 Report from Messari (PDF)

7. Blockgeeks Video Tutorials (Video)

8. The Coinstack Website (Website)

9. 2008 Bitcoin Whitepaper (PDF)

10. 2013 Ethereum Whitepaper (PDF)

📰 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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