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The Institutions Are Here šŸ’°

Deutsche Bank, Citadel Securities, Charles Schwab, and BlackRock all made announcements this week. Plus news about Do Kwon being found guilty on using a fake passport and Binance to leave Netherlands.

Author

Ryan Allis
June 22, 2023

Price performance since we began writing Coinstack in January 2021

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šŸ’µ Weekly Crypto Fundraises & Deals

Here are all the crypto fundraises we heard about this week, ranked by sizeā€¦

  1. DTCPay has raised $16.5M from Kwee Liong Tek for a digital payments platform

  2. Bit2Me, a leading Spanish crypto exchange, has raised $15 million in a funding round led by Investcorp

  3. Neutron raises $10M for a cross-chain CosmWasm platform from Binance Labs and CoinFund

  4. TapiocaDAO, a borrow, leverage, lend omnichain powered by layerzero, has raised $6M seed raise, led by fisher8cap

  5. ResearchHub, the startup co-founded by Coinbase CEO Brian Armstrong to accelerate the pace of scientific research using cryptocurrency, has raised $5M in a Series A fundraising, led by Open Source Software Capital

  6. Poko, a Web3 payments startup based in Singapore and Vietnam, has raised $4.5M in a funding round, led by Y Combinator 

  7. Intuition, on a mission to enable individuals to create, explore, curate, and own a verifiable knowledge ecosystem that helps us navigate our exponential world, has raised $4M, led by Supercrypt

šŸ—žļø Crypto News Recap: The Top 5 Stories

Welcome back to This Week in Cryptoā€¦ everything you need to know in one scannable format. Here are the top 5 stories of the weekā€¦

  1. šŸš€ Deutsche Bank, Citadel Securities Signal the Crypto Land Grab Is Accelerating - Deutsche Bank has applied to offer a crypto custody service. Citadel Securities, Charles Schwab and Fidelity-backed EDX Markets went live today. The move comes after BlackRock applied for a Bitcoin ETF in the US. Itā€™s a sign that more is to come.

  2. šŸš€ BlackRock Takes Giant Leap Toward Spot Bitcoin ETF With SEC Filing- BlackRock took a giant leap toward a spot bitcoin ETF, filing a registration statement with the U.S. Securities and Exchange Commission on Thursday. Known as the the iShares Bitcoin Trust, the Delaware statutory trust will hold assets primarily consisting of bitcoin held by a custodian designated as Coinbase Custody Trust Company.

  3. Do Kwon Found Guilty in Montenegro Fake Passport Case- Do Kwon has been found guilty by a court in Montenegro of using a fake Costa Rican passport in an attempt to leave the country in March. The former co-founder and CEO of Terra Labs was sentenced to four months in jail, according to a court statement.

  4. āš–ļø Binance to Leave Netherlands After Failing to Acquire VASP License- Binance is set to exit the Netherlands after its attempts to secure a virtual asset service provider (VASP) license failed. Starting from today, the crypto exchange is no longer registering new users residing in the country. It is also sending emails to existing users with information regarding their accounts and any assets they currently have on the platform, Binance said in an announcement Friday.

  5. āš–ļø Coinbase Slams ā€˜Evasive Responseā€™ From SEC to Court Order - After a protracted silence and vague responses from the United States Securities and Exchange Commission, cryptocurrency company Coinbase filed an official request in federal court on Saturday.

šŸ’¬ Tweet of the Week

Source: @dan_pantera

šŸ“Š Key Stats of the Week

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

1. Per April 28th filings, Celsius holds 660mm $CEL tokens on a $692M circulating supply, which reflects a roughly 95.3% share.

Source: @TheBlockPro__

2. Tokens deemed as securities by SEC are down by 28% on average. This drop was further fueled by the de-pegging of USDT caused by a heavy imbalance in Curve's 3Pool.

Source: @TheBlockPro__

3. Last week, there was a possible attempt to depeg Tether (USDT), the worldā€™s largest stablecoin. The selling started a few days before USDT dipped to as low as $.995

Source: @Kaiko

4. Binance.US market share drops to 1%.

Source: @Kaiko

5. GBTC discount narrows following BlackRock ETF filing.

Source: @Kaiko

šŸ“ Highlights from the Top Crypto Reports

Here are the top highlights from the best crypto research reports this weekā€¦

Key Narrative: Oracle-Free Protocols

Amidst the relatively quiet market conditions, a new set of DeFi builders is making noise by reimagining the architecture for lending and derivatives protocols. The core design change these protocols have in common is their lack of reliance on oracles. Traditionally, DeFi protocols that offer leverage via spot lending markets or derivative instruments have used oracles to determine when a position should be liquidated or what the outcome of a derivative contract should be.

For lending protocols, this means that eligible collateral is restricted to assets that have reliable oracle price feeds. Loan parameters, such as the loan-to-value ratio, are governed by the protocol and, as a result, any bad debt incurred becomes a responsibility of the protocol rather than its individual lenders. Similarly, derivatives protocols that rely on oracles for pricing lack internal price discovery mechanisms and are susceptible to lagged price updates which severely limits their scale and user experience.

Finally, oracles create another attack vector for DeFi protocols. Although protocol safety is generally assumed to be inherited from the protocolā€™s underlying smart contract network, it also relies on a properly functioning oracle. Should a protocolā€™s oracle be compromised, it can be manipulated so that attackers have an unfair advantage over the protocol and its users. This explains how Avi Eisenberg was able to conduct his infamous Mango Markets hack last October.

The New Kids on the Block

Up-and-coming ā€œoracle-freeā€ protocols are aiming to rebuild DeFiā€™s core services with novel architectures but come with their own sets of trade-offs. Their basic designs can be broken down into two general categories: peer-to-peer lending and hybrid protocols built on automated market makers (AMMs).

Peer-to-Peer Lending

Peer-to-peer lending shifts the burden of pricing and underwriting from the protocol to the user. Instead of defining interest rates and LTV parameters, lenders decide their own value comparisons. This gives rise to a loan order book similar to trades carried out on a CEX. Loans that are in a desirable range for borrowers will actively earn interest, but out-of-range liquidity will remain idle.

Removing oracles from the protocolā€™s mechanics means these loans can be created from any on-chain collateral. This shifts the burden of bad debt from the protocol to the user and opens the door to lending against cryptoā€™s long tail of assets.

While a peer-to-peer design offers greater customizability over loans, it creates an inferior user experience. To ensure supplied liquidity is being used productively, users must actively manage their positions in a manner similar to Uniswap V3ā€™s concentrated liquidity positions. Whether its savvy users or external protocols that manage these positions, they will likely rely on oracles to determine when to rebalance a position. This effectively reintroduces oracle-risk back into the equation.

Prominent protocols in this category include Blurā€™s Blend, PWN.xyz, and Ajna.

AMM-based Hybrids

The second category of oracle-free protocols are built on top of AMM LP positions. Most commonly designed around Uniswap V3 concentrated liquidity positions, these protocols rely on DEX liquidity to provide users with access to leverage or derivative instruments.

The lack of reliance on oracles in this design category allows the protocol to calculate liquidations and the outcome of derivative contracts from its underlying liquidity pools. Essentially, the LP positions function as an oracle of their own. Additionally, these LP positions provide a primary market to offload protocol inventory during liquidations or contract expiration rather than needing to liquidate collateral on external platforms. This creates greater efficiencies within the protocol and helps to mitigate some forms of MEV.

Protocols to watch in this category include InfinityPools, Limitless, and Panoptic.

šŸŽ§ Top Crypto Podcasts of The Week

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

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šŸ“° 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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