New unstable coins

Welcome to The Daily Moon. Cross-chain bridge Nomad lost $200 million worth of crypto after a hack. Turns out a new update exposed the bridge to spoof transactions. Once attackers figured out they just needed to track a past transaction and replace the wallet address with their own, it basically became a free for all. Let’s see how long it takes to recover these losses.

The markets were choppy, with Bitcoin below $23,000 and Ethereum falling to $1,570 levels. Nasdaq fell due to a slump in technology stocks. Back home, Sensex and Nifty ended flat amid volatility.

DeFi Drives To Stable

Open-source DeFi lending protocol Aave will launch its stablecoin GHO. And ETH-based crypto DeFi pool Curve is headed that way too. DeFi protocols are keen to trade in their own stablecoins, build their business, and increase revenue potential. With the Terra-Luna crash fading into the night, DeFi has turned to stablecoins again.

FYIAave’s GHO is expected to attract more users because of yield payments. In return, Aave will charge interest on loans.

What’s the catch? Stablecoins worth nearly $150 million are in circulation. Tether’s USDT and Circle’s USDC account for two-thirds of this market. That doesn’t mean there are no risks. There are two factors to keep in mind:

1. Quantity of the reserves: Aave has not yet disclosed the reserves that will back its stablecoin GHO. If you remember the Anchor Protocol crash, the investors lost all their money. Without the backing of sufficient reserves, Aave’s stablecoin is, well, unstable. For some perspective, Circle holds $55.7 billion in reserves, of which $13.6 billion is in cash.

2. Quality of the reserves: Stablecoins are backed by a mix of cash and bonds. Bonds’ repayment history and returns need to be considered. For instance, Tether will reduce its commercial paper reserves to hold more US dollars.

The IMF has also warned investors that stablecoins not backed by 100% cash reserves are vulnerable to financial failure.

Money, money, moneyDeFi protocols are looking for alternate sources of revenue. Existing stablecoins are backed by third parties that take a commission. An in-house stablecoin solves that problem.

Bear Market Isn’t Over

Crypto funds saw record inflows in July. Bitcoin and altcoins worth $474 million were bought during the month. A certain uptick from June, which saw outflows worth $481 million. But before you rejoice, the bear market has not yet subsided.

First, the good newsJuly was a good month for crypto investment products and the strongest so far in 2022. In the week that ended July 29, Bitcoin saw $85 million worth of investments, amidst the US Fed interest rate hike. It was the fifth consecutive week of inflows.

And, the bad newsOverall trade remained subdued. Short-Bitcoin funds saw exits of $2.6 million. The bear market has continued, with just whale HODLers remaining dominant. Bitcoin’s network fees have dropped to 13.4 BTC as compared to 200 BTC in April 2021. There is no influx of new demand. Data suggests that there will be true demand recovery when new active addresses get added and fees rise to 35 BTC per day.

As You Say SEC

Binance doesn’t want trouble. The US arm of the crypto exchange has delisted AMP and eight other tokens almost overnight.

What’s the rush?AMP was among the nine tokens classified as securities. And Binance wants nothing to do with SEC governed securities. Not yet anyway.

The big pictureThe US securities regulator has shifted its focus to the crypto market. Coinbase is already under SEC investigation over the sale of unregistered crypto. Binance wants to play it safe to avoid penal action, especially since it has growth ambitions in the US.

This is not the first time, though. Binance suspended all trades on Ripple’s XRP token in January 2021 after an SEC probe.

Now what?AMP crashed ~10% to less than $0.01 levels. But Binance hasn’t fully turned its back on the crypto token. It claimed that AMP trades could resume as soon as there is clarity on its classification.

Is This Bored Apes’ Finale?

Yuga Labs launched the Bored Apes Yacht Club (BAYC) to help artists innovate on an existing Ape character. But innovation doesn’t come in the absence of freedom. Something the artists working with Yuga Labs realised they didn’t really have when the company sued a creator for trademark infringement.

The missing piecesWhen artist Ryder Ripps made money through his parody creations of BAYC apes, Yuga Labs founder Wylie Aronow wasn’t amused. Yuga Labs sued Ripps on the claim that their trademarked BAYC ape designs were lifted.

Loyal users are unhappy because this isn’t what was conceived. Aronow, who’s been a darling of the alt-right, will have to try harder to convince his followers. Meanwhile, he has the court case to handle.

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Who are we? There is a lot happening in our world. Everything has layers, and each layer has to be carefully peeled so you, the reader, know how the world of money is changing every day. That’s our promise. Help you unpeel the onions, which are the public markets in the US, India, and crypto, so that you know just a little more.