Solend Centralising?

Welcome to The Daily Moon. Elon Musk loves himself in the limelight. As you may have heard, the founder of Tesla Motors and SpaceX and the wannabe owner of Twitter was sued for artificially pumping Dogecoin. He has now tweeted that he will continue to buy the token. The price of the token went up. Let’s see if the richest man alive can change the fortunes of Dogecoin.

Bitcoin’s dead cat bounce?

Over the weekend, Bitcoin found new lows and went past the $20,000 high watermark. ETH, too, dipped below $1,000. Both quickly found their way back above those numbers.

But that dip hurt. The complete extent of it probably won’t be seen for a few months, but there has been some immediate fallout.

• Crypto lending platforms Celsius and Babel froze all withdrawals. Estimates suggest that $15 billion worth of user funds have been locked.

• Meanwhile, Three Arrows Capital is looking down the barrel. Lenders have walked away from the company.

That doesn’t work

The market has reacted negatively to this new low and that has triggered a sell-off, so the prices may dip further.

• Canada’s Bitcoin ETF sold 24,500 BTC in a single day over the weekend. That's a staggering 50% of its entire BTC holdings.

• Crypto mining companies have started getting rid of their holdings in order to stay afloat. For context, in May 2022, companies sold 4,411 BTC. That’s four times more than what was sold all of 2022 so far.

Now, to add a little more to this, the market is still recovering from the Luna collapse that lost investors close to $60 billion.

Darkest before dawn?

It was easy for El Salvador President Nayib Bukele to say, but a deeper look into his investments makes things a little gloomier.

Beyond the bombastic, there seems to be a belief that crypto will recover, and for those who understand its applications, it is a good time to buy the dip. Your mileage, however, may vary.

CoinDCX won't let you withdraw

This is going to run and run. Users of CoinDCX have been complaining on Twitter that the platform won’t let its users withdraw funds. This isn't, however, a one-off incident. Multiple users are talking about the same thing and it seems to be a long-running problem.

To be fair, the exchange has said it is all to do with wallet maintenance. But maintenance that lasts months? Something’s up.

It gets complicated

CoinDCX’s competitor, Coinswitch Kuber, too, has the same problem. But it advertised right from the start that users won’t be able to withdraw their funds until proper regulations are in place. CoinDCX hasn’t made an announcement of this kind yet.

FYI

CoinDCX was the first crypto firm to cross the unicorn valuation last year and counts Coinbase as one of its investors. It has 12 million users and was in trouble with lawmakers when it aggressively advertised during the IPL not too long ago.

End of the line?

It’s a story of overreach. Solend, Solana’s DeFi lending protocol, wanted to take control of a private wallet. This wasn’t greeted kindly. The company justified it by saying it had to take this extreme step because it came this close to panic sell-offs and even a network breakdown. All of this happened because there was a fear that the price would hit $22.30.

Uh-oh

First, the timeline. A whale wallet first deposited 5.7 million SOL, which is worth 95% of the lending platform’s entire SOL pool. It also massively borrowed USDT and USDC. SOL was struggling. It had seen 27 million tokens and $840 million had already exited the system since last week.

This exit saw the price of the token drop. Had the price hit $22.30, Solend would have to pay back 20% of this whale’s collateral as a margin call. This huge, sudden multi-million dollar liquidation would prove disastrous.

The overreach

Thus was born “SLND1: Mitigate Risk From Whale”. This would allow Solend to take complete emergency control over the wallet. But community members rebelled, calling it “outrightly illegal”. Solend had to propose a second vote invalidating SLND1.

Finally, some good news

In the midst of all the gloom, a token bucked the market trend. Cardano saw its price rise a shade over 10% over the past week. Institutional investors such as Grayscale have started fancying it as well and have earmarked almost a third of its Ex-Ethereum fund for it.

Why is it hot?

Not too long ago, the number of projects being built on top of the platform crossed 1,000, thus creating a large enough use case for it. Compare this to ETH, which has just over 250,000 projects being built on it. Despite Grayscale’s interest in it, Cardano doesn’t have enough exposure to institutional investors and is shielding it from the crash. Now, there is also excitement around an upcoming fork. This upgrade will dramatically alter the transaction speed while lowering the fees.

And that’s it for today. If this email was forwarded to you, please consider subscribing. It’s free. We’ll never show you an ad or charge you for this. We swear.

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.