The Big Recap by Lark

It has been a rough week in the market with lots of downside volatility, but there are always coins which outperform. There are always opportunities to be found in the market. So today let’s look at what assets are currently out performing the market and why? 

Chainlink has captured the attention of traders following the Chainlink upgrade narratives with CCIP and Staking coming this year. I wonder if a Chainlink run could pull up other oracles? 

Osmosis is a Cosmos based defi yield farm with good yields that has been getting a lot of attention. Jesse has a full breakdown on this protocol in issue 53.

Tokemak is a liquidity engine for defi. Great staking rewards paid in TOKE for a variety of tokens on their platform. Jesse has a full breakdown on this protocol in issue 59. 

Dopex is a crypto options platform with good liquidity incentives. Jesse has a full breakdown on this protocol in issue 71. 

As you can see DEFI is capturing a lot of interest from the wider market on the downturn. In particular new defi protocols, except Chainlink which is an OG. Many of the defi 1.0 coins have been on a non stop descent for a year, but defi 2.0 si on the rise. Now I would like to mention this is not a recommendation to run out and buy these coins, but I bring it up as an example that you can always be finding gains in this market. The real key is having an adequately, although not overly, diversified portfolio. Different things pump at different times for different reasons, and often when one sector is pumping another is dumping. In my own portfolio you can see a good spread between layer one chains like DOT, ETH, and Elrond, defi like Curve and Tokemak, gaming / metaverse like Wilder and Aurory, and even a few NFT plays like Ethernity. Although NFT market tokens have not had big returns for the most part. 

Here are a few coins to keep your eyes on in different sectors that COULD MAYBE do well moving forward. 

DEFI: 

Curve Finance CRV is a very unique protocol which has largely cornered the stablecoin swapping market on various chains. Treasuries continue to acquire this asset. Farming on Ethereum sucks due to high fees, but there are actually some pretty sweet farms and rates on Polygon and Arbitrum.

Wonderland’s TIME token could be worth looking at again. It is currently 75% under the all time high, the staking rates remain ludicrous. The team is actively finding new revenue streams including running validators on Avalanche. High risk play, as all of these OHM forks are, but this one is backed by the Abracadabra guys. 

Trader Joe JOE continues to look good in spite of the price crash. It is doing ¼ of the volume of Uniswap, and is getting ⅓ as many site visits as Uniswap, but the market cap is shockingly 1/30 th the current Uniswap market cap! I am farming this coin and will continue to do so while the rates remain decent. 

Layer Ones: (outside of the top 50, although protocols like Near, Fantom, and Elrond are worth watching)

Moon Beam’s GLMR is basically Ethereum but on Polka Dot. Huge backers. Just went live this week! The play was to back them in the crowdloan, however secondary market buys could do well. I invested in the crowdloan. 

Oasis Network’s ROSE is a coin that we have discussed previously here and on Youtube. It focuses on defi, data tokenization, and parallel smart contract layers. Big backers and big partners, now the question is can that be translated into further gains for the ROSE asset? Well Oasis is putting 150 million dollars towards a “yes” via their ecosystem fund. An update on this, apparently Binance has increased this up to 200 million! 

Kadena KDA was very very hyped about 2 months ago. Since then the price has dropped 66%. This coin gets a lot of play on social media. It was built by the same people who built JP Morgan’s blockchain back in the day. Adoption will be the key to finding success here. 

Gaming: (spoiled for choice, keep an eye out for games launching in 2022)

Guild Fi GF is one of the many guilds which have launched recently into the market. The biggest one, Yield Guild, got near a billion dollar market cap at the height of gamefi mania. This asset niche within gaming has high potential due to the mechanics of treasuries and the general hype around gaming. Guildfi has some of the best backers and a mid size market cap. Other high potential and lower market cap guilds are Avocado, Blockchain Space, and Rainmaker. 

Aurory AURY is but one of the many cool games launching on Solana. It is a JRPG with cool NFT characters and fun looking game play. I feel like Solana is attracting a lot of talent in terms of game developers with interesting titles like Star Atlas,  Decimated and Elumia as well as a dozen others coming out. 

Wilder World WILD is a metaverse coin. Metaverses are the virtual worlds of the internet. They encompass gaming, as well as socializing, and a broad range of experiences like concerts. I am a big fan of what Wilder is making and think that this coin will continue to have success into the future. Honorable mentions High Street and the newly listed Solana based metaverse coin Solice.

***Bitcoin could nuke and take the whole market with it. As always DYOR and never invest more than you can afford to lose. I am just sharing some things I am watching, YOU still need to DYOR and decide if any of these are worth your money. 

IN OTHER NEWS

Ethereum’s premier layer two Arbitrum went offline for about 6 hours on Monday. This is just the latest in a long line of technical issues in the crypto space, the most prominent of which has been the frequent DDOS attacks on Solana. This serves as a reminder that so much of this space is still in the experimental phases. Developers are moving fast, and sometimes things break. We are testing in the wild, and if you are here now using this stuff then you are a pioneer. 

Defi pioneer Andre Cronje, the founder of Yearn Finance among others, is building something new on Fantom along with Daniele Sestagalli from Abracadabra. While we still do not have complete details it seems that it will be a new protocol for Fantom which will allow for swaps and pooling as well as vesting and yield farming. This is definitely something to keep on your radar. Could be a good farm when it opens up. Following Andre on Twitter is probably the best way to find out about the launch. By the way it appears that tokens will be dropped to users of the top 20 protocols on Fantom. 

Defi updates 

• Tokemak single sided staking rewards for Ethereum are back to 10%! Of course this would bounce back the week after I move my ETH out, lol. Check it HERE
• In another Tokemak related story, they have just integrated with the MIM stablecoin. Current rate around 25%. HERE
• Ramp Defi has launched on Avalanche. HERE
• Abracadabra has enabled WBTC lending markets! Source
• Tetu an app live on Polygon and Fantom has some very attractive rates. HERE

Stablecoins by Matt

A Look at Stablecoins

A stablecoin is a cryptocurrency whose value is pegged to a real and stable asset such as a fiat currency (most common), precious metals such as gold or a group of crypto assets. The advent of stablecoins in the crypto market has been a game changer. Crypto prices are volatile at the best of times and stablecoins play a crucial role in combating that volatility by offering a convenient, stable place to park funds, enabling investors to keep cash-like assets within the ecosystem and providing an alternative to transferring funds to/from traditional bank accounts when trading crypto.

Given that crypto trades 24/7, 365 days a year, stablecoins have given traders peace of mind by allowing them to cash out of positions while they sleep rather than sweating on the overnight price swings of their portfolio. Holding a cash equivalent in a tokenised form also enables investors to move funds immediately within the crypto ecosystem and take advantage of buying opportunities much faster than waiting days for a bank transfer to arrive. 

There is also the added benefit of being able to use stablecoins in the DeFi (Decentralised Finance) sector, providing access to lending and borrowing services with investor returns being far greater than anything that traditional banks can offer.

Stablecoins have now become entwined in every aspect of the crypto ecosystem and there is little doubt that they have contributed greatly to the development of the space as a whole. However, there are some risks investors should be aware of as some stablecoins offer very little in the way of transparency surrounding the assets that they hold in support of their token value.  Let’s take a look at some of the most popular stablecoins which are pegged 1:1 with the US Dollar and live on smart contract enabled blockchains such as Ethereum, BSC etc. An up-to-date list of stablecoins by market cap can be found here.

Tether

The big daddy of them all is Tether (USDT) issued by Tether Holdings Limited, which is in turn owned by Bitfinex. At the time of writing they are the largest player in the stablecoin sector with a market cap of $78.7 billion and are used by most exchanges and is very popular in trading pairs and commonly used in DeFi.

Tether has come under considerable criticism in recent years in respect of the transparency of its holdings with some fearing that it poses a systemic risk to the ecosystem if it is not as fully backed as it claims it is. Regulators have also taken a keen interest. In 2019 the NYAG (New York Attorney General) investigated Tether and determined that the operators of the Bitfinex trading platform, who also control Tether, had engaged in a cover-up to hide the apparent loss of $850 million dollars of co-mingled client and corporate funds. The case was later settled by Tether and under the terms of the settlement they are now required to publish quarterly CRRs (Consolidated Reserves Reports) which disclose their holdings. The most recent report can be found here. Tether’s largest holdings include a mixture of Commercial Paper, Cash/Bank Deposits and Treasury Bills. Cash deposits only represent around 10% of its holdings while their other assets are considered low risk cash equivalents. It’s also worthwhile noting that Tether uses offshore banking infrastructure.

USDC

Sitting in the number 2 spot is USDC which was launched in 2018 and has a market cap of $43.5 billion. It enjoys widespread acceptance by exchanges and has gained growing popularity in DeFi protocols and other decentralised applications. Lending credibility to the project is the fact that Coinbase and Circle are the co-founders. 

Until July 2021, it was claimed that USDC was backed 1:1 by actual US Dollars in a bank account however this changed to reveal that only approximately 60% of their reserves are held as cash with the remainder being held in short duration US Treasuries.

BUSD

Founded by crypto exchange giant Binance, BUSD is regulated by the New York State Department of Financial Services (NYDFS) and issued by Paxos, a regulated blockchain infrastructure platform. BUSD has become a popular trading and DeFi token with a current market cap of $14.2 billion.

BUSD issues monthly audited reports which attest to the matching supply of BUSD tokens and underlying U.S. dollars. It is 100% backed by reserves held in either or both (i) fiat cash in U.S. banks and/or (ii) U.S. Treasury bills. 

TerraUSD (UST)

The decentralised UST stablecoin was launched in 2020 and has an interesting way in which it maintains its peg of 1 UST = 1 US Dollar. UST isn’t backed by USD held in a bank account. Rather its supply algorithmically changes based on Terra’s native LUNA token’s price and supply, to cause an equilibrium that aims to keep its value.

Each stablecoin is, in effect, backed up and exchangeable for the governance and utility token LUNA. Terra acts as a counterparty for anyone looking to swap their stablecoin for LUNA and vice versa, which affects the two tokens’ supplies.

While it can be used for trading, UST is more commonly used in DeFi protocols. The current market cap is $10.4 billion.

DAI

DAI is an algorithmic stablecoin which was launched in 2017 and aims to keep its value as close to 1 US Dollar as possible through an automated system of smart contracts on the Ethereum blockchain. DAI is maintained and regulated by MakerDAO, a Decentralised Autonomous Organisation (DAO) composed of the owners of its governance token, MKR, who may vote on changes to certain parameters in its smart contracts in order to ensure the stability of DAI. 

The Maker Protocol allows users to issue DAI by locking collateral assets of a greater value in the system’s vaults. Maker currently supports a variety of collateral types including volatile crypto assets, stablecoins, liquidity tokens and real-world assets.

The current market cap of DAI is $9.1 billion and it is commonly used in DeFi protocols and is popular to spend.

Regulation

In November 2021, the Presidents Working Group on Financial Markets (PWG) released a report calling for regulation of stablecoins and legislation specifically addressing risks to stablecoin users, payment system risk, systemic risk and concentration of power. In this report, the Secretary of the Treasury Janet L. Yellen was quoted as saying, “Stablecoins that are well-designed and subject to appropriate oversight have the potential to support beneficial payments options. But the absence of appropriate oversight presents risks to users and the broader system. Current oversight is inconsistent and fragmented, with some stablecoins effectively falling outside the regulatory perimeter.” Regulation of stablecoins is certainly coming to the space. It appears that it is only a question of time.

In closing, stablecoins have become a vital part of the crypto ecosystem but they are not all built equal and investors need to make their own determination of risk in respect to the adequacy of assets which support the value of the tokens issued and the level of centralisation and trust of the token issuers. Consideration should also be given to what impact that regulation could have on the space. For the time being, there’s no standardised way in which stablecoins disclose their assets therefore they would appear to be an obvious target for regulators. One wonders if the eventual introduction of the U.S government backed digital dollar might be the solution that regulators are really looking for. The big question is whether it would eliminate the need for stablecoins such as Tether and USDC. Only time will tell.

 

Final Notes

Thank you so much for your support, and I truly hope that today’s issue will give you insights needed to help you master your wealth.

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Legal Disclaimer

TCL Publishing ltd (director Lark Davis, owner of Wealth Mastery) is not providing you individually tailored investment advice. Nor is TCL Publishing registered to provide investment advice, is not a financial adviser, and is not a broker-dealer. The material provided is for educational purposes only. TCL Publishing is not responsible for any gains or losses that result from your cryptocurrency investments. Investing in cryptocurrency involves a high degree of risk and should be considered only by persons who can afford to sustain a loss of their entire investment. Investors should consult their financial adviser before investing in cryptocurrency.