[Coinlive] Daily Digest - 1st August 2022

Headlines

▌Tether: USDT Hedge Funds Failed to Return as Expected 

Tether criticized some hedge funds for shorting USDT and said that airdrop bets failed to pay off as expected and required huge transaction fees instead. Since investors panicked out of the stablecoin market after the Terra crash in May, USDT and the U.S. dollar were briefly de-anchored, and the price fell to $0.95. As a result, several hedge funds shorted USDT in the market, hoping to create "in the billions" pressure. Eventually, this led to massive capital outflows that damaged Tether’s liquidity and ultimately bought back USDT at a much lower price. But according to Tether, these hedge funds have lost millions of dollars on short bets due to a lack of basic understanding of how USDT works. Tether said: “Traders have shown they are willing to be long USDT and collect the fees paid by hedge funds going short. Funds could have made large returns throwing darts; instead, they paid funding to traders who were long USDT on perpetual markets, locked up their capital, and made no profit." 

Policy

▌Report: The Central African Republic Requests Regional Central Bank’s Assistance in Crafting Crypto Regulations 

The Central African Republic recently asked the region’s central bank to help develop a regulatory framework for cryptocurrencies. The report also said the Central African Republic had expressed "commitment to the single currency and respect for the statutes of the Bank of Central African States". The report also added that both BCAS’s Herve Ndoba and CAR’s finance and budget ministers have signed a statement showing their commitment to working together again. 

Cryptocurrency

▌Vitalik Buterin calls MicroStrategy CEO a "total clown" 

July 31st news, in response to MicroStrategy CEO Michael Saylor's remarks that Ethereum is inherently unethical, Ethereum co-founder Vitalik called Michael Saylor a "a total clown" in a tweet and expressed "Why extreme Watchers always pick heroes who prove to be downright clowns?” 

▌Ethereum’s July On-Chain NFT Sales were Slightly over $500 million, Hitting a 12-month Low 

According to the latest NFT transaction data, NFT sales on the Ethereum chain were only $535,698,216.54, a new low in the past 12 months, but still higher than the same period last year (July 2021 NFT sales on the Ethereum chain were $410,229,362.36). At the time of writing, total NFT sales on the Ethereum chain totaled $28,963,820,891 with 13,033,622 transactions. 

▌Changpeng Zhao: Large Liquidity is One of the Best Consumer Protection Mechanisms 

Binance CEO Changpeng Zhao said on social media that large liquidity is one of the best consumer protection mechanisms because it prevents market manipulation, market volatility, and reduces liquidation. Imagine if we divided liquidity into 180 countries, this would make it 180x easier for large traders to swing the market and significantly increase volatility. At this point there will be arbitrage traders trying to balance prices, but they are not as efficient as an order book, and which arbitrage traders will make money (paid by consumers) between both buyers and sellers. Another misconception people sometimes have: on exchanges, users don’t choose counterparties, they just trade with an order book, but the order book actually acts as a broker. Greater liquidity also provides users with better prices, tighter spread, and lower slippage, which is a very important form of consumer protection. 

▌Ethereum Changing Its Proof Mechanism From PoW to PoS Is a Big Change

Gabor Gurbacs, Director of Digital Assets Strategy at VanEck, tweeted that Ethereum is a $200 billion asset. Changing its proof mechanism from POW to POS is a big change. Assuming that it’s a simple transition with full support of the new chain is premature. Chain splits are possible. There are lots of stakeholders with differing interests.

▌The Majority of Capital Investment in the World Is From Sovereign and Pension Funds but the Allocation of Crypto Is Still Basically Zero

A Bridgewater research note published Jan 2022 stated that, Bitcoin is about 1.4% as liquid as US equities; this would entail holding a much smaller capital position in the liquid mix, but its high volatility means that a relatively small allocation in dollar terms would still give meaningful exposure on a risk-adjusted basis. In late June, Kevin O’Leary of Shark Tank fame pointed out in an interview that the majority of capital investment in the world is from sovereign and pension funds and said their allocation of crypto is still basically zero. Until crypto is adopted by institutions, they can only be considered as really moved into crypto. O’Leary added, that this market capitulation is an opportunity for investors to get ahead of the trend, and recommends going long crypto before funds really begin to move 1% of their holdings into Bitcoin. O'Leary projects the price of Bitcoin will double overnight it dawns on markets that this is actually happening. He thinks this will happen by January or February 2023.

▌LianAn Technology: The Number of Security Incidents in July Decreased Compared With That in June, and the Loss of Attack Incidents Was About US$26.045 Million

According to the monitoring data of LianAn Technology’s security team from Chengdu, in July 2022, the number of various security incidents decreased compared to June. In July, there were more than 19 typical security incidents, of which the total loss of attack security incidents was about US$26.045 million, a decrease of about 89.5% compared with June, and it was the lowest month since 2022. While the attack incidents and the number of losses were greatly reduced in July, the number of security incidents in terms of rug pull or scams increased significantly compared to June, and some of the involved amounts exceeded 10 million Chinese Yuan. Users should pay more attention to improving their anti-fraud awareness. In the same month, the attack incidents caused by the exploitation of contract loopholes accounted for 40%. It is still important to do a professional security audit before any project is launched. In addition, 40% of attacks this month originated from private key leaks and phishing attacks. It is recommended that users and project parties must safeguard their private keys, be vigilant at all times, and not easily click on unidentified links to prevent phishing attacks.

▌Tether CTO: Tether Plans to Support ETH2 After the Merger

Galois Capital survey asked if stablecoin company Tether would support the PoS ETH network after Ethereum’s merger, Tether CTO Paolo Ardoino replied that Tether plans to support ETH2, and also stressed that support of ETH2 will be seamless. Ardoino added it’s not about what Tether prefers between PoW/PoS. Stablecoins should act responsibly and avoid disruption for users.

▌Research Shows Cryptocurrencies Are Becoming a Global Risk Asset

According to the mid-year crypto outlook analysis released by Bloomberg Intelligence, although the crypto market value fell below $1 trillion in the first half of 2022, compared with the roughly $25 trillion value evaporated by the global stock market, this year's crypto bear market is just a rounding error. The market value of crypto evaporation only accounts for a small part of the market value of global stock market evaporation. At the beginning of July, the total market capitalization of cryptocurrencies accounted for about 1% of the global stock market capitalization. However, it is lower than the peak of 2%, but it has increased by about 10 times from 0.1% in 2017. In addition, it is also worth noting that cryptocurrencies have recently begun to take on the global risk asset scene, with an early trend of increasing adoption of Bitcoin and other cryptocurrencies as global collateral in a digitized world.