DeFi platforms increased profits amidst FTX collapse

Daily futures trading volume on DeFi platforms reached $5 billion. This is the biggest amount since Terra collapsed in May of this year. Crypto-Upvotes expert review.

DeFi platforms increased revenues amid the outflow of funds from centralized exchanges that occurred due to the collapse of FTX. On-chain data showed an increase in activity on decentralized futures trading platforms and an increase in revenue for DeFi protocols, Cointelegraph reported.

However, not all decentralized applications (DApps) and protocols show such a trend. Because some of them have financial ties to FTX and Alameda. But data on DeFi projects’ revenues show that at least three protocols have exceeded $1 million in the last seven days, including Ethereum and OpenSea Marketplace.

Decentralized futures trading platforms have increased their trading volumes to record levels. Their daily turnover reached $5 billion, the highest since the Terra token crash in May of this year.

Despite the increase in trading volume, the total value of locked-in assets (TVL) at DeFi only increased at seven networks. Gains Network, a futures trading platform on the Polygon network, showed the biggest increase. Its TVL increased 17.3% over the week. And inter-network protocol Ren saw its TVL drop by 50%. This is because Ren worked closely with Alameda. And received quarterly funding and stored its funds directly on FTX.

Blockchain’s profit growth comes on top of an unchanged number of daily active users. Compared to previous weeks, the daily profits of leading blockchains have increased by more than 300%. This suggests that transactions among existing users are occurring more frequently.

Despite growth in profits, only Ethereum made profits among PoS-based blockchains. Other leading networks such as Polygon, BNB Smart Chain and Optimism did not profit. Holders of these tokens suffered inflationary losses.

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Funds outflow from CEX exchanges has intensified. What will it lead to?

Our experts told us what consequences may arise due to reduced liquidity on CEX exchanges. And how it will affect cryptocurrency prices

FTX exchange collapse caused a significant outflow of funds from centralized platforms. According to analytical platform CryptoQuant, after November 6, when it became known about problems FTX. CEX exchanges users withdrew 200 thousand BTC ($3.35 billion). As well as about 2 million Ethereum ($2.4 billion) and nearly $3 billion in Stablecoin.

For example, from Binance, users withdrew 81.7 thousand bitcoins ($1.35 billion) in just six days, or more than 15% of the total amount of bitcoins on this exchange. However, the head of Binance, Changpeng Zhao, called the surge in withdrawals small and explained that this is normal during a fall in cryptocurrency market.

Where do cryptocurrency owners transfer their funds?

Ordinary investors experience panic when there are some problems on centralized exchanges and market in general. And has a great desire to hide his funds to feel more relaxed. According to him, users primarily withdraw assets to decentralized wallets.

Means in these purses can not only store, but also exchange on the decentralized exchanges (DEX). After FTX started having problems, the number of such transactions increased dramatically.

In the last 24 hours alone, trading volume on DEX exchanges has increased by 38.66%, according to data from the CoinMarketCar platform.

Currently, the leading DEX platforms are Uniswap (v3), Curve (Ethereum), and PancakeSwap (v2). According to our analysts, daily trading volume on the first of them is more than $908 million, on the second and third – $170 million and $150 million, respectively.

In addition to decentralized storage, cryptocurrency owners began to take an active interest in hardware wallets. In the past week, revenue from the sales of Trezor devices grew by 300%. And competing company Ledger also recorded a significant surge in demand for its devices.

Reduced liquidity in CEX exchanges and the whole cryptocurrency market in general, what can it lead to?

Crypto market is now driven by investors’ fear of losing their investments. Reduced liquidity of crypto market and general pessimism mean a further decline in value of cryptocurrencies.

This process has a negative impact on the crypto market, it “slows” it down. This means it is not worth waiting for the recovery yet. Growth of crypto market can be forgotten for a while, now the main thing is not to fall even deeper.

However, our experts believe that cryptocurrencies are unlikely to hold out. The crypto market has not yet realized the scale of the disaster. Lack of liquidity leads to a decrease in trading volume. And hence, the profitability of trading platforms deteriorates greatly.

Large scale capital outflows can lead to a domino effect. One company is followed by collapse of other companies that are connected by common transactions. Some cryptoprojects have already reported financial difficulties caused by the collapse of FTX.

For example, crypto exchange AAX suspended withdrawals and said it lacked liquidity to continue operations. And cryptocurrency lender BlockFi is preparing a bankruptcy filing.

The next two weeks will show how serious the situation in cryptocurrency market is. According to our analyst, new bankruptcy filings will mean a massive collapse of the whole crypto industry.

Participants of trading on CEX exchanges may find it difficult to sell some coins quickly

This could happen because the outflow of assets from such exchanges reduces the volume of liquidity on them. Most likely, popular coins like Bitcoin, Ethereum and Stablecoin will not be affected. But some altcoins traded in tandem with Bitcoin or ether may suffer, according to our expert. Their liquidity will be low. This means traders will prefer not to deal with such liquidity. And prices for these altcoins will go down, largely due to the lack of active trading on exchanges.

“It’s a market, it’s all interconnected. The churn is mostly in Bitcoin and Stabelcoin, and all other pairs are losing liquidity,” explains our expert.

Traders can now pay attention to native coins DEX-exchanges. In addition, our expert noted that DEX crypto wallet tokens may also show growth in price.

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How does borrowed liquidity work in DeFi. Innovation or “house of cards”?

In what cases is borrowed liquidity useful in DeFi. And also what dangers it brings. And how to borrow for a user who owns Bitcoins. Crypto-Upvotes expert review

Rapid falls and rises in quotations are characteristic of cryptocurrency sector. Part of the high volatility is due to the large share of borrowed capital involved in transactions. Nevertheless, convenient borrowed liquidity is also one of strong points and features of DeFi finance.

Virtually every blockchain ecosystem has its own decentralized finance loan protocol. And the largest blockchains even have several. Such protocols work roughly the same way: by freezing their coins in a smart contract, users can release liquidity. When they receive credit in desired cryptocurrency or stabelcoins, interest accrues on deposit and borrowing. And for using a platform, a bonus is given as tokens to vote on future protocol development. Stablecoin borrowing usually comes at an impressively low interest rate of 1% to 2% per year.

Annual interest rates for coin deposits to the protocol or borrowing are identical for most large and time-tested platforms. Therefore, users can choose a product based solely on the overall usability of a particular blockchain and its software solutions. Thus, if a user, for example, frequently makes coin exchanges on Solana. And on the same blockchain plays some kind of P2E game, then the loan protocol as well, if needed. It will be more convenient for him to choose on the same blockchain.

DeFi borrowing is very easy and fast

This is an extremely convenient and fast process, which speeds up the already rapid movement of liquidity within the cryptocurrency sector.

When the market falls, traders using DeFi loans are forced to close their positions quickly. Because there is a danger of liquidation of collateral, thereby further accelerating the fall. When the market rises, it is also easy for traders to continue to create new buying volume. As the value of collateral assets rises, it makes it possible to increase the size of loans.

Similarly, borrowing protocols have already been used many times in market manipulations to collapse the rate of coins.

Is borrowing a unique advantage of crypto-assets or a dangerous trap?

The practice of borrowing against property or other valuables has been known since ancient times and is still widely used today. However, cryptocurrencies stand out among all other types of assets because of the incredible ease of obtaining borrowed liquidity. And complete freedom of its movement.

Owners of classic stocks in brokerage accounts might object. Because most brokerage platforms also provide credit leverage. Which is based on the capital available to this user. This is true, but there are two key differences that drastically distinguish web2 and web3.

For web2, the annual interest rate on borrowed brokerage funds will be significantly higher. And you will only be able to use the funds conveniently within the original platform. In the case of DeFi, borrowed funds are instantly deposited into the user’s wallet. And immediately can be used and transferred to third-party wallets and services without any restrictions.

When is borrowed liquidity useful?

The most valuable use of DeFi borrowing will be for those wishing to preserve the growth potential of their assets. Since its launch, crypto sector has been in a correction most of the time. Conversely, only briefly at its price peaks. Such moments are easy to miss if you sell an asset when you need dollar liquidity. And hope to buy it again later. And a rapid rise can happen in a few weeks or even days.

Borrowed liquidity can also be particularly useful for emerging market users with small deposits. Who strive to increase their crypto-assets portfolio step by step, if possible. For such category of users, the use of DeFi-protocols allows not to part with crypto-assets during an unfavorable market phase.

Of course, such tools carry a lot of dangers for inexperienced users. It is critical to keep statistics of all borrowings made. As well as to monitor your open positions. Which is based on the ratio of borrowed liquidity to the provided collateral. The safest ratio is no more than 1/3.

We recommend using only the least volatile of the coins, such as ETH or BTC, as collateral. Volatility of BTC has been steadily declining this year, and amid geopolitical instability has fallen below many fiat currencies and even the S&P500 index.

I have Bitcoin, how do I get liquidity and what are these risks?

The crypto sector’s flagship blockchain does not support smart contracts by default. Therefore, the first action for BTC holders on its main network would be to transfer Bitcoin to another network. One that supports DeFi-interactions. It is possible to move to another network in a decentralized way, using one of the bridges. Or by using a centralized exchange. In this case, the user will need to bring your BTCs to exchange, sell them, withdraw amount in main asset of destination network (for example, for Matic it will be Matic). And then exchange the asset back to the “wrapped” BTC on the new blockchain using any of DEX. At the same time, leaving some asset to the network itself to pay subsequent commissions.

Despite the many pros and little studied new ways of using borrowed liquidity. Its use remains extremely dangerous and involves risks every step of the way. Smart contract hacks, credit protocol oracle failures. Which can lead to accidental liquidations. Or the excitement and gambling addiction from feeling the possibility of getting “free funds” . This is just a short list of dangers awaiting users.

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The U.S. dollar collapsed against euros. How is this linked to the rise of Bitcoin?

Our Crypto-Upvotes experts discussed how US dollar affects cryptocurrency market. And gave predictions about the further movement of leading cryptocurrencies

Bitcoin rate rose from $19.5 ths. to $21 ths. per day. Ethereum rose by 13% and passed the mark of $1.5 ths. Among the top 30 cryptocurrencies by capitalization, all coins, except stabelcoins, increased in value. Market capitalization of entire digital currencies market showed growth of 6.9% and exceeded $1.047 billion.

At the same time, the US dollar collapsed against the euro on Forex market to its lowest level in five weeks. For the first time in this time, the U.S. currency became cheaper than euro. Dollar index (DXY) is also near a three-week low.

Impact of dollar index on cryptocurrency rates

How Bitcoin and the crypto market in general behave is influenced by the U.S. Dollar Index. Our expert explained that the DXY index (U.S. Dollar Index) shows the dynamics of the dollar against a basket of major world currencies. Such as : Euro, Swiss Franc, Pound Sterling, Canadian Dollar, Japanese Yen and the Swedish Krona.

Thus, the index shows the growth or decline of the U.S. dollar relative to a basket of currencies. When the index goes up, Bitcoin usually goes down. And when the index falls, Bitcoin goes up. This inverse correlation between the dollar index and Bitcoin was noticed a decade ago, and has been confirmed constantly since then.

Now Bitcoin’s rise above the $20,000 mark is due to the DXY index going down. The reason for this is the release of good reports by IT giants. As well as relatively positive data on the US labor market. And investors’ hopes that this information will lead FED to stop raising the rate.

Short-term strengthening of BTC or not?

However, despite some slowdown in U.S. inflation. The Fed will continue to tighten monetary policy. According to our expert, there is now too big a gap between inflation and the rate. Therefore, there is no reason to expect a strong slowdown in prices.

As early as next week at the meeting, Fed policymakers may raise the rate again by 75 bps (0.75%) to 4%. If FED declares that this trend will continue in the coming months, then today’s rate rally will be crossed out and sent to the trash garbage can.

According to our expert, we should expect in this case a new decrease of Bitcoin to the area of $15 thousand or even lower. Ethereum may go down to $1,000.

Under current conditions, cryptocurrency investors can liquidate futures positions. And make a profit by simply locking in profits on buy trades. Because there is no certainty that the current growth trend will continue now. Most likely, in the coming days it will be possible to observe the development of demand for the US dollar again.

What are prospects for growth of BTC?

Most likely, the trend of declining cryptocurrency rates may begin to change only in the first half of 2023. According to our expert, that is when the process of Fed’s monetary policy tightening may end. Or the step of rate increase will not exceed 0.25%. Then stock markets will start to form trends on increase of quotations. And on cryptocurrency market too, it will happen.

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Bitcoin has made it into Guinness Book of World Records

BTC has been written into history of world achievement Guinness Book of World Records on several counts, Crypto-Upvotes experts review

Bitcoin has been listed in Guinness World Records, the latest edition of Guinness World Records 2023. BTC is listed as the oldest cryptocurrency. And also as the first decentralized cryptocurrency and the most expensive cryptocurrency.

The latest of these records was recorded on March 24, 2022. On that day, Bitcoin was worth $42,900 and had a market capitalization of $816 billion. In addition, several other records related to BTC can be found in the book. For example: the largest theft of a cryptocurrency or the world’s first confiscation of a cryptocurrency. And even the largest cryptocurrency poker win ($1 billion).

There are also many NFT-related entries in the Record Book now. Among them is the very first unique Quantum token created in 2014. Or the most expensive token from NFT collections – CRYPTOPUNK #5822, bought for $23 million. And also the most expensive NFT issued by a sports club – Manchester City (UK) tokens with a market capitalization of $47 million.

Ethereum also appeared in the Guinness Book of World Records. However, ETH is not marked by any record. It is mentioned in an article about the first NFT Terra Nullius released on this blockchain in 2015.

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Interpol has created a unit to combat cryptocrime

The Interpol team, based in Singapore, will assist different countries’ law enforcement agencies. Assistance will be provided in investigations related to cryptocurrencies. Crypto-Upvotes expert review

Interpol has created a specialized unit to combat crimes related to cryptocurrency and other virtual assets, reports Business-Standard. The creation of the unit was announced by Secretary General of the International Police Jürgen Stock. This was said at a press conference before the start of Interpol’s 90th jubilee General Assembly. It takes place in Delhi from 18 to 21 October.

The main problem faced by law enforcement agencies of different countries in their investigations, the head of Interpol called the lack of a legal framework with regard to assets such as Bitcoin and Ethereum. The new team, formed in Singapore, will help fight crimes in this area in different countries. Currently, the international police force has more than 190 member states.

Interpol has helped investigate cryptocurrency crimes many times before. Not long ago, the international police issued their “red notice” against Terraform Labs co-founder Do Kwon. He is facing charges in connection with the $60 billion collapse of cryptocurrencies he created.

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Ethereum validators started rejecting most Tornado Cash transactions

Tornado Cash is under attack again. Most MEV bots do not handle addresses of this service.

Ethereum validators have begun rejecting most transactions related to the Tornado Cash service. As well as addresses on the U.S. Office of Foreign Assets Control (OFAC) sanctions list. So according to the MEV Watch tool from blockchain company Labrys. About 52% of blocks on the Ethereum network are validated through MEV bots that comply with U.S. sanctions. Another 6% of validators use bots that do not enforce sanctions. And about 42% of nodes on the network do not use such programs.

MEV bots are centralized software designed to extract maximum extractable value (MEV). Such software has become popular among validators because it efficiently selects those transactions that can generate the most profit.

MEV Watch shows which bots have been adhering to OFAC sanctions since Ethereum switched to Proof-of-Stake. These bots “discard” blocks with transactions associated with sub-sanctioned addresses. And this leads to an inability to put these transactions into the blockchain, no matter how high the fee would be.

According to platform data, there are currently 7 popular MEV bots. They are: Flashbots, BloXroute Max Profit, BloXroute Ethical, BloXroute Regulated, BlockNative, Manifold and Eden. Of those, only 3 do not censor transactions as required by OFAC. They are: BloXroute Max Profit, BloxRoute Ethical and Manifold.

Remember that on August 8, the U.S. Treasury Department published an update to the sanctions list (SDN). They included Tornado Cash cryptocurrency protocol and associated digital wallet addresses. The reason for blocking was that this service is used by hackers to launder illicit proceeds.

The attack on confidential Tornado Cash service continues. Our experts believe that in the near future the pressure on this service will only grow. We hope that they will be able to withstand all these blows.

 

 

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What will happen to cryptocurrency prices in October. Several forecast from Crypto-Upvotes experts

Our experts told us about possible price movements for cryptocurrencies in coming weeks. And gave forecast for their prices in accordance with different variants of events development

On October 13, after the publication of inflation data in the U.S., leading cryptocurrencies updated their price lows. Bitcoin rate fell to $18.3 thousand, less than the last time it was worth on June 20, when it was trading about $18.2 thousand. Also Ethereum showed decline – it fell to $1.2 thousand, updating its minimum since mid-July.

But by October 14 Bitcoin had recovered to the level of $19.8 thousand, the daily growth was 5.4%. Аnd Ethereum also rose in price by 7.2%. And the total market capitalization of cryptocurrencies is $980 billion, which is 5.5% more than a day ago.

Current situation on crypto market

Macroeconomics is the leading factor for cryptocurrency markets right now. Our experts notice that after the new release of inflation data in the U.S., there was a rare volatility in leading indices. But at the same time, the sharp drop was just as sharply bought back by investors. Cryptocurrencies reacted in a similar way.

Crypto market heavyweights such as Bitcoin and Ethereum are hardly reacting to events in the cryptosphere right now. However, there are not many negative factors. The main factor “confusing crypto-enthusiasts” is the trend toward tighter regulation in many countries. Because this brings cryptocurrencies closer to traditional asset classes.

Also, cryptocommunity is concerned about the decline of decentralization. Or the lack of growth of this indicator in many blockchains. In addition, the outflow of capital from GameFi, NFT and Metaverses markets looks logical against the background of energy crisis and risks of recession in economics.

Negative forecast scenarios

In case of a prolonged fall in Bitcoin, it is possible that those miners who have been working at a loss for a long time will capitulate. This is likely to lead to a decrease in the level of support. And it will bring Bitcoin’s price down to around $14,000 or $10,000.

Large capital is now panicking and seeking to withdraw funds in stablecoins and US dollar. The most likely scenario is that bitcoin will drop to $17,800 in coming weeks.

In addition, the fall in Bitcoin is accompanied by the biggest sell-offs of miners in the last 2 years – about 8,000 BTC per month (according to Glassnode). This has also influenced the rate of BTC decline and overall current market sentiment, our Crypto-Upvotes experts say.

Positive forecast scenarios

Crypto-Upvotes experts called a scenario in which cryptocurrency rates will start growing in the near future unlikely. However, if Bitcoin breaks through resistance level of $20.4 thousand, it will be possible to see movement to $22.5 thousand, our expert believes.

Positive factors that could support cryptocurrency rates are hard to find right now. At the same time, the option to increase prices of cryptocurrencies should not be discarded either. Because investors are eager to redeem assets at lower prices right now.

According to our expert, it could lead to overcoming the level of $1.4 ths for Ethereum. Bitcoin may initially reach a psychologically important level of $20,000. And its overcoming will lead to increase of BTC price up to $22 ths.

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BNY Mellon, oldest bank in the U.S., offers storage services for BTC and ETH

BNY Mellon licensed from New York state regulator to handle two cryptocurrencies. Review by Crypto-Upvotes experts

The oldest U.S. bank BNY Mellon began to provide services for cryptocurrency storage, writes The Wall Street Journal. For this purpose, the company received a license from the financial regulator of New York.

Bank will store the keys needed to access and transfer the cryptocurrency. It will also provide accounting services for Bitcoin and Ethereum.

BNY Mellon claims to be the first of eight systemically important U.S. banks to provide custody services for digital currencies. And it allows customers to use one custody platform for both traditional and cryptocurrency assets.

The platform will go live with select investment-fund firms this week. The bank said it expects to expand its crypto custody offerings to additional clients in the future, pending regulatory approvals.

In the summer of 2021, BNY  joined a group of six banks that plan to launch Pure Digital, a digital asset trading platform. At the time, the bank said it would roll out cryptocurrency infrastructure as the legal and regulatory framework emerged.

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Google will start accepting payments in cryptocurrency

Thanks to the integration of services of one of largest cryptocurrency exchanges. Some Google customers will be able to pay with cryptocurrency for cloud services, Crypto-Upvotes expert review

Some Google customers will be able to pay for cloud services in cryptocurrency at early 2023. This was announced by representatives of corporation at conference Google Cloud Next, reports CNBC. This will be possible due to cooperation of corporation with one of the leading cryptocurrency exchanges Coinbase.

First, corporation will accept payments in cryptocurrency from a limited number of customers through its integrated service Coinbase Commerce. Amit Zaveri, vice president and general manager and head of the Google Cloud platform, told CNBC. Currently, Coinbase Commerce supports 10 currencies, including Bitcoin, Bitcoin Cash, Dogecoin, Ethereum and Litecoin.

As time goes on, corporation will allow many more customers to use cryptocurrency. Also, corporation is considering using Coinbase Prime service to store cryptocurrency and conduct transactions in it.

At the same time, Coinbase said it will use Google cloud infrastructure for storage. Additionally, Coinbase will migrate its applications from Amazon Web Services cloud service. Also, when making cryptocurrency payments Coinbase will receive a percent of transactions.

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