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Stablecoins Race Heats Up

Weekly Market Highlights - Binance Research
2022-11-25 06:21
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Happy Friday! The Weekly Market Highlights is an initiative from the Binance Research team to round up the week, summarizing key market events and views from the team.
🔎 Macro / TradFi
  • Is a pivot on the horizon? Not yet, but one can hope. Minutes from the Federal Reserve meeting documented that it would “soon be appropriate” to reduce the pace of rate increases as officials evaluate the economic impact of recent measures. Following four consecutive 0.75% rate hikes, the markets now expect the Fed to downshift to a 0.5% hike in the December meeting.
🔎 Crypto
L1:
  • ETH stakers, good news. Ethereum developers decided to consider including eight Ethereum Improvement Proposals (“EIP”) in the next major network upgrade termed “Shanghai”. ETH staking withdrawals made the cut, paving the way for Ethereum to allow stakers to unlock staked Ether. That said, the timeline for the network upgrade has not been confirmed.
DeFi:
  • Following a trader’s attempt to short Curve ($CRV) tokens on Aave that left the DeFi platform with bad debts of ~US$1.6M, the Aave community has come together to discuss the best path forward. This includes proposals to repay the excess debt in the CRV market, and potential mitigation measures to reduce imminent risk to the protocol from manipulation of low liquidity assets.
Stablecoins:
  • The stablecoins race heats up. Cardona is set to launch a new stablecoin in January 2023. The U.S. dollar pegged stablecoin, “Djed”, will be an algorithmic stablecoin backed by Cardano ($ADA), and will use $SHEN as its reserve coin.
  • Separately, Curve released the whitepaper for its $crvUSD stablecoin. crvUSD will be over-collateralized and will use a novel algorithm termed Lending-Liquidating AMM Algorithm (“LLAMMA”) to liquidate deposited collateral to manage potential collateralization risks.
NFTs:
  • Did someone say “bespoke”? ApeCoin DAO launched their own white label marketplace built especially for the Bored Ape Yacht Club and Otherside communities. The marketplace will honor creator royalties and offer a reduced-fee structure for sellers. The launch comes at a time when other NFT marketplaces have varying creator royalty enforcement policies.
  • NFT marketplace, Magic Eden, continued its multi-chain expansion by integrating with Polygon. This is the third blockchain that Magic Eden supports besides Solana and Ethereum. The team aims to partner with Polygon to onboard more global brands and users onto NFTs, and to bring web3 games to the masses.
Others:
  • A few developments on CBDCs this week… The Bank of Japan announced that it will conduct a Central Bank Digital Currency (“CBDC”) pilot with three mega banks next year. The experiment will run for two years and the central bank will decide on issuing a CBDC in 2026. Separately, the Reserve Bank of India is preparing to conduct the retail pilot of the digital rupee next month.
  • Binance announced the launch of the "Industry Recovery Initiative", committing an initial US$1B to support the future of Web3. Jump Crypto, Polygon Ventures, Aptos Labs, Animoca Brands, GSR, Kronos and Brooker Group have also committed to participating with an initial aggregate commitment of around US$50M.
  • Check out CoinMarketCap’s new exchange reserve dashboard feature! Given increased demand for transparency by market participants, this tool allows users to monitor exchange reserves in an easy-to-use interface.
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About Binance Research: Binance Research is the research arm of Binance, the world's leading cryptocurrency exchange. The team is committed to delivering objective, independent, and comprehensive analysis and aims to be the thought leader in the crypto space. Our analysts publish insightful thought pieces regularly on topics related but not limited to, the crypto ecosystem, blockchain technologies, and the latest market themes.
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