View profile

A quick look at last week’s exchange ‘covfefes’, DeFi metrics watch

Revue
 
Check out past issues of the newsletter along with more interesting crypto content as well as short (
 

Satoshi&Co Daily Crypto Newsletter

November 8 · Issue #248 · View online
ZPX | Satoshi&Co Newsletters

Check out past issues of the newsletter along with more interesting crypto content as well as short (but great) conversations with leading crypto industry participants at our newly-launched website www.satoshiand.co

(We are super excited to be participating in conferences in Singapore and NYC this coming week. Aditya and Brian will be representing Qume at The Capital and Blockshow in Singapore. Jasmina and Shreyas Chari will be attending Consensus Invest in New York City. Be sure to look out for them in case any of you are at either of these places, or just drop in a line here and we will make the connect. 
Just to be clear, it so happens that these conferences happen to be in cities that these folks live and work out of. As a rule of thumb, most conferences that require you to fly out to another city are super-disruptive, unless there is an investor or customer check waiting at the end of the flight, to be brutally honest! Therefore we typically avoid the crypto/blockchain conference circuit as much as possible, as that can be a full-time occupation in itself).
Last week, a momentary outage at Coinbase triggered a flash crash on Deribit - a leading crypto derivatives exchange - the price fell down to $7500 from $9300, resulting in massive liquidations of BTC longs. It was a simple arithmetical mistake - Deribit in their calculations for the index by averaging prices, while dropping one of the numerator entities ( the coinbase price) to zero, forgot to decrease the denominator count by 1, and this ended up massively skewing the index downwards. Deribit has since offered to pay back close to 1.3m dollars to traders that were affected by this. 
We wrote an interesting piece on reference price design at Qume, where we talk about our design approach, and how it is superior to a lot of the current offerings out in the market, leading to far more stable through-the-cycle prices, and far fewer arbitrary liquidations.
Two days later, BTC price on CME temporarily decreased to $8500, raising even more concerns around potential price manipulation that crypto exchanges for long have been accused of. This is also one of the main reasons why the SEC has been reluctant to approve a Bitcoin ETF.
These flash crashes set in motion a cascade of events where price action on one exchange triggers unfair liquidations on other exchanges. Sometimes, these outages can be a source of tremendous opportunity for vigilant traders who can exploit the price action following an outage to buy/sell BTC at very low/high prices. That was the case on Aug-23 when an AWS outage crashed the orderbook on a few Asian exchanges, resulting in some trades being able to buy BTC for less than a dollar.
The frequency with which these outages seem to be happening, while par for the course for an emerging sector, is a serious concern that can affect regulator views around incremental legitimization of cryptocurrencies.
On to our Friday metrics…
Ethereum Locked in DeFi
MakerDAO still accounts for a lion’s share of ETH locked up in collateral, with more than 1.79 million of ETH locked up. Augur declined w/w by 2%. Maker showed a strong w/w growth of 7%.
Lightning Network Growth:
Capacity per channel was flat w/w. The total number of nodes increased by 1%, and the total number of channels was flat w/w.
(For reference, some previous articles on LN, here).
DEX Tracker:
Trading volumes on DEXs have increased on a w/w basis, with the average daily trading volume averaging 35k ETH for this week. IDEX remains the biggest DEX in terms of trading volume and DAI is the highest traded cryptocurrency on DEXs.
Source: dex.watch
(For reference, some previous articles on DEXs, here and here).
Crypto Loans Tracker:
Compound Loans:
Total loans issued on Compound for the last week stands at approx. $3.5 million for the week, a steep decrease from $5.2 million in the previous week. WETH is the most borrowed cryptocurrency on Compound followed by DAI and BAT.
dYdX Loans:
Total loans issued on dYdX for the last week stands at approx. $9.4M for the week, a 70% increase from $14M last week. DAI is the most borrowed cryptocurrency on Compound followed by WETH and USDC.
MakerDAO Loans:
DAI loans issued on MakerDAO for this week stand at ~$14.1M, a 50% decrease from $4.2M last week. The total outstanding DAI debt currently stands at ~$86 million.
(For reference, some previous articles on MakerDao, here and here).
You can also check out last week’s Metrics Watch here.
Meanwhile in Crypto Wonderland....
“Cardano To Partner With New Balance”
Proving the origin and authenticity of retail products has often been proposed as one of the key use cases of blockchain, but it was largely the turf of companies like VeChain and recently, IBM. Cardano is now jumping into this field with both feet through a collaboration with New Balance, the athletic wear and sneaker brand. Together they’ve developed New Balance Realchain, a new initiative that uses Cardano’s blockchain to confirm the authenticity of a select model of shoes. Complete with a landing page and app, Realchain uses a physical card with an internal chip that can be scanned with a phone, confirming that the New Balance footwear is indeed genuine.
“Tether Considering An Algorithmic Stablecoin”
Stablecoin provider Tether is considering creating an algorithmic alternative to its popular USDT token – possibly allowing traders to use cryptocurrency as collateral – as a means to provide another route to issue and trade USD-pegged assets. Paolo Ardoino, CTO of Tether and affiliated exchange Bitfinex, told Crypto Briefing the company was researching a new algorithmic stablecoin, possibly to be known as the ‘USDTX’. Although details are scarce, ‘USDTX’ could enable traders access to a store of value through leveraging their cryptocurrency holdings, if Tether goes ahead with the project.
“Nasdaq Lists AI-powered Crypto Index”
The world’s second-largest stock exchange, Nasdaq, has listed the AI-powered CIX100 index created by crypto data provider Cryptoindex. The news was revealed in a press release shared with Cointelegraph on Oct. 15. CIX100 is a crypto market benchmark that analyzes uses a neural network algorithm to analyze data for the top 100 cryptocurrencies, taking into account over 200 factors. Reportedly designed to exclude coins with fake volumes and rankings, the “human-free” tool targets both industry newcomers and professional investors. According to the press release, the data is derived from the nine largest cryptocurrency exchanges globally and factors in the results of millions of trades alongside news releases and social media data.
“eToro Launches A Crypto Portfolio Based On Social Sentiment”
eToro, the popular cryptocurrency trading website, is partnering with The TIE, a cryptocurrency information services firm, to implement a Twitter sentiments trading portfolio, which lists Dash as its largest position. The announcement discusses how the TIE-LongOnly CopyPortfolio leverages social Twitter sentiment, both positive and negative, as a significant indicator to compensate for the fact that most cryptocurrency fundamentals are still maturing and thus do not have revenue, dividends or debt.
Crypto Twitter Pick
Jill Carlson
With the Internet the addressable market for so many companies went from local (millions) to global (billions).

What got left out? Financial services. Locked in by jurisdictional regulations & currencies.

Crypto for the first time unlocks a global market for financial services.
2:29 AM - 8 Nov 2019
What We Are Reading / Listening To
Binance is blitzscaling by Multicoin Capital
Bitwise’s Latest Plans to Get a Bitcoin ETF Approved featuring Hunter Horsley and Matt Hougan
Overnight Performance of Top 10 Currencies
You are getting this newsletter because you or someone in your organization signed up for this. You can find more stuff to read at our news and research portal, our crypto index token and our upcoming relayer.
Brought to you by Satoshi&Co
This newsletter does not constitute an offering of securities in any jurisdiction. The contents of this note should not be construed as investment advice or as a recommendation to purchase securities. This note is intended for the consumption of the recipient alone and not for public distribution. Please consult a certified financial advisor or other appropriate practitioner as may be appropriate as per your jurisdiction.
ZPX Copyright © 2019
Did you enjoy this issue?
If you don't want these updates anymore, please unsubscribe here
If you were forwarded this newsletter and you like it, you can subscribe here
Powered by Revue
ZPX | 21-01, Clifford Center, Raffles Place, Singapore- 048621