Overview
Gemini Earn is another shining example of the importance of trust, DeFi, and self-custodial wallets.
Markets: Bearish pennants signal further downside risk.
Just in time: THORChain introduces single-sided staking vaults.
NFTs: Adidas introduces wearable NFTs.
Banter’s Take: How DeFI wins in the long run.
Good morning Fam,
Centralized exchanges are great platforms to trade, exchange crypto assets and speculate using derivatives, but they remain risky to store your crypto assets long-term.
As an example, Gemini exchange is the latest to be affected by the FTX contagion. 👇
While it remains very likely the highly regulated exchange keeps assets backed 1:1, that isn't true for the Gemini Earn program. Instead, the program allows users to earn a yield on assets by transferring full custody to Gemini, who, in turn, lends out the crypto assets to generate yield.
Gemini was lending assets to Genesis to create yield. Unfortunately for users, Genesis just announced insolvency because of exposure to FTX. As a result, Gemini Earn has now paused withdrawals.
As a result of losing trust, Gemini exchange users withdrew $483 million in one day!
Source: CryptoQuant
The exodus out of Gemini is a shining example that If you plan on staying in crypto long-term, it's not the time to trust. Instead, it's the time to learn and utilize the trustless systems of self-custodian wallets and DeFi.
Market update 🌍
BTC/USDT 1D
There's no doubt that crypto as a speculative asset is currently in the worst position since 2018. BTC hit two-year lows and looks poised to see further downside after all the contagion risk associated with FTX continues to unwind. The creation of a bearish pennant pattern on the BTC daily chart highlights the overall sentiment in the space. This pattern is often proceeded by further downside. The probability of price visiting the $12.5K support level seems a likely scenario according to technical analysis but whether it plays out in that fashion remains to be seen. BTC completed the daily candle down -1.41% to $16,662.
High-resolution chart.
ETH/USD 1D
Ethereum's daily chart is setting up very similar to BTCs' by forming a bearish pennant below the former $12.5k support. If the pattern plays out in a book-like fashion, with the price dropping the same percentage as the pennant's stem, ETH will hit $750 in the coming days to weeks. ETH completed the daily candle down -3.01% to $1,215.
High-resolution chart.
SOL/USD 1D
If investors are long-term-minded and their risk tolerance is high, Solana could become a highly lopsided reward/risk set-up. Development and activity on Solana remains high compared to other layer-ones, but trust in the network is at all-time lows. The detachment of Solana from FTX is a net-net positive for the network, even as the price continues to plummet. If the bearish pennant plays out accurately, SOL will hit a sub-five dollar price.
It could still hit $0 from that point, but there's always a possibility Solana survives and reaches former highs of $257 in the next bull cycle. That puts the reward/risk ratio at 5500/1, the chance of making a 5500% return to the downside risk of 100%, or $0.
High-resolution chart.
Newswatch 📰
THORChain “Earn” goes live. The decentralized DeFi platform THORChain introduces its live Saver Vaults, where users can earn single-sided yield.
FTX collapse news feed:
Genesis, crypto lending unit, halts customer withdrawals; $2.8 billion locked. Binance CEO CZ is considering a potential bid for loan assets.
California rushes to suspend the license of crypto lender Salt.
Sources say FTX employees were encouraged to keep life savings on the now-bankrupt exchange.
Sam Bankmen-Fried continues his strange Twitter rants at one point, saying "F*ck regulators" and then praises the cohort yesterday.
Former SEC official doubts FTX collapse will prompt congress to act on crypto regulations.
State-owned Singaporean investment agency Temasek writes down $210 million FTX investment to zero.
Former Alameda Research co-founder speaks out:
Jonathan Mann releases FTX fiasco theme song:
News tidbits:
"Man, this whole FTX fiasco really needs its own theme song." (said no one ever) songaday.world/auction/5068 (bid on the NFT👆)News tidbits:
Republicans secure the US House majority and will shift the path for crypto bills.
zkSync raises $458m and plans to go open source at the next milestone.
StarkNet deploys ERC-20 token contract on Ethereum.; STRK token is not yet available.
Aave is live on privacy-focused layer-two Aztec.
NFT & metaverse update 🐵
Adidas reveals its first wearable NFT collection, Virtual Fear.
My five cents….
Human decisions < Immutable code.
Crypto is experiencing a revolutionary movement as we speak. The FTX collapse remains a tragic event for users, but there are some positives to take away from the mess.
As the newsletter noted yesterday, DeFi is experiencing a blooming event. A testament to the crypto ethos of trustless systems, where immutable code protects assets from the often misguided hands of human actors in the space.
This is just the start.
These events are a funneling moment for DeFi. For every misguided actor in the space, the power of decentralized systems grows a little bit stronger. And while DeFi improves a little every day, trust in centralized entities deteriorates slowly but surely over time.
This trend will continue as more and more entities reveal exposure to FTX and any future mishaps of fallible actors. The downsides of the intertwined nature of centralized players are bringing massive awareness to the power of DeFi, a powerful narrative that's sure to stick.
It'll take a long time to transpire fully, but it's how DeFi wins in the end.
Gabriel
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For entertainment purposes only. NEVER FINANCIAL ADVICE