August 22, 2022       /       Unchained Daily       /       Laura Shin

Daily Bits✍️✍️✍️

• The FDIC issued cease-and-desist letters to five crypto companies, including FTX US.
• Aztec said FTX froze user accounts for using Aztec Network, which it deemed a “privacy mixing service,” and the latter responded with some initiatives to deter money laundering.
• Crypto lender Hodlnaut has laid off 80% of its employees since it halted withdrawals.
• After dropping by 8% on Thursday, the stablecoin HUSD recovered its peg.
• Tether, the entity behind USDT, revealed a 58% decrease in its commercial paper holdings.
• FTX generated more than $1 billion in revenue last year, according to CNBC.
• After estimating it would run out of cash in October, the CFO of Celsius pushed that date till the end of the year.
• Stephan Tual, one of the main designers behind the structure of The DAO, left the Ethereum community citing a disagreement with the current state of the network.
• A group of 50 people protested against the arrest of Alexey Pertsev in Amsterdam.
• BIT Mining tries to bring calm to investors after the NYSE warns the company for not being in compliance with the listing standards.
• Tribe DAO proposed a $157 million redemption plan to compensate the victims of the Rari attack and distribute crypto assets to token holders.
• Ethermine, the largest Ethereum miner, stopped processing sanctioned transactions.

Today in Crypto Adoption…

• Since being introduced in October, Nigerian CBDC eNaira has been used to carry out almost $10 million worth of transactions.
• Financial institutions in South Africa will be allowed to serve crypto clients.

The $$$ Corner…

• .bit raised $13 million in a series A funding round.
• Self-custody solution Safeheron closed a $7 million pre-Series A round.

What Do You Meme?

What’s Poppin’?

Bored Apes Floor Price Hits a Yearly Low, With Some at Risk of Liquidation

by Juan Aranovich

The floor price of the Bored Ape Yacht Club (BAYC) NFT collection hit its lowest since the beginning of the year and many holders who have borrowed against their Apes are in danger of liquidation.

BAYC is the largest NFT collection by market capitalization, at ~684,000 ETH, followed by CryptoPunks and the Mutant Ape Yacht Club.

On Saturday, the floor price of the collection hit 65 ETH. Along with all the crypto market, the project created by Yuga Labs has been on a downward trend since April 30, when it hit an all-time high of 155 ETH.

BendDAO is a decentralized NFT liquidity protocol in which users can deposit their NFTs (including BAYCs, CryptoPunks, MAYCs, and others) to provide collateral in order to borrow up to 40% of the floor price in ETH. If the user’s health factor (which measures the safety of the deposited assets against the borrowed assets and its underlying value) goes beyond 1, they get liquidated.

Coindesk reported on Friday that 45 of the 272 Bored Apes with BendDAO loans tied to them were in the “danger zone”, which means that the NFT is close to being auctioned off. At current market prices, that accounts for approximately $5 million at risk.

With floor prices as low as they are, there are some concerns about the consequences of a massive liquidation for the NFT market. “Liquidation will cause a death spiral for the BAYC ecosystem and NFT market as a whole,” explained crypto user doubleQ.

However, another user called TradFi.eth tried to bring some calm to the situation, as he thinks that this liquidation won’t have the previously mentioned effects. “Cascading liquidations actually will NOT happen because of the liquidation structure. Liquidators must bid within 95% of current floor price AND >= current debt. Liquidation window is 48 hrs,” he said.

Yesterday night, NFTStatistics.eth, the director of research at Proof Collective, warned that BendDAO had run out of ETH. At the time of writing, the contract has a balance of only 534 ETH. According to BendDAO, users have lent 15,000 ETH in the platform. Therefore, lenders will not be able to pull their money out. Borrowing and lending rates soared on the platform, with users having to pay as much as 100% for their debt. As a consequence, the health factor will get closer to the danger zone much more rapidly, as debt grows at a 100% APR.

Recommended Reads

1. SEC chair Gary Gensler on protecting investors
2. Olga Kharif on Ethereum’s centralization concerns
3. korpi on wallet security

On The Pod…

Ari Redbord, Head of Legal and Government Affairs at TRM Labs, talks about the sanctions on Tornado Cash, and the role of blockchain analytics tools in crypto. Show highlights:

• Ari’s background as a federal prosecutor and his work for the US Treasury
• why regulators sanctioned Tornado Cash, according to Ari
• why the Ronin hack was important for regulators to start taking DeFi hacks more seriously
• the fact that for the first time the Treasury Department sanctioned software
• whether the Office of Foreign Assets Control (OFAC) messed up
• whether regulators understood the impact on regular users
• the role of TRM and blockchain analytics tools in mitigating risk
• how decentralized applications use tools like the ones provided by TRM to comply with regulations and to block addresses
• why, if Ari were a regulator, he would focus on regulation guidance
• whether the sanctions on Tornado Cash are unconstitutional
• what the future of privacy in crypto looks like and whether the government is going after privacy technologies

Book Update

You can purchase it here: http://bit.ly/cryptopians