equity

Jun 22 2021

Hedge fund that shorted GameStop closes as $1.13B GME stock offer completes

One of the hedge funds badly burned in the infamous GME social media driven short squeeze is closing down, while GameStop itself has just completed its $1.13 billion equity offering.

According the Financial Times, London-based White Square Capital operated by Florian Kronawitter has closed its main fund and will return capital to investors.

White Square Capital reportedly had $440 million in assets under management (AUM) at its peak. The hedge fund was one of many that suffered double digit percentage losses from short positions in January, when the Wall Street Bets subreddit helped pump GME’s price from $21 on Jan. 12 to around $345 on Jan. 27.

However the FT reported a source as saying the fund’s closure was unrelated to its GameStop misadventure. In a letter to investors, co-founder Kronawitter cited the traditional equity long-short model was being “challenged” in the current financial climate, as there are “way too many fish in the pond” that operate with the same long-short strategy.

“The traditional edge is being arbed away [eroded by other investors], there’s an oversupply of capital,” Kronawitter said.

The co-founder also highlighted that the hedge fund’s opportunities for arbitrage have “diminished” due to the “onslaught of capital caused by central bank monetary interventions.”

These factors are also accompanied by the relative ease of access to information and cheaper investment alternatives, with Kronawitter asserting that it brings it to question how the management fees from hedge funds can be justified in the current market.

In a Reddit thread discussing the news on the r/wallstreetbets subreddit, members of the group shared their delight, with user “turtleduck77” likening hedge funds that shorted GME to dominoes falling, noting that its “Time to invest in dominoes! The game not the pizza.”

GameStop completes ATM offering

Yesterday GameStop announced the completion of an at-the-market (ATM) equity offering, with the company selling five million shares of common stock generating almost $1.3 billion before commissions and offering expenses.

“GameStop will use net proceeds from the ATM Offering for general corporate purposes as well as for investing in growth initiatives and maintaining a strong balance sheet,” the announcement read.

One of the growth initiatives likely to be funded is GameStop’s NFT marketplace set to be launched on Ethereum.

While details are sparse at this stage, the firm’s blockchain division is reportedly headed by the former business operations leader of Ethereum and Loopring DEX, Matt Finestone.

The smart contract platform is based on the ERC-721 NFT standard and was created by foobar, a developer who has worked on wrapper solutions for the classic version of Crypto Punks, HD Mooncats, and MooncatHelper NFT projects in the past.

https://t.co/ruuCD2q8JD pic.twitter.com/CxcaGKPeJk

— foobar (@0xfoobar) May 25, 2021

While top crypto assets and memecoins have been in a major down trend since May 12, GME’s meme stock has increased 36.6% within that time frame, increasing from $161 on May 12, to $220 as of today, according to TradingView.

In comparison, data from CoinGecko shows that crypto’s nearest equivalent in meme coin Dogecoin has cooled down, has dropped 64% — declining from a price range of $0.50 on May 12, to $0.18 today.

Hedge fund that shorted GameStop closes as $1.13B GME stock offer completes

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Apr 08 2021

DeFi’s money markets are finally luring in institutional investors

Bitcoin’s bull run from last year has caused even some of its biggest skeptics to soften their stance. From economists to hedge fund managers, the world is opening itself up to technology, and at the center of this movement is decentralized finance, or DeFi. While the market capitalization of all cryptocurrencies has hit $2 trillion, worth as much as Apple, it’s the promise of DeFi — a small corner of the blockchain industry today — that’s grabbing the attention of institutional investors.

As Bitcoin’s (BTC) bullish trend persists, interest-bearing crypto products have become all the rage. Some services offer up to 8% returns on Bitcoin holdings. For investors who are already expecting a rise in value, this can be incredibly useful for maintaining cash flow without selling any assets.

The three main factors solidifying institutional interest in Bitcoin are the current historically low interest rates, the inflation rate and geopolitical instability. With near-zero interest rates expected for the foreseeable future, investors are gearing up to move their funds into alternative locations for securing wealth.

The United States Federal Reserve’s 2% inflation target has incited concern in investors fearing devaluation, and with tensions between the U.S. and China on a precarious edge, portfolios denominated in U.S. dollars are becoming riskier by the day.

A market for money

Buying, storing and using cryptocurrencies securely is still quite a complex ordeal — far more involved than setting up a bank account. However, according to Larry Fink, the CEO of BlackRock — a global investment management fund with nearly $9 trillion in assets under management — Bitcoin could evolve into a global market asset and achieve new highs in the upcoming years.

In the traditional financial system, money markets are parts of the economy that issue short-term funds. They usually deal with loans for periods of a year or less, and offer services like borrowing and lending, buying and selling, with wholesale trading taking place over the counter. Money markets are composed of short-term, highly liquid assets and are part of the broader financial markets system.

Money markets are traditionally very complicated, with expensive overheads and hidden fees pushing most investors to hire a fund manager. However, their existence is paramount to operating a modern financial economy. They incentivize people to lend money in the short term and allocate capital toward productive use. This improves the overall market’s efficiency while helping financial institutions meet their goals. Basically, anyone with extra cash on hand can earn interest on deposits.

Money markets are composed of different kinds of securities, such as short-term treasuries, certificates of deposits, repurchase agreements and mutual funds, among others. These funds generally consist of shares that cost $1.

On the other hand, capital markets are dedicated to the trade of long-term debt and equity instruments, and point to the entire stock and bond market. Using a computer, anyone can purchase or sell assets in mere seconds, but companies issuing the stock do so to raise funds for more long-term operations. These stocks fluctuate, and unlike money market products, they have no expiration date.

Since money market investments are virtually risk-free, they often come with meager interest rates as well. This means that they will not produce huge gains or display substantial growth, compared with riskier assets like stocks and bonds.

DeFi vs. the world?

To hedge against currency risk, institutions have started using Bitcoin, and retail investors are following their lead. More than 60% of Bitcoin’s circulating supply hasn’t moved since 2018, and BTC is predicted to push well above $100,000 in the next 24 months.

If the current trend carries forward, investors will continue to stockpile BTC. However, while much of the supply of the world’s first cryptocurrency remains in storage, the DeFi industry is constantly producing alternative platforms for interest-bearing payments through smart contracts, which increases transparency by allowing investors to view and track on-chain funds.

The average return for DeFi products is also much higher than in traditional money markets, with some platforms even offering double-digit annual percentage yields on deposits. From asset management to auditing smart contracts, the DeFi space is creating decentralized infrastructure for scalable money markets.

According to Stani Kulechov, co-founder of the Aave DeFi protocol, rates are high during bull markets because the funds are used to leverage more capital, with the cost of margin pushing up the yield. “New innovation in DeFi is consuming more stablecoins, which further increases the yield. Unless there is a new capital injection — these rates might stick for a while,” he said.

The Ethereum network currently hosts most of the DeFi applications, and this has barred tokens that aren’t available on the network from participating in decentralized finance. Bitcoin, for example, despite being the largest cryptocurrency by market capitalization, has only recently found its way onto DeFi platforms.

With Kava’s Hard Protocol, investors can yield farm using Bitcoin and other non-ERC-20 tokens like XRP and Binance Coin (BNB). Backed by some prominent names (Ripple, Arrington XRP Capital and Digital Asset Capital Management, among others), the platforms allow users to stake their cryptocurrencies into a pool of assets, which is lent out to borrowers to generate interest.

The team also plans to add support for Ethereum-based tokens in the near future. The network’s upgrade to Kava 5.1, which was postponed to April 8 after failing to reach the required quorum, will also introduce the Hard Protocol V2, bringing powerful incentivization schemes and enhancements to its governance model.

Most loans in DeFi are overcollateralized, meaning the pool always has more money than it lends out. In case the value of the issued token drops, funds in the pool are liquidated to compensate.

According to Anton Bukov, co-founder of decentralized exchange aggregator 1inch, blockchains are the first-ever unbiased executors in human history — very limited, but ultimately fair — and could deliver new services and new flows of interactions in future. “Developers are doing their best to solve potential dishonesty issues of existing flows and invent new flows by replacing intermediaries,” he said.

By creating an automated platform to borrow and lend assets, decentralized finance enables money markets without intermediaries, custodians or the high fees that stem from high infrastructural costs.

Honest work

Of the many trends DeFi has set into motion over the last few years, yield farming has attracted quite a lot of attention. Yield farming is when the network rewards liquidity providers with tokens that can be further invested into other platforms to generate more liquidity tokens.

Simple in concept, yield farmers are some of the most vigilant traders out there, constantly switching up their strategies to maximize their yield and tracking rates across all platforms to ensure they’re getting the sweetest deal. The potential rate of return can become obscenely high, but it’s still unclear whether yield farming is just a fad or a phenomenon in the making. Kulechov added:

“Yield farming is simply a way to distribute governance power to users and stakeholders. What actually matters is whether the product itself would find protocol market/fit. Most successful governance power distributions with yield farming have been with protocols that have found protocol market/fit before such programs.”

Yield farming has an incredibly positive feedback loop, with an increase in participation pushing the value of its governance token up, driving further growth. According to Kava CEO Brian Kerr, while this feedback loop can produce very positive results in bull markets, it can have entirely the opposite effects in falling markets:

“It will be up to the governance groups of the various projects to navigate bear markets effectively, by ratcheting back rewards before a full-on death spiral occurs. Regardless of bull or bear markets, yield farming will be a mainstay in blockchain projects for years to come.”

Money markets are the pillars of our global financial system, but most of its transactions occur between financial institutions like banks and other companies in time deposit markets. However, some of these transactions do find their way to consumers through money market mutual funds and other investment vehicles.

Decentralization is the next frontier for finance, and as prominent investors continue to engage with the DeFi space, a decentralized economy seems all but inevitable. Participating in the burgeoning environment may be a risky bet today, but what decentralized finance platforms learn now will be the foundation of the robust DeFi applications of the future. According to Bukov, the higher interest rates of DeFi platforms are “absolutely sustainable.” He added:

“Higher profits are usually involved with higher risks. So the risk-profit model of all these opportunities is always nearly balanced. Normalizing risks would decrease profits because more participants will join to share the rewards.”

From smart contract malfunctions to the unauthorized withdrawal of community funds, the DeFi space is a place of both miracles and nightmares. DeFi-based yield farming platforms are still in their very early stages, and while the numbers can be all too tempting at times, it’s crucial to do your own research before investing in any platform or asset.

DeFi’s money markets are finally luring in institutional investors

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Mar 21 2021

Actionists reinventing art: As it ever was, so shall it ever be (even in crypto)

Art trumps money. Always. It is important to remember this amid the current crypto art hype. Nonfungible tokens have given digital art the benefit of provable ownership, scarcity and programmability, allowing digital creators to promote and sell their work in ways never before possible.

With the blockchain industry growing and markets becoming more liquid, crypto art has seen a flurry of incredible primary market sales. The ICO-like fear of missing out has inspired collectors and artists to chase scarcity, and even destroy art in the process, as was the case with the creation and auction of the Banksy print NFT.

Still, what may seem like a marketing ploy may be one of the greatest actionist performances the art world has seen to date.

Chasing scarcity

The rarer something is, the more it is coveted. That seems to be the basic principle of any collectible items and applies to crypto art as well. A quick look at single vs. multiple-edition sales shows that the market favors uniqueness.

This chase for scarcity has taken on many forms, from limiting the number of editions of a particular art piece to finding “firsts” in a sea of things — as was the case with Jack Dorsey’s tweet.

Major stars from the art world and music industry have started to experiment with NFTs, making six-figure drops a seemingly commonplace occurrence. From Paris Hilton’s $17,000 picture of a cat to Grime’s $389,000 Death of the Old to Beeple’s landmark Christie’s auction, sales and awareness are on the rise.

The allure of mega sales

Despite the incredible primary market sales, the secondary market, for the most part, has been relatively quiet. Looking at data from SuperRare, we can see that secondary market sales counts are a fraction of the number of primary items sold.

The fact that artists’ royalties are dealt with differently on different platforms and rarely function cross-platform further forces both creators and collectors to focus on initial sales for near-term success.

Bridging the gap

The blockchain industry has seen and continues to see many attempts to bridge the physical and digital worlds. With respect to art, the initial attempts were focused on tokenization of physical art and pieces by famous painters, with price tags that made them highly illiquid. The hope was that fractionalizing the expensive pieces through tokenization would lead to greater engagement from people who were previously priced out of the high-end art market. This would make the paintings more liquid investment vehicles.

To this point, the attempts have had very limited success. This may be due in part to the mismatch in audiences: Traditional collectors don’t operate crypto wallets, and digital natives feel less attached to physical items held by a centralized party.

However, what if someone could take a physical art piece and make it digital? The Injective Protocol team has tried to do just that. It acquired a Banksy screenprint “Morons (White),” only to burn the physical artwork (while streaming the event) and minting the image as an NFT.

The seemingly barbaric ritual was supposed to ascend the Banksy screen print to a blockchain and earn the team a tidy sum in the process. The second goal was clearly achieved. The original piece was acquired for $95,000 and auctioned off on OpenSea for around $400,000. However, it can be argued that what happened was a transfer from the physical to the digital world.

Rather, the Injective Protocol team destroyed a Banksy screenprint and created an entirely different work of art.

Vandals or actionists?

It is easy to write off the burning of the Banksy NFT as a successful marketing ploy, but on closer inspection, there is so much more there.

On the surface, there is a tip of the hat to the original artist, who himself has destroyed his own piece at an auction for the sake of creating new art. However, that is just the beginning.

Consider that art has a rich tradition of actionist events where an art installation was damaged for the sake of a statement, effectively creating a new piece of art. The most comparable example is probably that of Alexander Brener, who painted a green dollar sign on Kazimir Malevich’s white cross at a museum exhibition.

Brener was making a statement against “corruption and commercialism in the art world.” Now look closer at the Banksy screenprint and read what it says: “I can’t believe you morons actually buy this shit.” That cannot be an accident.

At a time when a Beeple work sold for $6.6 million, while a Vincent van Gogh (albeit a disputed van Gogh) went for $650,000, the Injective Protocol team made a statement by burning this particular Banksy piece and selling the NFT, which no longer represents a physical artwork but the memory of that artwork, at an auction.

To top it all off, the team streamed the burning of the piece… in true performance art fashion.

Did the market miss the point?

While the market has been debating whether the merits of the destruction of art, the nature of scarcity and the price mechanics of crypto art, the Injective Protocol team may have pulled off one of the most spectacular actionist art statements in history.

This was a performance art piece, a vandalistic ritual and an ironic auction all in one.

The market may be chasing scarcity for the sake of scarcity, without even pausing to consider what just happened. It may even be that the Injective Protocol team did not intend for all of the hidden meanings to be there. However, that is the power of art.

Years from now, after the FOMOs and FUDs settle their scores, we will be looking at this not as another six-figure NFT auction, but as perhaps the first instance of actionist art in the crypto space.

The views, thoughts and opinions expressed here are the author’s alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.

Ilya Abugov is an experienced analyst with a background in equity analytics, international management consulting and IT. He incorporates his traditional industry experience in his approach to data analysis and project evaluation. Ilya is the former head of research at Crypto Briefing and is an advisor at DappRadar. He is especially interested in the DeFi, art and collectibles sectors of the crypto industry.

Actionists reinventing art: As it ever was, so shall it ever be (even in crypto)

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Mar 11 2021

Banking Industry Execute A Smart Blockchain Test

Blockchain, also referred to as the Distributed Ledger Technology, marks the history of digital assets unalterable and transparent with the use of cryptographic hashing and decentralization. Blockchain is a high-tech alteration for Bitcoin, and as it emerges as a piece of evidence for transactions globally, it thus is highly essential. Transactions get stored on a ledger across the network and can be verified by users among networks.
Banks, along with other institutions, have traditionally served as the guardians of financial activity. It aims to safeguard accounts, extend credit while facilitating payments. By keeping the commercial wheel running and in place, the model enables several financial institutions to perform several services such as account balancing, fraud detection, and more.
What is blockchain?
In simpler terms, blockchain can be referred to as a technology creating a distributed ledger of transactions on a specific network that is easily accessible, secure, and tamper-proof. Being made by a large series of data blocks, it comprises a complete set of transactions.
The blocks are chain together electronically and are locked with cryptography along with a public record of transactions being established. With an increased block, there is a lesser probability existing where blocks can be altered.
How does blockchain work?
This emerging technology comprises three distinct concepts, including nodes, blocks, and miners.
The block comprises multiple blocks where each has three distinct elements:
The data in the block
A hash: It is a 254-but number and essentially starts with a huge number of zeroes.
A 32-bit whole number known as nonce gets generated randomly with the creation of a block. This then generates a block header hash.
When it is created, a cryptographic hash is generated. On the other hand, the data in the block gets tied to the nonce and hash.
Miners:
These create new blocks on a chain and with the help of a process known as mining. With every unique nonce and hash, mining blockchain is not easy and especially on significant chains. Miners make use of special software that solves incredibly complex mathematical problems. As the nonce is only 32 bits with the hash being 256, four billion nonce-hash combinations need to be mined before finding the right one. With this, miners are said to have found golden nonce, and the block gets added to the chain.
Nodes:
Decentralization is one of the essential concepts, and it is a distributed ledger that gets connected to the chain. The nodes can be any electronic device that maintains blockchain copies while ensuring the functioning of the network. The nodes must have their copy with the network algorithmically approving newly mined blocks for the chain to get trusted, verified, and updated. The participant offers a unique identification number reflecting the transactions.
How can the banking industry execute a smart blockchain test?
Over the past years, the pace of innovation has increased and across industries at large. Specialized advances in storage, networking, computing power, and more have produced an array of innovative technologies and business models.
Prominent organizations such as banks and financial firms have undergone a long-running blockchain test involving a smart contract prototype developed by blockchain. Enterprise blockchain solutions from Axoni reveal a test that processed over-the-counter equity swaps.
This took place following the months of testing. A varied banking organization took part in the test, from JP Morgan, Barclays, Credit Suisse, and City with eminent financial industry firms such as Thomson Reuters and IHS Markit. It was also graced by consultancy firm Capco.
There were several fortnightly meetings conducted among participants, especially during the testing month period. The testing went for as long as four months that witnessed rigorous testing. It witnessed Axoni’s blockchain prototype that was installed by organizations on the premises along through a cloud environment. One can rely on Smart Contract Development Services to execute the operations effectively.
Smart contracts for Blockchain:
What smart contracts can do is streamline the complicated process involving intermediaries due to a lack of trust among participants. With the identity stored, the lenders can make credit-related decisions. Hence, a smart contract gets created between the bank, the dealer, and the lender.
The blockchain smart contract is generated through several combined trades as submitted by dealers on the blockchain network. This also comprises inputs based on simulated legal confirmations. Thus, the golden record has been typically established in a proper synchronized manner and across the distributed ledger, although traditionally, it was only possible with the help of a trusted third-party clearinghouse. It is time to head to a smart contract company to explore the operations of blockchain.
Conclusion:
It is recommended that you get in touch with a professional, smart contract service provider to better understand the industry and its new relation with blockchain. Earn the right knowledge to stay ahead in your realm of operation.
 Banking Industry Execute A Smart Blockchain Test 
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Mar 11 2021

Simplify’s Bitcoin ETF Would Invest in Grayscale’s Trust and U.S Stocks

The U.S Securities and Exchange Commission’s (SEC) reluctance to approve a Bitcoin exchange-traded fund (ETF) doesn’t seem to discourage issuers these days.

One such is Simplify Asset Management, which has gone ahead to find ways to structure its products. The firm plans to roll out a Bitcoin product that’s not entirely focused on bitcoin. And why should they? The regulators still don’t trust the crypto sector.

Simplify’s U.S. Equity PLUS Bitcoin ETF

Simplify has filed its Equity PLUS Bitcoin ETF with the financial regulator. According to the filing, the Simplify U.S. Equity PLUS Bitcoin ETF will invest up to 15% of its assets in cryptocurrencies, either “indirectly and solely” through Grayscale’s Bitcoin Trust.

The rest of the funds would be put into U.S stocks. BNY Mellon would be the ETF’s administrator and asset custodian, while the ETF would trade on the Nasdaq exchange, if approved.

Simplify is not the only entity that has been looking for creative ways to structure its products in the U.S. Investment giant, JP Morgan, also recently filed with the SEC to launch its own “Cryptocurrency Exposure Basket.”

Simplify’s move of buying shares of Grayscale Bitcoin Trust, which invests solely in Bitcoin, provides access to the largest cryptocurrency’s price movements without physically purchasing Bitcoin.

Bitcoin ETFs In the U.S

For many years, Bitcoin ETFs in the United States have been met with rejection.

From the Winklevoss twins to VanEck’s, Bitcoin ETF filed with the SEC has so far been met with a brick wall. Years down the line, the story has still not changed.

The regulators continue to drown attempts of approving a bitcoin ETF giving reasons such as the bitcoin market is too volatile, it lacks sufficient surveillance and that it is too easily manipulated.

While the U.S regulators continue to reject Bitcoin ETF issuers, Canada’s financial regulator the Ontario Securities Commission (OSC) has approved two ETF issuers to invest directly in Bitcoin and other cryptocurrencies. They are the Purpose Bitcoin ETF (BTCC) and the Evolve Bitcoin ETF (EBIT) who have both been listed on the Toronto Stock Exchange.

Another bitcoin ETF called the CI Galaxy Bitcoin ETF by Mike Novogratz’s Galaxy Digital Holdings has been launched on the Toronto Stock Exchange. If approved, this would make the third Bitcoin ETF in North America.

As the U.S regulators continue to tread carefully, market participants and crypto enthusiasts seem to be optimistic that with Canada leading the way, a full-fledged ETF could soon be operational within the country.

Simplify’s Bitcoin ETF Would Invest in Grayscale’s Trust and U.S Stocks

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