Blockchain Consultants

Blockchain Transformations Done Here

Stablecoins

Altcoin Roundup: Stablecoin pools could be the next frontier for DeFi

In times like these, when the entire cryptocurrency market is down and there is nary a sector-wide runup to be found, traders have to dig into data to see how the market dynamics may have changed to pinpoint signs of new growth. 

Stablecoins are the newest trend to emerge in the decentralized finance (DeFi) arena due to the resiliency they bring to the sector, especially since protocols that are more reliant on the dollar-pegged assets continue to offer token holders low-risk yield opportunities in turbulent market conditions.

Possible evidence of stablecoins rising influence can be found in the difference between the decline in Ether’s (ETH) price and the total value locked in smart contracts. The price of Ether declined by 20% more from its peak than the decline in the total TVL of the DeFi sector.

TVL in smart contracts vs. Ether price decline. Source: Glassnode

When one takes into account that most of the crypto market saw price declines on par with what Ether experienced, the fact that the DeFi TVL fell less percentage-wise than the price of Ether points to the stability offered by stablecoins.

Stablecoin marketcap increases tenfold

The total amount of stablecoins available in the market has skyrocketed from under $15 billion to more than $113 billion over the past year, led by Tether (USDT) and USD Coin (USDC), bringing an increased level of liquidity to DeFi protocols.

Top seven stablecoins by market capitalization. Source: CoinGecko

The top stablecoins are included in a large percentage of the liquidity pool (LP) pairs available on DeFi platforms, as well as being included as a standalone token that users can deposit on protocols, such as Aave, to earn a yield. This further makes them an integral part of the burgeoning DeFi ecosystem.

Stablecoins have, in fact, led to the creation of a specialized subset of DeFi protocols, which focus on yield farming stablecoins and provide a safer way for investors to earn a yield while minimizing risk.

Early on in the DeFi craze, protocols attracted new users and deposits by offering high yields that were typically paid out in the native token of the protocol.

With a majority of DeFi tokens now down at least 75% from their all-time highs, according to data from Messari, many of the gains that users thought they made through staking and providing liquidity have evaporated, leaving little to show for the risks taken on these experimental platforms.

The battle for stablecoin liquidity

The rise of successful stablecoin-focused protocols such as Curve Finance, which is a decentralized exchange for stablecoins that uses an automated market maker to manage liquidity, platforms such as Yearn.finance, Convex Finance and Stake DAO battle to offer the best incentives that will attract a larger share of the Curve ecosystem.

Supplying stablecoins to Curve, or as a stablecoin LP like as a USDC/USDT pair, amounts to the blockchain version of a savings account. Many of the top protocols, including the three listed above, offer between 10% and 30% yields on average for stablecoins deposits.

Related: How stablecoins stay stable, explained

Thanks to smart contracts, users can make deposits to automated, compounding stablecoin liquidy protocols, reducing the stress of the daily market gyrations.

Total market capitalization of the top 100 DeFi tokens. Source: CoinGecko

The aftermath of the May 19 sell-off is still impacting investors, and in times like these, the yield opportunities provided by supplying stablecoins to DeFi protocols is an attractive way to diversify a crypto portfolio and hedge against market downturns.

Want more information about diversification into the above-mentioned projects?

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Altcoin Roundup: Stablecoin pools could be the next frontier for DeFi

Source

Altcoin Roundup: Post-crash prices give investors a chance to build a diversified portfolio

Welcome to Cointelegraph Market’s Altcoin Roundup, an in-depth newsletter that focuses on investing from the perspective of fundamental analysis and seeks to identify emerging blockchain projects and tokens that fill niche demands within the growing cryptocurrency market.

The concept of multi-sector investing has long been advocated in traditional finance as the conventional approach to building a balanced portfolio. Typical allocations include representation of stocks, government and corporate bonds, commodities and real estate.

Now that the cryptocurrency market has grown to a multitrillion-dollar ecosystem with numerous emerging assets, clear sectors are beginning to emerge. Savvy crypto investors looking to apply portfolio diversification practices to their holdings should begin to pay attention.

Total cryptocurrency market capitalization. Source: CoinMarketCap

The previous Altcoin Roundup discussed some of the top layer-one solutions and coins like Polkadot/DOT, Cosmos/ATOM and Solana/SOL that have been gaining prominence over the past year, but these projects could also fall under the large-cap investment umbrella alongside high-profile assets like Bitcoin (BTC), Ether (ETH) and Cardano’s ADA.

Once an investor has an adequate representation of blue-chip projects, other emerging sectors like decentralized finance (DeFi), oracles and stablecoins can be considered.

DeFi: Uniswap, Aave and PancakeSwap

Decentralized finance emerged during the summer of DeFi in 2020, and the sector helped kick off the current bull market by bringing a new level of excitement to the crypto ecosystem, which was in need of the next big innovation.

One of the best metrics used to demonstrate the rising success of DeFi as a whole is the total value locked (TVL) ranking, which collectively reached an all-time high at $157.63 billion on May 14, according to data from Defi Llama, and stands at $116.62 billion at the time of writing.

Total cryptocurrency market capitalization. Source: CoinMarketCap

The release of Uniswap’s decentralized exchange (DEX) interface — which enabled new projects to immediately launch and made tokens available to the general public — helped ignite a wave of growth and innovation across the market that continues to expand to this day.

In less than a year, Uniswap evolved into the top DEX serving the crypto community, seeing an all-time record of $5.74 billion in 24-hour trading volume during the market sell-off on May 19 and $5.37 billion in total volume locked on the platform.

Daily DEX volume. Source: Dune Analytics

The vast array of liquidity pools is the primary allure for investors looking to diversify their crypto portfolio. Through these pools, stakers have the ability to earn a yield by providing liquidity for the exchange in return for a portion of the trading fees. A number of pools offer staking returns ranging from 25% to 2,000%, and traders are able to select pools based on a variety of factors, including their appetite for risk.

While Uniswap has led the way for DEXs, there are other options like Aave’s lending platform that has emerged as the highest-ranking DeFi protocol by total value locked, with more than $14.1 billion in TVL at the time of writing.

Aave’s recent decision to offer layer-two (L2) access on Polygon has brought renewable energy to the AAVE ecosystem, as traders and liquidity gladly migrated to the lower-fee environment offered on Polygon. This resulted in a significant boost in TVL for both AAVE and Polygon’s native token, MATIC, which is now the second-ranked protocol by TVL, with $11.08 billion locked on the protocol.

Every balanced portfolio also has a small 1% to 5% allocation reserved for higher-risk assets, and the crypto market has no shortage of high-risk, high-growth assets.

For tokenholders who are open to a little more risk in return for higher yields, the Binance Smart Chain-based PancakeSwap boasts a TVL of $7.67 billion, and offers annual percentage rates (APR) of up to 482.54%, according to the project’s website, with all rewards paid out in the protocol’s native CAKE token.

Stablecoins are the new “savings accounts”

Though a token that stays pegged to a fixed value may not sound like the most attractive opportunity for investors, stablecoins have evolved to play a crucial role in the functioning of the wider cryptocurrency ecosystem.

Stablecoins often serve as the backbone of trading pairs on centralized and decentralized exchanges, as well as offering traders a simple way to lock in gains.

The two most prominent stablecoins are Tether (USDT) and USD Coin (USDC), which have circulating supplies of $60.9 billion and $21.6 billion tokens, respectively. Tether is currently the most traded crypto token, boasting 24-hour trading volumes that range from $100 billion to $290 billion.

Tether (USDT) vs. USD Coin (USDC) vs. DAI circulating supply. Source: CoinGecko

Other popular stablecoins include Binance USD (BUSD), the stablecoin created for use within the Binance Smart Chain ecosystem, as well as the algorithmically controlled stablecoin DAI, which is minted via pledging collateral on the Maker protocol.

For those looking to earn a little extra yield while in the safety of stablecoins, there are multiple options available such as depositing tokens into a lending protocol like AAVE to earn up to 5% on deposits or the decentralized stablecoin exchange Curve, which offers yields of up to 50% for some stablecoins pools offered.

Other popular options include supplying liquidity for the various decentralized exchanges like PancakeSwap, which offers 8.64% for its DAI-BUSD liquidity pool, or QuickSwap, which offers a reward plus fee of the annual percent yield of 15.01% for its USDT-USDC pool and 26.75% for its DAI-USDC pool.

Oracles

In a world that is becoming increasingly dominated by digital data, no cryptocurrency portfolio would be complete without access to an oracle provider. These entities are the industry’s heavyweights that facilitate the secure exchange of data and information within the cryptocurrency ecosystem, as well as wider financial markets.

Currently, Chainlink is one of the most dominant oracle projects and a key player that comprises a thriving open-source community of data providers, node operators, smart contract developers, researchers and security auditors.

While the Chainlink network doesn’t currently offer a direct way to earn a yield through a simplified staking or governance mechanism, it is easy for tokenholders to put their stash to work in DEX liquidity pools and DeFi protocols like Aave.

For investors who are not ready to trust decentralized exchanges and DeFi platforms, centralized yield-bearing companies like Nexo, Celsius and BlockFi are also available for crypto investors looking to earn a return on their holdings.

Centralized exchanges like Coinbase and Binance also offer direct staking capabilities. For example, investors could stake BAND for up to 11.7% APR on major exchanges.

As a result of the May sell-off, which saw more than $1.2 trillion in value wiped out of the cryptocurrency market, many of the top projects are now well below their all-time high values and trading at what some investors would describe as “bargain bin” prices.

While market participants remain unsure as to which way prices are headed in the short term, it would be wise to investigate these opportunities sooner rather than later, as the notoriously volatile crypto market can make significant moves at the drop of a hat.

Want more information about diversification into the above mentioned projects?

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Altcoin Roundup: Post-crash prices give investors a chance to build a diversified portfolio

Source

Possible Yearn rival Convex Finance passes $1 billion in total value locked

While much of the market reels from a devastating pullback that has dragged DeFi’s closely-watched total value locked (TVL) figure down from all time highs, one protocol is shrugging off the macro weight and surging up the TVL leaderboard. 

Ethereum-based Convex Finance ($CVX) cracked a billion dollars in TVL earlier today, rising as high as $1.14 billion and briefly cracking the top-20 by size, per DeFilama.

Convex team lead “c2tp” told Cointelegraph in an interview that the team has been overwhelmed by the support.

“We are blown away with the amount of support our platform has received. We’re very grateful for everyone who shares our vision. The community getting the word out has been the major contributing factor, as well as a show of support from the Curve team,” they said.

Convex is designed to be an optimizer for the Curve protocol, a platform that enables swaps of similar assets such as between different stablecoins or ETH and Lido’s staked ETH. Its CRV token has a timelock functionality, where users stake CRV for four years in exchange for veCRV, which allows users to “boost” the rewards for staking in Curve pools.

“We want to extrapolate the complex things away, like how much veCrv is needed to boost how much liquidity. But we also want to be open enough to show everyone what’s going on behind the scenes and the benefits we provide,” said c2tp of Convex’s services. “On top of veCrv to liquidity balance, locking a token for four years can be a big step for most people. We hope our system gives confidence in the value of our tokens so that you can join the ecosystem while still remaining liquid.”

The launch has not been without drama, however. Some observers have claimed that because Convex optimizes Curve positions the project is a threat to Yearn.Finance, whose yield vaults rely heavily on Curve.

However, c2tp rejected this notion, saying that Yearn and Convex compliment each other in what’s ultimately a positive-sum DeFi ecosystem:

“We don’t really see it as direct competition. There are different platforms with different goals. There is also a lot to gain when platforms integrate with each as part of the larger defi system. We encourage anyone to use what we have to offer as well as build on top. Defi is not a winner takes all, but something that becomes stronger as all the pieces fit together.”

Likewise, a Yearn representative dismissed the notion of the protocols doing battle with one another, noting that a large portion of Convex’s TVL is delegated by Yearn. 

“We love to see it,” said Weaver, a member of Yearn’s growth team of Convex’s success. “Many in crypto spend their time looking for ways to pit tribes against each other, but zoom out today and you see 19M additional veCRV boosting Yearn vaults, thanks to Convex. You asked if this was a vampire attack on Yearn. I don’t know what the opposite of that is, but this new lego is pumping boosties into Yearn.”

Possible Yearn rival Convex Finance passes $1 billion in total value locked

Source

Amid rising stablecoin inflow, cautious traders fear a dead cat bounce

The recent extreme volatility in the cryptocurrency market following Bitcoin’s (BTC) dip to $30,000 and the recovery to $38,000 has traders confused about whether the current price action is a ‘dead cat bounce’ which will see token prices head lower or a solid reversal that will set the floor for the next leg higher for the market. 

While BTC price still remains more than 40% below its all-time high of $64,863, bulls have managed to weather multiple attempts to significantly break below support at $36,000. 

BTC/USDT 4-hour chart. Source: TradingView

A closer analysis of on-chain data and exchange inflows shows that Bitcoin’s sell-off led to the market-wide downturn and Delphi Digital analyst Nick Pappageorge highlighted the fact that BTC inflow to exchanges “topped over 20,000 BTC in just one hour on Wednesday,” which was the highest level sesince March 2020.

BTC exchange inflows. Source: Delphi Digital

FUD-o-rama destabilizes the market

One of the major sources of market turbulence identified by Pappageorge was the seemingly daily FUD headlines, including yet another Chinese government ban of cryptocurrencies and concerns that Tesla would dump its Bitcoin holdings. These back-to-back fear-laced narratives led retail traders to offload their coins on exchanges to escape a further price slide.

Pappageorge also pointed to concerns raised by a pair of hacks on the Binance Smart Chain which saw the price of PancakeSwap (CAKE) and Pancake Bunny (BUNNY) plunge, with the latter being drained of $45 million worth of user funds as compounding market fears.

The turnaround in sentiment this week has been in part fueled by positive headlines such as the formation of a Bitcoin mining council following a meeting between Elon Musk, Michael Saylor and North American Bitcoin miners, which has helped spark a turnaround in BTC and altcoins. The quick reversal so triggered the debate on whether the current market activity resembles a dead-cat-bounce or a trend reversal. 

Experienced traders accumulate at lower prices

While many of the newer entrants to the cryptocurrency market have found the recent volatility nauseating, the more experienced investors jumped at the chance to accumulate BTC at a 50% discount as the number of new accumulation addresses reached new all-time highs amid the shakeout.

Number of Bitcoin accumulation addresses. Source: Glassnode

Well-known Twitter personality and Bitcoin analyst PlanB posted the following chart showing how Bitcoin oscillates around the stock-to-flow (S2F) model, showing the recent downturn is well within the standard range it deviates.

BTC price oscillations around S2F model. Source: PlanB

PlanB said:

“Buying opportunities like today are rare (Q1 2019 when I wrote the S2F article, March 2020 due to covid, and now). Life is all about choices.”

As for bullish signs needed to support a quick recovery, the May 24 Delphi Daily report from Ashwath Balakrishnan highlighted the “sharply rising” circulating supply of fiat-backed stablecoins, which has increased from “15 billion to nearly 21 billion in the last 5 days.”

Stablecoin circulating supply. Source: Delphi Digital

While this could be a sign that dip buyers are “loading up ammo,” Balakrishnan was sure to note that “it could also just be stablecoin arbitrageurs” and stressed the importance of “ensuring that the circulating supply doesn’t drop sharply to confirm these inflows will be deployed.”

A record amount of dry powder is now available on exchanges but at the same time, an entirely new cohort of cryptocurrency investors who just experienced their first 50% pullback are now wondering if they should pull out the market or double-down on their investment. The more experienced in the crowd are betting that the market is headed higher but further volatility is all but guaranteed.

The views and opinions expressed here are solely those of the author and do not necessarily reflect the views of Cointelegraph.com. Every investment and trading move involves risk, you should conduct your own research when making a decision.

Amid rising stablecoin inflow, cautious traders fear a dead cat bounce

Source

Cointelegraph Consulting: DeFi projects launch on Polygon, usage skyrockets

In the midst of the hectic crypto market, the gas fees in the decentralized finance (DeFi) sector have skyrocketed, once again highlighting the value of layer-two scaling solutions. Cointelegraph Consulting teamed up with Covalent to discover the numbers behind Polygon, the network that is onboarding an increasing number of decentralized applications, from SushiSwap to bZx.

Aave, DeFi’s lending giant, launched on Polygon this April and has already lured away about 66,000 unique users to the layer-two version. Nearly $12 billion has been deposited since the launch, and over $7 billion has been borrowed. Though what is important is that only $158 has been spent on gas across the entire Aave’s Polygon version.

Notably, the major fraction of borrows involves stablecoins, with USD Coin (USDC), Dai and Tether (USDT) making up roughly 60% of borrowings on Aave’s Polygon version. In fact, the breakdown of the borrowings reveals that Aave managed to execute its strategy that prevents users from risky borrowing against volatile assets, which in turn usually leads to liquidations.

Hot off the heels of 1inch Network’s launch on Polygon on May 12, we take a look at its usage as well. 1inch on Polygon has reached almost $18 million in daily swaps by dollar value, with the most swaps denominated in USDT, Wrapped Ether (WETH), USDC or DAI. 

There have been nearly 10,000 swaps facilitated thus far. The platform has already facilitated $43 million in swaps, but only $25 of gas was used to swap this amount.

Amid Ethereum network congestion and rising costs, Polygon is gaining momentum due to its astonishingly low transaction fees. With more DeFi projects pursuing multichain strategies, Polygon could onboard more projects in the near future.

For more charts, market signals and carefully curated news analysis, download the full edition of this issue.

Cointelegraph’s Market Insights Newsletter shares our knowledge on the fundamentals that move the digital asset market. With market intelligence from one of the industry’s leading analytics providers, Covalent, the newsletter dives into the latest data on social media sentiment, on-chain metrics and derivatives.

We also review the industry’s most important news, including mergers and acquisitions, changes in the regulatory landscape, and enterprise blockchain integrations. Sign up now to be the first to receive these insights. All past editions of Market Insights are also available on Cointelegraph.com.

Cointelegraph Consulting: DeFi projects launch on Polygon, usage skyrockets

Source

Verified by MonsterInsights