Article by

Other Topics

Market Insights

Web3 Watch

Published December 11, 2023
6 mins read

Article by [email protected]

Binance Updates

opBNB Roadmap

On 30 November, opBNB, BNB Chain’s L2 utilizing the OP stack, unveiled its roadmap. Apart from introducing AppChain architecture and driving community collaboration, here are its plans moving forward:

  • Q4 2023: Reduce fees from $0.005 to $0.001
  • Q1 2024: Increase block capacity from 100m/s to 150m/s
  • Q2/3 2024: Increase gas limit per block from 100m to 200m, and achieve 10,000 TPS
  • Q2/3 2024: Decrease gas fees by 10x to $0.0005

According to DefiLlama, the TVL of opBNB currently stands at $3.33m, up from $1.5m in August – a far cry from its competitors in the L2 space. We await to see if opBNB’s community collaboration efforts help to grow the ecosystem, along with its primitives, and consequently drive more user growth and capital into the chain.

Binance to cease support for BUSD

Back in February, BUSD (Binance’s stablecoin), was under regulatory scrutiny from the NY Department of Financial Services, which ordered Paxos to stop issuing it. Fast forward to today, Binance announced it will cease support for BUSD on 15 December. Withdrawals will be halted on 31 December, where any remaining BUSD balances will be converted to FDUSD. Users will be able to redeem their BUSD until February 2024. 

Although BUSD has not been phased out yet, looking at “Volume by Currency” on Binance over the past 24h, it seems that users have already halted BUSD activity:

Chart 1: Binance CEX Volume by Currency, 24h (Source: CoinGecko)

Outflow of BTC from Binance to Coinbase

CryptoQuant has reported a 5,000 BTC outflow from Binance reserves driven by retail outflow, while Coinbase reserves have increased by ~12,000 BTC:

Chart 2: BTC flows from Binance to Coinbase (Source: CryptoQuant)

We believe the inflows into Coinbase can be attributed to its resilience and legitimacy in the eyes of regulators, with Coinbase as the exchange and custodian of choice for many BTC Spot ETF applicants.

Institutional Liquidity Events

Update on Mt Gox

In late November, Mt Gox’s trustee announced in an email that commencement of repayment could begin in 2023, extending into 2024. However, the email stated that the trustee “is making efforts to commence repayments in cash within the 2023 calendar year”, although many Mt Gox victims would have expected to be repaid in BTC.

As of 5 December, there is ~137,890 BTC in Mt Gox’s balance ($5.7b+). With this expectation of cash repayments rather than BTC in 2023, this alleviates potential supply overhangs in the short-term, at the very least.  

Celsius: Eligible crypto holders able to withdraw 72.5% of their assets

In a filing in the US Bankruptcy Court for the Southern District of NY, certain eligible crypto holders classified under “Class 6A General Custody Claims” and “Class 6B Withdrawable Custody Claims”, will be able to withdraw 72.5% of their cryptocurrency holdings, minus transaction fees. 

Despite the positive news, there have been various users on Twitter facing difficulties when withdrawing – some have cited login issues to the app when they had created their login via Facebook in the past and are only able to use Facebook as a means to log in, while others have run into various time-based, custody-related obstacles that led to them not being able to withdraw at all.  

Talos to route trades through Uniswap

Talos, an institutional crypto spot trading platform that usually sources liquidity from centralized venues, announced in late November that its clients will soon be able to access liquidity from the leading DEX, Uniswap, through its API.

Although there have been other OEMS/trading solution providers are building solutions to aggregate liquidity from both centralized and decentralized venues, this is a groundbreaking move, as this is the first ever enterprise API integration of Uniswap’s API, from a major provider  – another sign that the worlds of CeFi and DeFi are colliding, and a new dimension that bull market conditions in crypto have never experienced before.  

We expect this move to (i) serve as a gateway for other established institutional OEMS / trading solution providers to aggregate decentralized venues alongside centralized ones, (ii) potentially extend Uniswap’s dominance, if slippage and various fees prove to be not an issue, and (iii) legitimize decentralized venues. 

Significant Token Unlocks: Optimism, dYdX, 1inch, Aptos, Apecoin

In previous muted market conditions, it appeared that trading around supply events such as token unlocks was no longer very viable. However, with market conditions changing, it seems that making trades pre and post-unlock, are back on the cards:

TokenUnlock Details (# of tokens,USD value, % of circulating supply)Price Action: 1 week before unlock date to date of unlockPrice Action:A few days after unlock dateRemarks
Optimism ($OP)32m $OP $40-50m 2.7%24 Nov to 29 Nov: ~$1.875 to ~$1.68 (-10.45%)29 Nov to 5 Dec:~$1.68 to ~$1.85 (+10.6%), retraced to ~$1.72 Positivity surrounding adoption of Optimism’s OP Stack
dYdX ($dYdX)150m $dYdX> $500m~80+%25 Nov to 1 Dec:~$3.71 to ~$3.03(-18%)1 Dec to 5 Dec:$3.03 to $3.51(+ ~15%)Bullish unlock possibly due to stakers staking unlocked $dYdX for revenue accrual from DEX trading fees
1inch ($1inch)98m $1inch~$34.5m9.48% 25 Nov to 1 Dec:$0.37 to $0.34
(~ -9.85%)
1 Dec to 4 Dec:$0.33 to $0.37(+ ~ 12.12%)NIL
Aptos ($APT)24m $APT~$180m2.33%TBC: 12 December unlock dateTBC: 12 December unlock dateNIL
Apecoin ($APE)15.6m $APE~$25m4.23%TBC: 17 December unlock dateTBC: 17 December unlock dateNew project, ApeChain (L2) to boost utility of $APE

 Is NEAR nearing a resurgence? 

NEAR, an EVM L1 that utilizes sharding to process transactions in a fast and cheap manner, launched in the previous bull cycle back in late-2021. Its token rose to ~$20, before plummeting to lows of $1-3 when the entire market collapsed. Since then, NEAR has not managed to gain its footing, ecosystem wise and in terms of price action.

However, on 28 November, NEAR announced “NEAT”, the first Bitcoin inscription standard on NEAR, breathing life back into the network. We believe they intend to capture attention and capital from the strong BRC20 narrative in the space, following in the footsteps of Ordinals. Through NEAT, the NEAT inscription team has enabled the launch of public tokens on NEAR. The launch of its first NRC20 tokens was a huge success, with 100% of the tokens minted out, comprising a total of 24,139 holders. 

This was similar moves from Litecoin, Doge and Avalanche, where the enabling of inscriptions on these respective chains had led to a surge in transactions, and hence revenue for the network. On launch day, daily transactions increased by over 460% (chart below).

Chart 3: Daily Transactions on NEAR (Source: Artemis)

Through this, NEAR had earned $173k in fees (+ ~68% jump in revenue) through a record 13.19m transactions within a day, 350k $NEAR burnt, along with a surge in its TVL from $48.76m on 28 November, to $57.32m on 5 December (+17.55%). Whether the chain’s recent success is short-lived or sustainable remains to be seen.

Cross-Chain News

Circle launches bridged USDC standard

Circle has introduced a new streamlined process for developers to launch bridged USDC to a new network, with the optionality for Circle to seamlessly upgrade to make USDC native on the chain in the future. 

In the first phase of the two-part process, third-party developers control the token contracts on the new chain, with a backing of these bridged assets by native USDC on another chain. In this phase, the bridged USDC on the new network is ‘unofficial and not issued or redeemable but will be a proxy to USDC in any ecosystem where bridging is made possible.’ In the second phase, Circle and the third-party developer can decide to upgrade the bridged USDC to become native on the network in the future. The establishment of this process serves to combat fragmented liquidity of USDC and harmonize its total supply across chains. 

Wormhole raises $225m at a $2.5b valuation

In other cross-chain related news, it was recently announced that Wormhole, a cross-chain protocol, has raised a whopping $225m at a $2.5b valuation from prominent investors such as Brevan Howard, Coinbase Ventures, Multicoin, Jump, and more.  

It is important to note that back in February 2022, Wormhole was hacked for over $320m, via an unauthorized minting glitch on the ETH-SOL bridge, with Jump Crypto saving the protocol by plugging the $320m hole, following the exploit.

Users have been able to use Wormhole’s Portal Bridge since its inception in 2021. However, we would expect bridging volumes to increase, wih many hoping to receive an airdrop of $HOLE, in a similar fashion to airdrop hunters seeking an airdrop from Layerzero’s Stargate. 

Wormhole’s TVL peaked back in 2022 at $3.8b, but dropped significantly in early-2022, probably as a result of overall bear market conditions. However, we observe that TVL has been picking up significantly since November this year, and foresee this to increase over time. Wormhole’s TVL currently stands at ~$736m. (chart below)

Chart 4: TVL of Wormhole since inception (Source: Wormhole)

In terms of volume and transactions, we observe a parallel to TVL, where it peaked in 2022, and is currently picking up at a fast pace. (chart below)

Chart 5: Volume and Transactions of Wormhole since inception (Source: DappRadar)

Stargate: Phishing incident through governance forum

Some community members of Wormhole’s rival, Stargate, recently experiences a phishing attack through its governance forum, Stargate Snapshot. The attacker acquired a sufficient amount of $veSTG to post a proposal on the forum, with a phishing link in the proposal. Over 1,000 users participated in the vote, with the scammer getting away with over $43k in profit.

KyberSwap and HECO Chain exploits

KyberSwap

On 22 November, KyberSwap was unfortunately hacked for ~$54.7m. The hacker exploited a loophole in the platform’s complex liquidity calculations, tricking it into recognizing double the actual liquidity. By carefully manipulating prices and using a flashloan, the hacker drained the targeted pool entirely (~$54.7m), making a profit of about 9 wETH. The hack exploited KyberSwap’s liquidity reinvestment feature causing the platform to miscalculate liquidity by about 10%. The hacker cleverly manipulated the swap input to deceive the platform and acquire funds through abnormal termination of swaps. Twitter user @StackDigest explains more details of the exploit in this tweet.

Following this the exploiter demanded to buy over and complete executive  over Kyber, with a deadline . Executives that remained would have their salaries doubled under the new regime, and are to be bought out. Others would be ‘wished well’ in their ‘future endeavors’, with a 12-month severance, with full benefits and assistance in finding new careers. 

The exploiter also revealed that post-takeover, it would no longer be the ‘7th most popular DEX, but rather, an entirely new cryptographic project.’ The full letter, along with what would happen to liquidity providers on the DEX, and other stakeholders, can be found in this link.  

Since then, Kyber has responded in good faith, that they would be extending grants from the KyberSwap Treasury, to fully compensate those who had lost their funds in the KyberSwap Elastic Pools attack. 

Unfortunately, KyberSwap’s TVL has plummeted since the attack, from $84.9m to $7.43m as of 6 December. Following their prompt response to fully compensate their users, Kyber has been receiving an outpouring of support from the community on Twitter.

HTX and Heco Chain’s Cross-Chain Bridge

In late-November, HTX and its blockchain protocol, Heco Chain’s cross-chain bridge, was hacked for $97m. This incident follows an $8m (500 ETH) exploit of HTX back in October, where losses were fully covered days after the incident. Justin Sun immediately responded to this latest incident, with an immediate temporary suspension of HTX withdrawals and deposits, an investigation into the attack, and full compensation of HTX’s hot wallet losses. 

HTX has since restored services within 24h of the exploit and has stated that they had ‘properly handled this attack’.

Arbitrum Developments

DAO approves $23.5m backfund for 26 additional projects for its STIP

In our previous edition of Web3 Watch, we highlighted that the proposal for the $23.5m backfund for 26 additional projects to receive $ARB grants, was on track to being rejected. Fortunately, the proposal concluded on 3 December, with a 216.77m of 73.8m quorum reached, and a majority support of 143.15m (66.03%), against 73.44m (33.87%) voting against. 

This brings the total projects funded by the short-term incentive program to 55, and the total amount of $ARB to be handed out in grants to 71.4m $ARB (~$77.8m). Notable projects that would receive this backfund are Gains Network, Stargate, Synapse, Wormhole, Thetatnuts Finance, and more.

The result of this backfund would further encourage TVL to be retained within the Arbitrum ecosystem, and retain transactions on the network, especially protocols that received the grants.

Protected Perpetuals protocol, Good Entry, sold out and launches token

Protected perps protocol on Arbitrum, Good Entry, launched its token, $GOOD, in a public sale on 27 November, at a 10m FDV. 150m tokens out of its 1b total supply were sold for 1.5m ($0.01 each) in a matter of 38 seconds. Although it was heavily botted, it was a resounding success for a public grassroots approach to its fundraise, with no VCs invested in the project. A week after on 4 December, the token was launched on Camelot DEX, also at a 10m FDV ($0.01 per token). Currently, $GOOD is sitting at $0.039, a 3.9x from launch. 

Gaming – Illuvium launches Arena on Epic Games Store

Illuvium is one of the most prominent and dominant blockchain games in the Web3 ecosystem. It began around 2021, with much hype surrounding it. The game has been developing throughout the market cycles and has been fleshed out over time.  

In early November, Illuvium announced that it will be launching one of its games, Illuvium Arena, on the Epic Games Store. The token rose by ~51%, from $63.61 to $96.17. Since then, the token had retraced to $80, but has since surged to its current price around $111, with a market cap of ~$419m. Currently, Illuvium has an ecosystem of games, where assets and gameplay are interconnected – Illuvium Arena, an auto-battler of monsters (ie. Illuvials), Illuvium Zero, a land-based manager for buildings and resources, Illuvium Beyond, a trading card game, and Illuvium Zero, the main open world game.   

NFTs are so back?!?!

After a long and huge slump, the NFT markets are well and truly be back in action, with overall positive price action in various NFT collections: 

Pudgy Penguins has made a huge comeback since its takeover last year, from its 0.8 ETH bottom to a whopping ~10 ETH today. Azuki was wrought with controversy and negativity upon the launch of their second collection, Elementals fell from ~15 ETH down to ~2 ETH levels, and are now sitting at ~6.8 ETH.

Latest Articles

Asia Colour -

11 Jul 24

Tonight’s CPI release has captured everyone’s attention. The market anticipates a 70% chance of a rate cut in September. This optimism has been reflected in

July 11, 2024
1 mins read

London Colour -

10 Jul 24

The macro backdrop has turned rosier over the past week, and we think crypto has bottomed as we were unable to break lower despite the

July 10, 2024
1 mins read

Asia Colour -

09 Jul 24

BTC prices dropped to $55.2K during early US trading on Monday after the German Police moved $900 million worth of BTC to exchanges. The market

July 9, 2024
1 mins read

London and New York Colour -

08 Jul 24

Equities and Gold have been bouncing higher from the start of last week but crypto prices have gone the other way. What is going on?!

July 8, 2024
1 mins read

New York Colour -

05 Jul 24

Reasons for the dip Our view Trade Idea The desk has seen a rush from clients to deploy Accumulators today. The vol spike plus dip

July 5, 2024
1 mins read

Asia Colour -

04 Jul 24

Are you feeling the pressure from the recent sell-off in the crypto market? BTC has fallen below the 60k support level, but there may still
July 4, 2024
1 mins read

Exclusive insights tailored specifically for you.

Follow us to receive the latest developments in crypto derivatives.

Disclaimer

This information contained in this website is intended as a general introduction to QCP Capital and its activities as a Digital Payment Token (DPT) service provider and is for informational purposes only.

 

QCP Capital is not acting and does not purport to act in any way as an advisor or in a fiduciary capacity vis-a-vis any counterparty. Therefore, it is strongly suggested that any prospective counterparty obtain independent advice in relation to any trading investment, financial, legal, tax, accounting or regulatory issues discussed herein. This website is only directed at informed and qualified investors. Your entry to this website attests that you are fully aware that trading of DPTs is not suitable for the general public and that you are an informed and qualified investor, and are also fully cognisant of all technological and financial risk(s) associated with trading Digital Payment Tokens.

 

In the event you intend to onboard with QCP Capital to trade in DPTs, by onboarding with us you acknowledge that you are aware of any rules and/or regulations applicable to the provision of DPT and/or financial services, the high degree of risk involved and that in no event will QCP Capital or any if its directors or employees be liable for any injury loss, claim or damage (whether direct, indirect, consequential or incidental) arising either directly or indirectly out of, or in any way connected with, the site, or its use.

 

If you are located, incorporated, or otherwise established in, or a citizen or resident of certain jurisdictions, QCP Capital may be unable to, or otherwise reserve its right to refuse to engage in or establish a trading relationship with you. Please contact us if you believe you have received this notice in error. QCP Capital is not registered or licensed to operate in the states of Louisiana and New York and will not be able to establish a trading relationship with you if you are resident, incorporated or have your principal place of business in New York or Louisiana.

 

You also acknowledge that you understand that trading in payment token derivatives (“PTD”) are also not any less risky than trading in DPTs. PTD services are not regulated by the MAS and QCP Capital is as such not licensed under the MAS to provide PTD services. You should only trade in PTDs if you are an Accredited Investor and/or have sufficient experience and knowledge in trading PTDs.

 

Risk Warning on Digital Payment Digital Services
The Monetary Authority of Singapore (MAS) requires us to provide this risk warning to you as a customer of a digital payment token (DPT) service provider.

 

Before you pay your DPT service provider any money or DPT, you should be aware of the following.

 

Your DPT service provider is an exempt payment services provider pending licensing under the Payment Services Act (2019) to provide DPT services. Please note that this does not mean you will be able to recover all the money or DPTs you paid to your DPT service provider if your DPT service provider’s business fails.

 

You should not transact in the DPT if you are not familiar with this DPT. This includes how the DPT is created, and how the DPT you intend to transact is transferred or held by your DPT service provider.

 

You should be aware that the value of DPTs may fluctuate greatly. You should buy DPTs only if you are prepared to accept the risk of losing all of the money you put into such tokens.

 

You should be aware that your DPT service provider, as part of its licence to provide DPT services, may offer services related to DPTs which are promoted as having a stable value, commonly known as “stablecoin”.