Despite the latest FTX-related crisis, Solana still has what it takes to win the layer-1 race, according to the head of strategy at the Solana Foundation, Austin Federa.
About two months after the FTX collapse, the Solana network is stronger than ever, according to Austin Federa, head of strategy and communications at the Solana Foundation.
Federa defines the recent SOL token price crash as a short-term market reaction to the perceived connection between Solana and the defunct crypto exchange FTX. While FTX founder Sam Bankman-Fried was invested in many Solana-based projects, Federa pointed out he didn’t have any influence on the network’s operations and fundamentals.
“The external perception was that there was a very close relationship between the Solana network and FTX, which wasn’t the case,” Federa explained in a recent interview with Cointelegraph.
According to a recent report by Electric Capital, the Solana network has been experiencing a record inflow of developers contributing to the ecosystem.
To Federa, developers are increasingly building on the Solana network because of its main value proposition: cheap and fast transactions.
“You can build new types of products and services that aren’t transaction-constrained,” he pointed out.
When asked to address the problem of outages that have plagued the network over the past year, Federa mentioned a number of technical upgrades that should improve the stability of the network in the months to come. One of them is the recent introduction of priority fees, which should reduce the amount of transaction spam on the network.
Federa also mentioned Firedancer, a new validator client that is expected to go live on Solana’s mainnet by the end of 2023.
To find out more about how Solana is recovering after the FTX collapse, check out the full interview on our YouTube channel, and don’t forget to subscribe!
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The bank applied for the application in 2019 and sued the Fed in an attempt to speed up the decision.
The United State Federal Reserve Board has rejected Custodia Bank’s application to become a member of the Federal Reserve System. In its announcement, the Fed stated that the application was “inconsistent with the required factors under the law.” It also claimed Custodia had an “insufficient” management framework and cited an earlier joint declaration by the Fed with the Federal Deposit Insurance Corporation and Office of the Comptroller of the Currency that found crypto assets to be at odds with sound banking practices.
STATEMENT FROM CUSTODIA BANK about today's Federal Reserve action on its membership application. Its master account application remains pending: pic.twitter.com/QkMjcT508J
In spite of the rejection, the bank’s application for a master account remains pending, the bank said in a tweet. A so-called “master account” enables a bank to make international transfers and carry out other important functions. Custodia, headed by Caitlin Long, applied for the master account in 2020 and sued the Fed over the long delay in considering the application in June.
The Fed gave the bank 72 hours to withdraw its application, Custodia said in a statement. It added, “Custodia actively sought federal regulation, going above and beyond all requirements that apply to traditional banks.”
The Fed only issued guidelines for granting master accounts in August, when it became clear that digital asset banks could have a difficult time receiving an account. “Institutions that engage in novel activities and for which authorities are still developing appropriate supervisory and regulatory frameworks would undergo a more extensive review,” the Fed said in a statement at the time.
BNY Mellon bank was approved by the Fed to provide crypto custody services in October, making it the first major U.S. bank to offer custody of digital assets and traditional investments on the same platform. Custodia Bank was founded in Wyoming in 2020, taking advantage of the crypto-friendly state’s 2019 opt-in custody rules for “blockchain banks.”
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Persistent worries about Binance’s solvency, increased regulation of the crypto sector and questionable use cases are chipping away at BUSD’s market capitalization.
Stablecoins in the cryptocurrency market help provide U.S. dollar-pegged tokens within the volatile industry. In bull markets, the market capitalization of stablecoins tends to decrease as investors flock to more volatile assets; and in bear markets, investors seek shelter in low-volatility stablecoins, thus increasing their market caps.
On Jan. 26, the total market capitalization for stablecoins like Tether (USDT), USD Coin (USDC), Binance USD (BUSD) and Dai (DAI) is over $131 billion.
Stablecoin supply dominance. Source: Glassnode
Stablecoins are so crucial to the future of crypto that Moody’s, a well-respected analytics agency, is planning to develop a scoring system, which may help reduce the speculation and fear that some investors have with stablecoins.
Such fear amid a lack of stablecoin transparency has led one of the top stablecoins, BUSD, to see a major usage decline in recent weeks.
Let’s examine the factors affecting the BUSD stablecoin.
BUSD’s market cap takes a major hit
While the BUSD market cap witnessed a large bump on Sept. 30, 2022, those gains came from Binance’s decision to forcefully swap the exchange’s USDC holders to its own stablecoin. Those gains have since evaporated. At the time, the automatic conversions took $3 billion off of USDC’s market cap.
BUSD’s market cap has continued to fall due to problems with the dollar-pegged tokens’ management that first came to light in January 2023. While Binance pushed back on reports that the stablecoin was not fully backed, investor fears led to a major exodus.
According to blockchain analytics provider Nansen, the circulating supply of BUSD decreased to $15.4 billion on Jan. 25. The drop represents a decrease of $1 billion from the previous week and $2 billion compared with December 2022.
Stablecoin market caps. Source: Nansen
The most recent decline sped up BUSD’s market cap decrease from $22 billion when worried investors rushed to withdraw money from Binance after it misrepresented the amount of digital assets in its collateral reserves by combining corporate holdings on reports.
BUSD inflows struggle
When the price of Bitcoin (BTC) is on the rise, like it has been recently, stablecoins typically see a decrease in inflow as investors sell for other assets. A way to measure demand for stablecoins is to look at exchange inflows.
According to analytics provider CryptoQuant:
“Higher value indicates investors who deposited a lot at once are increasing recently. For stablecoin, value rise indicates buying pressure.”
This means negative numbers show a decrease in buying pressure. While all stablecoins are seeing lower demand or inflows, BUSD has witnessed nearly 3x more inflow.
All stablecoins' inflow versus BUSD. Source: CryptoQuant
The massive decrease in demand may continue as the markets continue to rise and questions around BUSD remain.
A concerning statistic surrounding BUSD is the lack of stablecoin use outside of its parent exchange, Binance. While $13.8 billion in BUSD resides on Binance, the next closest tally is $32.6 million in BUSD on Crypto.com. While Crypto.com may be the second-largest exchange for BUSD, USDC is the largest stablecoin on the CEX, with $582 million, dwarfing BUSD’s numbers.
Stablecoins on exchanges, sorted by BUSD. Source: Nansen
The lack of use cases following the major decrease in demand for BUSD does not bode well for its market cap if the trend sustains over a long period of time. Combining these two negatives with the recent move by SWIFT to ban dollar transfers lower than $100,000 on Binance suggests that the stablecoin could continue to face major headwinds.
The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
This article does not contain investment advice or recommendations. Every investment and trading move involves risk, and readers should conduct their own research when making a decision.
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In 2021, Stripe raised $600 million from a group of investors at a valuation of $95 billion, making it one of Silicon Valley's most valuable startups.
Internet payment processor Stripe is reportedly eyeing a public offering and has set a 12-month timeline to explore the possibility.
Stripe has hired Goldman Sachs and JPMorgan Chase to advise on the feasibility and timing of a public-market debut, according to a Jan. 26 report by The Wall Street Journal. A source with knowledge of the matter told the Journal that Stripe's executives will either take the company public or allow employees to sell shares in a private transaction.
The Journal also reported that Stripe’s management is unlikely to pursue a traditional initial public offering because the company doesn’t need to raise additional capital. Rather, the company is more likely to pursue a direct listing. In such a scenario, Stripe would place existing shares on a public stock exchange and let the market decide the price.
Founded in 2009 by Irish entrepreneurs John and Patric Collison, Stripe provides payment processing solutions for several major internet companies, including Shopify and Instacart. The company raised $600 million in 2021 at a valuation of $95 billion. Its investors included Ireland’s National Treasury Management Agency, Fidelity Investments and insurers Allianz and AXA.
Visa CEO remains confident that blockchain-powered solutions can be integrated into its services and offerings to power the next generation of payments. https://t.co/0bSWh2xw7g
Stripe has had a hot-and-cold relationship with digital assets dating back to at least 2014. In 2015, the company announced that it would accept Bitcoin (BTC), allowing users to send and receive BTC as they would fiat currencies. Stripe’s Bitcoin payment services would be halted in 2018 after three years, with the company’s founders claiming that BTC is better served as an asset rather than a medium of exchange.
The company reentered the crypto sector during the bull market of 2021 with a renewed focus on blockchain payments. The following year, Stripe announced fiat payment support for cryptocurrencies and nonfungible tokens. Through new application programming interfaces, businesses can now use Stripe to accept fiat payments for crypto.
As reported by Cointelegraph, Stripe also launched a new payout program in 2021 that would allow select content creators to withdraw earnings denominated in USD Coin (USDC).
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Joseph Bankman, Barbara Fried and Gabriel Bankman-Fried could reportedly face questions in bankruptcy court about any financial benefits they may have received from FTX.
Lawyers representing FTX in bankruptcy court have reportedly argued that former CEO Sam Bankman-Fried’s immediate family should face questioning regarding their personal wealth.
According to a Jan. 26 report from Bloomberg, FTX’s lawyers requested Judge John Dorsey in the District of Delaware allow them to question Joseph Bankman, Barbara Fried and Gabriel Bankman-Fried — the father, mother and brother of SBF, respectively — under oath about any financial benefits they may have received from the exchange. Other FTX executives could reportedly be subject to the same line of questioning in an effort to track down assets tied to the bankrupt crypto exchange.
Joseph Bankman, a law professor at Stanford Law School, who canceled at least one of his classes amid the FTX controversy, reportedly acted as a tax adviser to the exchange’s employees and made recommendations regarding hiring the company’s legal team. Together with his wife, Barbara Fried — also a professor of law at Stanford — Bankman helped guarantee SBF’s $250-million bail with equity from their California home.
In 2020, Bankman-Fried’s brother, Gabriel, helped found Guarding Against Pandemics, an advocacy group aimed at supporting legislation to prevent future pandemics like COVID-19. Some of SBF’s funds went directly to the group, which supported federal lawmakers, and he and his brother also personally contributed to certain campaigns.
It’s unclear whether questioning the family members, should Judge Dorsey approve issuing subpoenas, would result in “hidden” funds associated with FTX being discovered by investigators. Joseph Bankman has already reportedly hired an attorney amid his son’s criminal case, but testimony here would fall under FTX’s bankruptcy proceedings.
Sam Bankman-Fried faces eight criminal counts, including wire fraud and violations of campaign finance laws. Since his arraignment in the United States upon being extradited from the Bahamas, SBF has largely been confined to his parents’ home, with his trial scheduled to begin in October.
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Following a failed short attack, DeFi exploiter Avraham Eisenberg was liquidated from Aave at a loss of $10 million.
According to a new post on Jan. 26, Marc Zeller, integrations lead at decentralized finance (DeFi) lending protocol Aave, stated that the firm purchased 2.7 million Curve (CRV) tokens, which would clear “excessive remaining bad debt” within the next 15 hours over a dozen transactions. The move follows the community approval of Aave Improvement Protocol (AIP) 144, which deployed a swap contract that acquires 2.7 million units of CRV, with a USD Coin (USDC) spend limit of $3,105,000 and a maximum unit value of $1.15 per CRV.
The bad debt on the Aave protocol resulted from a sophisticated exploit that took place on Nov. 23. Avaraham Eisenberg, who previously drained DeFi protocol Mango Markets and caused $47 million in net damages, took on a series of heavy volume short CRV positions on Aave in an attempt to orchestrate a short squeeze and force developers to buyback his positions at upward of 100% slippage due to lack of liquidity.
However, it turned out Aave had much more liquidity than anticipated, and Eisenberg reportedly lost $10 million on the trade. Nevertheless, some slippage occurred as a result of the incident, and Aave was left with a total of 2.656 million CRV in bad debt while liquidating Eisenberg’s positions.
The same day, Mango Markets filed a lawsuit against Eisenberg, asking the court to rescind its $47-million bounty agreement with the hacker for his role in the $117-million exploit on Oct. 12, 2022. The United States Securities and Exchange Commission has charged Eisenberg with stealing $117 million in digital assets. Eisenberg was arrested in Puerto Rico by the Federal Bureau of Investigation on Dec. 27, 2022, on charges of commodities manipulation and commodities fraud.
Avraham Eisenberg (right) during an interview. Source: YouYube, “Unchained” podcast
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BTC price performance may encounter a new magnet above the $50,000 mark if gold continues to be a trendsetter.
Bitcoin (BTC) could get sucked toward $50,000 like a magnet if it continues to follow gold, fresh analysis predicts.
In a Twitter update on Jan. 26, popular trader and market commentator TechDev presented a lofty new BTC price target tied to XAU/USD.
Gold, Bitcoin inverse dollar correlation “without question”
As the debate over how much Bitcoin will compete with gold remains, bullish-price takes are surfacing.
For TechDev, the outlook is more optimistic than for many — Bitcoin might even crack the $50,000 mark.
“What if Bitcoin continues to follow Gold / DXY ?” he queried.
An accompanying chart compared BTC/USD to gold versus the U.S. Dollar Index (DXY). The precious metal, TechDev hinted while continuing a previous narrative, may be frontrunning Bitcoin in terms of its recovery.
BTC/USD vs. XAU/DXY annotated chart. Source: TechDev/Twitter
“Outside of momentary reactions to geopolitical events... You think gold has been leading bitcoin for 4 years?” a previous Twitter thread asked.
TechDev added that the idea was “not a forecast. A legitimate question.”
“Would be interesting if it does play out. Both assets’ inverse correlation to the dollar is without question,” he concluded.
Should Bitcoin keep chasing gold in relative terms, the outcome could be a game-changer for bulls. XAU/USD is up 6.1% year-to-date — already far below BTC/USD by 39%, per data from Cointelegraph Markets Pro and TradingView.
According to TechDev, Bitcoin now has a chance of passing not only $30,000, but even $50,000.
Alasdair Macleod, head of research at Goldmoney, this week brought geopolitics to the fore in his forecast, predicting a major uptick in gold-based trade in Russia, China and across Asia.
“Russia will not make formal announcements about gold standards, because there is no need. Nor will China: instead it might reveal an increase in gold reserves,” part of a Goldmoney article released on Jan. 26 read.
Macleod himself is no Bitcoin fan, with a dedicated article comparing it with gold as money from December flatly predicting that the latter would win out in a crisis.
“To affirm its status as money, bitcoin will have to obey the laws of time preference. In other words, its current relationship with interest rates must change, so that rising interest rates reflecting fiat currencies’ loss of their purchasing power should become reflected in rising values for bitcoin,” he wrote.
“We will not try to guess this future. But we can say confidently that if the debasement of currencies accelerates, gold’s relative value will increase accordingly while that of bitcoin might not.”
The views, thoughts and opinions expressed here are the authors’ alone and do not necessarily reflect or represent the views and opinions of Cointelegraph.
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