Stablecoin Wars
The Blockchain Sector @ 2022-09-06
The Blockchain Sector provides information relating to emerging financial technologies. It should not be considered financial advice. Disclaimer below.
Curve Drops crvUSD Bombshell
Curve Finance published a Typescript library which references a crvUSD stablecoin. The repositories description is “JavaScript library for Curve Stablecoin” strongly suggesting a stablecoin is in development or at least being experimented with.
There are no contracts in the library but it mentions crvUSD/weth liquidity and liquidation functions so it may be something similar to $DAI which uses ETH as a underlying asset to mint an over-collalteralized stablecoin.
Curve perhaps has a competitive advantage in the stablecoin wars because their protocol is used to efficiently trade between liquidity pools. It seems likely they would try to leverage this position to create liquidty and utility for crvUSD however the dynamics for this are unclear from the code released so far.
The full repository is at https://github.com/curvefi/curve-stablecoin-js
Binance To Remove USDC Pairs
This was a sensationalist story which got taken as USDC is being delisted from Binance. Initially I thought this might be a reaction to the Tornado Cash sanctions but after looking into it further it seems like an obvious business decision.
Binance has it’s own BUSD token which is perhaps underperforming in terms of TVL and utility relative to the organisations position in the industry.
They announced that USDC, USDP, TUSD will be auto-converted to BUSD and trading pairs that use those base assets will be discontinued.
This would assumably increase liquidity on BUSD pairs and increase the utility and usage of that asset.
Full PR here: https://www.binance.com/en/support/announcement/e62f703604a94538a1f1bc803b2d579f
Central Bank Digital Currencies & BRICScoin
In other news I went on a complete tangent and put together a tin foil hat theory that BRICS are trying to disrupt the US dollars dominance as the global reserve asset.
I also put together some example code for how a Solidity CBDC could work although I see no situation where a public blockchain would be used over a private network by a major nation state:
https://github.com/jamesbachini/CBDC-Central-Bank-Digital-Currency
Markets: ETH Relatively Strong
Following on from last weeks newsletter, BTC.D did break the 40% level and dropped quite sharply down below 39%. Ethereum looks strong in weak market conditions and is outperforming currently.
This is due to industry focus around the merge which is due in just over a week. If we take a look at the ETH/BTC chart:
A pre-merge continuation to around the 0.88 level looks, perhaps too obvious. I expect the short-term success of the merge transition will determine where it goes from here. Long-term I believe the smartest people in the industry are working on this and I have full faith in their ability to make it work.
Bitcoin is not showing the outperformance expected in bear markets but at some point focus and narratives will return. Bitcoin has first move advantage, the Satoshi story, industry leading censorship resistance, institutional investors and a cult like following among it’s core supporters.
In altcoin news the markets seem to be stagnating to a certain extent. Projects with traction and utility are outperforming as we’ve seen a rush to quality in the market downturn. At some point this will reverse and the limelight will be pointed towards the latest and greatest newly minted projects. This is where the big returns come from so now might be the time to start researching what sectors/narratives might gain traction in the next alt cycle and look for best in class, shiny new projects.
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Disclaimer: Not a financial advisor, not financial advice. The content I create is to document my journey and for educational and entertainment purposes only. It is not under any circumstances investment advice. I am not an investment or trading professional and am learning myself while still making plenty of mistakes along the way. Any code published is experimental and not production ready to be used for financial transactions. Do your own research and do not play with funds you do not want to lose.