Should You Be Worried About USDe? 🥶
Weekly News Recap: 🌉 Wormhole's airdrop, 🔄 Ethereum's policy tug-of-war, 🪙 Ripple's stablecoin, 🛠️ Lido's lockup, 📈 VCs bet big, and more!
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In this episode of Unchained, the spotlight turns to Ethena Labs, particularly its synthetic dollar, USDe, which achieved a remarkable $2 billion market cap in just seven weeks.
The conversation features Guy Young, the founder of Ethena, who navigates through the success of their flagship product and the consequential ENA token launch.
Amid the rapid ascent, Young scrutinizes the risks tethered to USDe, including custodial and counterparty dangers, while articulating its utility beyond conventional stablecoins. Debunking parallels drawn by critics with Terra/Luna's downfall, he said, "It really is a very weak surface-level argument to compare what Ethena's doing to Luna."
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Weekly News Recap
Wormhole Completes $2.4 Billion Airdrop
On Wednesday, Wormhole completed its much-anticipated airdrop, distributing 1.1 billion W tokens to early adopters of the cross-chain protocol. Following the airdrop, the token began trading at around $1.60. However, the price experienced a swift decline during price discovery before settling at around $1.40.
With the token's rebound, Wormhole's market capitalization grew to approximately $2.4 billion.
Though Wormhole rewarded users from several blockchains, including all major EVM-based chains —such as Sui, Osmosis, Injective, and even the defunct Terra—the W token was only claimable on the Solana blockchain, which suffered some congestion issues as users reported failed transactions.
Ethereum Community Divided Over Proposed Monetary Policy Change
The Ethereum community was at a crossroads this week, with a proposal to adjust its token issuance model sparking widespread debate. As staking on Ethereum grows, researchers Ansgar Dietrichs and Caspar Schwarz-Schilling suggest revising the monetary policy to mitigate potential negative impacts, like inflation for non-stakers and increased centralization.
Their proposal aims to balance the staking ratio, but it has met with resistance from some parts of the Ethereum community. Critics argue that altering Ethereum's foundational economics could compromise its integrity and deter institutional investors. With the staking rate rising—31 million ETH are currently staked—concerns about Ethereum's future and its currency's role are intensifying. The proposal's supporters believe it's a necessary step to ensure Ethereum's longevity, while detractors see it as a threat to the network's principles and market stability.
Binance Advocates for Detained Compliance Chief in Nigeria
On Wednesday, Binance issued a public statement defending Tigran Gambaryan, its Head of Financial Crime Compliance who is currently detained in Nigeria on suspicion of committing several financial crimes in connection with the exchange. Binance emphasized that Gambaryan lacks decision-making authority within the company and should not be held accountable for company decisions.
Nigerian authorities arrested Gambaryan and Nadeem Anjarwalla, Binance's Regional Manager for Africa, in February, subsequently accusing both executives and Binance of tax evasion, money laundering, and operating without a license. They were set to be arraigned in the country’s Federal High Court on April 4, but that has been postponed until April 19. Gambaryan and Anjarwalla have both sued the Nigerian government for human rights violations. Gambaryan remains in custody; however, Anjarwalla managed to escape detainment and leave the country in March. His whereabouts are unknown.
Ripple Set to Unveil USD-Pegged Stablecoin
On April 4, Ripple announced its intent to release a U.S. dollar-pegged stablecoin aimed at serving enterprise clients and payment companies. This new stablecoin, expected to launch later this year, will be supported by USD deposits, short-term U.S. Treasuries, and similar assets, with regular audits by an independent accounting firm.
Ripple President Monica Long emphasized the stablecoin's potential to facilitate institutional and decentralized finance (DeFi) applications across the XRP Ledger and Ethereum ecosystems.
Technical Glitch Freezes $24 Million in SOL on Lido’s Staking Protocol
An operational hiccup in Lido's smart contracts on the Solana blockchain has locked in approximately $24 million of SOL, preventing users from withdrawing their staked tokens. The issue, detailed by Pavel Pavlov, a product manager at P2P — the entity managing Lido on Solana — stems from a flawed smart contract function that complicates the withdrawal process.
Pavlov highlighted the problem in a Lido Discord channel post on March 30, stating, "The current implementation uses the split function in the withdrawal process of the smart contract, which is quite significant in terms of complexity and time to amend." He further mentioned that the technical team is planning to coordinate with Lido DAO to discuss potential solutions and timelines for resolving the issue.
This setback follows Lido's decision to discontinue its protocol on the Solana blockchain in October, after a vote by the community. Although users were given a deadline of February 4, 2024, to unstake their assets, the recent discovery has made the process exceedingly difficult, especially for those unfamiliar with the protocol’s command line interface (CLI).
Venture Capitals Stir Bull Market Speculations with New Crypto Funds
Crypto venture capital firms are making bold moves to raise substantial funds, signaling expectations for a prolonged bull market. Paradigm, a leading venture capital firm, is seeking to raise between $750 and $850 million for a new fund, according to Bloomberg. This effort, aiming for the industry's largest raise post-crypto winter, underscores a rejuvenated interest in cryptocurrency investments.
Similarly, Galaxy Digital has plans to launch a $100 million venture fund targeting early-stage crypto companies. This marks a strategic shift for Galaxy, which previously invested its own capital and is now expanding to include external investors. The fund, named Galaxy Ventures Fund I, LP, aims to invest in up to 30 startups over three years, focusing on financial applications, software infrastructure, and crypto protocols.
These initiatives arrive amid a burgeoning crypto market, further evidenced by a 52.5% month-over-month surge in VC funding for crypto projects in March.
Jupiter Token Hits Record High Amid Governance Vote
Jupiter's governance token, JUP, achieved a new all-time high on Sunday, reaching $1.92, in the midst of a governance vote to allocate 4.5 million JUP tokens to its core working group. The decision has sparked mixed reactions within the community, with 75% voting in favor despite some expressing strong disapproval on forums and social media.
The allocated funds aim to support Jupiter's core working group's efforts to advance decentralized finance within the Solana ecosystem. The decision has led to concerns about the size of the allocation and its impact on the project's future, with critics arguing the allocation is excessive without clear performance indicators or accountability, suggesting it could risk the project's success.
DOJ's Wallet Containing $2 Billion Transfers A Portion of its Bitcoin Holdings to Coinbase Prime
A crypto wallet belonging to the U.S. Department of Justice (DOJ) that holds approximately $2 billion in bitcoin seized from Silk Road, executed a transaction to Coinbase Prime on April 2. The wallet transferred 0.001 BTC, signaling that it might have been a test transaction. Soon after, an additional 1,999.999 BTC, valued at $131.27 million, was moved to Coinbase Prime's hot wallet. This sequence of transactions, initially for a small amount and then significantly larger, suggests the DOJ may be testing the waters before potentially liquidating or moving large sums of bitcoin tied to the now-defunct dark web marketplace, Silk Road.
Bitcoin Miners Achieve Record Revenue Before Halving Event
Bitcoin mining operations hit a new revenue peak, garnering $2 billion in March, setting a record just weeks before the anticipated halving event that is expected to slash their earnings. This significant milestone surpasses the previous high of $1.74 billion in May 2021. The substantial revenue includes $85.81 million from transaction fees and $1.93 billion from block rewards.
Foundry USA led the charge, mining 1,300 blocks, or 29.4% of the total, followed by AntPool and other notable mining pools. The upcoming halving will reduce the reward from 6.25 BTC to 3.125 BTC per block, potentially halving miners' profits unless bitcoin's value increases markedly. This adjustment occurs amid a backdrop where spot bitcoin ETFs have dramatically increased demand, purchasing 66,008 BTC in March—far outpacing the 25,513 BTC mined. This shift in supply and demand dynamics hints at a possibly different outcome post-halving than in previous cycles.
FTX Estate Sets Repayment Plan for Creditors by End of 2024
The FTX bankruptcy estate has outlined plans to initiate repayments to creditors by late 2024, following an agreement between the Chapter 11 bankruptcy court in Delaware and the official liquidation proceedings in the Bahamas. This decision comes after acknowledging the complex situation due to FTX's accounting issues, with efforts to ensure no creditor receives less than they are due.
Both legal entities have expressed a "shared goal" to distribute initial funds to verified creditors by year-end. Creditors have been invited to submit their claims through FTX's portal, initially set for closure on May 15, though recent updates suggest an extension to June 2024. This process marks a significant step towards resolving the financial chaos surrounding FTX, providing a path for reimbursing those affected by its downfall.
