Another week passed, and KardiaChain Research is still so productive and brings us with the latest movements in the market. Let's find out what happened recently.

Macro-environment of the crypto market

Money from traditional financial markets is flowing to the crypto space, meaning there are more opportunities for crypto projects to grow.

  • Galaxy Digital partners with Bloomberg for the DeFi index. The index tracks nine different decentralized finance projects, including  Uniswap (UNI), Aave (AAVE), Maker (MKR), Compound (COMP), Yearn.Finance (YFI), Synthetic (SNX), SushiSwap (SUSHI), 0x (ZXR), and Uma (UMA). Galaxy Digital as a full service, digital assets merchant bank, with distinct trading, asset management, and principal investment, and Bloomberg L.P. is a financial, software, data, and media company. The DeFi index, however, is not for everyone. It requires a minimum investment of $1 million and has 2% management fee.
  • Wells Fargo and JPMorgan both registered for Bitcoin funds with SEC. Both banks are partnering with NYDIG on the offerings. NYDIG is a technology and financial services firm dedicated to Bitcoin.
  • Defi Index and Bitcoin Funds offer a new way for traditional investors to invest in crypto assets without actually holding the assets.

Gary Gensler - SEC chairman wants to regulate decentralized finance (DeFi).

  • Mr.Gensler has previously suggested that the decentralized finance space could be in the business of selling unregistered securities. He advocates that decentralized finance is centralized in other aspects, such as DeFi promoters and sponsors. “There’s some incentive structure for those promoters and sponsors in the middle of this.” 
  • Putting in simple words, many investors and influencers are early investors of the DeFi products; when the number of users of those DeFi products increase, the value of the projects increases (since the value of crypto projects is highly related to network effect). Therefore, investors and influencers have high incentive to get more and more people into DeFi space.

Segment review

The 7D market performance as of August 22 is weaker than the previous period. NFTs had a cool-down period with a 7D return of 8.17%. DeFi (10.31%), Smart Contract Platform (+7.63%), and Web3(+8.72%) grew steadily but smaller in magnitude. 

Smart Contract Platform

Avalanche had an impressive performance last week with 7D returns of +127.1% as the demand for AVAX increases.

  • The Avalanche ecosystem has been expanding with new projects introduced to the ecosystem and Ethereum bridge. To enter these projects, users need to acquire AVAX - Avalanche native coin, when more people want to enter the Avalanche ecosystem, the demand for AVAX increases leading to an increase in the AVAX price.
  • Most recently, Avalanche launched a $180 million DeFi incentive program to lure DeFi developers and yield farmers to its ecosystem. Aave and Curve are among the first to participate in the scheme. $30 million in AVAX has been allocated across two protocols for the first phase of the program. The incentive program also includes a $3M liquidity mining incentive for Benqi Finance - Liquidity Protocol on Avalanche.
  • The largest oracle provider Chainlink has just gone live on Avalanche, enabling a wide variety of DeFi projects to soon be launched. NFT Marketplaces and IDO Platforms are being launched.
  • DeFi apps on Avalanche offer high APR to attract investors. With the Avalanche Bridge, investors can move their assets from Ethereum to Avalanche to earn high APR while paying lower fees. Three weeks after launching the bridge, $100M in tokens are transferred to and from Ethereum.
  • Large stablecoins such as USDC and USDT will be launched in Avalanche soon. Having two large stablecoin “adds another core infrastructure to the rapidly expanding Defi ecosystem on the platform”. Stablecoins provide investors a safe way to park and stake their assets on Avalanche, while the Avalanche Bridge helps to move their assets between the Avalanche chain and Ethereum chain. Therefore, the liquidity of AVAX native coins and other tokens built on Avalanche will be higher. Higher liquidity means more use cases and possibly higher prices.
  • Early this year, AVAX was listed on OKCoin - a U.S crypto exchange, and soon AVAX will be added to Kucoin and Gateio.

Solana (+40.29%) reached its new ATH at $71.72 on Aug 20. There are a few reasons for Solana's exceptional performance

  • The Solana ecosystem has come together including the launch of Mango - an exchange platform on SOL backed by Sam Bankman-Fried. Projects backed by large investors like Mango receive a lot of attention, thus leading to higher demand for SOL and MNGO. Mango offers high interest on USDC deposits with 20.67%. High interest rates are lucrative more many investors.
  • Launch of Wormhole bridge with other blockchains: Terra, Ethereum, and Binance Smart Chain. The bridge allows investors to move their assets from older chains to Solana, especially from Ethereum to escape high fees on this chain.

Terra (+44.9%) new proposal 116 has passed its on-chain voting. This proposal is in accordance with the 150m USD Terra Ecosystem fund. With this fund, TerraForm Labs aims to increase overall adoption and rate of innovation within the Terra Ecosystem

DeFi

THORChain (+29.71%) had a big increase in the last weekend with daily returns from Aug 21-Aug 22 being about +17.28%. The rise of THORchain is attributable to the latest announcement of Binance about mandatory KYC. This means almost all big centralized exchanges now require mandatory KYC. THORchain is one of a few multi-chain decentralized exchanges. (Other projects, CHAINFLIP LABS and Sifchainare in the development stage)

Important news

Coinbase reveals its future investment strategies

  • Coinbase will add $500 million of cryptocurrency assets to its balance sheet, and it will invest 10% of all profit going forward in crypto. Coinbase will become the first publicly-traded company to hold Bitcoin, Ethereum, Proof of Stake assets, DeFi tokens, and many other crypto assets on its balance sheet.
  • Moreover, Coinbase has stockpiled around $4 billion in cash to prepare for a possible crypto winter (regulatory crackdown on crypto). The cash is reserved to invest and continue to grow its products and services in the event of a crypto winter.

Coinbase announced its official launch in Japan in partnership with Mitsubishi UFJ Financial Group. MUFG Quick Deposit will provide a quick way to convert fiat to crypto and vice versa. It is one of the major moves of Coinbase to Asia markets that for the past few months Coinbase has been discussing.

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