The Weekly Wrap: Unstablecoins, Canada imposes buy limits, CME plans ETH options
Aug 19, 2022
1. Acala’s aUSD and Huobi’s HUSD suffer depeg
The Facts:
- This week, two more stablecoins, Acala’s aUSD and Huboi’s HUSD, suffered a depeg.
- Parachain Acala’s stablecoin fell 99% amidst an exploit enabling the hacker to issue 1.3b tokens.
- aUSD is a decentralized, over-collateralized, and multi-collateral, crypto-backed stablecoin minted through Collateralized Debt Positions (CDPs).
- As of writing, aUSD regained some of its losses, now trading at $0.75 after almost $3b aUSD was recovered from the hacker’s wallets and got burned.
- On Thursday, Huobi’s stablecoin HUSD also depegged and fell 15% from its $1 target value.
Why it’s important:
- With Acala recovering the exploited funds, the damage was mitigated yet raised questions about Acala’s decentralized and permissionless properties.
- After countless depegs of the last couple of weeks with the Terra collapse having the most impact, stablecoins remain risky with the newest two additions of this week.
- Moreover, the last two weeks brought even more headaches when it comes to centralized issued stablecoins as the Tornado Cash sanctions and the DeFi dependency regarding the upcoming ETH PoW fork exposed major obstacles.
- Amidst concerns about censorship resistance and more stablecoins running unstable, other projects such as Liquity’s LUSD or RAI get more attention.
- RAI is similar to Liquity’s single collateral approach, yet is not bound to a price reference such as $1 but has a floating peg that changes dynamically.
SOURCE: (DATA AS OF AUGUST 19, 2022) TRADINGVIEW, (CHART) BITCOIN SUISSE RESEARCH
2. Buy limits for crypto on Canadian exchanges
The Facts:
- Crypto exchanges in Ontario Bitbuy and Newton now implemented annual buy limits of $30k for digital assets.
- The limit will not apply to assets such as BTC, LTC, ETH, and BCH.
- However, these limits do not apply to BC, Alberta, Manitoba, or Quebec as they apply only locally.
- The Canadian Securities Administrators are now demanding exchanges to abide by rules and “provide a pre-registration undertaking to their principal regulator” before operating due to the rise in popularity of cryptocurrencies.
Why it’s important:
- Not only in Canada the regulatory scene is moving as the EU is inching closer to a new AML regulator for crypto assets.
- The Fed also released new guidance to banks interested in engaging in crypto-related activity.
- Moreover, four crypto mining companies, Riot Blockchain, Inc., Stronghold Digital Mining, Core Scientific, and Marathon Digital Holdings received letters from the House Committee on Energy and Commerce asking for clearance regarding the environmental effects of PoW.
- This might polarize the upcoming Merge of Ethereum even more as ESG is closely linked to PoW and PoS.
Financial privacy should be the norm. People don't like getting their page views tracked by companies running ads - but don't realize their lack of privacy is so much worse in financial services.
Brian Armstrong, Co-founder & CEO of Coinbase on discussions sparked after crypto mixer Tornado Cash was sanctioned (via Twitter)
3. CME to launch ETH options prior to the Merge
The Facts:
- CME announced its plans to launch options on ETH futures on Thursday.
- The Chicago-based derivatives market CME Group revealed that it aims to launch the product before the Merge, Ethereum’s transition to PoS that is scheduled for September.
- According to the group, they already noticed a rise in open interest and trading volume for micro-sized ETH futures options as well as ETH futures, which is likely linked to anticipations of the upgrade ahead.
Why it’s important:
- Despite the difficult market conditions recently, more positive news coming TradFi and institutions after last week’s announcement of BlackRock’s major private Bitcoin trust.
- As such, Brazil’s largest and renowned brokerage XP launches BTC and ETH trading to their 3.6m customers, hoping to reach 200k active crypto users by end of 2022.
- Meanwhile, Brazil’s largest investment bank BTG Pactual launches another trading platform called Mynt for BTC, ETH, SOL, DOT, and ADA.
- Moreover, one of the biggest digital banks Revolut gets approval to offer crypto services throughout Europe signaling confidence in crypto markets.
10001
ChainID of the expected Ethereum PoW fork resulting in ETHW
In other news
- Buenos Aires to run Ethereum validators in 2023 (via CoinDesk)
- Jump Crypto to build a new validator client for Solana (via Jump)
- Dragonfly buys hedge fund MetaStable Capital with $400m AUM (via Bloomberg)
- Coinbase to pause withdrawals and deposits during the Merge (via Crypto Briefing)